Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good day, and thank you for standing by, welcome to the Idorsia Half Year 2022 Financial Results. [Operator Instructions] Please be advised today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Andrew Weiss, Head of Investor Relations. Please go ahead.

Thank you, Sarah. Good morning, good afternoon, everyone, and welcome to the Idorsia first half 2022 webcast. With me on this call are our CEO, Jean-Paul Clozel; our CFO, Andre Muller; and our Chief Commercial Officer, Simon Jose. They're all here to provide additional color to the press release and first half 2022 financial report published today at 7:00 a.m. Central European Summertime. Next slide, please. We will first be making prepared remarks and then we will address all of your questions at the bottom half of this call. But before kicking it off, I need to remind everybody about our disclaimer. We will be making forward-looking statements in this call. Hence, you have been adequately warned about the risks associated in investing in Idorsia shares. Next slide. With this said, Jean-Paul, the floor is yours.

So we are on Slide 3. When we created Idorsia 5 years ago, we had a clear goal to become a fully-fledged biopharmaceutical company. And just 5 years after the creation of Idorsia, I'm very pleased to report that we are really on a very good track to achieve this goal. Next slide. We set up from day 1, and we have not changed this priority list. We had defined 5 key priorities. First, deliver 3 products to the market within a midterm time. Number 2 was to beat a world-class commercial organization to be able to retain the value for our discoveries. Number 3, to bring as fast as possible Idorsia to sustainable profitability, to continue to fuel our pipeline with new discoveries, and finally to utilize state-of-the-art technologies to drive innovation within the company. So Slide #5. Let's look at what we have achieved within these 5 years. First, 2 products are on the market, QUVIVIQ in the U.S., PIVLAZ in Japan, but we have got results of -- very good results of aprocitentan, which I will describe briefly afterwards. So we are on a good track to get soon 3 products on the market. The U.S., Japan and European organization are now established and we are starting to have revenues, and I do believe that we are on the path, as we have mentioned, to reach profitability in 2025. We have also continued to discover drugs. And on top of the existing growth that we had 5 years ago, we have now a very rich pipeline with some new products moving to Phase II or to Phase III. And finally, and we don't have time today to go into the details, but I can tell that we are using state-of-the-art technologies in research, but also in also marketing, where all the most modern tool, including artificial intelligence are used in order to optimize our revenues for marketing, but also our ability to discover new drugs. Slide #6. So we want -- and that's a very clear goal. We don't want to be one of this biotech companies which are not just profitable after 20 years, we want to become profitable as soon as possible. And in order to achieve that, we want to combine not only revenues from our commercial products, and we intend to commercialize QUVIVIQ, PIVLAZ, but also Lucerastat, Cenerimod, and selatogrel. But we want also to have revenues from milestones and royalty streams. As you know, we get 8% of the sales of ponesimod, which is primarily marketed by Johnson & Johnson. We will have a significant part of the revenues of aprocitentan. We are waiting the results of the T-type calcium channel blocker, which has been licensed or partner with Neurocrine. And we are also expecting that vamorolone is going to be approved in not the too distant future, and bring also milestones and revenues to Idorsia. So now let's start with the first part of this revenue, Slide #7. And I would like to give the word to Simon Jose, who has been very efficient to beat the commercial organization all around the world. He was the first person to have this task and to have to do, and I have to say that he has done a fantastic work and is going first to discuss the results of these efforts and the efforts of the U.S. team with the launch of QUVIVIQ, but of course, he will also describe the launch of PIVLAZ in Japan.

Thank you, Jean-Paul. And as Jean-Paul said, it's a very exciting time for Idorsia as we launch our first 2 products. I'm very pleased to be able to share with you today the positive early momentum we're seeing with both QUVIVIQ the U.S. and with PIVLAZ in Japan. Next slide, please. So starting with QUVIVIQ, which, as you know, was launched in May. The feedback we have received from health care professionals and patients have been very positive, and we're very encouraged by the steady growth in prescriptions and physician adoption, which I'll share with you in a few minutes. But of course, before any of this can happen, we need to build awareness amongst prescribers. And as you can see here on the right, we are making good progress here with physician awareness of QUVIVIQ already at 52% in June, just the second month into the launch. Next slide, please. So awareness is building, but what about physician receptivity to the profile of QUVIVIQ. This slide shows the results of some market research we conducted prior to launch with a blinded product profile. It shows physicians who are highly attracted to using QUVIVIQ compared to the other medications they used to treat insomnia. And as you can see, 60% of physicians were passionate about using QUVIVIQ, that's the green segment, or attracted to using QUVIVIQ to the blue segment. And of course, this was significantly greater than all other products in the category and importantly, nearly twice the level of the other 2 DORAs in the panel. Next slide, please. And the feedback we have gained from market research about the product profile is translating into positive feedback from doctors about their experience with the product. These quotes are just a few examples of the dozens that we have received with similar themes, and I'll just give you a moment to read them. In fact, I was in the U.S. last week and spent a day with one of our sales representatives in Washington, D.C., where I received similar comments and feedback. Interestingly, I had one doctor tell me, she had switched 13 patients from ambient to QUVIVIQ and haven't heard a thing back from any of them. And when she saw the slightly puzzled expression on my face, she quickly went on to say this was very good news. She was perfectly clear that these patients would have got straight on the phone if it wasn't working out. So in many cases, no news is good news in this category. Next slide, please. So turning now to the numbers. As you've seen in the press release, net sales in the second quarter were CHF 0.4 million. This clearly is not reflective of actual prescriptions dispensed or of product demand. As to enable patient access and generate early demand, we are providing a robust patient support and co-pay program, including a first 30-day prescription free. As you're aware, patient support programs are becoming commonplace now to support new launches during the period where insurance coverage is being built. Furthermore, you should also note that we did not actively stop the channel at launch. Next slide, please. Now as many of you know, we are partnering with a specialty pharmacy services company, vitaCare, to manage a key component of our patient support program. Now whilst this makes it easier for patients to get their prescriptions filled, it makes the reporting of QUVIVIQ prescriptions more difficult. IQVIA does not currently include vitaCare in example bank, and therefore its syndicated report under report prescriptions to QUVIVIQ. We have full transparency of the vitaCare data and combined vitaCare and IQVIA, without over or under accounting. And as we communicated in early May, we will report these data during our quarterly earnings calls. So here, you're seeing the first set of them, from launch through July 15, with the vitaCare data being added to the IQVIA numbers in the chart. So you're essentially seeing the IQVIA line at the bottom, then the EPS number of vitaCare, and then the total prescriptions in black. I think as you can see, we have good momentum in the growth of prescriptions dispensed with the most recent data point exceeding 1,100 prescriptions for the week ending July 15. You'll also notice a few dips during the weeks where there was a national holiday in the U.S. This is a normal pattern created by vacations, reduced doctor visits and reduced pharmacy hours during the weeks in question. Next slide, please. Now taking a closer look at some of the early data, we are particularly pleased with the adoption of the higher 50-milligram dose. You will see on the left that around 75% of prescriptions are for the 50-milligram dose, which is expected to offer the best efficacy for the majority of patients. We believe this, along with the 30-day first prescription free and a clear nightly dosing message will help enable a successful trial, something we know is critical in insomnia. Additionally, we are seeing around 60% of prescriptions being written with at least one refill, with over 20% having 4 or 5 refills attached, and repeat scripts are starting to be filled. The chart on the right shows the number of writers per week, the number of physicians or nurse practitioners. You can see the strong growth in total writers as we add new writers every week. We now have nearly 2,700 writers after 10 weeks on the market. You'll note the data on writers is only through July 8. There is a weak lag in obtaining these data versus the total prescription data where we have through July 15. Next slide, please. This is perhaps the most important slide I'll show you today. It's showing the NBRxs of the 3 DORA products from our launch in May through July 15. As you can see, QUVIVIQ went past Dayvigo after only 6 weeks on the market. Now think about that for a minute. Dayvigo has been on the market for 2 years. And after only 6 weeks, more new patients are being put on to QUVIVIQ than are being put on to Dayvigo. And with the current trajectory, it won't be long before we are through Belsomra too. Now this matters a lot, not because the existing DORAs are a material source of business for QUVIVIQ, they are too small. But because it is the ultimate proof that doctors are responding to the differentiated profile of the drug and our messaging is resonating. In fact, less than 5% of our source of business is coming from the DORAs and the majority of QUVIVIQ is coming from new patients at around 40% or switches from benzo drugs or trazadone, around 47%. This is a very encouraging profile. Next slide, please. So we're off to a good start, but what comes next? We have long maintained that consumer awareness and activation will be critical to the long-term success of QUVIVIQ, and our strategy is centered around this, as you've already seen with our prelaunch partnership with Jennifer Anderson. We believe branded DTC and consumer activation will be an important momentum building catalyst going forward, and we have recently announced our partnership with 2 celebrities as QUVIVIQ patient ambassadors; actor, Taye Diggs; and former Olympian and Champion skier, Lindsey Vonn. Both Taye and Lindsey are taking QUVIVIQ and have positive experiences on the product. They've already participated in a number of media interviews. Last week, Lindsey was on the Today Show, sharing her insomnia story, which then got picked up by other outlets, including People Magazine. After this interview, web traffic to quviviq.com tripled from the previous days. Together, Taye and Lindsey have already reached tens of millions of consumers with their messages, many QUVIVIQ branded. And in the late summer and early fall, DTC television commercials featuring Taye & Lindsey are planned to start airing. We expect this to have a substantial impact on consumer awareness and motivating potential patients to talk to their doctor about QUVIVIQ. So overall, we are pleased with the start we have made in the first couple of months in the U.S., and are confident that as we exit the summer months and activate our branded DTC, we will see a further positive shift in momentum. Next slide, please. Looking beyond the U.S., QUVIVIQ is on track to become a global brand. Following the EU approval in April, launch preparations are underway in the top 5 European markets with the first launch in Germany expected before the end of the year. The local teams are actively engaging with medical experts, policymakers and payers to introduce Idorsia and raise awareness about the significant burden of chronic insomnia. As the first dual orexin receptor antagonist approved in Europe, there is a high level of interest among medical experts in the differentiated clinical profile of the product. We have also filed QUVIVIQ in Switzerland and Canada, where we have recently appointed general managers and are establishing local affiliates. Finally, we have now completed recruitment of the Phase III study in Japan and expect the top line results later this year. Next slide, please. So to finish off and just turn briefly to PIVLAZ in Japan. We launched PIVLAZ or clazosentan in Japan in April for the prevention of vasospasm following an aneurysmal subarachnoid hemorrhage, a life-threatening condition, which has an incidence in Japan that is 2 to 3x higher than in the rest of the world. Next slide, please. There has been no new innovation in this field for over 20 years. So the availability of a new product with high quality evidence is creating a good deal of excitement within the neurosurgeon community in Japan. Neurosurgeons have responded very favorably to the robust Japanese Phase III data, demonstrating safety and efficacy of PIVLAZ, which was published in the Journal of Neurosurgery in April this year. Next slide, please. I'm very pleased with the positive early results of PIVLAZ since the launch in April. Net sales in the second quarter reached CHF 11.4 million. And of this, nearly 70% has already been purchased by hospitals from wholesalers, and we have been receiving reorders since the beginning of May. Approximately 60% of our target hospitals have placed at least one order for clazosentan. And as we estimate that based on the incidence of aSAH in Japan, approximately 10% of patients were treated with PIVLAZ in June of 2022. We expect this positive trajectory to continue as PIVLAZ is included in more hospital formularies and treatment protocols, and neurosurgeons gain more experience with the product. So in summary, our commercial organization is fully focused on executing against our ambitious launch plans for both QUVIVIQ and PIVLAZ. We're hearing positive feedback from our customers about both of these innovative products, and we are seeing the number of prescribers and prescriptions dispensed increase steadily week-over-week. I'm confident that the positive momentum will continue to build after the summer months as we ramp up our consumer activation in the U.S., and continue to gain patient share for PIVLAZ in Japan. And with that, I'll now hand over to Andre.

Yes. Thank you, Simon. Let's move to Slide 21. And on this slide, U.S. GAAP numbers are built over the first half. Let's first start with the net revenues. Simon alluded to the CHF 11.4 million sales of PIVLAZ CHF 0.4 million of QUVIVIQ. As you know, we reported net sales and not gross sales. So it does not really reflect the demand in share volumes, notably for QUVIVIQ. We had also roughly CHF 11 million contract revenues, a little more than CHF 10 million were deferred from previous out-licensing deal, so a milestone and slightly less than CHF 1 million relating to [indiscernible]. And we'll come back to the CHF 407 million non-GAAP operating expenses in a minute. So this led us to a non-GAAP operating result of minus CHF 384 million with the usual D&A and stock-based compensation. The U.S. GAAP operating results reported were minus CHF 405 million. Below EBIT, the CHF 15 million is mainly relating to financial expense, CHF 8 million in connection with a convertible bond interest and CHF 4 million on the unrealized loss, notably on Santhera shares in connection, we see a tax expense. So this led to a U.S. GAAP net loss of minus CHF 499 million. Next Slide, 22, please. Coming back to this non-GAAP operating expenses, you see we had a small increase in R&D totaling CHF 180 million, of which you had a fixed cost base, mainly in research, more than CHF 70 million -- CHF 72 million, actually study expenses, of which CHF 60 million were related on Pfizer compounds. Selatogrel, we see ongoing Phase III as well as AMI, where we see a nice increase in the recruitment pace and see a development of cardiopan. We have daridorexant, we see a Japanese trial that will be finished before year-end and also the initiation of the pediatric one. And we had [indiscernible], we see a progression of Phase III. Lucerstat also mainly with drug substance and clazosentan finishing the western trial REACT that should also read out by the end of this year. Then, of course, a big jump is in SG&A with CHF 226 million, slightly higher in G&A, reflecting also a more global footprint in the U.S., in Japan and now starting also with the launch preparation, having now 6 affiliates in Europe and Canada, plus of course, marketing and selling mainly driven in the U.S. with QUVIVIQ and to a lesser extent with the launch of PIVLAZ. So CHF 407 million, a huge increase compared to last year, CHF 248 million. Next slide, please, 23. You see here the cash flow. So liquidity cash flow reconciled with liquidity was minus CHF 455 million. First year, CHF 407 million non-GAAP OpEx we just discussed. CapEx of CHF 18 million. You have the usual staff in CapEx with CHF 12 million. And you had also a CHF 6 billion milestone in collection this year Japanese approval early 2022. Working capital changes, CHF 42 million, mainly buildup of inventories to supply both U.S. and Japan with QUVIVIQ and PIVLAZ, CHF 22 million increase in receivable, as one can expect, we see sales which are out, CHF 10 million and rest is other receivables or payables. And last year, you had CHF 12 million with others. That's mainly relating -- you have a lot of movement here, but your main one deferred revenue of CHF 11 million. So we ended the second quarter with liquidity of CHF 733 million. Next Slide, 24, shows liquidity between cash and cash equivalents, CHF 230 million and deposits of less than 12 months, CHF 500 million. And you also see how these liquidity is held mainly in Swiss franc, CHF 572 million and also in USD 146 million. [indiscernible] with relating to operating loss, USD 840 million GAAP, excluding D&A and SBC, mainly non-GAAP operating loss should be as we indicated with the full year results. And as mentioned in the press release, is Q1, CHF 785 million for non-GAAP. We need more visibility to guide on net sales a little more than 2 months after the launch in Japan and less than 2 months because the drug was not available in the retail channel before mid-May for QUVIVIQ. But we are committed to spend around CHF 785 million net [indiscernible] profitability target. No change here, but I'm more confident than when we initially published this guidance, which was based on daridorexant U.S. [indiscernible] strong result of aprocitentan in resistant hypertension. We have no doubt that aprocitentan will be approved in U.S. and in Europe [indiscernible] we'll get nice [indiscernible] on net sales of [indiscernible]. Jean-Paul, floor is yours.

Thank you, sorry. You were cut, Andrew -- sorry, Andre, but we can -- answering the questions to clarify a few points that you made. So as you said, our expectation of becoming profitable in '25 did not include aprocitentan income and I think that the good results of aprocitentan shows us the importance of building and continuing to build the pipeline. So how is moving our pipeline, Slide #28. So on top of daridorexant and -- which is now basically we are waiting for the Japanese results in end of this year. But for clazosentan, all patients within REACT have been included, and we are now analyzing, and we need to have a 6 months follow-up. So the results should be available end of this year or beginning of next year, mostly mainly beginning of next year. Aprocitentan, we got the results, I will describe them later on, but also all the other projects are moving except the selective, the SORA, which is -- was not positive and we absolutely -- we have decided to stop this program and we eventually evaluate what should we do with this compound. We have other drugs which are finished. We have finished Phase I, such as CXCR7 antagonist for multiple sclerosis, a very interesting product. And the other products which are nearly ready to initiate Phase II. And of course, for all of these programs, we are evaluating how to optimize the value for this product, is it by doing -- keeping the development for us or partnering. And of course, in very competitive areas, we are choosing a partnering solution. Next slide, Slide 29. So I mentioned the results of aprocitentan. This was for me a very important results because we have been working on these drugs within Actelion and Idorsia is a result basically of 30 years of research of endothelin. It's really an optimized mixed dual endothelin receptor antagonist. And what we saw is, I think, very clear. Aprocitentan reduced blood pressure compared to placebo and all the methods which have been used to measure blood pressure being at the doctor office or ambulatory, at home or after withdrawal and with using these 2 methods. All results are consistent and show a very significant effect of aprocitentan on blood pressure. As mentioned, the effect, and this is maybe the first time that in so severe patient such a long evaluation has been done, but the effect is maintained and very well confirmed after a period of 48 weeks. And very interestingly, the effect has been observed in a group of patients, which are known to be resistant to usual anti-patented drugs. And very important to remember that this was done -- this study was done on top of a triple therapy for 40% of the patients, but quadruple therapy, meaning a calcium antagonist and a directed and an adjutant receptor blocker and the beta blocker in 60% of the patients. And also you will see when receptor blocker and the beta blocker in 60% of the patients, and also you will see when the results will be available that this was in very severe patients, patients combining heart failure, renal failure, obesity, diabetics for nearly 50% of these patients. And this is why the very good tolerability and safety that we have observed is so important. So I'm very confident that this drug is going to satisfy a highly unmet medical need in these patients. So what are the next step with aprocitentan, Slide #30. We want to file the NDA before the end of the year. And we also -- and of course, it depends on the acceptance of abstracts and so on, but we want to show the results in a scientific presentation as soon as possible. And we want, of course, to submit this result for peer review publications. And clearly we have increased our interaction with Johnson & Johnson, with Janssen, who is in charge of the commercial launch because we, of course, want to have the best label and the label which also corresponds to the need for a successful marketing. Next slide. So already as we are half year in 2022 and when we think of what we are able to achieve in this first year, it's quite impressive. So if we summarize what has happened during the first 6 months of 2022, we had QUVIVIQ approved in the U.S., clazosentan approved in Japan, the commercial launch of clazosentan initiated in Japan, the commercial launch of QUVIVIQ initiated in the U.S., QUVIVIQ approved in Europe, and we obtained the results of aprocitentan in Phase III, final results. Now the rest of the year is going to be also very important because QUVIVIQ is going to be launched in Europe. And I do believe that Europe is a fantastic ground for a commercial success of QUVIVIQ because no innovation in the sleep domain has been happening for drugs within the last 20 or 30 years. This year, we have -- is in the second half of 2022, we intend to launch the Phase III with cenerimod, we have -- and we have discussed with the FDA, and we are integrating all their requests and all our also learnings from the Phase II within our Phase III, which should start before the end of this year. And we -- as I mentioned, we'll get the results of daridorexant Phase III in Japan, which will be the base of an NDA in Japan. And we want to finish the Phase III of clazosentan for European and the U.S. And this Phase III is called REACT. As you see, a lot of things will happen and I'm not discussing all the brand new products that we are discovering, and I can tell you we have made some breakthrough in several areas. So be prepared for more. Thank you.

Thank you, Jean-Paul. So this concludes our prepared remarks and we are now happy to move on to the Q&A session of this call. On logistics, May I quickly ask you that when you formulate your questions, that you limit them to one question only and drop back into the queue. Furthermore, you have the opportunity to write your questions on the webcast and we'll be able to then take them up in this forum. Operator, please prepare the lines.

Thank you. [Operator Instructions] We'll now take our first question. This is from the line of Peter Verdult at Citi.

I have 3, but I'll only ask 1 and drop back in the queue. The question to Simon on QUVIVIQ. I mean, patients have used the drug, survey docs, the message points you give do resonate, payer access is always going to be the issue. You previously talked about balancing the need to drive access without giving away too much on rebates. The question is, do you think you have that balance right at the moment? And should we or the market expect any of the big 3 PBMs to provide access by year-end? Thank you.

Please stand by while we just wait for the speakers to be connected. Please stand by while we connect the speakers line. By the way, we have the speakers reconnected. Apologies for the delay, please continue to hold while we get the speakers back on line.

Yes, Hi. This is Andrew. Who is on the call?

Andrew, you've got the line of Peter Verdult from Citi open. Do you need the question.

Okay, we're back in. Somehow the line just broke down. Hi, Peter, how are you doing. You want to address your questions.

You want me to repeat it or did you get that, were you able to hear?

No, we didn't get anything. Suddenly -- our line just died off suddenly.

Okay. Well, I have 3, but I will play by the rules and ask one and drop back in the queue. When we speak to patients and docs, the message points given do resonate, payer access is always going to be the issue. So you previously talked about balancing the need to drive access with not giving away too much on rebates so early in the life cycle of the product. Do you think you've got that balance right at the moment? And can I push you on when we could expect 1 of the big 3 PBMs to provide access, could something happen before year-end? Thanks.

So yes, I think we're where we want to be. We're in discussions with every single large plan and we're in that cat and mouse game, Peter, as we've talked about where we're trying to trade off driving demand to make sure that we can have the right conversation about when and how much versus the long-term potential of the product which has a patent life of 15 years. So after 2 months, I wouldn't expect to have been presenting a contract. And to be honest, if I had one here now with you, I can promise you I would have paid too much. So I can't tell you when it will be because that's a lot going to depend on -- it's confidential, it obviously depends on how we go with the demand and where we net out. But I'm completely comfortable where we're at the moment. But it really is about driving demand so that the payers can respond.

So Peter, it's Jean-Paul. I just wanted to insist. This is -- and I am very convinced when I see the data, when I see the feedback on the market, this is going to be a big success. We are already going to be -- I really think before the end of the year, above [indiscernible] we are going to be the new product in sleep area, the real breakthrough that people are waiting for a long time. And it would be crazy for us to give up by accepting too high rebates to give up too early. This is a long-term decision. Of course, it's always very tempting to give up, but we are not going to give that, and we want a decent discount, and this is going to happen. And this is why we need to be a little bit patient because the time is working for us. You see the steady increase of the demand. And at one point, I'm pretty sure we will find a very good negotiation solution with this PBM.

Thank you, Peter. Operator, next question please.

Thank you. We'll now take our next question, please stand by. Question is from the line of James Gordon from JPMorgan.

Hello, James Gordon, JPMorgan. So I'll go for QUVIVIQ, please. So you previously did issue '22 revenue guidance and then you now have withdrawn it. So is that because of challenges with coverage and more couponing and couponing going on longer or the 2 are interlinked. So is that the reason? And if so, how much better could the couponing situation be in Q3? Should we assume a lot less couponing? Or might it be a similar amount of couponing? And if we try and extrapolate your chart, I think it says on Slide 13 that 60% of coupon patients have gone on to come refill patients. So does that mean -- is that how we should think of it? That's like your conversion into payment, paying patients for Q3? And if I could squeeze in just a clarification point. I think I saw a comment in the release about nonequity dilutive instruments. So does that basically mean debt issuance in H2?

James, sorry, we've got cut off again. Yes, just going back to your question about what is happening in the ramp. I mean I think the first thing I would say is that we probably have hit a tougher environment that we're launching into with COVID. I was in the U.S. last week, and as I said, and you go into the doctor's offices and there's still some of them are putting patients face to face. They're still dealing with backlog and catch-up. And in that context, sort of pulling patients in on insomnia isn't sort of top of their list. So I think we have a challenging environment that we're launching into. We had a couple of operational things that we've since squared away around electronic health systems. It's taken us a while to get the more up and running because some doctors' offices are on 3 months contracts. And therefore when you have to write prescriptions electronically, a number of those doctors couldn't do that in the first month or 2. So we've had a few sort of headwinds that we've been battling with, which I think is what perhaps has slowed the demand slightly. But as I said, I think if you look at the charts now, we are breaking through that and I think we're very pleased with what we've got. It's perhaps a little bit delayed compared to where we thought we would be. I don't think at this point, contracting is part of it. I don't think we would expect to have big contracts and open access at this early stage of the launch. I think it's about driving demand to make sure that we can subsequently open those contracts up. Regarding your second point on the 60%, just to be clear, in the slide I showed it's 60% of prescriptions written include a refill or more than one refill. It's not that -- but we are seeing those refills being filled. And just to give you a sense of what's happening at the moment. We looked at the first few cohorts in May and the majority of prescriptions were they had a refill, that refill has been filled and the majority of the time it's in 32 days or less.

Okay, equity question.

Yes. Thank you, Simon. Andre, are you still on the line?

Of course. Sorry, I missed the question of Peter.

James Gordon asked a question about -- what potentially could be a nonequity financing?

Well, I'm afraid, James, you will need to be a little more patient, a couple of months before we can announce such deals. But I indicated sale and leaseback, I indicated the rate-related deals. We are working on it. And as you can imagine, getting these strong results for aprocitentan will dramatically help. So this -- it will be around these 2 type of instruments in order to again start 2023 with a stronger balance sheet and more than 12 months cash runway.

Okay. I think James was explicitly asking whether debt could be part of that financing tool.

Could be - could be one of the avenue.

Thank you, Andre. Operator, next question please.

Thank you. We'll now take our next question -- this is from the line of Dominic Lunn from Credit Suisse. Please go ahead.

It's Jo Walton here from Credit Suisse. I'm afraid I'm sorry to be like a stuck record and still on QUVIVIQ and access and payment. We see that you have a 0 dollar co-pay to start with, and then you have a renewal of $25 a month. If I was a payer and I could see that my patients could get 3 products initially and then they could get refills paid for Idorsia at $25 a month, which is probably roughly what I'd be charging them for Tier 2. What is the incentive that brings the payer to come to Idorsia and say I want to get involved. So I guess my question is how long is this couponing going to be going on? And specifically, if I were to look for a coupon today, how long could I look to be getting effectively free product before I have to suffer any material financial pain. Thank you.

Hey Jo, it's Simon. It actually worked the other way around, I think, in that we right now estimate we've got 20% access, and we're obviously looking to drive business through that 20%. We are also -- every single patient that goes through vitaCare additionally is going through the process, which can ultimately lead to a prior authorization application, some -- a good number of which, by the way, are being approved. So everything in that 20% plus prior auths -- the payers are paying for full price with no rebate. They also do respond to patient need, patient volume. And as we start to generate demand and we go through Dayvigo, we go through Belsomra, and they see true demand in the marketplace and they start paying full price with no rebate for the business that's going through. Then there is an opportunity for us to have that conversation. And that's traditionally the way that the market works. Right now, I don't blame them. Right now they say, hey, guess what, I've got Belsomra, I've got Dayvigo, why the how should I give you a contract for QUVIVIQ. It could well go the same way as the other 2 -- and it isn't. We're already demonstrating that the volume is on a very different trajectory than the other 2. And once that picks up and once they start seeing what they're paying for the covered lives, and I think we'll be in a very different place to have that conversation. With regard to the timing of couponing, that will depend on where we get to with the payer contract. But essentially, once we start to see commercial coverage come up, then that will obviously come down.

Can I sneakily just check then a 20% access rate is a good enough rate to trade off against the cost of a national direct-to-consumer campaign in September when you haven't got that much access to pay it back?

Yes. I mean over several years, yes, because as a primary care drug, we don't expect a breakeven in year 1, usually looking at a profitability for a primary care drug in year 3. We're targeting, as you know, as a company, we put our guidance to be profitable in 2025.

Thank you, Jo. Operator, next question please.

Thank you. And we'll now take our next question. This is from the line of Manos Mastorakis from Deutsche Bank.

Yes. Hello, everyone. Just wanted to get a better sense of PIVLAZ revenues phasing for the next few quarters? if you kind of make a comment on that, please. Thank you.

I'm not going to comment on future revenue projections. I will -- the thing I think I know is on a lot of people's minds is how much of this is real and how much of it is stocking in terms of what we've reported out already, which I obviously can't tell you retrospectively. But I'll give you an -- in June, for example, wholesalers ordered -- reordered 90% of what they sold out. So I think we're already at a point where we're at a steady state in terms of what's in -- in May it was 70% and in June it was 90%. So the volume that they sold to hospitals, they essentially reordered 90% of that volume from Idorsia. I think that -- I think these people has always been underestimated the potential because people underestimate; first, how big is the problem of these patients and especially in Japan. And we -- the Japanese have done are basing their prescription on results obtained in Japan. It's a full 2 studies, the whole NDA is not only based on in terms of safety on all what we have done in Europe, in the U.S., but mainly on 2 pivotal studies in Japan. So most of the best centers have been involved, and this explains why the pickup is fantastic at the beginning of this launch. And I'm stunned to see that already, as mentioned, we are treating 10% of the patients after 2 months. Imagine what is going to be at the end of this year. So you can expect, and I'm good, I would say, a good surprise for PIVLAZ compared to the expectation of the market this year.

Operator, next question please.

Thank you. We'll now take our next question. And the question is from the line of Raghuram Selvaraju from H.C. Wainright.

This is just with respect to the long-term view on QUVIVIQ. Can you comment on potential additional sleep disorders that you want to explore with the drug given its profile and treatment of insomnia, particularly with respect to conditions like jet lag and shift work disorder?

We have -- especially in the U.S., I have to say, we have a label which doesn't exclude Jet Lag, exclude any sleep disorder. We have chosen as a strategy to go with the big indication, let's say, the largest label and we discussed it with the FDA. So we have no restriction. And frankly, our marketing goal is certainly not the jet lag, 1 or 2 drugs. The real what we have observed is that the benefit increased with time and I think the chronic insomnia is really our target. And there are millions and millions of patients and tens of millions of patients with chronic insomnia. What we want during the first year is to focus on marketing effort to explain that this is a chronic disease like hypertension, diabetes, where you need to be treated every night, and I think that if we would start to discuss jet lag it would be a little bit against this message. I think it is a fantastic drug for chronic insomnia. I think it could be good and we didn't do the study. So -- but people, if they want to take it for jet lag, they can. But frankly, when you treat -- when you take this drug every day, this is where you have seen the benefit that we have described in our Lancet paper on daytime performance and this comes with time. And this is really a drug for chronic use.

Thank you, Jean-Paul. Thank you, Ram. Operator, next question please.

Thank you. We'll now take the next question. The question is from the line of Thibault Boutherin from Morgan Stanley.

Hello. Can you hear me?

Yes, we can.

It's just about the agreement with Syneos Health. Just wondered if you could give us some color on how this partnership has been going? If you had to make any adjustments to the agreement, incentive structure or anything? And basically what you learned since the launch in relationship with the agreement compared to your initial expectation? And also still on some topic, if for some reason you want to take back control of marketing for any reason, how binding is this agreement and how much freedom you have here in terms of doing that? Thank you.

Thanks, Thibault. Let me start with your second question or part of question first. So just to be clear, we are in full control as our dossier of the marketing, the pricing, medical and everything to do with the strategy of the product. Syneos essentially are providing sales force services to us, and we're pleased with the way that's all going. We've had to make no adjustments to the contract. But I know I've said this before, but we need to be very clear that Idorsia is in full control and has built the capabilities for all of what I would describe as the strategic capabilities that the organization requires for the asset, and Syneos is providing sales force services in partnership with us. They're doing a very good job. We're pleased with the quality of the sales force that they've stood up and we've had no cause to change anything to do with the contract.

Thank you, Thibault. Operator, next question please.

Thank you. And we'll take our next question. This is from the line of Rosie Turner from Jefferies.

So I will start with one also. How are you thinking about the launch plans in Europe? And I suppose it will vary in terms of country access, I think before you had spoken about Italy, but I just wondered if there was an update there?

Yes. I mean we're expecting actually to be launching Germany first. As Jean-Paul said, we look at Europe very -- bullish about Europe because the unmet need is huge, just as big as it is in the U.S. In fact, the number of patients on prescription medicines in Europe per capita is higher than the U.S. I think that's probably because there's more OTC use of sleep meds in the States. And many of the European regulators and even some of the payers are really quite concerned about the long-term use of Zs and benzos and put restrictions around their use. So being the first DORA to come into the European market against that backdrop gives us a lot of confidence in the opportunity ahead of us. As I say, we'll launch in Germany later in the year. And then as you rightly say, we'll roll other markets out through the course of -- across the end break of the year and into 2023 dependent on market access. You're right, that Italy is a self-pay market, which means we won't have to wait all the way through a long protracted reimbursement process in Italy. And there is potentially an opportunity for us to think about a similar approach in Spain. But otherwise, it will be linked to reimbursement, particularly in the U.K. and France. And just I wanted to add that there is something very special for Europe is that the label of QUVIVIQ in Europe is quite extraordinary, I have to say. It's really for insisting on chronic use here, it's -- and you know that in Europe most of the drug -- every drug, most of the drug, I have to say, especially benzo, Z-drugs are limited to a few weeks of treatment. Here, it's the first chronic insomnia drug which is approved for chronic use and which is also approved for patients who have a really daily consequences. There is in the label very clear mention on the fact that it should be really -- it's going to work, especially in patients with chronic daily impairment of their daytime performance and that there is a benefit of QUVIVIQ in this patient on the time performance with the 50-milligram. So we have a very, very unique label, which is unique as an insomnia drug because it's the only drug. And this is very important for reimbursement because nobody can compare to a drug\ which is not approved for more than a few weeks. So I think it doesn't -- it really, I think is very helpful, the reimbursement. It is really a drug for chronic use and for patients with daily impairment of their activity. So this is what we try to really integrate into our launches and we are working on that in every country. And in addition to having chronic labeling, just to add the [indiscernible] data on daytime performance are also in the European label, which is very beneficial for us in Europe.

Next question, please.

We'll now take our next question from the line of Keyur Parekh at Goldman Sachs.

The first one is, if I look at consensus for 2022, we've got QUVIVIQ sales of about CHF 70 million and then 23 at about CHF 250 million to CHF 260 million. How comfortable are you with consensus numbers? Do you think they are broadly in the right kind of ballpark? Or do you think given some of the decisions you're making from a commercial perspective, we should be thinking about a different curve to the ramp.

Andre, are you on the line? Do you want to take that?

Or do you want me to take that?

Well, I can take it. You've seen that we maintain our net operating loss guidance, but we no longer break it between sales, other revenue and OpEx because we are -- we need a few more weeks to get more visibility on the uptake, mainly for QUVIVIQ in the U.S. So I will not comment on the consensus for 2022 and even less a comment for 2023 and after. But as we said and Simon [indiscernible] we have almost 13 or 14 years of IP protection. So we will not sacrifice short-term profitability or sales by contracting with payers. We really want to get -- to extract the most value of QUVIVIQ, notably in the U.S. So we'll give for a full year, certainly more color we see our Q3 results. But right now, it's premature.

Thank you, Andre. Thank you, Keyur. So we've got 1 or 2 questions coming in through the webcast. One of them is for you, Andre, on the back of the non-equity -- the nonequity financing possibilities throughout the remainder of this year. Do you want to give some more granularity as to what those could be and then when that they could be actually happening?

Well, we are definitely actually working on it. So I'm confident that, again, will ink a few deals. Will it be in Q3 or early Q4 I don't know. But for sure, our objective is to raise cash with either, as I said, sale and lease back and/or royalty related -- royalty monetization or royalty-related deals or even structured debt. So between this combination plus Jean-Paul also mentioned it, but out-licensing takes time. But I hope also that we link a few out-licensing deals. But I'm really confident that we'll raise a significant amount of cash, putting us in a very strong position starting 2023.

Thank you, Andre. We've got another question on -- do we have an update on the development of lucerastat, Jean-Paul?

I think that we are basically continuing the open-label phase and we are preparing a discussion with the authorities. We want to -- we have seen, as I mentioned many times, we have seen very, very interesting data on the, I would say, end organ protection with this drug. We want to confirm this data with as much information as we can. We are using -- we were mentioning we are using basically all the new technologies and new techniques to evaluate these effects, for example, you are using artificial intelligence techniques to really compare with a sort of a placebo untreated group. And we will discuss at the end of this year with the authorities the results. But since the protection of this drug of lucerastat is going to be through orphan protection, we prefer to take our time to accumulate data and to go to the authorities with very convincing data. That's the situation. I can tell you that the data that we have are very impressive. And this is why we do not want to give up on this drug because I do believe it's a very efficient drug in Fabry.

Thank you, Jean-Paul. Operator, do we still have questions in the roster?

We do. We'll try to take the next one.

Yes, please.

Thank you. The next is from the line of Peter Verdult at Citi. Please go ahead.

Sorry -- just question -- second question to Andre on the [APRA] royalties. Could you characterize the level of interest that's been from parties? How many are in [indiscernible] and your level of confidence that a deal can be done before year-end? And then maybe for Jean-Paul, can you just reassure us that the edema signal in precision is going to be considered as manageable from a docs perspective?

Jean-Paul, do you want to take also CFS question?

Yes, I have to say edema signal is not -- it's really -- I would say, I will not discuss the word manageable. I think it's a very -- it's part of the treatment of these patients and it's really not causing people to stop the treatment. I think we have a few. I think we can count on the -- basically the -- on one hand the patients who had to stop because of that. So I think that in this very severe patient, this is not going to be an issue. And even more, I think that what we have observed and what is more important that despite the very severe renal problems that these patients do have, we have not seen. What I was really worried and with everybody should be worried when you treat this patient is the occurrence of acute renal failure because when you give anti-patency drug in these very severe patients, this is a big risk, and we didn't see that. So I think the safety is going to be not an issue. Of course, every doctor will look always at these patients and -- but frankly, it is not to the point that it should produce stopping the treatment. And that's the situation. So I'm very confident. And these are very severe patients. I said on 4 therapies, and what we have observed also is some and we will give results later on some very interesting indication on some renal function or renal damages. We have measured proteinuria. We have measured glomerular filtration. So we have some very interesting data that will be shown later on and we should reassure everybody using the drug. And the other question, sorry, I forgot the other.

The level of interest?

And by Johnson.

No, by other parties in the royalty deal.

In the royalty deal. I think, as we said, we have many interest. But a deal is a deal. And until it's signed, it's not signed. So I do not want to comment before we have the signature on this contract. And of course, we are working, and Andre, especially is working very hard. But the data here, I think that what you have also to remember is that this protocol, this protocol of the studies have been really suggested to us by the FDA. This is what they wanted to see in a drug in resistant hypertension. And the fact that all the primary, secondary end points are positive. The fact that this is a protocol really agreed with the FDA and basically suggested by them, and they had a very good -- it was a very good idea, very good suggestion. I think we know that this drug really should be approved. I know that you always have to be very careful. We are working on the quality aspects and so on, but we know that this drug should be approved on the merit of the clinical results. And this is really making much easier our discussion with the potential royalty for royalty deals. Now we have the results and we have been able to start the discussions.

Thank you, Jean-Paul. Thank you, Pete. Operator, do we have any questions left?

We do, please stand by. The next question is from the line of Dominic Lunn from Credit Suisse. Please go ahead.

Thank you, Jo Walton again. I'm sorry to go back to QUVIVIQ, but this is a question about Europe. So I understand you have the Syneos sales force as you have in the U.S. You have vitaCare as a distributor in the U.S. Is there any equivalent in any of the markets that you would use in Europe? And given that there hasn't been a DORA approved in Europe, how confident are you that you've got all of the data that you need to maximize the local reimbursement for those countries that will give reimbursement and that you won't have to do additional clinical studies. It's a degree -- a question really is a degree of confidence in your knowledge about the 15-plus markets in Europe versus the 1 market that you have in the U.S.

Simon?

Yes. Okay, Jo. So just to be clear, vitaCare is not our third-party logistics providers. So all the distribution of drug, they do, do some of that themselves where the product has come in directly to vitaCare and they can distribute directly themselves. But we also have a 3PL in the U.S., which does the traditional distribution. And we have a 3PL in Europe that will do the same distribution throughout Europe. The actual patient service and co-pay model is not applicable to Europe just because of the difference in the nature of the markets. But obviously, we have all of the traditional distribution set up in Europe already. With regard to payer, we're confident we've got what we need. And a large part of that, as Jean-Paul said earlier, is because payers are starting to separate out chronic versus acute. And actually I'll give you an example that in our NICE submission and in our conversations with NICE in the U.K., we have agreed that QUVIVIQ will not be compared to the Zs and the benzos because the Zs and the benzos are restricted to 2 to 4 weeks of treatment, and this is a chronic medication. And by separating out as a chronic medication, you actually avoid the need to do these sort of head-to-head. So I'm not saying that's going to be the case in every single market, but we're in a very good position to be able to use the difference in the labeling to separate out the comparisons that is required. And honestly, I think we're very focused on the top 5 markets. I mean, we talk -- there are 15 and we can get to 40 something. But really, the concentration of the opportunity sits with the big 5 markets and the addition probably of the Nordics.

Thank you, Simon.

Thank you, Jo. Operator, next question.

Thank you, please stand by. The next question is from James Gordon from JPMorgan.

James Gordon. Thanks for taking the follow up question. It was just following up on the financing point, because my understanding before having that Plan A was the divestment of approvability and we've heard that it's not to do with edema or any approvability concerns. Is the challenge just that at this point, J&J hasn't said that much about their aspirations for the product and that may be a potential purchase of the royalty would like to see not just the approval, but even how the launch is starting to go before they really want to commit to it. And the other part of the question was just I heard sale and leasebacks mentioned. On the balance sheet, I think PPE something like CHF 150 million. Is that the sort of the part of the company that could be for sale? Or does that understate it. Is there more to sell than that?

On the latter part of your question, James, yes it's your ballpark. And these are buildings that we received from the demerger process from Actelion back in 2017. On the first part, yes, J&J has not indicated much so far, except that back in November of October or November had an R&D day mentioning 5 drugs with a potential of more than CHF 5.9, including aprocitentan with a potential between CHF 1 billion and GHF 5 billion. Now they've seen the data of the PRECISION trial, and these large companies, they wait for the results before really putting all the resources behind the potential alone. And that's what we see now. So of course, we've not seen the full set of data. This will be reserved for publication, certainly [indiscernible] scientific [indiscernible] later in the year. But -- and I don't want to preempt yet an excitement around the -- around aprocitentan. But as Jean-Paul said, we see data of the PRECISION trial. We are confident that J&J is the ideal partner to make aprocitentan a big success. I recall that most of the analysts see sales peak north of CHF 2 billion. At CHF 2 billion, we would get CHF 550 million royalties. So it's not tomorrow, that's for sure. It's a drug that could be launched in 2024 in the U.S. and in other territories after. And each additional CHF 1 billion on top of the CHF 2 billion would be an additional CHF 350 million. So yes, aprocitentan, for us and for [indiscernible] related deals was a key milestone to achieve. And I'm not saying that the regulatory risk is off the table. But with, as Jean-Paul said, with a Phase III which was designed with the FDA and with primary -- all primary and secondary endpoints met with statistical significance. We are highly confident that the drug will be approved and J&J will launch it, and we have no doubt that we have an ideal partner here with Janssen.

Just if I understand, James, you wanted to ask why does it take time? Is it -- was it one of your questions, sorry, or...

Yes, time, all static, I think the initial -- at least what I understood before is it sounded like it was very much that the plan A was that it would be sold by the end of the year, but it now sounded like there was quite a few different options being entertained. And so my question was if it's not the approvability and it's not the profile, which sounds like it's very good, why was it lesser.

No, no, not at all. I think it takes -- Andre can-- it takes time and we want to have a good deal. We don't make a royalty deal for several hundred millions. And of course, it's going to be a big deal. We want to take the -- we want to go through a real good process and we want to find the best offer. And we want to work on every single details of this offer. It takes time. But I think that there is nothing which is in front of us, which would prevent us to do such a deal. Now we have the results and we -- everybody is quite confident that this drug is going to get approved. So there is no issue on this side. So I repeat, we do not want to get through dilution, and we will use many approaches in order to avoid diluting the shareholders we are working very hard. And every day, we are making progress. And before the end of the year we'll be there, I'm quite confident. But we do not want to give up value too early. And this is what -- this is a topic of Andre to try the best deals of all what we do.

Thank you, guys. Thank you.

Thank you, James. Thank you, Jean-Paul. Operator, do we have any questions left? The time has advanced.

We do. Please stand by while we take the next one. The next is from Rosie Turner from Jefferies.

Hey, thank you for taking my follow question. So it just cracked up a bit earlier, Andre, when you spoke about what you needed to be able to see to give us some kind of guidance on QUVIVIQ, I guess, for the remainder of this year. And I just wondered what that was? Are we kind of waiting to see that DTC have an impact, I guess, the beginning of September so we can expect maybe a bit more guidance in Q4? Or is it something else that we just missed. Thank you.

No, it's really to see demand. Simon, I'm sure you can add to what we need that we are more confident in the uptake beyond preliminary weeks.

Yes. I mean, Rosie, it really is for us to have some more time and see some more data points. I think momentum is good. You've seen the NBRx data, which is a critical lead indicator. And then we've got the DTC, as you mentioned, kicking in, in sort of late August, September. And I think once we start to see what the trajectory looks like, thereafter we'll be in a better position to have a view as to what that looks like.

Just I would like to say, as a CEO, it's not a congratulations. So please believe me that we are all very focused on our task and on the challenges. But which company has built within 5 years a GP sales force in the U.S. and now in Europe, I don't think that has happened. And frankly, we have had at the first weeks, it was not easy for us to go through the distribution channel. We were not a very big company compared to the big Merck or Pfizer of the world. And of course, we had to get the organization, the distribution system in place, the electronic systems in place, which is now in place. So that's the first point. The second point was really to inform the doctors and this is really what we have done. You have seen more than 50% of the doctors know about QUVIVIQ. They are testing it. Let's be clear. Even if they believe us, I think they still believe more in the things they will see by themselves. So they are testing, most of them testing in a few of the patients, sometimes in a lot of their patients, but sometimes in 1 or 2 patients. and what we have heard that they are very happy. But this is a phase where the doctor are testing it. But the real clear thing is that this market will take off only with DTC because today doctors, as we say, have some other clear priorities. They have the COVID situation which was not anticipated. I frankly believe that the beginning of the year that this is with vaccination going behind us. There is, as you have seen, quite a big number of patients will have COVID and then when the patients will be able to really know about this drug and ask, this is going to make the difference. And already we are going to be the #1 DORA very soon. Frankly, before being the #1, I would not have discussed with these payers. I want to be the #1 to discuss. That's always a much better situation. And we are going to see the real impact of DTC during Q3, but even more Q4, I would say, it's a Q4, it's a Q4 issue. Then we will really be able to describe with you when are we going to plan for the payers to cover us, how much is the demand and what our expectation. And this is really -- this is going to happen late this year.

If I may, Jean-Paul, I would add to your comments that sleep is -- it's a perfect world for a drug that works and we believe that QUVIVIQ has these key attributes. I say it parallels, but look at the launch of Otezla back in 2014, you need free sampling to build experience with the patient, the word of mouth, but also with physicians because if you get a strong feedback from patients, this is what will drive the commitment. Now Simon has shown that less than 2 months after the launch, we have already 52% awareness, which is already a significant percentage. And so your second part will be, yes, PBMs, as Jean-Paul said and Simon said before. Yes, well, there are some barriers and with stronger demand we will get these PBMs on board, but not at all parts. I hope we'll have the same profile in COS, with Celgene and now GNS north of CHF 3 billion. But look at the first quarters, it was really a slow update. I hope we'll do better.

And also just to add, sorry, because I think we forgot to mention it during this -- or we didn't mention it as much as I think is the importance of the 50-milligram, 50-milligram dose which is really basically recommended in Europe and which is approved, and this was -- it was so important for us to have 50-milligram. 50-milligrams gives a subjective improvement in the patient, we know it. Basically, 1 hour total sleep time, subject to in fact improvement. One hour of sleep per day means a whole night of sleep at the end of the week. This is major. And this is really fed with the 50-milligram more than the 25-milligram, and this is why we are so happy and we have to fight. And we are fighting that really people, patients take the 50-milligram dose, which is certainly the dose giving the best subjective effect without a price to pay on the side effects. And this is the indicator personally, which I look the most because if we would be having 75% of the patient 25-milligrams, I think we would be in trouble because it would mean that the patients will not make the difference and will not tell the doctors what they do today, they tell the doctors, God, I have not slept for such a long time so well. And this is because they feel it, this is a subjective and this is a 50-milligram, and we are working very hard on that. And I think this launch is a success, will be a success because also we are spending a lot of energy on this dosing recommendation.

Thank you, Jean-Paul. Okay. We've overdrawn our more than half an hour. We need to conclude the call for today. So on this, we're going to thank everybody for their ongoing interest in Idorsia. Our next scheduled news flow will be the 9-month results on the 25th of October. But I'm sure before then, we'll be talking again. So stay safe everybody. Operator, please close down the lines.

Thank you. This does conclude the conference for today. Thank you. You may now disconnect. Speakers disconnect. Speakers, please stand by.