Idorsia Ltd (IDIA) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Idorsia Q1 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Andrew Weiss. Please go ahead.

Thank you, Melanie. Good afternoon, good morning, everyone. My name is Andrew Weiss. I'm the Head of Investor Relations and Corporate Communications at Idorsia. I want to welcome everyone to our webcast to discuss the publication of the first quarter results published this morning, 7:00 a.m., Central European Summer Time. With me on this call are our CEO, Jean-Paul Clozel; our Chief Commercial Officer, Simon Jose; and our Chief Financial Officer, Andre Muller. They're all here to provide more color on the press release that was issued. Next slide, please. As customary, before handing over the microphone, I need to remind everyone that we will be making forward-looking statements. You have therefore been appropriately warned about the risks and opportunities of investing in Idorsia shares. With that, Jean-Paul, the floor is yours.

Thank you, Andrew. So soon Idorsia is going to be 6 years old, and within these 6 years we have accomplished a lot. We have developed, registered, and launched 2 products worldwide, at least in the U.S., Europe, and in Japan. We have a third product which is filed, and this is a precedent time, and the PDUFA should be [indiscernible] in the U.S., and we are starting in Europe. We have built a pipeline with several late-stage products, but we have also discover several new products, and unfortunately we will not have the time today to discuss the very early products that we have discovered. Next slide. Clearly, what is key for us is QUVIVIQ, our insomnia drug, and I would like, in a few words, to explain the strategy we have to make it a really blockbuster drug. First, we had to establish QUVIVIQ as a leading brand in insomnia in the U.S., and we have spent last year and this year a lot of energy to really build the QUVIVIQ as this brand, and now you will -- Simon will show you that indeed we are the leading brand in insomnia in the U.S. And this increase of demand has helped us and is helping us to expand the reimbursement, and this was a pre-requisite, and this is why we have spent so much efforts to increase the demand. But as you have seen, we got in the first quarter of the year ESI reimbursement, and we are continuing with several other payers to work and to find a solution to expand this reimbursement. Then, now, we are launching and we are -- we want to establish QUVIVIQ as also the leading brand in insomnia in Europe. We are -- in Europe, as you know, there have been no other orexin receptor antagonist, and we have launched in the beginning of the year in Germany and Italy, and we hope in several other European countries in the second part of the year. Then we want with QUVIVIQ to change the treatment paradigm in insomnia. That means to -- for example, to promote and to use QUVIVIQ chronically every night because we have shown that the benefit of QUVIVIQ increases with time. We have filed recently a citizen petition to really [ de-scale ] the QUVIVIQ in the United States. Therefore, we are making now -- and we have I think many opportunities to explain to the prescriber that insomnia is indeed a very serious issue, that patients should be treated chronically, and that indeed they should choose a drug which not only improves the night, but also has some impact on the day performance. This is what can be achieved with QUVIVIQ. Finally, the fifth effort will concentrate on expanding the medical utility of QUVIVIQ. We have worked up to now mainly in adults and in patients with chronic insomnia. We are now starting -- we have started a project pediatric to use QUVIVIQ in children. We are doing studies in patients with nocturia, with sleep apnea. So we want to really show that indeed the very good profile of QUVIVIQ allows to use it in several types of patients. So now, I am going to let Simon explain you the progress we are making with QUVIVIQ on the market.

Thank you, Jean-Paul. Can you just move to the next slide, please. Thank you. Good afternoon, everyone, and good morning to those of you in the U.S. So building on the objectives that Jean-Paul outlined, I would like to share with you today the progress we are making on the launch of QUVIVIQ in the U.S. and Europe, and of course, PIVLAZ in Japan. Next slide, please. So as most of you know, of course, we launched QUVIVIQ in the U.S. in May last year and Germany and Italy in November. In the first quarter of 2023, net sales were CHF 4.3 million. And of course, to enable patient access to QUVIVIQ in the U.S. ahead of broad payer coverage, Idorsia continues to offer a strong copay program, including a free 30-day first prescription. And as I've said before, due to this approach, net sales in the U.S. do not reflect actual dispensed prescriptions or the product demand that we're generating. Next slide, please. So moving then to demand generation in the U.S. We achieved a very strong 40% growth in total prescriptions in the first quarter compared to Q4 last year, with over 22,000 prescriptions dispensed in March alone. The 50 milligram dose, the dose which shows the greater effectiveness of the 2 doses, continues to be prescribed at a 3:1 ratio over the 25 milligram dose, confirming that our messaging is reaching and being acted on by our customers. The chart on the right shows the channel breakdown of TRxs which we've shown you before. And here now you can see that the IQVIA line is converging with the Vitacare line, which is a positive sign of increasing access and paid prescriptions. This is naturally something that we're tracking very carefully as we focus our efforts on increasing the proportion of scripts that go through the retail channel and on generating paid prescriptions. Next slide, please. I'm very pleased that QUVIVIQ is now the leading branded insomnia medication in new-to-brand prescriptions in the U.S. across all market segments, whether that's the commercial and all the government segments. We crossed Belsomra in the first quarter after less than 1 year on the market. And given that more than 50% of Belsomra prescriptions come from Medicare Part D, where we are not currently contracted, this is an even greater achievement. And then as you can see on the right, the continuing prescriptions or refills are growing strongly and increased by nearly 60% in Q1 this year over Q4 last year. And this is consistent with the positive feedback we hear from physicians and patients about QUVIVIQ, particularly with the 50 milligram strength. Next slide, please. As I just mentioned, Belsomra is over-weighted in Part D, where QUVIVIQ is, of course, underweight due to its current access position. So looking at the commercial market only where we can compete on equal terms, you can see that QUVIVIQ has passed the other DORAs in total prescriptions, not just NBRxs, and now has nearly 40% share of the commercial market. We have in less than 1 year shown we can compete, differentiate QUVIVIQ and establish it as the leading DORA in the U.S. market. As Jean-Paul mentioned, our imperative now is to expand payer coverage, which I'll return to shortly, and transform this old generic market into one where the DORAs and QUVIVIQ in particular are central to the treatments of insomnia and not relegated to use after the older addictive benzos and Z-drugs have failed. Next slide, please. And expanding the DORA market is exactly what we're doing. As you can see here, QUVIVIQ is not only gaining market share, but it is expanding the class. Following the launch of QUVIVIQ last May, DORA TRxs have grown by 42% and NBRxs are up 93%, with QUVIVIQ prescriptions being almost all additive to the class. We continue to see the source of business for QUVIVIQ coming from the older, widely used sleep medicines such as trazodone, Z-drugs and benzos, with only a small number of patients coming from the other DORAs. Next slide, please. So coming then to access and reimbursement, which is clearly essential to convert our prescription demand into net revenue. Following the launch last year, payer contracting in the U.S. has developed more slowly than we anticipated, but we are making good progress. Today, QUVIVIQ is covered by Express Scripts National Preferred Formulary and Tricare Uniform Formulary, which together represent over 32 million lives in the U.S. Following the contract with ESI for its National Preferred Formulary, we're working closely with the ESI downstream accounts to pull the ESI rate through and add additional contracts and covered lives. There are a few small accounts totaling around 2 million lives that have already added QUVIVIQ and have taken the ESI rate, but the larger ones have their own procedures and time lines that we have to work through with them, which does take some time. Furthermore, we are in very active communication and negotiation with CVS Caremark, which represents just under 30 million commercial lives. So we remain laser focused on driving more access and gaining coverage for QUVIVIQ, including the Medicare Part D formulary for 2024, for which we've submitted bids. Next slide, please. We're turning now to Europe, where we launched QUVIVIQ in Germany and Italy, as I said, late last year. While it's still relatively early days, demand is growing well, as shown here with the weekly unit sales from wholesalers to pharmacies. So this essentially represents pharmacy purchases. As pack sizes differ between the 2 countries, we've normalized units to tablets, which is what you're seeing here. And this picture represents and reflects the positive feedback we hear from physicians and patients on the differentiated profile of QUVIVIQ, the first and only DORA available in Europe. In Germany, the AMNOG processes to set pricing and reimbursement after the free price period, is ongoing, as well as the GBA review of the potential exemption of QUVIVIQ from the 4-week prescription limit on hypnotics. In Italy, all sleep medicines are C-class or privately paid by patients, and QUVIVIQ has launched into the same C-class. Prescribing is currently limited to specialists only at this stage, where the feedback on their experience to date has also been excellent. Next slide, please. So looking further across Europe, following the launches in Italy and Germany, we are next preparing to launch in our home market of Switzerland in June. We will initially launch in the private market, focusing on specialists while the reimbursement process is running. In the U.K, the NICE assessment is also underway, and we anticipate launching there later next -- this year. And our local teams in Spain and France are preparing for subsequent launches in those markets. Next slide, please. So finally, just to finish with PIVLAZ in Japan. We launched pretty much to the day 1 year ago. It was the 20th of April last year. And next slide, please. You can see that the first quarter sales were CHF 13.5 million. Net sales in the first quarter continue to be impacted by the strong Swiss franc, as well as by wholesaler ordering patterns related to the end of the calendar year and the fiscal year in Japan. Neurosurgeons continue to incorporate PIVLAZ into treatment protocols, and awareness amongst our target customers is now greater than 95%. Approximately 27% of patients were treated with PIVLAZ in March, based on the estimated incidence of aSAH. Now as I've mentioned before, the initial rapid uptake seen last year benefited from study investigators' fast adoption of PIVLAZ, and we are now entering a period of more moderate growth as new accounts build experience with the product. So in summary, I'm very pleased to see QUVIVIQ is now the leading insomnia brand in the U.S. commercial market in terms of prescriptions. Although, payer access has been slower than anticipated, we have secured access with ESI and Tricare and are in active discussions with other major payers. As further reimbursement is secured, we expect paid prescriptions to continue to increase, boosting net sales. In Europe, demand is growing with our first launches in Germany and Italy, and we're preparing for additional launches later this year. And equally important to establishing QUVIVIQ as the leading treatment for insomnia is transforming and modernizing the entrenched generic market we have entered, creating a future where orexin antagonism and QUVIVIQ are central to the treatment of chronic insomnia. Thank you, and I'll now hand over to Andre.

Next slide, please. Thank you, Simon. Melanie, next slide, please. Just a comment on how the U.S. GAAP net result came about. Starting from the left, we see a net revenue, CHF 18 million net sales that Simon just explained, plus CHF 3 million contract revenue will come a little later. We see a breakdown of non-GAAP OpEx. D&A, CHF 5 million, stock-based compensation, CHF 12 million, leads us to a U.S. GAAP operating result of minus CHF 198 million. And below EBIT, so minus CHF 15 million is mainly driven by financial results. Non-GAAP, it's mainly -- CHF 7 million mainly, interest paid on the outstanding convertible bonds. And U.S. GAAP, we've had also an impairment on our equity stake in Santhera for CHF 7 million. The remainder, so CHF 1 million, is mainly tax. So this leads us to a U.S. GAAP net result of minus CHF 212 million. Next slide, please. So here we have a breakdown of these non-GAAP operating expenses. You see our research is slightly lower in the same quarter in 2022 with CHF 28 million. That's fundamentally a fixed cost base. The development of CHF 56 million includes clinical developments, CHF 35 million, with roughly CHF 19 million study costs and CHF 16 million fixed costs, which allow us to advance the pipeline and notably the Phase 3 compounds, selatogrel and cenerimod. There is also CHF 21 million in chemical and pharmaceutical developments, of which, I would say, study costs or drug substance, CHF 9 million, drug products, CHF 7 million, are really variable costs and CHF 5 million fixed costs. So SG&A at CHF 117 million increased by almost 18% compared to last year. The CHF 117 million include marketing and selling, CHF 96 million. And Simon explain you that we are growing -- we have now an organization almost not fully fledged, but in the U.S., in Europe and in Japan. And you have CHF 21 million G&A. This leads us to the CHF 202 million non-GAAP OpEx in Q1 2023. Next slide, please. Liquidity. If we want to reconcile with the non-GAAP operating results we just commented, limited CapEx, CHF 4 million, inventory built, CHF 26 million, mainly for semi-finished daridorexant. Working capital requirements increased by CHF 34 million. That's mainly a prepayment that we usually have in Q1 in various departments, including marketing fees and DTC campaign, IT licenses, et cetera, and pension, which also increased by CHF 20 million. So this explains the lion share of this CHF 34 million increase, plus other items, which brings us to a liquidity of CHF 212 million by the end of March. Next slide, please. I'm not going in too much detail with this CHF 212 million. I'm sure we'll get some questions with how we will extend the cash runway. So let's go directly to the next slide, please, which is the guidance. As you can see, we removed the revenue guidance issued with the full year 2022 result, which was CHF 230 million, mainly because there's uncertainty around the sales. As Simon explained, we have nice -- [ see ] -- volumes in the U.S. are nicely picking up, but we have some headwinds in the growth to that. And converting these volumes into net sales will mainly depend on securing some additional coverage for 2023, of course, in commercial, and also working on Medicare Part D, but this would kick in for 2024. So maintaining the non-GAAP operating loss around CHF 650 million means that we have already taken some cost containment measures in order to secure this loss. And so, to a certain extent, we minimize the risk, notably on the top line, by lowering the OpEx surveys. Next slide, please. We still keep this guidance with profitability by 2025, with revenue above CHF 1 billion, based on what we know, i.e., QUVIVIQ, PIVLAZ in Japan, and aprocitentan tiered royalty, because we strongly believe that aprocitentan will be approved with a PDUFA date on the 19th of December 2023 and in Q -- H1, let's put it this way, for Europe. Next slide, please. Jean-Paul, hand over to you.

Thank you, Andre. So as I mentioned at the beginning, we are progressing on the commercial front, but we must continue to innovate. And as I've mentioned also, aprocitentan review by the FDA, by the European authorities is continuing. The PDUFA for aprocitentan is planned for the 19th of December 2023. In Phase 3, selatogrel is also progressing well. We have recruited more than 4,500 patients in this study, and we are continuing to recruit at a very good pace. Finally, we have started our 2 studies -- 2 registration studies with cenerimod in lupus. And as I have mentioned, we are continuing to progress our early-stage pipeline. So momentum is -- next slide, please. So momentum is building in 2023. We have mentioned ESI contracting. We have also submitted aprocitentan in Europe, and we are waiting in the coming weeks, I would say, a regulatory decision for QUVIVIQ in Canada. We are discussing with both U.S. and European authorities the path forward for lucerastat, and QUVIVIQ should be launched before middle of the year in Switzerland. Also, this -- in the second part of the year, we should launch QUVIVIQ -- and we are in discussion, of course, with NICE. We should launch QUVIVIQ in the United Kingdom, and the submission for QUVIVIQ in chronic insomnia in Japan should be filed before the end of the year. And as I've mentioned, just before Christmas, we should hear about the FDA decision for aprocitentan. So you see quite a lot of action in 2023, and I think that's -- on that, I give the word to Andrew to start the Q&A session.

Next slide, please. Thank you, Jean-Paul. Thank you all for your prepared remarks. We now have time to address questions. We have come to the bottom end of the hour, so we've got ample time here. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Peter Verdult from Citi.

3 questions, 1 to Simon, 2 for Andre. Simon, on QUVIVIQ, thanks for the update on access and reimbursement, but just wanted to get a better idea, put simply, when you expect QUVIVIQ to inflect? Because, correct me if I'm wrong, I think when you gave guidance at the start of the year, there was roughly CHF 100 million [ penciled ] in for QUVIVIQ. That sales guidance has now been removed, run rate less than [ 20% ]. So just -- question #1, just when you expect to see that revenue conversion? And then 2 for Andre. Firstly, on the guidance, could you help us a bit more over and above your prepared remarks to just understand the assumptions here? Because sales are trending now less than CHF 100 million, your prior guidance was CHF 230 million. And you're keeping your EBIT guidance unchanged. So that, correct me if I'm wrong, looks like CHF 100 million cut to the OpEx, or 10% to 15% cut to the cost base. I'm still worried that you're now cutting into muscle rather than fat in terms of making those numbers. I just want to understand what you've done in terms of cost mitigation? And then lastly on financing. I think you were signaling at JPM in January that your PONVORY monetization deal was coming, and just wanting to better understand why we're still waiting 6 months after the Phase 3 data for a deal? And what are you expecting now that you're using the words and/or equity, and/or non-equity financing? Are you expecting a raise and a deal on that approach to provide you 12 months runway or longer? I just want to get a better understanding as to where -- what your ambitions are?

Simon?

I'll start then. I think we're pleased with the demand profile we've got. I think the question around -- the expectation around revenue conversion clearly is going to be linked to when we get the next access step, which is the ones that are most advanced in our conversations are with CVS, which is a big one, of course, at 30 million lives. And that, unlike ESI where you have the downstreams, is more of a switch. But we're working with the downstreams too. I wouldn't want to put a precise time on it, but I think that our hope would be that we'll have something to be able to say within the next few months, maybe around the summer break. And then after that we should start to see the revenue inflections. But we see it within ESI now. We can see more paid claims going through. That's not the issue. We just need more scale of reimbursement, access and lives, which is going to come with the downstreams with CVS this year. And then if we're successful with our conversations on Part D, we'll see it again in January, assuming we get Part D.

Andre?

Yes, Peter. So to your first question, I will not give you a breakdown between revenue and OpEx. But you're right. We are working here on a thin line. We need to -- cost containment measures have been taken, not touching what we believe is the muscle, not saying that what we removed was fat in the budget. But that's implemented. And depending on other BD discussions, we'll see if we need to go further in terms of cost saving. To your second question, specific to the royalty monetization deal, yes, when we spoke early February, we were -- we had a non-binding term sheet signed on a deal, which is to be a fully transparent, no longer on the table. So now we are -- we have 2 other royalty monetization deals ongoing. Hope that will be able -- will be one of the other. And again, hope that in the course of May, we should be able to link one of the other. And as I alluded to, we have a few ongoing potential collaboration deal, our licensing deal. But you need to be 2 to tangos over some unpredictability by the nature of such deals agreeing -- well, having a partner to confirm their interest after thorough due diligence, and of course, agreeing on the terms of such a collaboration. So as you can see, we're not relying on only 1 deal. Nothing here is excluded. And as a backstop, a meaning that if all these non-equity dilutive initiatives cannot be completed within the next 4 to 6 weeks, we would then certainly envisage to raise cash through an equity rate. But this is really the backstop in case everything else would fail.

Operator, next question, please.

Our next question comes from the line of James Gordon from JPMorgan.

I'll ask a question about one thing, which is creatively the cash runway. So within that question, non-dilutive options, what is still being explored? Is it just apro or are you looking at other things? And would it potentially just be a stock gap to then raise more capital later in the year? Or do you think non-dilutive options could actually potentially secure a cash runway into 2024? And if you were to instead raise equity, again, how long a runway would you be looking to lock in? And just finally, as part of this question, in addition to raising cash, could you look to really pause all activities beyond QUVIVIQ and PIVLAZ commercialization? So it sounds like there's still quite a lot of R&D planned, but there isn't a lot of cash to fund it. Is there a way that you could put some R&D activities on hold and do a more drastic cost cutting to extend the runway?

Well, I can take it, and Jean-Paul, feel free to chime in. Yes, a cash runway, obviously with CHF 212 million, we need, as I mentioned, to raise cash in the next 4 to 6 weeks. I explained the various options available. It's not only wishful thinking. I can tell you, it's active discussion. We are running all these potential funding avenues in parallel. And we are also in a position, if need be, to pull the trigger on an equity [ raise ]. So let's -- it's a sort of a hurdle race. The more we can [ race ] at this time, the better. And -- because then it will significantly extend the cash runway. But I want to do it in a pragmatic way, so sequentially. And we know that we don't have so much time ahead of us in order to secure 1 or several deals. My favorite option is a string of deals, which would allow to extend more significantly the cash runway. But we'll see in the next few weeks.

And just, James, I just thought that -- what is more important for us is to create value with the asset that we have. I have mentioned selatogrel. I've mentioned -- So I think rather than to stop and to lose this value, it's better to find partnership, to find -- to out-license. There are many solutions which we are exploring now. We have a company which is discovering and which has shown that we can really develop -- discover, develop and put on the market. So we are creating value and we should continue to create value. So the strategy of the company is to create -- to continue to create new products and to put them on the market, either ourselves or with partners. I think that if you mean which type of amount, we really are trying to really bridge the gap to profitability. This is what we are trying to do. And it's interesting to think that we are speaking of profitability to come because we have -- also, we see that our sales are increasing, that we are launching in several products. So we need to bridge this gap. And the goal and the amount is just this amount. And we are working very hard. As Andre said, it's -- I want to say, we are exploring several avenues. We don't have only 1 solution. And I'm very optimistic that we are going to really finance this company, bridge this gap and reach profitability as a company based on the marketing, but based on commercial organization and also research together.

Operator, next question, please.

Our next question comes from the line of Jo Walton from Credit Suisse.

I'm afraid I'm going to go back to QUVIVIQ. I suspect that we're all a little mystified by the level of prescriptions that we can see in IQVIA, which I think we understand are ones that are beyond a bridge program and should come with some revenue to you, and yet the effectively almost 0 revenue in the quarter. So I'm going to ask again, if we can get some help on this as to perhaps what proportion of the scripts that you are seeing at the moment are free? Is it just it takes a very long time to convert a free -- first month free to a second month that's paying? And that's why we're still not seeing it, given that the ESI coverage came in, in January? Can you also confirm for us that you think that the net price that you'll get in Medicare is going to be on a par with the net price that you're hoping to get in commercial? Clearly, Belsomra has a low price that you've had to match in commercial. I think we're worried that they may have an even lower price within Medicare. And a follow on surrounding that, you've used Syneos as your marketing partner to do your promotion. Can we just ask how you're checking the tires there to see that they're doing a good job and all the money that you're spending is actually coming good? Because you are investing a lot and just at the moment you're realizing really very little. So if you could -- I'm sorry it's the same topic again, but we're all looking for more confidence that prescriptions are going to turn into paid prescriptions in a relatively short period of time.

Simon?

Sure. Yes, let me just break down the script. First of all, if you look at Vitacare versus IQVIA, give or take we're 50-50ish, but the Vitacare volume is consignment volume and we make no money on that as we've talked about before. But even in the IQVIA segment, as we obviously have paid scripts going through the IQVIA segment, but we still have a copay and a coupon program in the IQVIA segment, in the retail segment, which may well be buying down a copay for people who have coverage. For example, an ESI patient, we're buying down the copay. But if you're not covered and we still have a significant proportion of patients that aren't covered, we could be buying down the whole script in the retail segment. So the GTN is a combination of Vitacare and the coupon buy-down that's going on in the retail segment, which is why the GTN right now is so high. The answer, as we keep coming back to, is payer coverage, because as soon as you get payer coverage, and we've seen it with ESI, then your paid scripts go up and it's really then just the copay buy-down that you're dealing with and the free scripts then essentially sort of move away. And we're increasingly now working on different tactics and activities to move more volume into the retail segment and work and support doctors with prior authorization processes and various other things to increase the paid prescriptions. So it'll keep coming back to, we need to get the payer coverage, one. And secondly, we need to make sure that we're working with physicians to be able to manage the prior authorization process if those patients don't meet the step edit requirements for the Z-drugs, benzos. Part D, I'm not going to comment on the price specifically. We've made our bids and we're working with the Part D payers, and we're hopeful that we'll be able to get our Part D coverage in place for 2024. But obviously until that's done, we can't confirm that. Finally, Syneos. I mean, first of all, Syneos is doing our salesforce activity. So all of the commercialization, the strategy, the marketing, the access, medical is all being done by Idorsia. So Syneos is essentially our salesforce and we're pleased with what they're doing. When we benchmark Syneos against other companies who've been around for years, our metrics are either at or above benchmark compared to other companies with salesforces, particularly in the primary care space. So we're very comfortable with Syneos.

Our next question comes from the line of Sachin Jain from Bank of America.

The same topics again, if I may. So firstly, for Simon on the payer coverage, ESI downstream and CVS, do you have a sense of what volumes you needed to get them across the line? I'm just trying to get a sense of how explicit your conversations have been that give you confidence you'll get there by summer, which is still more of a hope? And then related to that, I'm just trying to also just follow up on Jo's question to get a sense of does that payer coverage definitely convert, given that 30 million covered lives is quite a lot to be only selling 4 million? So just, you know, it's a 2 part question. And then I've got 1 for Andre on financing.

Yes. I mean, there isn't a volume target that you say, if you hit this number, then you're done. It's a negotiation that usually involves the volume. And I think at the moment are -- being #1, the NBRx, the TRx in the commercial space are helping us a lot with those conversations because it's evident now that the physicians and patients are seeing the product differentiated. So that's helping a lot. But there isn't, if you like, a numeric target that we have to hit. And then it's mixed in with their own processes and timings. And when things have to happen, you can't just say, can we have this on Monday? They've got a process to follow. They're also spending a lot of time doing biosimilar stuff and all these other things. So I think that all of that mixes together. But it's a lot more than I hope. I think we feel we're making very good progress. And we'll -- as soon as we have something to say, as I say, in the next few months, we will do so. On the 30 million lives for CVS, that is more of a switch than ESI. ESI is 13 million -- 13% of their business is in NPF and 19% is in the downstreams, which we have to work through their own processes.

And then just 1 -- a couple of follow-ups for Andre on financing. Apologies just to dig into this. So you mentioned 2 other parties you're in discussion with. Is that Apro or is that some other pipeline asset? And did those discussions only start post the non-binding deal not progressing? And then I did want to follow-on from James's question on just how you think about the size of equity ratio should you get there? Because obviously, without community conflection, the total amount of finance you need before you get profitable is in the sort of high hundreds, close to 1 billion. So if you came to the market, would you still be looking to do that in segments or, just trying to get a chunk of it done to give the market comfort that you're finance through to profitability?

I think we cannot mention. There are a lot of confidential discussion. It's -- we cannot really -- we cannot comment on this one. We are certainly not only discussing about on the aprocitentan, as we mentioned. We are creating value, is value with -- we have Phase 3 products, which are moving. We have other products, which are moving [ audio ] projects. So we are really -- as I mentioned, we are trying to find many solutions. And we are in discussion with several partners and -- but this is remaining confidential and this is only progressing. This is what I can say. Sachin, trust regarding the equity -- potential equity arrays. As I told you, it's really a backstop option. We hope to get a pool at the upcoming AGM for what is called Capital Band, which would allow us to have authorized capital -- plus the conditional, but the authorized capital on equity arrays. And here, we would be able -- we should have approximately 100 million shares available. So that's the first thing. And after the AGM, again, depending on the other deals, we'll see how much we will use in an equity [ raise ] if need be.

Operator, next questions, please?

[Operator Instructions] Our next question comes from the line of Rajan Sharma from Goldman Sachs.

Just on the cost savings. I was just wondering what potential SG&A expense savings you could make this year? Could there potentially be a head count reduction or could you delay additional QUVIVIQ DTC spend until you're in a better formulary position? And then just on the operating loss guidance, does that include any contribution from lucerastat given that we're expecting an update in mid-year?

So your line was really bad there, Rajan. So first on the granularity of where potentially savings could come from, we will not disclose where the cost of containments already made or upcoming ones would come from. Rajan, could you repeat what you meant with lucerastat? I just got that word out, but I didn't understand the context of it.

Yes, I guess, is there anything -- can you hear me better now?

Yes.

Yes. So I was just wondering if there's anything within the guidance in terms of the operating loss and any costs relating to lucerastat within that, given that we're expecting a decision on the path forward during the first half of this year?

Yes. So I said [ more ] detailed breakdown of the cost containments already taken or upcoming ones. Lucerastat, we have the open-label extension, which is ongoing, and the costs are properly taken into account. Again, this guidance is unforeseen events and excluded, and here in the unforeseen events, there is no potential BD deal with the upfront that we would get, which would help for the funding to extend the cash run rate, but would, of course, improve the revenue line. So here, we have not taken any assumption of a potential deal that we are working on.

Operator, do we have more questions?

[Operator Instructions] Our next question comes from the line of Leonildo Delgado from Helvea.

I have a couple of questions on Santhera. What do you plan to do with your growing stake? And I'm just wondering if it might play any role in your non-dilutive fundraising strategy? And so -- or rather, if you consider acquiring Santhera, for example, on a share swap and merging it into your operations?

I must say Santhera is not my top priority, despite our very good relationship with the executive team and the Chairman who were -- it's not on top priority, so there's nothing relating to these funding avenues that I mentioned that would come from Santhera. We have approximately -- I speak on top of my mind, but approximately a little more than 10% of the equity of Santhera. So we are a shareholder, but we are not an insider. So I wish all the best to Santhera, and of course, to all the shareholders, including Idorsia, would benefit from.

And I want to mention -- to add, that I think vamorolone is a great product. I should be approved by the FDA, and I think that this is why we have tried to help Santhera to put this product and to give access one day to the patients with this great product. So -- and that should translate in some -- hopefully some shared move for Santhera, where we will benefit. But we are not active in any other action, other than wish them the best and really just looking at the progress of vamorolone, which is, I really repeat, I think a great drug.

You speak to Dario Eklund, the CEO, Thomas Meier, the Chairman.

Operator, any further questions?

Thank you. There are no further questions at this time, so I will hand the conference back to you for closing remarks.

Thank you, Melanie. Well, this concludes, therefore, the call for today. Thank you very much for your ongoing attention in our stock and our development. This is going to be an exciting quarter, so stay tuned. I look forward to speaking to you again. Operator, please close the lines.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.