Newron Pharmaceuticals S.p.A. (NWRN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the 2021 Results and 2022 Outlook Presentation Conference Call. I'm Moira, the Chorus Call operator. [Operator Instructions] and the conference has been recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Stefan Weber, CEO of Newron. Please go ahead, sir.

Thank you, Moira, and welcome, everybody, to this annual press conference call from Newron. I'm here in Milan at the company headquarters. I'm joined by Ravi Anand, the Chief Medical Officer; Marco Caremi, Executive Vice President, Business Development, Legal IP; Roberto Galli, the Vice President of Finance; and in Morriston, New Jersey, good morning, Dennis. We are joined by Dennis Dionne, our Vice President for Commercial Affairs. So welcome, everybody. Good afternoon to our listeners in Europe, and good morning to our listeners in the United States. This is all about innovative drug development in disease of the central nervous system. And those who know Newron, and I hope you have all had a chance to download the slide deck from our website, we are moving to Slide 4. You will have recognized that 2021 seems to be current uneventful year for our shareholders and investors. What I can tell you, though, is that below the surface, we have kind of preparing -- been preparing a lot of activities that will, hopefully, and as we are confident, bear fruit in this year in 2022 for our shareholders and investors. And that obviously is mostly due to evenamide, our absolutely unique compounds that we are developing currently in a potentially pivotal study as an add-on therapy -- first add-on therapy ever to be approved in schizophrenia. We have started last year, the first randomized, double-blind, placebo-controlled study with evenamide in patients with chronic schizophrenia, who are not responding adequately to any second-generation antipsychotics. This study 008A is going to report results towards the end of this year, and Ravi will guide you through a lot more detailed study. Even before reporting those results from the first pivotal study, very excitingly, we will have results from the first open-label study with evenamide in patients suffering from treatment-resistant schizophrenia. You know that the only drug approved in treatment-resistant schizophrenia is clozapine, and that goes back to 1989. Nothing else has been approved since; 30% of the total schizophrenia population or 0.3% of the global population do not have any medication. There is a huge unmet medical need, and evenamide as an add-on therapy to any second-generation antipsychotic and/or clozapine promises to become the first drug since and beyond clozapine in treatment-resistant schizophrenia. Besides those 2 studies, what we have done, we have worked down a list of tasks that we were given by the FDA, and that includes 2, one preclinical and one clinical safety study, which showed to us that this drug is perfectly safe in humans. To complete the topics on evenamide, I will mention that we are currently evaluating due to companies contacting us and approaching us potential partnering scenarios that could be either a global license or a regional co-development corporation or a local partnering or co-development corporation. Moving on to Slide 5, to the drug around which Newron created and which we have taken to the market: safinamide branded in most parts of the world as Xadago add-on treatment to levodopa in patients suffering from Parkinson's disease. Last year, we have taken the key step of preparing for an additional label with this compound, the only drug outside of the United States and only the second drug in the United States to be approved as a treatment for Parkinson patients who suffer from levodopa-induced dyskinesia. You know that the one drug on the market has been sold for $400 million of cash last year. So this is just evidencing the huge [indiscernible] potential and the medical need of those patients, 40% of Parkinson's patients do suffer from levodopa-induced dyskinesia. We did report that we have received a number of [indiscernible] other Paragraph IV Notice Letters, and we are proud to tell you that with our partners with Zambon and Supernus, we have taken all the legal action that needs to protect our intellectual property in the United States, and make this drug arrive at its patent life, which in United States is 2031. On the Corporate topics, we have taking down the last outstanding tranches from the funding line from European Investment Bank, 2 tranches of each EUR 7.5 million. That means we have now fully drawn the EUR 40 million line that we were granted by European Investment Bank. Given the circumstances, we felt it was more than appropriate to call the cash that is available to support our development projects. And on top of the pipeline projects that we are actively developing right now, you know that we have presenting that for the last 2 or 3 years, we are looking into opportunities to expand our pipeline. And I believe I can say that we are not only confident but we haven't been as close as to delivering on this promise as we are right now. That takes us to Slide 6, which is the company highlights. So what do you get if you are an investor or shareholder in Newron right now. You do get a drug that Newron's team has taken from early preclinical to the market in Parkinson’s disease. It was the first new chemical entity in the - in the United States and in Europe. So innovation is right here, and we are right now preparing for a new label study to take this compound to the peak commercial potential with that LID study. And evenamide a completely new mechanism of action, glutamatergic mechanism of action, not related, not overlapping with any drug approved on the market in schizophrenia, and a unique position in the first and only add-on therapy. There is massive new flow to come in the next 6, 12, 18 and 24 months. The management team has done it before. [indiscernible] Newron has taken the Xadago to the market, and is about to take the next drug to the market with evenamide. The cash we can dispose over the next 2 years is more than EUR 15 million, which is the cash in the bank, last 2 years of expected royalty income and R&D tax credits in Italy that we can cash in. So that makes us confident to say that the cash reach will be more than 2 years from now 2024. Looking at the commercial situation of our 2 compounds, Slide 7. The Parkinson's compound is very easy. This drug is globally licensed. And that means the upside for our investors and shareholders is kind of limited because we qualify for milestones and royalties. We have collected more than EUR 65 million from this compound to date, and we see that number grow every year, and we see additional dynamics as this year. The new label study and the new label Parkinson's disease, levodopa-induced dyskinesia should give this additional momentum. Evenamide is very exciting commercially because it is a combination of a very large indication, a unique positioning, a unique mechanism. So you would probably want to call that an opportunity for a $1 billion drug. But we have a combination here of a very large indication, 70% of today's schizophrenia patients and a 30% population dose who are treatment resistant, which is a much more palatable indication to be commercialized by midsized companies, at least in some territories. And within that 30% population of treatment-resistant schizophrenia, we have those about 30,000 patients who are treatment resistant to clozapine in the United States. And that is a perfect opportunity, a niche market for a company like Newron, 200 million sales per year in 30,000 patients in the big 8 states, East Coast and West Coast, in the state and veteran hospitals, a perfect target for us, patient population that you can easily discriminate because they are all registered for clozapine treatment, and they all have to come in for a weekly or bi-weekly blood test. So commercial opportunities for partnering, for licensing, for codeveloping and for commercializing [indiscernible]. If we go to Slide 8, besides the news flow, there's only one thing I would want to highlight to you. The 3 compounds that we see here all go back to Newron's group of glutamatergic mechanistic drugs, driven by a voltage-gated sodium channel blockade. This is remarkable because those drugs do create the benefits without the side effects usually connected to sodium channel blockers. And this is remarkable in so far as everybody else would probably develop those compounds in epilepsy. But Newron took the decision to take them into Parkinson's disease, into schizophrenia and into certain types of central pain, for those compounds are absolutely unique. There is no second -- there's no drug ahead. There's no drug behind or close to it. We are unique in our positioning. We are unique with that mechanism in those indications. That all said, I hand over to Ravi to guide you through Xadago, our Parkinson's drug and [indiscernible] innovative compound schizophrenia.

Good afternoon, everyone. Stefan has already presented to you the commercial features and what the standing is for Xadago. I'm going to present to you the opportunity that he has described in much more greater detail. So first of all, despite being the fact that is the first drug approved for Parkinson's disease in greater than 10 years at the time that it was approved, we basically had an opportunity to get an additional label, which will be very exciting for this drug and also actually for the field, because we would have a drug which would be fully capable of improving Parkinsonism, improving motor fluctuations and at the same time reducing dyskinesia. Dyskinesia is generally associated with the use of L-dopa and develops in about 5% of the patients every 6 to 7 years. It starts developing after use of L-dopa and continues to increase, till it believes about 40% of patients who have been taking L-dopa for a certain length of time will basically become dyskinetic. Currently, only amantadine sustained release is the only drug that has been approved for this. And it is an effective drug, but however, associated with very significant side effects, which limits its use. The study that we are doing would be basically a potentially pivotal study as discussed with the regulatory authorities. And we intend to start that study towards the third, fourth quarter of this year, contingent on everything, continuing well with COVID situation. And obviously, the financial terms for the study, as Stefan has described, would be very attractive. Moving on to Slide 10. The protocol has been discussed already with the FDA, and we are currently in the stage of basically preparing the submission for going to the CHMP to discuss the study. The study would be a global study, and basically based on the fact that Newron was responsible for the development and registration of safinamide, Xadago worldwide, it has been decided that Newron will be responsible for the operational conduct of the study, while Zambon will be remaining associated with the study. The cost will be shared by both partners equally. And in response for that, Newron will qualify once the drug has been shown to be successful for a onetime milestone payment, and there would be a further increase in the royalties paid to Newron for the sales of Xadago irrespective of whether it was the [indiscernible] indication of motor fluctuations or the new prescriptions coming out of the dyskinesia claim. Needless to say, the very fact that the study would be initiated would probably lead to a greater investigator interest and start of prescriptions for this indication as it is actually already indicated for the very population which gets dyskinesia eventually. There's a lot of confidence we have in the fact that safinamide or Xadago will show an anti-dyskinetic effect. This is based upon a solid body of scientific data. The basic mechanism by which L-dopa induces dyskinesia is the excessive release of glutamate by L-dopa. Safinamide inhibits the excessive release of glutamate, and therefore would be acting as the causative mechanism of the L-dopa. The behavioral models performed in rodents but also in monkeys, by academic institutions all have indicated that safinamide not only improves Parkinsonism in these models, but also reduces dyskinesia. But more importantly than the animal data and the neurotransmitter data, we have data from a Phase III study in which patients were treated for about 2 years. In that study, the subset of patients who were dyskinetic right from the beginning, that was a substantial number, which was 223 patients, at the end of 2 years, showed a significant reduction in dyskinesia. Now based upon the fact that in the new studies, we would be using a much more sensitive instrument, patients who are more dyskinetic at baseline, there is great confidence that the study will demonstrate a significant benefit in favor of Xadago, safinamide over L-dopa alone in reducing dyskinesia. The preparations for the study are currently ongoing. As you can imagine, such a study is going to take a lot of time to prepare, but we are fairly confident that our third, fourth quarter of this year, we would be able to initiate the study. Commercial opportunities for Xadago, however, have already been described by Stefan. As you know, the drug is licensed to Zambon and other partners worldwide. In the U.S. and in North America, Zambon has launched this drug. And then eventually, it has been licensed now in the U.S. to Supernus, another biotech company with a stellar record in the marketing of CNS compounds. In Canada, Valeo Pharma continues to do an outstanding job. In the EU, Zambon remains in charge. And in Latin America, certain territories will be licensed out. But in the large territories such as the Brazil, Colombia, the drug will be marketed by Zambon. And the applications for regulatory approval have been made and also including Mexico. In Israel, the drug is already on the market by Medison, and in Asia, which is a very big achievement for us, Meiji and then eventually partnering with Eisai have the approval in Japan, and it is expected -- it has been launched already in Japan. And I can only say that we have great admiration for the data coming out of Japanese studies, which are being published worldwide. In Australia and New Zealand, Seqirus launched the drug in 2019 and is progressing well. We don't need to go into any great detail about Parkinson's disease here because we all know that is going to be affecting a large population, especially those in the geriatric age group. But lately, the trend is to see that basically Parkinson's disease begins to creep downwards in terms of its onset. The market exclusivity from the U.S. of 2031 whereas in the EU basically for about 2019 will offer a great opportunity to reap the benefit of the investment being made in dyskinesia study. So overall, it's a very interesting opportunity for us. And now I move to evenamide. This is a drug on which we are really spending a lot of our resources, a lot of our thinking and a lot of our effort on. This is a drug for which we will have a composition of [indiscernible] patent in 2033 worldwide, and there will be a 10-year exclusivity post approval in the EU obviously. What we're doing with this drug is something very, very unique. Schizophrenia to this date is only being treated as a monotherapy drug. Despite the fact that we know that over 70% of the patients are unhappy with their current treatment in monotherapy. There has been no real serious attempt at developing a mechanistically based treatment that could be used as an add-on therapy. We know from various studies that about the chronic schizophrenic patients are likely to discontinue the current medication within about 1 to 1.5 years after they started because due to loss of efficacy or adverse events or both. One of the reasons why all the drugs seem to be showing the same profile is because mechanistically, they all seem to be acting through a similar mechanism of 5-HT2 and D2 modulation. What this drug does is, it's completely acts through mechanisms that are different than this, and therefore the combination of this would be a very significant advantage. And -- at the same time, as would be a requirement for an add-on treatment, it does not have any dose-limiting adverse events. Since clozapine was approved for TRS, which was in 1988, '89, no other drug has been able to approach the treatment-resistant population. And we are very interested in that because our data, our preliminary data suggests that this drug would also improve patients who are nonresponders to clozapine. This drug is available for partnering. But again, we want to be very cautious about the way we go about partnering because we may want to make sure that we maintain a controlling interest in the further development of the drug and guiding it through registration, the same way which we did with safinamide. So we are expecting that the drug is going to get commercialized in about '23, '24, and moving on from there basically. The target profile for this drug would be basically to be going for 2 indications. We are not going for monotherapy. But what we are doing is we're heading for patients who are chronic schizophrenia patients. And we broadly divide them into 2 categories, although as a scheme, as you can see on Slide 11 -- Slide 13 is showing you that there's a continuum of nonresponse. Many patients are nonresponders right from the first episode, but the vast majority begin to show nonresponse within about 5 years. Some of these patients are not what we will call as meeting the international criteria for treatment resistance, but 30% of these patients will meet the criteria for treatment resistance, which means that they have failed 2 trials from an antipsychotics of 2 different chemical classes when given for an adequate period of time. However, in the field, a psychiatrist doesn't draw this distinction. While they have a patient who has partially responded but at the same time has a resistant symptoms, delusions -- hallucination which don't go away, and they are already on an antipsychotic. Instead of switching to another antipsychotic and getting a similar -- evenamide offers the opportunity for the patient to remain on the same drug, but now add something, which will be complementary because of a synergy that will produce a beneficial effect. So this comprises about 70% of the patients with schizophrenia. So we are hoping that not only with the drug we're targeting the 30% TRS patients, but also the other patients who show inadequate response but are not currently considered as treatment of this. How does this drug do this -- this is on Slide 14. And this is a voltage-gated sodium channel blocker, which is highly targeted towards sodium channels and sodium channels alone. We have investigated all about 130-plus CNS receptors, enzymes, transporters and have shown no significant interaction with any one of these. What it does is that it selectively acts in the sodium channels. And as you can see, in the first panel on the left-hand side, when it goes to the resting state, you need 25 micromolar of this drug. But in the inactivated state of the channel, 0.4 micromolar is enough to produce its effect. And this is illustrated in the middle panel, where you can see that 1 micromolar of this drug has no effect on low-frequency firing neurons, but on the high-frequency firing in neurons, it completely wipes out the firing. Why is this important? Because in the brain, we do need to control the excessive excitability of neurons that we see in patients with epilepsy, but also in patients with schizophrenia. And how does this do this eventually? The right last panel on the right shows you, this is in vivo microdialysis, a very difficult study to do. In this study, what this graph is showing you that it has no effect on basal glutamate, which is the first part of the flat curve that you're seeing. Then we basically are injecting a drug which produces a release of glutamate, this is the black line going up. And then you can see dose dependently, the administration of evenamide reduces the excessive release of glutamate. So this reduction in glutamate levels, coupled with the reduction and excitability, added on, on top of 5-HT2 and D2 and modulation of mesolimbic dysfunction in patients with schizophrenia should produce a greater effect than has been seen to this date. Do we have any evidence that this is working in behavioral models of schizophrenia? Yes. And as you can see on Slide 15, we have evaluated this in a wide variety of models, which assess positive symptoms, negative symptoms, mania, cognitive impairment and impulse control. Whether we use this drug as a monotherapy or add-on therapy, it works. Why then do we go for only add-on therapy, because in the add-on therapy, first of all, the dosage required for the drug is lower. So there is less likelihood of any side effects. But more importantly, monotherapy drugs exist. When you get an add-on treatment that would work, it would be added on to any of the existing antipsychotics. So you have a ready-state -- ready-made market plus also the monotherapy patients are not benefiting from their current treatment, so this would offer an advantage there. Now, do we -- can we show you some models? We just take a long time to show you every model that I think on Slide 16, you see one of the representative models. In the bar on the left, you can see the normal pre-pulse inhibition, which is a model of information processing, which is known to be affected in patients with schizophrenia. The administration of glutamate antagonist such as ketamine, impairs it significantly. Clozapine at this given dose does not improve it, [indiscernible] this drug given the [indiscernible] at a dose of 1.25 milligram. We then -- when we combine the 2 you can see in the fourth bar that there's a significant reversal at a dose of 5 milligrams. On the right-hand side, the 2 bars show you that when we add this drug at a higher dose, it produces an even larger effect. This is very interesting because this is suggesting to us that the patients who are clozapine nonresponders may actually now have a medication that could help them respond. And as I mentioned before, you can see that the plasma concentrations that are required in monotherapy are far, far higher than required in add-on therapy. Moving along to Slide 17. We basically have performed after the discussion with the FDA and the MHRA a pilot study, which was a proof-of-concept study, placebo-controlled in which patients with recent worsening of their symptoms while they were still on their antipsychotic, which was risperidone or aripiprazole. This is a 1-month trial and in a small number of patients, only 89 patients showed a significant benefit, which interestingly started already after 8 days when the drug was given at the lowest dose of 15-milligram BID. We saw a significant improvement of the positive symptoms. Now the [indiscernible] came out significant, but we were interested in seeing whether there were patients who have -- could be considered as responders or was this attributable only to a couple of patients. And what the data showed was that the percentage of patients who were considered responders was significantly higher than the previous treatment alone. More importantly, this was also reflected in the ratings of CGI of change, which is performed by a psychiatrist, which is a holistic assessment of the patient and this again showed the same pattern. Virtually, all of the items, all of the measures used in this study showed a benefit of evenamide. Of course, not everything came out significant because the sample size is way too small. So what was it telling us that patients who are on 5-HT2 D2s and who were beginning to worsen, once they got a glutamate release modulator added on, they benefited. Based upon this, we have designed our program after discussion with the regulatory authorities, and this is described on Slide 18. So we had extensive discussions with European authorities, the Canadian and the FDA. And based upon that, there were some additional requests made by the FDA that we have completed. We have done all the preclinical work bar the carcinogenicity study, which will start now. There's no organ toxicity. There's no histopathology that was shown to be causally related to drug. All the data have been submitted to the health authorities already. We have completed another study, a safety study in patients, which was to look at CMS changes in these patients when this drug is given -- an add-on to other antipsychotics, including clozapine. And in this study, which was a 138-patient study, we could show that there were no safety issues at all. The data have been submitted to the FDA. We have now also submitted the TQT study, which is the study we require for all antipsychotics to show that there is no effect on the heart. And that has been submitted to the FDA, and we hope that by the -- in the next few months, we will get feedback on that too. We also took the step to start the first study in patients with treatment-resistant schizophrenia with this drug, this study is ongoing. This is a study in which patients who are in treatment with schizophrenia, meeting the TRRIPs criteria, which means they failed 2 antipsychotics, different classes and are currently not doing well on any other second-generation antipsychotic or first-generation antipsychotic, are randomized to treatment with different doses of this drug and we have a blinded rater. So we are able to assess some dose response relationships in this. In this study, at least 150 patients are required. We are close to about 110, 114 patients randomized. So we expect that we should be able to complete the enrollment in the next 3 to 4 months and have the results of this study out by the end of this year -- towards the end of the third quarter. What is very interesting in this study is that to this stage, the rollover into the long-term treatment is very, very high. Treatment-resistant patients switch medication all the time. The fact that we are having over 90% rollover into an extension suggest: a, the drug is very well tolerated; and b, the patients and their physicians perceive some benefit, that's why they're continuing. Regarding the regulatory authorities, we have made provisions that there will be [Technical Difficulty]. First, as I mentioned before, are the patients who are inadequate responders but are not treatment resistant. These are patients who are taking currently second-generation antipsychotic, but these scores reflect that they are not fully controlled. They are in the state of psychosis, and they have significant positive symptoms. The second population will be the patients who are treatment resistant already, are on a second-generation antipsychotic, and we will be adding on our drug on top of that. The first pivotal study, which is in patients who are not treatment resistant. This is a very large study in the sense that it is being performed in numerous countries in Europe, Asia and Latin America. This is a study in which we will be evaluating the top dose of 30-milligram BID compared to placebo. This study will enroll at least 200 patients. The COVID epidemic really affected the start of the study, but now that it is going away, we are catching up with the study initiations and the enrollment fairly rapidly. We expect to complete the study towards the end of the third quarter, and we should have the results by that -- around that time. So starting in the early part of the fourth quarter. The second pivotal study is the most important study for us, that is the study in patients with treatment-resistant schizophrenia. We have had discussions with the FDA and CHMP before. And just now we got a big -- our submission to the CHMP for a follow-up meeting to discuss this study has been accepted. So we will be having a second discussion with that -- with the CHMP on the exact precise criteria that will be used in the protocol, and the protocol will be reviewed by them. This will be a study done at 2 doses of the drug, 15-milligram, 30-milligram BID. And compared to, obviously, patients who would be on placebo on top of their current second-generation antipsychotic. At least 150 patients per group will be enrolled. We will be using artificial intelligence to ensure patients are compliant with their medication. And this would be an 8-week study in deference to the FDA's request that this study population may require longer so we should take a longer duration of treatment. We want to start the study in the -- by the end of this year, and we expect to spend about 1-year time in enrollment and another 3 to 4 months in completing the treatment period and the follow-up period to have the results by early 2024, which will allow us to file by the end of 2024. We also have the option to add other studies in patients with mania, bipolar disorders and other indications at that point. With that, I think I'll turn it over to my colleague, Roberto Galli, to give you the financial situation.

Thank you, Ravi, and good morning or good afternoon, everybody. So let me provide you with few numbers related to Newron as of December 31. As last year, our outstanding shares were 17.8 million, out of which the 0.6% was held by senior managers and directors. We have about 2.7 million derivative instruments outside, of which 1.8 million are stock options, while 800,000 are warrants. Stock options are -- 1 million of stock options are held by senior managers and directors. Warrants are held by [indiscernible] -- and they are related, as you know, at the financing agreement we have signed with them. If you want additional information, please check the Corporate Governance section of our annual report. So moving to the next slide, 21. Let me say thank you to our analysts for their coverage. And namely Lucy and Peter from Jefferies; [indiscernible] -- Samir, Bob and Jacob respectively from Rx Securities, Value Lab and [indiscernible]. And just to tell you that to the best of our knowledge, Zambon is the only material shareholders that is above 3%. On the next slide, so Slide #22. What you can see is that for this -- again, that we have shown an increase in the royalties and this increase is in line with the one that we showed in 2020. And this is despite the COVID pandemic. The increase is about 9.5% this year and it was about 10% last year. What we have noticed is that in U.S.A., Supernus is doing a good job because sales are growing. But sales are growing also all around the world. And we are also happy because Zambon launched in June 2021, Xadago in Brazil. R&D expenses are decreasing, but the decrease is mainly related to the fact that in 2020, we accrued about EUR 3 million for closing costs related to the [indiscernible] development that we halted in May 2020. And just to tell you that the delta between the operating loss and the net loss is mainly due to the increase in interest that we have paid or we are due to pay to EIB. And this is because we increased the loan from EUR 25 million up to EUR 40 million in October of this year. Slide 23. As Stefan was saying to you before, our cash and other financial assets are EUR 35 million, on top of which we have the R&D tax credit that in this case, is spread between noncurrent assets and current assets. So in the noncurrent asset includes EUR 10.4 million and the current assets EUR 2.1 million. So all in all, we have EUR 12 million -- EUR 12.5 million of R&D tax credit that can be used. And so back to the cash, as Stefan was telling you, we can -- we will -- the cash will be -- will bring us, sorry, well into 2024. On the graph on the right, you can see how we have financed our activities in 2021 and where we have invested cash. So I would move to the next slide, that is the agenda of the General Shareholders' Meeting that will be called for April 5, 2022, at 10 a.m. here in our premises. The first point is the approval of both the Italian GAAP and the IFRS financial statement. The second point is the redefinition of the number of Board members. Please note that when one director left last December effective at the end of this year, we decided not to appoint any new director as all the Board is due for reelection next year. So we decided to not appoint anybody, and this is why we have to reduce the number by 1. The third and the fourth point in the agenda are again something that we are obliged to do because we -- the company must have Board of statutory auditors and an audit company. They both are expiring with the approval of this year's financial statements. And this is why we are now due to reappoint them for the next -- for the coming years. Just to recap, on Slide 25. As my colleagues were telling you, we have a unique portfolio. Xadago has been approved and sold almost all around the world, and we are also increasing sales coming in. Evenamide is a complete new mechanism of action and a complete new concept in treating patients with schizophrenia. And on top, you know that we keep searching for new strategic and relevant asset. Our news flow is extremely relevant because we will have data coming from 2 evenamide studies next year -- sorry, this year, and then we will start at the end of third quarter [indiscernible] study. As I was telling you and before, we are well financed in 2024, and we can use about EUR 50 million of cash because we have, as you see, EUR 35 million, more or less as cash and other financials, plus we can use about EUR 16 million of -- coming from royalty income and the R&D tax credit. So having said that, I think that we can go to the question-and-answer section.

Over to you.

[Operator Instructions] The first question is from Samir Devani from Rx Securities.

I just -- just wondering, is this the first time we're hearing about study 014. I don't recall hearing about it before. And if that's the case, what's the rationale for it being open label and not controlled? And maybe can you just clarify because the timing of the results because I think the statement as Q2, but Ravi mentioned maybe late Q3. So perhaps just some clarification on that.

Okay. So first of all, study 014, we initially started keeping in mind we conceived it really as a be closed safety study. And that's why -- because we were going into TRS for the first time, adding a drug on to patients who were notorious for taking high doses of antipsychotics, and taking a new chemical entity, and investigators wanted to be sure that they could see any emerging intolerance if it emerged. That was the reason for keeping it open label for the safety reviewers. But at the same time, the efficacy would be judged by a blinded rater who would have no idea of what dosage the patient was getting. And this study we basically were not paying too much attention to because we were really much more focused on the other studies at that point. But now time has come, basically, when we have over 100 patients plus as I mentioned, who basically been enrolled, about more than 100 have completed the first part of the study. So we are basically approaching to a stage where I think the study gets much more and more attention. Again, the number in -- when we exactly expect the results to come in a function always of the enrollment, which is again currently contingent on the situation with COVID. So based upon that, I think the numbers fluctuate. My gut feeling would be that probably if the current situations continue, not only we would get to at the end of the third quarter. Otherwise, the slower one will be the fourth quarter of this year for the study 014. That's basically what we expect to have the results from study 014 coming in. Does that answer your question?

Yes, right. And then maybe just one quick follow-on. Just in terms of the legal costs of defending safinamide IP, is that -- does that -- are you bearing that? Or is that being shared or is Zambon covering that?

Okay. Thank you for your question. The legal cost will be fully covered by Zambon in accordance with the license agreement we have in place with them. I cannot disclose the actual amount of money. We've got a kind of expectation from the patent law firm in charge of following the case in the U.S. It's not enough to tell you. But in any case, this is fully covered by Zambon. And they confirm that we have started the case under the 30 months that was achieved from the FDA. So the product will be under that type of stay until September 2024. And in the meantime, the court has been established. It will be the Delaware court. The judge has been selected and the cases have started.

The next question is from Bob Pooler from Valuation Lab.

[indiscernible] for this year -- just a few questions. First, starting maybe with the operating expenses. Could you provide guidance for this year on your operating expenses?

Yes. So you should expect an increase, especially on the R&D part of it because in September this year, sorry, in September 2021, we started the first pivotal study on evenamide, so providing that we have to finance the study. On the G&A side, I don't expect any increase. But on the R&D, yes, I would say that probably what we have seen in 2021 is the low side of it yes.

On Xadago, have sales also been impacted by the pandemic potentially? And do you expect maybe a sharper increase of sales this year?

What -- I have to say that Zambon was quite surprised by the increase in 10% because they thought they were much more affected by the pandemic. So I believe -- I mean, we believe also that the pandemic will just, let's say, just leave us slightly more relaxed probably also that the sales should increase.

Okay. And then on evenamide. Just what are the remaining safety issues you have to address with the FDA, so on completion of the remaining trials?

From our point of view, basically, we have completed all the clinical package, and we are coming away from study [indiscernible] as well as the TQT study -- the TQT study has already been [Technical Difficulty].

Sorry Ravi, I can't hear you well.

I'm sorry. Preclinical requirements from the FDA we are already doing that -- we have already submitted that data and that has been acknowledged by the FDA. For the clinical side of it, the EEG study data have already been submitted to the FDA. The full report has been submitted. The TQT study, the study looking at the impact of the drug to affect QT segment, and study basically came on absolutely clean showing no increase or placebo actually a reduction compared to placebo has been submitted to the FDA, but it goes to a special division of the FDA, which takes some time to review the data. And the last data would be the safety data that we will get from the TRS study that we will be submitting as soon as we complete enrollment in that study. And that's basically all that be over to the FDA.

Okay. And then just on the study design there. So study 008A for nontreatment resistant, that's a potential pivotal trial. Does this mean you will file for accelerated proof on positive results? Or do you have to wait for the Study 003 for full approval or for filing?

Okay. We have extensive discussions with the regulatory authorities beforehand. If study 008A came out significant, but it would not be adequate for approval or accelerated approval for sure not. However, if study 003 came out positive, that would lead to an accelerated approval, and it would not need a second study. But if both the study 008A and the TRS study came out positive, that would obviously give us not only immediate access to the NDA filing, but also would give us the entire label, add-on treatment in schizophrenia. So that would be the situation, plus the benefits of having the TRS study come out positive is that the FDA and CHMP and Canada will probably waive the requirement in some of the ICH requirements and would let us get by with less number of patients submitted in the NDA. And the rest of the data to come while we were already having data collected in the field to marketing trials. Plus, in addition, in certain countries in the world, we will be getting basically the approval to be able to provide accelerated marketing approval to be able to provide the drug to patients.

Okay. And then on study 014 and the extension, would that be sufficient, if that's positive for particular clozapine treatment-resistant patients -- too far for accelerated approval?

No, I don't think so because I think for that, we will need the new PRS study and the subset of patients will be on clozapine. Our expectation is that probably currently, we are averaging about 18% to 20% of clozapine patients in the group of TRS patients who are going into the trial.

Okay. And then final 2 I had in mind. On positive results for study 008A, do you expect that to potentially trigger partner agreement. Or is that probably the time on positive results that we can expect -- the market can expect a partnering agreement?

I think, Bob, that depends on the type of partnering agreement. I would expect that a global transaction would depend on positive outcome on study 008A. I believe that regional co-development transaction could any time -- could happen any time before as could a local development corporation. So it depends really on the type and companies you are talking to. And just to complete that, Bob, thanks for the question. It will obviously depend on the terms because with that new deal coming, we are not up for a cheap deal.

[Operator Instructions] There are no more questions at this time.

Thank you very much, Moira, and thank you all for attending this call. And let me close with the slogan of the month, which is Slava Ukraini. Thank you. Talk to you next year again.

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