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

Ladies and gentlemen, welcome to the Newron conference call reporting exceptional 1-year results of Study 014/15 with evenamide in treatment-resistant schizophrenia. I am Alice, the Chorus Call operator. [Operator Instructions]. The conference is being recorded. [Operator Instructions]. The conference may 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, Alice, and good evening, I should say, to our listeners in the East. Good afternoon to the European listeners and good morning to those in the United States. Happy New Year to everybody. May 2024 be the year of success for all of us. And for sure, it should continue the dynamics we have seen lately in the antipsychotic markets, it should be a good year for Newron. I'm here today with Ravi Anand, Chief Medical Officer, who is today dialing in from New York, who will take on the presentation of the exciting 1-year results this call is about. This refers to Study 014 and 015 in which evenamide was tested as an add-on therapy to any second-generation antipsychotic in patients who are treatment resistant. I trust that you have downloaded the slide deck for this call from the website or via the link in the press release. And as Alice just said, we are looking forward to the Q&A session later on. So Newron is all about drug development in the CNS space, takes us to Slide 1, all innovative. We are listed on the Swiss Stock Exchange since 2006, with our shares also being traded at Frankfurt, et cetera, and the Dusseldorf Stock Exchange. So please read carefully the disclaimer on Page 2. After 20 years of existence, Newron should have a drug on the market using or applying the usual time lines for taking drug on and taking it through all the development stages to the market. And so here we are, our first drug Xadago, an add-on treatment for Parkinson's disease. Was approved in the year 2015 in the European Union and the year 2017 in the United States. Has been marketed for a number of years by our global partners by now, and if we can say one thing about this Xadago which comes from the same source as evenamide, the drug we are focusing the call today on, it is a safe drug and it works in CNS diseases. But for investors, you might say well it's on the market for 8 years now in Europe and for 6 years in the United States. It's a nice royalty stream. There is no substantial upside to come from that compound. So the real upside for investors is with evenamide. It's again a voltage-gated sodium channel blocker just like Xadago is, and it offers a new concept in treating schizophrenia in 2 indications, one for inadequate responders and number two for those patients who are treatment resistant in schizophrenia. We are looking for additional assets to complete the pipeline or to complement the pipeline and the management that is running Newron has taken a number of compounds to the market besides evenamide, which we took on in early preclinical and took to the market. Ravi Anand, our Chief Medical Officer, has been in comparable positions with Novartis, Roche and Organon CNS branches. We have massive news flow recorded. You have seen just before the end of the last year, we did announce the completion of the enrollment of our first pivotal study with evenamide in schizophrenia. That is the indication where patients are not yet treatment resistant. The results from that pivotal study are expected by the end of Q1 of this year. So today, we are talking about the Phase II study 1-year results in the second indication, those patients who are treatment resistant. More news flow to come in the next 3, 6 and 9 months. That is partnering and the start of the pivotal study in treatment-resistant schizophrenia. We are funded beyond the inflection points. We do have a cash balance as the last June of EUR 17 million. We have an ongoing income of royalty and R&D tax credit from Italy, that is about EUR 8 million per year. So our cash reach is into Q3 of this year. So let's switch to evenamide, which is offering the potential to change the treatment paradigm in schizophrenia. It's a large market. We are talking about 1% of the global population. And just to highlight to you how big and how important this market is, I spoke about the late dynamics in the antipsychotics market. You have probably seen the news from November, early December when a company called Cerevel was acquired by AbbVie for $8.7 billion. And Cerevel has most advanced compound being a schizophrenia treatment in a Phase Ib status with 2 Phase II studies ongoing. Just to add on, just a few days ago, you might have seen the news on one of our peers, Karuna, who are, I would say, a 1-product company around a drug in schizophrenia this point in time, have been acquired for $14 billion. I will admit that Karuna has filed the dossier for approved for marketing with the FDA, so they are slightly ahead of us. But that shows you the kind of interest and excitement right now for innovative treatment for schizophrenia in the market. We should not forget the last approved drug, which happens to be Intra-Cellular Therapies' Caplyta, which is on the market now for 3 years and that has been launched by the company itself Intra-Cellular in the United States. And after 3 years, the annualized sales of that compound in the U.S. alone are $500 million. Way ahead of the 5 years that it usually needs to take a drug to peak in CNS indications. They are doing it themselves. They are at $500 million annualized sales after 3 years. So this confirms the statement that any slightly innovative drug in schizophrenia will be a blockbuster. Now what does a evenamide offer? It offers a unique mechanism of actioning and positioning. We are the only drug under development, no competition left nor right, no 1, 2 years behind offering a glutamatergic mechanism. And we are the potentially first drug to be approved as an add-on therapy in schizophrenia. And the simple reason for that is that so far all the drugs on the market do work by the same mechanism and an add-on would simply be kind of an increase of dose and increase of side effect. So there is no approved add-on therapy right now for schizophrenia. Evenamide's being approved as an add-on treatment would change a non-responder into responder. There would be no need to change the current therapy when more than 70% of patients come back to the doctor and say, symptoms are coming back. There's no need to take them off their current medication, to wash them out, to titrate them up slowly on the new medication. No risk of relapses, no hospitalizations and no risk of increased suicidality due to that switch of medications. Just stay on your current medication, add evenamide, get the additional benefit, no incremental side effect of relevance seen so far. Ease of use for patients and physicians. No risk, less cost. So the first indication that we are currently developing evenamide for is add-on therapy in those patients who are no longer seeing the full benefit from their current medication, chronically schizophrenic, but not yet treatment-resistant. Besides that, that is the second indication and that is the indication that we are indeed focusing the further regulatory path on, that is that evenamide beyond and since clozapine, which has been on the market since the late '80s but is massively underused, it would be the one and only therapy beyond clozapine for those patients who are treating-resistant schizophrenics. 30% of the total schizophrenic population, means 0.3% of the global population, are diagnosed as TRS but the upside is up to 50%. Doctors saying, I could diagnose half of my patients easily as treatment resistant; I just don't do it because there's nothing I can add to them as a therapy. TRS is a huge market opportunity. Initial indication of about $150 million or $200 million. Those patients who are treatment resistant only to clozapine that we might want to keep to ourselves in case we would go for licensing. So there would be a nice niche opportunity for our own commercialization should we license the global rights to evenamide. What do we have to offer to you? We do already have positive results from Phase II in non-TRS patients. And as I mentioned before, the first pivotal study in non-TRS is ongoing, the enrollment has been completed end of December and the results from that first pivotal study with evenamide will become available by end of this year's first quarter. Changing to treatment-resistant schizophrenia, we have for you the pilot study in 161 TRS patients after 12 months, and that's exactly the result that we will focus on today. With positive results from a pivotal study in TRS, 1 study would be sufficient to get the drug approved for marketing. And prior to the formal process of marketing, we might even get an early access in some of the territories it might be reimbursed. And in others, it might be not and we would only collect the safety data and get access to the patients. Commercially, we are protected. Our exclusivity from the competition of meta patent goes until 2033. And in the European Union, we have additional exclusivity beyond, which is the 10-years data protection exclusivity. So assuming that the drug would hit the market in 2026, that would give us exclusivity until 2036. That all said, I hand over to Ravi. We are on Slide 5, and we are talking about the medical need for the patients suffering from schizophrenia. Over to you, Ravi.

Thank you, Stefan. Good morning to folks in the U.S. and good afternoon to those in Europe. Stefan has talked about broadly about schizophrenia. But I think the dimensions of the population that could benefit from a new treatment are immense. As most of you already know, we're talking about over 20 million patients worldwide. You're talking about almost 30 to 60 antipsychotics available in different countries. And what is unique about all of these is the fact that none of them have been shown to provide substantial relief across the spectrum of schizophrenia patients and for the extended periods of time. Most of the payer drugs approved are really going to be targeting the acute phase symptoms and reducing their severity for the phase period of time, but then again patients generally relapse. 10% to 20% of patients will relapse over a period of 1 to 2 years. What is unique about schizophrenia is it is the same disease around the world. It's got a 1% prevalence. The age of onset in males tends to be around 18, 19 years of age. Females is about 5 years later. The outcomes are the same. 30% of patients usually respond to monotherapy, 30% of patients show a response which is less than adequate, and another 30 patients -- 30% is what we call as treatment-resistant. The -- in addition to not being able to control the progression to treatment resistance, the current antipsychotics have not shown any efficacy in treatment of negative symptoms, reducing the burden of cognitive dysfunction or maintaining patients in the community. If we move now to the next slide, #6. I'm just briefly going to go with the mechanism of action of evenamide just to show you how different it is from anything else. We have looked at over 130 different CNS targets, including receptors, enzymes, transmitters. This trial does not interact with any one of those. The only thing that it does, it inhibits sodium channels, voltage-gated sodium channels in a very unique way. If you look at the bar graph -- if you look at the graph on the left-hand side, you see that the -- in the resting state of the cortical neurons, you need 25 micromolar of this drug, which is like buckets of drug, to produce an effect. But in the inactivated state of the channel, which is where it really must get active in states like epilepsy, acute burst firing, you only need 0.4 micromolar. [indiscernible] as a drug becomes active when it's needed to become active, not otherwise. But the major advantage would be that it would not have side effects in patients who are not needing the level of effect that it produces. The level of effect that it produces can be seen in the middle graph where you see the 2 kinds of neuron, the high frequency firing neurons and the low frequency. The low frequency firing neurons is what all of us need for a normal functioning for neurological function, for coordination of activities, for movement and 1 micromolar barely has an effect. But if you look at the left-hand side, the high-frequency firing neurons, epileptic states, et cetera, 1 micromolar almost completely inhibits this fast firing with neurons. How does it do this? It's a very simple action. All that this drug does with the virtue of its effect on sodium channel is control the excessive release of glutamate. So in the resting state, it has no effect on glutamate. The base of glutamate is unaffected. And this is the mark showing you from in vivo microdialysis. The injection of veratridine, which releases glutamate, which is shown in the blue -- in the black, you can see glutamate is released peaking. The blue and the red are different concentrations of evenamide and you can see they attenuate that release. This is the sole function of this drug in the brain, and that's why it is so unique a compound to play with. If you go to the next slide now, which is Slide 7. This function offers us a lot of opportunities. First of all, this is a drug which could be added on to any drug, any drug could be added onto it. There is no other drug that's glutamate release inhibitor. So therefore there's no competition for it at all. It will be -- if the studies come out positive, as they increasingly look like, it will be the first add-on antipsychotic acting through a different mechanism to be approved for patients who are partial responders. As I mentioned before, at least 30% of the patients are partial responders. Generally speaking, probably this number could go up to 60%. For treatment of this in schizophrenia, since clozapine's approval in 1989, there has been no drug that has been approved. And these are the patients who have the worst medical outcomes. These patients -- generally we say in schizophrenia mortality reduces life by about 10 years. In treatment-resistant schizophrenia, it's probably about 20 years. The rate of suicidality is very high in these patients. And to this date, even with clozapine, the maximum proportion of patients who respond are 30% and clozapine is barely used. 5% of the patients in the U.S. who are treatment-resistant get clozapine. In Europe it's about 10% to 14%. So the vast majority of patients with treatment-resistant schizophrenia are receiving treatments which are -- have got no scientific basis and have never been approved. So therefore the addition of glutamate release inhibitor to a patient who could be on any of the marketed drugs and if it's producing an effect would be a major, major breakthrough. Currently, the worst kind of patients that one can find in the clinic are those who are clozapine nonresponders. These are the patients for whom there is no hope and they take up a lot of other resources. The data that we have collected to this date show that the addition of this drug to clozapine nonresponders may be produce -- may be beneficial for those patients. And that would be a unique indication for this drug. Moving to the next slide, #8. We very quickly run through why this is unique. First of all, the structure is not belonging to any known class of drugs that are used as antipsychotics. The pharmacology, as I've mentioned to you, is completely unique. What we have seen in humans to this date is a very benign side effect profile. And I'll go through this in later detail, but just to say that the usual side effects of antipsychotics are not noted at all. There is no comparison that has been identified to this date. We have a data now, which we'll be talking in a few minutes, from 161 TRS patients. And generally speaking, you tend to see about 10% of patients having a relapse in about a period of 1 year. That is for garden-variety schizophrenia. For TRS patients, the number would be much, much higher. For some reason, we cannot explain, and we obviously hope is because of the efficacy of the drug, out of the 161 patients who were enrolled in this trial and 106 who got treated, there's not been any psychotic relapse. If that number is confirmed in subsequent studies, that would be a major benefit for positive health technology assessment. There is no EPS with this drug. There is no weight gain with this drug. There's no sexual dysfunction. There are no endocrine abnormalities. There's no cardiac dysfunction that we have noted at this date. We have done studies -- specialized studies that have demonstrated there's no QTC prolongation. There are no cardiac abnormalities. There is no pattern of any abnormal laboratory results. You do not need to monitor labs again and again. And there are no other side effects of the type we mentioned. ICH requires 100 patients treated for 1 year. We already have crossed that number. We have more than 120 patients who have been treated for 1 year. We have at least 500 patients unique subjects who have been treated and 400 patients with schizophrenia. All tox studies that are required for registration have been completed, except carcinogenicity, which after long discussions we have now come to an agreement with all the authorities that we would not need to do a 2- to 3-year study. We will only do 1 study in 1 species. Normally, you have to do both species. And that will be a 6 month in genetically modified mice. That will significantly shorten the timelines to submission. For Europe, we also have to do the ERA studies, but that would be negotiated at the time of discussion with the CHMP. Another major advantage is that we have got tentative agreement from authorities in Europe, including CHMP, FDA and in Canada that were the TRS potentially pivotal study, which will be the next study we will be performing, be positive, that may be adequate for giving approval for this drug under the expedited approval mechanism. That would be a major benefit, and that is why we are focusing the strategy on TRS. Next slide, please, which is Slide 9. So where are we now at the moment? For TRS, we have 1 study, which is completed, the 1-year data that we are presenting today. This was -- let me say it right now, so there's no confusion, this is not a pivotal study. This is not supposed to be a definitive study. This was a pilot study, looking at tolerability and efficacy of 3 doses in TRS patients as an add-on. We designed the study in 2 parts, 6 weeks the first part and then an extension up to 1 year. Both have been completed. The -- in the non-TRS population, we already completed the Phase II study a few years ago, and the second potentially pivotal study has just completed enrollment and this is a study in which we'll have 290 patients who've been randomized to either placebo add-on or evenamide add-on of 30 milligrams. The efficacy data that we have to this date indicate that we will probably -- we will definitely show a benefit of treatment compared to baseline on the key efficacy measures in schizophrenia, which are the positive and negative symptom scale. But more importantly, also on the severity of the disease as judged by a clinical global rating performed by the psychiatrist. And also their functioning appears to improve not just for 6 weeks, not just for 6 months, but throughout the 1 year. Now why are we so excited about the results coming from an open label study? First of all, treatment resistant schizophrenia patients and the ones we took here were the ones who were already on an antipsychotic, and they were not doing well. We managed to get a clinically important improvement on the PANSS scale. 20% improvement from baseline in treatment-resistant schizophrenia patients is considered clinically important. We got also 1/4 of patients improving on the Clinical Global Impression of severity. This is 2-category improvement from baseline, not just minimal improvement but 2-category improvement. And we also have 1/3 of the patients being judged as much improved by the clinician. This is not just at 6 weeks, but we're talking about numbers going up to 1 year. And what is unique about this study? I think all of us will have skepticism about an open-label study, non-placebo-controlled. The important thing is that placebo response in treatment-resistant schizophrenia has never been seen to be sustained and over time as we see in this. So we clearly see the benefit which is increasing over time. Why is that so important? First of all, it tells us that the patients who responded initially continue to respond. They did not drop back to baseline. But more importantly also, many patients who did not respond in the beginning became responders at 6 months, became responders at 1 year. So this goes against the teaching where we say schizophrenia in general, if a patient doesn't improve in 6 weeks, he is unlikely to improve any further. But here what we are saying is, keep faith and keep on treating patients, and if they stay on drug, they will improve. Very surprising finding was these patients who were treatment resistant meeting the international criteria improved to a certain extent that about 50% of the patients would no longer meet the criteria for treatment-resistant schizophrenia. This, as far as we know, is a first-time result. And last but not least, the term remission. You hardly ever hear about trials in schizophrenia producing remission of patients. And these are fairly elaborate criteria. But what we was really surprised to see is that at the end of the 1-year period, 1/4 of all the patients of treatment-resistant schizophrenia, and let me tell you that there are no guidelines even for treatment-resistant schizophrenia, showing remission. 25% of the patients met this criteria. So overall, this study has been amazing, and our confidence in its results has grown as the results have become much more solid as time goes on. Next slide, Slide 10. So I'm going to talk briefly about the design of the study. As I mentioned before, it's a pilot study, 6 weeks, followed by an extension. Again, we've talked about the objective. This was not a pivotal study. It was just to gain insight, but the results have been so positive that with hindsight I wish we have gone and done a placebo-controlled study. What we did is we took patients who by history had not responded to at least 2 different medications -- antipsychotic medications. This had to be a documented history. The patients must have failed these antipsychotics in trials of adequate length, which means at least 4 to 6 weeks, and at therapeutic doses. Since TRS patients cannot be managed just on [indiscernible] they were all on another antipsychotic. And again, they were not responding, Otherwise, they wouldn't be treatment-resistant. They were not responding to this drug when they come into the study. This could be any antipsychotic, first-generation or second-generation, except clozapine because it was felt to be too difficult, too risky at that stage to be asking patients to come in every week for a clozapine blood test as this study was run almost concomitant with the pandemic. And the issue of patients visiting centers was very difficult. Efficacy measures are the same as in any other trial and all the latest results are basically certified. The severity of the patients we chose was 70-90 on the PANSS scale. Now this may -- some may consider it as somewhat low. But please do not -- please note that these are patients who are scoring this while on an antipsychotic. If you have taken the antipsychotic away, probably the scores would have worsened by at least another 10 points. But in addition to the total score, we also had a requirement that the core positive symptoms, the symptoms that really drag a patient to the attention of the psychiatrist were scoring greater than 20. And the CGI of severity of disease was at least moderate to severely ill. And these are scores while on an antipsychotic. So without the antipsychotic they will be even worse. And suicidal patients, of course, were excluded. We started the study in India, Italy and Sri Lanka, but as -- unfortunately because of the pandemic situation both Italy and Sri Lanka contributed very little. The next slide, which is Slide 11, is a description of what happened in the study longitudinally. We randomized 161 patients to 1 of 3 doses almost equally. This is in Study 014 which was 6 weeks duration. At the end of 6 weeks, patients who completed had the choice to continue or not to continue on the extension. So out of the 161, 153 completed 6 weeks, which is a number which is extraordinarily high. You hardly ever see a dropout rate less than 10%, 20% even in a 6-week study. So we had a very low dropout rate. As you can see from here, there are only about 8 patients who discontinued. Of the patients who completed the study, 144 out of the 153 chose to continue. That can only imply that they see a benefit and that there are no side effects. When we got to the 6-month stage, out of the 153, 132 completed the study. And basically out of those, 12 discontinued in that time period. When we got to 1 year, we have 121 patients out of the 153 who completed who entered -- completed the 6-week period. Most common reason for withdrawal from not going in through the full 1 year was the withdrawal of consent because patients chose not to come to the clinic any further. Dropouts due to adverse events were only 2. And 1 patient died after about 6.5 months of treatment suddenly of cardiac cause. So basically, we have now 1 year data from the 121 patients who have completed the study. And all of our analysis are based upon the standard ICH E9 requirements for analysis of studies, as you go to the next slide. Let me first give you the summary of the results. Less than 1/3 of the patients experienced any new treatment-emergent adverse event. There were 2 serious adverse events that occurred during the study. One was a death which was after 6 months. This patient has improved quite a lot in terms of the psychosis. There are no any other adverse events. And as you probably know that in schizophrenia, sudden cardiac death is one of the commonest causes of death in this patient population. An autopsy indicated some evidence of atherosclerosis. There's a second patient who did very well in the study, was off medication for more than 20 days and as was not followed very carefully by the relatives, went and kept on drinking a lot of liquids. And as you know, in schizophrenia, there's a condition in which patients keep on drinking so much liquid, they cause acute dilutional hyponatremia, which then leads to a seizure, and that occurred in the study. So these are the only 2 adverse -- serious adverse events. There are no other extrapyramidal side effects, endocrine effects, metabolic syndrome, sexual dysfunction, CNS effects or laboratory abnormalities. No patient relapsed during the 1 year of treatment. We have an Independent International Safety Monitoring Board comprised of the chairman of Rush University in Chicago, another schizophrenia researcher from Baltimore and a cardiologist from Chicago who regularly review all the data. Based upon the data that we have now, it is very clear; this drug could be added to any antipsychotic. Any antipsychotic could be added to this drug. It seems it's ideally suited for the treatment of TRS patients. Why do I say that? If I look -- if you look at the next slide, which is Slide 13. This is a positive and negative syndrome scale. This is a scale based upon which all health authorities judge the efficacy of a drug. You can see from baseline onwards of all the patients who entered the extension study, there is a reduction in scores as time goes on. Now at the end of 1 year, this is almost like 20%. Why is this so important is basically, again, the progressive reduction indicates a mechanism which is very difficult to explain. Usually, we do not see this with neurochemicals. We see an abrupt reduction and then plateaus out, a very minimal change. But this looks like a sustained reduction over time. And I don't know it's possible to say what would have been the result if we've done 1.5 years, it may have increased even further. But at least for 1 year, we've seen a 20% reduction in the PANSS total score. If you go to the next slide, which is the Positive Syndrome Score, but now showing you the responder analysis, 20% reduction is considered clinically important. And you can see that, again, from week 18 where we have 25% of the patients who are responders, it jumps to 34% and then to 41%. The proportion of patients who are meeting the 20% criteria is increasing over time. In other words, patients who have not responded at 6 weeks, which we are not showing you in this, that was in Study 014, who had not responded at 6 weeks, responded at week 18. Those who have not responded at week 18, some more joined in at 6 months. And of those who had not responded at 6 months, many more joined at 1 year. So the number of patients who attained clinically important response also increases the time, not just the magnitude, of the change. Next slide, which is Slide 15. Clinical Global Impression of Severity of Illness. Why do I stress this so much? For a psychiatrist, generally speaking, scale scores are meaningless. We do not go around talking about this patient is 82 or 84, 36 or 37. But what we do really talk about is how severely ill is a patient. Is he mildly ill, is he moderately ill, is he severely ill? We generally rate this on a 7-point scale. This is done by a psychiatrist who's very well experienced with the method of treatment. And as you can see, patients came in the study with a score of 4.5, means they are between moderate to moderately severe. And by the time they exited the study, they were down to a score of 3.5, which means between they're mild to moderate. So it's a 1 category change you can see in the means. But the means tell us nothing. So let's look at the next slide, which will be Slide 16. And now you see the real picture beginning to emerge. We are looking at patients who improved by 1 category. And if you look at in 1 category, it looks like almost 75% of the patients improved in the severity of the illness at the end of 1-year period. The patients who are severe moved to moderately severe. Those who are moderately severe moved to moderate. Next slide. And this is now showing you the final 2 scales of the study, the Clinical Global Impression of Change, which is the psychiatrist does an interview with the patient. It's not a scale anymore. And just based upon the interview where he talks about how the patient is doing, how the patient is feeling, how he looks at him and how he is dressed, how is he talking. Is he oriented in time? Does he still have -- believe that he's hearing the voices? He judges the patient as either no change, minimally improved, much improved, very much improved or minimally worse, much worse, very much worse. And as you can see in the graphs, the pink color graphs tell us that by the end of 1 year 1/3 of the patients were considered as much improved. Not minimally improved, much improved. Again, consistent with the symptom scores, there is an increasing effect over time. And lastly, we have a Level of Functioning scale, which measures functioning. And what we see here now compared to baseline, again, there is an improvement in the symptoms, the items that assess functioning in these patients. Next slide is a finding which I had mentioned to you is very unique, at least for me, which is to see that the patients who came into the study no longer meeting the criteria for treatment resistance. How did we select patients with treatment resistance? First of all, they have to have schizophrenia history. They are needed to be having disease for at least 5 to 10 years. They had to be moderately ill at least. The PANSS score had to be greater than 70. A score of 4 or more on the core items of psychosis. What are the core items of psychosis? Conceptual disorganization, hallucinations, suspiciousness, unusual thought content. The score of these 4 must be moderate for at least 2 of these and a total score of greater than 20 on all the positive symptoms, which are listed down below. On the next slide, which is Slide 19, I show you the results for each of these items. In the interest of time, let's go to the last column, which is showing you the 1-year results. And we have taken the liberty of showing you both the LOCF, which is the last observation carried forward, and the Observed Case analysis. The difference being Observed Case means only those patients who were present at that time and the LOCF means patients whose score has been carried forward even if they have dropped out before. But remember, the dropout rate in the study is very low. So as you can see, 84% of the patients were still there at 1 year. 84 patients rather no longer meet the criteria of score greater than 70. Likewise core item score, 66% of the patients have scored less than 20. The severity of the disease is judged to be less than moderate in 63%. And score of 4 or more in non-core symptom is now not met in 72% of the patients. Overall, if we combine all these criteria, 55% of the patients are no longer meeting the criteria for treatment-resistance. This will be a wonderful thing. It means a patient who was not responding to any medication, the addition of evenamide has now made this patient benefit from treatments. Last is a term which you never really hear about in a trial, which is remission. Remission is not response, is not benefit. It is much, much more than that. First of all it means the symptoms are down to a level that individual's behavior is not affected at all and would never be diagnosed as schizophrenia. Symptom improvements must not be for 1 week or 2 weeks or 1 month; at least 6 months. Why is remission so important? Because long-term studies have shown us that those who achieve remission status, they are much better long term. And it also sets a minimum -- standard for the minimum severity of symptoms that these patients must be having the symptoms absent to remain at this level. Now if you go to the next slide, just on Slide 21, there have been very few studies done trying to understand even what is remission. There's one study from 1993 from Lieberman et al, they use the scale known as the Schedule for Affective Disorders and Schizophrenia, and they defined certain items of that scale and made it a requirement that no items should be more than 3. The CGI of severity should be less than the 3. The CGI of change must be much improved, but it only required 8 weeks. The latest version that has been published, which was is in 2005, Andreasen et al redefined it using the PANSS scale, and they noted down certain items of the PANSS scale, which they felt were very critical for remission. Virtually all of these items the scores have to be below 3 and they basically required that this level of change should be maintained for 6 months at least. We looked at both of these criteria. So the first one, we had the impaired understandability which is in the Lieberman criteria is no longer present in any scale. So we replaced that with a suitable transferable term which was [indiscernible] which is conceptual disorganization. And bizarre behavior also we replaced it with mannerisms and posturing from the PANSS. Now let's look at the results on the next slide. And to my immense surprise, 25% of the patients, doesn't matter which criteria you use, maintain -- meet the criteria for remission and surprisingly, the Andreasen criteria which requires 6 months of preservation of symptoms at a low level were also met. This was a fantastic result and we hope that we can build upon it in the next few studies. But these data are very critical for us to decide to move into the next trial with patients with treatment-resistant schizophrenia. The next slide is now showing you the design of this trial. This is a trial design which we have agreed upon with all the European countries, with CHMP, with Canada, and we've offered it again to the FDA and they have generally no disagreement with this. It will be a 1-year study, placebo-controlled study. Very rarely you get 1-year placebo-controlled studies in patients with TRS. The first 42 days will be without getting medication without randomization just to make sure the patient is eligible. They are taking their drug. The plasma levels of whatever drug they were taking are adequate. An independent committee would decide which patient goes into the trial on that. Patients get randomized. After 12 weeks will be the primary efficacy end point. That will be the PANSS scale. Patients would continue after the 12 weeks on whatever medications they were getting; there is no choice decision to whether I continue or not. You're required to continue unless you're having severe side effects. And at 26 weeks, we would have a second endpoint where, again, the primary efficacy variable would be the PANSS scale. If both the 12-week and the 26-week endpoints are positive, for Europe we would no longer be required to do a remission -- relapse prevention study. That's a major benefit of this design. And the final efficacy assessment will be at 52 weeks. So this is a study which we hope to get started in the second quarter of this year. Now I spent a lot of time. So let me just quickly go through the remaining compound, which is Xadago. As Stefan has mentioned, it's already marketed everywhere. We, Newron, basically submitted the NDA and the European approval. Is globally licensed. We get double-digit, single-digit royalties depending upon the country and the geography. And the next slide, which is Slide 25, you can see the various countries where it is marketed in and all the partnering companies that have launched this product on the market. And with that, I think I'll come to a close, and I turn it over to Stefan. Thank you very much for your attention.

Thank you, Ravi. Fantastic presentation. And back to Alice for the Q&A session.

[Operator Instructions] This question comes from the line of Bob Pooler ValuationLAB.

Well, first of all, happy new year to you all. I think you guys are off to a flying start this year, and it looks very interesting. So good luck with that. Just a few questions from my side. Again, with the 1-year results and you had the interims before, what were the most surprising results of this at the 1-year point for both of you?

I think it's [indiscernible] is a more scientific result. I -- as I think I mentioned before, I fully expect patients who were doing well in schizophrenia for the period of time to start declining. That did not happen. I also never expected the responder rate to increase. And finally, the results on the number of patients who are no longer meeting criteria for treatment-resistance schizophrenia or the number of patients that have gone into remission. Especially the remission. This just came out of left feet. We never even thought about this. That's why we didn't even have criteria in the study to even consider remission. It's such a rare thing to see remission in patients with schizophrenia. And these are patients with treatment-resistant schizophrenia. Irrespective of the results of the evenamide, what it tells us is that basically, we have seen a phenomenon that if you have a good drug, which is tolerated, patients take it, they seem to like it, you can get a very good benefit in patients even with TRS.

If I may add, Bob, I think what was stunning to me is that, look, we are working with external vendors. So everything is quality controlled. So we have complete trust in the results that we got. But then you want to check it by external experts, by the opinion leaders, and we had 2 meetings this year with those opinion leaders, one in Barcelona in October and one before in May in Toronto. And the unanimous feedback by those KOLs is being completely stunned by those results and saying, well, if this can be confirmed by that coming pivotal study, that will really completely change the treatment paradigm in treatment-resistant schizophrenia. So I love that even more because it tells us we're absolutely on the right path.

Yes, just the new phenomenon also as the patients are in remission, what happens with those patients? Do they continue treatment or stop treatment and in general?

Yes, Bob in general in schizophrenia, we tell always patients that even if your symptoms disappear, continue treatment for at least 2 years, 3 years beyond the point where you have no symptoms at all. So clearly, the study you can never assess that. In this study, the patients who are in remission, they are still on medication.

[indiscernible] also mentioned that there's the potential for early access in the presentation there, too. So the participants in the Study 014 and 015, are they continuing with treatment? Are you going to get further data from these?

Yes. I think we basically [indiscernible] the issue has been that we never designed the study to go beyond 1 year. And so we never even thought that -- I personally never thought that we will be left with more than 20% of the patients. And fortunately we're left with about 80% of the patients. So we have no time now to modify the protocol any further. So we still have a few patients who are continuing treatment but that's a very small handful.

Okay. Then just on the second pivotal trial or the first pivotal trial in the TRS patients, the Study 003, could you then provide a little bit the time lines there. So I think you're starting in Q2 this year?

Yes, towards the end of second quarter of this year. It will probably take us about 1 year to enroll patients. And then 12 weeks is the first primary endpoint. And then we need a few months for data cleanup, et cetera. So obviously, we would not wait until the full 1 year was completed before we would announce the results. So starting in '24, we will go to mid-'25 and then take the 12 weeks for treatment, another 12 weeks or so for meta cleanup and all. So by the end of '25 and beginning of '26 is probably when we would have the results.

Okay, '25, '26, results there. And you mentioned that this trial because I see you, I think you from the previous sort of trial design, you've increased the number of patients there. And I think we're going from 10 weeks to 12 weeks now. Is that because this could also potentially be a pivotal trial?

It is a pivotal trial. Absolutely. And ideally, we initially designed it as...

I mean as a single pivotal trial because [indiscernible] that you needed to.

In a single pivotal trial design, which has to be a design which is -- the results are robust, the data coming from a trial that is believable and it has to be for a condition for which there is no medical -- there's immense medical need and no current treatment available. So those are the reasons. So it's a substantially powered trial. And as you rightfully said, basically we have increased the sample size dramatically.

Then just any read-through of the study that you're seeing on the upcoming Study 008 in non-TRS patients there?

No, no [ read-through ]. I think the only I can tell you we are very thankful this study got completed. And the dropout rate, again, is very low. It's very low, so it's just signifies that whatever we see in one study is being magnified in the other study.

Okay. And then just on the outlasting [indiscernible] the question is when do you expect and what kind of agreement do you look at but probably you will go for -- well, you have cash, I saw it in the trial, into Q3 this year. And if this trial starts at the end of Q2, probably you will have a partner then given that you need the funding for the trial before you start. Is that a correct assessment?

Yes, Bob. I mean you know that we have -- generally, we have 3 paths. We could follow the example of Intra-cellular Therapeutics. It's a wonderful example that against all the odds you just take the drug to your market. Now that leaves you with 2 paths. Number one is you finance it by equity, which I believe will be a challenge given our still current share price. The other is you go for a financing partner that is funding the development to the market and is repaid by future revenues, which is a very viable path. The second path is that you go for partnering. And you know that we have spoken about it that once or twice before. That means we need either a global partner or we go for a staggered licensing, that means giving away Europe and Asia first, Latin America, and then after additional results have the key upside, which is the U.S. and probably Japan until the drug is ready for approval. So that staggered approach might be the better one for our shareholders. But obviously, if there's one of those global parties who says, I want the global rights and I will expand this from being clearly schizophrenia into bipolar and all the other cluster indications, which means that the market potential of the drug will increase from a blockbuster to a multiple blockbuster, that obviously would probably serve the drug best even if our shareholders would only have one inflection point, but that would be without doubt a big one. And the third option is, obviously we referred to that's available to Karuna and obviously that's nothing we can plan, but we realize that it can very easily be part of your life. And for that, it's important that we have an independent Board of directors and that the Swiss takeover rules are applying to us by our statutes. So that's the 3 paths. The ones that we can plan for and the one that we are planning for, that's certainly the potential funding against future revenues versus the partnering a staggered or global license transaction.

Our next question comes from the line of Samir Devani with Rx Securities.

Hi guys, Happy New Year. Congrats on the data. It's a good start to the new year. I've got a few questions. Perhaps just a couple first you for Ravi. And then maybe one for you, Stefan. Just in terms of the trial run, can you just remind me, were patients allowed to alter their antipsychotic dose during the study?

I mean the patients were allowed minor adjustments. But if anybody basically needed a rescue then -- meaning greater than 20% in change in the dosage, then they were basically treated as a treatment failure, with respect to being on a [ single ] dose, in other words basically.

Yes. And then I think in your previous releases, certainly at the 6-month time point in the presentation last year, you gave us quite detailed information on the various doses. Is it fair to assume that what we saw, the trends that we saw at 6 months in terms of the 7.5, 15 and 30 are pretty much replicated for 12 months?

Yes. I think I would say probably fairly replicated, except the 30-milligram seems to be becoming better with time, but again, it's nominal differences. I think at the present moment I would say basically, dose not appear to be a major determinant of efficacy. It does look like -- if you look at the example, Latuda, there's only 1 dose, which is effective. The higher dose is not effective and the lower dose is not effective. So antipsychotics is difficult to say. But at the present moment I would say that if I had to pick, probably I would say the 15 to 30 milligrams are the best doses.

Okay. And then you're sort of guiding to the end of Q2 start for the Phase III in TRS. Does that mean that you've technically had your end of Phase II meeting with the FDA?

Yes, we had FDA meeting before and we actually have a new submission, which is to be now with the new protocol, which it will contain all the latest results, and that should be again the new submission now. We already have done that with the CHMP. And with FDA, they needed to see the new protocol design. That's what we are submitting now.

Okay. And then just 1 final one for you, Ravi. Just in terms of the design of the study and what you've updated today in terms of the study remaining double-blind, how easy is that to do? If you're going to announce 12-week data, whether it's positive or negative, how does that influence the patients on the double-blind section? Is there any danger that...?

Yes, you're right. The way it works is a complicated story. But basically what it is that nobody excepting the statistician and a limited number of people would get to know the results. No investigator gets to see the results.

At 12 weeks you mean?

At 12 weeks. No investigator gets to see the data. The team which is doing the analysis is completely new from that point onwards. So it's like you build some kind of walls between the data that has been analyzed and those are continuing in the field. The patients, as far as they know, they were randomized to a dose, they're going to continue for the rest of the time even in the study. There's no [ break; you are blind ]

Okay. So that sounds really complicated to me. So does that mean that you wouldn't put an announcement out after the 12-week analysis?

We would probably do it under restrictions and the full details will only go to a regulatory authority. I mean something what we did with safinamide. The 016 and 018, 016 was the pivotal which was 6 months and the extension of the -- that was 2 years. So that's what we did. Again, the full results would never be out.

Okay. And then just one for you, Stefan. Just in terms of the partnering, and you've gone through a few of the options that you're considering. I'm just wondering how much does the 008 study determine the path forward? Because clearly, if you're looking to start the Phase III in TRS at the end of Q2, I assume that deal has to be determined really pretty soon and you've got data coming at the end of the March. So is it sort of the end of March to the end of Q2 is going to be sort of where everything is going to be happening?

Yes. So Samir, we are waiting for Study 008A, just to be precise because we did have a study. So what I can tell you is that the process with potential partners has been going on for quite a while. I can tell you that a substantial number of partners has been updated permanently. And as we are speaking, our Business Development has informed everybody in the process about what we have disclosed today. There's going to be an opportunity, Ravi and I will attend to JPM in San Francisco next week. We have numerous meetings with interested parties to provide an update face-to-face. So this process has been ongoing. Everybody is updated to the extent possible. And so we are best prepared. Are there parties, the big parties who want to see study 008A results before they make the final steps? Absolutely. That is for various reasons, and we don't have to discuss it in detail. It's necessary. So are there other parties who might not wait for those 008A results? Is it necessary to wait for the 008A results? No, because as you have taken from this call, one study in TRS, the pivotal study design that Ravi has just presented, which will be a gold standard study 12 months double-blind, placebo-controlled study in TRS, one study would do. So what is the requirement for this study 008A? Well, we obviously want to see supportive results for a filing in treatment-resistant schizophrenia. Is it a must that these results are fully positive? No, not at all. Is it relevant? Oh, yes, sure. If somebody would go for a deal ahead of those results, would he discount the payments or make it in milestones? Absolutely. So I think that is, to describe in a lot of complexity, what might happen. Are we confident that the process might be very speedy once those results are out? Absolutely because everybody is up to speed.

Okay. Perfect. And maybe just 1 final question. Just in terms of the finances. You talked about cash to sort of Q3. Does that include any repayment of the EIB loan?

I can tell you that we have very good discussions with the EIB and even if there is no -- nothing declared yet, we are confident that there will be no repayment to EIB in June. So that will not be an issue.

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

Congrats on the results. I have a couple of questions on evenamide and a couple on your partnering efforts. So what are the key risks do you see in the Phase III in TRS?

I'm sorry, couldn't hear the question again.

What are the key risks do you see in the Phase III in TRS?

In the Phase III, the key risk? Yes. Well, the first risk, I think, in any antipsychotic is basically that the placebo response can kill the study. As you saw the Lundbeck compound, it is a very well-designed study that placebo response killed. So we have taken a few precautions here. There are differences in the design. They chose a design in which they make patients respond before they respond -- further randomize them to placebo and they expected the placebo group to get worse. We're then the opposite. We have taken patients who are not doing well, and we are excluding all patients who have done well during the screening period, so we only have patients left who are not doing well, who have failed. Hopefully, this will reduce it. Secondly, we have a duration of treatment which is very long. And as I said just before, placebo response doesn't usually last that long. The fact that we have 12 weeks and 26 weeks and 52 weeks, I think if a placebo could last that long, it should be marketed. So I don't expect the placebo response would go that long. That's the second thing. Third, these are patients who have failed drugs, at least 2, based upon the International STRIP Criteria. So these are pretty hardened patients who generally do not respond to placebo. Those are the things we can do that's for placebo response. Second is an unknown toxicity. Kind of unlikely because we have more than 500 patients treated, but theoretically you could never say no, that nothing would happen. And third, which I think is what makes me most nervous, is we could have another pandemic. That would be something which we cannot do anything about. Those are the 3 things that I see at this stage.

Okay. Do you have any insights on the potential pricing of evenamide, if it reaches the market?

I think what we can say, Leonildo, is that the pricing is never the decisive force in the sales of those antipsychotics. Where they really get that $1 billion sales from is not an excessive pricing but it is the huge number of patients that will be using the drug. We would certainly advocate that the pricing should be supportive of a huge and fast spreading in the market of this compound. But don't forget, we would be the one and only treatment alternative to all those 30% to 50% patients who are treatment-resistant and have to take clozapine but don't want to take clozapine. So we would be in a fantastic position to penetrate that market, that huge market, very quickly. And that is the discussion we're having with the partners. But if it should be globally licensed, then as you know, the final pricing decisions will be taken by the partner.

Maybe the next one goes to you, Stefan. So you already said that conversations are ongoing -- partnering conversations. I'm just wondering what has been the feedback of your potential partners so far? And what's their profile? I mean are we talking about big pharmaceutical companies, midsize? Could you give some -- shed some light here?

We have -- the options are widespread. We have global partners looking for these results from Study 008A to confirm their interest. We have regional partners who want to see the results who are willing to discuss. And we have territories, like remote territories parties who want to have the local rights only. So we are in the luxurious position to have competitors or, let's say interested parties for all types of deals, and we are talking to parties that are interested in funding studies. So in the best case, we can pick the best option for our shareholders and the best option for the patients and the largest penetration. And that is something that we enjoy. So let's see in the next weeks where that takes us.

Okay. Maybe just 1 final question. So you just mentioned cash runway goes into 3Q, so we all know -- Q3 exactly. So we all know that sometimes partnering conversations tend to take longer than expected. And I'm just wondering if there is any fallback plan in case it takes longer or beyond Q3?

Yes, absolutely. You can rest assured that this company will not run out of cash because 2 or 3 months of cash are [ missing ]. So discussions are ongoing. It is clear to us that our shareholders are very sensitive about dilution. And so we'll probably not be fundraising with material dilution because, quite honestly, the cost of the study and the cost to the market would be too much dilution to bear. So it is not a valid option for us. But if there is a need for 2 or 3 months or 6 months additional cash runway, you will understand that this company protects the value of its assets -- of its key assets, especially in the case of positive results. So none of the parties that we are talking to would -- should speculate on Newron running out of cash. I guarantee.

There are no more questions at this time. Back to you for closing remarks, gentlemen.

So thank you, everybody, for attending the call. It has been a huge pleasure to start the year with this news, and I can promise there will be more news to come very soon. So stay tuned. Talk to you next time. Have a good rest of the day.

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