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

Ladies and gentlemen, welcome to the Full Year 2023 Results Conference Call. I'm Sagar, the operator from Chorus Call. [Operator Instructions] The conference is being 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, Newron. Please go ahead, sir.

Thank you, Sagar, and welcome, everybody, to this call on 25 years of innovative CNS drug development. Effectively yesterday, Newron turned 25. We wanted to share that with you. Thanks to our listeners here in Europe, and good morning to our listeners in the United States. I'm here today with Ravi Anand, our Chief Medical Officer; and Roberto Galli, our Chief Financial Officer. All 3 of us will guide you through a number of slides, and then we will all be available for your questions and respond them to the best of our knowledge. I hope you have all downloaded or opened the slide deck that was linked in our press release, and you found on our website and that is exactly what we are going to use now. I'm moving over to Slide 3, where you see telephone numbers and the speakers, so to Slide 4. So we have given this last year 2023, the title, the resistance melting away and you could take it literally when looking at our patients in treatment-resistant schizophrenia and this resistance formally melt away, but you could also take it in a transferred way when referring to the financial markets, the biotech market in the last 18 months. It seems like excitement and interest by investors is finally and slowly coming back. And you could say that this specifically applies to our section of the market, the CNS area and very specifically schizophrenia, where you have seen some of our peers being acquired, Karuna for $14 billion by BMS, Cerevel for $8.7 billion by AbbVie and where 1 of our closest peers Intra-Cellular is doing extremely and excitingly good at 14x their current sales of the only approved drug they have and with a market cap of $6.4 billion. But let's focus on Newron's performance in the last year and in the first few months of this year. And let's start with evenamide, our schizophrenia drug. We have reported a number of times, and I will make only a very short summary, and Ravi will give you a bit more details about those exciting, unique, never seen before results we had with evenamide in Study 14 and 15, a Phase II study, where we have shown over 6 weeks, 6 months and up to 1 year on all the important efficacy end points as an increasing level of efficacy, we have seen doubling, tripling of the number of responders and we have seen an extremely high compliance and loyalty of the patients to our drug, which is a clear sign of a very good safety profile. These results have been disclosed in 6 different points in time. And the last results have just been disclosed in the very first days of January of this year. This data have also been presented at a number of medical community conferences where there was no doubt about the clinical meaningful response that evenamide has created in TRS patients over all the time points. And these results or part of those results so far have also been for the first time disclosed in the peer review journal, the International Journal of Neuropsychopharmacology. And I can promise you that the next publication is already on its way. Moving to Slide 5. Based on those exciting results we have seen and the exciting response by our investors and the pharma companies through our potential partners. Our intention is to start the pivotal study, the one and only pivotal study that it would need to get this drug approved in treatment-resistant schizophrenia as soon as possible, and Ravi will show to you our concept and our ideas on how this study will look like. But short term, that means within the very few next weeks and the guidance is April of this year, we will report to you from the second indication in which we are actively developing evenamide. Those patients who are not yet treatment resistant, but who see insufficient benefit from their current schizophrenia treatments. We will show to you the results from the first pivotal study called 008A with evenamide at 30 milligrams bid in those patients. These results will trigger a partnering process and will take us into a partnership with a pharma company than supporting the pivotal study in TRS. Moving to XADAGO, our Parkinson's drug, which was the compound around which Newron effectively was created 25 years ago, you know that we have taken this drug to the market over all the regulatory and development hurdles. And this drug is on the market since 2015 in Europe and 2017 in the United States. We lately had seen some generic companies filing Paragraph IV notices and we can report that with our partners, Zambon and Supernus, we have successfully reached agreement with those generic producers which will keep them from launching generic drugs until the end of 2027. In Europe, the supplementary protection certificates have been approved in most territories of relevance, and we are pursuing those countries in which they are still open and we are confident that we will successfully complete that process soon. And that means that the European patents would stay valid until 2029. On the corporate level, moving to Slide 6, we had a number of promotions taking Laura Faravelli to the position of Vice President, Business Development; and Roberto Galli, our long-term Vice President Finance has been moved and promoted to Chief Financial Officer. And importantly, we also have 2 new entries into the Board of Directors, Gillian Dines, already appointed as a Nonexecutive Director at the AGM of last year; and Margarita Chavez joining us as an adviser in October last year, now being appointed -- now being nominated to be elected as a Nonexecutive Director at the upcoming shareholders' meeting on April 17, '24. So you see new members in the management and in the Board and a clear highlight with females with high strong track record in the industry joining the team. Very lately, just Thursday and Friday last week, you have seen that we have cleaned our financial position. We are in a strong position now with no repayment obligation to European Investment Bank for another 1.5 years. And with a new investor putting between EUR 5 million and EUR 15 million into the company. And the important message here is, look, we are all prepared for the pivotal results to come, and we are funded well into next year to take care of all the challenges and the positive outcomes that could result. Thus resulting are the company highlights on Slide 7. The portfolio of company compounds is XADAGO and evenamide. XADAGO, we have mentioned it already. It is for investors, just a permanent and steady royalty stream. It's growing. It has been growing last year with more than 10%, very good news, and it will go on until 2029. But the real changing event is going to be evenamide because we do not only offer a new mechanism of action in treatment-resistant schizophrenia, but also completely innovative positioning. This would be the 1 and only drug besides and beyond clozapine, which is a massively underused treatment in treatment-resistant schizophrenia with 90% to 95% of TRS patients today not being treated with drugs that have shown scientifically -- scientific evidence of efficacy. We are looking for additional compounds to broaden our pipeline as we go. And there's no need to mention again that we are awaiting massive news flow. The Phase III results in non-TRS and execution of a licensed transaction and the start of the pivotal study, the one and only pivotal study in TRS later this year. The management has taken [indiscernible] to the market. Ravi Anand, our Chief Medical Officer, has taken a handful of drugs to the market in Novartis, [indiscernible] former positions, and we have already covered the funding. We are well funded into 2025 given the restructuring of the debt with EIB and the fresh money taken on board from an institutional investor last week. Let's move to evenamide, which is a game changer in schizophrenia. We are talking about a very large market. You know this is about 1% of the global population wherever you go. And just to mention that half of that population up to 0.5% of the global population need to be considered as treatment resistant. The current market with more than 30 trucks approved is characterized best by saying there has been no innovation for more than 25, almost 30 years. And all those drugs, even if they have some benefits accompanied by massive side effects like pound weight gain per week, sexual dysfunction, hormonal changes. And the need for patients according to the KT study to change their medication after every 18 months. There is clearly a massive need for a drug with a completely different and disconnected mechanism of action, which in fact is the reason why FDA has not approved a single add-on therapy in schizophrenia so far. All drugs currently work by the same mechanism of action. Here comes evenamide with a completely disconnected and different mechanism of action. It's the 1 and only drug that works by a glutamatergic mechanism. It is the perfect add-on therapy with additional efficacy and no incremental side effects of relevance. It changes nonresponders into responders. The doctors, the patients, the families and the social system do not have the risk of relapse of hospitalization and increased suicidality because the patient can stay on his current medication. He just takes an additional drug with additional benefits and no incremental side effects. Perfect add-on drug. Evenamide, in fact, could still qualify to be the first add-on drug in schizophrenia. But even more importantly, and that's our focus in the further process towards regulatory approval is this could be the 1 and only drug beyond clozapine in patients with TRS. I mentioned it, it is between 30% patients in TRS who are diagnosed today up to 50% of patients talking to doctors every second of their patient will qualify for TRS having failed on at least 2 other compounds from different background in schizophrenia. It not only offers a large opportunity of TRS, but there is a very small niche indication of those 30,000 patients in the United States who are treatment resistant to the 1 drug approved clozapine that we could keep and carve out in a license process and keep to ourselves, which would, on its own, be good for about $150 million to $200 million sales in the United States. So what do we have to offer and show to you today? We do already have positive results from a Phase II in non-TRS patients. And as I mentioned before, the results from the pivotal study in non-TRS are expected within April, so within the next few weeks. In TRS, the indication of focus, we are having results from that very exciting 161 patients Phase II study with ever-increasing efficacy from 6 weeks to 6 months to 12 months with ever increasing doubling, tripling number of responders and a very high patient compliance during the study. This drug in TRS could be approved based on 1 positive pivotal study. It also has before formal approval, the chance to be approved for early market access. So in the U.S., in territories like France and in the U.K., this drug could reach patients where before it was formally approved. The commercial exclusivity is defined by the composition of meta patent globally, which is running until 2033. And in the European Union, as you know, we qualify for 10 years data exclusivity. And assuming that this drug would be filed in mid-26 and on the market in early '27. That means that the exclusivity would go until 2037 early in the year. On Slide 9, you see the 3 indications that evenamide covers, each of them is a major market opportunity. You know no drug on the market in schizophrenia will usually sell less than $1 billion. And if you go for the surrounding the cluster indications, bipolar depression and whatsoever, it can be a multiple of that. There is no direct competition to evenamide as it would be the 1 add-on treatment. It is the 1 and only drug with glutamatergic mechanism and clearly, it has the potential to change the treatment paradigm of schizophrenia. The first population are those who are not yet treatment resistant. That is the 1 indication that we are pursuing, where we have Phase II results, the Phase III results are coming in a few weeks' time. Up to 70% of patients who have a need every 18 months on average to switch their medication. What we say is do not switch from 1 to another antipsychotic with the same mechanism of action with the same class of side effects just as soon as the efficacy fades away, add our drug on top. For the first time, those patients will have an alternative to the classical switch of medication, no relapses, no hospitalization, no increased suicidality. That's the promise in that indication. The middle one is the TRS indication, the 1 that we focus on for a number of reasons. Our regulatory strategy. It would be the 1 and only treatment for TRS and beyond clozapine, 30% to 50% of patients. And it would be the 1 treatment the market would be wide open to us. We have market research that proposes that within a few months' time, we should cover 30% of the population. And the third indication that is the small niche indication that I spoke about within that large indication of TRS, there's that very small part of the population, 30,000 patients in the U.S., mostly East and West Coast states, mostly in the veteran and state hospitals. People have to come in every 2 weeks for blood tests, people who are in the clozapine treatment registry of those 30,000 patients who are treatment resistant to clozapine, we could cover that on our own with a very small commercial team. And that all said, I hand over to Ravi to guide you through our findings in TRS in Slide 10.

Thank you, Stefan. Good morning to folks in the U.S. and good afternoon to people in Europe. So I'm going to start about making a couple of general comments about evenamide before we get into specific data. Newron and its investigators and advisors are truly excited about the potential of evenamide because it represents the first drug in over 30 years that is targeting treatment-resistant schizophrenia, has positive data, although in a Phase II trial, and acts through a very different mechanism, which science has been advocating for a long time as being the principal reason why patients show resistance to antipsychotics. Evenamide is unique in its structure. It doesn't resemble any existing antipsychotic in its pharmacology because over 130 different neurotransmitters, enzymes, transporters that are usually targeted by CNS drugs have been looked at, and it doesn't touch any 1 of them. The proposed mechanism for use is going to be as an add-on treatment. To the best of our knowledge, there is no compound currently marketed in garden-variety schizophrenia or in treatment-resistant schizophrenia that has an add-on use. And this will be the first compound that could get this possible indication. Why are we so specifically excited? Because some of the findings which we have from this 161 patient open-label study for 1 year are truly remarkable. In any study in patients with schizophrenia, approximately 10% of the patients experienced psychotic relapse, while on medication over a period of 1 year. In this study, of the 161 patients who were on medication, not 1 relapsed. This finding alone if replicated in a Phase III pivotal study would be adequate to meet requirements for a positive health technology assessment. One of the key requirements for an add-on treatment is that it must be very well tolerated. What we see here is a drug which has no extrapyramidal side effects, no endocrine side effects, no propensity to target the liver or the kidney. There is no weight gain. There is no sexual dysfunction reported to date. There are no real remarkable CNS side effects that we could hang our hat on. So it looks like it's very well in tolerated. And as a consequence, as I'll show you, there are very few patients who drop out due to side effects. What are the usual problems with antipsychotic drugs? The one which most health authorities are worried about is the risk of QTc prolongation. We have done the study, which is a thorough QTc study and that shows that compared to placebo, there is no risk of QTc prolongation. We've also done further evaluation of the type of effect it produces and it can be classified as an anti-arrhythmic Class 1B. But in addition, we have looked at all the patients we have in clinical trials, they do not show any evidence of a systematic increase in QTc. We're fairly confident of the safety, although one needs to have a very large number of patients. But as a number of patients, we have currently exceed 500 and are increasing every day. 120 of these patients have already completed 1 year of treatment. All the tox studies that are required for registration have been completed, submitted to health authorities with no request for having [indiscernible] study any further. We only need to do a carcinogenicity study, which in the old days used to be a 2-year study done in 2 rodent species, but now in discussions with FDA, CHMP in Canada, it will be only 1 study of 6 months duration in genetically modified mice that will be required. And for Europe, we would need to do the ERA studies. One of the major successes that we have had is in discussion with health authorities is that keeping in mind the very high medical need, the significant increase in morbidity and mortality in TRS patients and the fact that there is no other treatment available, one potentially pivotal study of long-term duration placebo controlled, if it is fully positive will be adequate to file a registration dossier and could be approved on the basis of that 1 study and supportive data. Moving on to Slide 11. Let me talk to you about the design of the study and the data that we have in the Phase II study. This is a placebo -- sorry, this is a non-placebo-controlled study, which is rater blinded, 3 doses, initially 6 weeks duration and then patients continue on up to 1 year, all patients had to meet criteria for treatment resistant schizophrenia. And the criteria are listed on the right-hand side. I will not bother to go through that. All patients were on an antipsychotic to which they were not responding. So treatment-resistant schizophrenia, history, plus they're on an antipsychotic on which they are still very psychotic, and these were the criteria that got the patient into the study. The efficacy measures used in this study are the same standard ones used for trials anywhere. The study was performed in India, Italy and Sri Lanka. Unfortunately, the commencement of the study almost coincided with the pandemic, greatly limiting the opportunity to extend it to other countries and also to a certain extent, affecting some of the patients who dropped out because they couldn't come for visits. Moving on to Slide 12. That shows you in one glance what happened in this study. There were 161 patients who were randomized. At 6 weeks, 153 completed 6 weeks. This is a very high number, well above 90% completion. Usually in schizophrenia, we have a 20% to 30% dropout rate by 6 weeks. Out of these patients, 144, again, well above 90%, chose to continue on treatment and only 9 declined to continue any further, mainly because they didn't want to come back or visit during the pandemic. Of these patients, 144, 132 went on to complete 6 months of treatment and then 121 completed 1 year of treatment. So it's a very high completion rate. And as you can see, the number of patients who dropped out due to adverse events were only 2. And 1 patient unfortunately died after having been 6 months in the study, no side effects, had shown tremendous improvement, but as happens in schizophrenia, you can have sudden death. What does this slide tell you? First of all, if a patient was having side effects, neither the caregiver nor the patient would agree to come back for visits again and again. So the very high completion rate tells us, first of all, that the patient is tolerating the drug well. The next important takeaway message, again, is a tentative message, is the drug must be doing something. Patients with treatment-resistant schizophrenia who are not doing well are unlikely to continue on a medication which is not giving them some benefit. So already, we can understand from this slide, the drug is very well tolerated and is definitely producing some benefit. Going on to Slide 13. This probably explains why we have seen some of the phenomenon in the Phase II trial. So as you can see from this slide, the patients who entered the study has positive and negative syndrome scale score of about 80. Let me put that and translate that. Usually, a patient in treatment-resistant schizophrenia studies would have a cover of about 90. Why is this around 80? Because all these patients are on an antipsychotic. If the antipsychotic was not there, it probably would be approximating 90 and above. At 6 weeks, when we first saw the results, the improvement was about 12%. And that's underwhelming and I was tending to think very well, this maybe just about a placebo change. But when we looked at the 6-month results, we found a very peculiar phenomenon, very exciting one, though. The patients had further improved. And looking at 1 year, they almost come up to about 20% reduction in the store. Why is this so remarkable? Because in schizophrenia, the conventional wisdom has been that patients improved by 4 weeks to 6 weeks, maybe 8 weeks. But subsequently, there is no further improvement. Here, it seems like the drug is producing a benefit that continues to increase over time. And we don't have data beyond 1 year, but it looks like it might even go further than that. Moving on to Slide 14. And this is explaining to you the responder analysis. So in treatment-resistant schizophrenia, the hurdle level is at a 20% improvement in the PANSS score from baseline. What we saw was about 15.5% of patients met the 20% reduction in criteria at 6 weeks, not very exciting. But when we come to 6 months, what we saw was that this number has more than doubled. And this was, again, telling us something that the patients who have not improved at 6 weeks now went on to improve at 6 months. But also those who had improved at 6 weeks held on to their improvement. But by the time they got to 1 year, this phenomenon was much more pronounced. We had over 40% of the patients meeting this criteria. So this is really exciting that even if a patient is not responding early, if they stay on evenamide and they follow the instructions, they will continue to show improvement, and they can have a benefit even as late as starting at 1 year. Now these results are also replicated for other efficacy measures in Slide 15, which is the clinical global impression of severity of illness. This is not a scale like where we count points. But this is done by clinicians looking at how the patient seems like. Is he able to address himself, is he be able to talk cogently, does he know he's fit, where is he? And again, we see at baseline, the score is 4.5, 4 means moderate, 5 means moderately severe. So the patient is between moderate and moderately severe. And as you saw in the previous slide, over time, we continue to see an improvement. And by the end of 1 year, the patients have dropped 1 full level in the severity rating. If we now go to the next slide, where we look at the responders for the severity of illness, and we decided to raise the hurdle level, not to look at minimal improvement only, but at least 2 category improvement from baseline. In other words, if a patient was severely ill, if they were now moderately severely ill, they wouldn't count, but only if they went down to moderate. So 2 categories of severity should be improved by and we again see the same phenomenon, whereas from 10% at week 6, they come to about 24% at 1 year. On Slide 17, you see another analysis for another measure, which is the clinical global impression of change. In this, we usually consider people responders who are minimally improved or much improved. And in this one, the only stuff to go through are much improved. So we have about 24% improving at 6 weeks. But as time goes on, by the time of 1 year, it's up to 37%. The 37% of the patients are much improved compared to the baseline value. And last but not least, on the right-hand side, you see the level of functioning scale, which is the scale which looks at activities of daily living and how the patient is able to function as the score is improved, meaning the patient is functioning better. On the next slide, we show you analysis, which is very unusual and that is hardly ever reported for any other drug. Sorry, you see that this is Slide 18. These are the criteria which we use to diagnose the severity of treatment-resistant schizophrenia at baseline. Patients have to meet all these criteria to get into the study. And as time goes on, you can see the number of patients who meet those criteria keeps on going down. If you look at the last row, where we look at all these criteria together, it is amazing to see that almost 50% of the patients no longer meet the criteria for treatment resistance. In other words, we have responded to evenamide treatment to such an extent that looking at their severity scores on the different measures, they could no longer be considered as treatment resistant. This led us to doing another analysis which is to look at how many of these patients have really, really done well, which would mean remission. Remission in schizophrenia is virtually never reported because hardly ever a trial shows patients going into remission. This means the patient now have a level of symptoms that does not interfere with his functioning in the community and would not lead him to a diagnosis of schizophrenia. The requirements are fairly stringent. The improvement has to be clinically important and should last for a minimum of 6 months. Why is this important? Because patients who meet the 6-month criteria, the rational symptoms tend to have a much better long-term outcome. When we did this analysis of the patients we had in this study, as shown in Slide 20, there are 2 sets of criteria that are considered for remission, Lieberman et al in '93 and the later one Andreasen in 2005. The 2005 criteria are the most stringent one. So we choose to show you those. And what we see is that 25% of the patients are meeting criteria for remission. That means their levels have dropped to a certain -- such an extent they no longer meet the criteria for treatment resistant and they no longer would have been diagnosed as schizophrenic based upon the current level of symptoms. So this is a phenomenal finding, and we hope that we get an opportunity to replicate that in the next slide. These results have been very important for us because it means now we really need to do the next potentially pivotal placebo-controlled study which is shown on Slide 21. This is the 1-year placebo-controlled study that we have discussed with CHMG, got their agreement, got the agreement of the FDA for the design of the study. Patients who are treatment resistant would be required to meet the international criteria for treatment resistant. They must have documented failures to at least 2 different antipsychotic drugs. They would be on another antipsychotic at a steady dose in the therapeutic dose range. They would be meeting the criteria for severity, the ones I showed you before. These patients are to be -- write informed consent. They would go to the basic interview, and we will take plasma levels of -- in the blood to measure that they were really taking the drug they said they were taking and at an adequate dose. This would be repeated at least 1 more time before the patient comes to baseline 42 days later to make sure they're still continuing to take their background medication. All these data in the first 42 days would then be going to an independent eligibility assessment for international, which would be independent of Newron, CRO investigators. These experts would decide whether the patient meets the criteria or not. We then basically randomize the patient to evenamide or placebo. We would make the first primary assessment at 12 weeks. At that point, the requirement would be basically that they have to meet the criteria for the PANSS, mean change and a key secondary measure, which will be the CGI of severity. During this period, also we will be taking blood levels to make sure they are taking the previous medication and they're taking study medication that can be measured. The next assessment would be at 26 weeks. Patients who complete 12 weeks would not go out of the study. They would continue on whatever drug they were taking and the study medication. And then we will be doing the second assessment at 26 weeks. If this is also positive, it's a major win for us because we have agreement with CHMP that if both these endpoints are met, we no longer need to perform a relapse prevention study. And then patients will continue on to 1 year, which will be assessment of long-term efficacy, but also gives us a chance to look at relapses, et cetera. So we are very hopeful that we basically get to start the study towards third quarter of this year, take about 1 year from enrollment. And then the first assessment will be done 12 weeks later, allowing us to file for the submission for the first 12-week endpoint, basically sometime in '26 midyear and get an approval in '27. So with that, basically, I complete the talk on evenamide. And I turn it over to my colleague, Roberto Galli, for safinamide.

Thank you, Ravi, and hello to everybody. So I have to admit that safinamide after this presentation from Ravi looks quite boring. It was the first approved new chemical entity about 10 years ago, and Newron licensed it in 2011 and in 2012, worldwide, to Zambon and to Meiji Seika. And right now, what we are earning from safinamide is double-digit royalties or single-digit royalties depending on the market. And so far, we have collected more than $80 million in milestone and royalties. And as we'll see in a couple of slides royalties increased significantly. In the next slide, I mean, you know that we are listed at SIX and we are also traded at XETRA. Outstanding shares at the end of December 2023 were 17.8 million, of which managers and directors held 0.6%. Outstanding options and derivatives were 1.1 million and 1.9 million, respectively. And the difference between those 2 numbers are the warrants that we granted to EIB. I want to say hello and thank you to all our analysts, so to Leonildo, to Samir, to Bob and to Soo because of their help and friendship with us. So far, what I can also tell you is that our biggest shareholder is Zambon that holds more than 40%. So we can move to Slide 24. As said before, royalties in this year increased by EUR 800,000 or 13%, up to EUR 6.7 million. Research and development expenses increased as well and the reason is that we have a lot of -- we made a lot of activities to finalize the study of '14 and '15, the ones that provided data in 2013. And we also brought to the finish line study 088 that is supposed to report in the next coming weeks. The delta between operating loss and net loss is mainly due to the interest that we are paying to EIB and to a sort of, let's say, IFRS technicality related to the expense that warrants shown in the P&L, in the profit and loss account. Next slide is about balance sheet and cash flow. So as you know, we have an R&D tax credit and at the end of 2023, it was up to EUR 8 million, out of which EUR 5.7 million were in the noncurrent assets, while EUR 2.3 million were reclassified in the current asset because we believe that we will use it in the next year on for 2024. Cash and other financial assets are around EUR 12.6 million, and current liabilities increased by more than EUR 20 million, EUR 22 million. But please keep in mind that this is the picture we had to took at the end of December when we were supposed to reclassify the current debt to -- among the current liabilities. But given that we signed an agreement with the first tranches will now be payable into November 2025. So those current liabilities are no more longer there. Taking a look also to the cash flow. Again, the first and the last bars includes not only the cash but also the financial assets. And what you see under working capital and other adjustments are the usual adjusted nonmonetary expenses or revenues and the movement in current receivable again and payables. So to the next slide, that is the number 26. We will have the next AGM in April 17, 2024 Official calls will be out in March 26, so next week Tuesday. You will be called to join us in the meeting in order to approve as usual, the Italian and the IFRS financial statements to appoint as a Non-executive Director and independent also, Margarita Chavez, for the remaining 2 years, 2024 and 2025. And therefore, the extraordinary part that is to amend Article 14 of the bylaws and this is a way to simplify or better to say give -- okay, to simplify the way in which the directors will be paid so the shareholders will approve a maximum amount and this maximum amount or the maximum amount has to be spread among the different directors. In this way, we will fix this procedure. Then we will also have 2 capital increases that could be exercised in the next 5 years. The first one, the 3% one is mainly related for option plan and the second one is a standard share capital increase. So looking forward seeing you at the shareholders' meeting, I think I'm done, and we can move to the question-and-answer section.

[Operator Instructions] The first question is from the line of Romanoff Soo from Edison.

I agree the sector and CNS in particular, are seeing positive trends in investor conviction. So it's nice to see. My first question, I'm glad to see the 008A study results, especially on the heels of encouraging 015 results. I'm mostly curious about the slight pushback in the timing. It's not much. I mean, it's from March to April, but just curious about that?

Yes. So this is Ravi. Let me answer your question. When we made the announcement of the completion of enrolment, it was based upon the feedback we had at that time of 290 patients that enrolled. Just when we made the announcement, we got a frantic message from Argentinian investigator, that actually, they have still 1 patient in screening who he had not heard from for the last week, 10 days, so he had presumed the patient that dropped out. But the patient's relatives called to say the reason he had not called in was because he was in the hospital, not seriously ill but severely ill enough not to initiate the study. The investigator tried to get the patient to drop out of screening. But the family and the patient absolutely were adamant. So this puts the pressure on me. On the 1 hand, we made the announcement to drop the patient. On the other hand, there is an ethical issue. Since he had already gone through a long washout period, met all the criteria. It seemed a little heartless to do that. So we allowed him. Unfortunately, he took about 16 days to start the randomized period. So originally, the plan was that since we had patients by first week of January all in, we would have taken 28 days of treatment, plus 7 days of the follow-up period, safety period, plus 6 weeks to database lock, which would have brought us towards the end of March, beginning of April. Now because of this delay, everything gets pushed back by another 16 days or so. But unfortunately, what happens, as you know, is that 1, even when 1 patient gets added in, you have to repeat all your safety updates and everything and all the tables. So taking that into account, there will be a slight delay. So instead of end of March, beginning of April, we will probably be going into, let's say, third week of April or so.

Yes, that's great. That's good news. For my second question is multipart. Could you confirm that the 008A study is registrational? And then assuming positive results, I think you're going to pursue NDA filing and commercialization with an outlicense partner? And then the last part is assuming there is a deal across all the indications, could we assume that the expenses will be picked up by the partner? I realize that these are a series of very sensitive questions. So any directional help would be great for us.

Sure. Let me answer the first question. The study has been designed as a potentially pivotal study. It's a placebo-controlled study of evenamide and placebo as add-on to a single antipsychotic. It includes, I think, about 12 different antipsychotics have been allowed, including clozapine. It has the same efficacy measures as you see in any pivotal study. The statistical analysis plan conforms to the state-of-the-art for statistics. So assuming that the results are positive, there is no reason why it would not qualify the registration study. And why that would not be supportive of the overall strategy that it would support a study of an NDA for treatment-resistant schizophrenia. I think I'll leave the second part of the question, Stefan, to you.

Yes. Thank you, Ravi. And thank you Soo for asking the questions and attending the call. So on our partnering strategy, it wouldn't make sense to license one indication and the other not which doesn't work in schizophrenia. What we are considering instead is that we are licensing either globally or we are licensing in a 2-step approach like the nonstrategic territories, and we would only regard the U.S. and Japan as being strategic. So we would start with the nonstrategic territories licensing. And then after results of the pivotal study in TRS towards end of next year, we would consider the opportunity to license the U.S. and Japanese rights. This 2-step process would possibly promise 2-step and a higher return to our shareholders. While I would admit that the global license right after results from 8A might enhance the broadening of the development into other indications like the bipolar depression and related indications, so it will be a balanced -- this decision in the end will be a balance between the offers and the strategic commitment of our partners in order to advance the development the fastest way towards the NDA filing. And it's impossible right now to make a prediction which 1 of the 2 concepts will win, we have interested parties for both, and that's the good news. I hope we will be able to choose in the interest of our shareholders the best deal on the table.

Yes. That makes sense. I mean it's kind of an area that hasn't really gotten a lot of attention, so that's positive. For my last question, I wanted to talk about the Phase III TRS program. I think we're still referring to it as Study 003 and is it on track to commence in the second quarter? And then to add to that, can you give me a sense of the cost? I think we've been looking at EUR 30 million to EUR 40 million? And then the last piece is -- yes, I guess just the cost would be great.

Yes. I can just tell you the study number. I mean we've had a lot of questioning of the study as we have all moved from 003 to 016 and now to 017, but the study remains the same. And it's the same concept that we had from before. The cost would be approximately about EUR 40 million, EUR 45 million.

And remember, Soo, the cost for that study is substantially lower than usually in pivotal studies or in monotherapy studies because our patients won't need to be hospitalized.

Yes. I mean it's a long study. I think it's going to be 3 years or something like that, so that makes sense.

No. No. I think the estimate, the guidance is that we would have results before next year is over. So the total duration, I think the math Ravi made is usually 1 year for getting all the patients in and then 12 weeks towards the primary endpoint for the U.S. authorities. So we should have those results before the 2025 is over.

Soo is talking about the long-term extension. Yes, that would go longer.

Yes. Okay. So we have to differentiate between time -- yes, sorry.

The next question is from the line of Bob Pooler from ValuationLAB.

Well, first of all, congratulations on Newron's 25th birthday, and you guys still have a lot of things on your plate I see there. And then also congratulation on the 2023 results. There, we saw a 49% jump in XADAGO, although [indiscernible] is boring, that's quite a jump there. I see that's particularly from the other income from contract with customers, what was the reason behind that from $0.1 million last year to $2.3 million in 2023? And is this a one-off?

Sorry, Bob. Could you repeat because I didn't get your question.

Yes, it's -- if I may, Roberto. The EUR 2.3 million is a onetime, Bob, indeed, and it is also paid by Zambon. And remember, we had a discussion with Zambon on the study in levodopa-induced dyskinesia. So this is the termination payment.

Termination payment for the PDS trial. Okay. Okay. And then on -- just going forward on the R&D spend is, of course, a little bit difficult because you will be starting, I think, the -- is it now called Study 16 or Study 17, the TRS study in Q3 this year?

16 or 17 is the same study, yes.

It was called also 3, if you want.

Yes, we called 3. What is now the official name, 17?

17, yes.

Okay. Yes. Just on the R&D spend, again, going forward because that's actually, I think, the largest trial or the only trial going forward that you have this year.

I don't have an answer frankly speaking, because it all depends on what we will find as a partner. So we might see a partner that will take over all the costs whichever they are, we might be in the situation to partially finance it. It depends. It depends on the partner. What we know right now is that even if a partner will take part of -- will finance the deal, whether that's the study, we would like to be the 1 on top of the study. So we would like to be the ones that run -- officially run the study because we want to be in charge of it because we want -- we have seen what -- we have seen what happens when you lose control. And then on to tell you on top that those costs, there is also some preparatory work for the start of the study because there are certain kinds of activities that needs a lot of time, so we'll have time wasting, and we have already started it. So that the partner will be ready to start immediately on the field.

Okay. Okay. And then just on, yes. And also what is also depend, of course, the partnering, the timing of the partnering that will still be before you start the study 17?

Absolutely, yes, sir.

Okay. So that will be for before Q3 this year, you expect to sign a deal?

Yes. Yes.

Okay. And then just -- again, on the -- you pick 2 agreements, either 1 straight off the global or otherwise a 2-step deal, which has your preference? Would it be the 1 that's the 2-step because that gives the most value?

Bob, it's very hard to say. As I said, we have to choose a global partner would be expected to expand into the other indications. And that might be the loss -- the best long and outcome for the drug and the royalties. But then the best terms we would probably get if we would do it in a staggered way because ultimately, the value of the compound will explode when it is ready for NDA and it has -- it still has the U.S. market and the Japanese market home with us. So there is very good reasons for 1 and the other it must depend on the profile of the partner, and it must depend on the terms on the table in the end and be assured that the best deal for our shareholders will win in the end.

Okay. But would it be fair to say that you'll wait until you have the results of study 008A?

Yes. I mean we have lined up all those parties. I think it's more than 15 months by now that everybody who is interested in schizophrenia, who should be interested or might be interested in schizophrenia is permanently updated. We have parties on the CDA. We have parties who have done their due diligence, who do rolling due diligence. We have a huge mix of different potential partners. That's why we are confident with positive results. Things can move very rapidly. And that is why we also are confident that then we might have term sheets that allow us to make a choice rapidly.

And then just coming back to Study 008A, that is a potential pivotal trial there? The approval if -- first of all, what would you like to see, what is needed to be seen for an approval, and I assume that would be an accelerated approval. When do you expect that could be approved and launched and the time lines there?

Bob, do you mean the 017 or 008A now?

008A.

I mean, obviously, I would like to see the sky and a very blue sky, but I would settle for statistical significance in the primary efficacy measure in the primary analysis and for the significance also the key secondary. I would like to see basically those 2 come out positive for sure. I mean that would be great news because this will be the first drug ever in schizophrenia to show a positive result in an add-on study, number one. Number two, in the study in which patients are not full responders. So that will be number two. And then last but not least, the first drug that has glutamatergic mechanism has prevailed over nonresponse in these patients. So I think -- I would just settle for the primary efficacy measure in the secondary, as I said, the side effect profile, I mean, touch wood, but we already know it's very, very innocuous and I hope that we will unblind the study, we continue to see the same. The dropout rate even in this placebo-controlled study, which is done in about, I think, 15, 16 countries is very low. So we are fairly confident of the safety. And then I think the pivotal study, 017, as I think I mentioned before, there are 2 sets of dates. One would be basically that we will file in '26 sometime second, third quarter for the FDA because that's contingent on the 12-week endpoint. And if once that is met, then we will probably file within 6 months of that. By the end of the year, we would definitely have filed.

Okay. Well, thank you, and fingers crossed for positive results for 008A.

The next question is from the line of Delgado Leonildo from Baader-Helvea.

I have 3 questions. The first 1 would be with regards to royalty income from safinamide. It was significantly up 13%, if I'm not mistaken. So what [indiscernible] growth? And is it sustainable? Should we -- can we project this into, for example 2024?

Leonildo, I guess you should make a positive projection to 2024 as you are limiting it to the royalty income and you exclude the onetime payment. We do see some exciting developments in Latin America and over Europe. So yes, there should be a positive trend in '24.

The second question is, could you please break down the potential scenarios of the Study 008A outcome and the implication on licensing discussions?

Yes, that's simple as well. Leonildo, we have 3 scenarios. One is the study is successful which should propel us ahead in our discussions. The second is obviously easy as well if there is a completely flat situation then our licensing effort will no longer be a Phase III licensing stage, but it will be a Phase II licensing stage. And that would have an impact on our licensing terms. And in a worst case, there might be a scenario that there will be no license, even if unlikely because remember that the pivotal study is 3x the patient population of a successful Phase II, the patients are substantially more severely ill at the Phase II, they were at a PANSS total of 62, now beyond 80. And in the Phase II, they also started very low dose with 7.5 bid and only went up to 25%, while this time, they started at 15 and went up to 30 milligrams. So we deem a complete failure of the study pretty unlikely, you can never exclude it. More challenging will be the scenario when the study doesn't come out significantly positive. And that is a scenario where we could argue that, that study is not really needed for approval of evenamide. It should have the safety data, it should have some supportive evidence. But we can go ahead and will go ahead with TRS, which is our regulatory strategy anyway for all the good reasons, you need 1 study only. You don't have to relapse prevention study, you can get the drug on the market prior to formal approval and you have the 1 and only drug in the market, quite honestly, because clozapine is frankly out of the market. So that is the scenario which we deem that we will have a license, but the terms would obviously not be as good as they would be in a successful scenario. I think that is where we are.

And my final question would be with regards to pipeline expansion because you mentioned this particular point on the press release. So how important is it to expand the pipeline before the pivotal TRS data is out? And so are you already thinking about using some of the proceeds from recent deals to basically expand the pipeline?

Yes. So we do have a business development effort, which is split #1 to find the perfect partner for evenamide. But continuously over the last years, we have also been looking for additional assets to the pipeline. And we do have some assets under review at any given time under CDA or not in due diligence or not. So you can assume that whenever we have the leeway, the resources and the funds to take on a compound, we will have another compound in the pipeline to develop because sustainability of a biotech company does not only depend on royalty stream, but also on the next compounds. So the intention clearly is that Newron goes on developing CNS drugs, and we are searching permanently. How much resources we will be able or we will have to spend on evenamide will again depend on the partner. Right now, at this point in time, our resources are focused on evenamide because we have to prepare the preparations for the TRS study in time and we have to, at the same time, get the results, the readouts from Study 008A. But that will then develop depending on the licensing partner.

The next question is from the line of Samir Devani from Rx Securities.

I'll try to be reasonably brief. So just on the -- I just wonder if you can just take us through qualitatively the performances that are go in the key territories. So obviously, U.S., Germany, I guess, Italy and the U.K., if you could just talk through that? And then the only other question I already had is just a clarification on a comment you made, Stefan, just on the IP protection in Europe. I just wanted to confirm, you said with SPC's protection to 2029, whether that was correct or not?

So Samir, the commercialization in the different territories is not in our hands, that is Zambon and Supernus and Meiji Seika. What I can tell you is if you look for the real -- the question, where does the money mostly come from? You remember that disappointingly, it is not the U.S. where the money is coming from. And that is due to a number of reasons, 1 being that we believe that the initial partner was not the right partner. And second, that the U.S. label has never made it to the same level of label as we had in Europe. Unfortunately, that has not changed. So the U.S. situation is something like 5% of the total revenues. What is very promising after corona, and that is really the reason why we see double-digit percent growth again in Europe. That is the performance we have in the classical countries like Southern Europe, and Western Europe and some fast-growing territories in Latin America. I will say that the U.K. is possibly 1 of the smaller tranches in Europe, while Italy, Spain, Germany are the most -- the strongest territories. And on the SPCs, what I can say is that the SPCs in 18 territories, if I remember correctly, have already been granted. And that means we have a few other territories going on where the process is either at the authority level or it is at a court level where we are fighting for the SPC to be finally granted. So far, we don't see any territory that would have a material negative impact on our financials. So there is, right now, no reason to be scared of any development here. We are confident that we will finally get all the SPCs in the key territories.

And just with the SPCs, the protections to 2029, was that correct?

Yes, yes, that takes us to 2029, sorry. Any other questions?

No, sir. That was the last question for today.

So thank you all for attending the call and for bringing up the questions. It was a pleasure to update you. And we can only say please stay tuned. The next few weeks will be very exciting, and we'll love to have you back for the next update with those results. Have a good day, and talk to you soon. Bye.

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