Poxel S.A. (POXEL) Earnings Call Transcript & Summary

[Audio Gap] [Operator Instructions] I now hand over to Thomas.

Thank you, Nicolas. Hey, everyone, and good morning, good afternoon. Thank you for joining us today. I'm Thomas Kuhn, the CEO of Poxel. After my introductory comments, highlighting our key achievements of 2022 and early 2023, I will go into the details of today's announcement where we did our debt restructuring and a new equity linked financing. And I will give you an update on the recent trend of TWYMEEG sales, our lead product. I will then review the full year 2022 financial results. Before leaving the floor to David, our Chief Scientific Officer. David will provide an update on our clinical pipeline and will then conclude and open the call for questions. Before we begin, this is our forward-looking statement. Forward-looking statements are subject to inherent risks and uncertainties beyond the company's control that could cause the company's actual results or performance to be materially different from the expected results or performance expressed or implied by such forward-looking statements. Further information can be found in our most recent registration. So let me start with the key financing update. Given the momentum of TWYMEEG sales and the potential of our development pipeline, we are pleased that we have significantly extended our cash runway for 2 years through Q2 2025 based upon a successful restructuring of our debt combining with the new equity linked financing assuming a full drawdown. This debt restructuring agreement postpones initiation of repayments until Q1 of 2025 at the latest to be repaid with positive net royalty flow to Poxel anticipated to start in Sumitomo Pharma’s fiscal year 2024 based on the strong growth trajectory of TWYMEEG sales. Concurrently, we also announced today that we finalized an equity-linked financing with IRIS with an initial drawdown of EUR 3.5 million. We are really satisfied that we have finalized this important step for the company's progress. We now have more financial flexibility that we can build on to secure additional financing options including our ongoing active partnership discount rates to our programs with the ability to pursue our strategic plan in rare diseases. This past September marked the anniversary of the first year of commercialization TWYMEEG of an our first approved drug for type-2 diabetes patients in Japan. We have observed a strong growth trajectory in sales in the past few months, 90% over the last quarter that led our partner to increase its full year 2022 forecast by 20%. The strong growth trend also gives us better visibility on our future royalties and the royalty rate, which we expect will increase to 10% during Sumitomo Pharma's fiscal year 2024. Regarding our clinical development program in rare disease of Adrenoleukodystrophy, our first indication of Phase II proof concept studies for PXL770 and PXL065 are prepared to initiate, subject to additional financing. During the year, we substantially added to the regulatory designations for our rare disease indications for ALD in the U.S. but also in Europe, orphan-drug designations were granted to both PXL770 and PXL065 and a fast track designation also granted to both in the U.S. For Autosomal-dominant polycystic kidney disease that we call ADPKD, the FDA granted orphan drug designation to PXL770. Additionally, our preclinical results in ADPKD were published in a contribution to Kidney International, and these results support development of PXL770 as a Phase II clinical program in ADPKD. In Asia, 2022 was a very important year as we reported positive results from our Phase II DESTINY-1 study. In that trial, PXL065 met its primary efficacy endpoint with liver fat content reduction for all those that are statistically significant and demonstrated -- and we demonstrated a strong improvement in fibrosis without worsening of NASH, which as you may know, is an FDA approval endpoint and represents a key unmet medical need for this disease. We presented these Phase II results at the Annual American Association for the Study of Liver Diseases, AASLD in November. Our Late-Breaking Abstract was selected by AASLD as one of the best of the liver meeting for 2022. These letters were also recently published in another prestigious journal, the Journal of Hepatology, a review by nature concluded that a safer prioritize alternative is a [indiscernible] We continue to believe that the NASH field that represents a large and underserved opportunity. We recognize the landscape in NASH field remains a changing environment due to large investments required to run the Phase III trials. However, there have been several positive developments in NASH over the past few months, including with the recent news as of yesterday, along with our positive readout and it is very encouraging for the field, as there is no improvements here for patients. Organizationally, we continue to execute upon the saving plan we initiated in 2022, which include a significant workforce reduction. This saving plan aims to adapt the company's resources to the current clinical development plan while preserving critical resources and competencies. As part of this saving plan, we have also decided to resize the Board to 4 current members from 8 as of today. The Board members who are stepping down will transition to a new Board advisory committee that will continue to assist us. So today we issued, as we all know, a separate press release to announce the details of finalized agreements with our lender and with IRIS. We are very pleased to have announced that important step for the company's course. Indeed, thanks to the successful restructuring of our existing debt and the new increased equity-linked financing facility, our cash runway is now extended 2 years through Q2 2025. This debt restructuring has been felicitated by TWYMEEG strong growth trajectory, providing increased confidence that TWYMEEG royalties will generate substantial future cash flows. In those agreements with our lenders, IPF and the banks with whom we contracted French government guaranteed loan that we call PGE loans here in France, amortization payments under the existing debt facility are postponed to reinitiate when the company expects to start receiving positive net royalties from TWYMEEG sales in Japan expected Q1 2025 at the latest under [indiscernible]. Before the end of Sumitomo fiscal year 2024 ending March 31, '25, Poxel expects TWYMEEG net sales in Japan to reach JPY 5 billion, enticing Poxel to receive 10% royalties on all of TWYMEEG net sales and a sales-based payment of JPY 500 million. Positive net royalties and sales-based payments will be directed to the debt reimbursement until the loan is fully repaid. The company expects the PGE loan to be fully repaid in Q2 2028, and IPF to be fully repaid in Q2 2029 at the latest. After this time, subsequent net royalties and sales-based payments will revert back to the company. Culturally, we entered into a new equity-linked financing arrangement with IRIS. An initial amount of EUR 3.5 million has been drawn down. At our sole discretion, we have the option to draw additional tranche for up to a total of EUR 15 million over 2 years. The total outstanding amount held by IRIS will not exceed EUR 7 million at any time. We now have more financial flexibility that we can build on to secure additional financing options, including ongoing active partnership discussions related to our program with the objective to pursue our plan in rare disease. So let's move now to some commercial updates on TWYMEEG. As you can see on the next slide, here on this one, we have observed a strong growth trajectory in sales in the past few months, 90% over the last quarter, that's on the left panel. That led our partner to increase its full year 2022 forecast by 20% on the right panel. Based on the latest results, it's very likely TWYMEEG results will exceed the new forecast results by Sumitomo of EUR 1.8 billion. In this slide, I'd like to remind that TWYMEEG is an important addition to Sumitomo existing #1 diabetes franchise through its differentiated dual mechanism of action and favorable efficacy and safety profile. As I mentioned earlier, this past September marked the anniversary of the first year of commercialization of TWYMEEG, our first approved drug for type-2 diabetes patients in Japan marketed by Sumitomo Pharma, the leading companies -- the leading diabetes company, sorry, in Japan. TWYMEEG is 18 months into launch now and Sumitomo is recording sales significantly above their forecast for the following reasons. The number 1, the 1-year prescription restriction now lifted as well as easing COVID restrictions. Second reason, the key positioning in Japan market, given TWYMEEG dual mechanism of actions. Indeed, by highlighting the potential for [indiscernible] linked to this dual mechanism action, TWYMEEG can be prescribed as add on to any type-2 diabetes therapy and as a monotherapy. There have been increasing combination use with DPP4 inhibitors, but also more recently with SGLT2 inhibitors. DPP4 inhibitors are the most widely prescribed therapy class of type-2 diabetes patients in Japan. SGLT2 inhibitors and more and more prescribed in Japan, given the additional benefits, specifically on clinical action. Third reason, the strong sales and marketing infrastructure from our partners, Sumitomo. Fourth reason, Sumitomo continues to be very actively promoting the product at conferences and through additional publication all this contributing to adoption and raising awareness about TWYMEEG uses. Last but not least, reason, Sumitomo is running extensive medical affairs and Phase IV clinical activities to support the product commercialization, specifically to strengthen the product positioning in patients with limited treatment options, such as the elderly and renal [indiscernible] Sumitomo's Phase IV study targeting type-2 diabetes patients with chronic kidney disease, CKD 3b / 4 and 5 from moderate to severe, is nearly fully enrolled. The strong growth trend also gives us better visibility on our future royalties and royalty rate. For Sumitomo fiscal year 2023, so ending March 2024, Poxel expects to receive 8% royalties on net sales. Before the end of Sumitomo fiscal year of 2024 ending March 2025, Poxel expects TWYMEEG net sales in Japan to reach JPY 5 billion, entitling Poxel to receive 10% royalties on all of TWYMEEG net sales and sales-based payments of JPY 500 million. Beyond 2024, Poxel expects to receive escalating double-digit royalties as well as additional sales-based payments upon achievement of contractually [indiscernible] sales threshold. As a reminder, in accordance with the Sumitomo license agreement, Poxel is entitled to receive escalating royalties of 8% to 18% on net sales of TWYMEEG and sales-based payment of JPY 26.5 billion so approximately EUR 200 million. As a reminder also as part of the Merck Serono licensing agreement, Poxel will pay Merck Serono a fixed 8% royalty based on the net sales of Imeglimin independent of the level of sales. Going to the next slide. As part of our refocusing of our activities, we reviewed the organization of the Board and decided to resize the Board as of March 21, to 4 current members. Khoso Baluch as a new Chairman of the Board, Pascale Boissel and Richard Kender as independent members and myself. Existing Board member, Pierre Legault, Janice Bourque and Kumi Sato will transition to a new Board Advisory Committee, along with the former Director, John Kozarich, and he will continue to provide the expertise to assist the company in all its activities. Let's now review the financials for 2022. Let me start with the revenue. Revenue for 2022 reflects JPY 95 million, so roughly EUR 0.67 million of royalty revenue from Sumitomo Pharma, which represents 8% of TWYMEEG net sales in Japan. Poxel reported revenues of EUR 13.4 million for the year ending 2021, which mostly reflects the JPY 1.75 billion milestone payment from Sumitomo Pharma triggered by the June marketing approval of TWYMEEG in Japan. Going to the income. As we have seen our revenues in 2022 mostly reflect royalty revenue from Sumitomo Pharma, which represents 8% of TWYMEEG net sales in Japan. As we report the cost of sales, Poxel will pay Merck Serono a fixed 8% royalty based on the net sales of Imeglimin in accordance with the Merck Serono licensing agreement. As a company, the majority of our resources are allocated to research and development activities. In 2022, R&D expenses amounted EUR 13.9 million as compared to EUR 27.5 million in 2021. R&D expenses in 2022 and 2021 primarily reflects the clinical study costs incurred for the Phase II Destiny study evaluating PXL065 in NASH. To a much lesser extent, they also reflect some preparing costs for the proof of concept studies for both PXL770 and 065 in AIs. After R&D tax credit has resulted in income of EUR 1.4 million in 2022 as compared to EUR 2.3 million in 2021. Net R&D expenses totaled EUR 12.5 million in 2022 as compared to EUR 25.2 million in 2021. General and administrative expenses amounted to EUR 9.4 million in 2022 compared to EUR 10.6 million in 2021. The financial loss, excluding foreign exchange revaluation, amounted to EUR 9.7 million in 2022 as compared to EUR 2.1 million from in 2021, sorry. It mainly reflected the interest attached to the company's indebtedness, including interest on IPF as well as the exit fees fully recognized in the P&L in 2022 but only due at [indiscernible]. The net result for the financial period ending December 31, 2022, was a net loss of EUR 13.4 million as compared to a net loss of [ EUR 3.8 million ] in '21. Moving to the assets. Intangible assets amounted EUR 16.6 million at year-end 2022, a similar level to year-end 2021 and mostly reflecting the DeuteRx portfolio acquisition in 2018. Cash and cash equivalents amounted at EUR 13.1 million at December 31, 2022, compared to EUR 32.3 million in 2021. The change in cash of EUR 19 million reflect 2022 cash burn from operations partially offset by EUR 3 million cash in -- from financing activities. This EUR 3 million reflects the EUR 6 million from IRIS financing, partially offset by debt and interest payments. Moving to shareholders equity and liabilities. So total shareholders equity amounted to EUR 18.2 million for the year-end in 2022 compared to EUR 8.2 million at the end of 2021, which mostly reflects the 2022 net loss. Total financial liabilities amounted to EUR [ 44 ] million compared to EUR [ 35 ] million at the end 2021, most reflecting EUR 32 million of the IPF debt, EUR 6 million of the PGE loan and EUR 4.6 million of IRIS financing related to its nonconverted loans at December 31. The cash flow from operating activities amounted to EUR 21.8 million in 2022 compared to EUR 16.9 million in 2021. The cash flow from financing activities amounted to EUR 3 million in 2022 compared to EUR 9 million in 2021, mostly representing the IRIS equity-linked finance. So I was just releasing our press release, based on the debt restructuring announced today, on our cash position at the end of 2022 the loan available under the new equity linked financing results, current R&D plan, excluding initiation of the Phase IIa clinical proof-of-concept studies for both PXL065 and 770 in ALD and a strict control of our operating expenses. We expect that our resources will be sufficient to fund our operation and capital expenditure requirements through Q2 2025. In parallel, we are actively pursuing additional financing options including ongoing active partnership discussions related to our programs that we fund -- that will fund, sorry, the launch of Phase IIa clinical proof of concept studies for both PXL770 and 065 in adrenomyeloneuropathy. This chart summarized our pipeline. David will come back in all details on this. Just to summarize. Last September, we announced the positive top line results from PXL065 Phase II Destiny 1 trial. In U.S. and Europe, PXL770 and PXL065, were granted orphan drug designation. In the U.S., fast track designation was granted for both PXL770 and PXL065 for the treatment of ALD, designed to expedite development of pharmaceutical products, which demonstrates the potential to address unmet medical needs in serious or life-threatening conditions. A drug with fast track designation are eligible to apply for accelerated approval and priority review at the time of a New Drug Application submission, which may result in a faster product approval. PXL770 was also granted orphan designation for kidney disease called Autosomal dominant polycystic kidney disease [indiscernible] . So David will now summarize our development effort in our rare disease and NASH. David?

Yes. Thank you, Thomas. I'll now update everybody on our R&D activities, starting with our rare disease programs. So let me start with AMP kinase activation. PXL770 is our novel AMPK activator, the first such molecule to be studied in any human disease. And as this slide depicts, AMPK has the potential to improve many disease processes and PXL770 has produced substantial efficacy in multiple disease models, including those for NASH, diabetes, diabetic nephropathy and ALD. Most recently, we see compelling benefits in polycystic kidney disease, which I'll share with you shortly. The clinical development to date has demonstrated target engagement and translation of several disease-related efficacy parameters to humans, suggesting the likelihood of broader translation for this mechanism. And preclinical and clinical safety have also been very favorable with more than 200 humans exposed for 12 weeks. So let's review again, adrenoleukodystrophy or ALD. ALD Is a neurometabolic disease caused by mutations in the ABCD1 gene encoding a key fatty-acid transporter that results in accumulation of very long-chain fatty acids or VLCFA, which leads the damage of neurons. As an X-linked disease, males are more severely affected, and ALD is also now frequently diagnosed based on recent and broad-based adoption of newborn screening. Thus, the prevalence of ALD is similar to hemophilia, about 20,000 in the U.S. alone. Patients with ALD typically have progressive and debilitating spinal cord degenerating or adrenomyeloneuropathy, AMN, and also frequently develop severe brain lesions. We are committed to targeting ALD, which is a very serious disease without any approved pharmaceutical therapy. And based on the strong rationale for AMPK in ALD, we developed preclinical data for PXL770, which demonstrates substantial efficacy potential, both in patient-derived cells and in the classical animal model, the ABCD1 male mouse. These data were also published last year and a similar set of robust preclinical data for PXL065 have also been generated and also published in 2022. Based on all the preclinical and clinical data we have for both platform leads, we are planning to initiate 2 parallel and identical Phase IIa biomarker-driven POC studies, one with 770 and one with 065. We have open U.S. INDs, Orphan Drug and Fast Track designation for both molecules. The team is now fully prepared to initiate both trials which will enroll adult male patients with adrenomyeloneuropathy, the most common form of ALD. Each trial will enroll up to 12 or 24 adult male patients with AMN. Following a run-in period, patients will be treated for 12 weeks with 1 or 2 oral daily doses of either molecule. Readouts will include PK, safety and measurements at several time points of key disease-related biomarkers. The LCFA and neurofilament light chain, both of which are validated as disease associated. Additional exploratory biomarkers will also be assessed. Following analysis of these results, we should be able to choose the preferred molecule for further advancement into a pivotal trial to begin as soon as possible. We remain excited to pursue treatments for ALD as this represents an area of extremely high unmet medical need. It also provides substantial commercial opportunity given premium pricing for orphan drugs with similar prevalence. And the ALD community remains very engaged, and we have established relationships with key opinion leaders and collaborations with important patient advocacy groups. Let's now turn to ADPKD. ADPKD is an orphan inherited form of chronic kidney disease and its prevalence is about 140,000 in the U.S. ADPKD also has very high unmet medical need, more than 50% of patients develop end-stage renal disease, and only 1 drug is approved, tolvaptan which is associated with modern efficacy and substantial safety and tolerability challenges. The pathophysiology of ADPKD involves altered kidney metabolism and several publications cited here provide strong rationale for AMPK activation as a therapeutic approach. With the recently completed preclinical assessment of PXL770 in ADPKD, we've seen compelling benefits, and this Phase II ready asset has also garnered significant interest from potential partners. PXL770 produced strong suppression of cyst formation in 3D in vitro assays on the left panel. And in an established in vivo rodent model, we saw a normalization of kidney function and robust reductions in kidney size and cyst area in the middle and right panels, along with other improvements in kidney histology as well as target engagement. These results were published last month, as Thomas mentioned, in Kidney International. Validation of AMPK and ADPKD also adds value and creates optionality for PXL770. Preparations for Phase II and regulatory interactions are now ongoing. Let's now turn to a clinical update of our NASH program. Starting with a recap of recent results of our Phase II DESTINY 1 trial in NASH with PXL065, which is as I'll remind you, our NCE deuterium-modified R-stereoisomer of pioglitazone. Please also recall that PXL065 lacks significant PPR gamma activity but retains NASH efficacy in animals via its actions on nongenomic pathways. The rationale for studying 065 in NASH is largely based on a large body of literature with [indiscernible] molecule, pioglitazone, which has shown robust efficacy in biopsy trials noted here. I'll also call your attention to PO's benefit on fibrosis, the greatest driver to progression of more severe liver disease. Despite the strong degree of efficacy and recommendations to prescribe PO off-label, side effects like weight gain and edema preclude its widespread use in NASH. The DESTINY 1 Phase II trial was designed as a streamlined Phase III enabling approach as part of our 505(b)(2) pathway for overall development. 117 NASH patients randomized into the 4 groups noted here and treated for 36 weeks. Primary endpoint was relative change in liver fat content and biopsies in noninvasive tests were also evaluated with the aim of generating data that could inform the potential for later -- to later achieve established NASH regulatory requirements for initial approval. In this study, all PXL065 groups met the primary endpoint and up to 40% achieved a relative reduction of greater than or equal to 30% in liver fat content. We also observed improvements in ALT biomarkers of fibrogenesis and fibrosis risk scores, which included Pro-C3, P3NP, L, FIB-4 and NFS, which are not shown on this slide. Although the Phase II study was not powered for histology benefits, improvements in several parameters derived from the biopsy results were noted. In particular, 35% to 50% of PXL065 treated subjects achieved greater than or equal to 1 stage fibrosis improvement versus 17% with placebo. This is a substantial effect on fibrosis, and pooled results are shown on this slide where PXL065 improved fibrosis in 39% treated patients versus 17% with placebo. In comparison to reported data with other contemporary NASH development candidates, the efficacy of 065, in other words, the delta above placebo appears to be potentially superior. Importantly, the DESTINY 1 trial results also successfully addressed the hypothesis that PXL065 would have substantially reduced PPR gamma-driven side effects. No dose-dependent weight gain or increases in edema were observed. Nor were there any other potential PPR gamma related adverse effects like anemia. Overall, PXL065 was very well tolerated with a safety profile that supports late-stage development. As Thomas mentioned, results from the DESTINY 1 trial were presented at AASLD in November, and the complete data were also published earlier this month in the Journal of Hepatology. We're also very happy to see that this has engendered positive reviews including public statements from KOLs and in a recent comment published in Nature shown here. In summary, the DESTINY 1 trial met its primary endpoint and achieved other objectives including the demonstration of histologic effects that included a strong reduction in fibrosis. Other metabolic benefits were also evident HbA1c and insulin sensitivity improvements. Moreover, we achieved our goal of showing that PXL065 has reduced potential for PPR gamma-driven side effects and a good safety profile overall. Therefore, PXL065 is a differentiated NASH development candidate with a competitive profile that could also be complementary and well suited for use in combinations with other agents such as Madrigal's Resmetirom or others. And we're actively working towards further regulatory interactions for a potential pivotal Phase III program, subject to ongoing partnership discussions. I'll now turn it back -- the presentation back to Thomas to wrap it up. Thank you.

Thank you very much, David, for the careful presentation of our programs. So to summarize, 18 months of commercialization in Japan as confirmed remains a strong growth trajectory as demonstrated by the 90% revenue increase over the prior quarter leading to Sumitomo to increase its full year 2022 forecast by 20%. The debt restructuring that we announced earlier today has been facilitated but remains a strong growth trajectory, providing increased confidence that TWYMEEG royalties will generate substantial future cash flows. This debt restructuring, along with the new equity-linked financing facility significantly extends our cash runway by 2 years through Q2 2025. We're actively working to finalize other additional financing, including ongoing partnership discussions to be able to advance our rare disease strategy starting with our [indiscernible] This year has also been important for Poxel development as we continue to build the value of our assets focused on rare diseases and NASH. In rare diseases, we are prepared to launch the ALD proof of concept studies, subject to additional funding, which is our key priority. In ALD, for both assets, 770 and 065, we added valuable regulatory designations, orphan drug in Europe and U.S., and fast track designation in the U.S. The completion of clinical studies in ADPKD makes PXL770, a Phase II-ready program with orphan drug designation. For PXL065, IP portfolio has been elemental with a new U.S. patent, which provides additional protection through 2041. In NASH, the year has also been important for positive development as we completed our Phase II study for PXL065 and reported positive results that opened the way to further development with potential partners. While the landscape is challenging, there have been several positive developments in NASH over the past few months, and it is very encouraging for the field as there is still no approved medicines for patients. So as a conclusion, I'd like to remind that Poxel's mission and vision remain to discover, develop and commercialize innovative therapies for patients suffering from serious chronic and rare diseases with underlying metabolic pathophysiology. To fulfill our mission, our objective is to apply our strong and capabilities to build and strengthen the value of our assets focused on rare metabolic disorders and NASH. I want to thank our talented employees for their incredible energy and dedication during very challenging times. I'm so grateful to the patients and physicians who participate in our clinical trials. And lastly, of course, I would like to thank all of you for your continued support as a shareholder. We look forward, of course, to updating you on our progress. This closes the session today, thank you for being with us. And we will now open up the Q&A session. The moderator will provide instructions. Thank you very much.

[Operator Instructions] So first, we have a question from [indiscernible].

Okay. Thomas, David. I have 2 questions. First of all, on NASH. You've probably seen the Phase II study results from 89bio yesterday, and I see a pretty strong statistically significant fibrosis improvement in NASH resolution data. About half a year ago, there was also Akero with positive Phase III study. So I was wondering how you look at this in light of your own data and how do you see this impact your own ongoing partnership discussions? And secondly, on the AMN program, your clinical data looks pretty strong, and also the funding amounts needed for these initial proof-of-concept studies are rather limited. So I was wondering if you can share some feedback from discussions you had or you're having with potential partners and to what extent the approval of Skysona in the second half of last year for CLD makes companies and investors perhaps hesitant to step in for these programs.

Thank you very much, David, for your question. So first, going to NASH. Yes, we've seen indeed the results from 89bio yesterday. So for the persons in the call, 89bio and Akero are developing a similar class of product the FGF21. As you said, David, this is really nice data showing really concerning the efficacy of this class of product on both endpoints, NASH resolution and fibrosis improvement. So overall, I think this is really positive for the field. And that's why we mentioned that -- as you know, they were in the past, a setback in NASH, and now we are seeing much more favorable trends. And so all this is basically contributing to a more favorable environment for NASH, which is, of course, positive for us. It also gives you confidence. I think to companies willing to enter NASH I believe this indication could be successful. And the opportunity remains intact because as we all know, there is no approved product as of today. So to answer your question, I don't think -- I think it's a positive for our partnership discussion because as I said, it can really strengthen potential partners really targeting NASH that anyone can be positive in the field there. We have a very differentiated product compared to 89bio and Akero, new mechanism of actions, different mechanism of action. The unique properties compared to these 2 products is that we have an oral product, whereas they have injectable products. And we all know that for NASH as for diabetes, benefiting from an oral product is much more interesting. They have very good results, but injection required for the patients. With the safety liabilities associated with data, and we've seen basically the same tolerability and safety profile between the products. Compared to 065 now showing a very clean profile, we believe that this is really interesting for 065. And then the last piece I'd like really to mention on why we remain really confident for 065 is that being fully differentiated from others our product could be combined with any other product. And of course, starting with resmetirom from Madrigal because our product showed, as David mentioned, very strong improvement in fibrosis, whereas resmetirom really showed very good results in NASH resolution. So combining the 2 could be really effective to target the 2 key endpoints for NASH plus additional benefits, glucose effect and sensitizing effect for 065 and lipid effect for resmetirom. So the combination potential is there. And overall, I think it's positive for the field to have more solutions to come there. There is a desperate need really to have a solution for patients suffering from NASH. And I think we view this as another positive milestone with regard to our NASH development going forward. David, do you want to add anything on this?

Yes. The only other thing I was going to say about 89bio, I think they have very good results. Their quantitative effect on fibrosis is pretty much exactly the same as Akero reported. And coincidentally, it's pretty much the same as what we achieved as well. Now our p-value was 0.06 in the DESTINY 1 trial for the dose that had the greatest efficacy on fibrosis. And that's because we intentionally designed a study with a smaller sample size that was not fully powered for histology benefits. But we're able to rely on the 6 previous biopsy studies done with the parent molecule, pioglitazone, where there was evidence from those studies of very robust effects on fibrosis as well. So we feel very confident that our effect on fibrosis that we've seen with 065 is real and will translate in Phase III to a robust effect. So that's the only other thing I wanted to add on NASH. Maybe your other question, David, was regarding ALD and the approval of Skysona from Bluebird. I could take that, Thomas, if you'd like. We think that there is increasing interest in ALD from potential partners and investors. And Skysona really doesn't hurt us in any way. It actually helps. That product is approved as an ex vivo gene therapy exclusively for patients who are younger patients, adolescents and children with new onset, very early stage onset of cerebral adrenoleukodystrophy, which is a subtype of ALD that we're not specifically targeting right now. We're targeting the more common form, which is adrenomyeloneuropathy, the more adult onset form of spinal cord degeneration. So there's completely independent indications here, and we also have the potential, we think, in the future to potentially target cerebral disease in patients who would not be eligible for a product like Skysona or for the older version of that, which is somatopoeticem cell transplants. Does that address your question, David?

Yes.

And maybe to ask on this last answer from David, I think, of course, it's a very important really for the patients and the kids also suffering from this very severe disease. But also as David mentioned, it raise awareness on ALD. And I think we've been very active in discussing with the patient association. And we know that there is really a big, big unmet clinical need there, and we'd like to contribute to this. And of course, our curative as I mentioned during my speech, is really to continue our financing options. And now that our debt overhang is behind us, we believe we could successfully close other financing options that could, of course, lead to really resuming our activities and our clinical studies in India, so more to come on this.

We received also several questions from GMP Securities. So the first one, do you expect to receive the sales milestone in the fiscal year ending in March 2025 and will the milestone also go to pay off the loans.

So we -- in our assumption, and of course, we based our restructuring agreements with our lenders based on the conservative case. So I did mention the 20% increase on the sales guidance that Sumitomo has communicated and we believe it could be more upside. But so to be on the safe side, we based our assumptions on -- we have a conservative case there. So the first sales-based payments, we believe we should get it in Sumitomo fiscal year 2024. So this is really the first answer to the question. And then to answer the second question, until a full redemption of the debt, all the royalties and the sales-based milestone, and it could be several, will go indeed -- will contribute to the reduction of debt.

The second question from GMP Securities is what happens to the debt obligation if TWYMEEG sales don't hit the target to go to the 10% royalty rate.

So again, as I said, we've defined a way forward based on a conservative case assumption. So we believe that given the trajectory of TWYMEEG, you know that we could fulfill this sales obligation. And actually, we really believe that TWYMEEG sales will surpass actually this low, conservative case there. If that's not the case, of course, we will really need to rediscuss with our lenders because this could be [indiscernible] for us.