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

Hello, everyone, and welcome to this live webcast on the occasion of the release of the half year financial results of the company, Poxel. So today, we are pleased to welcome Thomas Kuhn, Chief Executive Officer; Pascale Fouqueray, Vice President, Clinical Development, Regulatory Affairs and Fanny Bosa, Vice President, Finance, who will give you an insight on the financial results over the course of the first half of 2023 of the company. During the presentation, you can ask questions and the questions are below your screen on the right. The management will address them at the end of the presentation. Thank you, everyone. I'm now giving you the floor to you, Mr. Kuhn.

Thank you very much. Good morning, good afternoon, everyone. Thank you for joining us today. I'm Thomas Kuhn, the CEO of Poxel. And I'm today with Pascale Fouqueray in charge of Clinical Development and Regulatory Affairs at Poxel and with Fanny Bose in charge of finances at Poxel. After my introductory comments and a brief summary of our first half 2023 corporate and business update, Fanny will review our half year 2023 financial results before leaving the floor to Pascale to go through our rare metabolic disease programs opportunities. I will then conclude, and we'll open the call for questions. Before we begin, this is our forward-looking statements. 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 regulatory filings. So let me start with a summary of the first half highlights. As announced in March, we have significantly extended our cash runway for 2 years through Q2 2025 based upon the successful restructuring of our debt concurrently with the new equity-linked financing, assuming a full drag. This debt restructuring agreement postponed initiation of repayments until Q1 2025 at the latest to be repaid with positive net royalty flow to Poxel anticipated to start in Sumitomo Pharma fiscal year 2024 based on the strong growth trajectory of TWYMEEG. Concurrently, we've also implemented an equity-linked financing with IRIS, which full drawdown would provide us a cash visibility until mid-2025. This has been an important step for the first months of 2023 and for the company's progress. Since then, we've been fully focused on working on additional financing options, which include partnership discussion related to our programs, for which we have very active discussions about the objective to pursue our strategic plan in rare disease. As mentioned, the sales of TWYMEEG, our first approved drug for type-2 diabetes patients in Japan has showed a strong growth trajectory in the past few months with a 23% growth over the last quarter. Current Sumitomo forecast for its 2023 fiscal year would imply a 90% gross sales over the full year of 2022 and give us confidence in the timing of royalty rates increase to the next threshold being 10%, which we expect to happen before the end of Sumitomo Pharma fiscal year 2024. Regarding our clinical development programs in rare disease and in NASH, during this half year, we have continued preparing the ALD plan with Phase II proof-of-concept studies that are ready to launch, pending additional financing, which we are actively working on. We are very proud to have been chosen as the winner of the 2023 edition of the I-nov contest financed by the French state for a program in ALD. This is a great recognition of our program and the work of our teams and the grant will contribute in part in the financing of this Phase II POC studies. In parallel, we've also finalized the Phase II and Phase III plan for PXL770 for the treatment of autosomal dominant polycystic kidney disease, ADPKD and met progress in the design of the pivotal program for PXL065 in NASH. As a reminder, the plan for PXL065 in NASH is to move forward with a partner and discussions have been initiated following the results of our successful Phase II DESTINY trial that we released at the end of last year. In line with our commitment towards patients, we've pursued our involvement with ALD patient associations, including with the Alex Leukodystrophy Charity, which hosted its community weekend in April and with the United Leukodystrophy Foundation, which organized a Scientific Symposium and Family Conference back in June. Organizationally, we continued to execute upon the saving plan we initiated back in 2022, which includes the significant preservation to 15 employees as of today. The saving plan aims to adapt the company resources to the current clinical development plan while preserving critical resource and competencies, specifically to execute our rare disease plan. We've also decided to resize the Board to 4 current members. So let me now go into more detail. As mentioned earlier, we finalized agreement with our lenders and with IRIS in March, and this has been a very important step for the company's products. Indeed, thanks to the successful restructuring of our existing debt and the new equity-linked financing facility, our cash runway is now extended through mid-2025. In both agreements with our lenders, IPF and the banks with whom we've contracted the PG loan, which is a French government guaranteed loan, amortization payments under the existing debt facility are now postponed to reinitiate when the company expects to receive positive net royalty flows from TWYMEEG sales in Japan, which is expected in Q1 and 2025 at the latest under conservative forecast. As a reminder, what we call positive net royalties are all royalties that Poxel received from TWYMEEG net sales above 8% as the first 8% had paid to Merck Serono in accordance with the licensing agreement we have with them. Therefore, net royalties will be positive for Poxel. Once TWYMEEG royalties and net sales percentage will reach 10% and above, which will occur when net sales exceed JPY 5 billion in the fiscal year. According to the current forecast, we expect to reach this threshold before the end of Sumitomo fiscal year 2024, so ending -- end of March 2025. And positive net royalties as well as sales-based payments will then be directed to the debt reimbursement until the loan is fully repaid. We expect the PG loan to be fully repaid in Q2 2028 and IPF to be fully repaid in Q2 2029 at the latest, again, better than conservative forecast. After this time, subsequent net royalties and sales-based payment will be brought back to the company. Concurrently, we entered into a new equity-linked financing arrangement with IRIS, an initial amount of EUR 3.5 million has been drawn down. And since then, 2 additional tranches of EUR 600,000 have been drawn in May and in June. At our third, this question, we have the option to draw additional tranches for up to a total of EUR 50 million over 2 years with the same condition that the total outstanding amount held by IRIS will not exceed EUR 7 million at anytime. With more financial flexibility, thanks to restructuring and equity-linked financing, we've been focused since then on securing additional financing options, including ongoing active partnership discussions related to our program with the objective to pursue our plan in rare disease. I'll get back to this in a minute. This debt restructuring has also been facilitated by TWYMEEG strong growth trajectory, providing increased confidence that TWYMEEG royalties will generate substantial future cash flows. Moving to the next slide, I will go into more detail on this sales trajectory. So as you can see, we've observed a very strong growth trajectory in sales in the past few months. Full year 2022 sales have exceeded Sumitomo Pharma forecast by more than 20%. And based on this Sumitomo Pharma full year 2023 forecast will represent a 90% growth over 2022. Based on the current forecast and conservative assumptions, we expect 8% royalty and net sales for the 2023 Sumitomo fiscal year. We then expect 10% royalty and net sales as well as the sales-based payment of JPY 500 million, so roughly EUR 3.4 million during the Sumitomo Pharma fiscal year 2024, upon reaching JPY 5 billion threshold, net sales, which is roughly EUR 34.4 million. Beyond 2024, we expect to receive higher escalating double-digit realities as well as additional sales-based payments upon achievement of contractually based sales threshold. Moving to the next slide. TWYMEEG is an important addition to Sumitomo existing #1 diabetes franchise through its differentiated dual mechanism of action leading to a favorable efficacy and safety profile. Today, it has a key positioning in Japan, thanks to its dual mechanism of action. Indeed, it can be prescribed and it's mainly prescribed as a therapy to any type-2 diabetes therapy, but it can also be prescribed as a monotherapy. There have been an increasing combination use with DPP4 inhibitors, but also more recently with SGLT2 inhibitors. DPP4 inhibitors are the most widely prescribed therapeutic class for type-2 diabetes patients in Japan and SGLT2 inhibitors and more and more prescribed in Japan, given the additional benefits, specifically in [indiscernible] inhibitor. TWYMEEG benefits from Sumitomo strong sales and marketing infrastructure. Additionally, Sumitomo continues to be very actively promoting the product at concurrencies and through additional communication, which is contributing to the adoption and raising product awareness. As an example, 9 abstracts based on Imeglimin Phase IIb and Phase III clinical trial were presented at the 66th Annual Meeting of the Japanese Diabetes Society held in Kagoshima in Japan in May 2023. As you may know, a Phase IV 52 weeks open-label long-term study of Imeglimin and Japanese type-2 diabetic patient with renal impairment is currently ongoing in Japan to strengthen TWYMEEG profile in this key subpopulation as well as in the elderly population and the topline results for this trial is expected in 2024 -- roughly mid-2024. For territories not covered by our agreement with Sumitomo, we are having discussions with various potential partners for Imeglimin commercialization in several countries. These countries are not in Europe or in the U.S., but include, for instance, India where local companies have received approval and have launched Imeglimin in monotherapy only. We'll, of course, keep you informed if we've reached the point of establishing agreements. Moving to the next slide. As mentioned earlier, during the first half, we pursued our corporate selling plan initiated in 2022 with the aim to adapt the company resources to the current clinical development plan while preserving critical resources and competencies. The company workforce has been rightsized. The organization of the Board has also been reviewed and is now composed of 4 members, Khoso Baluch as our new Chairman of the Board, Pascale Boissel and Rich Kender as our important board member and me. I will now leave the floor to Fanny, who will review the financials for the first semester. Fanny?

Thanks, Thomas, and good morning, everyone. So I will now review the financials for the half year 2023. So starting with the revenue on the next slide. So revenue for the first half of 2023 reflects JPY 148 million or EUR 955,000 of royalty revenue from Sumitomo Pharma which represents 8% of TWYMEEG net sales in Japan. Based on the current forecast, we expect to receive 8% royalties and TWYMEEG net sales in Japan through the Sumitomo Pharma fiscal year 2023, so from April 2023 to March 2024. And as you know, as part of the Merck Serono licensing agreement, Poxel will pay Merck Serono fixed 8% royalty based on the net sales of Imeglimin, independent of the level of sales. So moving to next slide. As we have just seen, our revenue in the first half mostly reflects royalty revenue from Sumitomo Pharma. And as reporting cost of sales, we paid Merck Serono a fixed 8% royalties based on the net sales of Imeglimin in accordance with the Merck Serono licensing agreements. So as a biotech company, the majority of our resources are allocated to research and development activities. And in the first half of 2023, the R&D expenses amounted to EUR 19.3 million, and they include primarily the impairment of PXL065 for amount of EUR 16.6 million. So this is a purely technical impairment aiming at being compliant with our accounting rules. It takes into account the company's need to obtain additional financing to pursue its development plan in NASH or ALD, its current market capitalization and the macroeconomic context in which it operates. However, we consider that the potential of PXL065 in its targeted indications in NASH and also potentially rare diseases remains unchanged and very promising. So depending on the evolution of ongoing financing initiatives and decision for a partnership for PXL065, the company will reassess the value of PXL065 at the end of the year. So the rest of the R&D expenses are decreasing in line with the company savings plan. R&D expenses are net of the R&D Tax Credit, Crédit d'impôt recherche in France. So that resulted in an income of EUR 300,000 for the first half of 2023 as compared to EUR 900,000 for the corresponding period in 2022. General and administrative expenses totaled EUR 4.3 million for the first half of 2023. So similar to the corresponding period in 2022. The financial loss amounted to EUR 3 million for the first half of 2023 compared to EUR 1.2 million during the first half of 2022, and it primarily reflected the interest attached to the company indebtedness. So to conclude on this slide, the net result for the financial period ending June 30 was a net loss of EUR 26.2 million as compared to a net loss of EUR 13.4 million in the corresponding period in 2022. So moving on to the next slide now with our assets. So intangible assets amounted to EUR 19,000 at the end of June. So -- and it -- as I said, it primarily reflects the impairment loss for the entire value of the PXL065 assets. Our cash and cash equivalents amounted to EUR 7.6 million at the end of June as compared to EUR 13.1 million at the end of December 2022. The change in cash reflects the cash burn from operations, which is partially offset by the IRIS financing. So moving on to the next slide with our liabilities. So total shareholders' equity amounted to minus EUR 25 million at the end of June as compared to minus EUR 18.2 million at the end of 2022. And the variance mostly reflects the H1 2023 net loss, partially offset by a capital increase due to IRIS conversions. The total financial liabilities amounted to EUR 47 million compared to EUR 44 million at December 2022. And it mostly reflects EUR 33 million for the IPF debt, EUR 6 million for the PD loan and EUR 6.4 million for the IRIS financing related to nonconverted amounts at the end of June. So following the debt restructuring in March and even the postponing of capital repayment, the full PD and IPF debts have been classified as insurance liabilities at the end of June. So moving now to the statement of cash flow. So the cash burn from operating activities amounted to EUR 7.8 million for the first half of 2023. That compared to EUR 13.3 million for the first half of 2022. The cash flow from financing activities amounted to EUR 2.4 million at the end of June, similar to the previous year and mostly representing the IRIS equity-linked financing. So based on our cash position on June 13 amounting to EUR 7.6 million, the full drawdown of the tranches available under the equity-linked financing with IRIS, the current research and development plan, which did not include the initiation of our Phase II clinical POC biomarker studies for PXL065 and PXL770 in ALD and a strict control of the company's operating expenses. We expect that our resources will be sufficient to fund our operations and capital expenditure requirements through Q2 2025. Thank you for your attention, and I will now hand over to Thomas.

Thank you very much, Fanny. So as you can see, this chart summarizes our pipeline showing the 3 pillars of our strategy: rare metebolic indications, NASH and type-2 diabetes. To further strengthen the opportunity in NASH with PXL065, in July 2023, the European patent office granted Poxel a new patent for PXL065, which describe a specific form of PXL065 with unique properties. This recently shown patent provide additional protection through 2041 with the potential for an additional 5 years through patent term extension. In 2022, as a reminder, we were granted the same patent for PXL065 from the U.S. patent office. I suggest now we go to the rare metabolic disease programs and Pascale will summarize our developments. Pascale?

Thank you, Thomas. Good morning, everyone. So I will now provide you an update on the 2 main rare metabolic disease that we are working on with our compound PXL770. So next slide, please. So as you may remember, so adrenoleukodystrophy is monogenic in rare metabolic disease resulting from a mutation in the ABCD1 gene. This gene encodes for a peroxisomal transporter, which is responsible for the transfer of the very long chain fatty acid in the peroxisome. And as they can't be degraded into the peroxisome, the VLCFA will accumulate in the cells, including normal cells. So because ABCD1 gene is located on the next chromosome, the main are affected by the disease, although [indiscernible] may develop also the symptoms later in life and with milder intensity. So the ALD prevalence is around 25,000 patients in the U.S. and overall worldwide 5,000 -- 500,000 patients. The diagnosis of ALD is often delayed. It's a difficult diagnosis, but it should be facilitated by the development and the spreading of newborn screening program. X-linked ALD is characterized mainly by 3 core clinical syndromes depending on whether it affects the brain or the spinal cord within the central nervous system. So the rapidly progressive leukodystrophy or cerebral ALD affects the white matter leading to cognitive and neurological disorder, and it occurs with the first peak of incidents in children roughly age 8 to 10. And the slowly progressive myeloneuropathy or adrenomyeloneuropathy is due to spinal cord neuron degeneration and develops gradually in adulthood with mainly get disturbance, spastic paraparesis and sphincter disturbance. But at any time, adults with AMN can also develop the serious cerebral form. Last, the primary adrenal insufficiency will occur in almost all subjects during their life span. On the next slide. So the PXL770 is a direct AMP kinase activator. It is the first molecule to be evaluated in clinical pathology and AMP kinase is an intracellular energy sensor, which promotes metabolic and functional adaptation of the cells to their energetic environment. We have shown that AMP kinase activity is depressed in several pathological condition like NASH, diabetes, ALD and ADPKD. And so the pharmacological activation of AMP kinase with 770 can restore various pathways, which explains its potential in the above-mentioned disease. So this slide illustrates the pathophysiology of ALD on the left part and the beneficial effects that are triggered by AMP kinase activation, including the decrease in the fatty-acid pool, the increased expression of the rescue transporter, the ABCD2 from the same family then ABCD1 and some broader effects of improving mitochondrial dysfunction, reducing inflammation and self suffering, which are all key components of the disease. On the next slide. So we have extensively investigated the effect of 770 in vitro on the left panel and also in ABCD1 null mice. And we have observed this strong decrease that you can see on the left panel in VLCFA after treatment of patient cells with 770, but we observed also this effect in plasma and also in spinal cord from the genetic null mice. And this was associated as well with improvement in the histological structure of motor neuron here in sciatic nerve as well as improvement in the locomotor capacities of this mice. And all the results that we have shown here with 770 have also been observed with PXL065 and the data collected with the 2 compounds have been published in 2022 into different journal. Next slide, please. So here on this slide, it shows that we previously let in 770 in NASH indication, first in preclinical setting and also in 2 different clinical trials, Phase II trial. And we demonstrated PXL770 effect on steatosis, on inflammation and insulin sensitivity and glucose control in animal models. So this beneficial effect were recapitulated in vitro in human cells and also in patient during the clinical trial. So the good translation of preclinical data into clinic for these metabolic and liver parameter, confirms good predictability in this animal model for this target. So this gives us more confidence on the potential of 770 for other indications, such as the ALD or the ADPKD for which we have put together a strong preclinical package. On the next slide. So in ALD, there are a limited number of molecules that are currently in development in ALD and the 2 most advanced candidates are the leriglitazone in the middle. This is a metabolite of pioglitazone with a strong PPAR-gamma activity. And on the far right, the product from Viking Therapeutics, a thyroid beta receptor agonists. So the leriglitazone pivotal trial in AMN subject did not met its primary endpoint on the 6-minute walk test, the regulatory endpoint, but there were some favorable trends on secondary criteria or in subpopulation of subject. And most importantly, the study tend to show that the leriglitazone could delay the occurrence of the cerebral form of the disease, which is currently under a more specific clinical investigation. On the Viking compound, it's in Phase Ib in AMN subject. The preclinical data confirmed a decrease in VLCFA in genetic models, the less magnitude compared to 770 and without reported information on histology or functional benefit. Next slide, please. So we plan to initiate 2 parallel identical studies, 1 week 770 and another one with 065 to validate the preclinical data, relying mainly on biomarker. These are short studies of 12 weeks. So as a reminder, we also have an IND for the 2 compounds as well as Fast Track and Orphan Drug Designation in this indication. So the clinical team today is ready to initiate the studies, which are expected to enroll 12 to 24 subjects with AMN and treat them for 12 weeks with one or the other molecule and the study will evaluate pharmacokinetics, safety and activity on key biomarker, the VLCFA of course, and also the neuron filament light chain marker of neuronal else plus other and biobanking. So on the next slide, please. We keep working on the design of the pivotal study considering the natural history of AMN, the lessons learned from the leriglitazone development from the patient's voice on their daily burden and, of course, on the regulatory constraints. So we are here contemplating the option to look for a conditional accelerated approval using the postural boots we test unpriced endpoints. So it's a surrogate endpoint, which is more sensitive to capture the balance issues experienced by the patient. And this first part will be continued with the second part to reach the regulatory endpoint, the 6-minute walk test. Of course, we will also address multiple secondary criteria, biological, neurological, aging as investigated. We are also working now on the duration, the sample size, eligibility criteria and other key aspects for business. Next slide, please. So developing new treatments in such a rare disease where there is no treatment could generate a lot of value for the company as the medical need is huge and the number of candidates is quite low. So it's also a significant commercial opportunity considering the high price that has been obtained, other rare disease is of roughly the same prevalence. The PXL770 has reached proof of clinical efficacy in this indication. This data are expected to translate into efficacy based on the good translation of sales previously in NASH indication. So we are ready to move into clinical proof of concept. We are continuing to work in the next -- on the next step with the support of our [ call ] and being still in contact with the patient association. Next slide, please. So we change disease, and so we move to ADPKD. So ADPKD is the most common genetic disease. It's affecting roughly 140,000 patients in U.S. roughly the same prevalence in Europe, and it's leading to a stage of renal failure in more than 50% of the affected subject are in their 50s. So the disease is characterized by the uncontrolled development of cyst formation from the [indiscernible]. And so the cyst will fill up with fluid and will keep growing leading to those enlarged kidney as you can see on the slide, with inflammation and fibrosis affecting the residual parenchyma. So there is only one drug that is currently approved, the tolvaptan. It's inhibiting the vasopressin receptor in the kidney. So it has been shown to attenuate disease progression, but its use is limited due to the serious liver safety and the poor tolerability linked to the intense criteria, part of the mechanism of action as it most impact nephrogenic diabetes insipidus. So they are on the right path, multiple documented rationale for targeting AMP kinase in ADPKD. [indiscernible] AMP kinase is expeted to have both disease-specific effect by acting on cyclic AMP, the enter pathway, the CFTR channel which have been shown to be involved in cyst proliferation and through its secretion. But also on broader effect, increasing the number and the function of mitochondria, so correcting the mitochondrial dysfunction and also limiting inflammation injuries and fibrogenesis. On the next slide. So we evaluate the effect of 770, again, both in the in vitro 3D cyst growth model and in genetic animal with conditional PKD1, the main gene affected. So PKD1 gene dilution, this is one of the main -- not the only one, but one of the main gene involved in the disease. So the PXL770 suppress in vitro 3D cyst growth in a post-dependent manner, as you can see on the left graph. In mice, we can see significant reduction in kidney weight as well as in the cysts that are observed here, you can see that on the picture. And this was associated with an improvement in histological parameter as well as in renal function, as you can see in the middle panel. So all those data have been recently published in Kidney International. We are currently working on the development plan in this indication, and we are contemplating the option to initiate a lean proof-of-concept study evaluating the capacity of 770 to decrease the total kidney volume as a marker of target engagement before moving into a pivotal trial, and the objective of this pivotal trial would be to apply for conditional accelerated approval using the total kidney volume as a surrogate endpoint and to confirm this effect on the renal function using slope of the estimated [indiscernible] rate with the goal, of course, to delay the progression to end-stage renal disease and the initiation of dialysis or transportation. Next slide. So the development of new treatment in a rare disease like ADPKD is critical because of the medical needs, which is persisting despite the availability of tolvaptan because the indication of tolvaptan is selective and it's use is limited by the risk -- hepatic risk and the quality side effect, as I mentioned previously. So the tolvaptan has the potential to slow down the progression of renal impairment, but not to stop it. And so there is still a large room for new treatment to be used in combination with tolvaptan. In addition, contrary to the tolvaptan, which activity is rested to the kidney because of the vasopressin receptor expressed early in the kidney. The 770 could potentially be beneficial also on the liver cyst growth and liver hypertrophy, which can be impressive in this disease leads to clinical symptoms in some patients, mainly women. So considering the preclinical data and the good tolerability compared to tolvaptan, 770 has the potential to bring some benefit in the severe disease. It could be also a significant commercial opportunity considering the high price obtained in other rare disease with roughly the same prevalence. I will now turn the presentation back to Thomas for conclusion.

Thank you very much, Pascale. So to summarize, this half has been marked by our debt restructuring, which was facilitated by TWYMEEG's strong growth trajectory, providing increased confidence that TWYMEEG royalties will generate substantial future cash flows, along with an equity-linked financing facility. These two successful operations significantly extend our cash runway through mid-2025. TWYMEEG sales trend has been very dynamic and Sumitomo Pharma 2023 forecast would represent a 90% increase over the full year 2022. TWYMEEG growth sets. In parallel, we continue to build the value of our assets focused on rare diseases and NASH. In rare diseases, we are prepared to launch, as Pascale told you, the ALD concept studies subject, of course, to additional funding, which is our key priority. The grant will be attributed as winner of 2023 edition of the I-nov contest, financed by the French state will contribute in part in the financing of these studies. In ADPKD, 770 is a Phase II-ready program, as detailed by Pascale, and for PXL065, we now have a U.S. and European patents for PXL065 which provide additional protection through 2041. So really strengthening the potential in NASH, but also for other rare diseases. We have adapted the company's resources to our current clinical development plan and need and actively working to finalize other additional financing, including ongoing partnership discussions to be able to advance our rare disease strategy starting with our ALD side. So as a conclusion, I recall that Poxel mission and vision remains to discover, develop and commercialize innovative therapies for patients suffering from serious chronic and rare diseases with underlying metabolic pathophysiology. To fulfill this mission, our objective is to apply our strong R&D capabilities to build and strengthen the value of our assets focused on rare metabolic disorder and NASH. This is a challenging time, but we are working diligently on additional financing to move ourselves forward and so I'd like to take the opportunity to thank our employees, the patients and physicians who have participated and will participate in our clinical trial and you, of course, for your continuous support as a shareholder. We look forward to updating you on our progress. Thank you again for being with us, and I will now ask the moderator to provide you instructions for participants to ask questions.

[Operator Instructions] So to start, with the first question, it's regarding the depreciation of PXL065. What were the reasons of this amortization and depreciation? And was that a requirement from the auditors?

Yes. So maybe I can start with answering this question. I'm sure Fanny will weigh in there. So again, as mentioned by Fanny, I mean, given the company's market cap, which was really between EUR 18 million to EUR 20 million, given, of course, the value that was assigned to the product part was EUR 16.6 million. It was decided indeed an account really with our external auditors, and we'll discuss that with them over the past week and months there to really -- take really this impairment test. So that basically it could really reflect from an accounting standpoint, what is required really by the normal. So again, this is very much independent to this strategy that is currently really pursued by the company on this product. And I recall here that we really believe in the value that we have signed initially on the product based on specifically now on very successful Phase II results. And as you know, we are working really in parallel partnering the assets so that we can execute our pivotal program for which we have greatly progressed, as Pascale mentioned, involving KOL and also through regulatory interactions there. So this is really purely technical, as we mentioned, given the context and it should be firmly associated to the ongoing activities, building the plan, but also having partnership discussion on this asset. And that's why this value could be adjusted again upward at the end of the year. But maybe, Fanny, you want to weigh on this?

So Thomas, I think you said everything. This depreciation is only related to book value or an accounting value and absolutely not reflecting any market value of the asset. And as Thomas said, this accounting treatment can give a view at the end of the year, depending on the evolution, which is not something that cannot be reversed.

So thank you for your answers. Now regarding the I-nov contest, how much more financing do you need for AD trials following the grant from the I-nov contest and for the ADPKD studies?

So our goal indeed is to really strengthen the financing of the company to be in a position to execute our [indiscernible] studies, specifically, ALD and ADPKD. In ALD, it is roughly a EUR 3 million investment per trial there. For ADPKD, you have a higher number of patients there. So it's higher amounts than these are roughly the EUR 7 million to EUR 8 million range there. So the I-nov contest and so the financial grants that we get, we partly support the financing of these studies, but as we said earlier, the goal is really -- to really finalize really the options we are working on, financing options, partner discussions and nondilutive options, of course, to really be in a position to progress really our programs and specifically launched the study there.

So thank you, Thomas, for this precision. Now regarding TWYMEEG, which has demonstrated commercial momentum, we know that the current forecast provided by Sumitomo seems rather conservative. It is not like JPY 4.2 billion for the full year of 2003 (sic) [ 2023 ] when we've already achieved JPY 1.2 billion on Q1. So can you please comment it?

There is indeed a very good momentum on TWYMEEG, and we have very regular contact with our partners, Sumitomo Pharma, and clearly, they confirm that there is a great demand really of the product in Japan. As you know, and as any company or as Sumitomo is, of course, constantly looking really at the market demand there. And so they are really monitoring carefully the abilities. So currently, the guidance is, of course, of JPY 4.2 billion. We will discuss, of course, given the recent trend, whether this needs to be revised. But again, we will do this in coordination with our partner, Sumitomo Pharma. And of course, we'll inform the market accordingly. What is great is that indeed, there is really a very strong performance there. As I mentioned, not only in combination with DPP4 inhibitors, which is the initial positioning but also in combination with any standard of care, Sumitomo has confirmed that the product is gaining market share in combination with any product there. And so we believe that this could lead to a very significant growth, and of course, Sumitomo will take all this into consideration, knowing that, as I mentioned earlier, in addition to this, we are looking forward. We need to getting the Phase IV results really from a CKD trial, which could further position the product in a very key subpopulation in Japan, which is the elderly and the chronic key subpopulation which could lead to a momentum of the sales there. So looking forward to all of this. And of course, following our regular exchange with Sumitomo, we'll get back to the market when adjustments will be required.