Zealand Pharma A/S (ZEAL) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Zealand Pharma Results For The Full Year 2022 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anna Krassowska, VP of Investor Relations. Please go ahead.

Thank you, operator. Welcome, and thank you for joining us today to discuss Zealand's full year results for 2022. With me are the following members of Zealand's management team: Adam Steensberg, President and Chief Executive Officer; Henriette Wennicke, Chief Financial Officer; and David Kendall, Chief Medical Officer. You can find the related company announcement and annual report on our website at zealandpharma.com. As described on Slide 2, we will be making forward-looking statements that are subject to risks and uncertainties. With that, I will turn the call over to Adam Steensberg. Adam?

Thank you, Anna, and thanks to everyone for joining today. I'll begin on Slide 3. 2022 was a transformative year for Zealand, and I'm proud of the progress our team has made since announcing the change in strategy to prioritize investments in peptide therapeutics R&D. We achieved key milestones across our clinical pipeline, reporting positive Phase III results for both our assets targeting rare diseases: dasiglucagon in newborns and children with congenital hyperinsulinism and glepaglutide in seniors living with short bowel syndrome. We also advanced our portfolio of peptides targeting obesity. Following our decision to scale back commercial operations, we executed 2 partnerships for our marketed products. We sold the V-Go insulin delivery device to MannKind Corporation, and we entered into a partnership with Novo Nordisk to commercialize Zegalogue. Finally, despite the challenging financial markets, we were able to strengthen our balance sheet through equity raises and extend our cash run rate into mid-'24. Continuing this momentum, 2023 looks to be a very exciting year for Zealand. Turning to Slide 4. We have 3 key strategic objectives aimed at maximizing the value potential of our portfolio. Our first objective is to progress our rare disease assets dasiglucagon and glepaglutide towards regulatory submissions. Our second objective is to advance our obesity portfolio. For the dual GLP-1/2 agonist BI 456906, Boehringer is planning to share the results of the Phase II obesity trial with the scientific community in the coming months. Boehringer has also informed us that in parallel, they are engaging with health authorities to discuss plans for Phase III for people living with overweight and obesity. Regarding our wholly owned assets in obesity, we expect to present data from the amylin Phase I program during the year and initiate new clinical studies with all 3 assets. Finally, our third key objective is to engage in partnership discussions in alignment with our change in strategy. As we evaluate future partnerships, we will seek to continue to participate in the programs across the value chain, leveraging our strength and capabilities to maximize the value of the asset. In addition to these 3 key objectives, we are also focused on activities that support our programs in type 1 diabetes management. This includes submitting a marketing authorization application to the European Medicines Agency for Zegalogue, which we are responsible for under the global agreement with Novo Nordisk. I would like to spend a few minutes on our dasiglucagon program in children with congenital hyperinsulinism, or CHI, as we're approaching the NDA submission in the first half of this year, and we believe it represents significant opportunity for Zealand to address a major unmet medical need for children and their families. Moving to Slide 5. CHI is a rare disease that affect babies and children. [ An effect ] in the pancreatic beta cells results in an overproduction of insulin, leading to frequent episodes of severe hypoglycemia that may result in brain damage. Care for patients with CHI is complex and more than half may be suboptimally treated with current therapies. We completed a Phase III program demonstrating the clinical potential of dasiglucagon administered as a continuous subcutaneous infusion via a wearable pump. If approved, we expect to utilize the DEKA infusion pump to provide dasiglucagon to patients. As shown on Slide 6, we estimate that there are up to 800 children with diffuse CHI that may be eligible for dasiglucagon treatment in the U.S. Most of these children are treated at -- are closely followed by pediatric endocrinologists in a few Centers of Excellence. To the right of the slide, we present examples of other products targeting ultrarare diseases with high clinical burden that command premium pricing in the U.S. And if approved, we do believe that dasiglucagon has the potential to provide comparable clinical value, thus also representing a significant opportunity for Zealand. Advancing to Slide 7, I will now turn over the call to our Chief Medical Officer, David Kendall, to discuss the rest of the R&D pipeline. David?

Thank you, Adam. Today, I will focus my remarks on our obesity portfolio. But first, I would like to provide a brief update on glepaglutide, our long-acting GLP-2 analog that is being developed for the treatment of short bowel syndrome and intestinal failure. Please turn to Slide 8. As many of you know, in September of 2022, we reported positive top line data from the EASE 1 Phase III trial, which demonstrated that glepaglutide treatment given twice weekly when compared to placebo significantly reduced parenteral support volume required in individuals living with SBS and intestinal failure. In addition, we observed that approximately 1 in 8 patients treated with glepaglutide in EASE 1 successfully weaned off parenteral support within 24 weeks, achieving so-called enteral autonomy, while no placebo-treated patients were able to achieve this enteral autonomy, a feature we believe is differentiating from current treatments. We look forward to presenting the results of EASE 1 at upcoming scientific congresses in the coming months, including data on the response in specific subgroups. A total of 96 patients who completed EASE 1 enrolled in EASE 2, the first of 2 long-term safety and efficacy extension studies. Interim data from these extension trials as well as from the EASE 4 study assessing long-term effects of glepaglutide on intestinal fluid and energy uptake will all be a part of the regulatory package for glepaglutide. We had previously anticipated interim results from EASE 2 before the end of 2022 and from EASE 3 in the first quarter of 2023. However, having the positive results of the EASE 1 in hand, we made the decision to extend the interim analysis to include 24-week data from all individuals enrolled into EASE 2. This will include data from patients who are on placebo in EASE 1 and thus, this will allow us to hopefully expand our understanding of the potential for glepaglutide to reduce or eliminate the need for parenteral support as we observed in EASE 1. As such, the interim results from EASE 2, 3 and full results of EASE 4 are now anticipated in the first half of this year. Importantly, extending the follow-up period for EASE 2 and 3 will not impact the timing for a potential regulatory submission, which we anticipate in the second half of 2023. Advancing to Slide 9 and focusing on our obesity portfolio. There is little doubt that obesity represents one of the most significant health care challenges of our time, and we are excited to have a rich and differentiated pipeline of novel assets for the potential treatment of obesity. Obesity is a complex disease that can be treated pharmacologically by targeting a number of unique metabolic pathways. While single modality therapies have shown significant effect on body weight, it is expected that dual or triple hormonal treatments will be necessary to achieve even greater degrees of weight loss comparable to that seen following bariatric surgery. We are using 2 specific approaches at Zealand: dual pharmacology to target 2 receptors with 1 peptide and potent and differentiated single-receptor agonist that can be used alone or in combination with other peptides as loose combination or in co-formulations. Please turn to Slide 10. In this figure, we present a representation of our differentiated peptide molecules targeting obesity. Each peptide in our portfolio has been designed to target important neurohormonal pathways that are important in the regulation of body weight, including food intake, energy expenditure, food composition and satiety, any one of which can play important roles in achieving weight loss. Our therapeutic approach aims: one, to achieve increased weight loss; and two, to provide additional effects to address specific needs or co-morbidities of obese or overweight individuals. Our novel dual-hormone candidates are designed with GLP-1 receptor agonism as a foundation to provide weight loss through reduced food intake and delay gastric emptying and to offer the potential to improve glycemic control while adding agonism to a second receptor for complementary effects. With each of these molecules, we are targeting weight loss that can exceed that observed for GLP-1 receptor agonism alone with the potential based on nonclinical and clinical observations to date to be on par with other dual-hormone candidates currently in development. Turning our attention to BI 456906, an asset co-invented with Boehringer Ingelheim, where the additional effects of glucagon receptor agonism are designed to complement GLP-1 agonism and are postulated to stimulate energy expenditure and improve the trafficking of fats with the potential to further improve weight loss and target disorders of liver fats. BI 456906 is in active clinical development with our Boehringer Ingelheim partners for the management of obesity and NASH. In 2022, very encouraging data on both glycemic control and weight loss in patients with type 2 diabetes were reported following only 6 weeks of treatment -- 16 weeks of treatment. We very much look forward to having BI share the results from the 46-week Phase II trial of BI 456906 in overweight and obese individuals at a scientific congress in the coming months. Dapiglutide is a first-in-class dual GLP-1/GLP-2 receptor agonist, leveraging the effects of GLP-2 agonism, a peptide hormone that is co-secreted with GLP-1 following meals. The rationale driving the use of dapiglutide is the potential to provide weight loss through potent GLP-1 receptor agonist activity combined with the known effects of GLP-2 agonism on intestinal barrier function. It is postulated that improvements in intestinal barrier function can improve gut function and target the low-grade inflammation that is associated with syndromes of obesity. We are actively investigating a number of these mechanisms through an investigator-led clinical study due to start in the coming days. We also believe based on data from clinical studies the GLP-2 receptor agonism can also contribute to improve tolerability of the associated GLP-1 agonist. And in closing, we note that our portfolio also includes 2 single-receptor agonists: the islet hormone amylin is known to play an important metabolic role and is a validated target for the potential treatment of obesity. Amylin treatment results in weight loss by reducing food intake by increasing satiety, and amylin is known to restore leptin sensitivity, which may contribute to more lasting weight loss effects. We believe that amylin agonism can play an important role both as a stand-alone treatment for obesity serving patients who may not tolerate or adequately respond to GLP-1-based therapies, and amylin as a non-incretin hormone can be used in combination with other incretin-based treatments to provide additional weight loss. Zealand's novel long-acting amylin analog is specifically designed to allow for once weekly administration and for co-formulation or co-administration with other peptide-based therapies. We are currently advancing our amylin analog ZP8396 through Phase I multiple ascending dose studies and plan to share clinical data from this program this year. Finally, we are planning to bring our unique stand-alone GIP receptor agonist into clinical studies in the second half of 2023. We are both excited and encouraged by the strong momentum across our development pipeline in rare diseases and obesity and look forward to providing additional updates as we advance our programs in 2023. I will now turn the call over to our CFO, Henriette Wennicke, to review the full year financial results for 2022. Henriette?

Thanks, David, and hello, everyone. Let's move to Slide 11 and the income statement. Revenue for 2022 was DKK 104 million driven by the development agreement with Alexion and the partnership agreement made in Q2 2022 with Novo Nordisk. Zealand received an upfront payment of DKK 25 million from Novo. Operating expenses for the period were DKK 941 million, within our guidance for 2022. This is slightly above last year when comparing with continued operations. The increase is driven by the progression of our research and development activities, especially our late-stage clinical programs. Sales and marketing expenses decreased compared to last year following the announced restructuring in March 2022. Other operating items increased due to restructuring costs related to continued operations and costs related to the U.S. NASDAQ delisting in September 2022. Net financial items for the period resulted in a loss of DKK 135 million compared to DKK 25 million for the same period in 2021. These costs are primarily driven by the loan agreement with Oberland. As a result of the announced restructuring, all income and expenses related to commercial efforts related to V-Go and Zegalogue are accounted for as discontinued operations. Net result for these discontinued operations in 2022 was a loss of DKK 237 million. Let's move on to Slide 10 -- 12 and the cash position. In 2022, we were able to strengthen our balance sheet with gross proceeds worth more than DKK 1 billion despite very challenging financial markets. We also paid down half of this facility with Oberland and made significant investments in progressing our pipeline. At year-end 2022, cash, cash equivalents and marketable securities were approximately DKK 1.2 billion. With this, we have a cash runway through mid-2024, which allow us to continue investments in progressing our R&D pipeline in 2023. Talking about 2023, let's move on to Slide 13 and the financial guidance for the year. As Adam said, 2023 looks to be a very exciting year for Zealand. We will invest in progressing our rare disease assets towards regulatory submission in 2023 while at the same time, investing in our [ B2C ] portfolio. Consequently, in 2023, we guide for net operating expenses of between DKK 800 million to DKK 900 million. This is somewhat lower than recent years' expense level and do reflect the restructuring initiatives implemented last year. In 2023, we will also engage in partnership discussions, as Adam mentioned, in line with our change in strategy. However, we will not provide guidance on revenue anticipated from [ restructuring ] and new license and partnership agreements due to uncertainty related to the timing as well as the size of such revenue. And with that, I will turn the call back to Adam.

Thank you, Henriette. 2022 was a year of significant evolution for our company. And through our strong clinical progress and successful partnering efforts, we are well positioned to achieve our strategic priorities in 2023 and beyond. We look forward to NDA submissions for our rare disease programs and significant progress for our clinical programs targeting obesity, while striving to be the world's best peptide drug discovery and development company. Thank you, all, and I will now turn it over to the operator for questions.

[Operator Instructions] Our first question comes from the line of Thomas Bowers from Danske Bank.

A couple of questions here from my side. So just to kick off -- kicking off here with BI 45. So you comment in the report that BI is currently engaging with health authorities to discuss the Phase III plan. So could you maybe just add a bit of color on the advancements made by BI recently and also the reason for you to now be able to communicate what seems like quite material increased certainty that this candidate will go into Phase III? And secondly, just being, [ if we say ], devil's advocate here. So that Phase III planning comment you made, I guess, that's, of course, related to obesity and not just interactions for type 2 diabetes obviously, just to rule out any misunderstandings here. And then my last question relates to CHI. So of course, the partner situation. I noticed you have raised your [ peak sales ] expectation due to, yes, of course, other drug pricing strategy and then after some payer feedback. But -- so where -- what does this actually leave you regarding the out-licensing, the partnering situation? I sort of sense a change of mind here. So can you maybe just elaborate what's your plan A and plan B, so to say? So anything that could, first of all, materialize pre-NDA or pre-approval? And then -- and also, if you actually end up going alone here, is this actually something that maybe could even also have some impact on your OpEx guidance for '23? Yes, I think that was basically it.

Thank you, Thomas, for your questions. And I will start out and I may hand over also to David at one point. But if we just start with CHI as the first thing, it is -- with the new strategy we have, it is our clear ambition to have a commercial partner for CHI. And as we approach an NDA submission in this first half year and we would hope to see a Fast review around 6 to 8 months with the FDA, it is, of course, important to have a partner onboard this year in order to become -- to be fully ready for launch in the first half of next year if we can continue to pursue those time lines. So it is clearly our plan A to have a partner. And I -- as we also have shared, we have had very good interactions and are making good progression on these discussions. But we've also been clear that we wanted to get the NDA filed in place before we truly activated these discussions because it is more simple to have a dialogue with multiple parties if you have the full data set in an NDA format. So we feel very confident on this path, and that is our strategy. Having said that, as we also shared in our -- shared here in our prepared remarks, while it is our ambition to play a role in these strategic partnerships, we are not just looking for strategic opportunities on paper. We actually do -- it is our ambition to continue to play a role but to collaborate with companies who have rare disease commercial infrastructure in place so we will not have to build that, meaning Zealand will still play a role there. But of course, that also depends on the discussions as they progress. And I would also say, all the activities -- commercial activities needed this year for prelaunch activities, they are built into our budget. So there should be no impact here. When considering our glucagon GLP-1 with BI 456906 molecule that Boehringer is developing, we have been very clear for a long time. And of course, it's based on our own review of the early data that the product looks extremely strong, and we have also communicated and based on feedback from Boehringer that they have a lot of confidence in the molecule. You are right that now they actually allowed us and informed us that, first of all, they expect to share the data in the coming months from the obesity Phase II study and that they are having parallel discussions on Phase III planning for overweight to obese individuals with health authorities. In our mind, that's, of course, a stronger messaging than what we have done before, but it's in line. It's a step forward in the messaging, and it just underscores the confidence we believe that Boehringer have in the program and also have towards the opportunity to move into Phase III. But as you know, I cannot comment further on these -- the details because we have not seen the Phase II data yet, and it is up to Boehringer to provide the further details to the program. But we sense a lot of confidence in the program and also confidence towards the opportunity to move towards Phase III.

Your next question comes from the line of Brian Balchin from Jefferies.

It's Brian from Jefferies. Just a quick clarification on BI 906 in obesity. Is that a potential milestone associated with the initiation of that Phase III?

Thanks for that question, Brian. So we only guide on the, you can say, outstanding milestones and royalties. And we have around EUR 350 million in outstanding milestones and high single to low double-digit royalties to the program. I think it's fair to assume that it's a classical preclinical deal that we made. And we have received milestones, as you can see in our earlier reports when we initiated Phase 2, which was around EUR 20 million. So I think it's fair to assume that we would get something also when we pass specific development steps and also with regulatory and commercial. But we do not guide on the specific value. So that is back to what Henriette said. Those will only come once we know them.

Our next question comes from the line of Michael Novod from Nordea.

So a couple of questions from my side as well. First, on dapiglutide, would you expect that it's possible to have the initial results available sort of by year-end 2023 or early 2024 from the investigator-sponsored Phase II trial? And secondly, on BI 456906, given sort of traditional time lines, would then -- it be fair to assume that data will be out at ADA? And secondly, also that at that point in time, Boehringer will have likely clarifications of the ongoing discussions regarding Phase III plans with the regulatory authorities, i.e., that they would also like to be able to communicate around ADA whether it's a go or no-go decision to start the Phase III? It definitely sounds like a go decision, but we just need the firm announcement and the timing of that. And then lastly, maybe just sort of a, of course, a smaller question to Zegalogue. Now it's in the hands of Novo. We haven't seen any sort of notable traction thus far. When would you expect that we start to see something on Zegalogue? I know it's not a key drug for you guys, but still it would be nice to see that it gained some traction in the U.S.

Thank you, Michael, for good questions. If I just start on Zegalogue. You can say we handed this product over to Novo Nordisk in the second half of last year. And of course, we would expect to see some traction coming into the year once they get their hands around it. So -- but as we have also all the time said, it is not the most important part of our value or equity story to Zealand. It's an incredibly important product for patients, and we are extremely happy to see that it's in the hands of Novo Nordisk. But of course, we would expect to see traction and also that the product starts to provide some contributions to our revenue in the future. And one of the activities that we have focused on this year has been marketing authorization application so we could also potentially get the product into the European market. On the Boehringer collaboration, 906 and assumptions around when BI will make decisions and so on, I'm really sorry that I cannot make more comments. I think we have gone as far as we can go right now in the commenting. But as I said before, we feel really confident that BI is confident in how we'll move this product forward. And I think we -- it's also clear that they see it as a very important potential product in their pipeline. So I cannot comment further on this. [ But dose regulations ], I will have to leave with you guys. On dapiglutide, we are just about to start the study, as David said. And maybe, David, you can shed a little bit more light on what we intend to achieve here, but I think it's more likely in '24 we'll see data [ from that ].

Yes, Michael, thanks for the questions around dapi. The investigator-led trial, we have successfully navigated the requirements now in Europe for CTA/CTIS. And as I've said, we anticipate the initiation of the first patients within the coming days. The timing of the final data availability and disclosure, to Adam's point, is very likely to fall right around the change in years. So we would anticipate that in early 2024, we would have those data. And obviously, we, ourselves, are planning progression to the dose ranging and titration study Phase Ib. So all of that is in play for this calendar year, and we look forward to more comprehensive data availability from the investigator-led trial and our own programs in the first part of next year.

Okay. Great. Maybe I can just throw in one additional follow-up question to sort of the partnering preferences because you're getting Phase I data for your amylin analog during the year, you're getting dapiglutide data during sort of turn of the year or into early 2024. What would be sort of the partnering preferences? Is it to do a potential larger, strategic collaboration where you sort of also play a smaller role? Or would you rather prefer to do individual partnering on these projects like the amylin, dapiglutide and also the GIP?

That's a very good question, Michael. And I would say we are open to both scenarios. I think the most important part for us is we believe, especially for the 3 assets -- the proprietary assets where we have all rights, we believe this represents a very, very significant value potential for the company. And we are in a unique situation here. It's actually not that often that biotech companies find themselves in a situation where even though it's still early clinical programs, it is -- they are quite mature when you compare across the industry if you look outside Zealand and Novo Nordisk. So -- and we know there is a large pharma group of companies who we would normally expect to be in this space, but they do not have the richness of the pipeline you would expect. So we are in a very, very unique situation. And we are also, as we have said today, fully committed to continue investing and putting all the efforts into these programs as needed in the next couple of years. When we -- before we end the Phase III, it would be very logical to have a partner onboard. And I would say also, of course, it could also be logical to have a partner onboard earlier for these programs because of the potential value they carry. But our focus is perhaps not so much if it's one partner for all key assets or if it's -- and even stuff we have in the preclinical pipeline or the individual partnerships. The most important part for us is that it's the right partnership, it's 100% committed large pharma company and we have the opportunity to continue to contribute and thereby also retain more of the value for these programs because of the value potential we see with them.

Your next question comes from the line of [ Priscilla Hernandez from Van Lanschot ].

So for the amylin analog single ascending and multiple ascending dose data set that is coming out in H1 and H2, respectively, can you provide some context on what we should expect in terms of number of subjects and metrics and biomarkers? And what is, in your view, key to show in the study? And also, a second question on the partnership. So could you further elaborate on your plans for glepaglutide? So where are the discussions now versus late last year? And what do you look for in a partnership? And what should we expect in terms of timing?

Thank you. I'll start and then -- on glepa, and then I'll hand over to David. On partnerships for glepaglutide, it's a little bit the similar situation as we have with CHI. We really like to have all our data in place before we open up [ data room ]. But having said that, we have multiple interested parties as with CHI, and we have progressed dialogues. But we do not anticipate to open up [ data rooms ] until we have all data in place. Basically, it makes it too complicated if we have half-baked data stories. So that will give you a little bit of an idea on the time line for that. And I would say for glepa, it's a little bit the same type of partnership as with CHI. Perhaps you can say for glepa, you need organizations who have a little bit stronger commercial footprint because it is going to be a competitive situation. Whereas for CHI, it's a more -- it's -- we are going to be potentially the first that can introduce something for these patients. So there, it's enough for us to have the relative infrastructure to support [ the product suite ] to the market. On the time lines and the data and studies on amylin, because it is one of our key obesity assets, I will ask David to just comment a little bit on that.

Yes. Thanks for the question. And Phase I, as you well know, is not always the space for the most creative study designs. So safety and tolerability and ensuring we have adequate exposure to our amylin analog that will inform dosing for Phase II is obviously key to those studies. But as we have reported, we've completed the single ascending dose study. And those data, we believe, will give us the first glimpse at the potential impacts on body weight. Much as you may recall for our dapiglutide assets, despite relatively short exposure, one gets an early perspective on the potential for its impact on body weight. And Phase Ib will give us even greater insights into dosing, dose escalation and longer exposure that will allow an even more granular look at the potential clinical impact specific in terms of body weight loss targeting this asset for obesity. So I won't overpromise from a Phase I -- Phase Ib set of studies. But much as we've seen with other assets in the obesity space, I think we can get significant insights as to their clinical effect even in the safety, tolerability and dose-finding studies.

Your next question comes from the line of Jesper Ilsoe from Carnegie.

A few follow-up questions from my side. So firstly, on partnership deal updates, just to understand you guys here on the call. Is it still the base case to start partnership discussions on glepaglutide during Q2? Or is that more Q3 now due to these, say, gathering of the full 24-week interim data on glepaglutide? So is it -- will you start the clock with structural partnership progress in Q3 now? Is that fair to assume? Then on CHI, can you just confirm, are you still in partnership discussions? And would it, in that case, be fair to assume a potential deal during the second half of this year? Or could it still be earlier? Then I have some follow-ups afterwards.

Thank you, Jesper. So let me try to clarify. So for both CHI and for glepaglutide, we have had multiple interactions and we have multiple interests and have discussions at several levels. Regarding moving to the diligence phase and getting into the very detailed discussions, we have -- first of all, we are prioritizing to have the data in place. For CHI, that is going to be the case, as you know, very, very soon because we are, hopefully, soon to submit the NDA. So -- and also, we expect a Fast review with the FDA. So a CHI partnership is our first priority this year because we expect to have a partner to launch with potentially already in the first half of next year. Another key priority for us is, of course, to, once we have all the data in-house, engage in discussions in more data and diligence discussions on glepaglutide. And whether that's going to start in the second or third quarter, I think it's not something I can comment on. But it's -- I can comment on our priorities, and that is basically due to launch timing. Like for CHI, it's important for us to have a partner in place before glepa because with glepa, as you know, we expect a [ 12-month revenue and only a ] submission in the second half. So we have more time. And then for obesity, it's a little bit opportunistic to where we just keep dialogues ongoing. So that is my set of priorities. And yes, I hope that answers your question.

It does. Just a follow-up then to the CHI sales opportunity. So based on your slides and you've also previously shown this, it indicates a 400 million total addressable market or more. Do you think that we underestimate this sales opportunity? And based on the discussions you've had with partners so far, do these partners agree with this? Or is this just the theoretic sales potential and not what could be the base case?

Yes, so I would say we have not shared market research yet. So what we have done is we have a pretty good idea about, at least as good as you can have for a rare disease, which really don't have any good treatments today, how many patients would be available in the key centers? And then when we took that down to say who are the ones of these patients whom truly could be candidates because they have insufficient response to current ways of managing the patients, then we get to a number of 800. And that is within the target population of the patients that we would hope to have in a potential label. Having said this, very often for rare diseases and ultrarare diseases, once you start to have treatment opportunities available, you will start to see hundreds of patients in centers and smaller clinics. So it could be a higher number, but this is a number which we believe is centered around the key centers, and it doesn't even account for this European opportunity. So I would -- it's a number that we are pretty comfortable with. But I could also easily see that the number of eligible patients would be higher once we start to -- if we have a product that is available to patients. And then I would say another thing that we are looking into when it comes to hyperinsulinism is also if we should start to consider programs for adult patients because we think there's an opportunity to expand into those as well. So on the value opportunity, we have only so far decided to provide examples of comparable products which have launched into rare disease, ultrarare disease markets, and we have not shared any specific market research on our program. But I would say, if we provide sufficient clinical benefits, which we believe our program has demonstrated, but, of course, ultimately, we have to see a potential label, then we think it's good comparisons. So I would say later this year, we would share more on this. And this is, of course, as you can imagine, also the conversation that we would enter partnership discussions with. This aligns with some of the ideas that I shared here.

Your next question comes from the line of Mark Purcell from Morgan Stanley.

It's Mark Purcell from Morgan Stanley. I have 3. Firstly, on 906, I wonder if you could help us understand the initial impact you see in the heart rate with that asset. If you can share that based on the 16-week diabetes data. And is this increase in heart rate a reason why you believe BI is likely to start trials in obesity but potentially not in type 2 diabetes until further titration work has been done? I know a parallel here to what's going on with Lilly's GGG agonist. The second one on dapiglutide. Can you help us understand how much further you're going to likely push the dose in your 13-week dose ascension study versus the investigator-led DREAM study? I'm just wondering which additional benefits you expect you might be able to see as you push up the dose both on the GLP-1 and the GLP-2 component. And then lastly, on the amylin analog 8396, 2 parts. Have you seen any potential here in CKD? Other companies that are playing in this space have mentioned potential benefits in renal patients. And then part B, when you talk about combination studies, are those within your own portfolio? So with dapi, are they potentially with Boehringer? Have they shown any interest in combining amylin with 906? Or is this already in an early stage looking to seek partners who have complementary assets?

So I'll start and then I'll hand over to David. Thanks for the questions, Mark. So if we just start with 906 then, I think -- I'm very certain that the heart rate observations in the type 2 study has nothing to do with Boehringer's priorities regarding obesity and NASH. I think it has been the key focus for them all the time. I think it's extremely encouraging to see the very good glucose control the product also provides. But as such, diabetes management is more saturated today with more treatment choices. Whereas in obesity and in NASH, there's a much bigger need for new and novel treatments. So that is the focus for them. And maybe just one more -- yes. And Dave, do you want to comment on the heart rate observations...

Yes, Mark, thanks for the question. And as you're probably well aware, virtually across the panel of potent GLP-1 receptor agonist, and I've had exposure to a few of them over the years, particularly as the dose is pushed, that increase in heart rate is a known consequence of these long-acting GLP-1 agonists. But obviously, there are plenty of encouraging data on cardiovascular risk with the same agents in the type 2 diabetes space reducing cardiovascular risk likely reducing the risk and progression of renal disease. So despite that known effects on heart rate, as Adam said, it has been clear to us and made quite clear, we think, by BI that their priorities have been obesity and NASH, but -- given what is known about the GLP-1 receptor agonism, having a clear understanding of its potential impact in type 2 diabetes and perhaps informing future life cycle management decisions. But the focus is obviously obesity and NASH for that asset. I'll also address your other 2 questions on dapiglutide dose escalation. Obviously, the investigator-led study is, in great part, in the hands of that investigator. And because many of the outcomes are mechanistic, they have a somewhat different dose escalation and maximal dose that we would anticipate will be slightly lower than that planned for our Phase Ib study. So as with all of these GLP-1-based therapies, it is really looking to achieve a balance between optimal dose exposure with the highest dose possible given its tolerabilities, but also having an understanding of what titration scheme will allow you to get there. So our efforts in Phase Ib will be, first and foremost, to assess safety and efficacy, but also to gain a clearer understanding of what dose scheme, meaning titration and maximal dose, can be used in type 2 -- or in Phase II and beyond. So I hope that gives you some clarification. Finally, to amylin, the 8396. The combinations, as I alluded to in my remarks, really just opens a number of possibilities. Our assets, as you know, is co-formulatable. We've presented nonclinical data on co-formulations with the GLP-1 receptor agonist with our dapiglutide assets as a co-administration. So really, the opportunities to combine with any and all other incretin-based therapies is something we don't see likely with cagrilintide given how it is being assessed and likely brought forth for submission. But that freestanding or loose combination opportunity and ultimately, if there is interest to co-formulation, possibility for fixed-dose combos really do exist based on what partners may be most interested. Your comments about CKD. Obviously, any weight loss agent that lowers the burden, fat amylin body mass and also can reduce blood pressure like we've seen with the SGLT2 inhibitors, the GLP-1 receptor agonist, so yes, we are intrigued by that potential opportunity. But first and foremost, as we've said, our focus will be on assessing our amylin agonist in the obesity space. But these other value adds, if you will, will certainly be on our radar as we get into Phase II and beyond.

And just going back to the heart rate increase, if I may. So with GGG and [ most glutides ], you're seeing up to 30 beats per minute. With GLP-1 stand-alone, it's like 6 to 7 beats per minute. Obviously, it comes down with the GGG over time and [ most glutides ] over time, but it's something regulators have cited some concerns around. I guess if you look at the Altimmune asset, you don't see increase in heart rate because they're [ pharmacokinetics ]. I just wondered with this BI asset what level of heart rate increase you've seen and whether from your position, you think this is something that's going to be important to address through a different dose titration regimen in Phase III.

Yes. So Mark, I think another important aspect here is to recognize that this diabetes study was a study where they did very fast dose titration. So it was really suboptimal dose titration for our molecule with a lot of nausea and vomiting. So all [indiscernible], we believe, through the observations that was also seen in [ halfway ]. So -- and I think the key difference here is that we have a lot of GLP-1 onboard. Just as David said, [indiscernible] other GLP-1s. So we are perhaps not -- we don't buy too much into the PK argument for other GLP-1 [ tools ]. We think it's actually more a question of if you have GLP-1 onboard, then you will get -- you will observe the same pharmacology as has been seen with other GLP-1s. If you don't have GLP-1 onboard, then you might more see what you could expect from [indiscernible]. So we think -- yes, it represents quick and maybe too fast dose escalation in order to get to efficacy readouts. And this is, of course, something, as you also mentioned, when you get into longer-term studies, you can address this and titrate in a more sensible way.

Yes. And Mark, to add to that, yes, you're right with the long-acting agonists, particularly with the slower titration schemes that have ultimately been brought to market. If you remember back to dulaglutide, Lilly's Trulicity, and I was with Lilly at the time but these are public domain information, that they actually -- we actually had an adaptive Phase II/III design that included both the titration scheme and included heart rate increases as part of that decision tree. To Adam's point, both the total exposure to GLP-1 and the rapidity with which you increase the GLP-1 exposure can have significant impacts on heart rate. So I would not overread into particularly shorter-term studies that push the dose quickly. And obviously, we'll have, we hope, the data from the obesity population with BI 456906 very soon to get a broader look at a much longer exposure in the 46-week study, which for us is, obviously, an important piece of data to understand the full safety and efficacy profile.

There seems to be no further questions. I would like to hand back for closing remarks.

Okay. With that, we would like to thank all the attendants and for all the good questions, and we look very much forward to connecting on future announcements and updates. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.