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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
On the financial results, first quarter of 2023. First, Gregor Siebert, CEO of PAION; and Sebastian Werner, CFO of PAION, will present you the business highlights and financial figures. Afterwards, you will have the opportunity to ask questions directly. Please note this conference call is being recorded, and a replay will be available later today on PAION's website. Before we get started, I would like to remind you that today's call may include forward-looking statements and that actual results may vary from PAION's current anticipations. I would also like to refer to the disclaimer included in the presentation slides. I would now like to hand over to Mr. Siebert. The floor is yours.
Thank you for the introduction. We all welcome to our Q1 call 2023. Sebastian Werner and myself will guide you through our Q1 results and also our further outlook for 2023. I think we can move on with the disclaimer. If someone would like to read the disclaimer later on, which will be published on our web page. Looking to our agenda, our agenda is straightforward. We'll start with our corporate overview with our goals and objectives a little bit too fast, with our corporate overview and then we'll talk about our great products, followed by our Q1 financials presented by Sebastian Werner. Looking to PAION's mission statement, and now we can move forward with the slides. Our mission is to become the leading specialty pharmaceutical company in anesthesia and critical care. We are developing our mission with our 3 innovative products: Byfavo, our lead drug, remimazolam; GIAPREZA, it's angiotensin II; and XERAVA, it's eravacycline. Later, we'll hear more about the products. It's a progress with our 3 products. Looking to our strategy -- next slide, please. Looking to our strategy, how to reach and to realize our vision is number one, building up a commercial platform for our sales in Europe in anesthesia -- in the area of anesthesia and intensive care. Number two is, for sure, is acceleration of our sales and commercialization, especially now in the new area of general anesthesia. We'll hear later on more about the general anesthesia and the marketing authorization of general anesthesia, which we received recently for Europe. For areas where we have outside Europe, we will explore further out-license opportunities. And for our lead drug, remimazolam and, for sure, we'll work on the life cycle management for remimazolam to maximize the outcome of the drug. Last but not least, and I'm pretty sure Sebastian Werner will later on step into this topic. We build -- we're working on a solid, robust financing concept to develop our commercial platforms. Next slide, please. PAION at a glance. PAION's lead drug, our remimazolam, Byfavo, is meanwhile registered in all major pharmaceutical markets worldwide. It's registered at all markets? Yes. And now, we have 2 registrations -- 2 indications. One is general anesthesia, one is procedural sedation. We have a mixed picture right now in the world in regards to our registration and one of our objectives and targets is to harmonize this registration divisions. Number two, we have 3 innovative products in Europe to sell. And number three, we're working on the life cycle management with remimazolam. And this life cycle management is ongoing. And you will see later on the slide about the time frame and better protection for remimazolam. Next slide. We have a solid base for our strategy with long-term patent validity for all of our products, increasing market access in Europe, market access is becoming more and more important topic, not just in Europe, also in other areas of this world, and I will come back later to this topic of one of our important milestones in quarter 1. And we have a very strong partner network in Europe with Medis and Viatris. Before we talk about PAION, let's talk about myself. The next slide, please. I'm the CEO with PAION since December last year. Before I had a period of more than 35 years of pharmaceutical and medical device industry experience in various companies. Most of my time of this long period, I worked in the area of anesthesia and critical care, selling almost similar products we are selling in PAION in regards to anesthesia, sedation and anti-infectives. I would like now to hand over to Sebastian for a short introduction of himself, and then we'll continue with PAION.
Good afternoon, everyone. Just quickly to myself as well. I am almost 30 years as well in the hospital, pharma, medical and emergency markets. I started my career in 1996 with Hoffmann La Roche for almost 18 years. Then I moved on as a Managing Director and CFO to Zimmer Biomet, a big American medtech company. And since last year June, I am the Chief Financial Officer at PAION. Next slide, please. Greg?
Important events in 2023. I think about one important event I talked about already. It's the EU approval for remimazolam in general anesthesia in the EU. It's not just an event. I would like to say it's really one of the really big milestone achievements for PAION in this year because this is really -- gives us the access to a big market in Europe. We realized capital reductions earlier this year. And number three is when we talked -- I talked about market access and the importance of market access worldwide. We received recently the information that we got a J-code in the U.S. What is a J-code? J-code is something like reimbursement number for remimazolam in the procedural sedation that helps the doctor in the U.S. to get with -- all the patients in the U.S. to get reimbursement for remimazolam. We pretty much believe this will be a breakthrough for our sales in the U.S. It's one of the very important steps. We have realized in all markets where we do not have an appropriate market access, the sales are running quite slow. If the market access is well done and available, the reimbursement possibility is existing to get much better sales. Next slide. Targets for 2023. I'm happy to announce number one, that we achieved already 2 important targets. It's number one is CHMP opinion, and two is, already the marketing approval of remimazolam announced on the 3rd of April this year. And this is really great achievement and a big milestone. This will help us to grow the remimazolam by further sales in key markets in Europe and also with market access and launch implementation of angiotensins or GIAPREZA and XERAVA we are developing. Just as an example, we adjusted the final negotiation, which is a German sick fund for reimbursement price for GIAPREZA and XERAVA. We hope we can sign the contract very soon in the next 3 to 4 weeks. This kind of activities are all going in many markets in Europe. Last but not least, remimazolam in general anesthesia will be launched end of Q2, beginning Q3 in Europe. And I will show you later on one of the -- show you an overview of the launch event for general anesthesia of remimazolam at the end of this presentation. Now talking -- next slide. Let us talk now about our great products. And in the life cycle management, which I mentioned already. Just like to show you the long patent validity of all products, especially of our lead product Byfavo in Europe. It's up to March 2036. This is quite, I would say, comfortable time frame to develop this drug. To sell this drug, we need to work also on the life side management of this drug. GIAPREZA and XERAVA, our two in-license product also gives us a great opportunity for sales up to December '34 or September '33 for XERAVA. Next slide, please. With our 3 products for acute care and hospitals in Europe, we have an excellent base of sales and profit development in the next years with peak sales of about approximately EUR 200 million. This includes also the license payments from our license partners in various regions. Next slide. Let's focus now on lead drug, remimazolam with its brand name Byfavo. Next slide, please. Byfavo is combining the best of both worlds from propofol and remimazolam. Number one is rapid onset and offset. And this rapid onset and offset is predictable for the anesthetist from tradition. Secondly, we have an excellent hemodynamic stability profile for remimazolam. The outcome is a predictable outcome for the anesthetist. He knows what he is doing. He knows what he will get. And for the patient, it's much bigger safety. Next slide. I mentioned already, remimazolam is registered and also launched in many regions of this world. There's still some regions open. And one part of our strategy is looking for out-license partners in regions where we haven't had licensed partner so far, for example, Australia, New Zealand, Middle East, Canada. Those are business development activities, which are ongoing and we will work on those markets. Next slide. Moving to our existing partner base. We talked about U.S. With Eagle, we have a great partner in the hospital segment. And now with the J-code, I believe we have excellent opportunity for growth in the U.S. Cristália with Latin America, perfect on time in our market approval -- the first market approval is expected in Brazil in 2024. Next focus [indiscernible]. With Europe, we have 2 buckets. Viatris is an established company with a positive sales force and excellent sales track record in various European markets. Launch is in preparation and the first product will be launched in the Viatris markets after the availability of market access in the third quarter of this year. Medis with Eastern Europe, mainly the smaller Eastern European countries, already started the launch activities in several markets. And further markets will come, especially what I mentioned regarding is Australia and New Zealand, Canada and Middle East. Next slide. What are the comments from users about our drug remimazolam, Byfavo? And the comments and feedback is great. However, there are many comments. And if you are asking, if this great product wonderful? But I like one comment on this page very much. It's a comment: it's a very fast recovery, and already awake before you come to rest. This is underlining the predictable outcome of the usage of remimazolam in the hospital events, anesthesia segment. However, the product is recognized as great product. But also we have to recognize the very complex hospital launch process and the alignment of multiple stakeholders, including the market access in the various countries. We have 3 buckets. Next slide, please. With different indications, we have XERAVA is in reserve and effective. We have GIAPREZA for the treatment of septic shock. We have Byfavo for sedation and general anesthesia. So completely different indications, however, we'll look to the slide where the product is used is the hospitals and place of usage, operational, ICU and endoscopy, they are quite big overlaps. But even better, when you look to the decision-making process and decision-makers, we find a lot of overlaps with all 3 buckets. There are -- even we talk about quite different indications, it's a broad overlap with all of the targets. And there, I think it's really -- it's a key of success to sell all products at the same time to the same people. What have we done -- next slide. What have we done so far with our product? And I would like to give you a snapshot. Two of our events for this year. Drug event was earlier this year in March, the International Congress of Intensive Care in Brussels. It's Worldwide Congress. It happens every year in Brussels. We had a symposium about the benefits of angiotensin or GIAPREZA and the result was really unbelievable. We had more than 200 participants in the symposium. Great results regarding the usage of GIAPREZA were presented. It was presented, number one, the theoretical concept of GIAPREZA, but even more convincing was the practical usage of GIAPREZA, how the physician needs to use GIAPREZA and what is the outcome for the patient. Next slide will show you a symposium in the future. On the 4th of June this year in Glasgow, in the Euroanaesthesia Congress, we will use this event -- the European Congress of Anesthesia, we will use this event as a launch event for the general anesthesia indications, which indication we recently got approved. Topics about the symposium is introduction about the concept of remimazolam, Byfavo in general anesthesia and also about the practical experience and usage of remimazolam in the hospital. Objective is to give the physicians and anesthetists confidence in the drug, let's say, start using remimazolam in general anesthesia. What -- our next slide, please? What are our targets for Byfavo in general anesthesia? Of course, it will be, as mentioned earlier, it will be the pharma market, mainly the propofol. And number two, because of the very good and excellent hemodynamic profile of Byfavo, our patient focus are the critical ill patients with ASA III and ASA IV groups. In summary, Byfavo is a safe solution for anesthesia in the hospital. Next slide. I would like to thank you very much, and I would like to hand over now to my colleague, Sebastian, for the financials.
Thank you, Gregor. I will now guide you through the financial key figures for the first quarter of '23 compared to the first quarter '22 and also give an outlook for the fiscal year '23. A short update on the cash position and financing. End of '22, we had a cash position of EUR 10.6 million, which decreased until the end of the first quarter '23 by EUR 3.5 million to EUR 7.1 million. Based on our current planning, our liquidity run rate is still into the third quarter of '23. We expect increasing revenues in the coming years from our operating activities. However, as already communicated, PAION still has a financing requirement of about EUR 30 million. In the coming years until breakeven, we are making good progress in raising the required funds through different financing measures, which I will elaborate later in more detail. Next slide, please. Now continue with selected item of the P&L. On the left-hand side, we see the revenue, which amounted to EUR 2.3 million, and expecting the guidance coverage of EUR 30 million to EUR 90 million, if you want. EUR 1 million is attributable to the milestone payments and EUR 1.3 million to revenue from our normal operating activities. In the same year of the previous year -- period, revenues amounted to EUR 25 -- EUR 21.5 million of which EUR 20.7 million resulted from patent sales and milestone payments and EUR 0.8 million from our normal operating activities. On the upper right hand, you can see that research and development amounted to EUR 0.9 million, which is EUR 0.2 million less compared to the 2022 first quarter. The expenses are mainly related to Phase III trials in pediatric studies for all 3 products. Rigorous cost management reduced general and administrative expenses, what you can see in the left-hand corner, by EUR 0.6 million to EUR 4.5 million in the first quarter '23. In total -- on the right-hand side below, on the total net loss of minus EUR 3.0 million was incurred in Q1 '23 compared to a net gain of EUR 15 million in Q1 '22. In Q1 '23 aside, is in line with the guided corridor of minus EUR 15 million to minus EUR 13 million EBITDA. Q1 was positively influenced in particular by the special effect of EUR 20.5 million from the Humanwell patent sell agreement. Next slide, please. The staff development is illustrated on the left-hand side compared to a total number of 72 employees at the end of '22. We had 68 employees at the end of Q1 in '23. And now next slide, please. I will guide you to give an outlook for 2023. This year, our focus is on further strengthening the commercial and distribution infrastructure. Based on our current planning, we expect for '23, an EBITDA between minus EUR 15 million and minus EUR 13 million and the revenue between plus EUR 13 million and plus EUR 19 million. Next slide, please. Finally, a few words to the progress of our financing concept. In January '23, the extraordinary general meeting, approved the proposed capital reductions by redemption and consolidation of shares. This reduction -- resolution was entered in the commercial register at the local court of Aachen on the 14th of March '23. With regard to the option of financing through equity, the resolution passed provides the necessary leeway for a possible capital increase in the future. Currently, we are evaluating various financing options up to breakeven. We will provide an update on the progress in the near future. Thank you very much. And I'll hand it back to Mr. Bouba and open up for questions.
[Operator Instructions] Mr. Simon Scholes, your question, please.
So I've got a couple of questions -- more than a couple of questions, if I may. The first one is, I was wondering if you could tell us what the API and own sales were in Q1. Also you mentioned the J-code in the U.S. and also reimbursement in Germany for GIAPREZA and XERAVA. And I was just wondering if you could give us an update on what the reimbursement situation is in the other European markets. Also on -- back on the API subject, I was wondering if you could tell us what the -- what your average margin on API is. And as far as general anesthesia in Europe goes, I mean, so far, your sales in -- or so far sales performance in Japan in general anesthesia hasn't been that spectacular. I mean I know there's been the problem with the glass fragments. I was just wondering why you expect performance in Europe to be better than in Japan. And that's it for me.
Simon, I will start basically with the first one about the details, how much in API and own sales. That's information we have not disclosed or not disclosed in that detail. And therefore, I'm at the moment unable to answer the question, to be very honest.
Okay. And you have mentioned own sales in the past though.
Yes. We combined it basically now to a section that calls operating activities, which is reflecting the own sales section, and we're just showing onetime income like milestone payments or upfront payments as a separate item. But in principle, what you see on the operating business is in line with what is really coming from operational kind of activities.
Okay.
Probably, Simon, let's -- I would like to answer your question regarding the reimbursement and market access situation for our products, including J-code for the U.S. and XERAVA, GIAPREZA and remimazolam in Europe. Yes, it's developing. In Germany, we are close to finalizing contract with XERAVA. In other markets, market access situation is quite a bit straightforward. For example, in Australia, we are selling already XERAVA on a regular base. If I would go now through, I would say, country by country, on the reimbursement situation, I would say it's quite complex. And from the time perspective, would eat up all the time we have today.
Okay. We can discuss it later.
We can do it really on a one-to-one basis. We have 27, 28 countries in Europe. And honestly, it's -- in every country, it's slightly different. And also there is kind of -- I would like to say it like this, this kind of launch pattern to follow to have the right prices. So it's really quite complex, the overall market access and reimbursement situation.
Okay.
Japan. Sorry, Simon, I don't want to skip the question regarding the topic with Japan. Japan business is running well. It's growing. We just had with -- our partner meeting finished few days ago. And the quality issue we had some time ago is solved by additional checks of the product that is not happening again.
Okay. But I mean, do you expect sales in Europe to pick up more quickly than they have in Japan?
I expect it will pick up more quickly, especially with the indication of general anesthesia.
Yes.
Yes. Because in this case, we have -- the reason why it is quite easy in this case, we have mainly one decision-maker on this and [ its uses ]. So it's not a group of doctors in the hospital.
Okay. I mean is the system that much different in Japan?
No, it's very similar in Japan.
Okay.
[Operator Instructions] There do not seem to be any further questions for today, Mr. Siebert, Mr. Werner, your closing words, please.
And if I see it correctly, we have Mr. [ Schwieterson ] raising the hand.
Mr. [ Schwieterson ], your question, please?
In the financial report, you're also reporting that you have -- you're working on various different financing measures and 3 different ones mentioned there. First, of course, potential capital increase, but also licensing agreement. And lastly, capital from third parties. And you say that the negotiations are in a very late stage already. So would you -- does that apply to all 3 financial options? Or is it just applying to the licensing one that you mentioned in the Q1 statement? Or is that also regarding the third -- the potential financial coming from third parties? This is also in a rather developed stage already? Can you elaborate on this a little bit more because I think this is at the moment, the key question, the financial question that everybody is waiting for?
Mr. [ Schwieterson ], yes, I know I can imagine that one. What we are going to do, we are working on -- really on a concept. And what we're not going to do, we will not communicate any kind of Celonic tactics. We want to communicate the financing concepts, maybe out of -- consisting out of the 3 or maybe just 2 or other ones at the point of time when it's basically finished. And as a core concept to the market that we can demonstrate that we are financed under breakeven. This is our goal to communicate the financing under breakeven because I think that's what the community is interested in. Therefore what you asked before is what is all 3 options.
Okay. And can you have like at least a rough estimate when this financing concept will be finalized? It will be 4 months or 6 months? Is there any indication you can provide?
As soon as the ink is dry. No, I think when we look into our communication of what the reach of our cash is at the end of Q3. We definitely have to have the concept finalized before that endpoint. Therefore, you can imagine this between second and third quarter.
[Operator Instructions] Mr. Scholes, you raised your hand again. Any further questions from your side? So that's not the case. Mr. Siebert, Mr. Werner, your closing words for today.
Hello, sorry, this is Simon again.
Mr. Scholes, any further questions from your side?
Yes. Just on the API margin, I was wondering if you could give us an indication as to what the margin you're generating on API is.
Simon, we never communicated that much in detail, to be honest.
Are you generating any margin?
I can promise you, for sure.
Are you generating some margin then?
We are generating margin on good one. Better midyear.
Okay. Well, that's good. All I wanted to know.
So Mr. Siebert, Mr. Werner, your closing words for today, please.
From our end, we thank for the participation and as well for the questions. And maybe Mr. Bouba, you can finalize the call now if there are no further questions.
Yes, we will now finish the call. Thank you for your attention, and goodbye.