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Good afternoon, and welcome to the Heidelberg Pharma Half-Yearly Financial Report 2020. The call will be hosted by Dr. Jan Schmidt-Brand, CEO and CFO of Heidelberg Pharma AG. My name is Anika, and I'll be your coordinator for today's conference. [Operator Instructions] I'm now handing you over to your host, Dr. Jan Schmidt-Brand, CEO and CFO, to begin today's conference. Please go ahead.
Thank you, Anika. Hello, ladies and gentlemen. Welcome to the Heidelberg Pharma Press Analysts and Investors Conference Call to discuss our financial results for the first half 2020 and to provide a business update. My name is Jan Schmidt-Brand, I'm CEO and CFO of the company. Joining me on the call today are my colleagues, Professor Andreas Pahl, Chief Scientific Officer; and Katja Arnold, our Investor Relations Consultant. Please note that this presentation is available for download on the Heidelberg Pharma website. This conference call is being recorded, and the replay will be available on our website after the live event. Before I begin, let me remind you that we will be making forward-looking statements on this call as well as during the question-and-answer session. Please see our safe harbor statement here on Slide 2. For a more detailed discussion of the risks and uncertainties affecting our business, please see the 2019 annual report that is available on our website. Please turn to Slide 3. On the call today, we will give you a brief corporate overview and outline on key achievements in the first half of the year. We will then provide an update on our ATAC projects and partnerships as well as our legacy clinical assets. This will be followed by a review of our financials and an outlook for the rest of the 2020 fiscal year. This slide, and we turn to Slide 4, provides a quick overview of our company. As a reminder, we are the first company to deploy a completely new mode of action in cancer treatment, inhibition of RNA polymerase II by using the toxin Amanitin to develop anticancer therapies. Our mission is to provide new treatment options to improve efficacy, to overcome resistance mechanisms and to kill both proliferating and dormant tumor cells. Amanitin is a natural toxin found in the death cap mushroom and has a unique biological mode of action, which could serve as the basis for developing highly effective innovative drugs. It works by inhibiting RNA polymerase II, which results in programmed cell death or apoptosis. RNA polymerase inhibition is a novel principle in cancer therapy which we believe could lead to major clinical advances in treating cancer. We are especially excited about the strong efficacy our technology appears to have against a particular aggressive set of tumors, those with TP53 or 17p deletions. We use our proprietary and innovative ATAC technology for the manufacturing of antibody-targeted Amanitin conjugates. Before we continue with this presentation, I want to briefly discuss the impact of COVID-19 on our business. At Heidelberg Pharma, we have been fortunate in that our day-to-day business processes have only been affected to a small extent. We take our responsibility for the safety of our employees very seriously. And where possible, our staff has been working from home. For those employees who needs to be on-site, we have implemented a rolling system to comply with our safety regulations. There has been few disruptions or delays in our supply chain and research and development activities.Maintaining a dialogue with potential investors and the scientific community became more difficult during the global lockdown. A cancellation or postponement of many conferences significantly reduced opportunities of informal meetings. Although we have been able to hold meetings virtually, these cannot fully replace personal contact and dialogue with our partners, researchers and investors. We experienced some delays among our collaboration partners with early-stage projects due to reduced capacities and temporary laboratory closures that have since been lifted. Telix Pharmaceuticals stopped patient recruitment for the pivotal Phase III ZIRCON trial in March 2020 as a result of the pandemic but has now resumed enrollment. Despite the challenging situation, our projects proceeded according to plan in the first half of the 2020 calendar year. Please turn to Slide 5. The majority of our activities are focused around the ATAC platform technology. With this proprietary technology, we are developing our own product pipeline. Our lead product candidate, HDP-101, is initially being developed for multiple myeloma. At the same time, we are working on additional proprietary ATAC candidates that will undergo clinical testing to determine the efficacy and tolerability with the goal of taking the most promising candidate into development. A large part of the preparatory work serves to prepare and protect our IP. We also have collaborations with biopharmaceutical companies to develop product candidates for them using our ATAC platform, 2 key ones being Takeda and Magenta Therapeutics. We are particularly excited about the great progress made in our collaboration with Magenta and will provide you an update later in the presentation. We also have 2 partnered legacy clinical assets from the former ILEX outside of the ATAC technology. These licensing deals provide us milestone payments and long-term upside revenue potential. All development costs are borne by our partners. We are not using any resources to further develop these programs. Please turn to Slide 6. Our focus is to move HDP-101 towards the clinic. We will provide a more detailed update on HDP-101 in a few minutes. Beyond HDP-101, we have several preclinical ATAC candidates, including programs evaluating PSMA-ATACs and other programs in hematological indications. We have selected metastatic castration-resistant prostate cancer, or CRPC, as the clinical indication for the PSMA project. In recent months, preclinical studies have been conducted to determine in vitro and in vivo efficacy, tolerability and pharmacokinetics. The data has shown that the PSMA-ATAC has a promising therapeutic window. Of note, there's a very high prevalence, up to 63% of the 17p deletion in metastatic CRPC. Since tumor cells with a 17p deletion, as I mentioned earlier, are particularly sensitive to Amanitin, this, in turn, means that PSMA-ATACs might be particularly suitable for tumor therapy of metastatic CRPC. The other proprietary projects are not disclosed for IP reasons. Turning to our partnerships. We will discuss in more detail, later in the presentation, recent progress by our partner Magenta. Let me also mention that our partnership with Takeda is proceeding as agreed, although Takeda has not yet publicly disclosed any information on the work. Regarding our licensed legacy clinical programs, we will provide a more detailed update on Telix activities with TLX250-CDx, the former REDECTANE as well as an update on MESUPRON later in this presentation. Please turn to Slide 7. As you can see, despite the challenges in recent months with COVID-19, we have been busy. On the corporate front, in April, we successfully raised EUR 14.4 million in gross proceeds via a private placement. We also were granted a couple of important patents. Our partner in the Anderson Cancer Center was granted a key patent by the U.S. patent office for diagnosis and treatment of selected patient groups with TP53/RNA polymerase II deletion. Heidelberg Pharma holds the exclusive licensing rights to this patent. This is the basis to develop a companion diagnostic to detect and quantify the 17p deletion in patients. Such a diagnostic tool could be very helpful in identifying particularly suitable patient groups for ATAC treatment. The European Patent Office granted Heidelberg Pharma an important patent with proprietary ATAC technology on the production of Antibody Targeted Amanitin Conjugates. The patent is based in the 2009 patent application that was submitted by Professor Heinz Faulstich and employees of the German Cancer Center, Krebsforschungszentrum DKFZ. Heidelberg Pharma exclusively live in-licensed the patent in 2009.Importantly, as we expect to enter clinical trials in the coming months, we have hired a Senior Medical Officer. I'm very pleased to welcome Dr. András Strassz, who has been driving forward the work of our clinical team in his role as Senior Medical Officer since April. He's a medical doctor and has 15 years of professional experience in clinical development and oncology gained from Affimed, Sandoz, Polyphor, Amgen and Janssen. We are delighted to have him on board, and he has already been a great asset. I'm very pleased with the progress we and our partners have made in the first half of 2020. Let me now turn the call to Professor Andreas Pahl, our CSO, who will walk through these achievements in more detail. Please turn to Slide 9, and I hand over to Andreas.
Yes. Thanks, Jan, and hello, everyone. Let me start by providing a status update on our lead proprietary conjugate, HDP-101. HDP-101, as you know, consists of Amanitin, a proprietary linker and the BCMA antibody. Our lead indication is multiple myeloma. While we know that the BCMA approach is a crowded field, we consider multiple myeloma as our foot-in-the-door indication to support our ATAC approach. We also want to point out that despite a variety of treatment options coming along, the disease remains incurable. Other potential indications include diffuse large B cell lymphoma and chronic lymphocytic leukemia. We believe that our ATAC technology may provide unique features by using Amanitin as a new chemotherapeutic agent that will differentiate HDP-101 from the competition. As part of this biomarker project, we are collaborating with the MD Anderson Cancer Center in Houston, Texas. The MD Anderson research team has demonstrated that the Amanitin conjugate HDP-101 was especially effective and efficient in attacking tumor cells for multiple myeloma patients with a 17p deletion. We also believe that our biomarker certification will give us advantages in the regulatory path. We intend to apply for Fast Track designation for HDP-101 at the time of IND submission. Please turn to Slide 10. So where do we stand? Our production partner, Carbogen, who's responsible for producing the Amanitin linker and communicating the final product, has now successfully manufactured several batches based entirely on the synthetic Amanitin derivative anti-BCMA antibody. The prior GLP toxicity study has begun at its advanced stage. The outline of the study design for our first-in-human Phase I trial has been completed and we are preparing the study protocol. We are also preparing the documents in the preclinical data package that will be part of the IND for the U.S. and the CTA for Europe. These are the applications we need to submit prior to initiating clinical testing. We plan to first submit the IND to the U.S. FDA in Q3 2020 and then to submit the CTA to the Paul Ehrlich Institute in Germany in Q4 2020. Following approval of the IND, we expect the Phase I trial to initiate in the first quarter 2021. We have reached out to the clinical sites in Germany and the U.S. that we would like to be part of the Phase I trial, and contract negotiations with the various sites are ongoing. I'd like to mention that we've got a lot of interest from doctors who are still looking for effective treatment options for multiple myeloma patients. Please turn to Slide 11. Let me now discuss in a little more detail our collaboration with Magenta Therapeutics and the recent progress they made. As a reminder, Magenta has currently exercised 2 options for the exclusive worldwide development and marketing rights for ATAC, one for the CD117 target and one for CD45. The ATACs are being developed from the conditioning of patients to receive stem cell transplants on gene therapy treatment. As shown on the slide, patients undergoing stem cell transplant or gene therapy are conditioning, i.e., the disease cells and stem cells must be removed. This is done transitionally with chemotherapy alone or in combination with total body irradiation. This conditioning process is associated with significant toxicity. As a result, many patients today are not eligible for these treatments. Magenta is developing targeted disease-modifying antibody drug conjugates, or ADCs, that made it possible to quickly and accurately remove the disease-causing cells in the body and safely reset the immune and blood system without chemotherapy or radiation. Please turn to Slide 12. We are excited about the great progress being made with the ATAC programs. In January, Magenta announced MGTA-117 as its first clinical candidate for the conditioning of patients for stem cell transplants or gene therapy. MGTA-117 is an ATAC that consists of the CD117 antibody, a linker and the toxin Amanitin, and this was developed by Magenta as part of our partnership. Magenta presented preclinical data from its work with our ATAC technology at various scientific conferences earlier this year. Magenta will conduct further preclinical studies and prepare for MGTA-117 to enter clinical trials in 2021, and plans to release first clinical data in 2021. In May and June this year, Magenta announced collaborations with the 2 U.S. companies, AVROBIO, Inc. and Beam Therapeutics. Now these collaborations, the companies to test MGTA-117 for conditioning for the gene therapy treatment in genetic diseases, including sickle cell anemia and beta thalassemia with Beam Therapeutics and other genetic diseases with AVROBIO. This expansion of the therapeutic replication area marks an important step towards the clinical limitation of our ATAC technologies in genetic diseases. We are delighted to see these agreements are opening up new application areas for our ATAC technology and that we will have the opportunity to profit from milestones and license income for new indications in the long term. The second candidate, the CD45 ATAC to reset immune system and halt progression of autoimmune disease, is in preclinical development and GMP manufacturing has started. Please turn to Slide 13. Now turn to our legacy partner clinical programs. The Australian company, Telix Pharmaceuticals Limited, has an exclusive license for the global development and marketing of the radiolabeled antibody TLX250-CDx, which we used to call REDECTANE, for diagnosing renal cancer. The license agreement also covers the development of a therapeutic radio immuno-conjugate program. The latest breaking news was certainly the Breakthrough designation from the FDA for TLX250-CDx on July 1. Breakthrough therapy designation is a process designed to expedite the clinical development and review of drugs that are intended to treat serious conditions, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available therapy on the clinical -- clinically significant endpoints. This is a very strong commitment of the FDA for this diagnostic approach. We congratulate our partner for the success.Telix is conducting another Phase III study, ZIRCON, with the TLX250-CDx as a global multicenter trial with sites in Europe, Australia and the U.S.A. It is planned to enroll around 250 renal cancer patients who are to undergo kidney surgery. After patient recruitment had to be suspended due to the COVID-19 lockdown, it was resumed in Europe in mid-June. Completion of recruitment for the entire study is now expected by the end of 2020, and data should be available in 2021. Telix assumes a market potential of 129,000 RCC patients eligible for PET imaging with the TLX250-CDx, which translates into a total addressable market value of USD 350 million in the U.S. and the EU. Please turn to Slide 14. Let me briefly provide an update with our other partner legacy clinical program, RHB-107, also known as upamostat, formerly MESUPRON. RHB-107 is an oral micro PA serine protease inhibitor designed to block the activity of tumor relevant serine proteases such as micro PA, plasmin and thrombin to prevent tumor growth and metastasis. New scientific findings have shown the mechanism of serine proteases also play a role in COVID-19 diseases. RedHill Biopharma reaches development and commercialization rights to upamostat outside of Greater China, announced in March its plans to study RHB-107 in combination with another RedHill development candidate, opaganib, as part of a Phase I/IIa study in an advanced cholangiocarcinoma, subject to discussions with the U.S. FDA. Additionally, in April, RedHill announced that it had entered into an agreement with the U.S. National Institute of Allergy and Infectious Diseases, which is part of the NIH, to provide RHB-107 for testing in nonclinical studies, productivity against SARS-CoV-2, the virus that causes COVID-19. Recently, RedHill announced in a COVID-19-focused conference that they are planning to initiate a Phase II/III study, including RHB-107 in mild-to-moderate COVID-19 outpatients at the end of 2020. We are looking forward to hearing the outcome of this important work. Let me now turn the call back to Jan, and please turn to Slide 16.
Thank you, Andreas. Turning now to the financials. As a reminder, our fiscal year ends on November 30. So the first half 2020 reporting period we are discussing today reflects the period from 1st December 2019 to 31st of May 2020 balance sheet date. Looking at our profit and loss statement for the first half of 2020. Heidelberg Pharma reported total income of EUR 3.8 million, thus falling short of the prior year figure of EUR 4.1 million, as individual planned orders and milestones at the partners was postponed until the second half of the year. Sales revenue and other income of EUR 3.1 million included revenue from the collaboration agreements for our ATAC technology of EUR 2.7 million, and EUR 0.2 million from our service business. Revenue also included EUR 0.2 million related to the out-licensed product candidates, TLX250-CDx. The total was somewhat lower than in previous year, which is mainly due to difference in timing of major payments from collaborations. Other income of EUR 0.7 million was higher than the previous year's figures of EUR 0.3 million and comprised income from the reversal of unused accrued liabilities in the amount of EUR 0.4 million, grants under the Horizon 2020 Framework Program of EUR 0.1 million and other items in the amount of EUR 0.2 million. Operating expenses, including amortization and -- depreciation, amortization and impairment amounted to EUR 13.2 million in the reporting period, higher than the previous year period of EUR 8.4 million. You can see a breakdown of expenses in the pie chart on the right of the table. The cost of sales relates to the group's costs directly related to sales revenue. These costs mainly related to expense for customer-specific research and for the supplier for Amanitin linkers to our licensing partners. They amounted to EUR 2.6 million, representing 20% of operating expenses, compared to EUR 1.9 million in the first half of 2019. Research and development costs rose year-over-year as planned to EUR 8.7 million compared to EUR 5 million in the first half of 2019. The increase was due to the expansion of cost-intensive internal (sic) [ external ] Good Manufacturing Practice production and preclinical and regulatory preparations for the clinical trial with HDP-101. At 66% of operating expenses, R&D remains the largest cost item. Administrative costs were EUR 1.7 million, which was 13% of operating expenses, compared to EUR 1.4 million for the 2019 period. Administrative costs included costs for holding company activities and stock exchange listing. The increase compared to previous year was due to expanded business operations. Other expenses for business development, marketing and commercial market supply activities, which mainly comprised staff and travel costs of EUR 0.5 million, they were higher than in the previous year, which was EUR 0.1 million, and continued to represent 1% of operating expenses. Net loss was EUR 9.4 million compared to EUR 4.3 million for the first half of 2019. Turning to balance sheet and cash flow on Slide 17. Let me briefly touch on a couple of key numbers here. Our cash outlay increased during the year, mainly resulting from the liquidity outflow triggered by the operating business. Cash increased to EUR 15.1 million as of 31st May 2020, from EUR 9.9 million at November 2019. The increase is attributable to the capital increase completed in April. Please turn to Slide 18. I will not go into detail here, but you can see some basic stock performance data, analyst coverage and ownership information on this slide. In April, we implemented a private placement issuing 2.820 -- 2,820,961 new shares from authorized capital, which corresponded to just under 10% of share capital at that time. A total of 2,679,968 of these shares were placed with the main shareholder, dievini Hopp BioTech, and 141,000 shares with institutional investors at a price of EUR 5.10 per share. This matter lifted share capital to EUR 31,030,572.We also decided to change the stock exchange symbol of Heidelberg Pharma from WL6 to HPHA, which has been applicable since 19th of June 2020. In the second quarter, MainFirst, which is part of international bank, Stifel, has expanded its coverage by acting as designated sponsor for Heidelberg Pharma in addition to providing analyst research. We also signed an agreement with New York-based Solebury Trout at the end of June to step up the group's IR activities in the U.S.A. The goal is to bring back the [ pharma ] share and equity story more into the focus of international investors based on its upcoming clinical program. Let me now wrap up with an outlook for the rest of 2020. Please move to Slide 20. This slide provides you an overview of our actual results to date -- year-to-date compared to guidance. The 6 months figures are in line with guidance. As expected, we saw an increase -- significant increase in operating expenses related to cost-intensive external GMP production. We are able to confirm today the guidance we provided in March for the full year 2020, which is outlined on this slide. Please note that our guidance takes into account additional potential cash inflows from new licensing activities at Heidelberg Pharma Research. Based on our current planning, we expect existing funds to provide us with sufficient funding to conduct operations until mid-2021. Please turn to the next slide. We continue to be very busy at Heidelberg Pharma and don't expect that to change intensively. Starting with HDP-101, preparations for conducting the first-in-human clinical trials are well advanced. As discussed earlier in the presentation, we plan to first submit an IND to the U.S. FDA and then to submit a CTA in Germany. As mentioned before, we plan to submit the IND still in 2020. Beyond HDP-101, we plan to decide on at least one other proprietary development candidate in our ATAC portfolio to advance. We also continue to work on our biomarker program related to the 17p deletion. Turning to our collaborations. We hope to sign additional research and option agreements with new biopharmaceutical partners similar to the agreements we have ongoing, Takeda and Magenta. We also look forward to continued achievements in these ongoing collaborations, including Magenta entering MGTA-117, [ into the cake ]. Regarding our legacy clinical programs, we look forward to our partners making continued progress in advancing these programs. While Heidelberg Pharma is not involved in this work, as a licensor, we will share some of the revenue associated to any potential successful development. We expect Telix to complete patient enrollment in the Phase III trial with TLX250-CDx by the end of this year. Telix plans to submit a rolling biological license application BLA for this product, where the application can be submitted in separate modules to streamline the FDA review process for approval. Telix is also planning the further development of a therapeutic radio immuno-conjugate program based on lutetium-177 labeling of the Girentuximab antibody. Due to the COVID-19 crisis, filing the study applications in the U.S., which was planned for the first half of 2020, has been delayed and is now expected to take place later this year. Regarding upamostat, while we have no insight on that work nor the timing of results, we look forward to updates from licensee RedHill Biopharma on the progress of ongoing work in advanced cholangiocarcinoma. RedHill announced that it will prepare for the Phase II/III clinical development program with RHB-107 for COVID-19. To wrap up on Slide 22. We at Heidelberg Pharma are excited about what the future holds and are driven by our vision of developing new options to address major challenges in cancer therapy. We are focused on developing our own proprietary pipeline of cancer drug candidates. And we are also collaborating with other biopharmaceutical companies to find novel ATACs, to treat a variety of tumors and address other cancer-related issues as well as disease beyond cancer. We believe we are well positioned to reach our goals and to bring new hope to cancer patients. On Slide 23, you can find our current conference schedule for the rest of the year and our financial calendar for 2020. With that, Andreas and I are happy to take your questions. Thank you.
[Operator Instructions] We have a question coming from the line of Dennis Berzhanin from Pareto Securities.
This is Dennis Berzhanin from Pareto Securities. I have a couple of questions, one on the development of HDP-101 and also on the financials. So for the development of HDP-101, on Slide 10, thank you for providing the status updates for all different activities in the preclinical stage. It seems like for the most part, everything up until the submission of the CTA and IND applications is pretty much completed or nearly completed except for the long-term stability studies. So could you -- which are ongoing still. So could you provide a little bit of status update there? How is everything going, especially given that some of the issues in the past with the formulaic issue, so just curious to see how that's going. And when do you think that's going to be completed? And if there's any challenges there? And then in terms of financials, just looking at the first half financials compared to the guidance on the sales and other -- on sales revenue and other income, you're just -- basically just a little bit under the lower end of the guidance, while the operating expenses have been quite high in the first half of this year, leading to the funds required per month above the high end of the guidance. So just wondering if we should expect anything in the second half of the year, it's -- to reverse this trend. Is there more top line performance coming in from somewhere? And where exactly? And do you expect the R&D expense to stabilize towards the second half?
All right, so let me first address your question about stability. So the typical procedure is that one already puts the tox spectrum stability because you don't want to wait for long stability studies after manufacturing the clinical bids. So the tox space is on stability. I believe, since February or March, we already have the first interim readout after 3 months, and we have not seen any issue with the stability of the other compounds. So we are highly confident since the GMP batch is manufactured for the same protocol as the tox space so that there will be no issues with the stability of our clinical trial material.
Well, with regard to the financials. The costs are mainly or overwhelmingly attributed to our development project. And of course, we had all these costs that go along with preparing clinical studies, mainly the GMP manufacturing and preclinical activities. So we largely expect that -- we anticipated some of the costs rather than doubling the cost we have achieved right now. So we expect still that we will hold our full year guidance. The top line is not related to these costs. It's largely dependent on, let's say, achieving certain milestones, getting milestone payments, achieving certain work packages with our partners, which then trigger payments. And we had only slight delays. But again, we are also optimistic that we will keep the annual guidance irrespective of, let's say, some shortcomings in the first half of the year. And say, one has to mention especially that last year, we had a different allocation of such kind of payments with the entities in the first half of the year. Does this answer your questions?
Yes. Yes. Just curious, are you, by any chance, getting any kind of assistance from the government Kurzarbeit for -- that you can use to save on your costs? Or anything you can -- like that, that you're receiving?
No. As we reported, we were not heavily affected, and we did not, let's say, send out teams into Kurzarbeit; rather, we sent them to home office and had this rolling system in the lab. So we were not, if we couldn't -- we had no reason to, let's say, cut the work hours. So we had no basis for asking for this kind of subsidy.
[Operator Instructions] The next question is coming from the line of Marcus Wieprecht from MainFirst Bank.
Marcus Wieprecht here, MainFirst. I have a question on your out-licensed legacy products. It looks like that you have some attractive near-term potential royalty-generating assets there. So I understand that you cannot provide any details on numbers, but maybe you can talk a little bit of the qualitative level, what kind of royalty range we can expect? I know that's probably a typical, sometimes annoying analyst question, but I would be interested in how the royalty range compares from the Telix product versus the RedHill one. And maybe also going further down in detail, how the -- is there a difference in royalties for the diagnostics indication for TLX250 versus the renal cell cancer therapy indication? And similar to the RedHill one, is there -- would there be a difference for the COVID-19 treatment versus the various cancer indications?
Yes. Thank you for the question. So let's start with Telix. We had published a couple of times that we are -- we have double-digit royalties. They are solid double-digits. We also published an order of magnitude between 15 and 25, but this will depend on further details we have not yet disclosed, just to give you an order of magnitude. And we have -- one has to remember that this diagnostic compound was out-licensed already as a Phase III compound. So Telix has only to -- well, they had to refresh the antibody manufacturing, which was quite an investment. But in terms of clinical trials, they only had to do a final pivotal clinical trial, what they're doing. So we believe that this royalty rate we will achieve that corresponds to this, let's say, relatively mature status of the product. With regards to the therapeutic variation of this product, royalties are much lower. They are lower single digit, which is due to the fact that, in former times, we did some very early pilot trials with external investigators which were investigators on the trials. But the first tests with the therapeutic approach, so it's much less mature than the diagnostic approach, and there's much more to do. But we also will profit through royalties from this indication. With regards to RedHill, we published that we have also double-digit in the mid-teens. So I guess this answers your question.
Yes. That's very helpful, more than I expected. So the next for you will be…
This was already published in former times, yes?
Yes. Okay. I would assume most people would not be aware of that, but it's, anyway, good to have a confirmation from your side. So the RedHill would be the same for COVID-19 and all the various…
Yes. It's just on the product, so it's not indication-specific.
The next question is coming from the line of Thomas SchieĂźle from EQUI.TS.
Actually, there are 2. One is speaking on the average share of the portfolio and putting the glimpse on Magenta activity. So you communicated that Magenta entered into further collaboration with AVROBIO and Beam Therapeutics. You said that this is quite a proof of your ATAC technology indeed. But -- and that's the question, is there any financial outcome and financial consequence out of this? So do you have to do -- will you get some more royalties and some extra royalties or milestones from these activities? And the second question is on your lead compound HDP-101, concerning the trial design Phase I dose escalation. What is your feeling? Does the discussion with the FDA and the Paul Ehrlich Institute goes in the right direction, meaning that you will be able to accelerate the starting dose quite steep and quite shortly? Or is this another -- or does the authorities are very reluctant on that point?
I can start first with the question about Magenta. So all our license agreements have more than one indication that leads to milestones. So opening a second indication for one product means additional milestones. This is only clinical milestones, starting from Phase II basically, but there are additional milestones. So if we go -- if we see different indications being covered, that's positive to the milestone scenario. And of course, as the overall sales will be increased of this final product, it goes without saying that with the higher sales volume, we have higher royalties. There's no need for an extra agreement on that. That just is due to the higher sales number that is to be expected.
All right. So with regard to the interactions with the agencies and the clinical trial designs. So we are in advanced stage. We also discussed with KOLs and the clinical site investigators about the starting dose and the dose escalation. So we do not see any reason to deviate from a standard protocol. And the standard tabulation of the starting dose were published formulas from the FDA. So we already determined, accounting that formula, our starting dose. So we do not see any reason to deviate from this. So we will propose this. We are also now going for a pre-IND meeting to the FDA to confirm that they are in line with our suggestion and to see whether they have any objections to really make the IND submission and CTA submission rather smooth and to avoid any bigger delays in discussion after the IND submission. And also for the dose escalation, with it's a typical design, we are planning for 6 cohorts. And this is, again, no deviation from a standard dose-escalation design.
So it will be a subsequent or a rolling escalation?
It will be a patient design, so there's an adaptive mechanism incorporated into this. So of course, we propose the dosings, but there will be an adaptive design.
[Operator Instructions] There are no further questions in the queue.
Well, then, thank you. I guess we can then close the call. I thank you all for listening and for participating in this conference. And see you soon next time. Thank you, everybody.
Thanks. Bye-bye.
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