Ladies and gentlemen, welcome to the Cosmo Pharmaceuticals release of Half Year Results 2023 Conference Call and Live Webcast. I am Alice, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing by the relative field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Alessandro Della Chà, Executive Director, CEO. Please go ahead, sir. Good afternoon, everyone, welcome to our half-year results report, where we're giving you an update on our progress. I hope you can all see the presentation on your screen. Presentation is divided into five sections. I think, the title under one is gone. I don't know why, the title of the first section is the following: Investment strengths. We believe that we are performing according to our plans and according to our expectation, hence, we would like to recap first and foremost before going into the details of the presentation on what we believe are our investment strengths. First of all, we have a growing revenue stream from an established business. As you will see, in factually, the revenue from our existing products, they do continue to grow and grow, I think, even beyond our expectations. We have two revolutionary growth drivers that have been launched in large markets and entrusted to world-class partners. Clearly, I'm talking here about Winlevi, about GI Genius. We have an exciting development pipeline, which is full of catalysts and things that are happening as we speak. Very strong financial position with no debt. We're profitable, with dividends being distributed in 2021 and 2022, and if things will go according to plan, also distributed in 2023. What our main focus area, I just want to point it out again, we're active in three areas. One is gastroenterology, the second one is health tech, the third one is dermatology. We have a product portfolio that is really quite wide, given the size of the company and given the market cap. We have six approved product. This is what we call the established portfolio. We have two growth drivers, GI Genius and Winlevi. I'll walk you through after a little bit more in detail. I think that this is a very consistent offering, given the size of the company. Our H1 2023 financial and operational highlights are as follows: We have progressed on all fronts, it's important to me to mark the following. First of all, the overall figures in terms of revenue is EUR 43.7 million versus last year, EUR 41.5 million. I want to remember that last year, in the first half, we received an EUR 80 million milestones under our Cortiment agreement with Ferring, whereas this year, in the first half, we received only EUR 2.7 million as a milestone from our partner, CMS, for the filing of the Lumeblue NDA in China. If you look at the revenue, excluding the milestones, our increase is actually 21.8% for a total of EUR 40.8 million of core revenues. I was saying that we are increasing on all fronts. I would like to point out that if you look at manufacturing standalone, in this half, EUR 8.3 million versus EUR 6 million last year, first half, our manufacturing of our own product has moved to EUR 26.4 million from EUR 22.2 million. Our revenue coming from royalties to EUR 5.2 million versus EUR 4.6 million in the first half of 2022, and other revenues moving to EUR 3.8 million. They include the milestones that we have received as I mentioned before. Most important for us, the business is actually experiencing a high organic growth. If you look at what we call the established business, the one that I showed you, the six products in the slide above, you can see that the Lialda franchise increased by 27.7%, the Cortiment income increased by 87.5%, the contract manufacturing by 48.1%, the Eleview income by 110%, and I believe that this is quite a performance in these times. Our two growth drivers have increasing revenues. Winlevi, as expected, we've seen a significant increase in the royalty income, and bear in mind that it is absolutely natural that. At the beginning, in the time of the launch, that we see more manufacturing revenue coming in respect of royalty revenue. Over time, you should see the royalty revenue increase in respect of the manufacturing revenue as sales begin to peak up. In fact, we have here seen a manufacturing income decrease by 55% and, symmetrically, an increase of the royalty income of 92.3%. Also, the GI Genius revenue has increased by 59% to EUR 4.3 million in the first half. I also want to remember you that last year, our total revenue for the year was EUR 102 million, if I'm not mistaken, of which EUR 41 million was in the first half. Historically, we do perform higher revenues in the second half versus the first half. Just keep in mind, this is also one of the reason why we are confirming our guidance, as already stated in our press release. So far, we are achieving our plan. Again, I wanna point out that in total, we've had EUR 43.7 million revenue versus last year, EUR 41.5 million. At EUR 14 million EBITDA versus EUR 14.9 million last year. Again, bear in mind the influence of the EUR 8 million milestone in this. Same for the operating profit. This year is EUR 7.1 million versus last year, EUR 8.1 million. Again, you have to keep in mind the impact of the EUR 8 million milestones and a profit before tax, EUR 3.7 million versus last year, EUR 9.1 million. Again, please bear in mind the impact of the EUR 8 million milestone. Probably the best indicator, and the quickest indicator to see that things are actually progressing very well in the right direction, is the significant improvement in cash generation. Last year, in first half, we generated EUR 12.6 million cash. This year, we have generated EUR 15.5 million. Bear in mind that the milestone coming from CMS, which has been accounted in the first half, has not been paid yet, so that has not impacted the net cash inflow. We do have a very consistent position in cash and short-term investments. That's EUR 222 million at the 30th of June. I've seen questions popping up about how are we going to repay the bond, let me just give you immediately a straightforward answer. Well, we're gonna repay the bond with the cash that we have at hand. The bond is EUR 175 million, we have more than EUR 222 million in cash and short-term investment, as I said, plus we are generating substantial cash from the operations. We are so confident in our future that we have continued to purchase our own shares in the market within the limits set by the SIX Swiss Exchange. The position at the end of June was close to 1.5 million shares versus a position in 2022 and the first half of 1,300. We have experienced a very significant progress across all of our product portfolio. I just wanna mention some of the most important highlight of this first half. We have had the approval in Japan of Cortiment by Ferring/local partner, Mochida. We have expanded our cooperation with China Medical System Holdings to expand the reach of Lumeblue also to other territories, which would include a lot of countries in Southeast Asia and most of the ex-Soviet Republic. CMS has sent us communication that has started the preparation for launch, and therefore asking our team to join and help to prepare launch. Just want to remember that the approval in China is expected between year-end, let's say fourth quarter of 2023 and beginning of next year, so first quarter of 2024, and this is why they have decided to start preparing for launch. Also, our key growth drivers are experiencing significant advancement. Well, first of all, with GI Genius, we have expanded our agreement with Medtronic, but most importantly, we have awarded... We've been awarded GBP 2.5 million from the United Kingdom, NHS, to run a very large-scale, real-world trial of GI Genius. The U.K. government is a strong supporter of introducing, as quickly as possible, artificial intelligence in healthcare, and it's a very good indicator that they are now running this trial and awarded us with a significant benefit. The new research that was published, I believe, that we have issued a press release to this. New research published by Northwestern Medicine has shown the impact of using artificial intelligence, not anymore in the academic clinical trial setting, but in real life, with real procedure, every day's procedure, with every day's endoscopist, not star endoscopist, and the results were mind-boggling. They were presented at the last DDW in Chicago, where this study raised a lot of attention. Basically, they have shown that the consistent use in everyday practice of GI Genius increases the ADR, which is the adenoma detection rate, by 13%. I just want to remember that for each 1% increase in the ADR, you have a corresponding 3% decrease in colorectal cancer. 13%, which might not look like a very, very large number, actually translates into 39% decrease in colorectal cancer, which is nearly half. Just bear in mind that if I'm not mistaken, in the U.S., you have around 50,000 people dying every year of colorectal cancer. Last but not least, we have won the AI Breakthrough Award. This is one of the, probably the most prestigious award that it's giving for AI innovation. If you see who the competitors were in that arena, and for a moment, instead of the name Medtronic, you put the right name of the developer and owner of the product, which is Cosmo, then you can see whose Cosmo is competing with in that arena. You're going to see the best name. We lost connection with the moderator. The conference will resume shortly. Thank you. This name. What pertains Winlevi, we have announced the license agreement with Hyundai Pharm for Korea and the approval of Winlevi in Canada. We have several agreements on the way that we all intend to close in the second half of the year. You will see deals happening for the rest of Europe, the Nordics, United Kingdom, Republic of South Africa, Middle East, North Africa. We are really expanding very, very significantly the franchise. Also, this is quite an advancement. What pertains our development pipeline, well, we have announced that we have finally begun our phase III trial in males for Breezula, the clascoterone solution for androgenetic alopecia. We have consistently advanced our oncology program. We have now started to treat the fourth cohort, so also in that specific venue, we are proceeding according to plan. We have completed the formulation and IP protection of our new drugs against bile acid diarrhea, that's CB-01-33 colesevelam. We are in the process of drafting the clinical protocol, and the intention is to be in a position to start the phase II clinical trials in the second half of this year. We're actually, as we speak, finalizing the agreements with the centers that should be running the trial. I would like to take a little bit of your time, and I hope that I'm not annoying those who might know these details already about our two key growth drivers. We do have two revolutionary products in large markets that are entrusted with very strong partners, and one is Winlevi, and one is GI Genius. To begin with Winlevi, you will remember that this is the first ever topical anti-androgen for the treatment of acne, as it's quite a remarkable achievement. It has been licensed to Sun, it is, as we speak, the number one prescribed branded topical acne product in the U.S. To date, prescriptions that have been generated on a cumulative basis are above 670,000. Even more important than that is the fact that the unique prescribers since launch now have reached a number of 15,000. Actually, 15,000 represent 88% of the total healthcare practitioner in dermatology. This means that basically 88% of those who can potentially prescribe Winlevi have already prescribed Winlevi. Particularly important, we are now finally seeing beginning of a second issued prescription, meaning not just first prescription, but also prescriptions that are renewed. This is a very important sign that the drug is penetrating the market. One of the reasons for this switch to second prescription is that Winlevi is sold in a tube that's particularly big. It's a 60 g tube, and that adolescents, teenagers are very frequently not very compliant, so in terms of applications of the cream, and therefore, there is a situation where the tubes in their hand, they actually last more than what was originally forecasted. This is the reason of the delay in the visibility of the renewal of the prescription. This is also proceeding well, and Sun is particularly satisfied. In fact, they have restated in their Q4 earnings transcript that Winlevi is one of their three main growth drivers in the specialty business, and that the coverage has improved in the last quarter and that they hope to continue improving coverage. Just to be clear, coverage means payer reimbursing the drug. I just want to recall what was the outcome of a survey made by Citi, the bank, on the potential perspective of Winlevi. They ran their own survey with 112 dermatologists in the U.S., and according to what they answered, Citi concluded that the market potential of Winlevi could be 12%-13% of the overall market, which would translate potentially in peak sales of $700 million-$800 million. Originally, the forecast was around 5/7% of the market share. The survey show that Winlevi can effectively capture 12%-13% of the market share, which should then be equivalent to $700 million-$800 million. Just want to remember the audience that we do receive double-digit royalties, that we have the potential to receive $190 million in commercial milestones, and that we are the exclusive manufacturer of the product. Moving to GI Genius. GI Genius, I think, continues to be the most undervalued asset, most severely undervalued asset in our pipeline. I guess there has to be something with the way we explain the business case that just doesn't go through, and that is precisely the reason why I feel that we need repeating ourselves until this becomes kind of evident. Winlevi was introduced. Sorry. GI Genius was introduced into the market with a first very particular indication, the detection of polyps in real time. What GI Genius effectively does, is GI Genius is a platform to overlay artificial intelligence content to any real-time video coming from any procedure. Just think of any situation, clinical or diagnostic, where the physician is looking at a screen to perform the procedure. There is room there for applying AI, and therefore a reason for GI Genius to be there. We have shown mind-boggling performance in the reduction of missed colorectal polyps, because our trial has showed that we can achieve a 50% reduction of missed colorectal polyps, which is actually equivalent to saying that we find 50% more. In fact, if you look at one of the most reliable quality measure for colonoscopy, you will see that GI Genius actually detects 46% more adenomas in a colonoscopy than without. Another indicator on how important GI Genius is becoming is that the total number of academic publications on GI Genius has now overtaken 30. If by any chance you venture to say, to go and look at what other potential competitors are doing, you may find one or you may find two. We have more than 30, and the most remarkable is the one that I just told you about Northwestern. It's also one of the latest. Medtronic is enthusiastic about how GI Genius is performing. You see there a quote regarding their earnings on the fourth quarter of the financial year 2023. They say, "Mid-terms growth driven by procedural recovery and strength in GI Genius sales. Our GI business grew 16% on procedural volume recovery and continued strong adoption of GI Genius." You will have noticed if you have already scrolled the presentation, but if you haven't noticed, I'm gonna tell you now, we're not giving any more data on the penetration of GI Genius in terms of how many devices have been placed, because Medtronic has expressly asked us not to do it. What we will be saying to you today is that the installed base continues to grow. I think that this slide that shows you the quality of the U.S. hospitals that have already installed GI Genius is quite telling, as well as the organizations, the institutions, mentioned on the side with their logo, that have already adopted GI Genius and are introducing more and more GI Genius in their endoscopy suites. What makes actually GI Genius so special? GI Genius is a game changer. I want to remember you all that while this year we won the AI Breakthrough Award, last year we won the Fortune 2022 Change the World list for the quality of the innovation. Is science-backed, it's data-based, but it's also human-centered. What our studies are showing more and more is that when artificial intelligence and humans, they work together, they are more effective than any of them on a standalone basis. This is actually the new paradigm, differently from what anybody can see now about the fears of the introduction of artificial intelligence here and there. When we see what is the impact of the introduction of the artificial intelligence in healthcare, and especially in diagnostic procedure, we see that the joint action of both AI and the physician makes the performance, the joint performance, the quality of the joint performance, not comparable with the performance of the physician on a standalone basis. This is why we always want to mention that GI Genius is designed to assist the physician, it is not designed to replace them. We are in the process of creating this new ecosystem to distribute applications, AI application within GI Genius. GI Genius, as I told you, is a platform with a modular architecture, whose purpose is to host multiple algorithms, multiple functions, multiple features, multiple applications. We are partnering, as we speak, with some of the leading providers of MedTech and AI in the whole world. We are establishing cooperations with important hospitals, important institutions, well-known companies. We have created our innovation center website to allow parties to develop applications to be installed in GI Genius. You can find a lot of details if you just have curiosity to scroll through our Cosmo IMD site. Cosmo IMD stands for Cosmo Intelligent Medical Devices, and this is our dedicated company for AI. This is a company that currently employs more than 50 people that are working 24/7 on the development of this new AI application. I'll tell you more about what is it that we are currently developing when we come to the pipeline. What we want you to understand is that this platform creates the opportunity to be the U.S. market leader in real-time AI, in GI and beyond. This is just a very simple list of the procedures that you can run using GI Genius as a platform to overlay AI content. As you can see, it's not just 19 million colonoscopies, but it's also 6 million gastroscopies, 500,000 ERCP, which is a special kind of endoscopy. You have 15 million laparoscopies where we can provide substantial assistance to the physicians performing the laparoscopy. You have rhinoscopy in non-GI, you have cystoscopies, you have laryngoscopies, you have arthroscopies. The market has an incredible potential, and let me tell you, we're not even mentioning here robotic surgery, time surgery, and again, all the many procedure where the physician does perform the procedure by looking at the screen and not by looking at a patient. The economics of creating a medical AI platform probably is not yet completely understood. The fact that with one single device, you can introduce multiple apps, should have everyone concentrate on the multiplier effect. We are trying to give an example on this slide by just showing you the potential. You would remember that last time we gave a figure about how many devices had been placed, they were in excess of 1,000. If you just look at 1,000 as an example, and just imagine that applications to perform different tasks could cost the hospital only as little as EUR 1,000 per month. That's not very much, if you assume that the app is going to generate substantial benefit for both the physician and the patient. Just look at that. If you have only 1,000 devices, and you have only one app placed, that's EUR 12,000 per device, because you have 12 months. That's EUR 12 million in a year, and that's EUR 36 million in three years. Just bear in mind that the standard duration of the agreements that Medtronic is signing with the client is around 27 months. If you have five apps, you're gonna have revenues of EUR 60 million a year, every 1,000 devices, and EUR 180 million in three years. If you have 10 apps, you're gonna have EUR 120 million for a year and EUR 360 million for three years. If you have EUR 120 million for 1,000 devices, and we have already placed, as we told you last, and we're not gonna go back to that number, and we're not gonna give you any update, as I said. Last time we spoke, I believe we told you that we were around 1,500 now already placed. Imagine that we are already at 2,000, with 10 app, that is EUR 240 million, and with 3,000, you have EUR 360 million. I don't need to walk you through the multiplier effect anymore. We are basically with GI Genius, we're everywhere in the news. Here, you just have a few glimpses of what's happening. We have an excerpt from the Northwestern Medicine. We have the statement over there from an MD at Northwestern Medicine, who say, "Because of our commitment to high-quality colonoscopy, we were already doing better than the national guidelines recommended. Could artificial intelligence make us even better? The answer is very clearly yes." On the left-hand side, you can see a couple of statements from the institution called MNGI, which is a very large healthcare provider and owner of many hospitals. You see, Minnesota's best colonoscopy just got even better. Why? Because they are launching and using GI Genius in all of their facilities. We told you already about the award. I just want to remember them again. AI Breakthrough Award, prestigious National Health Service in the U.K. award, winner last year of the best deep learning platform. Being awarded, as I remember, I told you already about that very, very important contract with the U.S. Department of Veterans Affairs to install GI Genius in all of their endoscopy suites. Let's move to the pipeline, because believe it or not, this is all that comes together with our market cap today. We have one product that has begun phase III, that's Breezula for androgenetic alopecia. We have two early stage that we expect will generate substantial returns with low investment, I talked about those already. First one is our oncology, one and only oncology program, which is nicely advancing in its phase I. Third one is CB-01-33 colesevelam for the treatment of bile acid diarrhea. We expect to move this into phase II by the beginning of the fall. This is what I wanted to point out. This is quite new slide, gives you the sense of what the company is doing. This is telling you what we're doing in terms of development pipelines for GI Genius. Actually, you don't see in here all that we're doing. You just see some of the things that we're doing right now. We have seven applications under development in GI, and three applications under development outside GI. The first one in GI is an app that will be able to issue what's called a summary. It's gonna tell the physician, the level of bowel preparation score, the withdrawal time, the cecum intubation, and other important performance indicator that will be very useful for the physician to indicate in the report that it will issue. The second one is polyp sizing. This is underway. It will be an app to measure the size of the polyp, which is another very important thing, and also quite indispensable to properly program the surveillance, follow-ups. The third one is the automatic AI-generated report. What is this? This is gonna be an application that will allow the physician to just print and sign the full report on the outcome of the procedure without having to lose any more time in sitting at his desk and try to collect what's needed to write the report and remember what has been done, what hasn't been done, what was found, what wasn't found. He will just now have to press a button, and the artificial intelligence will generate the report, including procedure highlights, just for him to sign, and we're expecting that this is gonna save the physician a substantial amount of time. We're preparing a application, first one, to support the standardization of upper GI procedure, and here I'm talking about gastroscopies and examination of the esophagus. One will be specifically dedicated to help the physician assess conditions in the upper GI endoscopy, monitoring esophageal symptoms, and detecting esophageal conditions. Another app we're working on is to assist navigation in the stomach. During gastroscopy, the stomach is quite a complicated organ to be examined. This is an application that will tell the physician whether he has effectively or not examined the whole surface of the stomach in the search for lesions. Another separate application will be for detection of gastric cancers, exactly as we have one already for the detection of colonic lesions. Outside GI, we are developing three applications. One is for detection of cholangiocarcinoma. You probably do not know, but there are many issues in the detection of that kind of cancers, and there are also many mistakes that are done, sometimes diagnosing as cancer, something that is not a cancer. We are also working on two different applications, one in laparoscopy and one in robotic surgery, to help the navigation by creating a system of waypoints that will allow the surgeon to perfectly position itself inside the organ that needs to be examined and treated. When it comes to key priorities, we are reiterating both our priorities and our guidance. Total revenue between EUR 110 million and EUR 120 million. Operating profit between EUR 25 million and EUR 35 million. The priorities will be: expand the GI Genius business, expand the Winlevi franchise, advance the clinical and development pipeline, and as mentioned in our press release, reverse the bond in cash. I hope I've been effective in explaining that we don't need to do anything peculiar to reverse the bond. We will just use the money that's in our account. I also wanted to be precise, and here I'm stating there's gonna be no rollover, so Cosmo will not issue any more debt. We don't intend to have another bond. We don't intend to raise money with bonds in any form. We will just use the cash that we have at hand. Together with the cash that we're currently generating, we will have more than sufficient cash to just conduct all of our operations. I'm thanking you very much, and I'll be more than happy to take any questions that you might have. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets and eventually turn off the volume from the webcast. Webcast viewers may submit their questions in writing by the relative field. Anyone who has a question may press star and one at this time. Our first question from the telephone comes from the line of Bob Pooler with valuationLAB. Please go ahead. Good afternoon, Bob Pooler, valuationLAB. Congratulations on the strong results there. A few questions, if I may. First of all, maybe on the currencies. We're seeing a weak US dollar there. How far does that impact actually revenues on a translational effect? Also, you're maintaining your revenue outlook. That means that you're seeing actually strong underlying growth. Is that true? Well, thank you, Bob. First of all, I mean, you're right in pointing out that traditionally, we've always been exposed to currency fluctuations in way that clearly we cannot control. This is a consequence of fact that we do account in EURO, but we do receive substantial revenues in dollars, and we also, we have substantial spending in dollars. From a certain standpoint, what we try to achieve is a kind of natural edge by keeping our liquid assets into the two different companies. Also bearing in mind that the main spending that we have ahead, which is the phase III for Breezula, actually will be in US dollars, so we do have to keep US dollars. Last year we did a gain on the US dollars, and last year we're making a loss on the US dollar. That's not really something that we can that we can avoid. Because we have explored many, many times if there was any efficient way to manage the risk, maybe entering into swap, but that would have ended up just being too expensive, and we decided not to do it. What we currently do is actually we do change in EURO, our surplus, to try to reduce the impact. Clearly, if you have even only, you know, $40 million and then you have a 10% decrease, then you lose $4 million. Actually, it's important, it's $4 million that are just figuratively lost, because that's not actually impacting the position, because the dollars that we keep are the dollars that we will spend. Effectively, it doesn't have an impact. Given that you have to draw lines at given point because you have to close the accounts, then you have this impact, which is kind of annoying. In respect of the underlying growth, the answer is yes. I just want to remember that also last year, we had $41 million revenue in the first half, but we had $61 million revenue in the second half. As I said, we have also different deals which we are about to close for the expansion of the Winlevi franchise. We believe we can fairly say that we will be okay with the guidance. Okay, yeah, I think that's quite a strong message there, because, yeah, as you said, the currency with the US dollar, the weakening there, to maintain. You're getting a lot of revenue coming from the U.S., Winlevi, GI Genius, Eleview. That does, I think, mean that you're getting strong underlying growth there. Switching to GI Genius, I think many people are starting to understand the multiplier effect on that and the leverage. I think more of the question is, when do you expect this multiplier effect to be material? When do you see the apps? When do you see this actually happening? Where will it take off? We're putting down a plan with Medtronic for the deployment of the apps. Our intention would have been to have the first app deployed within year-end. Mm-hmm. The other one to follow, at least two, if not three, of those that I have listed in the slide, would be intended for deployment during 2024. Of course, it would also depend, some of them will need also regulatory clearance, so we will be somehow depending on FDA clearance. Otherwise, that is okay. I think that we're also working with people that are actually developing their own application, which they would like to embed in GI Genius, and they're taking care also of their own regulatory pathway. Meaning that they will provide us a software as a medical device, SaMD, or as we prefer to say, app, which will be already fully approved and just ready to be installed. It's also possible that because of this, you will see the number of apps that will be placed in 2024 increase. Going to Winlevi, when do you expect the EU filing to occur? The EU filing is actually scheduled because I don't know if you know, but you do have to get a slot, specific slot. Mm-hmm. You cannot file, whenever you want, but you need to have a slot booked, and our slot is booked for October. October. Okay. Just on Breezula, could you give us a little bit the timeline to scalp one and two, when you expect top-line results and maybe estimated costs, plus also your commercialization plans? I think it would be fair to say between the end of 2024 and the beginning of 2025. Okay. Yeah. You have to bear in mind that clearly we cannot, you know, recruit all the patients simultaneously. Mm-hmm. It's a process, and we have 60 centers, so it's quite a piece of work. Mm-hmm. Okay. Let's go back into the queue and wait for other questions. Thank you. The next question comes from the line of Nicolas Payen with Kepler Cheuvreux. Please go ahead. Hi, guys. First of all, congratulations for the strong first half-year results. We have a few questions. The first one will be regarding Winlevi. Could you give us more detail on why there was a delay in the payment of the stock? How much do you estimate this revenue to be? Can we expect this revenue to be imputed into H2 revenues? Sorry, I'm not sure I understood the question. You said a delay in what? In the press release, this morning you mentioned that the manufacturing revenue decreased due to timing differences in deliveries during H1. Can you give us more color on that, please? No. That's simply because it was shifted. You know, they have the inventory, so these are just regular shifts. Normally, they, depending on how sales goes, you do have requests for manufacturing orders, either in the first half or in the second half. If they believe that they have sufficient inventory in the shelves, they will just, you know, just delay and say, "Well, instead of delivering me in April, please deliver me in September," and hence the shift. That's just absolutely normal. You know, the kind of sinusoidal curve that of the supply of drugs, and clearly, any company try to order just strictly necessary to satisfy the market demand. This is why for us, it's more important to see the royalty revenue increase rather than manufacturing revenue increase, because we're expecting the drug to be sold. What is reflected by sales is actually the revenue generated and the royalties. Okay. Just to make sure I understood, we can expect, therefore, that there will be higher manufacturing revenues in H2 as they will come on new products, right? That is correct. Yes. Okay, thanks. We had a second question regarding GI Genius. I believe in the press release you said that the OPEX increased, because of GI Genius. Could you explain us why, as the manufacturing revenues for GI Genius remain stable in the meantime? I don't believe that we have provided a big breakdown between revenue coming from manufacturing and revenue coming from royalties. In the report, you did provide the information. Okay. No, sorry. I thought you were mentioning, or you were mentioning the press release, because in the press release, there was no breakdown. I'm not sure I understand what is your question? You have to bear in mind the following: we don't manufacture anything that's not been ordered. When you see an increase in inventory, that's because we have been ordered devices, which we will then manufacture. We don't manufacture waiting for order, we only manufacture on order, but clearly, we are paid only once we deliver. Okay? Okay, yeah. Yeah, this is, this is important to understand. Over time, you will need to see that our share of revenue coming from Medtronic, which is our royalty, if you wanna call it like that, but it's actually more of a pure revenue shares, has to increase as contracts come to fruition and customers start paying. It will be natural also in this perspective, to see the revenue coming from subscriptions increase and the revenue coming from manufacturing being stable or actually decreased. Okay? Okay. That's the nature of the business. All right. Thanks a lot, that's it for us. Thanks a lot for the info. The next question comes from the line of Laura Hindley with Berenberg. Please go ahead. Hi. Great, thank you for taking my question. Firstly, on phasing. You reiterated the guidance for sales and operating profit for the full year. Given the first half performance, you do need considerable growth in the second half. Could you give some more color on where this growth is gonna come from? From your comments on Winlevi, it seems like at least some of this could be milestone or upfront revenue contribution. Have you baked that into your guidance? If you are including this milestone revenue in your guidance, is that only relating to Winlevi or to other pipeline products as well? When we're thinking about modeling, should we expect greater milestone income in the second half of this year compared to how it was in the second half of last year? Thank you. Thank you. Well, to start from the last, we do have budgeted sales milestones from Winlevi, reaching a certain level of sales. That is what we have in our budget. Coming to the first question, that's a little bit more tricky to answer. Yes, we do expect either upfronts and milestones coming because we have several potential agreements underway, which we would have expected to close in the second half. Yes, you're gonna see growth. We will be expecting actually organic growth, but you should also be expecting revenues coming from milestones and upfronts. I'd rather say mainly upfronts. The mix split be there between organic growth and then the contributions from revenues, not from milestones and upfronts, or predominantly upfronts. Excuse me? When we're thinking about getting to your guidance, what level of contribution will the milestones and upfronts be? Will this be greater than the milestones and upfronts that we saw in the second half of last year? Yes. Yes, or at least more or less in the same order. Okay, that's really helpful. Thank you. Kind of the same, if not higher. Okay, that's really helpful. Thank you. Another question on your tax rate. Your tax rate was particularly high this half, but typically, Cosmo has paid more tax in the second half of the year rather than in the first half. Should we expect even higher tax in the second half of this year? How should we think about the tax rate evolving as we go forward? What have you seen that was difficult to explain in our tax rate? We have a rather flat situation, and I'm not sure I fully get. Can you just help me understand better what is your... Yeah. Your tax rate comes out at around 60% just taking the first half of this year. Historically, Cosmo paid higher tax rates in the second half. If we think about this trend applied to this year, should we expect a continued high tax rate in the second half, or is this a one-off, particularly high tax rate? Well, you know, actually, it depends on the company. I'm not sure that this is completely clear. Cassiopea is an Italian company. Cassiopea pays higher taxes, so sometimes when you see the swing, that also depends on which company is more impacted by revenues. If you have strong revenues in Cassiopea, then you will see the tax rate increase, but that's the effect of Cassiopea being Italian and paying more taxes. Do you see what I mean? More income from Winlevi in the future, we should expect Cosmo's tax rate to trend up from where it is now. Is that a fair assumption? The fair assumption is that the revenue coming from Winlevi is taxed higher than the revenue coming from any other asset. Because all other assets have, since ages been sitting in Ireland, and therefore, they do benefit in terms of royalties over a lower rate. The assets that are in Italy, actually, they are impacted. Bear in mind also that the following, that you do see swings also because our manufacturing activity is all done in Italy by Cosmo S.p.A., which is a fully owned subsidiary of Cosmo Pharma. If by any reason, in a given year, we have larger revenues coming from both dermatology and manufacturing, you see a shift in the tax rate, because then a lot of taxes have to be paid in Italy. If it's in a year where we do receive up-fronts for products and license that belong to Cosmo Technologies, which is our Irish subsidiaries, then you see the tax revenue going down because that is taxed at the Irish rates. Okay. No, that's really helpful. Thank you for explaining that. Just generally thinking about this year, should we expect an overall tax rate similar to last year? Yes. Okay. My final question, I'll get back in the queue, is I've noted on your pipeline that you're not including Aemcolo in the Irritable Bowel Syndrome, the diarrhea anymore. Have you discontinued development of this asset? Is that across all indications, and why, if you have? The cost to run a phase III in IBS-D is very expensive, we have decided that we're not gonna bear it if we don't find a partner that will support it. Because given the fact that we would not be the ultimate marketeer of the product, it doesn't make sense that we run a phase III on a standalone basis and then hoping that we're gonna find a better partner afterwards. We are actively in pursuit of partners for further development programs, and this is basically where we stand. Unfortunately, our partner, RedHill Biopharma, is not in a position, is not in a financial position to bear that cost, as you might have seen, given their current market cap. That's why we're actively in pursuit of another partner. Still looking for partners for this asset. It's just not listed in your pipeline because you won't be doing the phase III trial. Correct. We don't want to do a phase III clinical trial if we don't have a partner on the side. Okay, great. Thank you so much. Thank you. We have a follow-up question from Mr. Bob Pooler, valuationLAB. Please go ahead. Okay, thank you. Just, probably that, is similar with Lumeblue, on the potential, second trial needed there for the U.S. What's the status with the U.S.? The status for the U.S. is that actually, we haven't found a partner yet, we won't do the second phase III trial... Mm-hmm. ... until we have found a partner. We are in active discussions, but so far, we haven't identified a partner yet. What we've been doing currently on the regulatory side is that we have asked the FDA whether they can take as a second phase III trial, the trial that was done by CMS in China. Mm-hmm. That was a very, very large trial with more than 1,800 patients. The nice thing of that specific trial is that it was run by CMS using the same protocol that was approved by the FDA for the second phase III trial of Lumeblue. Actually, that specific Chinese trial is gathering all the information that are needed. We do hope that the FDA will agree that that is a sufficient clinical data to support the approval. Okay. Just one follow on Winlevi then. In the U.S., you've seen a lot of prescriptions there, so now you're getting the repeat prescription there. Do you see less sampling and rebates going on also with the second prescription? Oh, yes. The key now for Sun is just to expand as much as possible the coverage. Mm-hmm. We're working very, very actively. We've also seen an improvement in the gross-to-net, that is a good thing. The most important thing for them is now to expand coverage. Okay. Okay, thank you. Thank you. The next question is a follow-up from Ms. Hindley with Berenberg. Please go ahead. Hi, thank you. I'm just following up from Bob's question again on Lumeblue, and actually Aemcolo as well. You're in these partnership discussions. I appreciate it's difficult to know exactly when these might happen, but are you thinking about deals being struck this year? Is that too soon? Could it be next year? How should we think about the level of upfronts in contrast to Winlevi? A similar question for Breezula. Will you only seek a partner once your phase III trial is complete, or are you in active discussions now? How should we think about the upfronts there as well? In terms of Lumeblue, I do not know, frankly, I just want to tell you bluntly, I do not know. I don't think it's going to be irrelevant, but I do not know, because that is going to be impacted also by whether the partner has to run a trial or not. If we do get a clearance from the FDA, then the Chinese trial is sufficient not to have another one, I guess that the outcome will come there. Unless we have full clarity on the regulatory situation, that's going to be a little bit difficult to speculate there. If it instead comes to Breezula, I believe that Breezula will see a higher, a definitely higher, upfront than the one that we have seen for Winlevi. I don't think the market potential is actually compatible. It's true that alopecia is more of a condition than a disease. The expectation is that this is going to be a global drug, therefore it's coming with a very, very significant potential. Basically, all the partners that we've been having discussion to in respect of Winlevi, they all wanted also to in-license Breezula. We have slowed down that. What we want to do now is, you know, is just establish everything in the trial. Do patients start to see outcomes? We are absolutely confident that that will be positive. I don't want to be in a position that I'm lowballing anything given that we have decided to bear the cost of the trial anyway. What I think that we will do is that we will wait for the end, but we will get into the trial, but we will, in the meantime, entertain the discussions that we are already entertaining with all partners. Clearly, on the first one that's interested, it's also Sun. Sun actually actively pursued that right of first refusal for Breezula when we discussed the Winlevi license, and we just told them that we weren't ready to go for that. Giving a right of first refusal would have actually hampered our capacity to negotiate freely also with other potential suitors. Okay, thank you. Sorry, did you say higher upfront than Winlevi? I said higher, yes. Okay, thank you. Finally, the timeline and potential upfront for Aemcolo and other indications. Well, by other indication, I think you're referring mainly to IBS-D, and I told you where we stand there. If we were looking for a partner that's willing to bear the cost of the development, because we don't intend to bear it ourselves. Okay. Thinking about that happening this year is probably unrealistic? It's probably unrealistic, yes. Okay. Thank you. Thank you. We have another follow-up question from Mr. Payen with Kepler Cheuvreux. Please go ahead. Mr. Nicolas Payen, your line is open. You may ask your question. Hi, thanks again. Regarding the first question is regarding Winlevi. When can we expect the first revenue coming on, coming from Korea commercialization? Oh, that's gonna take at least a year because the regulatory pathway for South Korea requires at least a year. They will have to assemble the dossier, file it, and then wait a year, not sure that we will be able to see it by the end of 2024. Okay. I think that's more likely to 2025, beginning of 2025. Okay. All right. Thank you. Maybe a final question from my side. Regarding GI Genius, how will the leasing model evolve with the new application? Will Medtronic come to a hospital with a list of apps, and then the hospital will have the choice to pick one application, or it will be a package that they have to take? No, it's exactly as you foresee. Medtronic has opted for the subscription based model by looking at what Adobe had done in the past, and I'm sure you're familiar with what Adobe, the software maker, actually did. Yes, the hospital will be provided with the list, the hospital will decide which apps to download, clearly the invoicing will start as soon as the app is downloaded. You know, you have just mentioned a very important point because the platform concept, together with the subscription agreement model, is gonna change dramatically the way medical devices do get into the marketplace. Because now you have, as you can imagine, extensively to promote them with physical meetings, you have to promote them by having reps going around and losing a lot of time and having the limited capacity of seeing only a certain number of clients every day. This is gonna be completely different. You're gonna have a menu, you're gonna choose from the menu. You will be in a position to test them. You will be in a position to see whether you like them or not, and then be able to do a final purchase with the same speed that you would otherwise use to download an application on your mobile phone. This is going to revolutionize the whole healthcare industry, also in terms on how apps will actually be promoted, right? Yeah. Very clear. Maybe one last question- Imagine the time to market and also the time to invoicing, how that will be compressed. Yeah. Today, we have a lag time with GI Genius, which is more than nine months between the moment that the hospital is starting to look at GI Genius and the moment the agreement is closed, and then we can start having the invoicing. Basically, the results that you're seeing right now in the promotion of GI Genius are basically those of exactly a year ago. This, the people don't understand, but it's important that everyone understand. Things are not happening as you speak. What the results that you're seeing of GI Genius now are the result of a year ago because of this lag time. When GI Genius will be solidly installed in thousands and thousands of towers and hospital, then the time to download the new app and the time to start making money out of those app will be minutes. You see what I mean? It's not gonna be nine months or 12 months anymore. It's gonna be minutes. Yeah. Okay, very clear. Maybe one last question regarding Cortiment. When can we expect the first revenue from Japan during H2 or later? August, if everything goes according to plan. We are actually already manufacturing the batches that we have ordered, and we will ship them in the next coming weeks to Japan. Or probably some of them have been already shipped, actually. I see the team telling me that we have already actually shipped Japan's launch. Yes, the initial sales are expected for the beginning of August. All right. Wonderful. Thanks a lot for this answer. Thank you. There are no more questions on the telephone at the moment. We will now read out question coming from the webcast. The first set of question comes from Martial Descoutures with ODDO BHF. He writes: "Thank you for taking my questions. I would have a few questions, if I may. The first one is, could you come back on the Lialda dynamics in the U.S. and Japan? The sales continue to increase. How do you explain the dynamics in term of value and volume? Could you give us your feeling to manage the expectations for this drug? Yes. Thanks, Martial, for the questions. That's right. The sales continue to increase, and there's a very simple explanation for that. The sales continue to increase because the generic doesn't work. People, and unfortunately, are put on generics treatment because of the agreements that they have with their own insurers, which clearly puts them on the medicine with a lower cost. Not necessarily the generic is as good as the originator, and actually in many, many instances, and we would have to open a very big and long bracket here, in many, many instances, the generic just do not perform as the originator or do not perform at all. Very often patients do realize it, and therefore they switch back to the originator, even if this occurs at their own cost. We have a lot of anecdotal evidence coming from patients that were on Lialda, that were moved to the generic, and then wrote us that they were going back to the original Lialda because that worked and the generic did not. That is the best explanation that I can give you. My expectation is that Lialda will continue to grow. It will not be, you know, a tenfold growth, but it will be a steady and a nice growth and a very nice contribution to the P&L, which we expect will continue to increase. Thank you. The next question. The second question that I see, maybe I can read that. I can read that because I have it in front of my screen. The second one is: Do you expect specific milestones paid from your partners in H2? Well, we're expecting milestone coming from Sun. Milestone that was due by CMS is already into our first half account. We are expecting actually upfronts. We're expecting upfronts from the agreements that we are in the process of negotiating. Yes, we do expect milestones and upfronts coming in H2. You ask me: We've seen an acceleration of your contract manufacturing revenue in H1. Have you a specific objective that you could disclose for this year? No. That is a business that will also continue to grow. It will not be a dramatic growth, but it will be a steady growth as we also try, you know, to shift from less profitable productions to more profitable production. I guess here you're referring at contract manufacturing with on behalf of third parties. We don't have a specific objective, but we still have a limited capacity in our plans to expand that production, and if there's gonna be opportunities, we'll do it. You say: Net financial expenses were strongly impacted by the FX. Can you give us more details for this end of the year? Well, I think we walk you through the dynamics. The dollar that you see within our deposits are dollars that will be spent over time. We're gonna bear whatever outcome is gonna come out of that, because it doesn't make sense for us to change them into EURO and then re-change them into dollars when needed, let alone the fact that every time you change them, you're losing, you're losing money. We've always taken the attitude that if we have a foreign currency deposit that we plan to spend, we just don't change it, and we keep it in that currency. This is the case of the dollar. As I have explained, the Breezula clinical, which is gonna be our most important cost center in the next year, will be in dollars, so we will spend the dollars that we have. We have, could you come back on the phase II design evaluating clascoterone? When do you expect to conclude the recruitment and publish the first data? I think we told you this. The phase II design is relatively simple. The treatment will last six months, and we're gonna have two primary, sorry, two co-primary endpoint. The first one is actually what is called an objective clinical endpoint. It will be the increase of the hair in a defined target area, which will be tattooed on the scalp of the patient and then counted. It's called TAHC, which stands for Target-Area Hair Count. That is, as I said, completely objective. You just examine the tattooed square on the scalp, and you count the number of hair and how this changes over time as an effect of the treatment. The second, co-primary endpoint is a little bit more tricky. It's called PRO, and this is actually completely subjective. PRO stands for Patient-Reported Outcome. This has nothing to do with whether the hair is growing back or not, but it just has to do with how the patient feel. Do they feel better? Do they feel more comfortable? Do they believe that their hair has grown, even if it hasn't grown at all? Or do they believe that it hasn't grown, whether actually it has grown? That is the patient-reported outcome. It's something that has always been there in this alopecia trial, and so the result of the trial will depend on the joint performance of these co-primary endpoints. There's another question coming from Mr. Serero, Jerry Serero: Can you give more details on the guidance? Last year, you had large milestones with Winlevi and Cortiment. Despite the very strong underlying growth, without milestones or license, the guidance will be difficult to reach. We have tried to explain several times that receiving upfront and receiving milestones, it's an integral, essential part of our business model. We are not a commercial organization. We don't do direct sales. We develop products, and then we license the products to our partners. Milestones and upfronts actually are not occasional, they are embedded in our business model, and that is precisely what you should expect. I do understand that it is very difficult to model them, and it's also very difficult to predict exactly when they will come, but this is part of our model, and I think that so far, as you have seen, we have delivered. Question from Mr. Reto Eberhard: Can you talk about Genius GI competition in the U.S.? I would feel like cutting the answer very short by saying that basically there's no competition. Olympus had the plan of launching their own AI system. That plan has been delayed indefinitely. There is a company that's a spin-off of the Massachusetts Institute of Technology that, to my knowledge, so far, and with great fanfare, has placed one device. They've raised $150 million, they have placed one device. Last time I gave you our data, which was March 2023, we had placed more than 1,500. None of the alleged competitors have a marketing organization. None of them has the marketing power of our partner, Medtronic. I should just say that I'm not particularly worried about the competition, but even more, know while you do have some guys that are trying to develop a similar system for the detection, well, it's important that the market understand that we are far, far beyond that. Nobody has even yet conceived the creation of a platform and the deployment of a marketplace for AI applications. I think that if any of the competitors will get to the market, then we will be far away from where we stand the moment they come. I do have another question here from Mr. Ernst Burnett. Question is: Where will you get the cash to repay the debt? The answer is from our bank account. Chris Tanner is asking us a question: Does GI Genius revenue increase as a factor of performed colonoscopy or a factor of gastroenterologist using the system? That is a question that I have a hard time understanding, because what Medtronic gets paid for does not depend on the number of colonoscopies. It's a subscription that the hospital pays, and therefore, the revenue does neither depend on the performed colonoscopy nor by the gastroenterologist using them, because if the hospital takes the system and pays us and then doesn't use it, for us, it's the same because we get the money anyway. I hope I've made myself clear here. Another question from Chris: Given the excellent reports on AI and NHS, what is hindering the increased penetration of the EU market by GI Genius? Well, nothing is hindering, if not the fact that it is extraordinarily difficult, long, and cumbersome to deal with U.S., sorry, with European hospitals, because most hospitals are owned by the state, and they're not private entities. You have to participate to bid, you have to. You have very long procedures to get into, then you have to fight with the well-known scarcity of resources of the public sector and the fact that the whole of European welfare is under a lot of pressure. Thank God that the U.S. have a different dynamic, because if the success of anything would need to depend from the speed of reaction of European government, I think that we would still be at Stone Age. Finally, still from Chris: Could you describe the subscription model with Medtronic? That's very simple. Medtronic is leasing the device to the hospital, so the hospital does not become owner of the device, but Medtronic remains the owner, and the hospital pays Medtronic a monthly fee. The average duration of any agreement for the placement of GI Genius is currently 27 months. Why is this very important? Every time Medtronic signs a deal, it knows already that it will be paid also for the subsequent year and for part of the third year. This is very, very beneficial for their P&L and also very beneficial for ours. I believe that we've answered to all the questions. I don't know if there's anything left. There are no more questions, either on the phone or written. I thank you all very much for your time. Clearly, I'm more than happy to talk with any of you or answer to any further question offline. You can reach out to either me or Hazel at any time. Thank you so much. Have a good afternoon.