Right, good afternoon, everybody. As the last people come back to their seats in the room, for those who don't know me, I'm Mary Jane Elliott, the Managing Partner here at ICR Healthcare in Europe. And as you know, we always run an event at this conference, a session at this conference, which is a live conversation between a senior industry leader and a key journalist. And today, I'm pleased to be introducing two important people to both our firm and our sector. And live on stage, we've got Rob Koremans, CEO of Recordati, and Ray Castaneda, Deputy Editor of Endpoints News. About Rob, for those who don't know him, he's been at the helm of the international pharma company Recordati since mid-2021. He has already, since that time, created significant shareholder value for the company, delivered a variety of deals, one extremely recently that I have no doubt they will cover today. He's delivered a robust strategy for growth, product advancements for shareholders and patients, which are dear to Recordati's heart. Rob trained as a medical doctor and has held senior positions at a lot of businesses, including Sanofi, Janssen-Cilag, Serono, Grünenthal, Zentiva, and Teva before he took the reins at Recordati. So I'm sure you will agree, a senior leader here for us to talk to and listen to today. Rey has got 10 years of journalistic experience and has covered pharma and healthcare during that time. Endpoints News, I'm sure everybody in this room knows, but it is a daily online Bible for pretty much all of us and focuses on how healthcare companies, people, and money drive our industry. So Rob and Ray enjoy talking to each other, and over to you to discuss Recordati. Thank you. Great. Great. Well, thanks for joining us this afternoon. So I mean, that was a pretty. Long introduction. Yeah. Very detailed. So I guess maybe just to sort of break the ice a little bit, what was it like joining the company in 2021 where it's sort of like a family-driven business and you were here as an outsider, maybe trying to change things up? It was fascinating. I'm actually the first non-Recordati family member CEO. The ones that chose to bring me there actually wanted a cultural change. Otherwise, you don't bring a Dutch guy to run an Italian company, right? And I think they managed to do that. It was fantastic. The company Recordati was already doing really well. For your background, Recordati got listed 36 years ago and has been the largest, the single largest value creator for shareholders in Italy in those 36 years. So it's not a company that did poorly, but management and the board believed that it was time to step up in innovation and maybe move from a company that was very strongly managed by patriarch CEO, taking many of the decisions and a very siloed company to one where you would empower, bring more management team that didn't really have a management team. So for me, it was a bit of a surprise in that sense, but I knew what I was getting into. And it's not the first time that I'm CEO, but it was the first time that I didn't get any dead corpses in closets. Very transparent, very focused, very open, very non-political company. So it's an extreme big pleasure. And then living in Italy. Was there sort of like a process that you sort of had to fight to change that you had a bit of a pushback, but you eventually got through the door? I think you always have that, and it's still happening, right? Transitions don't just occur overnight just because you say that you start to do something different at the top. So getting people on board, getting people involved, making them really see how we could do things even more effective or sometimes better and empowering, creating teams takes a bit of time. But quite frankly, already when I joined, there were some new members in the organization, and I think for many of them, this came as they wanted it, right? So I immediately had a group of people who very much were change agents, and it works. And it's always easier to change a company when you're doing well, and there's no crisis, there's no panic, and we continue to do well, but we've stepped up in growth. The hardest thing, I think, was to really get people to honestly speak up and give their opinion, which is a little bit also against some of the Italian cultural behavior. People would respect the boss, and so changing that and having them to participate, I think, was and still is an ongoing process. So how different is Recordati in terms of with your processes compared to other family-owned companies? The other pharma companies that are family-owned in Italy are not listed, right? So what we have always had is a governance that was very different from the other family-owned businesses in Italy, which made the company more transparent, and that I think is a good thing. Now moving to more engaged management and having very clear but few focused objectives, say, this is what we want to achieve, this is why we want to do it, and getting people on board, spending much more time on internal communication, being more present with the people and not just get them once per year to budget presentations where they had to explain all the single cost items is very different for them. So I think for people, it's a big change, but one that I think is strongly welcomed. There's a huge energy in Recordati. That's one of the reasons why we're doing so well. People are extremely committed, and I do my utmost not to try and change that. It's quite important to keep that energy. Just to note there, we're taking questions, so I won't save them at the end. If anything pops up in my iPad here, I'll just sort of ask Rob about that. One of the things that was interesting about Recordati is you are trying to be a bit more international if you want to have a bit more of an international presence. What was the impetus behind that, and how are you implementing that exactly? I think quite honestly, we have two businesses, right? A traditional business that is in essence a business with branded products, but they're long after loss of exclusivity and they're promotion sensitive. And then, and that's a European business, Europe-focused business, and that's about 62% of our current revenues. And then we have a fast-growing rare disease business, which is global and our single largest opportunity. And by the way, Recordati's single largest market is the United States. Now, if you want to be more international and operate in countries like Japan, Brazil, US, and it's difficult to do that with a mindset of always and only having Italian managers. So what we've started to do, and my team now is more non-Italians than Italians, and the opportunities, and that's why we started to do it, are bigger in the US. If I look at rare disease, you can earn five times more in the U.S. than you will ever be able to earn in Europe. If you do your clinical trials and your programs only for Europe, even with rare disease, I don't think you stand a good chance of making good money. Our EBITDA, if you measure that as a, if you take that as a measurement for profitability, is on the rare disease. Our overall company is 37%, or actually the last nine months was 38%, but the rare disease is higher than what we call specialty and primary care, so the traditional business. You don't make that if you don't get to the U.S. We need to really be international, take opportunities there, and be where the opportunities are. Do you see yourself changing the ratio between those two parts of the business, or do you want to keep that kind of static for now? No, by nature, rare disease will grow faster. It's been growing double digit for over 10 years. This year, we're growing at almost 15% so far. We just did announce an acquisition that once it's completed, we'll bring the growth even further up. We hope to be able to do that by the end of the year, get the approval from the authorities. I would be surprised if we wouldn't be at a sort of 50/50 relatively soon. Already today, rare disease gets close to 40% with this acquisition if once it's approved. Specialty primary care is growing mid-single digit. Rare disease is growing 14%-15%, but always double digit. And there's about 6,500 diseases, rare diseases, with no hope for therapy, no hope for anyone in even symptomatic therapy. So the opportunities to do new things is so much bigger there. So how do you sort of figure out the targets to expand on with your rare disease pipeline? Do you first target the, we want to get into this disease, or are you more interested about how that asset attacks the disease, if that makes sense? I think ultimately we look at, is this addressing a real unmet medical need? Our experience is if there's a real unmet medical need, you'll find a way to get that product successfully to patients. Second, you look at what's going to be the return of capital employed ultimately, right, in your business plans. You put money, resources, people, attention, and everything behind it also to make a good return. It's those two criteria, but we don't work with fixed ratios. If I look at our return of capital employed over the last 10 years, it's been between 15%-20%. Quite good, but it's not that if something is now expected to be like 14%, all of a sudden we won't do it. Strategic fit, can we really make a difference? How much do we need to invest? What's the risk? All these sort of things come to mind as well, right, if you make decisions, but I think at the heart of it is the true unmet medical need. Right. With rare disease, so you said that the U.S. is sort of a big market for you with rare disease. How sensitive is the rare disease as an indication to sort of geopolitical sort of issues, especially with the U.S.? With the upcoming administration, yeah. No, I think frankly, if you would make your decisions based on short-term politics, knowing how long it takes to develop products and bring them successfully to market and harvest, I don't think today we would have ever enjoyed the medicines we have today if people would have taken decisions only based on the short term, right? You need to really fundamentally believe in what you can bring for patients. And even after, no one really knows. I think it's early to speculate on what will happen under the Trump administration. But I would be very surprised if truly unmet issues, clinical issues, medical issues don't get also the right support. And we've seen the U.S. as a very attractive market. If you look at, it's probably where you can make 80% of your profit. So it's very significant globally. I don't see that change, frankly. Our products are never in this super high end of prices. We tend to be modest if we can. And they're also not the biggest cost factor for the administration on our company specifically. I don't expect any real impact from this, but let's follow it and monitor carefully. It might actually even be an opportunity. Some companies do react and investors do react to some of this pressure. I've already heard some CEOs and CFOs of companies state that they're moving out of certain rare disease areas. We'll be happy to take on these opportunities if they fit. It might be an opportunity for us. Yeah, so you're pretty much sort of like under the radar, slow and steady, and then look at how things go. Because with the incoming administration, it's one thing about it, it's very unpredictable about what they're going to do, so. Yeah, I think it will be unpredictable, and even if they're in place, you never know what's going to happen tomorrow. Our products typically, we have on rare disease, we have about 20 products on the market, which is a bit atypical for a rare disease business globally. Typically, we would have three, four compounds, which means that many of them are just, what, €100 million, €200 million. The biggest one we have in our pipeline we expect can do just short of €500 million or so. Our experience is that the Novartises of this world and the Sanofis of this world, with whom we have done deals, don't consider this to be interesting enough to really focus on it, and for us, it makes all the difference, so spreading that is already a bit of a diversification in rare disease. Then you're staying under the radar, really. Some of our products only have 60, 70 patients in the U.S., right? Ultra rare. That's not on anyone's radar, and we just really want to be as good as we can for those patients. One of the interesting stories this year is with regards to drug manufacturing. One of the biggest stories is the Novo-Catalent deal. Does that in some ways affect you directly, or do you have sort of like any insight about these kind of mega deals in terms of how does it affect a smaller rare disease company compared to these? They're buying a lot of capacity with those companies, and they're paying big money. Yes, there is some sort of impact. At Recordati, the practice is that we produce about 60% of everything in-house in Europe. Also our own API. In the last unstable geopolitical, very unstable times, this has proven to be a real advantage. I think in Europe, we're well advised to not get too much dependent on countries like China and India. I think you'll probably also see that locally produced products in the U.S. will get favored under the to-come administration of Trump. That has been an advantage in the past as well. I think it's something you need to really take into consideration. Now, for rare disease products with very small quantities, no one expects you to produce it in two, three locations. It's often simply not feasible. I don't see this as a, and there's no alternative, right? For most of our products, there just isn't an alternative. So it's going to be difficult to deny access. I wouldn't be too worried about tariffs and things like that. But I do believe it's important to be able to control your supply chain. So where's the other 40%? And do you sort of see that ratio changing anytime at all, or? No, the 40% is typically with contract manufacturers. Oh, you outsource the 40%. Or they were outsourced when we acquired the products, and doing a tech transfer can be very pricey. And for small quantities, sometimes simply not smart. And we continuously make decisions on, is it better done in-house, or should we keep it outsourced? I think our current ratio is pretty okay. If anything, I would love to sometimes have a real second source, but with many of the biotech products, that's a bit of a challenge. And then you really depend on having a very robust and reliable supply chain. So would you sort of consider expanding your pipeline into adding like a fresh new mechanism for a disease, for a rare disease, or do you still see yourself doing what you're doing now? No, traditionally, before I joined, Recordati basically acquired products on the market or very, very near launch, which is a beautiful way of avoiding risks and has been very, very good for Recordati given the financial performance. What we said is with the products that have been acquired from Novartis and also with the acquisition we did from a company called EUSA Pharma, we have opportunities within our own pipeline to do what you would call label extension, right? So get for new indications. This we can do in-house. It's relatively low risk and relatively low cost. It can be very meaningful. So we've started doing that. And with that capability in-house now, I would be very comfortable taking any product on board that is after clinical proof of concept and take it to market. It doesn't have to be in one of our current indications, which is rare oncology, rare endocrinology, or metabolic disease. I think rare per se is a good space for us to be, and we would be able to do that. But the latest announced acquisition of Enjaymo from Sanofi is a product that is already on market, right? So we are aiming at bringing also some of the colleagues of Sanofi in-house. And of course, we can only do and start doing these things once it's approved by the authorities. But I think it's an opportunity then also to look at once we've really made sure that we've brought in the product and integrated it well, there's an obvious question around, are there other indications that could be useful for this as well? That's a bit what you will see, I think, with many rare disease products that you look at. Are there other indications that could be interesting? So how do you, how does that work when you buy that product from Sanofi? Do you sort of take some employees from Sanofi that work on that product, or? It's their choice, right? They're employees in a free world. So we have to convince them that they are better off working for us than staying with Sanofi. Many have reacted very, very enthusiastic because of a dynamic environment. And we would really focus on this product and give it all the attention. And Sanofi has so many. So I think some people feel very comfortable with it, but I'm also sure that there are some people who say, you know what, I work here already 25 years, and I'm not going to change over to Recordati all of a sudden. But you have to explain what you do, why you do it, and they have to like what you offer and then join. And ultimately, it's their own decision. Of course, we talk very openly with Sanofi, and they've been extremely supportive in this process. But we can only really start once it's approved. Yeah, that's right. So I want to talk about China. What's your footprint in China like at the moment? Our rare oncology products are sold through a partner, BeiGene, and we have just recently launched our first metabolic product into China, and we got an approval for one of our key products in endocrinology, Isturisa for Cushing’s disease and Cushing’s syndrome, so we plan to launch that, but we have a relatively small footprint, and you don't need a big footprint. We will not produce. We will definitely not transfer technology there. We'll just have it as a commercial outlet, and work closely with doctors and patients there and the authorities to help and treat patients in China. Is that an attractive place to sort of find new technologies that you might want to take in, or is it? It can be, yes. I've seen some very interesting cell technologies coming and being developed there. So far, we work more with Japanese and American and European partners. We haven't really done much with Chinese partners yet, but it doesn't mean that it couldn't be attractive. I think, yeah, we have to be a bit careful there, but there are also patients who need treatments in China, and when our products can make a difference and help, I think it's our obligation to make sure that they get to patients, and we believe that on endo and metabolic, we can do it ourselves. On onco, we'll continue to work with the partner. What do you mean careful? What's the danger there, or what are the challenges in getting into China? In the past, people have seen technologies get copied quite easily in China, which I think is potentially still a risk. And if you talk about governments and regulators that change their opinion and approach very frequently and very fast, this happens in China, right? So you can really go with one way and say, okay, I need to do local production, or I have to do all the clinical trials in these dedicated clinical sites. And then all of a sudden, when you get close to market, things have changed and you have to start new. So it's a bit more of a complicated market. So do you, one more question on China, Biosecure Act? How would that affect Recordati if it will? And do you see any opportunities there? Biosecure Act? The Biosecure Act, yeah. Cool. Good question. I don't see us. I wouldn't know, honestly, Biosecure Act. We're not so strong into this area of anything with vaccines. I could see an opportunity for people in that space. I don't see a big impact on Recordati, but more of not knowing. Right. Yeah. It's the second degree impact, I guess, the ripple effect. Yeah. Yeah. That's something to look at. We've got a question here. Do you see further company consolidation in Europe to potentially compete with the U.S. or China companies? I don't think it's a question of size, frankly. I think it's a question of price, right? If a European medical agency keeps putting all sorts of very specific requirements for Europe and you have to do clinical trials in a certain way, which makes it very expensive, and then you don't get any recognition for your innovation going to France with breakthrough therapies, first time you can treat a certain disease, and they give it an innovation status of four, right? I think that's not helpful. So for me, the real challenge on Europe is more the pricing and reimbursement and speed of access to the market. I'm not so sure that it's necessarily only a question of mass or critical mass. Of course, I think if we would really put more focus on innovation, but I would believe it's always going to be important then to be globally active, and frankly, I think that the biggest opportunity will still be in the U.S., so people would focus on the U.S. So what's your, you know, going back to Recordati, what's on your blueprint at the moment? What's in your five-year blueprint, I suppose? We haven't disclosed our targets for five years, but it's a fantastic momentum in our specialty primary care business, which is largely European, with also countries like Turkey and Russia and Ukraine in scope. This is growing mid-single digit. We continue to do some acquisitions there of products that are still promotion sensitive. And we're looking at partnering to bring products to market, very late stage development in cardiology, cardiovascular rather, or in urology and gastroenterology where we have a footprint. And on rare disease, we look at it globally. We will continue to develop the opportunities within our current pipeline, which if they would all be successful and all come to market, which never, ever happens, we have the opportunity and potential to almost double our current revenues for rare disease. And we continue to really look at acquisition. Our growth has been traditionally 50% organic, 50% through acquisitions. I don't see that changed dramatically, and we will continue for BD to really, and M&A to focus more on countries like the U.S., Japan, and Latin America than on really Europe. It's important. It's nice. It's good, but it's not the key thing for us. The key thing would be to continue to grow in the U.S. You mentioned earlier that you've got a footprint in Russia. What's that like at the moment? And how does that? We have a local. We have two of our businesses in Russia. It was a difficult decision when Russians invaded Ukraine. Do you want to continue to do business there, right? And of course, you will have to follow all restrictions and follow the rules and the law and stay there very, very clearly within. But then we took the decision as a company that in essence, we don't differentiate whether people have what their background is, what religion, where they live. We believe that everyone has a right to get the right therapy. So we make our products also available in Russia and in Ukraine and within the restrictions there. So we have a commercial organization. We don't produce, but we have a commercial organization, medical support, making sure that patients have access and use it in the right way. That's what we do. So how do you sort of make sure that it gets to the patients? Have you sort of increased your commercial footprint there or added? No, we stayed more or less stable. One of the beauties of rare disease, you don't need so many people, right? So you can work with smaller teams. And that was a very focused team, which we kept making sure that patients got access and kept using the products in the right way, like we do everywhere and anywhere in the world. And we keep monitoring very, very closely to really make sure that we stick to all the rules and not ever do business with people that are on lists, which you don't really want to do business with or can't do business with. Yeah. So I've got a question here. So what does a Recordati look to do differently when it brings in their new products? How does it add value? Yeah, well, you add value through your existing connections with doctors and patients in the fields where we really have a good relationship with the relevant stakeholders in that market and know exactly how to bring products to market. What I've seen in the rare disease space, you need also a certain agility. Big, big companies, big doesn't necessarily make you more effective. You need to be comfortable with being intimate, if that's the right word, with patients and doctors in a very personal way. Driving diagnostics and diagnostic rates is very important. And many of those diseases, people don't know that they have this disease. Doctors don't know the disease. On average, it takes about 10 years before they get diagnosed. And then making sure that this accelerates and that when they get diagnosed, they get properly treated. There's a lot of education, and we know how to do that in a very targeted way, and then I'd like to think we also know how to make sure that patients use the products once they're on it appropriately. There's a huge number of people that stop therapies because they feel better or whatever. Making sure that they adhere when they can benefit from the products is something we do very personally and very directly. Many of our competitors in the U.S. use all sorts of more generic specialty pharmacies. We tend to really have very dedicated, personalized approaches to patients, which makes a difference, so I think it's a combination of things that we do differently. Yeah. And we get very passionate about what we do and drive it for the patient's interest as fast and as hard as we can. Are there sort of any disease spaces that you sort of want to get into that you're kind of keeping a close eye on? There are hundreds that we would love to get into because there's so many. There's such a huge unmet need still in the rare disease space, and I think the entire space is really interesting. Yeah. We're now very, very focused on rare oncology, rare endocrinology, and rare metabolic. If we could get anything in that specific three areas, it would be even more useful because we already have all the network and footprint and people out there, so that would be an extra bonus, but we don't restrict to just that. We look at the entire rare disease space. So you prefer to focus on those areas where you already have a footprint rather than starting like a fourth? Where we can use our expertise and our current footprint people, it makes more sense. But like I said, for rare, you don't need hundreds of people in the U.S. to help and bring your products to market. You can do it with a fairly small team. So it's not necessarily the number of people or the size. But once you have that and you have the close connections inside know-how, all the competencies related to a specific therapeutic area or a specialist group, then it's more logical to focus on that. We've got a question here. How does Recordati's recent acquisition of Enjaymo align with your value offering and broader strategy in its rare disease franchise? I think it fits very well. It's a product that addresses a really big unmet medical need called cold agglutinin disease. It's a really serious disease for which there was no other therapy. This is the only product available registered to treat this, and it makes a real impact on patients. There's a nice synergy with Sylvant, our product that we bring into the more hematology oncology space, where there's a nice overlap with the target audience that fits quite well. It fits quite well from the mentality of being very close to patients, and the Sanofi people that we interacted with picked it up immediately. That is a surprisingly big alignment to how you really want to approach patients and train them and help them to deal with the product as good as they can, so I think it's a perfect fit in all of that. How did that acquisition come about? Were you actively looking or did you sort of, did they sort of? They were actively looking. It was a public process. More companies were bidding, and we in the end won this race. And we have an extremely competent and a very good track record, extremely competent BD M&A team. And yeah, we managed to get this one on conditions that we think are very favorable financially. And the fit is really good. So we're really happy with this one. But it needs to still be approved. We expect this to happen still this year, but subject to approval of the authorities. Yeah. So what's your secret sauce, I suppose, then? If you've got a really good M&A team, well, you know, what's your good approach there? Don't get too many lawyers involved. No, I think there's no secret, right? It's hard, diligent work. We have some very competent and experienced people. They work in a dedicated team. They've been working together for quite some years. They know how to run these processes. And we do get some legal support, but we try to stay away from it as much as possible. And then I think it's also understanding how the other party works. And we've done deals with GSK, with Novartis, with AstraZeneca, now with Sanofi. They know that we know how to do these sort of things. And also with smaller companies where the owners, inventors know that we are not huge where this product will disappear, right? They feel that we are really still personal, where they don't become a number and the product doesn't become one of hundreds. I think we're attractive for both ends. Big pharma knows that we know how to do these things. We're fast, we're focused, and we were able to move really fast. And then we have the financial profile to be able to do the deals. Having our Specialty Primary Care businesses, which is highly cash generative, we have, I think, the highest margins in the industry with 37% EBITDA. You're really doing things with products that are off patent. We're doing things quite effectively, but that gives us financial power to invest in spaces like the rare disease and do good deals. So there's no secret. It's a lot of discipline, hard work, knowing what to do, competence, and then take decisions and move. So we've got a question here. So how do you figure out the rare disease division growth, like building a portfolio or more acquiring a portfolio from companies? I think it starts again with addressing the unmet medical need. Of course, if you acquire a company where there are also some earlier assets and there's the competence in-house, I think acquiring a company with the pipeline is then an attractive way. But it comes back to, is this really something that will make a difference for patients? Address that unmet need. And are these the capabilities and competencies we need? And is this ultimately also something that financially makes sense if we do our projections on return of capital? I think we've got a really good question here to end this talk with. So hang on. Time flies. Okay. How do you feel about 2025, both for the company and the broader healthcare industry? For us, I feel very good. We are in a fantastic moment. We have a fantastic momentum. I don't see that slow down anytime soon, and frankly with the Enjaymo acquisition being probably in place, subject to approval. The growth will continue. We have a fantastic momentum there. Our people are making a huge difference, and I don't see that stop at all. We gave a guidance before that we would, without Enjaymo, without any further deals already, at least achieve €2.4 billion next year, and Enjaymo, we expect to do another €150 or so at least. So we're looking at a growth trajectory that is very attractive. The industry has been tough in the last years, right? Geopolitical, so many changes, and I would wish that it would change and that it would be a bit more predictable, but I don't think it's going to happen, right? I think next year is going to be volatile. Geopolitically, logistically, but there might also be opportunities, like I said before, right? With companies like ours, where some of the biggies say, well, we move out of certain fields, there could be opportunities for companies like us to tap into that. So I expect it to be a challenging year and one that will require full attention and focus. But I expect us to continue to do well next year. But it's not going to be relaxed, enjoying the dolce vita in Italy. It's going to be hard work, which is good. I've got one final question. So if you weren't the CEO of Recordati, what do you think would you be doing today? I couldn't think of anything else. No, I think I would be in pharma. I would probably be in this space, but I do know it's fantastic to do, and it's an amazing privilege to be able to really make a difference for people, to do it in a way that also makes a difference for investors, and to see the world in a way that to travel and meet people, so I would love to do something where innovation is important, where you can really drive in growth. I don't know. Making wine, but I'm a bit too young for that. Great. I think that's all that we have time. Thanks for joining us. Thanks, Ray. Good one. Right, I've just got to double check. I have got the detail. Okay, let me just check. I've got it. Yes. Okay, I do need... Okay, good. Hi everyone. So for our last panel of the day, we are going to have a little bit of fun. And it's a totally hypothetical scenario in which these guys here are the management team and advisors, and you guys are the board. And you are going to decide what this company does. And we're going to throw you some slight curveballs and different things to happen. But the most important thing is if you could all take your phones out, which I know is not really necessarily something you want to do at a conference, but if you can take your phones out, go on to slido.com and type in this number, and there's going to be a poll. And at each point, I'm going to tell you to vote. And that's the most important thing. So if you can do that, and while you're doing that, I'm going to introduce these wonderful people here. So we have Renée, who is CEO, still CEO, even though you've got bought... No? Yes? No? Yes? No? I did step down as CEO first on November. She stepped down, but she was... I was. She was the CEO of Calliditas Therapeutics, who was just bought by... Yeah. Yeah. And a very, very good deal that was. We have wonderful Nicola, who is from Cooley, and she is actually going to be playing herself today. She is going to be our legal advisor for the day. We've got Roel from Syncona, who's an investor and is going to be using his investor head. We've got Liz Shanahan, who's chair of the board of AMS. Richard Taylor, who's Executive Director, Business Development, European Innovation Hub Transaction. Did I get that right? I think so. From MSD. So he's going to be playing a bit of the pharma head and thinking about that. And then last but not least is the wonderful Gino from Citi, who is also going to be playing himself. He's going to be playing the banker. Everyone good? All right. So let's go and set the scene. So it's February 2025. Markets are very buoyant with inflation continuing to track downwards. The Fed continues to cut rates. There has been a ceasefire in the Middle East. The jobs market is constructive. Nasdaq follow-ons are happening regularly at sensible discounts and are trading well. And there are many rumors of IPO candidates lining up and filing confidentially, especially in hot areas like obesity. So suspended disbelief a little bit. This is hypothetical. We're just having a little bit of fun. So introducing Fit Happens Therapeutics, of which these guys are the management team and you guys are the board. So next slide. First situation that hits... Oh, hang on. We've missed. I've got to explain that. Haven't I first? Oops. Sorry. Back up a second. Let me get my slide. So Fit Happens is a private company which was incorporated five years ago in the U.K. It's a platform company with one lead differentiated obesity asset, and it's not a GLP-1. It's just announced positive top line phase II-A data with clinically meaningful reductions in body weight. It has one other asset in the clinic for rheumatoid arthritis. The rest of the pipeline is early, but some promising follow-up assets are also in obesity. The company is primarily VC backed, but also has a pharma company on the cap table, Richard. The company has been in discussions with pharma companies, so to our panel before, it's been doing its relationship building and it's talking to various pharma companies, and post data, these are heating up. Some financing discussions have taken place, but at a lower valuation than the company would like, and importantly, the board is a bit divided, so some investors are maxed out and they're looking for an exit ASAP. The others have deep pockets and they want to build long-term value. And importantly, the company has 18 months cash. So now we can go to... Phase II-A data. Phase II-A data, yes. Positive phase II-A data. Yes, that was bullet point two, just to make sure. The next stage would need to do a phase II-B. Yeah, so our first news flash. Fit Happens receives an approach from Deal or No Deal Pharma for an option to take a license for its lead obesity asset. And this is the deal. Do you want to take this? Yes, so our lawyer is going to tell us. The deal is there's an offer from a pharma company to enter into an option with Fit Therapeutics to take an exclusive license to the obesity asset. It's not actually clear exactly over what obesity product, whether it's also the sort of the other assets that relate to obesity, but definitely for the obesity asset. It's an offer. It has an upfront that is lower than the company was hoping, but there are some reasonable sort of long-term development and sales milestones. And there's a low sort of single-digit royalty that's being offered. And the pharma company is wanting to take the option and then it wants to take on the development through to phase II-B. And without the company doesn't need to do anything. So the company will be able to use the upfront, although it's small maybe, to forward its other assets. And there's no sort of co-promotion or going forward for the company. So it's sort of a pretty straightforward option to take a license. And the pharma company has asked that it should be able to, it should have 90 days exclusivity to negotiate the option agreement with the company. Okay, everyone clear on that? So I guess first things first, Rob, what would you be thinking in this situation? I'm going to pick on you. Right away. It kind of feels like we're in a good place as a company. Good clinical data. We have cash. Markets are doing well. It feels like financing a phase II-B study in obesity is not an impossible thing to overcome to finance. And we have a couple of shareholders who might not be completely aligned with that mission. So getting a term sheet that allows us to have a discussion with those shareholders feels like a good thing to have. Managing the dynamics of that discussion in such a way that we don't end up in exclusivity with someone who says, "Take it or leave it." That's probably something we want to be careful about. But I would feel pretty good about life in a situation like this. Okay. Gino, what would you be thinking from your side if you were? Yeah, I think I agree with all of those points. I think the critical point from my perspective is you certainly don't want to be thinking in a vacuum, right? So you want to be assessing both your strategic and financing alternatives. So as I think about that, there's the go-to-loan strategy, right? There's looking to get capital from existing investors and/or new investors. There's naturally the term sheet that we have in front of us. And then there's trying to understand, well, what potential other offers are out there. And I think you touched on in the beginning of the dialogue, which is hopefully at this point, you've been in dialogue with other pharma to get a sense of what the level of interest is. I think part of what our role would be as bankers is also to kind of bring to the fore in our discussions with other pharma companies who's interested in the obesity space, who's interested in metabolic disease, and sharing that with you, and then again, I think as it comes to some of the other dynamics, when you think about valuation, again, you want to have a proactive approach to this as opposed to reactive, so hopefully at this juncture, you have a sense as to what the value of the asset is at this point in time. It's in phase II, so it's relatively early and you need to risk adjust that, but that said, you'll have an understanding or sense of vis-à-vis a licensing, M&A, or even going to do another private capital raise and/or going to the public markets. How do those different options stack up against each other? Doesn't the 18 months cash worry you? Yeah, I think 18 months cash is actually a good place to be, and we're going to jump ahead to maybe one of the scenarios where you've been in discussions thinking ahead where it hasn't quite worked out the way you wanted and you've got a 12-month runway. 12 months, being inside of 12 months of cash certainly worries you, but I think at 18 months, you certainly have a decent amount of optionality, particularly set against the backdrop that you described in the beginning where the macro environment is a pretty healthy one and financing is open to both private and public companies. Yeah. Richard, what would the pharma in that kind of opening gambit of when they put that first kind of term sheet out, what's going through the pharma's head? Yeah, I mean, I think from a pharma's perspective, I was going to give you a broad perspective, but I mean, I think you've got an offer from a pharmaceutical company. You've not gone shopping yet. They've not gone out to seek buyers, but somebody has proactively contacted you and said, "We're interested," and they've given you a term sheet. So I think that's worth a lot. You're not just spinning the wheels with somebody that may or may not get interested later. They're seriously interested. So I think that's something that you should take as something that could potentially move very quickly and that is a bird in the hand, if you like. So I think it would be if the upfront is lower than you'd expect. I think, again, from a board perspective, I would probably be sort of wondering about what we could do to negotiate that up, but also creating sort of some competition and one doesn't have to wait for the other. You could start the negotiations with the big pharma. I think from a pharma perspective, I think they'd be very. I think the exclusivity is super important to them. I think they don't want to stimulate an auction having been first across the table. And I think it's important to recognize that pharma will need to put on. How do they stop that? How do they prevent that? I mean, with the exclusivity, I think that would be something that's important to them. They're going to have to put on a huge amount of resources to do the due diligence and to start those negotiations. They're probably willing to negotiate on those, but it's difficult to negotiate on the terms without knowing what it is you're buying. You sort of give them a rough idea of something that's de-risked. For the pharma's perspective, we can give you some upfront. We can share in the success later on. You can do that sort of offer without having seen too much science. If you want to increase the offer, you need to see where are the risks? How do you mitigate those? Can you pay more upfront? I think those are things that you'd need to sort of start thinking about. But I would certainly start negotiating with the big pharmaceutical company. And I'd have, I think, very strongly about whether or not you'd go through exclusivity. I think that would be another negotiation in its own right. And it's probably the final point to make, I suppose, is as a biotech company, do you have the resources to sort of run the due diligence with a pharmaceutical company and negotiate with them while also trying to find other partners and potentially also running an IPO or whatever else it may be? So you've got to think really carefully about what you're going to do with your resources and sometimes just pushing the potential partner that you have, see where that's going to take you. And I think that if it's not good enough, then fair enough, walk away and start exploring other options. But you do need optionality, but yeah, just need to be careful on your resource. What about from your perspective, from the CEO? What do you think the CEO will be thinking about at this stage? I mean, I think that to some of the comments, I think that obviously this is good news in terms of there is a validation of the actual asset. Someone's come with an unsolicited offer. That's always good. I think on the other hand, I think you also need to keep a really cool head. Obviously, the team has worked really hard to get this. Data is very good. Markets are very supportive. I think management needs to kind of balance this with the kind of investors and some of the other pressures that might come to kind of do something quick and simple, but that might be a suboptimal outcome for the company as a whole, particularly if this is basically kind of what do you do if the upfront isn't going to be sufficient for you to actually advance any of your other assets? So, what does that actually leave you with as a remnant? And is this really a fair payment in terms of for all the work that's gone into the asset? It's really true. So, I guess from that perspective, my view would be that obviously I would be absolutely against exclusivity. I think that kind of takes away all your options. I think you absolutely need a plan B, maybe even a plan C, but definitely a plan B. So, I think you need to have at least two options. And so, I think you do need to kind of use this to kind of really explore and see what else might be out there and maximize rather than kind of rush for something. Yes. And Liz, would you agree? I would agree 100%. Yeah. I mean, I think exclusivity at this stage is really challenging, especially given what we're saying is the price point is quite low versus what we were expecting. But also you're then depending on milestones for them to achieve. And often their priorities change. And so what you might get actually after the event is a lot less than you had anticipated. I think people forget that sometimes when they're thinking about those negotiations. But yeah, I think exclusivity at this stage, I think plan B and plan C, definitely. Nicola, from a legal perspective, what would you say? Just add something to the exclusivity. I think 90 days is a long time for exclusivity as well. I think you'd want it preferably to be like 30 days. But I guess I don't know what you typically ask for, Richard. As long as we can get. Yeah, I think I agree with that. I think if you are going to enter into a scenario where you're getting exclusivity, probably three to four weeks, 30 days is the max that you're willing to give out. But you're also sending a signal then as a company saying, "You've come in with this unsolicited offer and we're willing to give you exclusivity on day one." I mean, that's like. Exactly. That's just a scenario that would never happen. So unless you're getting an absolute knockout offer where you've, again, you've got a sense that you think the asset is worth X and the pharma company has come in with an offer that's maybe twice what you expected, in that scenario, you'd consider exclusivity. But outside of that, I mean, again, advice you can take. I agree with you. I don't think you give exclusivity, but I think at some point you work to get the farmer really interested and get them to do the detailed due diligence. You're going to have to give exclusivity. Yeah. But you definitely don't want to give them 90 days. Yeah. And it's not just a discussion. We're talking price and exclusivity here. We should talk structure as well. Because this is not a deal that's going to do anything for the shareholders in that company. So as a board, sort of try to explain to your shareholders why to do this deal because this essentially leaves nothing on the table to build a company around. So you're in a good position. You can finance. You have other options. You're in a position to develop plan B and plan C. I mean, there's not even a discussion about price and exclusivity until we find a deal that makes sense for our shareholders. Good. Okay. I think this is straightforward. We're agreed. Let's see if the audience agrees with us as well. So do you proceed with negotiations on an exclusive basis or run a banker-led process? I think we're agreed here, but let's see what you think. Oh, we've got six people in proceed with negotiations on an exclusive basis. Okay. Oh, it's coming down. Someone's changed their mind. Oh, I'm influencing. Sorry. I'm influencing the vote, which I really shouldn't. Oh, wow. We've got 74. Okay. I think we are all pretty much agreed that we will run a banker-led process. So Gino, you're going to be busy. Right. Next. So the nice thing saying negotiations with deal or no deal are taking a long time. But Fit Happens only has 12 months left of cash. Uh-oh. Another big pharma, Titan Therapeutics, offers to buy Fit Happens Therapeutics. Titan Therapeutics empowers health one titan at a time. The offer is at a lower valuation than anticipated and hopeful by the board and management team, but provides investors with a return. The offer places most value on the lead asset with little or no value attributed to the platform or the clinical stage RA asset. On the other hand, the licensing deal, while taking longer than anticipated and having a low upfront, does provide significant backend bio- dollars if the product is successful. Hang on. Let me get to my questions. Do we sell the company? What do you think, Renée? No. No. Well, I guess it's a little bit early to answer that question. But I guess that one of the just thinking about kind of the differences here is obviously bio-dollars, and I think this was mentioned before, is a very kind of difficult concept because obviously you're giving away your ability to control the development. That means you have no idea how long it's going to take if they're actually going to spend the money. You're in a competitive kind of industry, whatever. So actually you lose all the control you have in terms of ever generating those kind of backend loaded buyer dollars. And I think we've all learned to discount some of those kind of buyer dollars quite significantly on the basis of kind of how much control you have and who your partner is. So I think that's a bit of a risk. In terms of selling the company, so obviously again, it says that it's an offer that is not kind of super exciting for the board or for management. And so again, I would still kind of say that this is an opportunity for the company to have those conversations, but actually proceed with an alternative that they can control, such as an alternative financing. That would be my view. So how do you juggle, Liz? It's a small biotech trying to juggle two processes of a licensing with 12 months of cash and trying to negotiate possibly with Titan to create this competitive. Possibly even a third. Possibly a third, yeah. Possibly even a third option. It is quite challenging, and I think that's where you will depend a lot on some of your external advisors to support you on that, and in terms of how you can build the right case, but what you have now is validation. You now have two offers on the table that say a lot about your ability and what you've developed. I think on top of that, you also have a clinical area that is quite hot at the moment. I think, Liz, we might. Is it? Is it Nicola? Is it Nicola? Oh, right. Okay. So you have a clinical area that's really quite interesting, and I think there's a lot of external interest in that. I think the big challenge you have is, I think we said at the beginning, divided investors. So half of them wanting to get out, the other half wanting to knuckle down and continue to invest in the business. It's the half that want to get out. Now you will have some big challenges with, I think, if you have an actual formal offer on the table. Richard, thoughts? Yeah. I mean, it's difficult without proper numbers, isn't it, to figure this out? So I think that it will come down to that and sort of take factoring in the NPV. And I suppose a couple of other things just to think about. I suppose if you do the licensing deal, if that upfront is sufficient to give you that runway that you need, it means the rest of the company is still intact to pursue its other programs, assuming it's got something. If that's your only asset or series of assets, then obviously you can juggle between the buyout versus the license. I suppose the other thing is maybe on the buyout, you could also consider. It'd be interesting to see what you think about this, but I mean, you could also consider sort of spinning out the assets that they're not interested in, so that haven't been valued. If they're not valuing, then you don't get them. So that could also be part of it. So you can have a Phoenix rising from the ashes. So in some ways, both of those get you to the same point, and it's a matter of the numbers and the sort of the hassle factor which goes with those. And I guess if the bank's advising on both, then they could potentially help with that. But yeah, I think that's probably the things to think about. And Rob, for you as the investor, would you say, well, it's an exit for you, right? And it's a modest return. We don't like modest returns. Fair enough. So it's an interesting situation. I mean, at a high level, I mean, we've obviously, as a team, we've been thinking about this and we've prepared for this. So we do have the resources to, Richard's point, to run these processes in parallel. And the part that we're missing here, going from 18 months to 12 months in cash, we've probably been in the market exploring what financing options we have because we don't want to run a strategic process without knowing if we have the option to independently finance. So I would expect that we have some options on the table there. The other thing you would expect at this point in time is that you've had a discussion with your board. There's two things that are going on here, right? So I have some shareholders that want to sort of be along for the ride, where I have some shareholders that want to get out. I also have a pharma person on my board. And so by the time that we get to this point, we've developed either a transaction committee on the board or a set of guardrails that allow us to have an effective discussion with our board and manage these processes in parallel. So it's great to have this. And if the first offer is an offer that is not necessarily the valuation that we expect it to be, that's unfortunate, but it is a better starting point for an exit discussion and for a banker-led process, I would say, than a licensing deal that takes out a key asset. So it's a good place to be. So we've got a couple of questions here. So when is the next value inflection event? So we would assume that that's the phase II-B data that they would go into a phase II-B and have that data. How much will the phase II-B trial cost? Assume there needs to be a route to that result if neither license nor M&A is pursued. Otherwise, the company is stuck. Absolutely. Which is why Gino would also be advising on the financing routes. As we've been doing. What have we been doing for the last six months? As I said, right at the beginning, from the get-go, you can't be thinking in a vacuum. So all of these options you'll be evaluating simultaneously. Often, I think the mistake that we do see companies make before they decide to bring in external advisors is choosing to go down a particular path and then six months later to say, "Actually, we haven't thought about that. Let's think about that." But as you rightly point out, you've lost six months. So I think it's absolutely critical to try and push all the different alternatives forward as simultaneously as you can. Because again, I think you're going to get to a point where there's a decision tree in terms of the decision you're looking to make, but you'll be equipped and armed to get to the right answer, understanding what's going to maximize value for shareholders under the different contexts. When you're comparing the license with the M&A and the consideration, you need to look very carefully at the M&A consideration because quite often that will be structured consideration for these sorts of deals nowadays. So the consideration for the M&A deal might be development and sales milestones in the same way you'd have in a license. And you can even see royalties. And so you're actually selling the company, but you're losing control over whether those milestones and royalties will actually be achieved. Whereas at least if you've got the license, if things go very badly wrong, there is a chance you can take back the asset. But that's much more difficult than an M&A deal. What about bridge financing at this stage? What would you be looking at? How would you structure that? Yeah, what are the options? I mean, I think if we're running out of money, then we will definitely need some bridge financing to get us over the line. And typically, that would be a SAFE or a convertible loan note. So short-term funding that will then convert once you did your M&A deal or when you did a further fundraising. But hopefully, we don't get into a scenario where just given the way we started and the situation that we're in, we're having to explore bridge financing. At that point, I think your banker or whoever else is to blame for getting in that scenario. I think it's one that you can navigate without getting there. Again, getting within 12 months cash is an uncomfortable situation to be in. It's not to say that you can't navigate it, but you do lose a lot of the leverage. And again, I think we're seeing recently, if you look at the last 12 months- 18 months, it's been quite challenging for companies that are looking to go public, particularly those that are going early to come to the right outcome. But again, if you're dual tracking or triple tracking the right way, often enough, the M&A scenario has proved to deliver or maximize value for shareholders at multiples of what you'd have done in an alternative private round and/or IPO round. So again, I think you've got multiple tools in your arsenal to get to the right place. Okay. So we've got a comment here. Board must also assess the impact of the pharma licensee eventually returning rights and developing the asset and rest of pipeline alone. So yeah, absolutely. It has to be considered. Okay. So in Fit Happens world, however, management time is seriously stretched and they're really very stressed. They can't pursue both a licensing deal or trade sale at the same time together. And they also want to get ready for an IPO, and Gino's really telling them they need to because he's saying the market's opening. And handle the regulatory file for the phase II-B as well because they're also trying to develop the asset and get that started. So we're going to vote. The vote is, should Fit Happens Therapeutics proceed with the licensing of the lead asset in parallel with financing options or proceed with the trade sale in parallel with more financing options? I need to turn them, sorry, I need to turn this on. Apologies. There we go. There we go. Vote away. Oh. Oh, we're kind of using Steven here. I'm trying not to influence this. What do we want? I know then what we want. Okay. It's a close race. Interesting. So I think we're just getting there on, oh, oh, making a late break for the trade sale. Any more votes? I think, oh, now it's getting a bit closer. Okay, I'm going to be quiet. Who's doing this to me? Stop. Okay, gosh, it's very, very close. Everyone finished? Are you sure? No one want to change their mind? I think I've decided forward as well. I think I've decided forward. That was disastrous. I can't see from here, but is it 45? Oh, I should be able to. I can see it on here. It's 46 to 43, Crikey, for the licensing. Oh, just switched. Okay, so we are carrying on with the licensing of the lead asset in parallel with financing. It's a very indecisive board. Come on. Never happens. Back to licensing. It's back to licensing. Oh my God, we're pretty much 50-50, but okay, I'm stopping the poll. It's 46 on the licensing. You're not allowed to vote anymore, that's it. It's a trump. You're not letting you vote anymore. Right, okay. So what happens next? Aha. Dun, dun, dun. The IPO market is wide open. Biotech Times has said that three recent biotech successes have sparked investor excitement. They're all above their open price, and four more have come forward in the last week, buoyed by strong U.S. economic data. Successful IPOs and investor appetite are strong. And our next slide. But Titan, Empowering Health, one Titan at a time, has just gone back and upped its offer to purchase the company. Fit Happens Therapeutics can extend its cash runway with bridge funding from existing investors who want to build longer-term value. So we've got cash, we've got the bridge financing. The IPO market is going great guns, and Titan's also come back with a higher offer. So we've got our tension. We've got a better offer. What do we think? Liz? I'm just a bit of a divided board now as well. This is where the fighting begins. Quite complicated. It could be quite complicated. I mean, if the IPO market is buoyant, it certainly is something to look at. Obviously, this is quite a sexy position and asset. So it might be a bit overly buoyant initially, and then there'll be a bit of a reset, maybe in 12 months or 18 months' time when the whole market settles a little bit around obesity drugs. So there's that to think about in terms of what that might look like and how everybody would feel about that as it goes forwards, particularly from an exec perspective, given many of them, I'm sure, are going to be long-term shareholders in the business, and it's going to be an important part of that for them. I think, obviously, for our investors who want to exit, the IPO is a good option. Actually, both are reasonably good options for them, I would say. So it's really, I guess, having a look at which of the two options is the one that is going to give the best value. And I think your investors will be very clear what their preference would be, as I assume the board will be as well, even though they are a little bit divided currently. But I think as you map through the scenarios, I think people will be quite clear on what option they would prefer. Gino, what would you be advising? What would you be? Yeah, I think, look, I don't think it's mutually exclusive to have to go one way or the other. I think you can pursue both options in parallel. I quite like the idea of being able to test the IPO markets and have that optionality. I think what's quite neat about that, whether it's the IPO and/or another private financing round, is that you're in control of your own destiny as the company, right? Because the M&A deal at any point in time can fall apart. But you don't want to be in a situation where you're relying on the potential sale of the company, and then you're thinking about how to fund the company going forward. You haven't addressed plan B or C to address that, right? So I think running a parallel process where you continue to engage with the transactional term sheet you have is a good one. But again, I think it's also an appropriate time to revisit the other pharma discussions you've had and potentially do a market check to see if there's someone else out there that could potentially come in with a higher offer. We've got a lot of comments going on here, so I'm going to have to engage. So have we time for a crossover round? Have we time? I think we would have time to do a crossover round, but the IPO market is so hot and we would probably, yeah, would we? Gino? Again, I think it's very much dependent on what you're trying to achieve with the crossover round, right? So how much capital are you looking to raise? I think what's quite different about the market that we're in today versus perhaps pre-COVID is companies that are kind of preclinical proof of concept. It's harder for them to get to the public markets. So if doing a crossover is going to get you to a point where it's getting you to a point with a better data set, that might make a lot of sense. I mean, I would say that a crossover can cause a lot of issues at this point in time, actually. I mean, from a kind of investor perspective, I would not be very keen. We're sitting here, I mean, if you do end up selling the company, you just diluted yourself hugely. It's great for the crossover investor, but maybe not so great for the company or for the other investor. So I think if you do a crossover round, it's almost like you're committing yourself to say, "We are going to go public. We're not going to sell the company to some extent," right? So I think doing a crossover now, assuming that we're very, again, and I think we don't really know, I guess, how committed, yeah, we don't know how much diligence they've done. We don't know how committed they are, how long it would take, and if the deal actually would go through, I guess we don't know that. But I guess for me, I don't know, Roel. You have a different, maybe you have. No, I agree with you. I mean, sort of market conditions is one thing, but I think we should ask a couple of questions about the company here. So I mean, what's the capital plan for this company going forward? We can talk crossover, we can talk IPO. Those are both dilutive transactions for the existing shareholders. So do I need that amount of capital to get value from my assets? To run a randomized phase II study in obesity will take me, what, €40-50 million. I can easily do that with private capital. I don't need to list the company for that. My RA asset is earlier. And the other question is, am I ready? So market conditions might be amazing, but am I ready for listing? Right? It's going to take me 24 months from initiating my phase II study until I get any meaningful data that will support my share. So do I really want to be in that place? I'll raise a lot of capital. I'll dilute my existing shareholders. My share price will go down all the way until I get my phase II data from my study. So there is a couple of real questions that you want to ask. I do think you should go out and prepare for that IPO because I think Gino made the point earlier. The most effective tool in an M&A process is having optionality. And the best way for us as an investor to sell our companies is if a strategic sees that I have the option, I have the, I guess you use the term control of destiny. I can finance the company on my own. I have access to capital markets, and so you either pull the trigger on a purchase now, or you're going to have to buy something that has raised a lot more capital and is going to be a lot more complex, the discussion we're going to have, so the best way to get M&A is to run a parallel process. So many points here. They all are, they're going a lot. So IPO on which exchange is a question. Would anyone consider? Yeah, not a question. Got to be a U.S. Three people have liked that one. Okay. Sorry, I'm assuming Nasdaq, but everyone would agree. I think they've heard the evidence. It's an EEA-based company. Yeah, if you look at the last five, six years, we haven't seen that. Yeah, someone's asking how large and effective a Titan sales force will they be able to maximize sales and royalties? Can existing investors buy in the IPO and only in the private market? What is the timing of value inflection for the follow-on assets? Does the bridge fully fund the phase II-B? When does that report data? There's a lot of questions here, which we can't unfortunately all answer, but someone shouted out, "Not AIM." And don't forget, some investors want a liquid exit. Yeah, absolutely. So anything else to add from you guys before we go to a vote? Oh, Richard, Richard, I'm sorry. Okay. I think you need to decide what you're going to do with the money that you're raising from the IPO. Are you going to turn yourself into a Fitco? Are you going to take this all the way to the market and build sales? A fully integrated pharmaceutical company? Are you trying to take this to commercial yourself, probably in the U.S., certainly? Or are you willing to take that risk? So it really does depend on the appetite of the board. And you've got a couple of guys who are wanting their exit straight away. And there's some risk. So there is more risk associated with the IPO versus the merger. But I mean, I think you've got to have the optionality. You've got to progress both. And then I think it's then a matter of, like I say, just figuring out what you're going to do with the IPO. And that licensing deal might still be on the table, but now you're in a bit more of a 50-50 relationship. So maybe you could sort of share some of the costs of development and co-commercialization as well. So once you've done an IPO, you're in a stronger position to negotiate those sorts of deals. So you can generate some more value, but you're also taking the risk that it all might go pear-shaped. And of course, you're left with nothing. I think on the IPO as well, you have to think of the risk of going ahead with the IPO and the cost of that and then in today's market, finding that when you're actually wanting to get out, you can't, so it's not quite as secure route as, say, a few years ago when you could start an M&A dual-track type process, M&A IPO, and you'd know that if you decided to go for the IPO route, you could be comfortable that you were going to get that. Whereas now you could go down the dual-track, spend a lot of money on the IPO, and then you can't actually, the market's closed. Okay. Okay, so Roel, are you saying that the IPO really now is just a negotiation tactic, that threat? Not necessarily, but because we went through the fact that it's an option and it's a financing option. So let's be very careful, right? So the M&A is liquidity for shareholders. IPO is a financing, and it's definitely not liquidity for shareholders in the current market, and so it's a different business plan. It's a plan where sort of I finance my clinical studies and make sure that I get to a higher, hopefully a better outcome because that's the calculation that your team is going to do. If I dilute shareholders with these two financing things that I'm going to do to list, can I get to an outcome that is proportionally better than the deal that I have on the table right now? Because that, on a risk-adjusted basis, I would need to be convinced about that. Yeah, and we've got a question here. Why not look for a contingent value right to top up the offer price on, say, approval? What do we think of the CVR approach? The challenge, so you would have to do your diligence on Titan. But if you assume that they're an average pharmaceutical company, you're going to assume that it's not your risk-adjusted probability of getting to, or not your probabilized getting to the market, but it's your probabilized getting to the market and then them screwing up half the time. So you're going to lose value on that one because pharma buys optionality, whether it's a CVR or whether it's a milestone, a royalty structure. And that's not always based on technical success. That's your valuation model. Their model is, "I want to be able to make decisions based on data, and I will have every option in the world to prioritize and deprioritize the assets in my portfolio." So we're generally quite careful with that, especially about valuing these things. Okay. All right. Any other points? Or should we go and vote? Let's vote. Okay. So does Fit Happens Therapeutics proceed with the trade sale or proceed with the IPO process? You guys decide. Oh. Trade sale is getting. Okay. Wow. So interestingly, while everyone's doing that, what would you guys do? Renée, what would you do? IPO or trade sale? I mean, it all comes down to something that we don't have the information about: what is the actual price, right? I mean, I think if the actual trade sale represents a good return and you actually believe that Titan is a good home and will be a responsible, and the more cash upfront, the better, obviously. I mean, the more structured it is, the more I would actually go towards an IPO because I'd rather have control myself than give it to someone else. But I think if it's kind of an all-cash deal, I think it becomes quite tricky to choose the IPO. But I think it all comes down to kind of how do you feel about the price and the certainty of closing and what they're actually going to do with the asset. What about the human element of it, though? As we talked about, like you were saying, Richard, becoming this fully integrated company, I mean, how much does that kind of factor in? Isn't there a bit of the IPO is a bit more of a, "No, we want to go alone and we want to go do this and create a company that is, yeah, bigger." How much does that get factored into versus your investors versus everything else? I mean, at the end of the day, I think the management team who's sitting here is obviously, they're supposed to create value for their shareholders. That's why we're here. And that's the board's responsibility as well is to do that. So I think it counts a lot on the day-to-day basis, right? I mean, that's what you spend 99% of your time on and you care about and you have your strategy. And of course, you want to do that. But I think when it comes to these types of situations, I think it really comes down to the return of the shareholders. I don't think that the shareholders will spend that much time thinking about those other issues. Yeah. Any other thoughts? What would you do, Nicola? I mean, I think a lot of companies do a dual track to give them the optionality. I think they get very stretched doing a dual track, particularly if you're a small biotech with limited resources and a limited management team, and it can be very tough to do both. Yeah. Rey? I would do a private round of financing and wipe out the non-existing shareholders, non-participating shareholders, and maximize my ownership and run the phase II study. What about you, Liz? I think that would be a great option. Yeah. We go with Rob because we didn't have. Upfront solution given some of the other challenges. But I think when it comes to a trade sale, I would agree with you. The investors make a decision based on what's right for them, whether it's the right thing for the individuals within the business. Often that's a secondary consideration, which is a bit of a shame, but I say the reason. Richard? Yeah, I think the trade sale, it's clean and simple for those that are wanting to bail out. I think that's for those who want to get return of their cash fairly soon. I'm assuming they've come back with an offer, so I'm assuming that you could be very close to signature and you wouldn't necessarily want to put that at risk. But if you're a CEO that's driven to create a massive company, then it flips. And I think that's where the human element does come in. He can persuade the board and the executive team to sort of push it. But that requires a different team sometimes to do that. Yeah, and Gino, going to stick up for the IPO? No, no. I echo that a lot of the sentiments are really shared, which is it really comes down to the missing information around price. It really depends where we landed on value because, again, you're looking to maximize value for shareholders. So depending on where we are with that, I think that's really going to drive the decision-making. What I'll say again, if you just look at the last 12-18 months, the companies that have been debating the dual track versus the M&A, for what it's worth, empirical data is that the M&A solution has actually delivered a lot more value than the public markets would have. But again, that's just a function of where the public markets have been in terms of valuation and risk-leaning it. So Rob, if you were funding the company privately, what changes would you be making? How would if it happens, their management team, are clearly struggling. So what would you be doing? Adding, would you get new personnel in? How would you support that company? I guess having discussions about two sets of strategic options and sort of listing doesn't quite feel like a struggling company. But I guess the comments from the team were clear. We probably need to upskill in terms of finance, BD, maybe commercial. We're going to run a phase II study. So we want to show the market that we're ready to go it alone. But again, I think you should feel good about this situation. You get approached from all sides and sort of the core premise. And I think this is, I think it's a very interesting discussion because we see this a lot on boards. I'm sure you see it as well. You get approached then and all of a sudden the whole board discussion is about the deal, about the exit. The board discussion should be around how do we run the company? How do we build value with this thing? This is one option that we're exploring. Never lose sight of your critical path where you're going as a company, so run the company. These things come on the side, and they might be options to generate shareholder value, but you should always be very critical of what they do for you as a company for all shareholders. Cool. Okay. All right. So we've decided that Titan Therapeutics is buying Fit Happens Therapeutics. It is the end of the road. But any other questions? Anyone else have any other questions? And I think I can open that if I stop. But any other questions from the audience to our management team? Go for it. We do have a roving mic, I think. Right next door. There you go. Right next door. So I wonder if you could just comment on the fact that in processes like this, management and different groups of shareholders will have different perspectives on this. Management will often want to get out quite quickly, going into a public company and then having to sell their shares later on is more challenging. But then also recognizing the fact that there are, you can't say shareholders want this. Some shareholders will want to return. Other shareholders will want to stick in for the long game, put more money in and get the higher upside. And the problem with going into a trade sale is you only sell aside one group of investors. The other group, no, that's it. They have no option to continue their investment. If you IPO, the ones that wanted to get out and take advantage of the valuation at that point can still get out. So actually in the IPO scenario, both groups of investors potentially can have their objective satisfied. Yeah. I think it's a super fair question. There's also the, I guess, discussion we had around financing up to an IPO. Your investor shareholders are going to be more sensitive to that dilution discussion than management shareholders who will sort of up their ownership one or the other way. So for me, this comes back to the point that I made earlier about having an early discussion within your board about setting guide rails for what you want as a company from a transaction. So, in order to run this process in a good way and to take into account that there are different types of shareholders in the company, there are majorities, and we kind of set those out early on to make sure that we can vote on these things, which means that in most of the companies in our sector, the vote of the preferred shareholders or the venture funds that are financing these companies will carry a lot of weight in these discussions in the end. But you want to have an early discussion about that to make sure that you can run a good process. This is obviously, I mean, like everything else. I mean, I think that as a management team, you can also see this a lot of times. Management teams who have that kind of divided kind of shareholder base is that when some of these things happen, the management team is also going to have to look around and see who steps up, right? Where is your chairman? What is your chairman doing? Secondly, then kind of like who steps up? Who are you going to be able to, who's going to clearly be the stronger kind of driving force? I think that's just a reality in terms of how that's going to kind of develop. Management team can try to kind of influence and come up with lots of ideas and suggestions, etc. But I think you find out very quickly kind of where your chairman is and who's actually going to be driving this at the board because you as a CEO or as a management team may not be in that room for a lot of those conversations. And so I think you will have a good sense. You need to have a good sense of what you think is most likely. And then I think kind of play your cards as best as you can following that. I think it also depends on whether you're dealing with a lot of founding shareholders. If you've got founders who are execs in the business as well or who are very senior management within the business as well. If they've been at it for a long time, they're often quite tired and they want a transaction. They want something to happen because they've frequently been at it for years and years and years with very little return for them at that stage. There is a lot of pressure. That tension, I think at board level can be quite challenging. Interesting. Oh, we have one question at the back. Do we have someone who can run that? Sean? Thanks, Liz. It was interesting. Apologies for being unemotional and somewhat empirical, but in phase II, you've typically got a 70-odd% chance of failure, and yet someone stepped in and said they're willing to accept that and give you money. If you carry on down the path, you'll get to phase III. There might be a 50% chance of failure, so you might get double the money. On the other hand, you might get nothing because it's phase III. There's still a failure rate, so empirically speaking, if you're risk-averse, you'll take the trade sale. If you really think you're willing to toss that coin for higher value, but also a risk of failure, and at the time you get the offer, there's zero risk of failure because you're getting the offer. So you're going from a 0% chance of failure in terms of at least the upfront rather than the royalties, I guess. The royalties are always a factor. Or else you're going to a situation where there's a 50% chance of failure. And U.S. biotech entrepreneurs, I think would take the money, take the kudos that goes with it and go off and start another company because that management team will be thought to have done very well. So everyone wins in the end. And I just think going, carrying on with further process is unnecessary risk if one wishes to be successful. And you could argue that it's the sort of thing that's blighted the European industry versus the U.S. industry, where serial entrepreneurs look at running a company for a few years and then moving on. This feeling that we've got to stay with companies, whatever, I think is a risk. Interesting. And Gini? I think there's a bit too much doom and gloom in that argument. I mean, if you want to make an empirical argument, you're missing some really important data. And I think some of us mentioned that on the panel. We don't have a price, right? So if I don't have a number, I cannot do a risk-adjusted empirical argument. We would all do that valuation case. And to justify financing at this point, to justify the dilution, we would want to see the business case for that. We would want to see the case how running the phase II study could increase our value enough not to take the deal right now. So you're right. We should do the analysis. But I think you are, I've learned not to say you're wrong. How should I say it in a different way? I don't know. I'm not English. I'm Dutch. I'm blunt. Look, I think it's too easy to say, let's just take the deal. If we really want to build companies, we shouldn't sort of run for the deal the first sort of option we have. We should think very carefully. And if we had the option to build something bigger and more valuable, we should do it. Take the risk. I think the only other thing to comment on is probably in terms of U.S. management teams taking the money. I think that unless you have a good price or a high premium or something that you can really hang your hat on, I'm not sure that that really happens. I think it's very much a kind of the visual of that kind of deal is very important for that management team to be considered successful and be able to become a serial entrepreneur. So I think it still comes back to, did you just do a deal? And does that mean that you didn't have any faith in your own asset because you were willing to hand it off to kind of the first guy who came by and at a very kind of mediocre price? Or did you actually kind of achieve a really good transaction? I think it does matter in the U.S. as well. Okay. Unfortunately, I think that's all we have time for. We can continue debating and fighting over this in drinks in a moment. But Mary Jane's just going to close the conference. But thank you very much to our management team and especially. I was going to say especially to Cooley who helped us build the scenario. Thanks. Right. As our panelists exit the stage, I would again like to say thank you very much to the management team, our panelists, the board for discussing the offers and options between Fit Happens and Titan. That was fun, but as I think we all know, quite difficult actually when there wasn't a price involved. Right. So this conference has definitely fallen at a very interesting time for our sector. I have already been told that I take too long on my introductions and that I should speak faster. So I will try to speak fast now because I know we've got drinks waiting for us, but I do need to sum up. That is part of my role here today. So let me just sum up. Panel one was our BD panel, as you remember, where the panelists discussed what future partners really want. And we heard how finding a partner now is all about the science. Sean Grady from AstraZeneca talked about the importance of getting science together so the sparks can fly. He and the panel talked about being tentacular, word I haven't heard before today, via bonding, building familiarity and likability between the deal teams earlier so the deal making can happen more easily, particularly if those really bright, driven, energized, sharp CEOs are right behind the deal and get on top of it. Panel two discussed what investors want, critical to all of us here today. There was a lot of talk about the macroeconomics and the political cycle for 2025. Linden talked about how she is dealing right now at the peak of uncertainty levels in the market, so not so great. However, I wasn't surprised to hear that management teams and quality remain key to what investors want to see and hear about beyond, of course, the product itself. We have had some talk today, as it won't be a surprise, about shareholder activism, how yes, it's always been there, but we should expect investors to get even more and more involved and engaged as time goes on. So everybody should have their ears pricked up for that. Hot areas for investment for 2025, very important. Mainly these included cardiovascular, I&I, radio pharma, psychiatry, and neurology. I'm sure I've missed some, but they seem to be the themes that the panelists discussed today. Then, of course, we heard from, live on the stage, Rey from Endpoints News and Rob from Recordati. You heard about Rob's real passion for rare diseases, his future deal-making aspirations, and strategy to fuel his Recordati's US growth. We've just had Titan and Fit Happens on stage, and so drinks, as I say, will shortly be served, but I would like to say a massive thank you to all of our sponsors who have helped us get this event together today. All, of course, our panelists and speakers who have made time to come and make this event so successful. But equally as importantly, actually, I'd like to say a massive thank you to the ICR Healthcare team, the people on the ground in London, our colleagues that have come over for the event, for arranging what is actually a huge event. We ran an IPO event this morning because we are optimistic at ICR Healthcare about the IPO market for 2025. You've heard about that optimism as well today. So it's not just us. But we've had a huge day today ahead of this all-important Jefferies Healthcare Week. And so massive thank you to our team for arranging what's an important day on our annual calendar. So thank you very much, everybody. Enjoy the drinks. Enjoy the evening if you've got other events to get to and the week ahead because I think we're all going to be exhausted by the end of it, but it should be a good one. Thank you very much.