PAION Earnings Call
1st quarter of 2017
Dr. Wolfgang Söhngen, CEO | Abdelghani Omari, CFO
Conference Call | 10 May 2017
Disclaimer
It is important to note that this information contains forward-looking statements which are based on the currently
held beliefs and assumptions of the management of PAION AG, which are expressed in good faith and, in its
opinion, reasonable. Forward-looking statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, financial condition, performance, or achievements of PAION AG, or
industry results, to differ materially from the results, financial condition, performance or achievements expressed
or implied by such forward-looking statements. Given these risks, uncertainties and other factors, recipients of
this information are cautioned not to place undue reliance on these forward-looking statements. PAION AG
disclaims any obligation to update these forward-looking statements to reflect future events or developments.
This presentation constitutes neither an offer to sell nor a solicitation to buy any securities of PAION AG
(the “Securities”) in Germany, the United States of America, the United Kingdom or any other jurisdiction.
Neither this presentation nor anything contained herein shall form the basis of, or be relied on in connection
with, any offer or commitment whatsoever.
The Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the “Securities Act“). The Securities may not be offered or sold in the United States absent registration or an
exemption from registration under the Securities Act.
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Agenda
1. Corporate overview
2. Financials
3. Remimazolam
 U.S. status
 EU status
 Japan/Asia status
4. Summary
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Corporate overview
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Corporate overview
PAION AG is a specialty pharma company with
a focus on anesthesia products
Remimazolam, PAION’s lead drug candidate,
is in Phase III development
Headcount of 30, HQ in Aachen, Germany: PAION AG
with a subsidiary in
Cambridge (UK): PAION UK Ltd
Seven regional partnerships for remimazolam in
the U.S., China, South Korea, Canada, Russia (CIS),
Turkey and MENA region
~ EUR 28.7 million cash and cash equivalents (end of
Q1 2017)
Supervisory Board
Management
Dr. Jörg Spiekerkötter (Chairman)
Dr. Wolfgang Söhngen
Background: Former CFO, Schering AG, Organon
Title: CEO, Founder
Dr. Karin Dorrepaal
Abdelghani Omari
Background: Former Schering AG Board Member
John Dawson
Background: CEO Oxford BioMedica
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Title: CFO
Corporate overview
Listed on Frankfurt Stock
Exchange, Prime Standard
(FSE: PA8)
Market capitalization:
EUR ~ 150 m
11 million shares traded
Stock Performance 2017
(price and volume in EUR)
2,7
Market Data
(EUR in million except per share data)
800.000
Current Share Price
600.000
Shareprice (EUR)
2,5
500.000
2,3
400.000
2,1
300.000
1,9
200.000
1,7
1,5
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Capitalization
700.000
100.000
0
Trading Voume Xetra+ Frankfurt
share/day)
2,9
High liquidity
(3-month period Xetra):
Financial Data (YTD)
€ 2.55
Q117 Revenue
€ 2.1
FD Shares Outstanding 58.2
Q117 EPS
€ -0.04
Market Cap
€ 150
Mean target price of
3 analyst reports
(Edison, Oddo Seydler, € 3.81
First Berlin)
Q117 Cash
€ 28.7
Financials
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Capital increase Feb 2017
 Capital increase with subscription rights for existing shareholders at EUR 2.05 per share
conducted in February 2017
 Gross proceeds of EUR 4.99 million
 A U.S. institutional investor had agreed to backstop the offering by purchasing all new
shares that were not subscribed
 Subscription rate was 96.31%
 Share capital increased from EUR 55,757,094.00 by EUR 2,439,023.00 to
EUR 58,196,117.00 by issuing 2,439,023 new shares
 Proceeds will primarily be used to prepare an application for market approval in general
anesthesia in Japan
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Consolidated statement of comprehensive income
In accordance with IFRS (all figures in EUR k)
Revenues
R&D Costs
2.051
Q1 2016
Q1 2017
-4.079
3
Q1 2016
Q1 2017
-6.502
SG&A Costs
Q1 2016
Net Result
Q1 2017
Q1 2016
Q1 2017
-2.218
-1.180
-1.003
-6.729
 Revenues mainly relate to upfront payment from Cosmo received in 2016
 R&D costs mainly relate to U.S. Phase III development program; decrease primarily due to lower expenses for
Phase III studies
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Balance sheet and employees
In accordance with IFRS (all figures in EUR k if not otherwise noted)
Total assets
37.984
Cash and cash equivalents
37.577
30.111
28.732
-1,379
31 Dec. 2016
31 Mar. 2017
31 Dec. 2016
31 Dec. 2016
27.367
36
31 Mar. 2017
FY 2016
 Equity ratio as of 31 March 2017 was 72.8 %
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31 Mar. 2017
Employees in the Group
Equity
24.943
Total Cash Flow
30
Q1 2017
Financial Outlook 2017
Revenues
Costs
Actual FY 2016
EUR million
Plan FY 2017
EUR million
€ 4.3 m
~ € 5.8 m
Comments
Revenues mainly relate to remainder of upfront
payment received from Cosmo in 2016
R&D
€ 23.4 m
~ € 18 m – € 20 m
Significant R&D expenses due to continuation of
U.S. Phase III development program of remimazolam,
but lower than prior year
SG&A
€ 5.1 m
~ € 3.5 m – € 4 m
SG&A costs will decrease compared to prior year
€ 5.0 m
~ € 3.5 m – € 4 m
Tax credits on parts of R&D expenses from UK tax
authorities
€ -20.1 m
~ € -12 m – € -14 m
Tax credits
Net result
Net loss will decrease
 Liquidity
 Cash is sufficient for completing U.S. Phase III program in procedural sedation under current planning. Should
development, filing and approval go according to plan, PAION will not need additional funding to bring remimazolam to
the U.S. market
 Additional funding of approximately € 20 m to € 25 m needed for EU Phase III development until filing
 Cash runway at least until end of 2018 (including expected tax credits but without potential milestone payments and
without potential costs of targeted continuation of EU Phase III program)
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Pipeline overview
Compound
Indication
Status of Development
PC
Ph I
Ph II
Ph III
Remimazolam
General Anesthesia
Japan (completed by ONO)
i.v. anesthetic/
sedative
General Anesthesia
EU (PAION)
Procedural Sedation
PAION, U.S. (Cosmo)
ICU Sedation
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Estimated peak
sales potential
(worldwide p.a.)
500m US$
500m US$
500m US$
Partners
Cosmo (USA)
Yichang Humanwell (China)
(T)R-Pharm (Russia+CIS,
Turkey, MENA)
Hana Pharm (S Korea)
Pharmascience
(Pendopharm) (Canada)
Events in 2017
PAION reports positive headline
data in U.S. clinical safety trial of
remimazolam in high-risk patients
undergoing colonoscopy
Dr. Raths leaves the
Management Board
Jan
Feb
PAION AG issues approx. 2.4
million shares at EUR 2.05 per
share in capital increase with
subscription rights
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March
PAION successfully completes patient
recruitment in U.S. Phase III study with
remimazolam for procedural sedation
during bronchoscopy
Apr
May
Remimazolam
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Need for improvement in the sedation/anesthesia space
 Unmet needs in procedural sedation
 Improved overall safety
 Improved patient satisfaction and
compliance
 Predictability of overall procedure time
 Improvement of patient throughput
 Reduced resources for supervision
 Amnesia for procedure with quick
regaining of cognitive function
 Avoidance of hypotension
 Being „back to normal“ quicker than
with midazolam (improved compliance
to follow-up screening)
 Availability of a reversal agent
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 Unmet needs in general anesthesia
 Reducing overall untoward negative
post-operative impact of anesthesia
 Avoidance of hypotension –
specifically in aging population
 Less requirement for vasopressors
 Avoidance of too deep sedation
 Improved overall safety
 Avoidance of pollution (gas)
 Amnesia for intervention
 Titrable level of sedation
 Availability of a reversal agent
 Plannable wake-up times
Continuum of Sedation
Definition of general anesthesia and levels of sedation/analgesia (American Society of Anesthesiologists, 1999 - modified)
Minimal sedation
“anxiolysis”
Moderate
sedation/analgesia
“conscious sedation”
Deep
sedation/analgesia
General Anesthesia
Normal response to
verbal
communication
Purposeful response to
verbal or tactile
stimulation
Purposeful response
following repeated or
painful stimulation
Unarousable even
with painful stimulus
Airway
Unaffected
No intervention required
Intervention may
be required
Intervention
often required
Spontaneous
Ventilation
Unaffected
Adequate
May be inadequate
Frequently inadequate
Cardiovascular
function
Unaffected
Usually maintained
Usually maintained
May be impaired
Responsiveness
Midazolam
Potential use for remimazolam
Propofol
Colonoscopy
Upper GI endoscopy
Bronchoscopy
Major surgery
Trauma e.g. limb-resetting, wound dressing
Biopsies
Minor procedures
MRI/Scanning procedures
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ICU sedation
About remimazolam
 Member of the benzodiazepine family
 Rapidly metabolized by tissue esterases
 Ultra-short-acting intravenous benzodiazepine
sedative/anesthetic
 Can be reversed with flumazenil if required
 Results to date indicate:




Efficacy and safety in studied populations
Rapid onset and offset of action
Appropriate depth of sedation
Hemodynamic stability
Procedural sedation
 Standards of care: midazolam and propofol
 U.S. Phase III program vs. placebo
 Additional data on midazolam
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General anesthesia
 Standards of care: propofol and volatile gases
 EU Phase III study vs. TIVA propofol
(discontinued)
 Japan Phase III program vs. propofol (completed)
Remimazolam – Extensive efficacy and safety database
Completed studies
Procedural Sedation
General Anesthesia
 8 Phase I/II trials in the
U.S.
 3 Phase I/IIa trials in
Japan (Ono)
 3 Phase III trial in the U.S.
 2 Phase IIb/III trials in
Japan (Ono)
Studies not yet completed
Procedural Sedation
 2 Phase I studies
General Anesthesia
 1 Phase I trial in Germany
 1 Hepatic impairment
study in the U.S. (Ono)
 1 Phase II trial in Germany
Plan to have more than 1,500 volunteers/patients on drug @ FDA filing
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Remimazolam – U.S. status
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Cosmo Pharmaceuticals –
Partner for remimazolam in the U.S.
 PAION received EUR 10 million upfront payment from Cosmo
 PAION is entitled to receive up to additional EUR 42.5 million in milestone payments and
significant double-digit tiered royalties
 Royalties on net sales in the U.S. ranging from 20% to 25%, which may be adjusted under
certain conditions but not to below 15% of net sales
 Private placement by Cosmo led to gross proceeds of EUR 9.6 million and additional
EUR 0.4 million in the course of the capital increase in Feb 2017
 Cosmo is responsible for market authorization as well as sales and distribution
 PAION will be responsible for and bears the costs associated with the completion of the ongoing
U.S. clinical development program in procedural sedation
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Primary focus – Colonoscopy
Rapidly growing market, big push for colorectal cancer screening:
 Regular and appropriate colorectal cancer screening is both recommended and covered by all major health plans including
CMS
 More than 4 million patients turn 50 and are newly eligible each year, baby boomers are all “of age” for screening,
i.e. > 50 years
 Millions more covered lives in the U.S. as a result of the Affordable Care Act
U.S. Market Size
Total U.S. market for
procedural sedation =
43 million procedures
Source: Ambulatory Surgery in the United
States, 2006, National Health Statistics Reports
Number 11, U.S. Department of Health
and Human Services and PAION projections
based on Symphony Health Solutions (2013),
Colonoscopy: Scoping & Mapping)
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~There are 15 million colonoscopies
out of a total of ~ 20 million GI
procedures. All these procedures
were performed outside of hospitals
and represent the most attractive
commercial segment.
Various data sources indicate that between 20-27% of
procedures are done in hospitals. 2006 CDC/NCHS,
National survey of Ambuatory Surgery(NSAS) and
National Hospital Discharge Survey (NHDS) (27%).
Qualitative market research by Kennedy associates
for PAION Inc. 2015 (20%).
26.7 million unique
procedure claims for
colonoscopy and
endoscopy in 2015
Source: I DATA Market Report on US
Gastrointestinal Endoscopic Device
Market - 2016
U.S. colonoscopy market split into 2 main segments
~20 million GI procedures per year outside of hospitals
Providers using midazolam:
Providers using propofol :
 Predominantly in West, Midwest and South
 Lower cost for insurers and CMS
 Problem:
 Less clinic efficiency
 Less revenue for providers
 Predominantly in Northeast & Eastern U.S.
 More revenue for providers
 Problem:
 Higher cost for insurers and CMS
 Dependency on anesthesia assistance
Considerations






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Market short on innovation
Sedatives are covered as part of a medical reimbursement; included in cost of the procedure
Quality of patient experience – efficacy, safety, and recovery time
Physician experience - predictability of patient response
Efficiency, throughput, and number of procedures per day
Total medical resource utilization
Market forces are leading to colonoscopy bundling
Increasing
costs
How to fulfill demand for
increased screening?
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Lower margins and
profitability
Lower
reimbursement
How to maintain income?
Increasing
trend toward
colonoscopy
bundles
• Bundles = contracted flat fee for the total cost of a colonoscopy
• Reducing variable costs and improving efficiency = path to higher margins
• Potentially very positive scenario for remimazolam
Comparison of pivotal Ph III in colonoscopy and Safety Trial
in ASA III/IV patients (based on headline data for ASA III/IV)
including midazolam open label in patients undergoing colonoscopy for procedural sedation
Pivotal Phase III (mostly ASA I-II)
ASA III/IV patients
461 patients
79 patients
Multi-center study in
the U.S.
Multi-center study in
the U.S.
First patient in
31 March 2015
First patient in
01 December 2015
Last patient out
11 April 2016
Last patient out
19 December 2016
all patients:
fentanyl 50–75 mcg
double-blind
remimazolam
5 mg → 2.5 mg
n=298
double-blind
placebo
(midazolam
“rescue”)
n=60
*Midazolam dose according to label (1.75/1.0 mg)
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all patients:
fentanyl up to 75 mcg
open label
midazolam*
(per FDA insert)
n=103
double-blind
remimazolam
2.5-5 mg
→ 1.25–2.5mg
n=32
double-blind
placebo
(midazolam
“rescue”)
n=16
open label
midazolam**
(per FDA insert)
n=31
**Midazolam dose according to label (1.0/0.5 mg) = reduced compared to pivotal Phase III
Comparable outcome in different patient populations
Pivotal Phase III (mostly ASA I-II)
ASA III/IV patients
Success of procedure
Success of procedure
100,00%
90,00%
84,38%
80,00%
70,00%
60,00%
50,00%
40,00%
30,00%
20,00%
12,90%
10,00%
0,00%
0,00%
Remimazolam
*ChiSquared
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test for dependency
Placebo
Midazolam
Fentanyl dose – Pivotal Ph III
Fentanyl top-ups count
Fentanyl total dose in µg
140
P<0.0001*
-17%
120
P<0.0001*
121.3
-43%
106.9
88.6
Fentanyl top-ups
Fentanyl in µg
100
2
80
60
1.93
1.34
1
0.76
40
20
0
0
Remimazolam
Placebo
Midazolam
*R vs. M: Anova F-test for equal means in 2 groups
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Remimazolam
Placebo
Midazolam
Comparable onset times
Pivotal Phase III (mostly ASA I-II)
ASA III/IV patients
Medians
Medians
Medians
Δ=15 min.
25
Δ=15.5 min.
19.0
19.0 19.0
20
Minutes
15
10
4.0
5
0
25
21.0
19.5 19.0
20
Minutes
Δ=15.5 min.
3.5
3.5
19
18,5
15
10
5
5
0
Start Procedure
Remimazolam
MOAA/S 3
Peak Sedation
Placebo
Midazolam
S621
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Start of Procedure
Remimazolam
Placebo
Midazolam
Time after end of procedure pivotal Phase III
End of procedure to fully alert
25
P<0.0001*
21.3
20
P<0.0001*
Δ=222 min.
-54%
Minutes
15
-39%
15.7
Δ=8.5 min.
10
7.2
5
0
Remimazolam
Placebo
Midazolam
*R vs. M: Anova F-test for equal means in 2 groups
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Placebo
Time after end of procedure
Pivotal Phase III (mostly ASA I-II)
ASA III/IV patients
End of procedure to fully alert
End of procedure to fully alert
25
25
21.3
20
20
P<0.0001*
15
15.7
15
Minutes
Minutes
-54%
Δ=8.5 min.
10
10
7.2
7
5
5
0
0
Remimazolam
Placebo
Midazolam
*R vs. M: Anova F-test for equal means in 2 groups
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5
3
Remimazolam
Placebo
Midazolam
Hopkins Verbal Learning Test pivotal Ph III
Retention raw score
5 min. after full alert
Retention raw score
pre medication
80
80
70.6
66.3
70
65.0
60
60
50
50
Score
Score
70
40
40
30
30
20
20
10
10
0
0
Remimazolam
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Placebo
Midazolam
30.5
Remimazolam
14.2
15.1
Placebo
Midazolam
Any AE reported in CRF in pivotal Ph III
Treatment-emergent AEs
p=0.0003*
100%
-19%
Share of patients
80%
73,2%
90,3%
Comparable safety to
Midazolam in
ASA III/IV patients
78,3%
60%
(Data not part of headline disclosure)
40%
20%
0%
Remimazolam
Placebo
Midazolam
*ChiSquared test for dependency on 2x2 table
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Conclusion for remimazolam procedural sedation profile
 The colonoscopy study in ASA III/IV patients confirmed the data from the pivotal Ph III study
which was mainly done in healthy patients (ASA I/II)
 Similar efficacy and safety profile
 No treatment-emergent serious adverse events in remimazolam patients
 Faster onset and offset compared to midazolam
 Good cardiorespiratoy safety
 Lower use of fentanyl still leads to sufficient sedation in this sicker patient population
 Overall success rate slightly lower due to study design
 With reduced dosing slower titration to effect which is wanted in ASA III/IV patients
 Study results for the pivotal Ph III bronchoscopy study are expected to be comparable to the ASA
III/IV study since the bronchoscopy trial recruited a higher number of ASA III patients than the
pivotal Ph III colonoscopy trial
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U.S. Phase pivotal Ph III: supports business case
(ability to treat more patients)
 With an average reduction of 20 min/procedure and an average number of procedures of
10-20/day/doctor, centers could increase throughput significantly
Time from start of medication to start of procedure
Remimazolam – 5.0/2.5 mg
Midazolam – 1.75/1.0 mg (1.0/0.5 mg in the elderly and debilitated)
Time to end of procedure to fully alert
Remimazolam – 5.0/2.5 mg
Midazolam – 1.75/1.0 mg
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minutes (Mean)
4.1
15.9
minutes (Mean)
7.2
15.7
Next steps – U.S. program procedural sedation
 Headline data of U.S. Phase III bronchoscopy trial expected mid 2017
 Phase I studies to further assess the abuse potential of remimazolam will start shortly
 Pre-NDA Meeting end of 2017
 U.S. filing by Cosmo
 Conditional on successful study results and dependent on interactions with the FDA, PAION
and Cosmo currently expect filing for approval mid of 2018
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Remimazolam – EU
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Our mission in general anesthesia:
Reducing the detrimental effects of
Patients with APM
< 60 mm Hg
first hour after intubation
80%
70%
60%
Share of patients with BIS
score below 40 until 1 h after
intubation
Share of patients who needed
vasopressor
in the entire study
70%
70,7%
Too deep sedation
Need for vasopressors
Hypotension
NNT=3.4
60%
-41%
50%
80%
64,0%
NNT=4.2
70%
73,3%
60%
-37%
50%
-44%
50%
40%
40%
41,3%
40,0%
NNT=3.1
42,7%
45,3%
40%
41,3%
40,7%
30%
30%
30%
20%
20%
20%
10%
10%
10%
n=75
0%
n=150
n=150
0%
Propofol
Remi 6mg
Source: PAION data on file
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Remi 12mg
0%
Propofol
Remi 6mg
Remi 12mg
Propofol
Remi 6mg
Remi 12mg
Remimazolam – EU program
 In February 2016, PAION discontinued a confirmatory EU Phase III study with remimazolam in
patients undergoing major cardiac surgery
 Due to the complex study design, the trial faced recruitment challenges
 PAION evaluated how best to resume the clinical development of remimazolam in the EU
 PAION determined that a study design analogous to the successfully completed Phase III
program in general anesthesia in Japan would be the best path forward in the EU
 Phase III study would thus be conducted with procedures in general surgery and not in cardiac surgery
 Phase I study to support sample size calculation for a EU Phase III study in general anesthesia
will start shortly
 Seek further guidance from the European Medicines Agency (EMA) to determine the
components of the new European development program
 PAION plans to commercialize remimazolam itself in the EU. However, PAION is also open to
discussing EU partnerships that are value-creating
 PAION estimates funding needs of approximately EUR 20 million to EUR 25 million until filing
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Remimazolam – Japan / Asia
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Remimazolam – Japan
 A total of three Phase I, one Phase II and two Phase III trials in general anesthesia have been
completed
 PAION had a pre-NDA meeting with PMDA in January 2016
 Positive PMDA feedback:
 Product manufactured in Europe can be used for commercialization in Japan
 PMDA regards clinical and non-clinical data sets as complete for filing in the indication “Induction and
maintenance of general anesthesia” in Japan
 PAION has started to prepare filing of remimazolam in Japan
 PAION will secure the necessary validation of commercial-scale production for the Japanese market
 The required approval dossier will be prepared by an experienced contract research organization (CRO) in
close consultation with PAION
 Such a dossier could serve as a reference dossier in certain other markets
 This would significantly reduce the necessary additional investment for partners in the respective
markets depending on the specific regulatory environment
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Remimazolam – Japan
 Activities are important prerequisites to advance ongoing discussions with potential licensees
 PAION seeks to partner in the Japanese market during or after dossier preparation
 Subject to further coordination with the regulatory authority, filing for market approval in Japan is
expected by mid-2018
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Summary
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Outlook 2017 and strategy
Remimazolam
 Focus on the remimazolam program in the U.S.
 Partnering and commercialization:
 U.S.:
 Completion of clinical development program in the U.S.
 EU
 Prepare and finance restart of EU Phase III program
 Japan:
 Preparation and submission of an application for market approval of remimazolam in general anesthesia
 Ongoing partnering discussions
 All partnered regions:
 Continuation of development and filing activities by cooperation partners
(Yichang Humanwell, Hana Pharm, R-Pharm, TR-Pharm, Pendopharm, Cosmo)
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“String of pearls”
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Upcoming milestones
Start of EU Phase III in GA
Potential filing in the U.S. by Cosmo
2018
Potential filing in Japan
Pre-NDA Meeting in the U.S.
Headline data Phase III Bronchoscopy U.S.
2017
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Thank you very much
for your attention!
Contact:
PAION AG
Martinstrasse 10–12
52062 Aachen – Germany
Phone +49 241 44 53-0
[email protected]
www.paion.com
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