Pierre Laurin - President and CEO Bruce Pritchard - CFO Frederic Dumais - Senior Director, Communications and IR

Mara Goldstein - Cantor Fitzgerald Alan Ridgeway - Scotiabank Neil Maruoka - Canaccord Genuity Doug Miehm - RBC Capital Markets Rahul Sarugaser - Paradigm Capital Derren Nathan - Hybridan

Good morning. My name is Leandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the ProMetic Life Sciences Inc. Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Pierre Laurin, President and CEO of ProMetic, and Mr. Bruce Pritchard, Chief of Operations and Chief Financial Officer, you may begin your conference.

Well, thank you very much, Leann, and good morning everyone. Welcome to ProMetic's webcast. I'll remind everyone of the statement of the Safe Harbor on slide two, that this presentation contains forward-looking statements about ProMetic's objectives, strategies, and business that involves risk and uncertainties. We're very pleased with the outstanding progress that ProMetic has made this quarter in delivering on many important milestones, especially our Ryplazim development and regulatory efforts. These positive developments are meaningful as we look forward to growing our business in 2018 and beyond. In addition, we continue to push forward on our small molecule program with PBI-4050, and we secured attractive near-term financing for ProMetic that allows us to execute on our product plans, partnerships and potential asset sales from a position of strength that will allow us to maximize shareholder value. During this call, we will discuss the following topics; Bruce Pritchard, our CFO, will start by reviewing our solid results and establishment of the substantial credit line. I will then discuss the FDA's acceptance of our BLA for Ryplazim, our clinical data on PBI-4050, and update on our manufacturing base and infrastructure. Finally, I will review the key catalysts expected in the coming months before opening up the call for your questions. This call is scheduled to last an hour. To start, I will turn the call over to Bruce, our COO and CFO. Bruce?

Thanks, Pierre, and good morning ladies and gentlemen. If I could ask you now to move to slide three in the slide deck, and a quick reminder that this part of today's webcast is based on the financial information for the third quarter of 2017 as well as on the audited statements for the year ended 31st December, 2016. All the figures are prepared under IFRS and the true [ph] annual information as available online at sedar.com. Everything that I'm talking about today is in thousands of Canadian dollars except where otherwise indicated. So let's move to slide four, and begin my part of the presentation with a review of revenues. We had a very strong third quarter with revenues of CAD24 million. The major driver behind that figure was CAD19.7 million of milestone and licensing revenues related to signing our license agreement with Shenzhen Royal Asset Management. And it's fair to say the funds have not yet been received, but we've booked these licensing revenues because we both met the stringent revenue recognition criteria laid out in IFRS, and because we have a high level of confidence that the funds will be received in the fourth quarter. This licensing revenue of CAD19.7 million is below the amount we originally announced as it takes into consideration sales taxes that will be to the account of ProMetic as well as currency fluctuations since signing the deal. Revenues from the sale of good, of CAD3.9 million for the third quarter, was up 62% on the second quarter and down slightly versus the first quarter of 2017. Other revenues in the third quarter totaled CAD0.5 million. I'll move now to slide five, and focus a lot more on the R&D costs, which is our largest expense category. In the year-to-date, we've incurred a total of CAD72 million in R&D costs, but as this schematic shows, CAD53 million or 73% of that total is on our Plasma pipeline. And of that amount, some CAD25 million or 37% relates to our manufacturing infrastructure. Over time as our products commercialize, that element of cost will of course migrate from R&D to cost of goods. The underlying spend therefore on our drug pipeline, both clinical and preclinical, was CAD41.9 million in the nine months of 2017 split roughly two-thirds to our proprietary plasma products and one-third to our innovative small molecule drugs. Using slide six, I want to make an important point about our spending trend. As we discussed our annual meeting on the 10th of May 10, we announced our target of keeping R&D and administrative spending relatively flat going forward. Today, I'm pleased to report to our investors that these expenses have been in a narrow range of CAD31 million to CAD32 million per quarter in each of the last three quarters, demonstrating our discipline in keeping these costs controlled despite advancing our significant clinical pipeline, and investing in inventory ahead of our launch of Ryplazim, and of course achieving important regulatory goals. On slide seven, and in line with that cost control, not the R&D spending of CAD23.2 million for the third quarter of 2017 declined at 5.3% over that in the second quarter primarily because of modestly lower spending in the plasma therapeutics area. If we move to slide eight, I'd like to provide some further color on the key figures from the profit and loss account for the third quarter and the nine-month period. Now I've already discussed revenues, R&D, and admin costs on earlier slides so I'm not going to repeat those again here. The cost of goods is up on the quarter both as a result of the increase in product revenue, but also because of royalty obligations associated with the SRAM revenues. For Q3, the net loss was CAD17.1 million or CAD0.02 per share on a basic and fully diluted basis, which is an improvement from the net loss of CAD29.3 million or CAD0.04 per share in the third quarter of 2016. For the third quarter of 2017, adjusted EBITDA was a loss of CAD6.7 million compared to a loss of CAD27 million in the prior year period. The company's year-to-date adjusted EBITDA for the first nine months of 2017 is a loss CAD60.5 million, around 5% lower than the CAD63.5 million EBITDA loss in 2016. So if I move now to slide nine, and just talk briefly about the latest balance sheet. We ended the quarter with CAD29.1 million of cash, and that's before the receivable from SRAM, which we fully anticipate receiving by the year end, hopefully one -- this month in fact, one tranche this month. Inventories were CAD32.6 million at September 30th, up CAD18.9 million versus the end of 2016, and CAD8.1 million higher than as at June 30 of this year. As of the 30th of September, around three-quarters of that inventory figure, or CAD23.5 million, relates to a combination of both our plasma inventory and plasminogen product as we prepare for the anticipated launch in the second quarter of 2018. Now, it's worth noting that this inventory investment is booked at cost, and that the selling price of the inventory will be obviously much higher than the value that we're carrying in the book right now. We ended the quarter with CAD65 million in long-term debt, up from the CAD48 million at year-end predominantly due to the new Thomvest loan entered into June, the first quarter of this year. If I move now to slide 10, and a few words about the pro forma cash position. The position at the end of the quarter amounted to CAD175 million. And it's important to note that this includes a line of credit of up to CAD100 million that we arranged with Structured Alpha, an investment firm affiliated with Thomvest Asset Management, one of our larger shareholders. We believe that this LOC was highly advantageous to the company and its shareholders. It can be drawn down in tranches over time and has an interest rate of 8.5%, and is repayable two years from entering into the credit facility. We feel that the size and structure of this LOC gives us the financial flexibility to continue with ongoing negotiations to monetize our corporate assets, including partnerships with pharma and biotech companies for our innovative drugs, as well as selling other corporate assets such as the priority review voucher. By securing the credit facility, the company now has the means to fund itself with limited dilution to existing shareholders to the point where it will also see revenues flowing from its sales of Ryplazim. The LOC means we will be focused on consummating transactions that will create significant shareholder value for ProMetic. And just to be clear, it's our intent to use as little of this facility as possible. Our primary focus remains on commercial transactions and deal making as a means of strengthening the balance sheet. This facility can best be thought of as an insurance surrounding on timing uncertainty for those events. And to answer some specific shareholder questions, there were warrants attached to the LOC, but the initial dilution on arrangement of the facility was minimal at 10 million shares or 1.4% on a fully diluted basis. These warrants were priced at 6.25% premium to the closing price. And we think that this was an attractive financing compared to other alternatives we observed in the marketplace at the time. And in addition, obviously management has the benefit of information not available to shareholders as we negotiate this deal. And as a result, we feel that this transaction will ultimately allow us to negotiate better terms on our ongoing deal-making activity. Moving to slide 11 and just demonstrating the runway that the company has with our current assets and the line of credit through the fourth quarter of 2018 and beyond. During this time, as the purple box illustrates, we expect several meaningful contributions to our balance sheet from partnering discussions and the potential sale of the priority review voucher, and other corporate and finance activities. So finally, in summarizing the financials, I feel that we've taken several positive steps this quarter in improving our cash position, both through our financial initiatives as well as our operational ongoing cost control. So I'm going to hand over back to Pierre for the business update.

Well, okay, well thank you Bruce. And let's turn to Ryplazim, on slide 12. First of all, we're very pleased to announce that Ryplazim trade name has officially been accepted by the FDA. I mean that's a very good sign of good things to come. And on slide 13, as a reminder, I mean, Ryplazim received three significant designations from the FDA. An orphan drug designation provides market exclusivity for seven years. Fast track designation which lead to the confirmation of the priority review, and rare pediatric disease designation provide us with the opportunity to be granted the priority review voucher. And in parallel to U.S. regulatory, we were pleased to have been granted priority review status in Canada for new drug submission that we plan to file this quarter. Priority review status in Canada assigns eligible submission a shortened review target of a 180 days comparison to 300 days for a regular review. So receiving those priority reviews demonstrated both the FDA and Health Canada recognizes seriousness of an unmet need of available therapeutic solutions for plasminogen deficiency and allowing Ryplazim when approved to reach patients sooner and generate high margin sales. If you look on slide 14, which serves as a reminder that if we receive FDA approval in April as expected, this will mean that ProMetic's team would have successfully developed a patent drug from first-in-human studies to commercial launch in about just three and half years; moreover if approved, Ryplazim will be eligible for a rare pediatric disease priority review or PRV. And this is highly valuable asset we intend to monetize and which could potentially be sold through major biotech or pharma company, which would allow ProMetic to significantly strengthen its balance sheet and further extend its cash runway while commercial sales ramp up. In recent years, PRVs have been sold in a range of 65 to $300 million since the benefit of the PVR is value created for an owner. For instance, a faster review time provides first mover advantage allowing the voucher holder's product to be introduced ahead of a similar competing product. As Bruce indicated earlier on the call, the sale of a priority voucher could prove to be very useful although it's not the only mean to help funding the gap to financial sustainability. And this sale will likely be handled by a banker to ensure an optimal process as soon as the BLA is approved. So in anticipation of our PDUFA date, our team has made significant strides to fully prepare it for a launch of Ryplazim in areas of both commercialization and manufacturing. First, slide 15, we have invested to better define and characterize the congenital plasminogen deficiency market. Now 80% of patients have multiple lesions on multiple organ system, but 80% of congenital plasminogen deficiency patients have ligneous conjunctivitis. And ligneous conjunctivitis is a unique clinical manifestation of plasminogen deficiency and has a specific ICD-10 code. So ICD-10 code stands for International Classification of Disease. And as part of a comprehensive market analysis on slide 16, IMS reviewed 937 million medical claims filed during three quarters in 2016 and found over 2000 individual patients having filed for this code. This along with several other analysis have allowed us to much better define the demographics, patients concentration, location and providing us valuable intel on how best to deploy our resources in United States such as illustrated on slide 17. We've put critical personnel in place in the North American market. We've been hiring sales managers and medical science liaisons or MSL that will cover some of the tier I ASCOs in the U.S. and in Canada as well as the specialists that we have identified that are already taking care of patients with congenital plasminogen deficiency. Well-planned logistics is also an area of investment. So to-date, we've hired over 15 account regional sales manager and MSL as well as professionals looking after marketing and reimbursement. And we are launch ready for Q1 2018. Several of our colleagues actually are participating. On slide 13, you see nice pictures of our participation this week at the American Academy of Ophthalmology meeting in New Orleans. And we you can see our exhibition booth on slide 18. Our manufacturing continues a pace in our facilities in Laval ad our Winnipeg CMO. As Bruce just discussed, we have made a significant investment in our manufacturing infrastructure ahead of the plasminogen launch, both with regards to our manufacturing lines and building inventory levels ahead of the anticipated launch during the first half of 2018. We also anticipate pre-approval inspection of our facility in Laval in the very near future. So now let's turn to slide 19 and other indications where ProMetic is working aggressively. We are leveraging our innovative drug in substantial proprietary manufacturing process by advancing our drugs in clinical care conditions, where the acute plasminogen deficiency is at the core of the complication. I mean this slide 19 lays out the broad market opportunity for plasminogen. The first intended indication being for congenital plasminogen deficiency. We intend to run the clinical trials to expand the use of Ryplazim IV formulation to severe burn patients and acquired acute deficiency such as the acute long injury being one of these ones. As you can see the number of patients grows considerably from 2000 patients with congenital plasminogen deficiency to as much as 15,000 annually with severe burns and over 100,000 annual VETs in the USA associated with acquired acute deficiencies. Plasminogen deficiencies are the core of complications in these patients. Medical experience, together with strong preclinical evidence suggests that supplemental plasminogen concentration will contribute greatly to the clinical outcome of these patients. The developments of clinical programs for these indications are underway with clinical trials in specialized sites across U.S. and Canada scheduled to test Ryplazim IV formulation in 2018. Now the areas of diabetic foot ulcer and tympanic repair indications are also very important indications where we have focus. Both these conditions require that Ryplazim administered subcu intradermal or intralesion such -- in such they are going to be relying on a completely different formulation of Ryplazim that have already been optimized. We worked hard to develop a completely distinct formulation for use on these hard-to-treat wounds compared to our IV formulation and we're now ready to test its informal regulatory controlled environment. You will have seen that we've announced in the last couple of weeks that we receive approval from the Swedish Medical Products Agency MPA to begin two clinical trials. The first of these are in patients suffering from chronic tympanic membrane perforation, a reminder on slide 20 of what that implies, both of these indication represents serious and large well known areas of unmet medical needs, it is estimated that as many as 70,000 children in the U.S. alone are diagnosed with chronic tympanic membrane perforations every year. And slide 21 illustrates some of the preclinical results supporting the rational for healing hard-to-treat tympanic perforation with plasminogen local micro-injection. The second indication on slide 22 is in diabetic foot ulcers, which is a huge unmet medical need with over 500,000 patients suffering from DFUs annually. There are no effective treatment available today for practitioners in this condition, has a devastating impact on patients including amputation. DFUs imposes billions in treatment of dollars of cost to the U.S. and Canadian Healthcare system as well as billions of dollars of loss work. So slide 23, our summaries of both those arranging studies with a goal to establish dose regimen and the primary endpoint around being safety telling our ability and efficacy of the new formulation. We anticipate dosing patients in January 2018 as of now and estimates that will have proof-of-concept data on the clinical outcome sometime in the second half of 2018. These two trials are being conducted in Sweden in top tier centers. As a reminder, the clinical experience has been generated with KOLs in Sweden and that's our reason for conducting the trials there. For tympanic repair, we're working with Dr. Cecilia EngmérBerglinat at the Karolinska University Hospital in Stockholm. This university hospital is the second largest ENT center in the world. For the DFU trial, the investigator is Dr. Jan Apelqvist, who is a world renowned expert in the field of diabetic foot ulcers and hard-to-treat wounds, at the Department of Endocrinology at SkaneUniversity Hospital in Malmö, Sweden, but overall we're very, very proud of our performance and pace of development for the Ryplazim program from the strategic standpoint as well I mean investors can anticipate that will maximize the value of Ryplazim in the long run as we're in discussions as well with potential commercialization partners for both selected indications and geographies. So while our enthusiasm for Plasminogen Ryplazim is talk able with numerous ongoing, perforations we are equally excited about our small molecule program and that applicable across a wide range of fibrotic indication and slide 25 provide a short summary of the three Phase 2 trials that have enabled us to demonstrate PBI-4050 early evidence of efficacy. Along with an impressive safety profile, but today I'd like to do a deeper dive with our Alström Syndrome on slide 26 rather a very rare indication where patients suffer from metabolic syndrome and fibrosis affecting multiple organs. We've completed the enrollment of 12 patients on this ongoing study in the U.K. And recently we've announced that the beneficial clinical effects previously observed are sustained during prolonged treatment. This study is very comprehensive and we're measuring the potential effect of PBI-4050 on deliver as well as other organs through various techniques. One of those techniques on slide 27 is called the Fibroscan, which is becoming more and more recognized by the American Association of Study for liver disease as a reliable noninvasive mean to measure liver disease progression. On slide 28, you've seen that's slide before when I'm reemphasizing that nearly all Alström patients develop severe liver fibrosis or liver cirrhosis and this is by far is not the same case for NASH patients. NASH may affect millions of people, but only a minority of them will actually go on to develop severe fibrosis or cirrhosis. So, on next slide 29, our Alström patients typically develop fatty liver disease by age of three or four years old which means that the fibrosis has been gradually establishing itself over 15, 20 years and then 90% of them will actually go on to develop severe fibrosis and cirrhosis. The average age of our Alström patients in a trial is about 22 years old and it's not surprising to see on slide 30 that the mean Fibroscan value is baseline is 9.8 PK which correspond to severe fibrosis. What is very encouraging are verse to see that PBI-4050 for a less than one year in those patients have enabled the reversal of destroying very impressive. The mean Fibroscan value for eight patients that has completed at 36 week or more treatment on PBI-4050 have dropped significantly to 7.5 and this is highly statistical significant. Slide 31 is even more remarkable that deceptive data in the five of eight Alstrӧm patients that have been on PBI-4050 for more than 36 weeks as significant or severe fibrosis or cirrhosis. And on slide 32 we are providing you with individual patients data that have seen a significant reduction of Fibroscan values or reduction of fibrosis and you can notice that these are the most compromise or severe or patients with severe significant fibrosis and some of them with actually cirrhosis. And on slide 33, this is the data for the eight patients that have completed 36 weeks and all of them as found a reduction of their Fibroscan value more data will become available in the coming weeks. As we're getting also MRI analysis of deliver as well as metabolic evaluation would gives us a status of how the liver perform but this time at the selector level. So based on this data, we will schedule a meeting with both the FDA and EMA to get a better understanding of what could be the next step for terrible condition that affects multiple organs in young patients. Our plan will be to conduct a Phase 2 to expanded trial in both EU and in the U.S. starting in 2018 pending that the recommendation from the FDA. But now let's also move on to an important target indication in our development program, which is Idiopathic Pulmonary Fibrosis on slide 34. As a reminder, IPS is a chronic and ultimately fatal disease characterized by a progressive decline in lung function and affects about 130,000 people in U.S. with about 30,000 - 40,000 new cases diagnosed annually. And mortality rate is as high as about 40,000 people die each year from this disease. So more -- so just a few weeks ago, we received excellent news that the FDA has granted us fast track designation for PBI-4050 in treatment of IPF. And this is very interesting given that fast track designation is granted for an indication where there is already two IPF drug approved. And it confirms that there is still an unmet medical need and that PBI-4050 offers a plausible solution either as a combination with nintedanib or as a standalone therapy. And this fast track designation will potentially allow ProMetic to advance PBI-4050 even faster. We are seeing excellent progress as we received FDA approval in our IND application to commence a pivotal Phase 2 preclinical trial in patient suffering from IPF. As a reminder, FDA concurred with the design of the clinical trial following the results of the Phase 2 trial that was announced last spring. And this is -- this Phase 2/3 IPF patients currently treated with nintedanib would be randomized to receive either 4050 or a placebo in combination with nintedanib. And ProMetic also intend to initiate the second Phase 2/3 placebo control trial which will enroll IPF patient with failed to tolerate nintedanib or pirfenidone. And these patients would be randomized to receive either 4050 or placebo, but this is a PBI-4050 monotherapy trial. Following the FDA approval of the IND, we've confirmed the CRO to work with. And we anticipate rolling our first patients in late Q1 - early Q2 with some preliminary data in mid-2019. This is summarized on slide 35. We believe that our small molecule program is an attractive bio pharma asset. And we are currently in discussion with several potential pharma partners for different indications and geographies. The data we have generated in the Phase 2 trials including the Alström syndrome is moving the needle. The efficacy is not in question anymore. Safety is a huge feature. And then obviously, we shouldn't discount the importance of once a day oral medication convenience. All those factors are attracting partners into multiple discussions with us. And we are very excited with the prospect that this will deliver major value for our shareholders. Before wrapping up, I want to highlight the key milestones that the investors could look forward to over the next six-nine months following our Q2 webcast last August. And first, from our plasma derived therapeutics on slide 36, we are very proud to review all our team's accomplishment over the past quarter including the fact that we had acceptance of our BLA for plasminogen and the establishment of a PDUFA date, receipt of rare pediatric designation for Ryplazim which complement our orphan drug designation and fast track status. And if approved, the rare pediatric designation would mean that ProMetic would receive a priority review voucher. The receipt of a priority review status in Canada was also delivered during the quarter and permission from the Swedish regulatory to initiate the two clinical trials in chronic tympanic membrane perforation and diabetic foot ulcers. And on slide 37, PBI-4050 received green light for its pivotal clinical trial for IPF. And PBI-4050 clinical data continues to impress in Alström patient and more to come actually from that study. And we look forward that there are several upcoming milestones. Commercial launch of plasminogen in the coming months pending FDA approval obviously, announcement of new data for future use of plasminogen in critical medical condition, partnering of both plasminogen and PBI-4050 for selected indication and geographies, new data for PBI-4050 in Alström patients, interim data for IVIG Phase 3 ongoing clinical trial, filing of BLA for IVIG in Canada as well as updates for our next star products into AlphaOne, which will also target orphan indication. And we are looking forward for a series of peer-reviewed publications to be published in the coming months covering both the mechanism of action and efficacy in multiple systems and clinical trials. So, slide 38 summarizes nicely how we are systematically building enterprise value. And we execute on our development plan and our drug candidate starts contributing to our revenue growth. Overall, we have accomplished a great deal on our drug pipeline regulatory front, commercial operations, and in setting up our balance sheet for success. With those remarks, I would like to open the call for questions. Taking your questions would be Frederic Dumais, and Bruce, and myself. With that, operator, please poll for questions.

[Operator Instructions] And your first question comes from the line of Mara Goldstein with Cantor Fitzgerald. Your line is open.

Thanks very much for taking the question. Just an initial question on 4050, you're pending initial of a trial looking in DKD. And I just was wondering if you could kind of give a little bit of details around size and scope of what you're thinking at this point?

Yes, good morning, Mara. For DKD, we're looking at late-stage clinical and late-stage disease like stage 3 diabetic or stage 4, which mean that patients have a very, very significant reduced kidney function. And we first decided to open our IND with the FDA using IPF as the first indications. But now that the IND has been open and there was no issues regarding any other aspect of the dossier, that CMC section, or toxicology, what have you, we log in to systematically file additional protocols to run this trial. This trial would be smaller in size for IPF, and would look to first confirm that we move the needle in very well defined markers for chronic kidney disease such as eGFR, proteinuria, and other markers. As you may recall, Mara, that we also had very positive early signals in the metabolic syndrome study and the Alström patients, significant reduction of biomarkers in the urine. Now these are not enough in itself to secure approval for CKD, but repeating that under placebo controlled trial will help us define the scope of the pivotal trial.

Okay. And just with respect to Ryplazim and the BLA which has been submitted and it was rolling [ph] submission, can you just discuss what are the outstanding review issues with FDA at this time -- or not issues, but where are the sort of outstanding elements of the review that's ongoing, and have they completed all of the CMC work relative to Ryplazim?

Well, as typical BLA review, we constantly get some questions that are rapidly dealt with. So there's been no surprise to date. We have a very, very robust step process, we have a very robust clinical performance in this trial. I think we're in very good shape with this file now.

Okay. And if I could just ask one more, just on the BD [ph] side, there were comments in the beginning discussing possible monetization of assets. And clearly you've talked about the pediatric review voucher. But are there other elements of the business that you would be looking at this point [indiscernible] monetization perspective, would the exception of, let's say, development rights for 4050 in other territories, and things like that.

Well, for plasminogen, for example, is assuming that we get approval in the U.S. that triggers potential sales in other countries that rely on that U.S. approval. And on a named-patient basis we could actually start serving patients outside the U.S. jurisdiction, and therefore partnering discussions to facility this are in play. Multiple players came forward looking at plasminogen's performance, and are interested in some specific indication that we can easily allocate under well-defined partnerships. And the same -- so that's why we mean by either partnership for indications and geographies are easily carved for both plasminogen and PBI-4050.

Okay. But were there other assets that you were looking at? I'm just curious from a bricks and mortar perspective or just trying to understand the comments that were made in the beginning.

No. I think the PRV, should we receive BLA, is an easy asset to monetize. I mean there is a process involved. We have already identified the bankers with track record that have actually -- have good intel on who would be interested in such valuable asset. So that's an easy asset, a complete, truly non-dilutive sale that we can allocate the process to a banker. But we're in no mood right now to dispose of any other asset of the company other than smart partnering [ph] and enable our growth.

Okay, thank you very much. I'll hop back in.

Thank you.

Your next question comes from the line of Alan Ridgeway with Scotiabank. Your line is open.

Hi, good morning guys. Thanks for taking the questions. Can you hear me okay?

Yes, Alan, good morning.

Hi. Okay, good. Just on the IVIG here, we notice that you guys commented on you're planning to file for approval in Canada. Could you just talk to us about what the timeline there is? What the process would be once you get approval in order to start selling in Canada, and there's basically two buyers here, Canadian Blood Services and Héma-Québec. Have you guys had any conversations with those two parties at this point as to whether or not they would be in a position or would desire IVIG from you quickly after an approval, or where that market is today. Could you just give us some more info on that front?

Yes. I mean, as we expect, IVIG should be receiving approval faster in Canada. And we look forward to update our shareholders in the coming days actually as we receive some news on the interim IVIG data. I think that we'll take the opportunity to provide more detail on the IVIG timing and so on. The Canadian marketplace is not exactly a small one for IVIG. And you're right, there's two main buyers with some tender cycle. But the discussions with those is such that they are very interested in Canadian manufactured IVIG, and they also indicate that the growth is such that there's always like, I call it, spot market, where you can come in. For ProMetic, as soon as there is an approval in Canada we could commence selling, and we've had discussions to that effect. The U.S. approval should follow by a quarter-and-a-half or two behind the Canadian one. And it's a question, as you know, of driving the plasminogen sales that will then drive the volume of plasma being processed, and then, at the same time, the volume of IVIG that we can sell alongside with plasminogen. So we're in good shape. You look at the size of the amount of nine to 10 millions grams purchased by Canadian authorities for the Canadian marketplace, 85% of which actually comes from plasma collected in the U.S., so self-sufficiency is a big thing, it is on the agenda of both Canadian blood Supply and Héma-Québec. And we look forward to collaborating with them for optimal IVIG revenue.

Now, just a follow-up to that, so -- I mean, clearly you guys are planning for plasminogen as being the large lead product that will drive manufacturing. But if you were to receive an IVIG approval would you in the shorter-term drive your manufacturing based off the ability to sell IVIG while plasminogen ramps? Or how are you thinking about running your manufacturing process once you get an approval, because my numbers would indicate that IVIG take you to profitability on the manufacturing side on its own. So could you just comment on that?

Well, it's a good exercise that we're running through right now, simulation of what's the best mix as we go forward. We fully anticipate plasminogen to actually drive volume. And obviously if we have the ability, and we expect to sell more IVIG -- there's simulation here, Alan, you can see. You can imagine manufacturing more for IVIG sales, and accumulating some reasonable stock level in anticipation of further growth on the plasminogen is anticipated. We have good expiry date on the product. We'll have three years on both products. And we can modulate to exactly achieve the goal that you described, reach sustainability as soon as possible.

Okay, great. And then just maybe one last one for me, and this is probably for Bruce. And thanks so much for the extended description of the R&D send. On the back of a plasminogen approval, Bruce, if I'm thinking about these costs moving around into other line items, such as cost of goods, would most of that Laval and Winnipeg manufacturing shift over at that point? Or how should we think about trying to model this going forward?

Yes, I think you're right, Alan. The majority of that would go over. And this kind of speaks to your earlier question over plasminogen versus IVIG. I mean, obviously if we're targeting plasminogen first and commercialize that first, then -- and that's the majority of our production, then the majority of those costs would move to cost of goods. So I think you can expect 70% or more of those costs to move into cost of goods on commercialization of the product. And then of course, don't forget there will also be other -- there'll be some savings in the R&D line as well as we can kind of trickle out the patients that have been on kind of compassionate use of the product and move then over to commercial supply, so you'll see some savings in the R&D line as well.

Thank you.

Your next question comes from the line of Neil Maruoka with Canaccord Genuity. Your line is open.

Hi, good morning guys. Thanks for taking the question. Both of mine have been asked already. But maybe I'll just ask a follow-on to Alan's question in terms of the broader strategy for IVIG, if you can just provide some color there, and timelines? And then just to follow-on to that, I appreciate the milestones as it relates to inter-Alpha-1, but can you talk about some of the other plasma products that you have in the pipeline and where they may stand right now.

Yes, well, good morning, Neil. First, I want to reiterate one of the objective there we had set for ourselves earlier this year, was to say that plasminogen is a product with a pipeline in itself. And that we were going to focus on expanding the use of plasminogen in other indications, and try to capture as much of the low-hanging fruit around the use of Ryplazim IV for acute care indications, which would then drive the entire business plan. Not to say that we're not interested in adding more products and increasing revenue per liter of plasma, but that's one of the things that we have to modulate to make sure that we keep R&D costs under control and focus on advancing more indication on the first product that we expect approval from. So we fully expect to have in the reasonable four or five products manufacture out of the same liter of plasma. But the stronger the plasminogen sales become then the highest revenue mix we can get from all the plasma we process. With regard to IVIG and Alan's previous question, this is a simulation that we're running through right now is IVIG, and there's some specialty IVG that we can also expect to sell as a result of getting the IVIG platform approved for sale. So that simulation is quite complex, and it's intended to maximize top line and bottom line contribution as have all this manufacturing infrastructure, might as well use it and generate revenue. But the real focus right now is to grow the sales of plasminogen beyond just the congenital deficiency but also address those other markets that the IV formulation could actually -- hopefully prove the point that supplemental therapy can save a lot of lives. So we look forward to a very optimal mix of development here, but focusing on advancing plasminogen as aggressively as possible.

Okay, thanks.

Thank you, Neil.

Your next question comes from the line of Doug Miehm with RBC Capital Markets. Your line is open.

Thank you, and good morning. Pierre, maybe you can just chat a little bit about -- we spend some time on the plasma side of the business, but 4050, specifically in IPF. Could you give us an indication of how a specific patient is going to look like in terms of disease severity as they go into either the 4050 alone, they're already tried other products, or in combination? Are there going to be differences in those two groups of patients in terms of severity?

Good morning, Doug. Not really. Surprisingly -- I don't know if you've seen the last publication of the American Thoracic Society minutes. As many -- depending on the region, but an average of 60% to 70% of mild-to-moderate IPF patients are not on therapy right now. They are not on therapy because they either have failed to tolerate the therapy or do not feel like indulging with the side-effects that are described in the product monograph. So there's a very high percentage of patients that would be called, call it, naïve. And they're not worse off than those who are on nintedanib or pirfenidone. So it's a higher percentage than expected of patients that are actually available for a stand-alone PBI-4050 trial and eventual treatment should we prove our point. They -- the terms of severity for the pivotal trial would be just akin to one inclusion criteria use for impulses trial. So very much middle-of-the-road, mild-to-moderate, well defined characterized patients. And the only difference between the two trials really is a patient that has been stable on nintedanib for at least three months. That is, that this patient that has been for three months on nintedanib is likely to be able to stay on that therapy for another year. I mean, because those who try and drop, they drop fairly quickly after trying. So that's the only difference between the trials. A stand-alone would be a patient that have either progressed on either drug or has failed to tolerate or doesn't want to take these drugs despite instance from its physicians. But overall otherwise their conditions are just the same.

Okay, perfect. And then as you've been talking to more and more companies about 4050 or those groups of products in that area, have you noticed any changes post the data release that has come from competing companies, [indiscernible] or Galapagos, or anything like that, or has it created more interest in your product?

I would say that the momentum has further improved, Doug. We clearly do not have 48-weeks data or 52-weeks data. However the data that we're generated in other Phase II trials such as metabolic syndrome, and even more so now in the Alström patients clearly show that the drug does not just have a transient effect that tapers off over time. In fact, the longer the patients are exposed to the product the longer you have a profound effect. And the statistical significance increase. So most companies in discussions with do not only look at IPF and or look at liver, they look holistically at the overall picture of the preclinical program and the performance on very hard to treat patients, such as Alström, and the IPF trial. So momentum is improving. The convenience of our once-a-day pill, well tolerated with the nintedanib -- I mean, pirfenidone is a non-starter, as we know. And the fact that our data, even though at 12 weeks, compare very favorably for what also published by the American Thoracic Society's paper where the combination of pirfenidone nintedanib didn't do better than 4050 alone in our trial. So it shows that there is something going on right now in those patients. And the overall landscape is extremely favorable for our offering.

Perfect. And then maybe I could just wrap up. Can you just specifically state out the timelines in terms of IVIG from filing and expected approval date north and south of the border? Thank you. I'll leave it there.

Yes, well, Bruce would like to handle that question, but at the same time we've given priority for the FDA inspection on our facility. And we will soon have revised schedule with regard to the timing. We want to make sure that we've taken into account all those permutation involved -- as you know we made the priority of the inspection to go smoothly. And in the coming days, we are going to update the street on how we have done in the Phase 3 trial and will be in a better position to provide the timing, Doug, for both the Canada and the U.S. perspective.

Okay. Thank you.

Thank you.

Your next question comes from the line of Rahul Sarugaser with Paradigm Capital. Your line is open.

Good morning, Bruce. Good morning, Pierre. Thank you so much for taking my questions. Confirming that you can hear me?

Yes, Rahul.

Great, great. Thank you. So, only really have one question, and thank you for your review of the development plan with plasminogen deficiency in the U.S. and your commercial plans. And so in your NDA you talked about 2000 patients as your target market. So my question is really kind of scaling that up into Europe. Would you be able to talk to your plans around the regulatory and commercial plan for plasminogen in Europe?

Well, yes. Europe is a complex market as you know. We have met with the EMA. And we know that in few months from now we will have gathered most of the data that the EMA has been looking for. I the EMA was little bit more -- requirement little bit higher in the sense that they wanted to make sure that we did show through the treatment of patients. I call it the on-off of lesions, and that the disappearance of lesions were definitely not coincidental. I think the FDA and Health Canada did not see any problem with this as those patients that we've treated successfully had those lesions for years in some cases, and that since then as well we've been to show that when you -- if you space treatment you end up having lesions coming back. So with all that data pack, we are in a position to go back the EDMA sometime in Q2 next year. And we will take it from there. I mean if they approve the package as submitted that means then we could expect an approval in Europe in H1 2019. In the meantime though, the product could be available to patients some countries in Europe and Turkey and other places in the world have a program called named-patient basis where KOLs can actually arrange with the government the reimbursement of products upon approval by the FDA. So we fully intend to use that system to reach to patients in Europe, Turkey and few other places in the world ahead of EMA approval. So I mean it's a two-prong step approach with regard to Europe. And fully expect that additional indications that we are advancing with Ryplazim IV could end up also becoming point of entry in Europe to treat severely compromised patients with acute plasminogen deficiency. So there is multi-prong approach here. But the objective is really to serve well the first market that we'll be approved in that is U.S. and Canada. And then also take advantage of the system to address some of the patients already identified in the European and Turkish market.

Great. Thank you very much. And just one follow-up question and then I'll hop back on the -- in line; you've identified 2000 patients based on the medical claims filed in U.S.,do you have any such data and estimates for the size of the market in Europe? And thanks, I'll leave it there.

The data was very well structured and available for Canada. There is some countries in Europe where the incidence is higher. So, we have to go through that process individually. But for example, there is a higher incidence in the areas where you have Turkish descent. And therefore, you will have a higher incidence in Germany compared to other market. So we are working with some potential partners to assess the market size in Europe as well as well as Canada and Japan and few other markets like that. So we'll update the street in due course. But, I think that we can almost assume that the rule of engagement in terms of incidence will mean that a 2000 patient population in the U.S. will probably be the same in Europe business slightly larger.

Thank you.

I think we have time for just one last question.

Your next question comes from the line of Derren Nathan from Hybridan. Your line is open.

Hi, guys. I am just wondering with the new funding in place and -- how does this set you up for some of the early stage conditions in the small molecule area the sort of pulmonary hypertension and cystic fibrosis related to diabetes and all that sort of stuff?

Derren, I am sorry. The line broke a little bit. Would you mind repeating a bit of your question? I am not sure I fully grasped it.

Yes. So -- now that you've got a line funding in place, how does that set you up for accelerating the small molecule franchise in areas where there is interest such as the pulmonary hypertension and the cystic fibrosis related diabetes?

Well, for sure with the performance of PBI-4050 in the Phase 2 clinical trial and the fact that we have been able to compare in the pre-clinical program multiple drug candidates, we're very, very interested in advancing other drug candidates in the clinic. So PBI-4547 is graduating into the clinic. And this is important because it creates new partnering dimensions for us. We could partner one drug for a specific indication and be progressing other drug candidate for other indication. So, segregating indication by -- with different drug is a much efficient way to go about this. I think that as we secure -- I mean we've launched many lines -- too many lines in the Lake as we said. And PBI-4050 performed well in every studies that we've challenged it to both pre-clinical and now clinical. But I think we'll have to focus the program and really progress in some defined indication with 4050 advancing other drug candidates to step in the shoes of 4050 and address as many fibrotic conditions as possible. And as we discussed before, we'll focus on niche indications, orphan indications. But there are some serious large indications where fibrosis is the underlying cause of the disease which is requiring partnering because the commercial reach is simply too big for us. So all we are doing here is setting ourselves for an optimal partnering and optimal growth pathway going forward, so…

Thank you very much.

On that note, Derren, I think we have set ourselves for an hour call which we've just reached limit. I thank you very much for your question, and thank you all for participating in this webcast, and look forward to more updates as we continue to advance our program. Thank you again very much.

And this concludes today's conference call. You may now disconnect.