Earnings Transcript for AEZS - Q1 Fiscal Year 2017

Operator: Greetings, and welcome to the Aeterna Zentaris Reports First Quarter 2017 Financial and Operating Results Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Philip Theodore for Aeterna Zentaris. Thank you, Mr. Theodore, you may begin. :

Philip Theodore: Good morning, and welcome, everyone. I am Philip Theodore, Senior Vice President and General Counsel of Aeterna Zentaris. I will be the leader of today's call. With me are David Dodd, President and Chief Executive Officer; Genevieve Lemaire, Vice President, Finance and Chief Accounting Officer; Dr. Richard Sachse, Senior Vice President, Chief Medical Officer, Chief Scientific Officer; and Mr. Jude Dinges, Senior Vice President and Chief Commercial Officer.

During this call, we will be making forward-looking statements regarding future events and performance of Aeterna Zentaris. The forward-looking statements are subject to risks and uncertainties that could cause actual events and results to differ materially from the forward-looking statements. The risks are described in further detail in the company's press releases and reports filed with the U.S. and Canadian securities regulatory authorities. These forward-looking statements represent the company's judgment as of today, Tuesday, May 9, 2017, and the company disclaims any intent or obligation to update these forward-looking statements unless we're required to do so by applicable law or by a securities regulatory authority. However, we may choose to update the statements. And if we do so, we will disseminate the updates to the investing public. :

It is now my pleasure to introduce the President and Chief Executive Officer of Aeterna Zentaris, Mr. David Dodd. :

David Dodd: Good morning, and thank you for joining us. On May 1, we reported that the ZoptEC Phase III clinical study of Zoptrex did not achieve its primary endpoint of demonstrating a statistically significant increase in the median period of overall survival of patients treated with Zoptrex as compared with patients treated with doxorubicin. We're very disappointed with this outcome because results of the study do not support regulatory approval. Furthermore, we do not anticipate conducting additional clinical trials of Zoptrex with respect to any other indications.

Our focus has now shifted entirely to filing our new drug application for Macrilen, and if the product is approved, to its commercial launch as soon as possible. We will also optimize our resources to be consistent with our focus on Macrilen-related efforts. We strongly believe in the potential that Macrilen provides for us to become a successful specialty pharmaceutical company. :

In case you missed our recent news about Macrilen, we announced on March 30 that we had a very productive meeting with the FDA the previous day. During that meeting, FDA agreed with us that our clinical studies of Macrilen addressed the prior deficiencies noted in the November 2014 complete response letter. This conclusion paves the way for our resubmission of an NDA for Macrilen, which we expect to file in the third quarter of this year. We expect to demonstrate that Macrilen is a robust, reproducible test providing good sensitivity and specificity. :

Let me take a moment to discuss the lead up to our March 29 meeting and our basis for confidence in the upcoming NDA submission and regulatory review. On January 5, we announced that we had missed the percentiles of agreement predetermined primary endpoint of the Macrilen confirmatory trial. This endpoint measures percentage agreement between the evaluation of a patient with Macrilen and the evaluation of a patient with the procedure known as the insulin tolerance test, where the patient is diagnosed as having adult growth hormone deficiency or AGHD. In other words, how likely is it that evaluations with Macrilen and the ITT would agree that a given patient had AGHD. :

You may recall that the design of our pivotal confirmatory Phase III study utilized the ITT, insulin tolerance test, as the comparator in an open-label, head-to-head, randomized, two-way crossover trial. The study also included an extension study, in which a subset of the subjects who completed the core study underwent a second Macrilen evaluation to assess the reproducibility of the first test outcome. The trial compared the amount growth of hormone in a fasted patient blood sample, following either administration of Macrilen or the ITT procedure to a preestablished cutoff point. If the amount exceeded the preestablished cutoff point, the patient was considered not to have AGHD. Conversely, if the patient was less than the cutoff point, the patient was considered to have AGHD. :

For the ITT, the cutoff point was 5.1 nanograms of growth hormone per milliliter of blood. For Macrilen, the cutoff point was 2.8 nanograms per milliliter. Establishing the respective cutoff points in advance of the trial was challenging, especially since there had never been a comparison study between Macrilen and the ITT. Based upon these 2 respective cutoff points, the predetermined criteria for success relative to percent positive agreement was not achieved. However, the criteria of success relative to the percent negative agreement was achieved. :

As you may recall, we immediately engaged external key opinion leaders in endocrinology and biostatistics to review the data. This quickly led us to the conclusion that we previously communicated, essentially that Macrilen not only performed very well, but compared to the ITT procedure, demonstrated more consistent, robust and evaluable results in support of diagnosing adults suspected of having growth hormone deficiency. In general, the data demonstrated that in each patient cohort of the study, Macrilen resulted in greater stimulation of growth hormone than did the ITT. One of the most important findings was the favorable difference in Macrilen-evaluable results versus the ITT. :

Also, the reproducibility results of Macrilen were most impressive. Overall in our view, shared by our endocrinology advisers, the data from the Macrilen confirmatory studies are compelling and demonstrate the viability of Macrilen for its intended clinical use. As a result, we provided the data analysis and trial information to the FDA, resulting in their agreeing to meet as soon as possible to discuss our findings and our proposal to proceed with an NDA submission based upon this confirmatory trial and their respective results. As reported, the meeting was held on March 29, resulting in a productive and successful discussion related to Macrilen. Our intention is to submit the Macrilen NDA in the third quarter of 2017, and if the product receives FDA approval, to commercially launch the product in the first quarter of 2018. Let me remind you that review period for Macrilen is 6 months. :

Now let's review the market opportunity that currently exist for Macrilen as well as the potential expanded margin opportunity based upon possible product differentiation characteristics between Macrilen and the ITT as well as other stimulatory test procedures that have been used for decades. We expect that approximately 40,000 confirmatory tests for AGHD will be conducted each year after the introduction of Macrilen, which represents the target market for Macrilen at the time of its anticipated commercialization following FDA approval. From a customer development standpoint, there are approximately 2,500 endocrinologists conducting these tests, primarily working from 1 of 150 pituitary centers, 200 to 300 large hospitals and 13 Defense and Veterans Brain Injury Centers, the latter of which becomes increasingly important as we develop and further expand the market for AGHD testing. As a result, approximately 30 field representatives are what we have determined will be required to commercialize and develop Macrilen use. In other words, a relatively small field sales force and commercial investment will support Macrilen commercial development. :

Keep in mind that the current AGHD stimulatory test, including the gold standard insulin tolerance test and the Glucagon Stimulation Test, or GST, are injectable, they take 3 to 5 hours to complete, are associated with potentially dangerous adverse [ events ] and/or offer questionable effectiveness in the case of the GST or repeatability in the case of the ITT. Also, as medical procedures, their administration varies from physician to physician, with the stimulatory agents and test procedures not being subject to FDA approval, regulation or oversight. Generally, endocrinologists report a relatively high level of nonevaluable ITT results as well as inconsistency in results due to procedural administration issues. :

We believe that a significant commercial opportunity exists to clearly differentiate Macrilen from the unapproved legacy stimulatory test procedures. Resulting in a potential value proposition, this supports establishing Macrilen as the new preferred standard AGHD stimulatory test based upon meaningful clinical features from our Phase III trial. These benefits include: accuracy; reproducibility; potency; safety; convenience; FDA-approved and administered in a consistent manner.

As a result of the Macrilen profile reflected in the Phase III confirmatory trial, we believe the existing AGHD stimulatory test market will be a profitable, albeit small, commercial opportunity of approximately $30 million to $50 million annually. Significant additional potential market expansion opportunities exist related to traumatic brain injury or TBI and pediatric growth hormone deficiency, if Macrilen is subsequently approved for the evaluation in pediatric populations. But our initial focus will be on achieving successful trial and adoption of Macrilen relative to the 40,000 stimulatory test market in the U.S. that exists today. :

Regarding expansion opportunities, the existing need for AGHD stimulatory testing based upon annual TBI hospital admissions and in conjunction with the existing guidance from the Endocrine Society, has the potential to significantly increase the annual number of stimulatory tests. However, I'll reiterate that our focus upon commercialization will be on the existing market. :

Finally, let me note that there is no competitive selling in this phase as the existing legacy test procedures are not FDA approved. And perhaps more importantly, we are not aware of any alternative products in development for this indication. With our Macrilen [ tab ] expanding -- or extending to the end of 2027 having been granted orphan drug status, we are fully committed to the success of this product. :

Now let me briefly comment on our financial position. We believe that our current cash position is sufficient to fund operations until the assumed approval of Macrilen at year-end. We ended the quarter with approximately $17.8 million of unrestricted cash and cash equivalents, which is indicative of an average monthly use of cash in operations of approximately $2.3 million during the first quarter, representing a year-over-year reduction of more than 20% in our monthly use of cash in operations. We expect to reduce our monthly use of cash even further as we wind down activities related to Zoptrex. Our current expectation is that our monthly use of cash in operations during the remainder of this year should decrease to between $1.7 million and $1.9 million, a further reduction of 22% compared to Q1 2017. :

At the end of the quarter, we have approximately 13.8 million common shares outstanding. During the second quarter of 2017 through April [ 18 ], when we altered the ATM product, we raised an additional $1.5 million of net proceeds using our ATM program. And we now have approximately 14.3 million common shares outstanding. :

Now I will ask Genevieve Lemaire, our Vice President, Finance and Chief Accounting Officer, to provide more information about our first quarter financial results. :

Geneviève Lemaire: Thank you, David, and good morning, everyone. Most of what I'll be covering has been presented in more detail in our consolidated interim financial statement and MD&A for the first quarter, which were filed yesterday.

From an operating expense standpoint, our main activities during the first quarter included ongoing efforts associated with our clinical [ disruptment ] initiative as well as, to a lesser extent, with our commercial operation and general and administrative activities. Total operating expenses amounted to approximately $5.9 million for the quarter ended March 31, 2017, representing a 19% decrease compared to the same period in 2016. The decrease was attributable to lower R&D costs and lower selling costs. General and administrative expenses were virtually unchanged in 2017 compared to 2016. :

Our total R&D cost in the quarter were approximately $2.5 million as compared to approximately $3.7 million in the first quarter of 2016. The decrease in R&D expenses of approximately $1.2 million was attributable to lower comparative third-party costs. Third-party costs attributable to Zoptrex decreased considerably during the 3 months ended March 31, 2017, as compared to the same period in 2016 mainly because the clinical portion of the ZoptEC clinical trial was completed in January 2017. Third-party costs attributable to Macrilen remained stable during 3 months ended March 31, 2017, as compared to the same period in 2016. Excluding the impact of foreign exchange rate fluctuation, we now expect that we will incur overall R&D cost of between $10 million and $12 million for the year ended December 31, 2017, which is significantly below our previous guidance due to the negative top line results of Zoptrex and the optimization of resources that we intend to implement as a result thereof. :

G&A expenses were approximately $1.9 million during the first quarter of both 2016 and 2017. This was in line with our expectations. Excluding the impact of foreign exchange rate fluctuation and the recording of transaction costs related to potential financing activities, which are not currently known or [ estimable ]. We now expect that G&A expenses will range between $7 million and $8 million in 2017. The slight decrease in the guidance is explained by cost savings and resource optimization initiatives that we intend to implement following the negative top line results of Zoptrex. :

Selling expenses, representing mainly the cost of our sales force and sales management staff, were $1.5 million for the 3 months ended March 31, 2017, as compared to $1.7 million for the same period in 2016. The decrease in selling expenses is explained by the reduction in a number of sales representatives from 20 to 13 in February 2017. Selling expenses in Q1 2017 were slightly below what we anticipated because we postponed some expenses related to the potential commercial launch of Macrilen. Based on currently available information, we now expect selling expenses to range between $6 million and $7 million in 2017. The decrease in the guidance is explained by cost saving and resource optimization initiatives that we intend to implement following the negative top line result of Zoptrex. :

We report net finance income of approximately $1.5 million in the first quarter of 2017 as compared to approximately $3.3 million during the first quarter of 2016. The decrease was mainly attributable to the change in fair value of our warrant liability, which resulted from the periodic mark-to-market valuation of our outstanding warrants. The mark-to-market warrant evaluation during the quarter was mainly impacted by the closing price of our common share on the NASDAQ, which fluctuated from $2.45 to $3.65 during the 3-month period ended March 31, 2017, as compared to $2.67 to $4.40 during the same period in 2016. :

We used approximately $7 million of cash in operations during the 3 months ended March 31, 2017, as compared to $8.8 million for the same period in 2016. This decrease in cash used in [ operating ] activities of about 20% for the 3 months ended March 31, 2017, as compared to the same period in 2016 was mainly due to lower operating expenditures. :

Cash used in operation was lower than initially anticipated mainly because R&D costs were less than anticipated, most of which were deferred to future quarters. During the quarter, financing activities in the form of net proceeds received from the issuance of common share under our ATM program provided $2.7 million as compared to nil for the same period in 2016. We now expect cash used in operating activities to range from $22 million to $24 million for the year ending December 31, 2017, as we prepare for the Macrilen NDA submission and commercial launch. :

We ended the quarter with unrestricted cash and cash equivalents of approximately $7.8 million (sic) [ $17.8 million ]. Know that we also raised approximately $1.5 million following the end of the quarter through the ATM. :

And now I'll turn the call back over to David, who will entertain questions. :

David Dodd: Thank you, Genevieve. My colleagues and I will now answer your questions. I'm, therefore, turning the call over to the operator for instructions on the question-and-answer period.

Operator: [Operator Instructions] Our first question comes from Jason Kolbert with Maxim Group.

Jason Kolbert: We really appreciate the updated financial guidance in particular given the Zoptrex event. Can you talk with us about what exactly is the next event that we should be focused in on Macrilen? How are the communications going with the FDA? When will you have a better feel for the approvability time line other than just hopefully year-end?

David Dodd: Sure. Thank you, Jason. The next milestone will be our announcement of submission of the NDA, which we expect to occur in early July. There really is no dialogue or interchange with the FDA in the interim following our March 29 meeting. There's no need for that. The minutes of that meeting, the formal minutes have been received, and they reflect everything we've previously reported, because they had contacted us and agreed to everything in advance of the meeting. So there isn't -- no anticipated, updated communications between now and the time in which we announce the submission of the NDA. Then following that period, the real interaction will be based upon any questions that may come out of the review of the data, and those are done on an ad hoc basis. Usually, those are not material and aren't normally announced because it's just common dialogue between a sponsor of the submission and the agency and all. And so we'll do that. And since we are only 6-month reviewed due to the previous complete response letter, we will submit it. Once they accept it for review, we're on the 6-month clock, and that should put us a year-end, or end of January the latest, we would anticipate approval. And our plan is -- which we can elaborate on -- or during this session right now, is to then be able to launch the product as soon as possible thereafter.

Jason Kolbert: And the financial guidance [ seems ] that you'll have some element of a commercial team ready to go to launch, even though you may not be at full scale, right? I assume you're going to hold something back. And then once you have approval, kind of amp it up to full scale and maybe even look to the potential for label expansion.

David Dodd: Yes, we have 13 reps right now in the field. And as we've communicated, we estimate approximately 30 would be the full sales force we'd put behind it. We don't anticipate having 30 onboard in advance of the launch, as we probably anticipate with a building higher than 13 but not at a full 30, but build towards that rather quickly.

Jason Kolbert: And David, can you expand a little bit about the clinical strategy in terms of expansion to other indications? You touched on some of the pediatrics. You also touched on TBI. Can you just give us a little bit about what your thinking is in terms of 2018 and efforts to expand it to those markets as well?

David Dodd: Okay. Especially traumatic brain injury or TBI, that is not a new indication. As you may recall, TBI is a causation of growth hormone deficiency or is a consequence of growth hormone deficiency resulting from traumatic brain injuries. The existing Endocrine Society guidelines recommend that any patient who has a moderate to severe TBI should be tested and evaluated for growth hormone deficiency 3 times during the year following the traumatic event. There are approximately 40,000 moderate to severe TBIs among adults, meaning individuals ages 19 and older, and those are ones who've been admitted to hospitals. So there's a greater number of those who don't go into the hospital. But there's 40,000 of those every year in the United States that would be candidates and according to the Endocrine Society guidelines should be tested. You take that 40,000 and multiply it by 3, that's a market expansion opportunity of 120,000 plus, in addition to what we are going to target initially

Operator: Our next question comes RK Swayampajula with H.C. Wainwright.

Swayampakula Ramakanth: Couple of quick questions. Regarding Macrilen resubmission, what needs to get done between here and early July that you think you would be able to submit this?

David Dodd: Sure. Good question, RK. A couple of things

Swayampakula Ramakanth: Yes, so one additional follow-up -- one follow-up from what you just said. So since you are connecting a new statistical analysis, will you be able to share that with investors? Or it's part of the dossier, and we will see it either during the review process or after the review process?

David Dodd: Let me just say, it probably depends on what that is. So for instance, we demonstrated in the study, in the confirmatory trial, that each of the 4 -- in each of the 4 cohorts, Macrilen had a greater stimulatory effect on growth hormone release than did the ITT. That was not necessarily expected. It was somewhat profound in a positive manner and very encouraging, because it shows the consistency and supportive nature relative to this product and all. So what we want to do is delve a little deeper in each of the cohorts. We will -- one of the determinations will be our recommendation on an appropriate cutoff point for Macrilen and the supportive information related to that cutoff point and all. And that will certainly be communicated publicly, I'll just say, at the time at which we can communicate it publicly. I can't make a commitment now that we will automatically do it. But once we have determined that, the most important element for us is to ensure that, that is included in, and we have the rationale [ in ] support of that with the FDA because they recognize that a different cut-off point than the 2.8 is appropriate and all, that we demonstrated that there was a broad range in which any number in that range will support the product and all. So far, our analysis is to do the -- what I'll call the optimization analysis. And then, our recommendation of the appropriate cutoff point for Macrilen. That will certainly be communicated to the investor community and publicly. I just can't say at what point in time, but it will be in -- likely would be available to communicate that prior to approval. But again, I have to go with what guidance I have on what is material and what we can communicate and not. But those are the types of things that we're looking at.

Swayampakula Ramakanth: Really appreciate that color. During that March 29 meeting or afterwards, did you and the FDA ever discuss the possibility of the requirement -- or the potential requirement by the FDA to do another trial with the new cutoff points that now we are discussing here for Macrilen and ITT?

David Dodd: There, I'm going to ask Richard to weigh in also. But there was not a -- that topic was not a topic of discussion in the March 29 meeting.

Richard Sachse: No. In fact the FDA agreed with us that the studies that we have conducted following the complete response letter fully addressed the deficiencies which were mentioned in the complete response letter. In other words, there was never the need for conducting additional trials at this time. FDA instead asked us to do these additional post hoc analysis, and based on these analysis, come up with a resubmission of our NDA and come up with a proposal for an ideal cutoff point.

Swayampakula Ramakanth: Okay. Just trying to understand the market and the potential for market -- for an expanded market than what it is right now. So in your prepared remarks, you said, David, you said there are about approximately 40,000 tests being conducted in the U.S. at this point. Of these 40,000 tests, you also said that there are some physicians who believe that some of these tests are -- really do not give them the answer that they need. So is there a certain amount of hunger in the marketplace for a new test, which could automatically expand more than the 40,000 that are there right now?

David Dodd: I'll answer -- I'll break it down. The answer is yes. The marketplace in endocrinology, we have the stimulatory tests. Again, they are not FDA-approved. They're not regulated, they're not overseen because they are procedures. And procedures are things that everybody does time and time again. Every time you do a procedure it's slightly different. Every time you pull up to a gasoline station and put gasoline in a car, you're doing a procedure, and do it a little bit different at different time. Sometimes you spill stuff, sometimes you don't. So there's so many things. As you know, procedures are prone to human inconsistency. That's the nature of a procedure that has multiple parts of it and all. And so the stimulatory tests, be it the insulin tolerance test or the Glucagon Stimulation Test, they were developed in the 1960s. So they are quite legacy procedures. And yet, they were the only thing that people have identified at that point that could give you meaningful information, meaning a blood sample for which you could then do an evaluation and be able to determine, or at least classify, whether or not a patient was deficient or not and -- with growth hormones. So that's what's been done forever. There is recognized in the endocrinology community among the practicing endocrinologists [ plus ] the general clinical community-based practicing endocrinologists as well as the leaders in endocrinology, that there is significant inconsistency in the procedural approach. There is a high level of nonevaluable results. You may recall in our report, we reported this major difference between what was nonevaluable results from the ITT versus the very high level of evaluable results that we had for Macrilen and all. And then the reproducibility is an issue and all. There are -- even at a controlled trial, I think we saw -- of experts in endocrinology that do this all the time, I think with the ITT, we saw around 20% of the ITTs that were performed had to be tossed out, so to speak. And yet we saw nothing like that with Macrilen at all. So it's been written up in the literature as recent as this past summer in an article about -- an article related to how one diagnoses growth hormone deficiency and the methods and all, and it referenced Macrilen or it referenced macimorelin as hoping that it might be available soon because of its, let's say, alternative value proposition and all. So we believe that based upon that, adoption in -- will occur rather quickly. We saw at the Endo meeting in early April a very high level of interest in our product during Dr. Jose Garcia's poster presentation, which we -- made it into the late-breaking stage and all. And so we're looking forward to a [indiscernible] trial and an adoption of Macrilen as the new standard in this sort of otherwise sort of small but albeit very profitable arena, the marketplace. And as I said, there is nobody -- there's no competitive selling going on out there. There are no other products in development for this indication, and so we're quite excited about that. So from that perspective, we know that there's interest in it. We know that there's expectation in it. We saw the disappointment when we received the complete response letter, which is why we moved so quickly with our adviser back to the FDA and have completed this trial. And we've seen the response of the results that had been presented on this. So does that answer your question or give you some insight?

Swayampakula Ramakanth: Yes, it does. And then my last question is on strategy. You gave us a good understanding of how you want to conserve cash through the regulatory hurdle of Macrilen. But at the same time, I would think you and the management probably are trying to figure out a proper strategy of managing Macrilen versus trying to grow the pipeline beyond Macrilen. Any thoughts at this point on that?

David Dodd: Yes, I would emphasize though that our priority, without a doubt, is to get this NDA successfully submitted. And we really have agreed as an organization, we will accept no distractions to that. We have seen increased interest in Macrilen relative to the rights of Macrilen in other geographic entities. So there are companies that have expressed, as we have proceeded with the announcements about it, with the meeting on the 29th, et cetera, that we have a good bit of interest in it, people evaluating it. Some are companies that are recognized in endocrinology, others are not. But in virtually all geographic regions, I think I would say with the exception of Africa right now, we have interested entities evaluating it, maybe all over in our data room. But -- so it's an ongoing basis. I just received an e-mail this morning by, again, an endocrine company that would like to meet and discuss it. So I think people, as they see that it's real, are seeing and understanding the value proposition more. Now we certainly recognize that going forward, a single-product company is not sufficient. And so we need to look at the -- filling a portfolio, what our options are and to go forward with that. That doesn't mean we can't find the time to have various discussions and all. But I just don't want to send a message that suggests that we have a very heavily priority of looking to add additional products to the portfolio. Because, one, our balance sheet won't support it. We'd have to do separate financing on any opportunity. That's probably feasible if it's the right opportunity and all. We recognize that it's done all the time and all. But we really feel that right now, from leadership, from systems internally in focus, Macrilen NDA is what it's all about.

Operator: Our next question comes from Praveen Khari (sic) [ Praveen Kudithipudi ] with WestPark Capital.

Praveen Kudithipudi: Yes, this is Praveen. And I have a question regarding the insulin tolerance test. I thought -- I mean, and regarding Macrilen. Can you highlight -- I mean, as you know, insulin tolerance test has a lot of side effects, and the health professional needs to be there all the time. And like, some of the side effects include sweating, palpitation, loss of consciousness and the worse being diabetic coma. And can you highlight the safety profile of Macrilen in regards to -- I feel that is a very distinguishing feature apart from -- also apart from the convenience. And can you highlight upon that?

David Dodd: Yes, gladly. I'll ask Richard to. Richard, thank you for...

Richard Sachse: Yes. Thanks, Praveen, for this very valid question. And this is actually one of the -- apart from the convenience, it's one of the major advantages of Macrilen in contrast to the ITT and the other tests that are all intravenous or intramuscular injections. So Macrilen is administered orally. And the side effects that we've seen in the clinical trial, well, let me say, is very minor. I mean, probably one of the worst side effects is the bad taste, but that's probably all. So we have not seen in this study, nor in the entire development program, any significant side effect that would make physicians not using the test or that would make patients not repeating the test. As you know in this Phase III study, we have implemented a second Macrilen test for a subset of the population. And all of the patients readily did the repetition. And therefore, we don't really see any side effect that would limit the usefulness of Macrilen. We did not identify any particular population in which Macrilen would be contraindicated in contrast to, for example, the ITT. And you mentioned a couple of indications in which the ITT would not be allowed. This is in patients with coronary heart disease, in patients with some sort of epileptic diseases or other diseases. We do not have any contraindication identified at this stage for Macrilen. In fact, we see that the administration of Macrilen is safe and well tolerated in the entire population study.

Praveen Kudithipudi: Great. And as a follow-up, how are the hypoglycemia rate in comparison to the insulin tolerance test, which is one of the bigger side effects of ITT?

Richard Sachse: There's no hypoglycemia because of the mechanism of action, Macrilen does not have any effect. As you know from the mechanism of action of Macrilen, Macrilen is directly stimulating the pituitary gland to secrete growth hormone. And growth hormone is a counterplayer of insulin and, as such, is protecting you from hypoglycemia rather than inducing hypoglycemia. So even from the mechanism of action, you would not expect any hypoglycemia after administration of Macrilen.

Praveen Kudithipudi: Great. And I don't know what the market is. Apart from the insulin tolerance test, there is also glucagon and I've seen some -- L-arginine tolerance test as well. So I don't know -- do you have any idea of how much the population is? Like who are taking glucagon or an arginine tolerance test?

David Dodd: Jude?

Jude Dinges: So yes, we believe that -- right now we believe the glucagon stimulation test is the most frequently used test, although the insulin tolerance test is the gold standard. Clonidine and L-Dopa and arginine are used less frequently. But we don't know exactly how many each of those are used. We do know none of them are approved. All of them are injectables. So clearly, our head-to-head comparator was the right one, the insulin tolerance test.

Praveen Kudithipudi: Sure. Great. And this is a question for you, David. Like you talked about traumatic brain injury and expansion to the pediatric population. I know that you are waiting, I mean, for the FDA and then like the strategy is to pursue this indication at a later time. And do you see any other areas, which Macrilen can expand into potentially, other than the ones that you have mentioned?

David Dodd: We don't. Historically, there have been discussions about cancer cachexia. There has been an investigator-initiated trial sort of underway, somewhat underway. [ This ] someone was using Macrilen to look at. You may recall that Helsinn conducted an IND trial -- program rather, of anamorelin for cancer cachexia, and they did not achieve success. They achieved their endpoints though. I think it's safe to say that our determination is, based upon the product as it is today, this is -- the indication is best for any other indications, such as a cancer cachexia, if one were interested in that, would require further development. Everything from a galenic standpoint to additional development, preclinical and all. So that is why we, a couple of years ago, put a halt to any communications of continued discussions about cancer cachexia as a future opportunity. It would get people at times rather excited because it seems like a great opportunity and a large need. But we've reached the determination that it was premature for us to be talking about it. And then we subsequently reached a determination, that we didn't believe that macimorelin in its current form, was actually a candidate to consider for the development in that type indication. Beyond that, we don't see any other indication. I don't know. Richard, do you concur with me on that? I believe so.

Richard Sachse: Yes. I fully concur. And as David stated, obviously, we were evaluating in the past additional indications. We just have to say that the entire development of Macrilen is spot on growth hormone deficiency, and this starts with a pharmaceutical development and a clinical development program. And at this stage, we don't see opportunities and alternatives beyond growth hormone -- beyond the diagnosis of growth hormone deficiency.

Operator: There are no further questions at this time. I would like to turn the call back over to Mr. Dodd for closing remarks.

David Dodd: Thank you. And again, I want to thank everyone for your continued interest and support in the progress of Aeterna Zentaris. I want to reiterate that our focus is on the successful submission of the Macrilen dossier. We will then communicate with you that we proceed hopefully towards a successful approval and plans for a commercial launch in early 2018. That's not that far away. So we're quite excited about it. We'll keep you updated on any -- other relevant developments of the company. We look forward to staying in touch with you and updating you again. Thank you.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.