Stephanie Carrington - Investor Relations Jan-Anders Karlsson - Chief Executive Officer Piers Morgan - Chief Financial Officer.

Peter Welford - Jefferies Liana Moussatos - Wedbush PacGrow Life Sciences Yatin Suneja - SunTrust Robinson Humphrey Julian Harrison - H.C. Wainwright.

Good day and welcome to the Q2 2018 Verona Pharma earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Stephanie Carrington. Please go ahead, madam..

Thank you, operator. Good morning or afternoon depending on where you are. And welcome to today's call to review Verona Pharma's result for the six months ended June 30, 2018. On this call, I'm joined by Jan-Anders Karlsson, Chief Executive Officer, and Piers Morgan, Chief Financial Officer.

I trust that you have seen the press release that was issued this morning before market open. It includes the results for the three and six months ended June 30, 2018 as well as an operational update. If you have not, the press release is also available on the Investor Relations portion of Verona Pharma's website.

On today's call, Jan-Anders will first provide a clinical development and business update for the second quarter 2018. Piers will then review the company's interim financial results for the three and six months ended June 30, 2018. We'll then open the call to your questions. We expect this call to last approximately 60 minutes.

As a reminder, the conference call and will be available on Verona Pharma's Investor Relations website shortly following the conclusion of today's call. During the call, the team will be making forward-looking statements. I'll remind you of the company Safe Harbor language.

All statements that do not relate to historical matters of historical fact may be considered forward-looking statements including, but not limited to, statements regarding RPL554 as a potent bronchodilator and anti-inflammatory agent; our ability to provide a promising therapeutic effect through the delivery of RPL554, the timing a top line data for our ongoing clinical trials; changes in our clinical development plans based on additional data; and the potential for certain formulations of RPL554 to address larger markets; and our plans to explore these formulations in cystic fibrosis and other respiratory indications.

These forward-looking statements are based on management's current expectations.

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance and achievements to be materially different from our expectations expressed or implied by the forward-looking statements.

Any such forward-looking statements represent management estimates as of the date of the conference call. While the company may elect to update such forward-looking statements at some point in the future, it disclaims any obligation to do so even if subsequent events cause its views to change. With that, I will now turn the line over to Jan-Anders.

Go ahead..

Thank you, Stephanie. It's pleasure to have the opportunity to provide you with a clinical development and a business update today. As many of you know, RPL554 is a first-in-class bronchodilator and anti-inflammatory agent. And we continue to evaluate its use as an add-on treatment to patients, using either single or dual LAMA/LABA bronchodilators.

In the US, we believe there are over 3 million COPD patients treated with a single bronchodilator commonly as a first-line treatment. As the disease progress, physicians are looking for effective compounds with new modes of action. This has proven to be a challenge given the lack of innovation in the space and recent clinical trial setbacks.

We have already demonstrated in two Phase II clinical trials that nebulized RPL554 produces a clinically meaningful and a statistically significant additional effect as an add on to both short and long-acting bronchodilators, including Spiriva, the most commonly used LAMA or long-acting anti-muscarinic agents.

It's worth recalling that we have also shown an improvement in residual lung volumes in these studies, which may lead to reduced symptoms such as breathlessness and these patients and in the time of onset of action when used in such a combination.

Physicians reported up to three quarters of patients on single bronchodilator may escalate to second-line therapy within 12 months. And nebulized RPL554 could be an important additional treatment in some of these patients with COPD symptoms and where inhaled corticosteroids may be less effective.

We estimate that approximately 2 million COPD patients in the US are treated with dual LAMA/LABA bronchodilators with or without concomitant use of ICS. Despite such maximum bronchodilator treatment, up to 40%, or almost 800,000 patients, are uncontrolled and continue to have breathing difficulties and COPD symptoms and needed additional treatment.

Unfortunately, there have been several late stage clinical trial failures in this group of patients, with a very high unmet medical need. For the severe and very severe COPD patients, we believe that about 20% regularly use a nebulizer.

To explore the potential therapeutic effect of RPL554 in this additional market segment, we reported last week that we have initiated dosing in a Phase II clinical trial, evaluating nebulized RPL554 as an add-on to dual LAMA/LABA therapy for the maintenance treatment of patients with moderate to severe COPD.

This randomized, double-blind, three-way crossover trial will enroll approximately 75 patients with COPD to investigate the efficacy and safety of nebulized RPL554 as an add-on to inhaled LAMA/LABA, tiotropium/olodaterol, or Stiolto/Respimat, compared to placebo.

It is expected that some patients will continue stable dose of ICS throughout the study, thus providing a triple-therapy background. We are starting this trial in line with prior expectations and anticipate receiving top line data in the first quarter of 2019.

We believe that this trial will help us understand the potential of nebulized RPL554 in COPD patients with airbag obstruction and COPD symptoms despite already using maximum standard of care bronchodilator treatments. And we provide important data to inform the design of pivotal studies with RPL554 expected to commence later in 2019.

We believe this could be a very significant commercial opportunity, in addition to the use of RPL554 as an add-on to single bronchodilators, as we have already demonstrated. In mid-May 2018, we attended American Thoracic Society International Congress, which was held in San Diego.

We provided further data on RPL554 as an add-on treatment to tiotropium or Spiriva. And in the second presentation, we reported data from a PK study in which we determined that the inhale route was most suitable for RPL554. Presentations were well attended and generated interesting and fruitful discussions.

Concurrently with a nebulizer formulation, we are developing RPL554 in both a dry powder inhaler, or DPI formulation, and a metered dose inhaler, or MDI formulation, for the maintenance treatment of patients with COPD.

It is estimated that, in the United States, approximately 80% to 90% of patients with moderate to severe COPD use inhalers for maintenance therapy. Successful development of the DPI or MDI formulation of RPL554 would greatly expand the addressable market for the drug and represents a multibillion dollar potential opportunity.

Development of this new formulations is progressing according to plan. We are completing preclinical development and expect the clinical trial with a DPI formulation to commence in the fourth quarter of 2018 and the clinical trial with MDI formulations following the first half of 2019.

These inhaler formulations will eventually become available for out-licensing to partner with the right development and commercialization resources. As you may recall, we reported very positive topline data from a full-week, dose-ranging Phase IIb clinical trial for maintenance treatment of COPD in late March 2018.

This study met its primary endpoint with RPL554, producing a clinically and statistically significant improvement in peak forced expiratory volume in one second, or FEV1, at four weeks in patients with moderate to severe COPD.

We also noted a statistically significant and clinically meaningful progressive improvement in COPD symptoms during the four-week study period.

We continue to analyze the data, and I'm pleased to report that Verona Pharma has been accepted for an oral presentation at the European Respiratory Society International Congress between the 15th and 19th September in Paris where our lead investigator will present more data from the trial.

To progress the development of nebulized RPL554 towards the start of Phase III studies, we focus on the maintenance treatment of moderate to severe COPD patients.

Our market research has highlighted that is indeed a very high unmet medical need for a novel drug with both bronchodilator and anti-inflammatory properties that can be used as an add-on treatment with the standard of care for these patients.

Patients on single or dual bronchodilator therapies represent two distinct, but very attractive, commercial opportunities. Many of these patients use nebulizers on a regular basis as part of the pharmacological treatment.

And the plans to progress the development of RPL554 takes into account our market research, the totality of our clinical data from trail 12 that have involved more than 730 subjects to date, the anticipated outcome of the now ongoing clinical add-on study and overall commercial opportunity.

We continue to keep the market informed as these plans progress. As you may know, few, if any, effective anti-inflammatory treatment exists for patients with cystic fibrosis.

Based on the a positive data in our clinical trial in these patients that we reported earlier this year, we're exploring the opportunity to utilize RPL554's anti-inflammatory effects in these patients while we focus on moving more rapidly towards the Phase III clinical trials with nebulized RPL554 for maintenance treatment of COPD.

I will now turn the call the call over to our CFO, Piers Morgan, to provide the financial overview..

Thank you, Jan-Anders. Good day, everyone, and thank you for joining the call today. I will provide a brief recap of our financial position, our results for the three months and six months ended June 30, 2018, as well as our financial outlook. I want you to the press release that we issued this morning and the 6-K that we filed.

The release includes income, balance sheet and cash flow statements for the three months and six months ended June 2018. Given that we are headquartered in the UK, our financial results are in British pounds. We have included a translation to US dollars using the period-end exchange rate on June 30, 2018 for your convenience at a rate of $1.3197.

Turning to the income statement, our operating loss for the six months ended June 30, 2018 was £11.5 million or $15.2 million compared to a loss of £10.9 million for the prior-year period. Operating expenses for the six months ended June 30, 2018 increased slightly due to an increase in non-cash share-based payment expenses.

The loss after-tax for six months ended June 30, 2018 was £14.6 million or $19.3 million compared to £5.1 million for the prior-year period. This represents a loss of £0.139 per diluted share or a loss of $1.47 per ADS for the six months ended June 30, 2018 compared to a loss of £0.073 per diluted share for the prior-year.

Our operating loss for the three months ended June 30, 2018 was £5.7 million or $7.5 million compared to £6.8 million for the prior-year period. For the three months ended June 30, 2018, the profit after-tax was £0.6 million or $0.8 million compared to a loss after tax of £3.2 million for the prior-year period.

This represents a gain of £0.06 per diluted share or a gain of $0.62 per ADS for the three months ended June 30, 2018. The total comprehensive income and loss for the three months ended June 30, 2018 was calculated as follows.

Research and development costs for the three months ended June 30, 2018 was £3.9 million or $5.1 million, a decrease of £9.9 million compared to the £4.8 million for the prior-year period. The movement was predominantly attributable to £1.4 million decrease in clinical trial expenses and £0.4 million decrease in preclinical development expenditure.

This was offset by an increase in spending on contract manufacturing and formulation development amounting to £0.9 million. General and administrative costs for the three months ended June 30, 2018 were £1.8 million or $2.3 million, which is a decrease of £0.2 million compared to £2 million for the prior-year period.

This reduction reflected a decrease of £0.2 million in the professional expenses relating to the global offering in 2017. Finance income for the three months ended June 30, 2018 was £5.3 million or $7 million compared to £3.4 million for the same period last year.

The increase in financing income was primarily due to foreign exchange gain on translating foreign currency denominated cash, cash equivalents and short-term investments, which compares to a foreign exchange loss on translating [indiscernible] in the comparative period, which is recognized as a finance expense.

Finance expense for the three months ended June 30, 2018 was £35,000 or $46,000 compared to £0.8 million pounds for the same period last year. This reduction in finance expense was due to the movements in foreign exchange rates, which resulted in the gain in the current period of 2018 and a £0.8 million loss in the three months ended June 30, 2017.

Taxation for the three months ended June 30, 2018 amounted to a credit of £1 million pounds or $1.4 million compared to the credit amount of £1 million in the prior-year period. The credits are obtained in relation to our quantifying research and development expenditure.

We ended the second quarter of 2018 with £68.9 million or $90.9 million in cash, cash equivalents and short-term investments, which comprise cash deposits with a maturity of more than three months.

Our net cash used in operations for the six months ended June 30, 2018 was approximately £12 million, which reflected an increase in operating costs driven by higher research and development costs and by working capital movements driven by the timing of supplier payments.

We expect that our cash, cash equivalents and short-term investments will enable us to fund our operating expenses and any capital expenditure requirements through the end of our Phase II of nebulizer RPL554 for the treatment of COPD and our proof-of-concept studies with DPI and MDI formulations of RPL554 for maintenance treatment of COPD.

And with that, we'd like to turn the call back to the operator and open it up for questions. Thank you..

Thank you. [Operator Instructions]. We'll now take our first question from Peter Welford from Jefferies. Please go ahead..

Hi. Thanks for taking my questions. We've got a couple. Firstly, on the DPI trial that you said you would commence in 4Q. That seems, I guess, a little bit earlier than you said before.

And is there a rationale for doing DPI and MDI separately? Secondly, then, just on the cystic fibrosis, any further thoughts on whether or not there's potential to do another clinical study there yourselves? And, just finally then on the CMO executive search, any update there at all on that position? Thank you..

Thank you for the questions. So, on the DPI and the fourth quarter, yes, indeed, it's a bit early. It's gone well. We like the formulation. We like the data so far and we expect to be able to start the study this year, which we're, of course, interested in. It opens new opportunities. You asked why MDI and DPI.

I believe that, in principle, they are quite similar to most compounds. We have seen with RPL554 in earlier studies that we changed nebulizer formulation and that created quite some different properties in the new suspension formulation we use from the early solution formulation.

We, yes, wanted to provide opportunities for potential [indiscernible] down the line to evaluate for themselves whether there was more attractiveness around the DPI formulation or on MDI.

Of course, it should give the same pharmacological data, but there might be slight differences in formulation on PK or perhaps duration of action in the lung as the compounded is then going through the lung and into the bloodstream. So, that's what the reason behind it. So, we'll see how that pans out.

The CF question was [indiscernible] question, could we or would we want to do another study? And, yes, of course, we would.

I think we would be very interested in moving it forward in an anti-inflammatory study, either a shorter study around the markers and biomarkers and events or a slightly longer and larger study around exacerbations in CF patients.

We really believe that there is a need for an anti-inflammatory therapy in this for patients and not much is approved or even used successfully. So, we look forward to that. However, we also want to stress that, clearly, we need to focus on getting the Phase III going as a nebulized treatment for COPD maintenance treatment.

So, that's the point and that's why we have to move the CF to second-line for no other reason. CMO search is going well. I understand the question. We have been very pleased by the candidates that we're talking to and we will, of course, inform the market as soon as we have the right candidate in place.

Does that answer your question?.

Great, thank you..

Thank you..

[Operator Instructions]. We now take our next question from Liana Moussatos from Wedbush Securities. Please go ahead..

Thank you for taking my question and congratulations on all your progress.

Assuming that you're going to again have positive Phase II results from the new trial with double or triple therapy next year, do you anticipate that Phase III is going to have a similar design or are you thinking single bronchodilator background? Can you talk about that a little bit? And partnering update for that? When do you think that you could announce a partner?.

Yeah. Hi, Liana. Now, thanks for the questions. Very good. So, yes, of course, we assume that we will have positive data – but thank you for asking – in the study of [indiscernible]. It's a very good question. We have said and, clearly, you're absolutely right. We will use this data directionally for the pivotal trial planning.

So, it's very important to us. While we, of course, expect it to be positive data and good data, we're also looking at payers and interest on physicians and KOLs and the commercial opportunity. And that's why we left it a bit open. Of course, the patients that are triple – double or triple therapy and continue to have symptoms and problems.

They then need something new and something different. That's clear. But we also have to weigh that with the opportunity as a single add-on agent. Remember in two studies, we actually already showed that we had very nice day as an add-on to tiotropium or to other short-acting bronchodilators. So, we know it will work in that setting.

I think looking at the totality of it during the next – later this year, next year will lead us to make a decision around what is the better background therapy. It has to be an add-on therapy. It's not the first-line treatment to start with. So, that will be a matter that we continue to update you on. Your other question was around partnering.

So, yes, good question. For the DPI and MDI, we've said all along that this is a very large – usually, it's exacerbation trials in Phase III. We can, of course, develop the compound and the formulation up to Phase II. And I think for Phase III and for commercialization, we really do need a partner that can help us on a global scale.

Having said that, we're a little bit away from that. We want to get into the clinic. We want to make sure we understand how the compound behaves in the new formulations and if we can rely on all the previous data we've done with the nebulizer to predict the future development also of DPIs and MDIs.

So, we will come back and update you on those discussions as well. And, of course, while we talk about moving towards commercial for the nebulized product, around 554, of course, we're talking about US primarily. So, also in a nebulized form, we need a partnership at least outside US going forward.

But it's a bit premature right now and we'd like to come back and update you as we move forward in this space as well..

Thank you very much..

Thank you..

We now take our next question from Yatin Suneja from SunTrust. Please go ahead..

Good morning, guys. Thanks for taking my questions. Jan-Anders, could you maybe help us frame the expectation for this newly-initiated add-on trial to dual bronchodilator? So, I think this is the first time you are testing it with the combo. So, just trying to understand how should we think about the synergistic effect with this combo.

And the second part of the question is that there will be some patient that are on inhaled corticosteroids. Do you think these guys could have a different effect or could somehow corticosteroid have a negative or positive effect based of the mechanism of action of the drug? And are these guys going to be on stable doses of steroids? Thanks..

Hi, Yatin. Thank you very much for your question. I think it's very good. As you say, we are looking at patients in on a dual background, LABA/LAMA background. Specifically, we're looking at Stiolto Respimat in this study that we now have ongoing.

Our expectation is, of course, that we will see an added peak effect with our compound and the duration of this peak that is meaningful for patients. This is a three-day crossover study with two doses of our compound and compared to placebo. And all patients, of course, have the background Stiolto treatments.

The expectation is that we will see a small dose-dependent difference in effects. So, the 6 mg dose we expect to be more effective than the 1.5 mg. It may still work, but we expect to see a small difference in activity. We, of course, also expected to be, as previously, well-tolerated.

And I think we are only sizing the study to be able to pick up also if the effect is slightly smaller than what we saw when we were looking at the add-on to Spiriva alone or tiotropium alone. Exactly what that difference will be, we don't know. We do think that you don't need a very large difference for the patients to actually experience it.

And if that is 50 mL or 40 or 53, we don't know, but we certainly power the studies to be able to see a smaller difference. So, the other part of the question was on inhaled steroids. So, we've already, in our previous trials, also included patients that were on a steady stable dose of inhaled steroids.

So, they kept it during the trials [indiscernible] study. It's about 30 to 40 and a bit more percent of the patients that actually were in the trial that also took an inhaled steroids. When we have looked at the data, we didn't really see from a bronchodilator perspective any difference in patients with and without inhaled steroids.

So, we do not expect to see a marked difference in the patients that were on LABA/LAMA and steroid, i.e. triple therapy, versus the ones that are only on LABA/LAMA therapy, looking now at the bronchodilator effect of the compound. And with bronchodilator effect, of course, we're also talking about plethysmography.

So, in this study, as we did in the tiotropium add-on study, we will look at small airway function and look at residual volume and expect to see an effect not only on large airways, but small airways which we think could very meaningful for these patients.

But to your point, in this short [indiscernible], we don't expect to see a difference whether they take or not inhaled steroids. .

Sure. That's helpful. And then, with regard to the baseline FEV or lung function for these patients, how would you put – or what sort of an expected baseline FEV function would you anticipate in this trial relative to the other add-on trial? And then, I have one more question after that..

Yeah. We have set inclusion criteria very similar to what we had in the previous study, where we added it on to tiotropium or Spiriva. And we expect that it would be quite similar. And if I remember right, it's about 1.5 liter, a bit more, a bit less. So, it's moderate to severe patients that we have included here..

Got it. So, the final question. A bit broader question. Can you maybe talk about the importance of exacerbation in COPD? I think, so far, you have not looked at how your drug could have an impact on exacerbation, given that so far that the duration is limited.

Talk about how regulators view that and would you be looking at exacerbation at some point or will that be just part of the pivotal program? Thank you very much..

Yeah. Thank you for the questions. So, that's, of course, what is very common, but not all studies are – or all Phase III are looking at exacerbation. So, if you look at Trelegy, for example, a GSK compound, I believe, was first approved as a bronchodilator and then they added on more recently and got the label expansion also to include exacerbation.

So, it is not necessary for approval, at least, well, globally, but we're talking US now and FDA. So, it's not necessary to have exacerbation as an endpoint to get approved as a bronchodilator with simple improvement, for example, in US.

Our physician research, our payer research has confirmed to us, as well as the regulatory guidelines, that it is possible and, for us, it's preferable to develop the drug as a bronchodilator with the anti-inflammatory effect, obviously, in place and have an approval as such and on to the market.

We would, of course, in the future also want to do in 3P studies or Phase IV program, look at exacerbation. But that is longer studies. It would take longer to be on the market and complete the studies. And we do think that there is a very important and valuable market opportunity for 554.

Also, if you have just bronchodilator symptoms and an anti-inflammatory effect and that you can then use the line extension or label expansion opportunity for exacerbation claim..

Got it. Thanks. Actually, I have one more question. This time it's for Piers. Could you maybe help us with the expense modeling going forward? Is Q2 a good proxy for the rest of the year or how should we actually ramp the expenses going forward? Thank you..

Yeah. So, thanks for that, Yatin. So, looking at our expenses, we are – it's a virtual company. And our expenses, therefore, lumpy and driven by the clinical studies that we're conducting. So, in the first quarter, we were, obviously, completing the 400-patient, four-week Phase IIb study.

The second quarter has been one in which there's been less clinical activity, although there's, obviously, a significant amount of preparation work for the LABA/LAMA add-on study that we've just commenced and also for the DPI study which we're planning to commence in fourth quarter in 2018 as Jan-Anders described earlier.

So, I think there would be probably a bit more expenditure than there was in the second quarter, but probably not quite as much as there in the first quarter. .

Got it. Very helpful. Thank you, guys..

Thank you, Yatin..

Our next question is from Patrick Trucchio from Berenberg Capital Markets..

Hi. This is actually Francois on for Patrick. I had a question about the DPI formulation commencing in the fourth quarter.

Can you give us any additional details regarding these studies, what the design may look like, how many patients you expect to enroll and will these studies be conducted in the US or Europe?.

Yeah, hi. I think this is probably work in progress and we'll certainly update you as we start the clinical trial. In principle, I can say that we look at two phases of that study, as one would, I guess. One would be a single ascending dose, looking at starting with a lower dose and then increasing to higher doses to look for efficacy and safety.

Of course, we expect to see the same bronchodilator efficacy in such a short study as before and the safety profile to be the same.

The second step will be a longer to-be-decided exposure over a number of days in the different doses where we would just like to confirm that the effect of the compound is maintained, also in DPI or MDI formulation in the same way as we see it with a nebulized formulation. So, there's no reason to expect anything different.

So, actually, it's with great comfort and great expectations that it will be a confirmatory type of study rather than anything else that we go into that in the fourth quarter. But we'll certainly update you and everybody else as we come nearer to the time. .

Thank you.

And switching gears a little bit, can you tell us what other respiratory diseases beyond COPD and CF, do you think, 554 is a good candidate for? And can you tell us if you're conducting preclinical studies presently to determine the applicability of 554 in these indications?.

Yes. So, on the – putting the thinking cap on, what we also have said, I think, previously is that while COPD, we think, is a large number of patients with a very high unmet need, they're very different from CF patients, obviously, and we do think that the properties of the compound lend itself [ph] to treat both of these groups of patients.

Beyond that, clearly, we already have shown that the compound works in allergic asthma. We've done some studies on allergic rhinitis patients. But, of course, in asthma, we have seen that the compound is at least as good a bronchodilator and have other properties that makes it an interesting candidate for an asthma development.

We, as Verona Pharma, have judged it [ph] beyond our means right now to expand into an asthmatic development, not because it's not any interesting a patient would have needed, but it's a very competitive space and it's difficult to run clinical trials sometimes.

Perhaps patients that are more severe and in need of more treatment, quite similar to the COPD development, would be an attractive space in any asthma development plan in the future, but we would have to come back and talk more to you about that.

We are not necessarily doing a lot of preclinical work and expanding indications at this point in time as many of the respiratory diseases, there are actually no good preclinical models unfortunately. But, clearly, we also believe that there are lots of instances with patients with lung diseases which then are troubled by chronic inflammation.

It can be an immune-driven disease and where there's a component of airway obstruction. And many of those, we would, of course, be interested in expanding in the future with RPL554.

But, practically speaking, I think we are very focused on the COPD and getting into the Phase III studies as soon as possible and we would really like to be able to also do some work in the CF space, which we think is very attractive and also very necessary actually for the patients.

Does that answer part of your question?.

Yes. That's very helpful. Thank you very much..

Thank you..

Our last questions come from Ram Selvaraju from H.C. Wainwright. Please go ahead..

Hi there. This is Julian on for Ram. Congrats on all the progress.

First, regarding the Phase II LAMA/LABA trial, how many patients do you anticipate enrolling who have previously received and will continue inhaled corticosteroid steroid therapy? I recall earlier in the call, it was mentioned, about 30% to 40% of patients enrolled in the previous monotherapy study, underwent this as well.

Do you expect a similar figure for this study?.

Hi. Hi. I think that's a little difficult to say, actually. We've had about 30%, 40% and a bit more percent in previous studies. I could actually not tell you exactly what that number is, but we do expect that when you have patients on double or dual treatment, then many of them will, of course, also be on inhaled corticosteroid.

So, there will be a proportion, but I cannot predict what number that will be right now, I'm afraid..

Okay, got it.

And my last question is, I was just curious, are there any differences in secondary endpoints between this coming toward currently enrolling trial and the recently completed monotherapy study?.

Yes. So, if you compare the new study that's just ongoing where the endpoint is peak FEV1, and that was the same in the four weeks that – I think you were referring back to the Phase IIb study. So, that's the same. We would look, of course, at duration and area under the curve, et cetera, around the bronchodilator aspect. There are two differences.

One is that in the now ongoing shorter study, we will look at plethysmography which is a way of measuring small airway functions, so peripheral [indiscernible].

That is exactly what we did in the previous add-on study with Spiriva or tiotropium, and that's where we actually could see an effect that was very pleasing indeed and which we thought would perhaps translate into symptom improvement. But a three-day study is far too short to really look at symptoms. So, that comes back then to the four-week study.

That's where we looked at symptoms before and that's different. We're not measuring that in this study. That was the first study, that four-week study, Phase IIb was the first study we looked at symptoms.

And the overlap or the connect between the two is that we really think that in the improvement in residual volumes, we open the airways, also small airways are engaged, it's much better for patients, much better oxygenation. And, of course, the endurance and the breathlessness is being reduced, obviously.

This translates, we believe, and I think commonly it's believed to translate the breathlessness into a symptom improvement, and that's what we picked up when we treated patients for longer.

Then coming back also to a previous point that was made around symptoms and exacerbation, so we actually believe that if you help an agent like RPL554 that is improving lung function through FEV1 or just opening airways that you also have an effect on small airways and that you have an effect on symptoms.

Data are the prerequisites, not always, but for believing that there could be an effect on exacerbations in longer trials. So, we think they saw a clear anti-inflammatory effect. And an anti-inflammatory effect is, of course, also an effect that is underlying the potential future effect on exacerbation.

That's why we are excited about the bronchodilator, the anti-inflammatory profile and that's why we think this will lead to usefulness for patients right now, but also an opportunity to expand and do longer studies, and actually, hopefully, in a successful – they're being able to show also that it keeps people out of hospitals which, of course, is very important for this group of COPD patients.

So, that was a long answer. I hope that answered your question about the differences between the two trials..

Yes, yes. Absolutely. Thank you for that color on that..

Thank you..

[Operator Instructions]. It appears there are no further question at this time. Mr. Karlsson, I'd like to turn the conference to you for any additional or closing remarks..

Yeah. Thank you very much. And thank you for joining us today. We've already shown that nebulized RPL554 demonstrated efficacy as an add-on to single bronchodilators in COPD. Estimated to be over 3 million patients in the US.

In our ongoing Phase II study, nebulized 554 is now added to dual bronchodilator in COPD patients, perhaps some 2 million patients in the US. And we expect data in the first quarter next year. So, large numbers of these patients remain uncontrolled with significant symptoms and they do need additional treatment.

We believe that RPL554's dual bronchodilator and anti-inflammatory properties is uniquely placed for both groups of patients representing significant commercial opportunities.

We look forward to updating you in the coming quarters on the progress in moving nebulized RPL554 towards the start of Phase III in the next year and progressing DPI and MDI formulations into clinical trials in COPD patients.

Successful inhaler development opens up opportunities to treat larger numbers of COPD patients and potential future licensing discussions with more resourceful pharma partners. We are scheduled to present next week on Tuesday, August 14 at the Wedbush PacGrow Healthcare Conference in New York City.

We will be conducting one-on-one meetings and look forward to catching up with some of you at that time. Thank you, operator. And this concludes today's call..