Good morning ladies and gentlemen and welcome to the Verona Pharma Full-Year 2018 earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to turn the conference over to your host, Ms.

Stephanie Carrington, Westwicke Investor Relations. Ma'am, you may begin..

Thank you, operator. Good morning or afternoon, depending on where you are, and welcome to today's call to review Verona Pharma's results for the 12 months ended December 31, 2018. On this call, I am joined today 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 opened. It includes the results for the 12 months ended December 31, 2018, as well as the 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 full year ended 2018 as well as the fourth quarter ended 2018. Piers will then review the company's financial results for the full year ended December 31, 2018.

We will then open the call to your questions and expect this call to last approximately 60 minutes. As a reminder, the conference call is being recorded and will be available on Verona Pharma's Investor Relations website following the conclusion of today's call. During the call, the team will be making forward-looking statements.

We remind you of the company's Safe Harbor language.

All statements that do not relate to matters of historical facts should be considered forward-looking statements, including, but not limited to, statements regarding ensifentrine as a potent bronchodilator and anti-inflammatory agent; the company's ability to provide a promising therapeutic effect through the delivery of ensifentrine; the timing of the top line data from its ongoing clinical trials; changes in its clinical development plans based on additional data; and the potential for certain formulations of ensifentrine to address larger markets, as well as the company's 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 its actual results, performance and achievements to be materially different from its expectations expressed or implied by the forward-looking statements.

Any such forward-looking statements represent management's estimates as of the date of this 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 turn over the line to Jan-Anders..

Thank you, Stephanie. It's a pleasure to have the opportunity to provide you with a clinical development and business update today.

Ensifentrine, formally known as RPL554, is a unique first-in-class PDE3 and PDE4 inhibitor which we believe will increase lung function, reduce symptoms, and improve quality of life in hundreds of thousands of patients with COPD in the U.S. alone that remain symptomatic despite current medications.

Verona Pharma's global rights to ensifentrine and we have granted patents in the U.S., EU, China and most other major markets, extending beyond 2035. Let me first remind you that COPD was the third leading cause of death worldwide in 2016 according to WHO and almost twice as many patients died from COPD as from lung cancer in that year. In the U.S.

alone, there are over 15 million COPD patients and current treatments provide some symptom improvements, but there is no cure. Also in the U.S., approximately 2 million patients with COPD are still uncontrolled and symptomatic despite being treated with currently available medications.

We believe that ensifentrine, which is both a bronchodilator and anti-inflammatory agent in one molecule, once approved will make a difference to the lives of many of these symptomatic patients.

Our clinical development program is designed to examine this novel mechanism of action in patients with COPD in order to evaluate efficacy, tolerability and dose to establish the fastest route to market.

In the 13 [ph] Phase 1 and 2 clinical trials involving some 800 subjects to-date that have been conducted, we have demonstrated that ensifentrine is a very effective bronchodilator.

It has anti-inflammatory properties which causes progressive symptom improvement in COPD patients and is well tolerated when dosed for up to four weeks, as shown in 400 patients in a Phase 2b study reading out last year.

In additional of the trials we have confirmed that it is also a very effective treatment when dosed on top of short or long-acting bronchodilators and inhaled corticosteroids.

We designed our most recent study to investigate whether ensifentrine also could improve lung function in patients already on two bronchodilators, which is believed to be the maximum bronchodilator therapy.

Although this is a very high hurdle for ensifentrine, it is important for later stage development and commercialization to clarify if this new mechanism could be effective in these more severe patients with very few further treatment options. We did report topline data from this three-day crossover study in 79 COPD patients in mid January.

We were very pleased that ensifentrine was also able to improve lung function in these patients already on dual and triple COPD therapy. In this study, all patients were administered an inhaled, once a day LAMA/LABA or called Stiolto, each morning followed by nebulized ensifentrine two doses 1.5 mg and 6 mg or placebo twice a day.

The morning dose 1.5 mg ensifentrine on day three produced approximately 50 mL of additional increase in peak an average of FEV1 0-4 hours when dosed on top of a LAMA and a LABA, even though Stiolto produced an unprecedented 400 mL to 500 mL improvement in peak FEV1 in this study.

On day three, after the morning dose of ensifentrine, average FEV1 reached statistical significance, although peak FEV1 was the primary endpoint did not. That was due to the higher 6 mg dose being less active.

It is important to highlight that the evening dose of ensifentrine on day three actually had a significantly more profound effect than the morning dose.

130 mL and 81 mL additional increases in peak FEV1 were observed with 1.5 mg and the 6 mg doses of ensifentrine which was both clinically and statistically significant when compared to the placebo group of the Stiolto back on treatment.

Similarly, we demonstrated substantial and statistically significant drops in residual volume, the measure of air trapping which is believed to be correlated to a reduction in symptoms in COPD patients.

It is important to recognize that around 50 mL further increase in lung function actually can be clinically meaningful on top of background COPD treatment as observed also with drugs currently approved for use in COPD patients in the U.S.

This study informs the further development of ensifentrine with more effective clinical trial design with patients from stable background therapies now the study focused on lower doses than the 6 mg if they now appear to be as effective and very well tolerated, recognizing that patients with background bronchodilator and even dual and triple therapy can be starting later stage clinical development many of which remain symptomatic and with few further treatment options.

And finally, FEV1 residual volume symptoms continue to be important study endpoints. We continue to advance to clinical development of nebulized ensifentrine. We plan to initiate the Phase 2b study of patients with COPD in the second quarter of this year and topline data is anticipated in the fourth quarter of this year.

This data will then be used to have a robust and well-informed end of Phase 2 meeting with FDA on dose selection, patient characteristics, concurrent COPD treatments and suitable endpoints, and thus inform the size and cost of a Phase 3 program.

This upcoming Phase 2b study will be a four-week, dose ranging study in approximately 400 COPD patients on stable LAMA background therapy. Endpoints will include lung function, symptoms, and tolerability. We will provide more details on design at the start of the study.

We are very pleased to update you on progress with new DPI and MDI formulations of ensifentrine. Handheld DPI and MDI devices are the most common forms of drug delivery in non-hospitalized patients with COPD and are well suited for maintenance therapy. About 5.5 million COPD patients in the United States are estimated to be using such devices.

We believe the development of DPI and MDI formulations has the potential to substantially increase the market opportunity for ensifentrine if approved and for the maintenance treatment of COPD. In addition, they could help the millions of COPD patients that need additional medication, but may not be suitable for everyday treatment with a nebulizer.

We started a randomized double-blind, placebo-controlled two part Phase 2 clinical trial in COPD patients with the new DPI formulation at one site in the U.S. in December last year. The purpose of this first part of the study is to evaluate the PK profile, tolerability, and bronchodilator effect of a single dose of ensifentrine.

We have already completed enrollment in Part A and we now expect initial data to be available in March. We expect the DPI formulation of ensifentrine to be well tolerated and to produce a dose-dependent bronchodilator effect in Part A.

While the magnitude that perhaps is similar to what has been published with DPI formulations a lot of bronchodilators, perhaps this effect will be slightly smaller than from a nebulizer formulation if only a smaller dose reaches the lungs of these patients. Based on this data, we will select which doses to move forward into Part B.

Part B will be a crossover study of multiple doses of ensifentrine dosed twice a day for a week in this same cohort of COPD patients. In this second part, we will evaluate the bronchodilator effects of repeat doses administered by DPI in terms of PK FEV1 as well as the safety and tolerability and the PK profile.

We plan to commence the Part B of this DPI Phase 2 trial in March and expect topline data in the second half of this year. We expect to initiate the Phase 2 clinical study using the MDI formulation to treat COPD patients during the second quarter of 2019 with data expected in the first half of next year.

Clinical trial design will be very similar to that of the DPI trial that already is complete. Let me briefly mention also opportunities for ensifentrine in cystic fibrosis and asthma. As you may know, few if any effective anti-inflammatory treatments exist for patients with cystic fibrosis.

Based on the positive data from last year CF patients, we are exploring the opportunity to utilize ensifentrine's anti-inflammatory effects also in patients with CF. Likewise, we have already shown that ensifentrine is an effective bronchodilator in asthma.

While both, CF and asthma are compelling clinical and commercial opportunities, our focus is initially to move towards Phase 3 with nebulized ensifentrine for maintenance and treatment of COPD.

Looking forward, 2019 will be a very important year for Verona Pharma with several data readouts that will potentially have a very significant impact on the development program and commercial value of ensifentrine.

First of all, the nebulizer formulation as mentioned the 400 patient's Phase 2b study is on track to start in the second quarter of this year and readout around year end. The data from this study will provide guidance for an end of Phase 2 meeting with FDA.

For the DPI we have initial data from the Part 1 of these two Parts Phase 2 trial with the first DPI formulation in COPD patients in March. This data should highlight the possibility of expanding the market potential to include the other 80% of the COPD patients who currently prefer daily use of an inhaler over a nebulizer.

MDI, the first Phase 2 trial with an MDI formulation is expected to start in the second quarter and readout in the first of half of next year, providing topline data on an alternative handheld formulation. Nebulized ensifentrine, which is a unique mechanism of action may be particularly suitable as an add-on treatment to COPD patients.

With the higher pricing of nebulized drugs in the U.S. we believe nebulized ensifentrine can become if approved a very attractive commercial opportunity.

Likewise, positive data from the DPI formulation of ensifentrine will be the first demonstration of bronchodilator activity in this new and more convenient formulation for potentially a much larger group of COPD patients.

We anticipate that we will partner the DPI or MDI formulations late in development in order to realize the full potential of this multibillion dollar opportunity. I will now turn the call over to our CFO, Piers Morgan to provide a 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 and of our audited financial results for the full-year 2018. I want to refer you to the press release that we issued this morning and we will also be filing a 20-F in due course.

The release includes audited financial results inclusive of income, balance sheet and cash flow statements for the 12 months ended December 31, 2018. Given that we are headquartered in the U.K., our financial results are in British pounds. But we have included a convenience translation to U.S.

dollars using the period end exchange rate from December 31, 2018 of £1 to $1.2763 .3053 per certain key figures. Turning to the income statement, our operating loss for the full-year ended December 31, 2018, was £25.6 million or $32.7 million compared to £29.8 million for the prior year.

The loss after tax for the full-year 2018 was £19.9 million or $25.3 million compared to £20.5 million for the prior year period. This represents a loss of 18.9 pence per diluted share or a loss of $1.92 per year for the full-year ended December 31, 2018 and this compares to a loss of 23.4 pence per diluted share for the prior year.

The total comprehensive loss was calculated as follows. Research and development costs for the 12 months ended December 31, 2018 were £19.3 or $24.6 million which is a decrease of £4.4 million compared to the £23.7 million for the prior year period.

The cost of clinical trials reduced by £5.9 million compared to the previous year because four trials were initiated in the year end of December 31, 2017 including a full week 400-patient Phase 2b trial for COPD maintenance treatment, compared to only two clinical trials started in the year ended December 31, 2018 and the largest of which enrolled 79 patients.

Preclinical cost also reduced by £0.4 million. These reductions were offset by £2 million increase in contract manufacturing and formulation development costs. Personnel related costs increased by £0.1 million in the year ended December 31, 2018 compared to the prior year.

Turning to general and administrative costs, for the year ended December 31, 2018 these were £6.3 million or $8.0 million which is an increase of £0.3 million year-over-year from £6.0 million in 2017.

The increase was primarily attributable to a £0.3 million increase in the non-cash share based payment charge together with £0.2 million increase in personnel related costs and £0.4 million in our overhead costs.

These were partially offset by £0.6 million decrease in professional feels which in 2017 included a [indiscernible] related to the global offering and shareholder private placement which occurred in 2017. Finance income for the 12 months ended December 31, 2018 was £2.8 million or $3.5 million compared to £7 million for the same period last year.

The decrease was primarily due to an increase in the fair value of the warrant liability in the year ended December 31, 2018 which is a non-cash item recorded as a finance expense compared to the decreased in the liability in the year ended December 31, 2017 which resulted in a non-cash gain which is recorded as financial income of £6.7 million in 2017.

In addition, there was a foreign exchange gain on cash and short term investments of £1.9 million in the year ended December 31, 2018, compared to a loss in the prior year which is recorded within 2017's finance expense. Furthermore, £0.9 million of interest was received in the year ended December 31, 2018 compared to £0.3 million in 2017.

Turning to finance expense for the full-year ended December 31, 2018 this was £1.3 million or $1.7 million compared to £2.5 million in the same period last year.

The movement was due to an increase in the fair value of the warrant liability as described earlier amounting to £1.2 million in 2018 causing the financial expense compared to a reduction in the value of the liability in 2017 which is recorded within 2017's finance income. The movements in the fair value to warrant liability are a non-cash item.

In addition there was a foreign exchange loss on cash in short term investments in 2017 of £2.4 million. In the year ended December 31, 2018 there was a foreign exchange gain which was recognized and recorded in finance income. However, the company maintained its balances in Pound Sterling and U.S.

dollars cash in short term investments to match expected future expenditures in those currencies and this approach should act as a natural hedge against the foreign exchange movements.

Taxation for the full year ended December 31, 2018 amounted to a credit of £4.2 million or $5.4 million compared to a tax credit of £4.7 million in the prior year period.

The credits are obtained at the rate of 14.5% or 230% of our qualifying research and development expenditure and the decrease in the credit demand was primarily attributable to the lower level of research and development expenditure in 2018 as compared to 2017 and which I described a few moments ago.

We entered the year with £64.7 million cash or $82.6 million in cash, cash equivalents and short-term investments with short-term investments comprised cash deposits with a maturity of more than three months.

Our net cash used in the operations for the 12 months ended December 31, 2018 was approximately £18.1 million pounds or $23.1 million compared to £20.7 million used in operations during 2017.

The cash used in operations reflects the expenditure on progression of our clinical studies, together with other nonclinical manufacturing and associated development activity, as well as the expansion of our management team and other corporate purposes.

We expect that our existing cash, cash equivalents and short-term investments will more than enable us to fund our operating expenses and capital expenditure requirements through the end of our Phase 2b developments and nebulized ensifentrine for the maintenance treatment of COPD and our proof of concept studies of DPI and MDF formulations of ensifentrine for the treatment of COPD patients.

Additional selected financial data will be included in our audited financial statements and also in our 20-F within Item 5 operating and financial review and prospects and in the end pages of tax document. And with that, we would like to turn the call back to the operator and open it up for questions..

[Operator Instructions] Our first question comes from the line of Lucy Codrington with Jefferies. Your line is open..

Hi there, thanks for taking my questions, just a couple please.

Firstly, I wonder if you could give us any idea if whether you've had more thought on the basis that you'll be including in the safety the dose finding study? And secondly, if you could give us especially an idea of kind of how we should think about cash balances this year and particularly in terms of the or should there be greater number of trials running particularly with the large dose finding study and so how that might impact R&D? And then secondly, finally, just looking at the timings of getting the dose finding data toward the year end allowing time for the end of Phase 2 meeting with the FDA should we be thinking more like the Phase 3 starting in the second half of next year and/or do you still think that it could happen in the first half? Thank you..

Thank you, Lucy. Let me start. The doses for the 2b study, I think the good news actually is that we see that the 6 mg and higher dose is really on the top of the dose response curve. So we can go down, which of course is good from many perspectives.

In the next study we would also have skip the 6 mg dose and we will explore a dose further down instead which we think will still provide us with several doses on maximum effect, will be having a maximum effect and if anything if even possible reduce the adverse events to a very low level.

We already have the placebo level and we think that this will give us even a bigger therapeutic index which is important for these patients especially as we use it as an add-on treatment. So lower doses in these patients. May be I can take the last question, then hand over the balance. So you were talking about the timing of this study.

You are right, the study is very important for a good conversation, a robust conversation with FDA.

So we will wait for this data together with the data from the other 2b study that we ran last year for that particular discussion and particularly around dose selection as you mentioned, we do believe still that the start of our Phase 3 study would be possible in the first half of next year.

If that changes during the year, then as we learn more about the ongoing study we will keep you updated.

Do you want to take the cash balance?.

Sure. So I'm trying to get ready for the question. As you know, we don't forecast our cash balances, but looking at the costs of the 400-patient study typically you should expect that kind of a study to cost in the range of $15 million to $20 million.

So and the ongoing DPI and the planned MDI study are both relatively inexpensive and costs in the low to mid single digit millions of dollars. So we would expect to end 2019 with still a pretty healthy cash balance which would excluding Phase 3 costs give it more than 12 months of cash runway beyond the end of 2020.

Obviously as Jan-Anders mentioned, we will get further insights to the design of the Phase 3 and those study costs will be significant..

Great. Thank you very much..

Our next question comes from the line of Joon Lee with SunTrust. Your line is open..

Hi guys. Thanks for taking my question.

I've been really intrigued by the fact that in your previous 403 subjects Phase 2b four week maintenance study, you pretty much see maximal FEV1 improvement as quickly as first week which is maintained up to four weeks before, but your patient reported outcome as measured by ERS [ph] continued to improve over that same period.

Is that something you see with other COPD medications or is this something that's unique to a different trend and maybe perhaps due to anti-inflammatory sets? And you would expect this to be sort of replicated in your next Phase 2b four-week study? Thank you..

Yes, thanks so much. You rightly observed that there's a discrepancy between the bronchodilator effect and a gradual onset of the symptomatic improvement. And we of course with our advisors believe this really is an anti-inflammatory effect that takes a little time to come on and then gradually and continually improves over time.

We do see it with other or it is reported with other COPD drugs bronchodilators and combination drugs. The difference is perhaps that what we look at in the literature may be a little different from exactly the same patients we use, often takes a bit longer to develop fully more than one month if you look at literature data.

So we believe we actually have a rather rapid onset of an anti-inflammatory effect compared to some other published data.

We also believe that the magnitude of the symptom improvement that we see and what we again see reported in the literature is very promising for RPL554 in the sense that not only the ERS scale that we use, but also TDI and other measurements of symptoms actually improve to the same extent over baseline also statistically significant and also with time, but quite rapidly compared to what's reported with other drugs.

So we believe this is really one of the perhaps most important advantages for our compound ensifentrine, but in the end it is important for the patient's symptoms is what patients complain about, not mL changes in FEV1, that's a regulatory endpoint and that's why we focus on symptom improvement as a key outcome.

And we do expect to see in patients also on background treatment in the next Phase 2b study a similar gradual onset of improvement that we saw in the phase, in the previous Phase 2b study..

Thank you. And just one more, you measured 22 secondary endpoints or something in that magnitude. Have you gained any insight as to sort of the wider inverse dose relationship or what the explanation could be for the 6 mg on the branded effect and if any of those results could be presented at a medical conference in the near future? Thank you..

You are talking about the last study that is reported on the….

Yes, the LAMA/LABA combo, yes..

Yes, we are just getting their full data set. So we haven't been able to analyze it fully. I do believe that it's an anomaly that it goes down the effect of 6 mg versus 1.5 mg, it’s most likely from all the studies we have done, all the data together is not a bell shaped dose response curve so lower effects with higher doses, but rather it's flat.

But there is of course variability at the top of the dose response curve and I think that's what we experienced in this recent study.

So I really do believe that the 1.5, 6, and as we have seen before, 12 and 24 mg they all are very close to the maximum effect that we can achieve with a compound and that the variability is purely a phenomenon of smaller number of patients being treated. And it is not a consequence of the compound itself.

But the good news is of course that we can explore lower doses and expect good effects and perhaps also a much better therapeutic ratio with our compound and that's customary in patients with COPD with other compounds..

Thank you..

[Operator Instructions] Our next question comes from Adam Walsh with Stifel. Your line is open..

Yes, good morning guys. This is Neil Carnahan on for Adam. In the upcoming Phase 2b study on top of both LABA, how would you define a positive outcome in this patient population in terms of FEV1 and residual volume measurements? And then I got one follow up..

Yes, hi Neil. The upcoming study of course, we expect to be quite similar in structure to the previous Phase 2b study and we would of course expect a positive outcome as say a significant increase in lung function measured as peak FEV1 or the area under the curve average FEV1 in the beginning of the curve.

And of course we will also measure other aspects of FEV1 including trough. The residual volume in the same way, we will not be able to look at that directly in this study. This is a particularly complicated treatment assessment of patients where you put them in a body box or a plethysmography and then measure static breathing and other parameters.

That is complicated and we instead look at the lung function measured as FEV1, but residual volume we think is very much related to symptoms.

And so the two correlates and we will measure symptoms as very important endpoints and dose we think will reflect any changes that we see in residual volume in for example as data readout is completed, but that particular measurements is more suited for specific studies in a few sites, one or two or three sites maximum to get a well controlled and not too much variability in the material.

Does that answer your question?.

Yes.

And then I got one follow up, just given prescribing behaviors for COPD are pretty entrenched in the community, can you just walk us through the thought process behind doing this Phase 2b on top of a LAMA, how you think ensifentrine will fit in commercially there?.

Yes, thanks. Yes, thank you. So there are two aspects to that question and one aspect is of course clearly this study outline. Now this study is not a commercial study.

This study is purely to have a conversation with FDA that is well-informed on a uniform background, where we can demonstrate that doses that are appropriate to take into Phase III clinical trials and those doses are safe and well tolerated and effective. So that's the purpose of this study.

The other aspect of your question which is very good is how would we see our compound position and commercially as a treatment for patients that are in one bronchodilator is usually it is LAMA or it could also be LABA perhaps. And then instead of going to from a LAMA to a LABA to a second bronchodilator why would you use RPL554, ensifentrine.

Now we believe that we will demonstrate as we have in our Phase 2b study, that our compound has a substantial improvement in FEV1 in lung function in these patients and we believe that is at least as good as you will see by adding another bronchodilator to the first one. So that's interesting. It gives you an option.

Now more importantly, we really believe that our compound is also an anti-inflammatory compound in the same doses at the same time. And we will therefore be able to demonstrate that we have a dramatic improvement in symptoms as we actually showed in the other study and in patients that are already on one treatment.

Now you have an opportunity to add one more treatment that is a great bronchodilators and also has profound effects on symptoms at the same time and is anti-inflammatory and you may avoid for some patients that does not like to take inhaled steroids, this may be an alternative to use a treatment that is not only a bronchodilator, but also a compound that is this dual mechanism of action.

And we think that is a compelling story. And let me just briefly say that of course if you are looking as we just talked about patients on dual and triple treatment, now here you are in a situation where there is really no further treatment modality today that you can, there are a few, but they are not well appreciated about patients.

We think there it is a situation where patients will rather ask for additional treatment from the doctor to help them to go through today. And if we can help those patients, with very few other treatment options, that will be a very meaningful contribution to this group of patients..

Thank you..

Thank you. And our next question comes from the line of Liana Moussatos with Wedbush Securities. Your line is open..

Hi this is Sweta for Liana. We have two questions.

In the Phase 2a on the top of maximum LAMA/LABA, why do you think there was a difference between the morning and evening doses and that the evening appeared to be more responsive?.

Yes. Thank you. That's a good question. I believe it's got a straightforward answer. The once a day therapies and then remember, when patients are on double or triple therapy most of the fixed combination sales and volume is on once a daily treatments.

So this is a category of patients that is then having just once a day treatment and it's perhaps the largest category of these patients. In the morning, once a day treatment works very well. During the 24-hour doing the day the effect fades away.

This effect, slightly diminishing of the effect during the day is much more pronounced with longer treatment.

So therefore it is not so difficult to see that if you add a company in the morning, if you are lucky as we were, we did see an effect that was meaningful and you would expect actually that if you add the same dose and see a similar type of effect in the evening it should be much more profound, a much larger effect because then there is not the same background dual bronchodilator treatment effect as we saw in the morning.

So that's not so surprising. What is important to remember is that these patients, many of them have symptoms during the day. We hope we can help them. Many of these patients have also symptoms during the night. And the problem is that there is no other treatment that is behaving in a similar way like ensifentrine that you can't take.

They are - today you are seeing rescue bronchodilators for example which is another Beta 2 agonist albuterol and of course you can inhale it and get relief from the obstruction. It has little to do with symptom improvement in itself and it will give you an increased heart rate and perhaps have a poor quality of sleep.

We think it's quite different, if you have a background treatment that is stable now on top of an evening dose, where you have a substantial improvement in lung function that as a duration of twelve hours, the whole night, and which we really believe also will improve night symptoms and give them a quality sleep and after that will be much fresher in the morning and have much better improvement of symptoms in the morning.

The concept has been explored by other compounds and is published in the literature. It's not rocket science, but maybe ensifentrine is rocket science if it actually is able to deliver to these patients a good quality of life also when they are most vulnerable during the night..

Okay, thank you.

And just one more question with cystic fibrosis what are your plans to move forward and when will we hear about the plans, would this be after the initiation of the Phase 3 study in first half of '20 or before that?.

Yes, thank you. It's a good point. We like to see, we think it's an important group of patients that really, really need a new anti-inflammatory treatment as asthma for that matter. We have data to tell us that we could actually progress this type of trials.

The dilemma for us if you wish, is that we have to focus 100% on the nebulized formulation moving towards end of Phase 2 and into Phase 3 and in addition of course the DPI and eventually the MDI formulations for COPD. So realistically, we will be into 2020 before we will be able to give you any firm guidance on how to progress.

And it has to be longer trials in CF patients and to do them correctly we will need to have the resources and the funding to progress and I think that would be in 2020..

Okay, thank you..

Thank you..

I'm not showing any further questions, so I'll now turn the call back over to Jan-Anders Karlsson for closing remarks..

Yes, thank you. Thank you everyone for joining us today. We look forward to reporting the next set of important clinical data already in March. So it's from the Phase 2 trial with the DPI formulation in COPD patients that we were talking about before.

We do continue to review our ensifentrine development strategy in the context of additional data generated including from clinical trials, regulatory interactions and market research to identify opportunities to enhance and derisk our late stage development and commercialization.

With this review and data from the next Phase 2b clinical study, we believe we'll be able to have a robust discussion around regulatory pathways and the design of the Phase 3 pivotal trials.

We continue to expect to complete our Phase 2 program late in the second half of 2019 before an end of Phase 2 meeting with FDA and before progressing into pivotal Phase 3 trials. We are scheduled to present on March 13, at the Cowen Healthcare Conference in Boston.

We will be conducting one-on-one meetings and look forward to catching up with some of you down there. Thank you, Operator. This concludes today's call..

Ladies and gentlemen, this does conclude the program and you may now disconnect. Everyone have a great day..