Thank you very much for your kind introduction. Dear, ladies and gentlemen, thank you very much for joining us for PAION's Earnings Call on the Financial Results of the First Half of 2019.

My name is Ralf Penner. I'm PAION's Vice President, Investor Relations, and I'll be moderating today's call.

I'm joined by Wolfgang Söhngen, PAION's CEO; as well as Abdelghani Omari, our Chief Financial Officer. Within the next half hour, we are going to highlight some of the page 129 in achievements, give details on the financial results, highlight the most important events and provide the pipeline and strategy update and financial outlook.

After this initial presentation, we will be happy to take questions. I would like to point out that the slides for the presentation can be accessed by webcast in parallel to this conference call.

The webcast details has been posted on our website and were also given in today's press release. If you have not already opened webcast link, you may want to do so now.

This conference call is being recorded and then audio recording will be available later today and will be posted on our website. Before we get started, I would like to remind you that today's call may include forward-looking statements and that actual results may vary from PAION's current anticipations.

I would also like to refer to the disclaimer included in the presentation slides. [Foreign Language] After these initial remarks, I believe that we shall start right on now with the presentation.

Wolfgang, please go ahead.

Thank you very much, Ralf. I would like to start actually with stating that the first half year was very successful for PAION.

We now have made significant progress compared to same time of last year. Three filings are underway.

We even have a PDUFA date for April, 2020 for the U.S. and our partners are making good progress and we also make good progress with the partner we have to contribute.

For those who are not familiar with the company, I would like to start with the brief overview. We have specialty pharma with a focus on anesthesia product, we want to expand into acute and critical care in the future, where we mentioned it’s in final stage of development with three filings but we still have one indication that we need to redevelop.

We already have eight recent partnerships ranging from the U.S. over China, South Korea, Canada, Russia, Turkey, MENA region and Japan.

We have slightly increased our in-house manpower in order to manage also the future plans of supply and entering the market in Europe. We had 19 million cash at the end of the half year and our market kept fluctuating on 150 million.

Right now, in the supervisory board, we had a change with since the last AGM, John Dawson, thank from this end for his contribution over the year’s and has been followed by Dr. Markus Leyck Dieken, who is now having a position in the Gematik in Germany dealing with Artificial Intelligence and Healthcare.

Our management team consists of Dr. Irina, who will talk after me.

Jürgen Beck, who is the Chief Development Officer and myself, and we are listed on the Frankfurt Stock Exchange since 2005. Market cap as I said fluctuating 150 million, liquidity described okay for Germany listed biotech company and we have 64 million shares outstanding and we have good support by our analysts.

And remimazolam our one and only product has potentially three different indications. The lead indication historically is different between the regions and general anesthesia was the lead indication in Japan and is the lead -- and used to be the lead indication in Europe, procedural sedation the lead indication for the U.S.

and ICU sedation we have completed a Phase II study in Japan and there’s just the indication that we want to takeover in the near future. remimazolam is in the stage of sedation and anesthesia and I would like to remind the auditorium that sedation is a kind of fluctuating state, where you from sometimes light sedation to deep sedation and general anesthesia.

Propofol is mainly used for the deeper sedation part in the equation. Midazolam historically is more used for the lighter part of the sedation and it is our believe that remimazolam can substitute on both ends.

So our competitors are midazolam and propofol which are both generic, what we think that we have a value proposition to substitute. What is important to consider when you talk about specifically general anesthesia is the usually and also in sedation procedural, sedation frequently, it's usually a combination of analgesia drug mostly opioids and hypnosis.

So remimazolam is relevant for the hypnosis part and [remisentinel] for example is usually given these days for during general anesthesia also in the combination with propofol or gas and in some indications, in some situations you also want the patient to be completely unable to move than so called neuromuscular blocker was added and all these three drugs had some interactions which are very important and need to be recognized and reported in clinical trials. And what we have heard from U.S.

all the time, specifically in the procedural sedation part is that remimazolam represents the best of both words because it is as safe as venture debt and as quick as propofol. So as I said before, we believe that we have the opportunity to substitute both midazolam and propofol in a very attractive and growing market setting.

And I would now like to hand over to Abdel to guide you through the financials.

Thank you, Wolfgang and good afternoon, everyone. I will now guide you through the financial key figures for the first half year compared with the prior year period and also give an outlook for the full year 2019.

First of all I would like to give you an overview of the financing agreement with the European Investment Bank that we found in June this year. The unsecured loan of up to €20 million in total can be drawn in three tranches and its available until June 2021.

Each drawdown certain condition, as for example, operational milestone need to be fulfilled. Each tranche has a term of five years and will be amortize often in the fourth year after drawdown.

The cost of capital is in line with market term for venture debt and include three components, cash interest, deferred interest and performance-related component. We plan to drawdown the first tranche 5 million this year.

Now let’s move to the P&L. Revenues amounted to €7.5 million and resulted from the milestone payment for from Cosmo in connection with the submission of the dossier for remimazolam and procedural sedation in the U.S.

Revenues of €0.5 million in the prior year period, resulting from the license agreement for Japan is Mundipharma. On the upper right hand side you can see that research and development expenses slightly decreased from €6.5 million in the first half year 2018 to €6.2 million in the first half of this year.

The R&D expense is mainly related to the ongoing Phase III study in general anesthesia. Compared to the first half 2018, general administrative and selling expenses increased by €0.6 million to €2.3 million in the first half of this year.

The increase is mainly related to higher selling expenses, particularly in connection with the set-up of the supply chain for remimazolam. In total, we show a net income of €0.6 million compared to a net loss of €6.2 million in the prior year period.

The net income includes income from R&D tax credit in the amount of €1.2 million. Now I would like to move to the selected balance sheet items and an overview of headcount.

Total assets increased by €1.3 compared to the end of 2018. This mainly results from a decrease of trade receivables by €1.5 million, due to the receipt of milestone payments in connection with the filing in Japan on the one hand and an increase of the tax credit claimed by €1.1 million for the first half year 2019, as well as an increase of cash and cash equivalents on the other hand.

As can see on the upper right-hand side, cash increased by €2 million compared to end of 2018 and amounted to €19.2 million as of end of June. This increase essentially comes from positive cash flows from operating activities in the amount of €2 million.

As you can see on the lower left hand side, equity increased by €0.6 million to €21.4 million mainly as a result from the net income for the first half-year. The equity ratio was 83.3% as of end of June.

This cash development is illustrated on the lower right hand side you compared to an average number of 39 employees in 2018 we had staff of 44 employees on average in the first half of this year. Finally I would like to give an outlook for full year 2019.

For the purpose of comparison, you can see the actual figures for 2018 in the left column. For the rest of the year, our main focus remains on the development program in Europe, the ongoing global regulatory processes as well as the manufacture and supply chain for remimazolam.

Regarding revenues, we expect these to amount to approximately €8 million. They are off €7.5 million in connection with the NDA filing in the U.S.

that we already realized and €0.5 million are related to the transfer of the Japanese filing dossier or transfer of the U.S. filing dossier to our partner, TR-Pharm.

Given the ongoing development activities, including the European Phase III study, we will continue to incur significant R&D expenses, which we estimate to be in a range of about €13 million to €15 million. SG&A expenses we’re increased to approximately €4 million to €5 million mainly because of pre-commercial activities.

Based on the estimate for the R&D expenses, we expect tax income from R&D tax credits in the amount of approximately €2 million. In total, we expect the net loss in the amount of approximately €7 million to €10 million.

Regarding our liquidity, cash at hand plus expected tax credit secured cash reach entered the second half of 2020 based on current planning. Until filing for market approval in general anesthesia in Europe, further funds of about €10 million will be required based on current planning.

This funding requirement could partially or completely be covered by the financing agreement with the European Investment Bank. Thank you so far.

Now I hand back to you, Wolfgang.

Thank you very much, Abdel. Just a few highlights on why we believe that remimazolam is a great opportunity and why we believe in the success and the long term.

When you talk about sedation and anesthesia, the big discussion hinges around safety. Remimazolam has significant offerings compared to the existing drugs, I would like to highlight the improved hemodynamic stability, which makes better suited for the ageing population as the most important ones and we come that specifically when we discuss general anesthesia.

Efficiency is as good as the current drugs because it cannot be better than 100%. Patient experience is very positive based on feedback that we had during the procedural sedation trials.

We assume that we offer our cost savings to executions by exchange in the current drugs with remimazolam. Remimazolam belongs to the class of benzodiazepine but it’s the first one that release very short acting which is very important.

We have significant market potential with IP in the different region, in the major markets. We have shown very good safety efficacy in more than 200 to 500 patients now and volunteer some drug.

As I have said before we have three different indications, two of which are in filing and ICU sedation which we still have to develop. We believe that the overall market opportunity is something like 500 million globally per indication and so far we are very happy with the results that we have achieved.

Let me now briefly touch upon the U.S. market, because its significantly different from what we are used to in Europe.

The U.S. market has the specificity and so far as colonoscopy screening is the highest in the world, which has led to a reduction in the occurrence of cancer and colon cancer, so therefore this screening is growing over time.

This is a growing market and they are more than 20 million colon screening in U.S. So there is significant individual markets which is not available in other territories of the world and this was also part of the reason why the lead indication of the U.S.

was procedural sedation. On next slide you can see the highlights of the results of the Phase III program that was discussed and agreed with the FDA.

There we’re three trials; one in bronchoscopy patients, one in such a healthy screening patients and one safety study in very sick patients. And if you look, if you compare the blue bars with the light blue and orange bars you see that the results across the free trials are comparable.

The Midazolam results are probably regarded as very low, if you look at this but this is due to the purposeful response definition. In the end, all of the people participating in the trials received a colonoscopy but the question was how soon can you start a procedure and can you start it with the predefined dosing regimen and TR-remimazolam clearly show significant improvement.

And this is -- and part of this is relating to the on-set time, which is significantly shorter than Midazolam at the dose that the label dose in the U.S. and it is also significant quicker wake-up time which makes it looking like the propofol situation.

So we gained or we have gained approximately 22 minutes procedure and colonoscopy, which leads physicians to do significantly more procedures per day per date than with Midazolam and we we’re told by our investigator that this drug that can do the same amount of patients as they can do with propofol. So where we are in the process?

Currently the NDA has under review, so our partner Cosmo receives questions and then we answer those questions to the FDA jointly and we accept that market approval maybe coming in April 2020 things go according to plan. We had significant new situation in Europe, because the marketing authorization application for Europe can hopefully still happen this year based on feedback from EMA we have started to work on the dossier already and we will be able to submit a marketing authorization based on the U.S.

dossier and the thing that we still needs to see whether we can get agreement on the pediatric plan in due cause with the agency because these are the precondition to filing. But the team is already working full speed and getting ready to file towards the end of the year.

In general anesthesia, the current problem is that with the ageing population the known hypotension that goes along with the existing drugs is causing problems and it has been now repeatedly reported that this leads to increased mortality and morbidity, although these patients survive the operation and the surgery and anesthesia, the effects of hypotension during the intervention leads to caveat problems, problems like stroke and kidney damage. And this is all due to significant hypotension and we have data from our Japanese trial and our trial in cardiac surgery showing that remimazolam has significantly less hypertensive events.

And therefore we believe to have very interesting value proposition in the general anesthesia and our trials in Europe, which I will describe later is designed to exactly show if deliver those data. The next two slide are just for reading but they highlight the PAION discussion.

It is -- previously there was a belief that injury, the hearty occurs during bypass surgery, it now has become clear that these mentioned hypotension events also have significant negatives impact on normal patients, which are not undergoing cardiac surgery but other surgery, imagine someone with the cancer who’s has already compromised in the healthy having significant hypotension leads in adds to the damage and the mortality. And it is -- there are independent studies reporting the same and precautions at meetings of a lot circle around how to prevent hypotension and during surgery and remimazolam is discussed as being one of the upcoming alternatives.

The design of the Phase III trials in Europe that we have recruited now more than 200 patients is a multicenter trial. We have Germany, France, Italy, Switzerland, the Netherlands, U.K.

and Belgium in the trial and as you see in the blue box, the primary objective of course is to show that they are just active as an anesthetic agent but the key secondary objective is to show improved hemodynamic stability compared to propofol and in the next couple of slides I’ll show you some data on this. So we assume that patient recruitment can be completed in the first quarter 2020 and now with the new plan to apply for approval in procedural sedation and the general anesthesia will then be the second indication which reduces the overall time and effort and volume of the dossier, so that we assume that we still will be able to file in a similar timeframe that we had planned initially with general anesthesia with the current timeline.

And also we had feedback and hoping to understand the market that it is really very good to launch for us procedural sedation because it gives physicians the opportunity to get new midazolam that comfortable with it which is easier in a procedural sedation situation compared to general anesthesia. So we have seen that the learning curve in visuals and sites, procedural sedation is much deeper than the learning curve and general anesthesia because it’s a much more complicated and dedicated set-up and because physicians are aware and one to take the patients.

They are very careful and considerate conservative. So this is part of the difference and we believe that if it can use and get used to remimazolam in procedural sedation, this will also support getting launch in general anesthesia with a better uptake.

On the next slide you see why we believe that we have a significant advantage of propofol based on the Japanese data. You see that there’s a significant reduction in hypotension and the mean arterial pressure below 60 millimeters mercury is definitely something that you do not want to have and it is now clear that both the hypotension and the duration of hypotension and also the requirement for vasopressors both contribute to damage of brain, kidney and heart.

And the third one could be too deep sedation. So how do we see the market and this indication?

The overall number of surgical procedures in Europe is growing. It is now more than 70 million.

All anesthesia are around 30 million plus and general anesthesia so not all patients that received general anesthesia something like 28 million and off these are 40 million high risk patients, which essentially represent the current situation in European hospitals. More than 50% of patients are now older than 60 years and most of these patients have co-mobility and therefore they are more growing to suffer from this hypotension and this is how we want to position remimazolam and this is also how the current trial has been designed because we are taking on both patients which are more sick than they used to be in that Japanese trial.

ICU Sedation, we see as a large opportunity that we have not addressed at this moment in time but part of the reason why we received the grant from the days and our plans that we will also address this indication. We have already exchanged ideas about this with investigators but we have to know active planning on when we will start indication but we do this as we focus our efforts on this as soon as the filings have been successfully complete -- not the filings, when we have the improvements.

I’m sorry. So again, this is a very attractive market with 14 million, 15 million patient days requiring sedation while they stay on the ICU and that’s the combination of the U.S.

and European markets. Again, here hemodynamic stability is key for the survival and to create improvement of patients and business while investigators are asking us when we are coming with the trial ICE sedation remimazolam has significant advantages.

I have mentioned in the beginning the activities of our partners. Let’s start with Japan.

Mundipharma has filed in December and we are hopeful that market approval could be achieved still this year. In South Korea, planning is currently to file towards the end of this year and in Russia, similar situation filing by the end of 2019.

In Turkey, we have new situation because R-Pharm who was the co-owner of TR-Pharm is now in charge and we are discussing currently with them which are the dossiers they prefer to use for filing. In Canada, PAION expects Pharmascience to use the market approval for their own filing which is usually Canada operates.

In China, we know that remimazolam is under investigation of the Chinese authorities, so we are not able to give a clear guidance on the timing because there is no clear guiding by the agencies like FDA order on the PDUFA date. This is not available for China.

So that is why we have no answer to this. I visited China in September, maybe again I will learn more so that in November we can give you a relevant update here as well.

On the next slide, here’s an overview of the deals that we have signed. So far we have received 44 million, out of this including the milestone by Cosmo earlier this year and there are [indiscernible] 76 million in milestones to come and attractive royalty rates and which are depending A.

on the time of when the deal was closed and B. on the type of market, because it’s natural that is an emerging market you’re not able to get the same price as in the western world.

Now people are more and more asking us on what’s beyond remimazolam. Well, the answer is let first get remimazolam over the finish line, so that is our current focus and we wait for first market approvals in Japan, China and also in the U.S.

the completion of the European trial and general anesthesia is upcoming early next year and potential market approval in the U.S. as I mentioned before the PDUFA data is in April, so hopefully when we are in May next year, we have three approvals and one more clinical important clinical trial completed.

And beyond remimazolam, our focus will be on acute and critical care because there are not so many new drugs around for general anesthesia or sedation. But we will look for fundamental products that fits to this and we track to market in Europe, our certain selected markets and we also understand that we need to -- that we need to get an additional product to reduce the cost of marketing providing the drug alone and in principle we believe that integration is a needed step to make PAION a profitable pharma company and so we have started those activities.

Supply chain is very active topic right now by the person who has experience has long history in and if we been to see him all understands the business and knows how to set-up what we need in order to deliver the product to our European customers and patients. Ralf, I hand back to you.

Thank you very much, Wolfgang and Abdel, for the presentation. Now we would like to start Q&A session.

Yes, good afternoon. In the press release you’ve talked about putting in place for implementing financing measures to finance your own commercialization in selected European markets.

So I was wondering in view of the recent disagreement with those financing agreements will necessarily involve equity or whether you could finance yourself in the future with respect to at least talent product portfolio purely have a debt?

If you are looking at other financing measures and here then we are looking at the full range, so its equity, its debt but it’s also mix of equity and debt like convertible.

Right.

Yes. I mean, it’s clear that the milestone that we’re expecting from the deals we have faced are significant source of financing but there it all depends on when do those milestones come in.

so there are somehow moving targets. And then of course the -- that we have now the [indiscernible] and then we were further behind our plans and then our strategy to market here in Europe and then those three elements we will then work out.

What exactly we will do and when.

Yes, I mean, just curious I mean, in 2020, I mean, you will be getting your first revenues both in the U.S. and Japan and you’ll be getting -- by the end you’ll be getting additional milestone revenues, so those two elements of income should significantly reduce the financing requirements as well and these two equity, so that one can imagine a scenario under which, the current product portfolio is purely debt finance, thereby basically eliminating any further dilution?

I mean, that sound realistic to you?

Yes. I think what you’re saying is right.

So we have significant milestones and inflection points upcoming and so then also coming along with these events, significant financing that will certainly help. And then we will see what balance will be there.

I don’t think it will be huge but if there is a balance than we will work out how to close this.

Okay. Thanks very much.

Hello. Thank you for taking my question.

Could you give us little more details on the process regarding the Type-II variation application with the EMA and regarding time table for the market entry in the EU? Thank you.

At this stage this is planned. We assume that we file procedural sedation towards the end of the year.

The -- if everything goes according to plan this should be completed by the end of next year and then we will have our general anesthesia dossier ready based on the current planning and then we assume that the overall approval time for general anesthesia could be between three and six months faster than it would be submitted as a first indication because based on the application and procedural sedation significant information on example production, on supply chain et cetera will be available and therefore the overall review time will be less. That’s the current plan.

Thank you very much.

Yes. Thank you very much everybody for your questions.

[Foreign Language].

[Foreign Language] Thank you very much, everybody, for joining us for PAION's earnings call on the financial results of the first half of 2019. I hope that we have been able to answer your questions.

But of course, please feel free to give me a call afterwards. I would like to listen - if you would like to listen to this call again, please visit our website, where the audio recording will be posted later today.

For now I'll say goodbye, and thank you very much for your continued interest in PAION.