Paion AG (OTCPK:PAIOF) Q4 2021 Earnings Conference Call March 30, 2022 8:00 AM ET
CompanyParticipants
Ralf Penner – Vice President of Investor Relations
Jim Phillips – Chief Executive Officer
Abdelghani Omari – Chief Financial Officer
Conference Call Participants
Simon Scholes – First Berlin
Operator
Hello and welcome to the PAION AG Conference Call on the Financial Results for 2021. My name is Josh and I’ll be your coordinator for today’s event. I will now hand over to Mr. Penner. Thank you.
Ralf Penner
Thank you very much for your kind introduction. And ladies and gentlemen, thank you very much for joining us for PAION’s earnings call on the financial results of 2021. My name is Ralf Penner. I am PAION’s Vice President, Investor Relations and I’ll be moderating today’s call. I’m joined by Jim Phillips, our CEO; as well as Abdelghani Omari, our Chief Financial Officer.
Within the next half hour, we are going to highlight some of the 2021 achievements, give details on the financial results, highlight the most important events and provide a pipeline and strategy update and financial outlook. After this initial presentation, we’ll be happy to take your 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 the webcast link, you may want to do so now. This conference call is being recorded and a replay 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.
After these initial remarks, I believe that we should start now right on with the presentation. Jim, please go ahead.
Jim Phillips
Thank you. Good afternoon, everyone. Very pleased to be able to discuss with you the presentation for 2021. And then towards the end, I’ll hand to Abdelghani Omari to take you through the financials. So just a reminder of our mission as a company, we are planning to be and are now fully engaged in becoming a leading specialty pharmaceutical business in Europe, focused on anesthesia and critical care. And of course, our focus is novel products which we’re currently launching into various markets.
Next slide. We’re well on the way. We see to be an innovation leader. And I think if we talk about the experience of doctors using our products around the world. There is a very high level of satisfaction to date with by favor our own products and the other two products that we have in our stable. We’re still building our European commercial infrastructure and we’ll talk a little bit more about that later in the presentation and we are going through our launch program for both Byfavo, our own product and for GIAPREZA and XERAVA as we speak. And what does that lead to? That leads to us driving fast revenue growth and reaching — we hope profitability in 2024 as we become a leader in our field. And of course, we’re always mindful of the future, future growth opportunities. And so we’re still always going to be looking for other ways to build our portfolio for the future.
Next slide. If we just talk a little bit about the management board because there’s a change that we announced this morning. So Abdelghani Omari, as you will be aware, has been with the company for a long time, has helped us navigate the difficulties of product development, registration and into the early stages of commercialization and we’re very grateful to Abdel for all his hard work over the last years. But Abdel will be leaving us later in the summer and we’re very, very pleased to be welcoming Sebastian Werner, who is actually with us today, who will be joining us at the beginning of June. And Sebastian is joining us from Zimmer Biomet, where he was most recently both involved as Regional Chief Financial Officer and also running a business within the Zimmer Biomet company. So really has a lot of highly relevant commercial experience.
Next slide. Just a reminder of our status. So we are still listed on the Frankfurt Stock Exchange, the share price trading in the 130s to 140s which gives us our market cap around 100 million which is severely discounted to the target price of the analysts. And so we see a lot of room for growth in the future.
Next slide. In terms of our key targets for this coming year, so essentially, we’re still in the launch phases for our three products around Europe. We are also working with our partners and we’ll talk a bit about Acacia and their acquisition later in the presentation. But those growth and launches are really important for our royalty-based revenues. Then, of course, we’re working on finalizing license agreements for our noncore markets in Europe and elsewhere and a little bit of that was planned to be done towards the end of 2021 and we pushed that out into 2022 for reasons that we’ll talk about later. We also expect this year to — we hope to get a positive opinion from the European CHMP for our second indication for Byfavo remimazolam in general anesthesia and that should then lead to a market approval at the end of the year or early in 2023.
Then a reminder of the products. So remimazolam Byfavo is indicated around the world for both general anesthesia in some countries and procedural sedation in others, ICU sedation, earlier stage and no plans at the moment to do Phase III in that indication in Europe. Angiotensin II, so that’s GIAPREZA, approved in Europe and in launch phase. It’s available in Germany already and being made available now in the Netherlands. And eravacycline XERAVA, also available in the Netherlands and also in use in some other countries already.
Next slide. We just have a picture of the pack of Byfavo, what it looks like as a real product and then on to why it’s a better drug. So this is an old slide and I won’t spend too much time on it. But what we’re finding in the market is that rapid onset and offset is clearly being demonstrated in use by doctors. And that translates into satisfaction, patient satisfaction, doctor satisfaction and reuse which is the key thing to driving future revenues.
Next slide, please. When we look at the key things about remimazolam Byfavo becoming a success. It’s really the things that are important to doctors are the time of recovery to fully alert, the success of procedures and then the use in the more difficult patients, the ASA III/IV type patients. And again, this is really now borne out in the commercial setting, whether you talk to key opinion leaders in China, America or Europe.
Next slide. Just a reminder of our label in Europe for the product. So this allows us to do — to promote the product for use in a time independent way which means there’s no restriction on the amount of sedation, although length sedation a doctor can use it for — there is no need for an anaesthetist to be there which can save the hospitals or the procedural centers funds in terms of releasing those doctors to do other work. And also to approved for any procedure within the European setting.
Next slide. A reminder of the IP, so the — besylate salt is protected in the U.S. until 2031, formulation until 2033 in Europe and other patents around the world. And of course, we are now investing in life cycle management and we hope to be able to announce further work on that later in the year.
Commercially; so in West Europe, we’re doing our own commercialization launch is already completed in Netherlands and U.K. and underway in Denmark and later in Q2 into the rest of Scandinavia. Outside of Europe and in the Southeastern countries of Europe, we’re partnering. We announced a deal with Medis for some of the old Eastern European countries at the beginning of the year and that’s part of executing part of our strategy as we speak. So we’re working in the countries we know best ourselves with the highest prices and margins and then we’re working with local champions elsewhere.
Outside of Europe; so in the U.S. a little bit — we’ll talk a little bit more later but Acacia Pharma launched the product in January last year. We get a royalty rate of between 20% to 25%. And I was with Acacia last week just before the deal with the Eagle Pharmaceuticals was announced and actually, the traction in that market in terms of formulary acceptance repeat order rates is now moving in the right direction. We hope that in their acquisition, they will become part of a much stronger and better company for us as a partner able to deliver stronger results.
Japan; Mundipharma, they launched in mid-2020 and they’ve had some stock problems but things are going well. Similarly, Taiwan are now moving towards the filing and launch phase of the product there. With Yichang Humanwell in China, you will have seen our announcement in January that we basically sold to Yichang Humanwell the royalties and patents for China for a payment of €20.5 million. This we feel was a very good deal for the company in — in fact giving us a nondilutive financing at the beginning of January. South Korea performing well so far. East Europe, as we just described, just signed that collaboration agreement and we will be pushing forward with that in collaboration with Medis over the coming months.
In Canada, we’ve agreed to terminate the license which was signed in 2014, basically because Pharmascience are unable to make their own internal processes and business case work for the product and we will look for a new partner. And for Russia and Turkey, MENA, we have just terminated our agreement with R-Pharm, related actually to nonpayment of milestones which we have impaired in our balance sheet. And in the context of the current geopolitical context, it allows us also to supply humanitarian aid to Ukraine with excess inventory that we have.
So just to go back to China again, we’ve talked about the way in which we’ve sold them the patents and the royalties but China has seen very strong sales growth and I think they have the same experience as other countries in terms of very, very positive feedback from users of the product. In Japan, the market growth was very strong but the product availability because of a battery call had to be scaled back. But we’re now hoping to see the strong growth come back into place during this year.
And then in the U.S., what I can tell you is that at the end of last year and I got this data last week, they had more than 150 formulary accounts in the U.S. open. Successes from Mount Sinai from several big hospital groupings in the U.S. market which bode well for the future. They clearly had a lot of problems in terms of access to doctors and to formularies in the U.S. prescribing and therapeutics committees because of COVID-19 and the effects it had on the health care system but we hope to see growth accelerating as the markets are opening up and also as Acacia becomes part of Eagle Pharmaceuticals which is a bigger company with more products with a greater sales capability which we see as a good place for Byfavo to be in the U.S. market going forward.
And then, I think this slide has been seen before. But again, this validates the product in the market. This was a letter published in the [indiscernible] journal in the U.S. What they are saying that what they were seeing was return of responsiveness following Byfavo compared to the old benchmarks of midazolam or propofol. They saw Byfavo causing less insult to difficult patients, particularly to the neuropsychiatric function after their procedures. So we’re very happy to report this and we hope to see more case reports coming forward in the future.
A little bit on our commercial buildup in Europe. So the three products, as we’ve stated before, they overlap very well. And I think our sales force is — were now selling more than one of these products together are finding the overlap, particularly between GIAPREZA and Byfavo very strong. In terms of how we work, so currently, European HQ is here in Germany in Aachen and we have our four subsidiaries. We have United Kingdom in London, we have Netherlands, in Amsterdam, we have a Nordic hub just outside Copenhagen and our German hub which is currently in Aachen. We haven’t formally decided on the location yet.
Next slide. Field-based teams, we have a mixture of key account managers and medical science liaisons. And again, this gives you a view of our current rollout plan for this year which would give us a total of 38 in the field in the countries that we described. A reminder of the market size. So just in gastrointestinal procedures, the colonoscopies, we’re talking about nearly nine million procedures a year. There’s a backlog because of COVID of these kinds of procedures, plus the others in cardiac, bronchoscopy cataracts. And what we’re finding in the real market is that areas we’re not expecting use, we’re starting to see use, such as cosmetic surgery, such as dentistry, where actually we have a Phase IV study started up in the U.K. at the moment.
Next slide. I think again, this is an old market research which is now being supplanted by real data from people in the market. But what we’re seeing in market is what the market research suggested and that people want to use — doctors want to use our product. They want to try it. I was in the U.S. last week. I met an ER physician and through — in a social event and they were saying, I really want to use your product because of the advantages that I’m hearing about from my colleagues. So we’re finding in the market that the things that we saw in market research are being borne out. Patient recovery is fast, sedation is good and procedures can be completed quicker and the doctors move onto the next patients. In terms of how we manage selling, so essentially, we have an account-based sales model. So we have hospital focus and then we work within the hospital at the key champions that you need to get a product into formulary or onto the drug procurement list. So you need clinical champions which can be an anesthetist, could be a surgeon, then you need to get the formulary committees and then, of course, the budget holder who tends to be a pharmacist. So this is how we work in each market.
And then if you look at something that we’ll show you over, each time we do this going forward, along with sales tracking will be KPIs for tracking remimazolam, in particular, as our largest product Byfavo. And when you look at the number of accounts we’ve targeted since we set up, it’s around 150 now and we have to identify all of the key individuals and work through those then get to the formulary submission and then move towards first order place. So you see a performance metric that will show every time we do these, analyst updates every six months from now on.
The general anesthesia which will be our second indication in Europe. As a plan here, as we’re looking at displacing propofol in use, that’s because volatile gases which aren’t used so much in Europe, is a little bit more complex as a product to work in terms of supplanting or changing news to. And the theaters that use propofol are already set up with what they need to do during anesthetics. So we’re looking at targeting the difficult patients, the elderly with complex medical conditions, the ASA III/IV and what we see from our Phase III study is that you see a hemodynamic benefit which is really one of those things that brings a clinical benefit to doctors, patients and health care providers.
All right, in terms of the market in GA, roughly 17 million procedures per annum. They’re growing — procedures are growing because of the aging population and underlying population growth. And essentially, ASA III/IV represents between 20% and 30% of the total market here. So our forecast and our planning is all based around this kind of market opportunity. Filing in GA was made at the very end of 2021 and we expect to have a CHMP opinion towards the very end of the year. We will then see following that, we hope, a European approval, perhaps early in 2023. And then we’ll, of course, do the MHRA approval immediately afterwards. So we can get product into general anesthesia in the U.K.
The other two products, GIAPREZA and XERAVA, so GIAPREZA is approved for septic shock. It’s used in intensive care therapy unit. And what we’re finding actually moving into the market is that we’re being seen more as a second-line therapy than as a third-line therapy. So there are a lot of discussions about the market size and the pricing to be competitive as a second-line therapy which we’ll update you further on but the market will be larger than we were initially anticipating in terms of the number of patients that can be treated with the product.
We’re discussing and negotiating the price in Germany as we speak and we expect to have a launch price in Germany in another about three months’ time from now. So we have made sales in Germany already. We’re just starting sales in the Netherlands and we’re also making the product now available in Austria. It will come later in the year in the U.K. and Denmark. Why is it important? Because distributive shock is really a major unmet medical need in that and the mortality rate is very high between 1/3 and 54%. So it’s one of the highest mortality indicators today in the intensive care setting. And that means essentially that the current products do not adequately treat the condition. So we see a very strong place for GIAPREZA as an alternative mode of action and an alternative way to treat this problem.
As I just said, what we’d initially planned was that we would be a third-line therapy for those who don’t respond first or second line. But now we’re in the market and starting to sell into hospitals. We’re finding that the intensive care specialists are looking more at GIAPREZA to be a second-line therapy. And there is a trade-off there between competitive pricing versus the uptake which we’re working as we speak.
And then, XERAVA eravacycline for complex intra-abdominal infections, so this, again, is a broad-spectrum antibiotic. It’s very competitively priced already in the markets that we’re launching into. And it’s available now in the Netherlands. It’s a very discrete set of customers, so it requires quite a limited promotional budget and effort by our representatives.
The next slide just shows the broad spectrum of activity. The higher the graph is the higher the bacterial growth. So what you see with XERAVA compared to other antibiotics is that it basically has the strongest, broadest section of action against a multiple range of bacteria compared to the comparators in these studies.
Next slide. As I said, it’s a complex market these intraabdominal infections treated by generic molecules to start with. But then you have potentially second-line empiric therapy and that’s where we see XERAVA being used and the other products in that area, such as Zavicefta or Zerbaxa are essentially higher priced than XERAVA will be in the market.
And now, I’m going to hand over to Abdel.
Abdelghani Omari
Thank you, Jim. Good afternoon, everyone. Before I move to the financials, I also wanted to take the opportunity and say a few words regarding the press release that we published this morning. As Jim mentioned and as you have — may have read, I will be handing over the CFO role to Sebastien Werner on the 1st of June and will then leave PAION at the end of August to pursue another opportunity. It’s more than 13 years now that I joined PAION and I felt that it’s time for me to leave my comfort on and move on to something new.
I joined PAION in 2008, when we just started to develop remi and I’m proud that we have developed it from preclinical all the way through to approvals and even first sales. I am happy that we have Sebastien Werner as my successor and we are already working together to ensure a smooth transition of my duties in the coming months. So I wish Jim and Sebastian and the entire team all the best for the future and I’m sure that we will be able to see lots of success with our products.
Now, let me move to the cash position and financing. In 2021, we have done a mix of dilutive and nondilutive financing. We have drawn €20 million loan from the European Investment Bank and we have conducted a small capital increase with gross proceeds of €7.8 million. At the end of ’21, we had a cash position of €6.4 million. After the balance sheet date in January this year, we have sold the Chinese remimazolam patent and the related royalty stream to Humanwell health care for €20.5 million which is actually a nice nondilutive financing.
In total, we expect to have sufficient liquidity for the next 12 months. Based on the current plan, we expect to break even in 2024 and until then, we will need financing of approximately €30 million based on current planning. The required funds could be raised through different financing measures and further partnerships.
Let me now move to the P&L. As you can see, revenues amounted to €7.1 million and resulted in the amount of €4.5 million from the sale of remimazolam API and royalties and in the amount of €2.6 million from upfront and milestone payments. Revenues were below our forecast of €8 million to €9.5 million which is mainly because additional license agreements originally planned for the end of ’21 were postponed into 2022. Research and development expenses amounted to €5.2 million which is a decrease of €5 million compared to 2020. The decrease is mainly due to lower expenses for the Phase III study which we completed in 2020.
General administrative and selling expenses amounted to €19.8 million, an increase according to plan by €12.3 million compared to the previous year. General admin expenses increased by €2.4 million to €5.5 million and selling expenses increased by €9.9 million to €14.3 million. The increase of admin expenses is due to financing activities and the expansion of our IT systems and infrastructure. The increase of selling expenses is mainly due to commercialization and supply chain activities for our three products. In total, a net loss of €21.8 million was incurred compared to a net income of €2.2 million in the prior year.
Now, let’s move to the balance sheet and an overview of headcount. Total assets increased by €8.6 million compared to the end of 2020. The increase is mainly due to three effects. First, we have capitalized the upfront payment of €18.5 million from the in-licensing of GIAPREZA and XERAVA. Then we have higher trade receivables and inventories now compared to the year before. These two increases were offset by a decrease of cash and cash equivalents by €13.2 million compared to the end of 2020, as you can see on the upper right-hand side. The change in cash and cash equivalents comes from negative operating and investing cash flows of minus €21.2 million and minus €19.2 million, respectively and was partially offset by a positive financing cash flow of €27.1 million.
As you can see on the lower left-hand side, equity decreased by €14.3 million to now €7 million. This change mainly results from the net loss of the year, partially offset by the capital increase that we did in 2021. The equity ratio went down from 76% at the end of 2020 to 19% at the end of 2021, mainly due to the reduced equity and the EIB loan of €20 million now being on the balance sheet. The staff development is illustrated on the lower right-hand side compared to an average number of 43 employees in 2020. We had 51 employees on average in ’21. At the end of the year, we had 56 employees.
Finally, I would like to give an outlook for ’22. Regarding revenues, we expect these to amount to about €32 million to €35 million, approximately €25 million to €27 million. are expected from existing licenses, thereof, €20.5 million from the patent assignment with Humanwell and about €4.5 million to €6.5 million from the sale of remimazolam API and royalties. We further expect approximately €2 million to €3 million from own commercialization of Byfavo, GIAPREZA and XERAVA. And also, we expect revenues from out-licensing of approximately €5 million.
Cost of revenues will amount to approximately €5 million to €6 million. As mentioned, focus of our activities will be on marketing and distribution, so net SG&A expenses are expected in an amount of approximately €26 million to €29 million. R&D expenses will amount to between approximately €7 million to €9 million. About €1.5 million to €2 million of the total expenses will be noncash amortization. In total, we expect an EBITDA of minus €9 million [ph] to minus €2.5 million for this year.
That concludes the financials. Back to you, Jim.
Jim Phillips
Thank you. So to conclude the presentation, I think last year was a year of transformation. This year is a year of starting to execute that commercial strategy. We are actually really a commercial stage business now with our three products. They’re really going strongly in markets all over the world. We think we’re on track to get to a breakeven point in 2024. And I think you can see from the outlook for this year that our negative EBITDA will be decreased significantly over 2021. But we’re still in the investment phase and I give counsel, don’t expect too much too early from the business. It takes time to build revenue. We’ve had COVID in the background and we’re well set and our teams are going great guns in the market where they’re able to see doctors and as they go through the launch phases.
But we do see ourselves now becoming a high-margin and profitable business in the near to midterm and by that, I mean, in the next two to three years. So we’re in 2022 now. By 2025, I would hope to be sitting here and telling you about the profits we made and the significant growth and use of these products, particularly Byfavo around the world and in our own territories.
So with that, I think we can conclude the presentation and open for questions, Ralf.
Ralf Penner
Yes. Thank you very much, Jim and Abdel, for the presentation. And now we are ready to take your questions.
Question-and-Answer Session
Operator
[Operator Instructions] We do have a question in the queue and it comes from the line of Simon Scholes from First Berlin. Please go ahead.
Simon Scholes
Yes, good afternoon. Thanks for taking my questions; I’ve got three. First of all, I was wondering if you could enlarge on what you’re seeing in the market for distributive shock. I mean you seem to be implying that GIAPREZA may supplant vasopressins. Secondly, on the East European licensing agreement, I didn’t think I saw the press release, so that I don’t think it was on the site. I was just wondering if there was an upfront payment involved there? And also, are you still looking to — looking for an out-licensing deal in South America later this year? I think you were talking about that last year. And then lastly, I was wondering if you could also enlarge on what you were saying about Canada, where you were saying that there was some problem with the licensing partners’ internal processes.
Jim Phillips
Okay. So this is Jim speaking. So I’ll try and answer all three of your questions. So in terms of the market in distributive shock, I mean, I think it’s early days for GIAPREZA in the market. We’ve made some significant sales already in Germany and we’re just seeing first use coming in the Netherlands. So, it’s a bit early to say we might supplant vasopressin. I don’t think it’s an either/or. They have different modes of action. And therefore, there’s a place for both products in the market. And the key thing about medical use in the intensive care setting will be how doctors decide which patients to treat with vasopressin or with angiotensin II GIAPREZA. And speaking from my medical background, angiotensin targets the renin angiotensin system. So the patients that will benefit from that more will be those that have lower levels of angiotensin. For example, that might be patients who are on ACE inhibitors who go into intensive care and then go into shock. This is the kind of feedback we’re getting from the market and that is why we believe that we may be moving the positioning of the product from a third-line therapy into. A second-line therapy. Medis, we don’t — there was an upfront but we aren’t disclosing it. It was a small upfront because this is a distributor deal. It’s not a licensing deal. So they are a distributor in Eastern Europe rather than a licensor.
For South America, yes, we’re very much on the way to a South American partnership deal and we would hope we will have further news on that later this year. And then finally, on Canada, I think it would be fair to say that even when I joined PAION now 2.5 years ago, the distribution agreement or license agreement with Pharmascience was not in the best health partly due to Canadian pricing, partly due to their own ability to see the way to profitability for the product in Canada. And it was a mutually acceptable termination that the two parties have come to. So they were happy to give us back the product. We are happy to take it back and find a more suitable partner in the Canadian market.
Simon Scholes
I think given the issue with pricing in Canada, I mean, do you think you’ll be able to find a suitable partner for Canada?
Jim Phillips
Yes. We can find suitable partners in other low-priced markets such as Eastern Europe. So I think we won’t have a problem in Canada.
Simon Scholes
Okay. Thanks very much.
Operator
Thanks very much. We have no further questions on the line at present. [Operator Instructions] Okay, we do have another question coming through. It comes from the line of [indiscernible]. Please go ahead.
Unidentified Analyst
Good afternoon, gentlemen. A couple of questions regarding financing and monetizing Byfavo. Over the past years, the stock market has not received too well dilution through either the offering last year or convertibles issuance. However, as well received the monetizing with Humanwell, any preference on that? Especially now with a stronger partner potentially in the U.S. with Eagle taking over Acacia? And second question, having read last week the fiscal year-end report by Cosmo, they have — they are one of the largest shareholders with you. They have reduced part of the stake. Have you been informed? Have you been in touch? Any idea about intention from Cosmo going forward?
Abdelghani Omari
Yes, thanks for your questions. I mean, this is Abdel here. Just on the royalty monetization I mean, as we’ve said in the past and this is also true now we’re looking really at the full range of financing. So both dilutive, non-dilutive hybrid things. Of course, with the share price development and this was also the reason to do the Humanwell deal. The preference is clearly on nondilutive financing. China was a natural market for that. I mean that’s the only licensee where we are not supplying API and that’s the market where we had the lowest royalty rate of 5%. So that was a natural one and the price was good that we achieved there. So that was a good nondilutive financing. Yes and I mean, now what we’re going to do next, I mean that’s, as I’ve said, everything is on the table. But what you can see from what we have done with Humanwell or what we have done last year, with the small rights issue. And then the EIB loan, we are really looking at the full range and try to be as less dilutive as possible. So that’s, I think, the guidance on the financing.
And then, the second question regarding Cosmo. I mean, we are aware, we were aware that they are trimming down their position slightly but no further insight into their plans.
Jim Phillips
Yes and just to follow up on that, this is Jim Phillips. I think we don’t regard Cosmo’s stake in PAION as being a big strategic long-term shareholder that might want to increase or do anything because it’s now seven years since the Cosmo deal was done. The license that they had for Byfavo which was the reason they took the stake has been passed to Acacia, then now to Eagle, assuming that deal completes. And so there are three steps away from PAION and they are not a financial investor. So I do not expect anything other than further trimming in the future.
Unidentified Analyst
Probably, if you don’t mind, one small follow-up. Jim, you mentioned earlier in the presentation, the potential takeover of Eagle through Acacia could probably strengthen the distribution success in the U.S. market as Eagle is the broader and more in-depth as sales force or have a more in-depth sales force. Could you imagine there would be a bit more acceleration if the deal closes potentially later this half year, so end of Q2, probably in the second half of the year? Because, I mean, they seem to see value because Acacia has two key products and Byfavo is one of those.
Jim Phillips
Yes. I mean, clearly, this is an — it’s being done through a scheme of arrangement. This is an asset acquisition. I don’t expect many Acacia people to be kept on by Eagle. They have a very good infrastructure, sales infrastructure in the U.S. of their own. We do not have current discussions with Eagle that clearly — in the mode of getting the transaction through and completed and we will be working with them as soon as the time is right to start those collaboration discussions. As I said in the presentation, I was in the U.S. last week with both our partners, La Jolla for the two products we have in Europe and with Acacia. And so obviously, we had some understanding of what might be about to happen. But from a speaking — basically from the market perspective and having recently run up before I was at PAION, U.S. commercial business, Eagle is a far better place and has the depth of capability that Acacia didn’t have and the financial strength also to see our products faster into the market and promote it to more physicians which is key.
And I think in the U.S. market, it’s a bit like I said when I was commenting on our experience in Europe. They’re finding dentists are using it, they’re finding areas where they’re not promoting where physicians are starting to use. So the broader spectrum of capability to promote product, the better and the sales force structure that the Eagle have, as I understand it today, is broader, deeper and will be better for our products. So I think to be honest, the time between now and closure is a difficult time because when a company is acquired and there’s a likelihood a lot of people won’t be carried over, they look for new jobs, they move elsewhere. So there is a risk in terms of short-term sales in the next couple of months. But once the deal is complete, I would expect to see a faster take-up curve. And certainly, the feedback from the market in America and from the doctors using the product is very strong and strong in a positive way.
Unidentified Analyst
Okay. Thanks a lot, again.
Operator
Okay. So it looks like there are no further questions in the queue. [Operator Instructions] Okay, so there are no questions coming through. So I’ll turn it back over to the speakers.
Ralf Penner
Yes, thank you, everybody, for your questions. And again, of course, thank you very much for joining us for PAION’s earnings call on the financial results of 2021. I hope that we have been able to answer your questions but of course, please feel free to give me a call afterwards. If you would like to listen to this call again, please visit our website where the replay will be posted later today. For now, I say goodbye and thank you very much for your continued interest in PAION.
Operator
Thank you very much for joining today’s call. You may now disconnect your lines. Hosts, please stay on the line. Thank you.
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