Good day and welcome to the Galapagos Financial Year 2018 Results Webcast and Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Elizabeth Goodwin. Please, go ahead ma'am.

Thank you very much and welcome all to our audio webcast today. I'm Elizabeth Goodwin, Investor Relations, and I'll be hosting the event. This recorded webcast is accessible via the Galapagos website home page and will be available for replay later on today. So that your questions could be included, we request that you call into one of the telephone numbers given in last night's press release. I've got one right here. For Belgium 32-2404-0659 and the code is 5739601. I would like to remind everyone, we will be making forward-looking statements during today's webcast. These forward-looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environment. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today speakers will be Onno van de Stolpe, CEO; Walid Abi-Saab, CMO; Piet Wigerinck, CSO; and Bart Filius, COO and CFO. Onno will go through the operational highlights; Bart will explain the financial results and give guidance for 2019. Onno will then close with the late-stage clinical news flow we expect this year. And you will see a PowerPoint presentation on screen during our talk. We estimate that this will take about 15 minutes and will be followed by a Q&A session including Pete and Walid. I would now like to hand over to Onno at this point. Onno?

Thank you, Elizabeth. Pleasure to be here. Everybody, welcome on the webcast. I'll start with the slide. If you go, Think big, Think big is the slide that shows what Galapagos stands for. It's an important year for Galapagos, because we are having our 20th-year anniversary. 20 years, in which a lot has happened since we started as small biology outfit looking for novel targets towards the move to become a fully integrated company by introducing filgotinib in the marketplace. If we go back and look at some of the highlights and I want to point to 2003 when we actually discovered in our platform the JAK1 target as the right one to go for, if you want to target rheumatoid arthritis. So a long time 16 years until we are waiting for the Phase III results with filgotinib. Some other highlights, the IPO in 2005 and the first pharma alliance, for those who have followed us a long time, that’s actually was with GSK in 2006. And then the first Proof-of-Concept in 2012 when filgotinib showed excellent results in the famous Moldova trial. Then we went public on the DARWIN results in -- on the NASDAQ in 2015, shortly after followed with a deal Gilead and on filgotinib. And then last year, the highlight of the year, clearly, the first Phase III data of filgotinib with FINCH 2. Excellent data set and are eagerly awaiting, as everybody else, the Phase III – the other Phase III FINCH 2 data -- FINCH data that are coming this quarter. Last year also, a highlight, of course, the start of the ISABELA trial in IPF. So we're looking forward to an excellent year this year, but before that let's look at some of the highlights that we delivered in 2018, and especially…

Thank you, Onno. This is Bart Filius speaking, Chief Operating and Financial Officer. Good morning everyone in the U.S. Good afternoon in Europe. My pleasure to take you through the financials of 2018, and conclude then also with a bit of background on our guidance for the year 2019. And, as usual, I'll start off with the cash position, which is shown here on this diagram. We've increased our cash position during the year with €140 million, as a result of on one hand a successful placements in September that generated over €280 million of cash proceeds in euros, and on the other hand, a cash burn, which netted out at €158 million for the year, which as you know is a combination of cash income for milestones and up from payments, as well as the cash expenses that are the investments that we do in our R&D platform. There is a small €10 million in between, which is a currency translation effect that we exclude from our cash burn, which really is a translation of the dollar position into euros and that one year and one quarter is positive, with the other quarter, it's negative. This time we have a €10 million positive impact on our total cash position. So, healthy finance with almost €1.3 billion at the end of the year 2018. And then as a reminder, we also have roughly €85 million of receivables from the Belgian and French governments that are not part of our cash position, but are due over a four-year to five-year period from now on in the balance sheet as well. So that, with regards to cash, let me then move on to revenues and other income. And I've chosen to give you a little bit more details this time than I've…

Thank you, Bart. If you look at the news flow that's divided in H1 and H2 and you will see the main clinical programs as early programs listed in board. We've had the once we actually new data where that released and our focus on those. Clearly, we expecting the main news being the Phase I and Phase III top line 24-week data that will come this quarter. So we ask everybody to be patient for a couple of weeks. And that of course is a hallmark for the company, because that concludes the RA Phase III data set of filgotinib and should be the basis for filing later on. If you look at the second half of the year, you see quite a bit of clinical data coming out mainly severance disease, where the further proof-of-concept will be disclosed as well as the lupus trial. So both of them are very important additional indications for filgotinib large market, higher unmet medical needs. So we're excited about those data sets to come. Then later in the year we also get the data for MOR106, the IGUANA trial where we share with you the primarily analysis of the Phase II and also the subcu bridging study where we expect to report data on the second half. And then we have a range of Phase I trials that will read out during the second half of the year including the first trial with the first generation Toledo. So that will hopefully give us indication on the safety and maybe some indication on efficacy. So we're excited about that. And the second Toledo program is expected to start Phase I before the end of the year as well. So we're all excited about the news flow that is coming towards us. We hope the data are positive and they form good basis to further progress the pipeline going forward. And with that I would like to stop the news flow discussion and hand it back to Elizabeth so we can start with questions right away. Elizabeth, floor is yours.

Great. Thanks, Onno. Thanks Bart. That does conclude the presentation for today. So I would now like to ask our operator Terra to connect us to any callers with questions.

Thank you. [Operator Instructions] We will now take our first question from Brian Abrahams of RBC Capital Markets. Your line is open, please go ahead.

Hi, there. Thanks very much for taking my questions. We've seen several other JAK inhibitors run into issues related to safety and higher doses and competitors take the strategy of filing based on lower doses. So a couple of questions along those lines. First off, can you walk us through your view as to the reasons why JAK1 selectivity might be so important from an AE standpoint? And then secondly, specifically, might you consider filing on the 100-mg dose. Do you think that profile would be sufficiently competitor there? Would you still need to complete MANTA if you were to file on this lower dose in the U.S.? Thanks.

Thanks Brian, this is Walid, Chief Medical Officer. I'll take your call. So, our view on JAK1 connectivity, I mean, I think based on preclinical data and initial results from our completed double-blind placebo-controlled trial as well as the open label long-term extension of the RA program in DARWIN 3 that we keep our recording on a regular basis. We believe that the profile that we've seen for JAK1 connectivity particularly staring the effects on hemoglobin and the platelets as well as the NK cell the way those would relate that to respectively potential risks of anemia, potential risks of thromboembolic events and risks of infection or fuse infection potentially malignancies, we believe the data so far are supporting our working hypothesis that JAK1 selectivity is giving us a more differentiated profile. Of course, we are waiting with bated breath the results of our two Phase 3 trials, FINCH 1 and FINCH 3 which will be available by the end of this quarter. Those are in more than 2,600 patients and should help us better define the risk benefits profile there and see whether our working hypothesis is actually translating into reality impact by data. Regarding the filing of 100 versus not. So, I've also spoken about this in a number of occasions. I'm very happy with the way we design our FINCH 3 program where we fully evaluate 100 and the 200-milligram in those studies. And at the end of the -- when we have all the package with all FINCH, again by the end of this month, we will be in a much better position to make an assessment on the risk benefit profile and whether we should file with both doses, one dose and so long so forth, but it's really premature at this point to do it. If I may, however, extrapolate from the FINCH 2 data where we studied both doses in the biological incomplete responder, so those are the more difficult to treat patients. With those when you look at the data, both on efficacy and on safety what we see is you see a very good performance of 100-milligram very competitive, but we see also a better performance of 200, so there seem to be a dose responses in terms of efficacy. But what stood out also for us is the absence of any dose dependent uptick in adverse events or safety concern. If this profile continue to be confirmed in the FINCH 1 and Finch 3 studies, then it will be in a very good place moving forward, but again, it's premature, we'll just wait -- we need to wait another -- few more weeks to be able to get the totality of the data, but that's where we are today.

Thank you very much.

We will now take our next question from Wimal Kapadia from Bernstein. Your line is open, please go ahead.

Great, thank you for taking my questions, Wimal Kapadia from Bernstein. Just holding up from the first question, if and you may be you can’t give too much, if FDA do consider thrombosis to be a class effect, how would that the impact your expectation for filgotinib in terms of market potential? And then just following on form that, in your discussions with the regulators is there a threshold event rate that FDA has in mind for thrombosis that needs to be considered worthy of a warning on a product label? And then just on cash burn and OpEx moving forward, how we should think of the acceleration beyond 2019, could we expect a similar jump in 2020 and beyond, and beyond line expense increase? And then could you talk a little bit how the mix of OpEx will change between R&D and SG&A assuming 1690 is a success in Phase 3? Thank you.

I'll probably start with the filgotinib. I think, it's really premature to be able to ask that question. It's very – sorry it’s not premature, you are welcome to ask the question anytime you want. But to answer that question about the class effect or not, I think we have wait to see the totality of the date of the FINCH program. I think that's very important. We have more than 2,600 patients that are got to be treated initially we’re going to give top line results for the first 24 weeks. But then shortly thereafter, we won't have the 32-week data. Those are going to a long way to help hallucinate whether selectivity of JAK1 versus the other is going to play a role into this or not. This is not a new thing. This is something that the field has been monitoring in detail. And it's very difficult because those are rare events and they do happen in the patient population. So you're trying to see whether there's a small increase or there is an increase in this rare event. So it's a bit difficult. The field is on it. We're on it, monitoring it and also trying to understand the biological underpinning. And this also leads to your other question whether there is a predefined threshold that the FDA is looking for. And I believe the answer is, no. We're not aware of it. If they have one in mind, they haven't clearly communicated on that. But when we were following the baricitinib Adcom that topic did not come out very loud and clear as to a certain rate that they need to see this. I think when we look at randomized controlled trials whether that's active or whether active or placebo control over long-term, that's going to be the more defining way to analyze the data. And I think our FINCH data are going to be very important to help the FDA and make up their mind whether we do have an issue with filgotinib or not.

Okay. I will take the question on the cash burn and look out beyond to 2019. First of all let me say that, we're very proud to have so many opportunities to invest in at the company that's why we're increasing our investments this year. Again from previous year, it basically is a sign of success of our pipeline with not just, the mid-stage assets that are well-known and well spoken about, but also the earlier-stage initiatives that we have. And so to the extent that this success continues and we'll be expected to do is that, you would expect also that the R&D expenses will also increase in later years. However, there is a caveat there which is that, we also anticipate an increase in milestones coming up in later years. So in 2019 just as background there is very little in milestones included in this number, guidance regarding to 340 million. The real material milestones are connected to the approval events for filgotinib in our partnership with Gilead. And those will come in the years say 2020, 2021. So there we are in a position where we might be seeing increasing R&D expenses being offset while also increasing milestone events. With regards to SG&A that will take up a larger proportion. I think still there will be relatively small compared to what we're investing in late-stage developments. But it will be increasing in 2020 as we are ramping up the preparations for launch. For filgotinib, in Europe as you know we have a co-promotion in EU5 and Benelux and we will also be bearing 50% of the initial launch expenses there. And also for IPF, even though that’s maybe a little further out, we will be starting to invest a bit in launch preparation. So indeed expect the selling components of SG&A to go up from where it is today.

Great. Thanks very much.

And we will now take our next question from Christopher Marai of Nomura. Your line is open. Please go ahead.

Thank you for taking the question. First maybe just to follow-up and clarify. We're getting the FINCH 1, 2 – 1, 3 readouts this quarter. Can you clarify as those might have been together or separately? Any chance they have been together? And then secondarily, can you follow-up on the selection trial? Congratulations on full recruitment there. Should we be anticipating first quarter 2020 readouts there? Is that reasonable? Could you maybe walk us through how some of that data may be read out? Thank you.

Thanks for the question. So yeah FINCH 1 and 3 -- by the end of this quarter. I don't think we're guiding at this point whether there will be one or two release at the same time, but we expect them at the end of this quarter. Regarding the selection, I think, yeah, we're very excited that we finished recruitment. As you can imagine this is going to be 52-week trial and then we have to gather the data. So currently we're targeting first half of…

2020

…it could be an earlier part. But we haven't given that clarity yet.

Okay. And then on 1690, could you maybe remind us some of the ISABELA interim go-no-go decision making questions? Is that safety specifically or efficacy? I know you rushed this one after a small, but exciting trial result. That's my last question. Thank you.

Yeah, sure. So actually we do both. So take into consideration that we went from the FLORA study, which was in more than 20 patients per week into a very large program more than 52-week treatment and more than – or in about 1,500 patients. We have to put checks and balances in place. So we have an independent data monitoring committee that monitors the study on an ongoing basis. That primary focus is to look at safety, but at the same time it's their progress to look at efficacy as well. And they do make an assessment on risk benefit. In addition to this, we do a facility analysis, which is something that we specify in the protocol. We haven't yet fully finalized it, because we would like to have a discussion with the health authorities on this and come to an agreement. But that facility analysis will be done when approximately a quarter of the nation has finished 52-week, which -- and by that time, we will take the totality of the data. We'll not stop treatment of the patient at week 52; all the patients will continue on whatever they are randomized on lab patient clear week 52. You can imagine when we take quarter of the patients who have gone 52 weeks; there could be more than 80% of the patients already randomized under the trial and more than 25% of them who have gone beyond week 52. So, we take all of the totality of the data which give us a lot of the information to be able to assess whether we're going to hedge feasibility. And in that case if we have feasibility then we will stop, there will be recommendation that would come to us from this independent committee that we look at the analysis to us whether we should continue the trial or not. That kind of how it is currently. But the test is finalizing--

Very good. Thank you.

We will now take our next question from Vamil Divan of Credit Suisse. Your line is open, please go ahead.

Hey guys, how are you? This is [Indiscernible] for Vamil. Could you sort of help us understand I guess the -- like what we should look for when FINCH 1 and Finch 3 reach out in the end of the quarter? What do you consider as success or to be better than the competitors? Thanks.

Well, I mean I think it's for us -- we stared filgotinib in a number of double-blind placebo-controlled trials in rheumatoid arthritis where we don't have any data yet in early RA which is what FINCH 3 is going after. But honestly, I think we can extrapolate from the performance of filgotinib and when you look at it how it's performing vis-à-vis the competitors, our expectations are that we will be performing in the top range in terms of efficacy. Our expectations also from our safety data so far -- again, expectation is that they're going to be coming to be a very good and positive differentiator. Those are our expectations. Let's see what the FINCH 1 and 2 data will like at the end of this quarter, but that's where we are today.

Thanks.

We will now take our next question from Adam Walsh of Stifel. Your line is open, please go ahead.

Hi, thanks for taking my question. This is Edwind Zhang from Adam Walsh. So, my question on MOR106 atopic dermatitis. You plan to do a new combo study with corticosteroid. So, what is the thinking behind this? And what difference do we expect compared to the current IGUANA Phase 2 study? Thank you.

Piet are you taking this, or am I taking this?

I can answer it. This study is to bring us closer to the daily practitioners up to now we've done a proof-of-concept. We do a very clean dose ranges where patients are only on the drug. And so the corticosteroids on top of that is a study that brings them closer to the daily practice where some of the patients get treated and we want to study that indeed our proof in that study that adding MOR106 on top of corticosteroids gives an additional benefit to these patients. So this is a study that are prepared as well for a Phase III to see whether we can safety include patients that have been on topical for a while, while stepping into Phase III. So it is more of a kind safety study that informs us on how we will design and how we need to include or exclude patient that have been recently on corticosteroids and anything else. Thank you.

We will now take our next question from Lucy Codrington of Jefferies. Your line is open. Please go ahead.

Hi, there. Thank you for taking my questions. I've just a got couple. You mentioned that filgotinib is due to start the Phase III psoriatic arthritis in the second half. But there is no mention of the Phase III in ankylosing spondylitis indication, is this something that's under consideration? And then secondly, we noticed that the all remaining deferred income is now being classified as current at the year-end, does that imply that the outstanding up from Gilead will be recognized has R&D costs in 2019? Or how you're thinking about that? And then finally, if you can provide any color on the recruitment rate into the ISABELA trial, and if possible any kind of information regarding the background medications of the patients are on? Thank you.

Bart, do you want to take the finance question first and I'll do the other.

Yes. Let me do that Walid. Hi, Bart here. On the deferred income, you're right. It's all classified as current deferred income, which means that we anticipate that we would recognize this in full in the next 12 months or this should be part of 2019 revenues indeed. The small caveat is that you don’t know exactly what the actual spend is, so it might be that we’re just going to be slightly short or slightly earlier. But we anticipate next 12 months indeed to recognized the full -- the remaining amount of the upfront from Gilead. Walid, to you.

Thanks, Bart. So for the filgotinib, I mean, the data from the TORTUGA study ankylosing spondylitis were very as you've seen the published in a top-tier journal. So I think we haven't guided specifically, we by – by we I mean, Gilead and I haven’t guided specifically about the start of the Phase III, but I think we can say that preparations are underway and we should expect to hear more and up in subsequent updates from them. Regarding ISABELA, so we're certainly in the startup phase of the study. We just helped a large investigator meeting in the U.S. where we had upwards of 75 sites attending for North American sites. Next week actually we're doing a very large one in Europe as well and then next couple of months afterwards we're going to be doing one in South Asia and Latin America. The initial feedback from a lot on the sites and the KOLs is there is a very high level of engagement and great excitement about this program. And I can say that we're off to a good start. Regarding background treatments, as you recall that study is designed to go on top of the standard of care. And our goal in the trial is that at the end of the day we will end up in a combination of actions where we would be mimicking what is essentially the current standard of care in the U.S. and on major European countries. So specifically about a-third patients would be on nintedanib, about a third would be on pirfenidone and a-third would be on neither type of other treatment. So of course during the conduct of the studies we will make sure that the proportion of patients in each of the arm, placebo, low dose and high dose will be equivalent between these various subgroups, so that we don't have overrepresentation over earlier, so we will do adequate certification to make sure that doesn’t happen.

Great. That’s helpful. Thank you.

We will now take our next question from Phil Nadeau of Cowen & Co. Your line is open. Please go ahead.

Good morning. Thanks for taking my questions. Just two from us. First on the filgotinib regulatory filings. Firstly, you mentioned that you expect to file ones the FINCH data are complete. But it doesn't specify in what -- in which territories. Could you maybe give us some sense of when -- where your current expectations are for the filing timelines in Europe versus The United States? And then second, on the IGUANA trial, I'm just curious, what would you consider Proof-of-Concept data from that study? What do you think would yield the competitive profile? Thanks.

So, it's Walid, I'll take the filgotinib question and then I'll turn it over to Piet for MOR106. So regarding our regulatory filing, I think, after the data from the FINCH 1 and FINCH 3 become available at the end of this quarter. We'll have discussions with the regulatory authorities in Europe, Japan and also in the U.S. to figure out essentially the filing plan for filgotinib. So I think more details on this and the sequence of it greatly depends on the outcome of these discussions. And I think, Gilead and us will be guiding on this with more clarity a bit later in the year after we've had those discussions.

Okay. Thank you Walid. On the IGUANA MOR106 which is a large dose ranges IP study. The goal we set for our subject there to be in the range where we've been in the Phase 1b. Such where we've shown that this is a treatment which is competitive to the efficacy seen and the safety seen with dupilumab. And so the ambition is to be clearly within that range of efficacy. Thank you.

We will now take our next question from James Quigley of JP Morgan. Your line is open. Please go ahead.

Hello. Thanks for taking my questions. Only a couple left. On MANTA, so here we had the -- or Gilead have announced -- maybe expanded the recruitments outside of just ulcerative colitis and into other indications. And I understand it's early but what's been the feedback so far on the willingness to recruit patients from those sites and especially just in the sites you were involved within the Phase 2 development? And looking at U.S. the market in general in RA and the potential pricing reform have been favorable for sort of drug pricing going down to -- or removing rebates and rebates have been quite a big important part of Humira. So again I appreciate it's not yet through yet, but how does this impact your source around the market for RA and the potential for the JAK inhibitors class to penetrate into the biologics and that's about it. Thank you very much. A - Walid Abi-Saab Two points. I'll take the Manta question. So as you know we discussed with the FDA opening up the recruitment to other indications. So within IBD, we're going to expand beyond [indiscernible] into Crohn's disease. There are also some opening up of some of the inclusion and exclusion criteria as well. And then in the rheumatic disease, we're going into RA psoriatic arthritis and ankylosing spondylitis as well. So initial feedback has been positive, I think John McHutchison few weeks ago in 2018 and this year results stated that he saw an increase in the recruitment in MANTA. And I think that's a good sign that -- of the initial response, but imagine we start activating more of these changes on the ground, we'll see things to continue to move in that direction. Bart?

Yes, I'll take that one and the other question James on drug pricing reforms and the impact on the market. So to be honest it's -- and also James, it's a bit early to comment on that for two different reasons. On one hand, we don't know where those reforms ultimately will lead to and if it to which extent they will become policy, so that's really a bit difficult for me to start commenting on now. And at the same time, we also haven't seen the full profile of filgotinib where we don't -- where we cannot really comment yet on the positioning it will take in terms of pricing. One thing I think will always stand out and that is that if there a differentiated molecule that there is also an option and a very good market for it as long as you can serve patients, you can get a good price both in the U.S. and in Europe. And we hope to demonstrate that through the program that we're running together with our partner Gilead.

Fair enough. Thank you very much.

We will now take our next question from Emily Field of Barclays. Your line is open. Please go ahead.

Hello.

Yes. Your line is open.

Oh, hi, sorry couldn't hear. Just a couple of quick ones. I was just wondering do you guys intend to publish the data from MANTA publicly? And then have do you determine whether that's going to be determined for filing in the ex-U.S. geographies? Also just for the Toledo program, what shall we be looking for in terms of incremental news flow I guess over 2019 in the coming months? And then on your cash position, in the context of the increased cash burn versus milestones that you expect in the coming years, how do you feel about your overall cash position? And do you expect that you would need to raise any additional capital this year? Thanks.

Okay. So this will be -- we'll try to take them chronologically. So for publishing MANTA I think it's too early to say that. I don't think we have any discussions with Gilead on this. So it's really difficult for me to speculate. I would imagine these would be important data in general for the field and knowing Gilead they probably would be opened to do this, but I'll have leave it to them. In terms of whether MANTA data are required U.S. or ex-U.S. and so on so forth. This will be -- we'll know that after we've had those discussions with the health authorities. As I indicated earlier, we're waiting for the FINCH 1 and 3 results by the end of this quarter, after which we'll engage in those discussions with the authorities and they will be able to better guide in subsequent earning calls probably we’ll hear it first from Gilead to whether these things are needed or not and in which geography. I think, Peit you're next.

Yes. Thank you, Walid. So, on the later program increment in news flow for this year, so we have an ongoing first into human SAD, MAD study ongoing. So we probably will report up on -- if that's completed. And than for the first compound 3312 is, the plan is to move into patients this year that sounds well theoretically and arms to start of that study. And then we have the second compound 3970 moving pretty behind and the plan there is to announce when we move into first into human, as well early second half of this year. And then meanwhile we have a large drug discovery programs as we indicate before, about half of the scientist that are coming in the formation of working under the program within the company and we expect to select additional novel molecules from different chemistries and with different properties of the course of this year. Thank you. Over to Bart I think.

Yes. I'll take the last question Emily regarding your –regarding the cash position. Obviously, we feel comfortable with the current balance sheet of almost €1.3 billion. Even with the increasing spend this year, we're in a good position I think also at the end of 2019. So from that angle, no necessity to raise additional capital at the same time we'll never fully rule that out. Obviously, what we can say is that over the history of the company, we’ve always been able to raise additional capital only at share price levels which are higher than previous equity financings. So we've always been very conscious of the negative effect of any financing and we'll remain to be that in the future as well, but we're comfortable with the current position.

Thank you.

Thank you. We will now take our next question from Dane Leone of Raymond James. Your line is open. Please go ahead.

Thank you for taking the questions. So a few for me. Just one on the IPF, I think in your words you said that you started kind of daring Phase 2 based off of a somewhat unlimited Phase 1 program. I was just curious, it's been a topic of debate with investors regarding that move into much larger program after that data set. Could you just kind of reminds us how your team thought about data points that came out of that program in terms of what you specifically were looking out for the signal that gave you the confidence to scale up that program so rapidly? And then I just have a follow-up on Toledo program after that?

Thanks Dane. Thank you for your question. You're probably off by 1 Phase in your question. We started the in Phase 3 on good data from a Phase 2 study. And that's why we were looking to find evidence of target engagement and a safety profile that would look good. If you look recall that 3 men’s that are available currently on the market, some are significantly from adverse events and actually despite the fact this patients are pushing, they have a deadly disease that data systems to give form of cancer they choose not to be on the drug -- about a quarter dropout every year from treatment. So when we saw the results actually we were very positively impress, not only we had the target engagement we were looking for, a reduction in LPA, but we also have seen effects on the functional capacity, which is one of the -- with the primary endpoint that the FDA looks at and they were clearly a trend between us and placebo. It took significance at week eight, although the study was very much under power to detect that.. Those data were corroborated when we also used home spirometry, which also gives you confidence that those effects are not just by chance that you manage to pick up when you saw these stations on few occasions in the office. And then when we used the more sensitive imaging technique of FRI, we also managed to detect a signal that indicates that our patients are stabilizing on drugs and on placebo they continue to deteriorate. So when you take the totality of the data, we felt that these data are convincing enough for us to be able to move to the next stage. And then when we thought about the next stage,…

Great. Thank you so much for clarification and color. I just wanted to follow-up with a quick question on Toledo program. So, we are going to get first in human data from this program in the back half of the year from actually number of the compounds. I'm just curious in terms of what you will be looking for that first data? Is this a situation where we're looking at a novel mechanism of action where we're going to be looking at biomarkers to see that the compounds are doing what you would expect them to do from the translation work? Or is this a partway or approach that you feel is already well-validated and you're going to be looking at more at the toxicity of those compounds. I know you'll look at the data in totality, but I'm just trying to understand the balances of what your team has confidence in versus what's kind of the unknown variable at this point?

Okay. Thank you for the question on Toledo program. It's quite clear this is something completely novel, so as part of the Phase 1, we indeed would like to see target engagement and that would as well give us confidence on how we might or we should translate the animal model data to the patients. It's also completely novel, we'll watch carefully safety as well, but it's a complete novel mechanism action, we don't have anything external there where we can hook our signs up to, so we have to develop this ourselves. So, there is a target engagement biomarker included. And that's going to be the fact point. And from there, we'll move on. And that's the primary goal of -- for the first compound. For the second compound, once we've done that translation, we should be able of moving faster and I just include that probably in the first 200 more as a check with data point and move them more quickest to the indications which are of most interest. Thank you.

Okay. Thank you.

Okay. Thanks Dane and to everyone who's asked the question today. I'm afraid we've ran out of time and -- so I -- if you have any questions that you were not able to ask, please send them to me or the IR team and we'll try to get answers for you. So, that does wrap up for today. Please look for publication of our annual report 2018 on or around March 29. And we thank everyone for participation today. Look forward to speaking with you all soon. Bye, bye.