Earnings Call: Q1 2020

May 13, 2020

Ladies and gentlemen, welcome to the Acelia Pharma Q1 report for 2020. Today, I'm pleased to present the CEO, Magnus Kofitsen CFO, Christian Borvoss CMO, Karl Bjartma and the CCO, Juli Juarez Brodren. For the first part of this call, all participants will be in listen only mode. Afterwards, there will be a question and answer session. Speakers, please begin. Thank you, operator. So welcome, everybody, to the webcast for Sui Thales Q1 reporting in 2020. So as just introduced, we have the executive management team here, and we look forward to updating you on our progress from this quarterly report. Now please turn to Page number two. As you'll see here, we will be making certain forward looking statements on this call, so please pay attention to the information on this slide. And now please turn to Slide number three. So in Asilie Pharma, we aim to improve the life expectancy and quality of life for people living with cancer. We do this by developing novel drugs targeting orphan oncology indications that can address unmet medical needs for patients who are not adequately served by currently available drugs. We focus on drugs where we understand the mechanism of action. And in combination with a well defined way through the market, we believe the likelihood of successful development of our drug candidates are higher than industry average. We have a very exciting clinical pipeline. Our lead program, Mangrel, is a novel diagnostic drug. It's in a registration enabling Phase III global development program and has FDA orphan drug designation. It's targeting an addressable market of $350,000,000 to $500,000,000 and has completed six clinical studies in Phase I and II. The other program is Oncrol. It's a novel patented tablet formulation of a chemotherapeutic drug, irinotecan, and it's being development being developed for the treatment of patients with advanced gastric cancer. It's completed phase one a, phase one b development with very encouraging data, and we will get more into day into this later in the presentation. Please turn to slide number four. This is the first quarterly report for 2020, but we have already met several very important milestones for the year. In February, we announced the first patient had been enrolled in SPARCL, our registration enabling global phase three study for MANGO. In February, we were also an awarded the best life science company in ALMA, which is where our company is based. And then we are very proud of this recognition of and it shows of our significant progress and value that we have created in our company. After the close of the quarter, we announced the enrollment of the first patient in the patent impairment study and also approval of the Oncoral patent in Japan. In Japan, there are unfortunately many people suffering from gastric cancer, so this is a very important milestone for us. Now please turn to page number five. Twenty twenty has not been all positive for Aecilia Pharma nor the rest of the world. In 2020, the COVID nineteen virus has rapidly spread around the world with devastating consequences for human life and economic development. At the CV Pharma, we've taken steps to minimize risk for for our patients, health care professionals that we work with, our employees and their families, as well as our communities. And it comes with that, we are in a relatively strong position with 169,000,000 Swedish krona in liquid assets at the end of this quarter, in q one, and we have a low and flexible cost base. The opportunity addressed by our drug candidates, Mangro and Oncrow, are unchanged. Clear development timeline could potentially be impacted, but based on our current analysis and and feedback from from the clinical community of the COVID-nineteen, we're not changing our time lines at this point. In this context, we see it as a positive that we have been able to enroll the first patient in the hepatic study, and we are the full team are very dedicated to moving this company successfully through this period of time. Now please move to Slide number six. Now we'll go into more detail on mangrove. I'd like to hand the word over to our Chief Medical Officer, Karl Duttner. Karl, please take over. Thank you, Magnus. In oncology or cancer medicine, liver lesions are common either as metastases from primary tumors elsewhere, for example, colon or lung cancer, or as primary liver cancer. And magnetic resonance imaging, or MRI, is the recommended and most sensitive method to detect liver lesions. So clinically, the aim is to detect and localize metastasis as early and as small as possible in order to decide on appropriate treatment. And to get a good quality image, a contrast agent, also called imaging drug, is needed, and this is where Mangra comes in. So go to next slide, please. Seven. Right. So contrast agents are available today, and and those are all based on gadolinium, a heavy metal, which is dosed intravenously. In most patients, gadolinium can be used. And the problem is that gadolinium based imaging drugs are not safe in all patients. Specifically, they should not be used in patients with poor kidney function since gadolinium is excreted through the kidneys and slow elimination can cause serious side effects. For that reason, regulatory authorities, for example, FDA in The US and European regulators have implemented restrictions for patients with impaired renal function. So that is a very specific unmet medical need, and that's what's illustrated on this slide. So today, patients with normal kidney function, and that's most patients, they can receive gadolinium based imaging drugs. However, patients with severely reduced kidney function lack an imaging drug today. So in the future, this unmet need can be met by MAGROW. And this specific target population is approximately four percent of all patients requiring an MRI. And that's approximately two hundred and eighty thousand patients per year in the major markets, and that's US, Europe, and Japan. And it meets the criteria for an orphan indication. So go to next slide, eight, please. So to complete our clinical program before regulatory filing, three studies are now either ongoing or will start shortly. And important to note here is that MAGARAG is the only liver specific complex agent in clinical development, so we are way ahead of any competition. So first, pivotal Phase III study SPARCAL investigates the efficacy and safety of mangrove in a target population with focal liver lesions and poor kidney function. And the study is expected to be completed next year. I will provide some more details on a subsequent slide on this study. The second study, the Attic Impairment Study, is investigating safety and efficacy in patients with various degree of liver impairment since these patients are not included in the Phase three SPARTA study. And this study is conducted at the specialized liver institute in Texas. And as mentioned, it's currently ongoing and enrolling, and we are expecting to have the final data later this year. And finally, since mangrove is an oral drug, we are interested in the effects of food intake on absorption of the drug. And this is addressed in a specific food effect study, which will start very shortly. And for example, then we provide useful information if, for example, this testing is required or not before intake of magrolin. And this study is also planned to be completed in 2020. So these studies, together with the already completed Phase I and Phase II studies, will then constitute a comprehensive data package, which will be paid to regulatory agencies for market approvals. So we can go to the next one, please, Slide nine. So this slide provides some more background on pivotal Phase III studies, Sparkling. As shown on the left, and as mentioned, there's a strong clinical proof of concept through six individual Phase I and Phase II studies with very consistent results. And these data were confirmed in an independent reanalysis by a blinded reader, which showed highly significant effect on parameters that will also be used in our pivotal phase three study. And you can see this on the right side of the slide, which illustrates the Phase III design. So the study, which is a global study with 200 patients, has been agreed with both FDA and EMA, and that's very important before you start the study. And the strategy here is to repeat and confirm the strong Phase II results using similar endpoints. So the primary endpoint is lesion visualization based on the co primary parameters lesion delineation and lesion contrast compared to background. And since there's no available contrast agent for these patients with impaired renal function, the comparator would be unenhanced MRI, an MRI without contrast agent, which is currently the standard procedure for these patients. And then for that reason, there's no randomization, but each patient serves as its own control. And this a design that has advantages on sample size and statistics. And finally, the follow-up of each patient is short compared to most clinical studies, and we will therefore have the finalized study relative sooner than typically in study with a similar size. So with that, I want to hand over to our commercial officer, Julie. Yes. Thank you, Carl. We are on page 10. Thank you. So as our clinical operations progress, we continue to prepare the commercialization of MINGRAS projected to take place in 02/2022. As previously presented, the initial target patient population represents 280,000 people in key markets. With our current target pricing assumption, this represents $350,000,000 to $500,000,000 A significant aspect of the market potential for Mangorad is that physicians confirm the need for Mangorad. They recognize the unmet need for a safe and effective diagnosis of liver lesions and toxicities for these patients with poor kidney function. This is shown on the left side where eighty five percent of physicians in a survey confirmed that they are likely or extremely likely to use Mangrolol upon launch. The benefit to payers and physicians match these unmet needs in the market. This will drive reimbursement and adoption. On the right side, Mangleral is presented as the only contrast agent for the type of patient population. Secondly, we have scientifically demonstrated an improved visualization of focal liver lesions and metastases compared to unenhanced MRI, and we'll have more data to support this from our Phase III program presented by our chief medical officer. And thirdly, the value of early diagnosis is recognized, I. E, early diagnosis has a significant impact on patient outcomes and survival rates in cancer therapy. If we now turn to page 11, we've mapped out our journey for commercialization and the preparations we need to go through for a strong launch in 2022. This year, in 02/2020, we need to continue the phase three program, which drives our overall time line. We need to detail our pricing and market access strategy. In turn, this will help us to find market priorities and projections. We need to detail our prelaunch and launch plan and confirm the case and blueprint for building our own U. S. Commercialization and partnering in other markets. In parallel, we need to expand our key opinion leader network and the understanding of unmet needs for this patient population. In 2022, the key focus will be on completing our Phase III program and preparing the regulatory filing. And with the phase three program in hand, we'll be able to initiate discussions with payers and policymakers and to kick off mobilizing our operations. In 2022, the focus will be on regulatory approvals, launch readiness and a cross functional launch execution. I look forward to sharing more about our progress and preparations for launch as we move ahead. With this, I will turn it back to Kar. Please turn to page 12. Okay. Thank you, Julie. And now we are moving into Oncrol. So we could go to the next slide, 13. So in in the same way as we have a strong clinical proof of concept with mangrove, there's also strong clinical proof of concept for arinotecan, which is the active ingredient in our growth. So arenautecam is a well established chemotherapy, which is currently given intravenously. And as a novel oral formulation, Oncoron has several potential advantages. First, the convenience of an oral administration. The drug can be taken at home instead of intravenously at the hospital. And secondly, the well known side effects associated with intravenous bolus dosing and high plasma levels, for example, nausea can be avoided. The daily oral dosing with Oncoron permits lower but still therapeutic plasma levels of the drug. And third, cancer therapy is often a combination of drugs, and Oncoral provides the possibility for an all tablet, all oral chemotherapy combination together with other established oral chemotherapies, for example, caesitabine or TES-one hundred two. For Oncoral, the intended indication is gastric cancer, and that's a severe cancer form with significant unmet need. Gesture cancer is rare, an orphan indication, which provides them several potential advantages from a drug development perspective. And once approved and on the market, a label extension can be considered. And here we are now currently comparing the Phase II study based on very promising and solid Phase I results. And with that, I'd like to hand over the word to Christian for the financials. Thank you. And please turn to Page 15. So if we look at the operating results for the current quarter, January to March, we had an increased operating loss compared to the same quarter last year. This is in line with our expectations and mainly reflects an overall higher level of R and D activities. The increased R and D costs have been driven by macro. In the current quarter, we have, as already described, opened clinical study sites and started the patient enrollment for the Phase III study for mangrove. We have also ramped up our manufacturing preparations and incurred cost for commercial preparations. This has meant higher cost for R and D and commercial preparations in the current quarter compared to last year, but again, fully as expected. If we now turn to Page 16, the key message here is that we continue to stand with a strong liquidity position. By the March, we had DKK 169,000,000 in cash and marketable securities. This solid liquidity position will be used to finance our ongoing clinical development for mangrove and also the precommercial activities. With that, I'll leave the word over to Magnus, please. Thank you. And now please turn to Slide number 17. So I'd like to end this quarterly update with our priorities for for the year 2020. We already enrolled the first patient in both the SPARGUE and the hepatic clinical study, and we continue to work with the clinicians to continue enrollment of patients in in our studies so we can demonstrate the value of mangrove. As Julie mentioned, we are also preparing for commercialization. We have many activities on go to enable us to design the value maximizing strategy and execute it. A lot of work is going on in this area. And finally, a very important activity this year is to complete the design of the ENCORE phase two study, and and we will share that later in the year with you and begin the preparations for starting enrolling patients in the study in 2021. This was our final slide, and we'd be happy to take any questions. Thank you. Our first question comes from the line of Ludwig Svensson of Redeye. Please go ahead. Your line is now open. Thank you, guys, for the presentation. It's nice to see that everything is going according to plan despite the corona pandemic. My first question is regarding Oncoral. And then I wonder what stage you are in in the preparations for the phase two trial and when you expect that trial could be initiated and how many patients that you expect to enroll in this study. Karl, do you want to check that? Sure. Thank you, Ludwig. Very good question. So where we are so we we now have established a very seasoned advisory board with very high profile experts. And with them, internally, we are drafting the study protocol. So we don't have a final protocol, but we have a draft synopsis. We have a very good idea on how what the study will will look like. And then I think your your second question was when do we plan to start the study. And and I would say, you know, in in in a year's time, less than a year, that time span. So late this year, early twenty twenty one would be my estimate. And then I think your question was the size of the study. So this is Phase II study, and I can't give you an exact number, but it would be in ballpark of a little depending on the endpoints and some other aspect, roughly 100 patients, give or take. Does that answer your question, Ludwig? Yes. Absolutely. Thank you, Karl. And then another question regarding Mongolrol. I wonder how the customer base, how large is it in The United States, and how many sales reps do you expect to enroll here to to work in this market? But we're still a little bit you know, we have made our our projections, and we are asking to shy of of a 100,000 patients addressable market in The US. But, Julie, maybe you want to comment. Yes. Thank you. So in terms of customer base and stage four slicing, as Magnus said, we're doing a study now to collect end market data for The US. The preliminary indications we have from previous research and and desktop research is that the target audience is somewhere between three and a half thousand and maybe four and a half thousand physicians. Again, we need to confirm that this indicates, if you look at our sales force sizing exercise, that the previously communicated sort of 10 to 12 field reps is a good assumption to work on until we've confirmed the numbers. So so it still look like an attractive case. Alright. Does this answer your question? Mhmm. Yeah. Absolutely. Absolutely. And then I have a final question, and that is about a partner for the European and Japan Japan market for Mangural. What is your dream partner? What kind of player are you looking for? Well, that that's that's a very good question. I think what we're doing now is maximizing the value. We are doing we've done important regulatory work in in clarifying the regulatory path forward in in the key geographies and and and making sure we can have a strong partnering package. Julie is also doing quite some work as we have, you know, the stronger negotiation position we have. I think for me, what is important for a partner is it's somebody that is very committed to the product, that will really work hard to make this successful and and whether it's a, let's say, a good fit to their business strategy. I think that's the most important rather than, you would say, necessarily the, you know, a huge size. I think this is not this is a a an open product. It's it's a it's I don't think necessarily we will have one of the biggest companies in the world to partner in this because this would be too small of a P and L impact on them if they are talking on on on billions and billions of dollars. So this would be you know, the ideal partner would be somebody that could consider Mangrove an important product in their product portfolio. Yes. Alright. Thank you, guys. That was everything for me. Yep. Thanks, Ludwig. Good questions. Just to remind everyone, if you would like to ask a question, please press 01 on your telephone keypad. We'll now have a further pause while any questions are being registered. So we have been very happy to update you on on the first quarter of twenty twenty. We have made good progress despite the the, you can say, the global situation, but we are very optimistic about a very successful year of 2020, but also in the years beyond. So we look forward to updating you on our progress going forward, and have a nice day.