Welcome to BioArctic Q1 report 2022. Afterwards, there will be a question and answer session. Today, I'm pleased to present CEO Gunilla Osswald and CFO Jan Mattsson. Please begin your meeting.
Good morning and welcome to BioArctic's presentation from the first quarter. I'm sorry about the technical issue. I'm Gunilla Osswald. I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Jan Mattsson. I will give an update on lecanemab and some recent highlights in Alzheimer's disease. The Alzheimer's disease field is progressing really well with both lecanemab and some other treatments, and with diagnostic tools such as blood-based biomarkers. I think that it looks very promising for lecanemab, and this year will be very exciting for us with the lecanemab phase III readout in Alzheimer's disease, during the autumn, and potentially an accelerated approval in the U.S. I will talk more about that here today. Of course, I will also mention the recent information from AbbVie on our alpha-synuclein collaboration. Next slide, please.
BioArctic is listed on Nasdaq Stockholm Mid Cap, and this is our disclaimer. Next slide, please. BioArctic is a unique Swedish biopharma company, and the aim is to improve lives for patients with brain disorders. I think that we are unique based on four different areas together. The first one is that we focus on research and development of innovative treatments for brain disorders, where there's a high unmet medical need, like Alzheimer's disease and Parkinson's disease. These diseases affect large patient groups and their relatives with large cost for the society. There is a high medical need for disease-modifying treatments affecting the underlying disease and slowing down the disease progression. The second aspect is that we have a great organization with very experienced and engaged coworkers and important fruitful collaborations with universities and our strategic partner, Eisai, in Alzheimer's disease.
We have an attractive and well-balanced project portfolio as the third aspect, with projects spanning from early discovery all the way to phase III, and now also in the regulatory process. We have partnered projects that generate revenues by milestones and where our strategic partners carry the cost for clinical trials. We have earlier fully owned projects with substantial marketing and out-licensing potential. The fourth aspect is that we are well-financed. We have a strong cash position of about SEK 800 million in the bank, and we have valuable collaboration agreements with big pharma like Eisai. I think BioArctic is a dynamic and very exciting company with a huge potential, which I'm happy to lead. Next slide, please. BioArctic has a rich and well-balanced portfolio, and we focus, as I said, on brain disorders.
We have fully financed partner projects like lecanemab in Alzheimer's disease and early innovative projects with great potential for the future. As you can see, Alzheimer's disease is our largest area. Lecanemab is our most advanced program, and here the regulatory process in the U.S. is ongoing by our partner, Eisai, and they also have two large phase III programs ongoing in parallel. Even if the first step with the first disease-modifying treatment is successful, there is still a large medical need for more treatment options and for combination of the therapies in Alzheimer's disease. That's why it's so important that we continue to work on further alternative approaches to disease modification of Alzheimer's disease. This quarter, we have stopped one of our Alzheimer's projects, AD1502, since the data does not support further progression.
We now have five early disease-modifying programs in Alzheimer's disease, including two of them where we have combined the antibodies with our brain transporter technology. In Parkinson's disease, our partner, AbbVie, recently took a strategic decision to terminate the collaboration on our alpha-synuclein portfolio. Now we are working with AbbVie to get a smooth and efficient transition of the projects back to BioArctic. Other neurodegenerative indications. Our portfolio here has expanded, and we have now also one more project for ALS with TDP-43. That is called MD BT- 4813. This is a project which is combining TDP-43 antibodies with our brain transporter technology. The blood-brain barrier technology platform is really exciting. It's progressing well, and we have now combined it with several of our internal projects, and we will continue to apply it to more internal projects.
In the future, it could be applied to other companies' antibodies or proteins on non-exclusive license basis. I think that lecanemab is very important for BioArctic, but I also want to point out that BioArctic is more than lecanemab. Next slide, please. We have a long-standing and successful partnership with Eisai. They have been a great partner in Alzheimer's disease all the way back since 2005. We have two license deals and several research collaborations still ongoing. We have valuable agreements with them with a substantial amount still to receive if it continues to progress well. In total, we can expect milestones up to EUR 151 million. If we come all the way to the market, we can expect royalties of high single digit, which could be substantial value for BioArctic's if you consider how huge this patient population is.
We also have retained rights to other indications and possibilities to market in the Nordics, which we are really looking forward to. We have a collaboration with AbbVie since 2016, and that collaboration is now under termination. That is regarding our whole alpha-synuclein project portfolio that we are now getting back. We have so far received $130 million. Due to their strategic business decision, they will end this collaboration now. According to the license agreement, we will take back the projects and evaluate the best way forward. Discussions regarding the project transfer is ongoing. I think we have a great business model. BioArctic brings forward new innovative projects with high quality, and then we partner with other large pharma companies to de-risk clinical development and optimize the commercialization opportunity. Next slide, please.
An update about what has happened the first quarter of this year. With regard to lecanemab, Eisai, our partner, they have initiated the submission of application data of lecanemab under the Prior Assessment Consultation system in Japan, and this is with the aim of a faster regulatory approval in Japan. There was also several presentations on lecanemab at the ADPD congress in Barcelona in March, and all the data presented continued to confirm the previous positive results and to further strengthen and differentiate lecanemab towards competitors. We were also pleased to note that the first patient has been enrolled in the DIAN-TU NexGen Study in dominantly inherited Alzheimer's disease subjects, where lecanemab is included as a backbone anti-amyloid therapy to be evaluated in combination with tau therapies.
The project portfolio has been updated and one new project has been added, as I said, and one Alzheimer's project has been stopped. We are continuing to build our Nordic commercial organization, and the four new recruits have now started, and they have vast industry experience. Next slide, please. I wanted to share some of the data being presented at the ADPD conference in Barcelona in March, which showcases the great achievements being done within the field. There is excitement towards the key results that are coming later this year. I think the atmosphere was very positive with optimism in the field, both with regard to treatments like lecanemab and with diagnostics, including blood biomarkers. There were several presentations held on lecanemab. Professor Lars Lannfelt presented the unique binding profile of lecanemab in comparison with competitors. Eisai presented many different presentations.
For example, one which I show data on here on the slide, which shows new blood biomarker data from the large phase II-B study with lecanemab. What you can see to the left is robust effect on the blood biomarker Aβ 42/40 ratio by lecanemab treatment compared to placebo. It also correlates very well with the profound brain amyloid PET clearing results. To the right, you can see the robust effect on the blood biomarker phospho-tau 181 by lecanemab versus placebo. I think it's clear that lecanemab targets amyloid, and still it shows a clear effect on downstream tau-related processes as well. I think this further strengthens the case for lecanemab. Next slide, please. Some comments on events after the quarter.
We have shared the disappointing news last week that AbbVie has taken the strategic business decision to end the collaboration with BioArctic's alpha-synuclein portfolio. We will now, in accordance with the license agreement, take the projects back and we're working on a smooth transfer. We will then also evaluate the best way forward for these projects. Yesterday, we had a press release on lecanemab, and that is a recently published article regarding disease modeling, which suggests that lecanemab could delay the progression of Alzheimer's disease dementia by several years. I will show you more data on the next slide, please. This was then described in publication this week in Neurology and Therapy.
It's a disease modeling done by Eisai, which is utilizing data from the lecanemab phase II-B study and from the large ADNI Study in the U.S. with regard to standard of care treatment of Alzheimer's disease patients. The modeling was performed to study long-term effects of lecanemab together with standard of care and compare that with standard of care only. Lecanemab treatment was estimated and showed that it slowed the rate of disease progression, which resulted in an extended duration in the earlier stages of Alzheimer's disease, like mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease dementia. It shortened the duration in the later stages, like moderate and severe Alzheimer dementia.
In the model, the mean time advancing to mild or to moderate or to severe Alzheimer's disease was longer for patients in the lecanemab treated group than for the patients in the standard of care group only. The prolongation was by 2.5, 3.1, 2.3 years respectively. The model also predicted a lower lifetime probability of admission to institutional care with lecanemab treatment. I think that analysis such as these are important to understand the potential clinical value and long-term effects for patients and families and society, which could be offered by lecanemab treatment beyond what can be seen in clinical trials. The outcome of Clarity AD phase III study will of course be essential to further refine this model, and we are looking forward to the top line results later this year. Next slide, please.
This slide shows the broad late-stage clinical program for lecanemab. Eisai, our partner, is strongly committed and they are driving this broad clinical program underway in a great way. The most important part is Clarity AD, the phase III confirmatory study in early Alzheimer's disease patients, where the patient enrollment was completed in March last year, and they should be treated for 18 months. The study includes 1,795 early Alzheimer's disease patients. On top of this, there is 100+ Chinese patients, which is included to support a future regulatory application also in China. The study is progressing really well, and we have a low discontinuation rate in the study, and many of the patients are going into the open label extension study. The 18 months data will be available at the end of September this year.
I think we have super exciting times ahead. Eisai has also just communicated that they plan to evaluate a new dosing regime with reduced frequency of administration utilizing blood biomarkers with dosing up to every third month in the open label extension study. They will also evaluate the subcutaneous injection formulation in the open label extension study, which I think will be a great complement to their intravenous infusion. The phase II-B open label extension study in early Alzheimer's disease is also progressing well with new data coming along continuously. All the data that has been reported at congresses so far have further strengthened the data and confirmed the positive phase II-B results. With profound amyloid clearance from the brain and continued low frequency of the side effect ARIA-E.
Then we have the other phase III program in pre-symptomatic Alzheimer's disease called AHEAD 3-45, which Eisai is driving together with Alzheimer's Clinical Trials Consortium. That is progressing in many different countries around the world as well. Then we have the DIAN-TU NexGen study for individuals with dominantly inherited Alzheimer's disease. The study started now in January this year, and lecanemab is here the anti-amyloid treatment therapy that every patient will have. Half of the patients will then be combined with a tau treatment, and half of the patients will have placebo as well. I think that is also an exciting study to follow. I'm really looking forward to the progression of this impressive broad program that Eisai is driving in Alzheimer's disease. Next slide, please.
Lecanemab has the potential to lead the paradigm shift in the treatment of Alzheimer's disease patients. We have a higher likelihood of success, which is based on the positive and consistent results in the phase II-B study. On top of that, all the data which is coming from the phase II-B open label extension study continues to strengthen and confirm the phase II-B results. The pivotal phase III study is well-defined and designed to confirm the positive phase II-B results. I want to point out that, of course, all drug development is connected with some risk. I believe that lecanemab has a high likelihood of success. We have the opportunity of being first with a full approval in the U.S., and the first disease-modifying treatment to be approved in pre-Alzheimer's disease in Europe and in Japan.
The rolling BLA submission to the FDA in the U.S. is under the accelerated approval pathway. This is ongoing by Eisai, and two of the three parts in the rolling submission have been submitted, including the preclinical part and the clinical part together with a proposed label. The third and final part is CMC, which is expected to be submitted this quarter. BioArctic we can then expect a milestone after the regulatory submission. There is a potential for an accelerated approval in the U.S. already this year. A full BLA submission, which is the most important part, of course, is planned to be submitted to the FDA pending positive results in the Clarity AD study, together with a regulatory submission in Europe and in Japan. All of these are expected to be submitted by the first quarter of next year.
There is a potential for a full approval in the U.S. already next year and in Europe and Japan next year or potentially the year after. I think it's really encouraging to see that lecanemab seems to be the best anti-amyloid antibody with a great opportunity to differentiate versus other late-stage competitors. We have shown that we have a rapid and profound clearance of amyloid from the brain by lecanemab. We see an early onset of clinical effect in slowing of cognitive decline. We see that we have a better tolerability profile with a low frequency of ARIA-E versus competitors, even without titration. Lecanemab is the only one of the late-stage anti-amyloid antibodies that gives the full therapeutic day from day one. Further development programs are also ongoing. I think it's very important with a subcutaneous injection as an alternative.
This will then make self-injections possible and more convenient administrations at home. Blood biomarkers are also making great progress in parallel with the therapeutics. Eisai will utilize the blood biomarkers to explore less frequent dosing as maintenance dosing after that brain amyloid has been cleared. The blood biomarkers are also being used in order to screening to identify the right patients. Other clinical studies in other Alzheimer's populations will also be interesting to follow. In summary, I think it looks great for lecanemab. Of course, nothing is ready until it's ready, but I think that we have a very exciting year ahead of us. Next slide, please. By that, I will hand over to our CFO, Jan Mattsson. Next slide, please.
Thank you, Gunilla. My comments relate to the quarter's number, and I inform you that we are now on slide 14.
30.
30, sorry. For those of you that don't know our company so well yet, at present our revenues consist of milestone payments and compensation from collaboration agreements, meaning that we don't have any steady revenue since we don't have any product on the market yet. Net revenues amounted to SEK 4 million in the quarter compared to SEK 7 million in Q1 of last year. Total costs in the quarter were SEK 10 million higher than in last year, and costs will continue to increase as we continue to build the commercial organization and to further progressing our expanded portfolio. Operating loss was SEK 44 million in the quarter compared to SEK 29 million same quarter of last year.
Our expenses for the full year 2022 are expected to be in the range of SEK 220 million-SEK 260 million compared to SEK 166 million in 2021. The reason again for the increase is the buildup of the commercial organization prior to the potential launch of lecanemab and costs for the expanded in-house project portfolio. Next slide, please. Cash balance amounted to SEK 801 million at the end of the quarter, and operating cash flow amounted to -SEK 40 million, which is slightly more compared to Q1 2021. Net result for the quarter was -SEK 44 million compared to -SEK 29 million in Q1 of previous year. In summary, BioArctic continues to have a strong financial position. With that, back to Gunilla. Next slide, please.
Thank you, Jan, and I will finish with upcoming news and some closing remarks. Next slide, please. I will talk about upcoming news flow and start with Alzheimer's disease. Eisai colleagues are working very intensely right now on the final part of the rolling submission for an accelerated approval in the U.S., which is expected to be completed the second quarter of this year. Then of course, as I said before, the Clarity AD top-line data is expected late September this year. Data with lecanemab will continuously be presented at international congresses. The next one we are looking forward to is AAIC in July, which will be a hybrid meeting again, partially virtual and partially on-site in San Diego. Here, lecanemab will be included in several presentations.
In Parkinson's disease, data will be presented at international congresses, and the next one is AD/PD in the middle of May. We will now take the project back and evaluate the best way forward, and we will communicate more when we have more information to provide. Our BrainTransporter Technology Platform is progressing really well, and we are expanding our portfolio with the BrainTransporter-coupled projects. We will communicate more regarding all of our projects when we have more relevant information to share. Next slide, please. I'll just close by saying that BioArctic is built on great science. We have great projects, we have great partners, and great people working for BioArctic. Everything we do is with patients in mind.
Our aim is to help patients with brain disorders, and I really think that we are on our way to help Alzheimer's patients right now. We have a very exciting year ahead. Next slide, please. By that, I say thank you so much for your attention. We are happy to take some questions.
Thank you. If you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from Joseph Hedden. Please go ahead. Your line is now open.
Good morning. Thanks for taking my questions. Just firstly, one on the financials. At the end of the AbbVie collaboration, how will you be recognizing the remaining deferred revenue? And can you confirm how much that is? I think it's about SEK 51 million, something like that. And then secondly, on lecanemab, what is your interpretation of CMS's recent final decision regarding Medicare reimbursement in the U.S.? Do you think that the coverage for their evidence development that they've confirmed is broad enough to reach most eligible patients? Or is it the hope that Clarity AD and perhaps similar results from other antibodies are gonna widen that reimbursement even further? Thanks.
I'll start with the finance question. When the license agreement is finally concluded, we will close the AbbVie project in our books, and this is expected to happen in the coming months. We have not yet considered any financial effects on this.
Okay. I'll take the other question, which is about the CMS decision. I think it's fair to say that, which I've said all the time, that it's great if we get an accelerated approval, but that will be with limited reimbursement, most likely in the U.S. Don't expect too much of an uptake. I think still it's very important because we can start to prepare sites and so forth. The most important thing is the Clarity AD results at the late September, and then to provide an application for a full approval. What CMS has said is that after full approval, if we have convincing clinical data, then we could expect a broader access to patients with a broader reimbursement.
Okay, that's great. Thanks very much.
Thank you very much, Joseph.
Our next question comes from Patrik Ling from DNB Markets. Please go ahead. Your line is now open.
Unfortunately, I cannot hear anything.
Are you on mute, Patrik, maybe?
Was there any more questions? Are we having more technical issues?
Operator, can you please help?
Hello, operator. Are you there?
I can hear you, but there is no one else it seems like.
Is that Gögona?
Yeah.
Yeah.
Hi, Gögona. Maybe we can take you. Any question? Maybe we can take your question.
Yeah.
Meanwhile, we are waiting for the operator and Patrik.
I was just curious whether you have some timelines to move more projects into the preclinical stage and further on.
Thank you so much. You see that we have a broad portfolio in the research phase, and it's progressing really well. I mean, it's like always, we have so many ideas that we had to stop one project due to that the data didn't support the further progression. On the other hand, we now added a new project and increased our focus also in ALS. I cannot say exactly when next project will be transferring to the next stage, but I can say that the portfolio is progressing really well.
Okay. About SEK 100 million or between SEK 80 million and SEK 100 million higher costs. Which exact projects in the portfolio are taking up these costs? Or where do you invest mostly?
I think it's fair to say that the majority of the increase in the spend is linked to the build-up on the commercialization organization and activities that we're doing to prepare for commercialization on lecanemab. I mean, what we have to think about here is that we are talking about a completely new kind of treatment for a kind of new patient population with earlier stages of Alzheimer's disease. A larger patient population and also with a kind of infrastructure that should be able to take care of the patients. There's a lot of work that needs to be done in the commercial part, which we are working actively on. That is one part.
The other thing is when the whole portfolio, which now is expanded, is progressing further, there will be more costs in the coming years. As soon as we can say which project that is being transferred into the preclinical stage where it's a little bit more costly, we will provide that information when we have taken those decisions.
Great. When it comes to commercialization in the Nordic, to understand your reasoning, why did you choose to market it yourself, to build up this organization yourself?
Yeah.
Sorry, I don't really understand your question.
Was it why we.
When it comes to marketing in the Nordics.
Why we choose to commercialize ourselves in the Nordics?
Instead of with a partner, yes.
We think, I mean, it's really important to have very experienced people doing this, and we have been able to recruit extremely experienced people into our commercial organization. I think that we are working very closely with Eisai to sort out all the details about how we will collaborate with them in commercialization of lecanemab in the most efficient and successful way.
In the Nordics.
I think that in comparison with I mean, we are getting high single-digit royalties on a global level. There is an opportunity for BioArctic to build the organization into a more full-fledged biopharma company and to get more revenues by also doing the opportunity that we have to commercialize in the Nordic region. I think it's both a strategic and a financial benefit for BioArctic to go into this path together with Eisai.
Thank you. I don't know whether anybody else is on the line.
We have anybody else on the line who wants to ask questions? Maybe Patrik.
Our next questions come from Chien-Hsun Lee, Pareto Securities. Your line is now open. Please go ahead.
Yes. Thank you very much for the presentation. Could you comment a bit on what kind of progress that AbbVie has completed in ABBV-0805, and if you transfer the project back, from what standpoint can you start to develop the project? Thank you.
Thank you. AbbVie has been driving the project forward in phase one. BioArctic, we delivered the whole IND package. What AbbVie has done since is done the phase one data, which has been presented, which looks really encouraging with a long elimination half-life, a good PK profile, and a good safety tolerability profile. We are now discussing how we're doing a smooth transition of the project, including what AbbVie has done to increase the value in the portfolio. Then we will look into different approaches and see how we can try to find a new partner in an efficient way to drive the program further. We are strongly believing in this program still.
We think that we have the most selective compound in ABBV-0805 with more than 100,000-fold selectivity versus the monomers, the physiological form of alpha-synuclein, and we are then targeting those harmful forms called protofibrils and oligomers of alpha-synuclein. We have very strong preclinical data that we have generated and the good phase I data. We think we have a great asset that we are now getting back in a smooth, efficient way together with AbbVie, and then we will find a new partner. That's our approach.
Great. Thank you very much.
Thank you.
Our next question come from Patrik Ling, DNB Markets. Please go ahead. Your line is now open.
Yeah. Hi. Patrik here. Can you hear me now?
Now we can hear you. Thank you, Patrik.
Great. First a question regarding the open label extension trial for Clarity AD. Do you have a sense for how large proportion of patients that actually complete the Clarity AD that moves into the open label extension?
Great question. Thank you, Patrik. What Eisai has revealed is that, 13.9%, when they last reported this, of discontinuation, which is lower. You know, normally for a phase III trial, you estimate 20%. That's normal. We have much lower than that. 13.9% was that. And then almost all of those patients come into the open label extension study. People highly want to continue because in the open label extension study, then every patient gets lecanemab, even those who had placebo in the core study, and also had lecanemab in the core study. Everyone then gets lecanemab. There is a very high proportion of the patients going in there.
The last thing that was reported was that more than 620 patients was already in that part.
Okay.
This progress is going well.
Is it fair to assume that for patient that's been on placebo, or even the patient that's been on treatment that you do a sort of a baseline PET scan and stuff like that?
Yes.
More or less like you did in the other open label extension?
Yes. I think what we have heard from Eisai, which was presented at ADPD, is also that the patients who will come into the open label extension study will be followed with several different measurements because here they will also be both looking at the subcutaneous formulation and comparing those who have had IV before with lecanemab versus those who will be having the subcutaneous administration of lecanemab who previously had placebo. I think that will be very important data. Also they will look at this with the increased frequency or less frequency, increased timing between dosing in both open label extension studies. There will be a lot of measurements, of course, including PET and also fluid biomarkers and blood biomarkers. Very important.
Okay, great. Could I also ask when it comes to the increased estimate of operating expenses here for 2022, does that in any way reflect that you might have to assume some additional costs after you get ABBV-0805 back, or would that come on top of the SEK 220 million-SEK 260 million?
Well, that is not included in that calculation at all. Well, we're now starting and initiating discussions with AbbVie, so we don't know where that will end up.
I think it's fair to say, I mean, it's very clear in the agreement that we have the right to get it back, and we are discussing now how to get it back in the most efficient and smooth way. I don't think there will be any major implications this year, but we will come back with more details as soon as we have that.
Okay, great. It's fair to assume that just the fact that you get it back would probably imply some additional costs just to, you know, keep the project fresh and alive and available for additional out-licensing.
What I can say is we are eagerly waiting to be able to work on this asset again. We think we have some great assets here that we really would like to drive forward in the most efficient way. Of course, we will also think about potential new partners as well. We will come back with more information when we are. This happened last week, please stay tuned. We will come back with more information as soon as we have that.
Okay, great. The last question. If you can give a little bit more granularity or clarity on the buildup of your commercial organization in the Nordics. How, like, how large organization do you think you would need and how many sales reps and so on? If you could share anything more on your thoughts here for marketing lecanemab.
Yeah. Right now we have six very, very experienced people in our commercial organization. It's amazing how we have been able to attract really experienced coworkers here. This is what we will have until we have the Clarity AD results. It's the next part. We will do a stepwise recruitment strategy here. After that, we will recruit some more people, and we are just now in discussions with Eisai about exactly how we're going to work together with them with regard to commercialization of lecanemab in the Nordics. We will come back with more information on exactly how large the organization will be. We are very committed to make sure that we have a successful launch and that we can have a broad access of lecanemab in the Nordic region.
This is the top priority for us, and we are very, very excited and committed to be doing this in the best possible way.
Who will be responsible for pricing in the Nordic region, given that the European countries are pretty much interrelated on pricing?
Yeah. I think it's clear that, I mean, it's Eisai who has the overall global responsibility for the research and development and commercialization of lecanemab. Of course, Eisai is responsible for the regulatory part and for the global pricing strategy. We will be heavily involved in the Nordic part.
Okay, great. Thank you very much, guys.
Thank you so much. Have a great day.
Thank you. There are no further questions at this time. I hand over to the speakers for any closing remarks.
I just want to say thank you so much for all the great questions and for your attention here today. I think that we are looking forward to a very exciting year, and I'm really looking forward to the results at the end of September and continued development of BioArctic. Thank you very much. Have a great day.