Earnings Call: Q3 2020

Oct 14, 2020

Today, I'm pleased to present CEO, Gunilla Oswald and Vice President, Investor Relations and Communications Officer, Aska Bussin. Please go ahead with your meeting. Thank you so much, and welcome to Biotic's interim report for the Q3 2020. I'm Gunil Aswold, and I'm the CEO of Biotic. Normally, I share this presentation with our CFO, Jan Mattson, but he had unfortunately to cancel at the last minute for personal reasons, and he will not be able to join us here today. So instead, we have our Head of Corporate Communications and Investor Relations, Oskar Bulsa, and he will share the presentation with me here today. This year has been very good for BioArctic so far in spite of the tough situation around us with the COVID-nineteen pandemic. Our great portfolio has progressed well. And thanks to our great personnel and our great partners, it's really advancing in the way we would want. Eisai has broadened the scope for BAN2401 and have started an additional Phase III program in even earlier stages of Alzheimer's disease, and I'll talk more about that. Next slide, please. Myartic is listed on naptex.commidcap, and this is our disclaimer. Next slide, please. Biotic is a unique Swedish biopharma company with the aim to improve lives for patients with central nervous system disorders. When I say that it's a unique company, I mean that based on 4 different areas. The first one is that we focus on the R and D of innovative treatment for CNS diseases where there is a high unmet medical need. These diseases affect large patient groups and their relatives and have large cost to society. Today, there are only symptomatic treatments available, and we work on disease modifying treatments affecting the underlying disease and slowing down the progression of the disease. So these areas have large commercial opportunities. The second aspect is that we have a great organization with very experienced and engaged coworkers and important fruitful collaboration with both universities and with strategic partners like Eisai in Alzheimer's disease and AbbVie in Parkinson's disease. The third aspect is that we have an attractive and well balanced project portfolio. We have projects spanning from discovery phase all the way to Phase 3. We have partnered projects that generate revenues by milestones, where our strategic partners carrying the cost for the clinical trial. And we have earlier fully owned projects, which we finance ourselves with substantial marketing and out licensing potential. The 4th area is that we are well financed, and we have a strong cash position with approximately SEK 1,000,000,000 on the bank. We have valuable collaboration agreements with big pharma like Eisai and Amphi at a value up to SEK 9,600,000,000 plus royalties if we come all the way to the market. And of course, this solid financial situation is of great benefit in this challenging time. So we can focus on driving our internal project forward in a good way. So I think that Biotic is a dynamic and very exciting company with a huge potential, which I'm happy to lead. Next slide, please. Then I will start with some highlights for the Q3. And we have just celebrated 3 years as a listed company. And if you reflect on those 3 years, we have made significant progress with the projects in both Parkinson's disease and, of course, Alzheimer's disease. If we start with Alzheimer's, where BAN2401 got positive results in a large Phase IIb study. And that formed the basis for A site to progress BAN2401 into Phase III a confirmatory trial in early Alzheimer's disease patients. In Parkinson's disease, AbbVie exercised the full license deal and ABBV805 entered Phase I studies. Our market value has tripled more than that since the IPO, and we have very exciting times ahead. If we then think about what has happened in our program, BAN2401, the confirmatory Phase III trial in early Alzheimer's disease is called CLARITY AD, and it is progressing well. Eisai has presented new data from the ongoing Phase IIb open label extension study at an Alzheimer Congress in July. And there, they show that they saw a rapid decrease of amyloid in the brain. They saw an effect already after 3 months of treatment with BAN2401. And this was in the patients who earlier had got placebo in the core study. What they also saw was that there was a continuous further decrease of amyloid from the brain by BAN2401. And it was more decreased after 6 months and even more decreased after 12 months. We also reported the same low frequency of side the side effect area is the brain edema, which is seen by several of the A beta antibodies. And BAN2401 has a low frequency of these side effects, and that low level was also now seen in the open label extension study, which is consistent with the previously reported levels in the core study. And this is one of the things which differentiates BAN2401 from competitors in late stage. Then the news for this quarter is also that Eisai, together with Alzheimer Clinical Trial Consortium in the U. S, have initiated and started now an additional Phase III program called AHEAD 345, and that started in September. And in this program, BAN2401 is given to very early stages of Alzheimer's disease. So we think I mean, it's really exciting to see the broad scope that ESA is driving for BAN2401. In Parkinson's disease, our partner, AbbVie, has canceled the 2nd part of the Phase I program with ABBV-eight zero five, and they are instead working on a detailed plan to accelerate the projects directly into Phase 2. And we think this is very good news. The 3rd quarter was also a great quarter for us with regard to our internal projects that continue to progress well in spite of the COVID-nineteen situation. Next slide, please. Here we see our attractive and well balanced portfolio. We have organized the portfolio in 5 focus areas: Alzheimer's disease, Parkinson's disease, other CNS disorders, the blood brain barrier technology platform and diagnostics. The portfolio is balanced in 3 different ways. The first is that we have several projects in different areas, all focused in CNS. The second one is that it spans from discovery phase all the way to Phase 3. And the third one is that we have a combination of fully financed partnered projects at innovative, fully owned projects with great potential. And our strategic partners, they finance the expensive clinical programs in Alzheimer's disease and Parkinson's disease. And we finance the less expensive preclinical phases. And we develop the programs to increase the value further before going into future partnering. In this quarter, we can also notice that we have the portfolio has been expanded with an additional Phase III program in a new patient population that has been added to the project portfolio. Next slide, please. Here we see our 2 long standing and extensive partnerships that we have. In Alpha Medicines together with Eisai. And they are very committed to dementia overall and to BAN2401. So far, we have received EUR 63,000,000 and the total aggregated value of the milestones is up to EUR 221,000,000. So there's still a lot left if the program continues to progress well. And if we come all the way to the market, we will get royalties. And these royalties are could be of substantial value. It could be like blockbuster revenues for Biotic, which means that it's more than US1 $1,000,000,000 per year without having any cost for the clinical program. So I think that this is a really good business model that we have at Biotic. We also have the right to other indications, and we also have the right to commercialize BAN2401 in the Nordic region for Alzheimer's disease. Then if we look at Parkinson's disease, we have a great collaboration with AbbVie since 2016. And we have so far received USD 130,000,000 out of the total aggregated value of up to USD 755,000,000. So even here, there is a huge possibility for further revenues. And if we come all the way to the market, we can also here see significant royalties for Biotic. And as we have already mentioned that they will start with Parkinson's disease for ABBV805, but they are also looking into other indications such as, for example, multiple systemic atrophy and Lewy body dementia. So this could also then, of course, lead to substantial revenues for Biotic. So I think we have 2 great collaborations ongoing for Biotic. Next slide, please. So now we go into Alzheimer's disease and BAN2401, which is a potential disease modifying antibody for Alzheimer's disease. And here, we have positive Phase IIb results, and we are now in 2 large Phase III programs. As you know, Alzheimer's disease is an area where there is a huge population. About 3,000,000 people are suffering from Alzheimer's disease, and it's expected to double in 20 years. There is a huge unmet medical need since there are no disease modifying treatments available yet. BAN2401 has a unique binding profile. It's especially designed and generated aggregated amyloid beta. We have a unique clinical fingerprint that was shown in the strong Phase IIb results in a large study with 856 early Alzheimer's disease patients. The effect was seen as it was rapid, and we saw consistent effect on preclinical scale. We saw a dramatic reduction of amyloid from the brain. We also saw an effect on several neurogenetic biomarkers. And we saw a good safety tolerability profile. Even though we do not have any titration in the Phase IIb trial and in CLARITY AD, The top dose was given directly to patients, and still, we have a really good tolerability and safety profile. So Eisai now has 3 studies with BAN2401 underway that we can see on the next slide. So here at Slide 8, we can see that Eisai, who are strongly committed to BAN2401, they have now expanded the program. So if you look in the middle of the slide, you see the Stage 3 and 4 of the FDA classification, the mild cognitive impairment and the mild Alzheimer's disease. These populations are together called early Alzheimer's disease. The CLARITY AD, the confirmatory Phase III trial, which is ongoing, it's 1566 patients. They are focusing on these patient segments. And the open label extension study, which is ongoing, is also, of course, the same patient population. The CLARATE AD study is progressing well. And according to Eisai, they expect patient enrollment to be completed this year, and they expect the 18 months results to be ready at 2022. The new Phase III program is called AHEAD-three forty five, and that's comprising of 2 sub studies, A3 and A45. And it started in September in the U. S, and it's also going to be a global program expanding over the world. And it's driven together by Eisai together with Alzheimer Clinical Trial Consortium. And there is a total of approximately 1400 subjects to be included in this program. And this is for Stage 1 and Stage 2 according to the FDA classification. So those are together called preclinical asymptomatic Alzheimer's disease. And this individual, they don't have any cognitive decline yet, but they have intermediate or elevated levels of amyloid in the brain. And the program is aimed to evaluate the therapeutic effect of BAN2401 on the progression of the disease. So it's more like a prevention program. So we are really looking forward to the progress of this impressive broad program that Eisai is driving in Alzheimer's disease. Next slide, please. So now we come to Parkinson's disease and ABBV805, which is a potential disease modifying antibody for Parkinson's disease. And here, we have very strong preclinical results, and now we are in Phase I. Parkinson's disease are, as you know, the 2nd most common laboratory generative disease, and there are no disease modifying treatments available yet. ABVD805 has a similar unique binding profile in a similar way as BAN2401. OA25 was also specially designed and generated to be highly selective to bind and eliminate the toxic forms of alpha synuclein that are called protofibrils or oligomers. The program is based on solid scientific grounds, and we have very encouraging preclinical data. Next slide, please. There has been great progress in our collaboration with AbbVie on the alpha synuclein portfolio. AbbVie licensed the whole portfolio of all our alpha synuclein antibodies at the end of 2018. The Phase I program is ongoing with the aim to evaluate safety and tolerability of ABBV805. Our partner, AdReese, decided during this quarter to stop the recruitment of the 2nd part of Phase 1 with a multiple ascending dose And instead, work on a detailed plan to accelerate the project directly into Phase 2 in Parkinson's disease patients. And we are very happy to see that AbbVie has a huge commitment to ABBV0805 and that they are already now preparing for how they, in the best way, can go directly into Phase 2 and then, of course, simultaneously reducing risk of delays. Our collaboration with both AbbVie and Eisai are very successful. And having a great track record of successful partnering is, of course, important when you consider future partnering, which is according to our business model. And I will talk more about the early projects on the next slide, please. So here we see our early stage portfolio, which continues to progress well and according to plan despite of the COVID-nineteen pandemic situation. Of course, we work a bit differently. But so far, we have managed to progress our early portfolio without any noticeable disturbances, and we are very proud of this. Our largest area in Alzheimer's disease, and here, we have 4 fully owned disease modifying antibody projects. Each project has a different mechanism of action different from each other. And in Parkinson, all our programs are partnered with AbbVie. Then if you look in the 3rd box, other CNS disorders. There, we are looking into other potential indications for Alzheimer's disease for BAN2401. And we are also progressing our new networked ENVY program that has got a very good start. And of course, our efforts with our BBB technology platform that I'm very excited about, this has expanded further and it's progressing really well. And then, of course, it's important to focus also on diagnostic tools in order to identify patients at an early stage and to follow disease modifying effect in Alzheimer's disease and Parkinson's disease. Next slide, please. So by that, we come to the financial summary, and I will hand over to Oskar Voson, who is our Head of Corporate Communication and Investor Relations. So please, Oscar, on Slide 13. Thank you, Gunilla. So looking at Slide 13 then, maybe just to start off for those of you who don't know us so well yet, I would like to point out that we currently don't have any steady revenues from products on the market, but have a business model focused on partnership agreements. And that means their financials are very much linked to milestones and income related to research products with partners, etcetera. So that explains some of the ups and downs here, but you'll get into it, believe me. So with that said, let's look at the revenues and operating profit. Net revenues were down SEK11 million for the quarter compared to SEK21 $1,000,000 same period last year. This is primarily related to lower activity in the Parkinson disease program and according to our plan. If we look at OpEx, the total costs are down with SEK 8,000,000 from SEK 40,000,000 to SEK 32,000,000. This was primarily due to lower currency exchange rates or losses, but also less travel and less consultancy costs. Also project expenses in total decreased to SEK 11,000,000 compared to SEK 13,000,000 last year, although expenses in our own project increased during the same period due to higher activity. Moving to operating profit, it was down minus SEK21 1,000,000 in the quarter compared to minus SEK11 1,000,000 Q3 last year. Just as for net revenues, this relates to lower activity in the Parkinson's disease program. And based on this, we've slightly adjusted our expectations on the total operating expenses for the year and now expect them to come in somewhere between SEK 150,000,000 and SEK 170,000,000. Next slide, please. Looking at our cash and net profit, cash balance continues to be in good health and amounted to approximately SEK1 1,000,000,000 at the end of the quarter. Our cash flow from operating activities was SEK9 1,000,000 compared to minus SEK49 1,000,000 in Q3 last year. And the net result for the period was minus SEK 21,000,000 compared to minus SEK 8,000,000 same quarter last year. In summary, we continue to be in good financial shape. And with that, I hand over back to Gunilla. Thank you very much, Oscar. So I will now conclude today's presentation with upcoming news and some closing remarks. So Slide 16, please. With regard to upcoming news flow, Eisai are progressing the Bruel's clinical program for BAN2401, which we spoke about here today, and they will present more information at the coming Alzheimer's Disease Congresses. And the next one we are really excited and looking forward to is CTAD in November. And this is a fully virtual Congress again, and we will see at least 4 oral presentations regarding BAN2401. And everyone in the Alzheimer's field is, of course, also very excited to follow the FDA Advisory Committee meeting on the 6th November regarding aducanumab. In Parkinson's disease, we look forward to the continued Phase 1 program and but that will be completed and at this preparation for starting the Phase 2 program. Also in the diagnostics area, there is great progress in the Alzheimer field with, for example, the blood biomarkers like phospho 17. And this is also very important and can make a huge impact in having an easy way to diagnose the patients when you plan to give the disease modifying treatment. So we're concluding that we have had a very good year so far, and we have exciting times ahead. Next slide, please. So I would like to end today's presentation with Land Bi Arctic is built on great clients. We have great projects. It is driven by great people. And everything we do is with patients in mind, and we really want to help patients to get better lives. Next slide, please. So by that, we say thank you so much for your attention, and we are happy to take some questions. Thank you. Our first question comes from Youssef Haydn from Rx Securities. Please go ahead with your question. Good morning and thanks for taking my questions. We see a second reduction in the No, it's not related to COVID. I would say, I mean, it's mainly due to that we have less expenses in our Parkinson's disease program since we have delivered most things to Africa. I think that's the main reason. And then, I mean, we have more costs since we are increasing the effort in our early programs. Of course, we have been traveling less, but I think that it's not really the reason. I don't know, Oscar, if you want to comment on that. Yes. Well, we can add also that if you look at currency, I think the currency loss last year was $5,500,000 and this year it's down to only less than $500,000 So that also makes a big difference on the OpEx. Okay. Thanks very much. And then just on BAN2401, I was wondering if you had any kind of idea when iFIND might present the first clinical measures from that open label extension study, the first signs of efficacy. We noticed obviously the biomarker data is very positive back at AAIC, but still focusing on some efficacy on competition. Yes. Thank you so much, Joseph. I'm as eager as you are to see that. And I think, I mean, we should be aware that this is an open label extension study. It's ongoing. And since it's open, Eisai, they are able to compile data along the way and to present it. What they so far have been presenting and also will continue to present more data on in at CTAB is the biomarker data, where it's easy to show a dramatic effect with BAN2401. Last time, they showed that, that was decreased already at 3 months and then more at 6 and more at 12. But and I think now at CTAD, we will see more data on that and also to follow to see how the adverse event on the tolerability side, if that continues to look as good as it has done before. That's what we hope for, and we will see that at the time. But you're asking for the clinical effect. And that in order to look at clinical effect data, you need more patients and more data. So I think realistically, we should see that next year. Okay. Thank you. And then finally, if I could just ask on ABV-eight zero five. It was interesting to see the outcomes of the PASADENA trial presented recently. And I fully appreciate that it's up to Algvea to design a Phase 2 study, but just wondering what your thoughts are on having seen those results. Is there anything that you would do differently to Roche and Provena in that trial? Maybe just if you could shed some light on what you found particularly interesting. Yes. No, thank you so much. Another great question, Josep. So of course, we are eager to follow Roche Protina and the Pasadena study. They had their first kind of readout with the first part of the study. And they did not hit the primary endpoint, which was very highly set. But what we saw which we thought was really good was they had some signals on several secondary endpoints. And we think that we have, of course, a much better compound in ABBV805 since it's generated to be much more selective and not bound to monomers as much as we think some of the competitors do. We think that we have a much more selective antibody that really targets and eliminates those toxic forms that exist in the brain. So it's really important to not go so much on to bind on monomers. So we are really encouraged to see what AbbVie are doing. And of course, they are taking all the learnings they can from this the results that they have presented so far. And Rosh Pertina is continuing with the 2nd part of the Phase II that we also will follow closely. So I think it's really, really exciting to see when AbbVie are ready with a detailed planning on Phase II and when they will present the design of the Phase II programs and what learnings they have taken into that. Okay. Thanks very much for that. Thank you. Thank you, Joseph. Our next question comes from Georgina Alcu with. Please go ahead with your question. Good morning. I have a question about the new exciting research on the APOE mechanism of action. Is there anything new there you could share with us, Gunilla? Thank you so much for that question. An excellent question. So you also know that during this quarter, I didn't mention so much about that, so thank you for the question. We have, during this quarter, also initiated a collaboration with Oslo University or maybe that was at the end of last quarter. End of last quarter. End of last quarter. Time is flying. So I think it was like June or so. Then we initiated a great collaboration with Oslo University, where Professor Lars Nilsson, who is one of the world leaders in the APOE arena, he will help us to study this target a bit further. What we have disclosed is that AD1801, one of our 4 fully owned programs, are have a mechanism of action, which is linked to APOE. We are still quite eager not to disclose too much details yet on the mechanism of action. It will be coming in not too long time, more details. But so far, we have revealed that it's linked to APOE. And you know that APOE4 is the most common genetic risk factor for Alzheimer's disease. So what we can say is we have initiated this collaboration with Oslo University, and they are now recruiting, for example, a postdoc that will work with this work. But otherwise, the program is progressing well internally and according to plan. Thank you. And I would like to inquire some more about the new generation research that you were doing on new potential compounds and targets? Yes. And I wish I could tell you because this is very, very exciting. And we are working on a broad target here, which has an opportunity for several different neurodegenerative disorders. And we quite recently, we had this as a pre project and they started like a true project early this year. And I can just say that utilizing all our great experience in this area with antibodies and aggregated proteins, We have a very good progress in this project. I'm really excited about this one. I just wish I could tell you more, but I need to wait. Okay. Thank you so much, Kunal. Thank you so much, Kegana. Thank you. There appears to be no further questions. So I'll hand back to the speakers for any other remarks. So thank you so much for your attention and for so many great questions. I wish you all a great day and stay safe. Thanks. Bye. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.