Hello, and welcome to the Biovica International Audio Cast Teleconference Q4 2020. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Today, I'm pleased to present CEO Anders Rylander. Please begin your meeting.
Thank you very much, and welcome everyone to this fourth quarter interim report earnings call for Biovica. If we move right away to slide number 2, we have the presenters for today. First of all, it's me, Anders Rylander, the CEO of the company. We have Cecilia Driving, our CFO, and then Amy Williams, Head of Clinical Development and Medical Affairs, that will also present. The agenda for today, if you move to next slide number 3, is that I will be performing an introduction, short, very short about the company and the product. We'll go through the highlights of the fourth quarter, and then Amy will take us through the clinical results that we presented during this period.
Cecilia will take us through the financials before I summarize, and we open up for a Q&A session. With that said, we move on to slide number 4, the short overview of the company. Biovica is a company that spans from academic research at Uppsala University since many years back, and the company was founded in 2009. We are traded on Nasdaq First North Premier, and we were IPOed in 2017. We still have our headquarters in Uppsala, where we have research and development, our lab, and also our production facility. We have also opened up our headquarters in the U.S. in San Diego, where we also are building up a CLIA-certified lab in order to serve our customers on the U.S. market. I'll come back to that..
The regulatory standards that we are fulfilling is the ISO certification since many years, and the product is CE marked. Our big next milestone is the 510(k) clearance for the U.S. market. That will open up the opportunity for us to introduce the product for clinical use on the large U.S. market. The focus area, the initial application is for monitoring within metastatic breast cancer. That's very short about our company. If we move to the next slide number five, just gonna introduce the product as well. The product name is DiviTum, stands for dividing tumor. Biovica's DiviTum measures cell proliferation from a simple and convenient blood test. As you all know, cell proliferation is essential when it comes to cancer.
We have shown in many clinical trials that this offers a great value to the treating physician and the patient to get a feedback on the cell proliferation levels ensured by the tumors in the body. Amy will go through this a little bit more in detail, but we've shown that both the baseline sample and the sample already two weeks into treatment provides very important feedback for the treating physician when it comes to the disease aggressiveness and how the patient responds to the treatment. Over time also we can follow the treatments and provide early feedback on treatment efficiency.
The standard method to follow up patients currently being used is through image diagnostics, where patients are followed through serial image taking several images and measuring the tumor site and volume, comparing that over time in order to draw conclusion if the patient is responding or is progressing to the treatment. We believe we have a product that offers advantages both for the patient as well as the treating physician as well as the healthcare providers and the payers for this treatment, being able to monitor and tailor the treatment in a better way. Moving on to the next slide, we have a summary over the highlights that we just presented in our report for the fourth quarter.
We have had two updates around the FDA process, which I'll come back to. We also announced that we're opening up a CLIA lab in U.S., which I'll also talk a little bit about. We have several new publications and presentations on the clinical side, providing even more evidence about the value of the product. Amy Williams will talk us through that later in this presentation. With that said, I'd like us to move on to slide number 7, which is the summary of the FDA 510(k) process. This has been going on for quite some time, and this has been affected by the pandemic situation where the FDA has allocated resources towards COVID tests.
The good news is that they have now started to work on their backlog, and we received feedback early this year in beginning of February. We were able to respond to that and submit feedback that addressed all the questions raised. Now we are in the final part of the substantive review, and the FDA has also provided feedback that they have started to do the assessment. That means that we still believe that the milestone that we have laid out, that we expect to get a decision during third quarter in this year is still valid, and we are looking forward to that.
Moving on to the next one is slide number 8, where we summarize the rationale and the background for opening up a CLIA lab in San Diego. We've done that because we see several advantages doing so. The primary one is that we will be able to interact directly with our key stakeholders, such as physicians and payers, but also the payers. This way, we will manage these relationships, and we get some market intelligence and can develop our sales force and sales efforts. It is also a great advantage when it comes to the reimbursement process, which is a critical success factor when it comes to the U.S. market.
Since in previous trials have shown the larger value of the product, we're also able to make sure that we can achieve value-based so that the price that reflects that in discussion directly with the reimbursement and not go through a partner. We see a great value in being able to manage that process ourselves directly. Another great advantage that we see is that we can ensure that all patients have access by setting up efficient logistics. We will make sure that we can have quick turnaround times back to the treating physicians and the patients with the responding to the patient and the treating physicians.
In order to do so, we've also developed blood collection kit to support this logistics process. The access is actually a great advantage as well. This will also give us a lot of market data, which I mentioned initially, that we can use to further develop our go-to-market strategy and process, sales process. Another long-term advantage is that with the informed consent from the patients, which we will ask for, we will be able to store their samples, creating a biobank, that we can use to further develop new products to further enhance the value for patients, cancer patients on treatment.
At the same time, we'll provide extra value for the patients being able to show not only their latest result, but also a trend result, so they can easier interpret how the disease develops. Of course, one thing that is not mentioned on the slide is that we, by doing this ourselves, will improve the margins. We make progress within this area. We have a secure facility that meets the requirements, and we are now building up the lab and will soon submit the application for CLIA certification. That work moves on according to plan. Moving on to the next one. It's not only the lab, we've also put together a really strong and experienced team in the U.S., in order to drive the commercialization activities over there.
Responsible for that team is Warren Cresswell, and he has a long experience within both diagnostics and pharma, launching products on the U.S. market and other markets. For example, he was responsible for U.S. commercially at Halozyme , and also other markets in APAC and South America. Warren has a great experience of doing this. He also has similar experience from Prometheus that had both a diagnostics business unit and a pharma business unit. Very, very happy to have him head up the team. Within sales, we have Kenna Richards, who also has a long experience both within pharma and diagnostics, specializing in sales and has been shown in the past that she's been able to develop successful sales organizations.
Heading up the lab is Dan Kaiser, who has experience of doing so both for CLIA lab and IVD, and also have a great experience within regulatory. It's also strengthening the team. Last, but not least on this slide is Amy Williams, who is our Head of Clinical Development and Medical Affairs, with the long experience from oncology and breast cancer that recently came from Novartis Oncology, working with drugs like the CDK4/6 inhibitors at Novartis. Has very relevant experience to this area that we are focusing in.
If you want more detail about this, where all these members of our U.S. management team did a presentation on their respective area, I strongly recommend that you go to our homepage using the link below, and listen to the capital markets day that we did only about a month ago. With that said, I'd like to hand it over to Amy in order for you to go through the latest clinical results that we presented during this period. Amy.
Thank you, Anders. Let's go to the next slide. Slide 10. Good day, everyone. As Anders said, I would like to highlight several recent clinical data publications from this year where patient blood samples were analyzed with DiviTum TKa. The first is data from the PITIA trial by Dr. Luca Malorni and colleagues from the Hospital of Prato in Italy. This work demonstrated that TK activity levels measured during the first month of therapy could identify metastatic hormone receptor-positive breast cancer patients who would go on to respond or not respond to a CDK4/6-based therapy of palbociclib plus fulvestrant. This work was published in the European Journal of Cancer in March. Next slide, please. Also in March, Dr.
Jairam Krishnamurthy and colleagues from the University of Nebraska and Washington University in St. Louis published this npj Breast Cancer article where DiviTum TKa was used to monitor metastatic breast cancer patients for disease progression, and the data showed that DiviTum was able to predict disease progression on average almost three months before it could be detected by standard imaging. Next slide. Then last week, at the ASCO annual meeting, we were all very excited to see DiviTum TKa highlighted in an oral presentation. The presentation was a direct comparison between ctDNA and thymidine kinase activity measured from the BioItaLEE trial. The data looked very good, which we were really pleased to see, and I'd like to summarize the data for all of you so you can understand why we were so excited.
Unfortunately, the slides that were shown during the presentation are copyright protected, so I cannot include them here. For anyone who is registered to attend ASCO, you can download the slides directly from the ASCO website. Next slide. The BioItaLEE trial was a phase III-B single-treatment arm study sponsored by Novartis. 47 Italian cancer centers participated in the trial. A total of 287 patients enrolled in the study, and of that 287, 241 patients had blood samples that were available for analysis. The goal of the study was to identify blood-based biomarkers that can predict how well a patient will do when treated with ribociclib. Blood samples were drawn from patients at baseline before any treatment, again at day 15, and then once again two weeks later on the first day of cycle two.
This, as I said, was a multicenter, independent trial. Two biomarkers were compared, ctDNA and TK activity. The analysis was performed by Novartis and the study investigators, independent of Biovica. Next slide. They first compared the prognostic value of only the baseline samples for ctDNA and thymidine kinase activity separately. For the ctDNA, patients were stratified by whether they did or did not have a detectable tumor DNA mutation at baseline. For the thymidine kinase activity patients, they were stratified according to whether their TK activity values were above or below the median TK activity value for the entire group. Each biomarker was then analyzed for an association with progression-free survival. The results were presented as hazard ratios, which in this case represent the percent reduction in risk that a patient's disease will progress on treatment.
The hazard ratios for ctDNA and TKA were nearly identical. As you can see on the slide, for ctDNA, the hazard ratio was 0.41, and for TKA, it was 0.45, meaning that patients with no ctDNA mutation or who had a low TK activity value at baseline were between 55% and 59% less likely to have disease progression versus patients with a detectable ctDNA mutation or with a high TKA value. The conclusion from this baseline analysis was that both biomarkers have equal prognostic and predictive ability at baseline, with the caveat that no optimization was done for the TKA cutoff level. They simply used the median TKA value as the high versus low cutoff point. Next slide. Next, the investigators looked at the on-treatment dynamic patterns of ctDNA and TK activity separately.
For ctDNA, they compared the day 15 samples to baseline. For thymidine kinase activity, they assessed only the on-treatment TKa levels at day 15 and at cycle 2, day 1 to stratify patients and then look at correlation with, their outcome. On-treatment TKa activity dynamic patterns were better able to stratify patients according to outcome versus ctDNA dynamic patterns alone. If we compare hazard ratios again, for ctDNA, if a mutation present at baseline was no longer detectable at day 15, the hazard ratio was 0.51 with a p-value of 0.0228. Thymidine kinase activity, if TKa was not detectable at day 15 and still not detectable at cycle 2, day 1, that hazard ratio was 0.18. With a p-value of less than 0.0001, so highly significant.
This much lower hazard ratio for thymidine kinase activity suggests that TKA is a better predictor of good outcome than ctDNA. Next slide. Next, the investigators did a combined on-treatment dynamic analysis of ctDNA plus thymidine kinase activity. Interestingly, the combined TKA and ctDNA data showed better correlation with outcome in the patients who were not likely to respond to ribociclib plus letrozole versus either biomarker alone. For this analysis, they compared the median progression-free survival times for each biomarker alone, and then what was it when they combined the biomarkers. As you can see on the slide, for ctDNA alone, the median progression-free survival time was about 12 months. For TKA alone, the median PFS was about 10 months. For both biomarkers combined, the median PFS drops down to 6.65 months.
The conclusion is that TKA is a very strong biomarker on its own for identifying responders to ribociclib and letrozole. Combining data from both ctDNA and TKA is slightly better for identifying non-responders than either biomarker alone. Next slide. To summarize, for baseline samples, ctDNA and TKA both work equally well to predict clinical outcome for ribociclib and letrozole patients. When using on-treatment samples, the TKA dynamic patterns were a bit better able to stratify patients according to outcome versus ctDNA dynamic patterns alone, especially for the patients likely to have a good response and do very well. For the combined on-treatment sample analysis, there appeared to be a better correlation with outcome in patients not likely to respond to ribociclib plus letrozole versus when TKA or ctDNA data were combined than when either biomarker was used alone.
This data provides further evidence that DiviTum TKa can serve as a valuable biomarker for CDK4/6 inhibitor treatment response and disease monitoring for metastatic breast cancer patients. All right, that ends it for me. Next, you will hear from our Chief Financial Officer, Cecilia Driving. Thank you.
Thank you, Amy, for handing over to me. We turn to slide 18, and we should focus to the financials, and we will look into the revenues. As you can see, this year's revenue is almost the same as last year's revenue, and it's still only research use only sales to the research market. This is going to stay that for a while until we have our FDA clearance. We have a very positive trend in the research market because we have more and more collaborations starting together with pharma. We have had an increased interest from pharma to use our biomarker in their clinical trials while they are developing new drugs.
We will turn to slide 19. Look at the cash balance, and we end the year with almost SEK 90 million in cash, and the operating cash flow for the period was SEK 16.6 million. It has increased some, but not more than expected since last year when we had SEK 9 million in operating cash flow. We are well capitalized with the current capital, and we expect it to last more than 12 months over our operations. We have grown the number of employees during the year, and we are now 25 employees on average. Compared to last year, we had 20. We have a lot of. We will increase this further on when we are launching the product.
After clearance, yeah.
Yes. I will hand over to you, Anders, for summarizing.
Thank you very much, Cecilia. Just to summarize, as I said initially, we have a product and a biomarker that addresses very important clinical unmet needs to more convenient and quickly provide feedback if the patient's treatment is effective or not, and thereby being able to manage the treatment better. The product is supported by several key opinion leaders, oncologists within this field, especially within the breast cancer, where we have the majority of our scientific collaborations. We have now over 25 published clinical trials and some more to come as Amy presented for instance the BioItaLEE trial.
These collaborations and clinical trials have generated strong clinical data supporting the value of the product, including the ones presented today, where we are complementary to ctDNA as well as a strong biomarker standalone. We already have research use and in pharma collaboration, and that is also we've seen increase in the interest of that, driven by these great clinical results primarily. The first area that we intend to launch the product for use clinically is for metastatic breast cancer on the U.S. market. We are working within other indications outside the breast cancer indication to widen the use to several areas. The upcoming milestones to look out for, we expect we're in the final part of the 510(k) process, as we said.
We expect to get feedback and clearance during the third quarter, this year. That will enable us to scale up the U.S. organization, adding sales people in order to launch it by end of this year. For next year, we're looking to launch it on the first European market, as well, and then expand to other markets in Europe. This was our presentation. Thank you very much for listening, and we open up for questions.
Thank you. If you do 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. We have a question from the line of Jakob Lembke from ABG. Please go ahead.
Hi, good afternoon. This is Jakob Lembke at ABG. I have a few questions, and my first question is on the CLIA certification of the lab based on the timing there and, you know, if you assess that it will be in place before or when you get the potential clearance, you can start to sell in Q4.
Yes. We expect to get the clearance around the same time as the 510(k) clearance and at least way before the expected start of sales by end of this year. We don't see that as being on the critical path, although it's an important milestone.
Okay. Just to understand.
Sorry. It's a lot more straightforward process than the 510(k) process.
Yeah. That was gonna be my follow-up is if there's any material like moving parts or if it's more straightforward.
It is more straightforward, but it still requires some work. For instance, you have to be very specific on the instrument down to instrument ID numbers. You have to have a medical director, et cetera, and you have to perform trials to generate data that shows that you have validated the product. All that is in place or in progress. We have the medical experts required, and we have instruments at the facility and the instruments being implemented.
Okay. Sounds good. My second question is on the costs and the personnel costs which seem to be a bit higher in the quarter, and I think you ended the year at 25 employees. Now also when you're looking to recruit the U.S. sales force, just how should we think about costs and maybe the increase to headcount going forward?
Yeah. We will, we have a lot of key resources in place with the 25 that currently working for the company. We have chosen not to staff the last key critical resources for the launch, which the majority is within the sales force as we can't keep them busy. We will as soon as we have achieved the clearance, we will roll out sales people, and we've also already identified candidates and are keeping them warm, so we have prepared for it. That will of course increase the personnel costs slightly. These people will have, of course, a base salary, but also have a variable pay component, which will be significant.
Okay. If lastly, I mean, on the more data you talked about here today during the presentation and the publications you have had recently, just looking at it, sort of, what the, I guess, the results and conclusions to draw, how do you go forward to sort of position the test to provide value to the market and the clinic?
I think it doesn't change our key strategy that we have really strong results on our own. I think it is interesting that within some areas we can improve the performance even further by combining it with ctDNA. That, of course, opens up opportunity to collaborate with ctDNA companies that are interesting to improve their value proposition like us towards the patient.
Okay. That was all my questions. Thank you very much.
Thank you.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. There seems to be no further questions, so I'll hand it back to the speakers.
Well, thank you very much for your attention. We will be back with our next report by end of August, and I wish you all a great summer in the meantime. Bye.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.