Hi, and welcome to today's event where we have the pleasure to present ExpreS2ion Biotechnologies. To help us through today's presentation, we are joined by CEO, Bent Frandsen. Today's topic, of course, the Q1 interim report. A very busy quarter, maybe not so much on the results side, but on all the data side on the breast cancer and also some COVID-19. Afterwards, also the period you had a capital raise. I guess a very busy quarter. Some topics to go through. As always, do not hesitate to ask questions during the presentation in the box down below. Just do it through presentation. I will see if it fits in. If it doesn't, no worry. We will pick up all the questions and answer them in the end. But for now, Bent, I think I will hand the presentation over to you.
Thank you very much, Michael, and thank you HC Andersen Capital for hosting this webinar with a focus on our Q1 report. My name is Bent Frandsen. I am the CEO of ExpreS2ion Biotechnologies, and I am going to carry you through a presentation alone this time. You will notice Keith Alexander, our CFO, is not present. He is on a parental leave. So I will handle this by myself. Just a brief introduction to ExpreS2ion Biotechnologies. We are a key player in advanced protein sciences, and we have a deep pipeline of novel that address high unmet needs in markets within infectious diseases and cancer. We are backed up by our contract research organization, which was the foundation of the company back in 2010. This business has generated more than SEK 60 million , Swedish krona, since we got stock exchange listed back in 2016.
We have a proprietary vaccine development platform with a strong track record. We have developed more than 500 proteins for clients and partners over the years with a very high success rate if you compare with other expression systems around. We target the global vaccine market, a market which has grown incredibly the last couple of years, obviously due to the corona pandemic. The market in 2021 is assessed at $190 billion. We are advancing our pipeline as we speak, and also during this year. We have some very exciting trigger points coming up, including a phase III initiation of our COVID-19 vaccine here even shortly.
This is the pipeline as we show today. We have our coronavirus vaccine, which is basically coupling SARS-CoV-2 antigens made by ExpreS2ion in our ExpreS2 system with VLPs, which are held in the associated company, AdaptVac, which we have a 34% ownership of. This product has completed phase II recently. It is fully out licensed to Bavarian Nordic, a key player in the vaccine field. Bavarian Nordic are, as we speak, in the middle of initiating or preparing the initiation of the phase III trial very shortly, and they will be the exclusive commercial company for this exciting product. We have a breast cancer vaccine where our ExpreS2 system is used for generating the HER2 antigens, and again, this is coupled to VLPs that we have in-licensed from AdaptVac. So in this case, it is a 100% in-licensed product opportunity that ExpreS2ion has.
This has completed preclinical proof of concept, and I will show you these data later as we speak. You will notice the green bar has actually progressed into the cGMP/ tox progress because we are there now. Furthermore, we have activities in influenza and malaria. In influenza, we are in preclinical stage where we make our HA hemagglutinin antigen in our ExpreS2 system. In malaria, we also make the various antigens in our ExpreS2 system and use various approaches, mostly adjuvanted, in collaboration with academic institutions such as University of Oxford, University of Copenhagen, and Walter and Eliza Hall Institute out of Melbourne, Australia. Two of these projects are also in the clinical stage as we speak.
For the coronavirus vaccine project, we call it ABNCoV2, as mentioned, is in the hands of Bavarian Nordic, and they have very recently, in Q1 actually, announced very good supporting data on the universal booster profile of this product back in February. Then later here in May, they have just announced very good data also when it comes to addressing the Omicron variant of concern. So even for the Omicron variant of concern, there is a very nice raising of neutralizing antibodies. Furthermore, Bavarian Nordic are in the process of starting their phase III trial here soon. Plan to be here in the second quarter of 2022, where they will enroll 4,000 previously vaccinated persons who receive a booster vaccination with ABNCoV2 or a messenger RNA-based vaccine. The aim is to demonstrate non-inferiority of ABNCoV2 to the licensed messenger RNA vaccine.
Bavarian Nordic also handles the vaccine and have the vaccine manufacturing process in place, and filling is now ongoing in their own manufacturing line. As mentioned, this phase III trial is going to start here as we speak, with anticipated completion before year-end. Bavarian Nordic actually expects approval and launch next year. The setup between Bavarian Nordic and ExpreS2ion goes like this. Actually, it is our 34%-owned company, AdaptVac, which is the licensor of this vaccine to Bavarian Nordic. There is a license agreement between AdaptVac and Bavarian Nordic, and then there is also a license agreement between ExpreS2ion and AdaptVac because of the ExpreS2 technology in the final vaccine.
Under the license agreement between AdaptVac and Bavarian Nordic, they received EUR 4 million upfront back in July 2020, and they are eligible to receive up to EUR 136 million in development and sales milestones. Furthermore, single to double-digit royalties of Bavarian revenues. On the other side, it is important to stress that ExpreS2ion owns 34% of AdaptVac. So what you see to the left, we have a 34% ownership of that cash flow. Furthermore, under the license agreement between ExpreS2ion and AdaptVac, ExpreS2ion is eligible to receive up to EUR 2 million in commercial milestone payments and a lower double-digit percentage of AdaptVac's royalties. Since this a very near term with expected completion of phase III here this year and commercial stage next year, you can imagine we are quite excited about the near-term potential cash flow coming from this.
With respect to our breast cancer vaccine efforts here, we make the ES2B-C001 vaccine, where we, as mentioned, target the HER2 receptors. Today, the market for this type of breast cancer is dominated by monoclonal antibodies, such as Herceptin, also known as trastuzumab, or Perjeta, also known as pertuzumab. They generate more than $11 billion of sales. Interestingly, in the small picture you can see above here is actually how we address the epitopes of the HER2 receptor with our vaccine, because there are four epitopes, one, two, three, four, as shown in the picture. The trastuzumab and pertuzumab products actually only target one of these, whereas our targets all four. So we have a polyclonal response on this. This is also important to notice in this respect, and probably also why we see some very strong preclinical proof of concept data at this stage.
Now, the monoclonal antibodies also come with some drawbacks in terms of resistance. Patients receiving monoclonal antibodies can develop resistance over time. This is known to happen in 20%-30% of patients. There are some heart-related potential side effects, and then the administration is rather cumbersome with dosing every three to four weeks, and it is quite expensive. All of these drawbacks we want to address with our HER2-c VLP or our ES2B-C001. These preclinical data we have shown before. This is what we announced in December and January earlier this year. To the left, you see a very clear proof of concept in a mouse model where you can see the red line is on the X-axis.
That is our vaccine injected in mice with an adjuvant, and none of the mice developed tumors, whereas those in the control group, you can see in the black curve, developed tumors over time. At the same time, on the right side, you see in another model where we work with transgenic mice that spontaneously developed tumors over time, that if you administer our vaccine with an adjuvant over two weeks, then you actually have a survival rate of 95%. After 32 weeks, you will see all the mice in the control group have passed away. This only happened to one mouse in our group with 20 mice, and that one mouse that did not, it had nothing to do with the vaccine according to our principal investigator. We have then announced new proof of concept very recently here in May.
I just want to emphasize that we have previously seen the ability to overcome resistance. That is also part of the reason why we in-licensed this project in February 2021. To the left, you see how we actually also with the ES2B-C001 vaccine that we now have in our hands can overcome resistance. To the left, you see in trastuzumab-sensitive cells that even trastuzumab, the blue bar, is able to inhibit growth of tumor cells. Whereas to the right, with the blue bar, you can see trastuzumab cannot inhibit growth in trastuzumab-resistant cells. Whereas our vaccine, as shown in the blood samples here, one, two, three, four in the red orange bars, actually statistically significant can overcome this resistance. Very important part of this vaccine opportunity.
To the right is what we recently announced there in May, that we are also able to inhibit tumor development in transgenic mice, in the mice where we see tumors developing spontaneously. Here you can see in the control group that these mice will develop tumors. In this case, they are being observed in the lungs, and you count the lung nodules, and you will see basically to the right with the ES2B-C001 with an adjuvant, our vaccine, the mice are completely tumor-free. Very strong proof-of-concept data. We are advancing our pipeline, obviously very much dependent on Bavarian Nordic when it comes to the coronavirus vaccine project, ABNCoV2. We are anxiously awaiting news from their side on the initiation of the phase III trial and the progression of this towards a commercial stage in 2023.
On the breast cancer project, ES2B-C001, we can now put a tick mark on the preclinical animal proof-of-concepts results in the first half of 2022. We have just announced that last month. We are on the path to develop GMP manufacturing. As well as we are starting up our preclinical safety studies that we will conduct here over the next year. They are expected to be completed in the middle of 2023. The aim is to file clinical trial application by the end of 2023 and start the first clinical trial in early 2024. By then, we expect to be more aggressive when it comes to potential partnering discussions revolving this particular project. On influenza and malaria, have not touched that much upon those, but they are progressing as well. Influenza, expecting to reach the stage of GMP manufacturing and preclinical safety studies later in 2023.
Within malaria, where we are involved in a handful of different projects, the Pfs48/45 project addressing transmission blocking malaria is expected to start a phase I trial later this year. For the RH5, there are two versions of that. The RH5-VLP is a coupling of the RH5 made in our ExpreS2 system to a VLP that University of Oxford, they are working on. They expect to start a clinical phase I trial in 2023. For the RH5 alone, a second phase I trial has started last year, and the readout from that is expected in the end of 2023. Before moving into the financial part of this presentation, just briefly about our management team. We have a very strong management team. You all know me already, and Keith Alexander, our Chief Financial Officer.
We have Dr. Max Søgaard and Dr. Mette Thorn and Dr. Mattis Ranthe, our VP of R&D Technology, VP Preclinical Development, and Chief Medical Officer, respectively. I just want to highlight here Mattis Ranthe, who started in 1st of February, and is very important in driving our breast cancer vaccine project towards the first clinical trial in 2024. Furthermore, the board were just reelected here at the annual general meeting on the 25th of May. So we still have Martin Jensen as our Chairman and co-founder, Allan Rosetzsky as our member of the board, and Jakob Knudsen, Karin Garre, and Sara Sande as members of the board. With respect to our Q1 results, just very briefly, we reached SEK 2 million revenue for the quarter, as shown in the left with the red surrounding. Here you will notice that it is primarily actually client-driven.
We have not received any grant income of note here for that quarter. For the operating profit loss, we continue with a new level, as you will see here, since we embarked on our pipeline-focused strategy, and this is all in line with our efforts to, in particularly, drive the breast cancer vaccine project forward. With our cash balance, it looks like this over the last quarters, the last two years. At the end of March 2022, we had SEK 125 million readily available cash, and this is excluding the cash raise that we did here that we completed on the 5th of May, where we raised SEK 73 million before transaction costs. We are in a good position here. The rights issue was completed successfully. 5.8 million shares were issued to existing and new shareholders, so we now have about 37 million shares in the company.
The subscription rate was 85%, which I consider very good under the current market environment. The proceeds come very nicely and enables us to de-risk our pipeline efforts as we go forward. The majority of the proceeds are going to advance our breast cancer vaccine project towards completion of the preclinical safety studies. As you may recall from earlier this year, we had a meeting with the regulatory authorities in Denmark, which basically, for our preclinical development, meant that we also had to include non-human primate species in our preclinical development plan, which is quite expensive. With that in mind, I am very pleased with the outcome of this rights issue, and I thank our investors in particular for also having the understanding on this. That is it on my side. I will be happy to continue.
Perfect. Let us take some questions. Is there the same failure success rate from the different phase within the vaccine field? I think going from preclinical to clinical to phase I to phase II. Just to get a feel of it, there is a lot of failures you normally see, or you see some failure rate in the normal pharmaceutical business, but is that lower in the vaccine field? Do you have more knowledge when you move the candidates through those? To get a feel of the risk associated with having preclinical projects.
Yes. Well, first of all, of course, it is risky business for sure to get a product all the way through the market, through all these stages of development. In general, as I understand empirical studies, working with small molecules is riskier than working with biologics, and also working with vaccines is less risky than working with biologics in general. That is my understanding of the empirical studies I have seen in this, but I cannot put any percentages on it in particular.
There has been some interpretation that the Omicron data on the COVID vaccine indicate that it's a broad covering. Interpretations, I think even Bavarian Nordic, and you have also stated it, is that also your feeling? How does that maybe fit into the new variant that now looks to take over? We are now hearing about a new variant actually in the news media taking over as the next variant. If I understand, it's a sub-part of an Omicron variant. If you can give some kind of your feelings into, do you also see it as broad-based, and do you also maybe see some advantages now that it's already a new variant, and maybe some of the competitors is actually trying to make an Omicron variant a specific type?
I think the data that has been shown so far across both preclinical and the first clinical trials, both from our own under the PREVENT-nCoV consortium and from Bavarian Nordic, all basically shows that we have a very strong vaccine candidate here that can offer very strong protection, and it goes across the variants of concern, including the Delta variant that we saw, and now also the Omicron data that Bavarian Nordic, they documented here with data from the phase II trial. Going forward, I'm very encouraged by this. Also, of course, the fact that Bavarian Nordic, they consistently describe this as a universal booster vaccine. They have actually a better understanding on the clinical data that are being generated now that just encourages me also against new variants of concern.
Perfect. How is your relationship with Bavarian Nordic? Could you work with a company for other future vaccine projects? Could you work with others, or is Bavarian Nordic a strong partner? Also looking maybe at partnering up with them in the breast cancer. How do you see this field?
It could be exciting if they took an interest also in our breast cancer vaccine. We know Bavarian Nordic now and have a dialogue with them every now and then, so that's good. ExpreS2ion, we can basically do what we like, so to speak. The license agreement is between AdaptVac and Bavarian Nordic, and ExpreS2ion is not hindered in pursuing vaccine opportunities on our own. We would, of course, always consider Bavarian Nordic as a potential partner in the future here now they're our neighbor and we know them.
There's a question. Time-wise, you are far behind Pfizer and BioNTech and Moderna. How does Bavarian intend to make up for that? The timeframe for when they get the vaccine to the market. Any thoughts you have, although you can't answer on behalf of Bavarian.
Yeah. It's not really fair to compare anymore with Pfizer and BioNTech. They came out one and a half year ago, and you see the protection being decreased over time. I think it's happened to a lot of us having been vaccinated three times, and still we catch the disease. I think with the profile of ABNCoV2, it is a strong vaccine candidate. Interestingly, last week, or I think it was even only earlier this week, that there was a hearing at the FDA in the U.S.A. looking at Novavax. Novavax is a vaccine company in the U.S. which are working on a COVID-19 vaccine, which actually use antigens that are made in insect cells and couple them to their own VLP system, which is interesting. Then they also apply an adjuvant in their vaccine.
They have just been evaluated by the FDA and authorized for emergency use here this week. I think that's that's strong news also for Bavarian Nordic, that this type of protein-based vaccine, and this vaccine actually even does not have an adjuvant, so it offers also another safety profile, which is very important to highlight as well. I think Bavarian Nordic come with a vaccine which is highly competitive, and there's definitely a market share for this in the years to come, no doubt about it. The disease is not going to go away neither here in the years to come.
Without piggybacking that much on Bavarian Nordic, I find it also interesting what has recently happened on the monkeypox side, where they've developed that years ago and now are able to pull that out of their product portfolio and get revenues from that as well in this situation with monkeypox being emerging.
Phase III on the COVID-19 vaccine, is that still expected first half year? Maybe the question is because we are really closing in on what we call first half year.
I'm only [inaudible] Bavarian Nordic's communication. I haven't heard anything other than them.
Maybe they were fishing for something on the side. Do you see any market consolidation in relation to large companies acquiring smaller biotech companies? We have a little bit of a winter out there for the biotech companies. You have been raising capital, but a lot are fighting about it. Some thoughts about this and maybe looking at your own side.
Well, I'm really pleased that we have our plan so clearly carved out, and we have it financed here through 2023 with the preclinical safety package. It's very exciting, and I'm concentrating on what we do with our pipeline and that notion. At the same time, we are also looking at various technologies and other companies working in the vaccine field and their situation just to get a flavor of what's possible in terms of potential business opportunities. But that's the nature of our business.
In what stage will you expect to find a partnership on the breast cancer vaccine if data continues to be good? Could you move it a little bit ahead? I think you have indicated 2024, or is that still your plans?
Well, I am saying that we will be more aggressive on partnering discussions at that point in time because then we have actually a clinical stage breast cancer vaccine, and that will for sure open doors at that point in time. The best time point to make a deal is of course when it is a little later, if you can manage to develop even further and extract more value of having a potential proof of concept, clinical proof of concept of your asset. We are looking into with potential revenues out of the Bavarian Nordic cash flow from the coronavirus vaccine. If we can allow that to ourselves to generate more value and keep the breast cancer vaccine project slightly longer, so to speak.
It is a little speculative at this point in time, but it is something we will be very alert on here in the next, yeah, one to two years.
As also understood, you said that you had a little bit lower R&D cost in this quarter. How did that actually fit in with that you are accelerating your breast cancer studies? Is that simply just something moving between quarters, or is there other things that is-
It's moving between quarters, and we will experience some higher costs on this because it's definitely expensive to do non-human primate studies. It's also quite expensive to outsource your manufacturing to certified GMP manufacturers. I believe in Q1 we are progressing on that notion, so we're going to see more ups and downs in our cost [inaudible] going onwards.
You mentioned 85%, a very high going to existing shareholders. That means 15 was picked up by guarantors. Do you expect these shareholders to be long-term investors, those guarantors? I know you can't promise for them, but what is your feeling?
I would hope so. In general, we have more than 10,000 shareholders in the company. We had about 15 guarantors in this rights issue, so I hope they can stay on board as we progress. We are certainly doing our best to continue with generating the trigger points here in our pipeline as we go forward. So why wouldn't you stay?
Maybe you actually already answered this one to help. Why not try to develop the breast cancer vaccine on your own, at least including phase II to get the most value out of it? I think you kind of alluded on that.
I did, yeah.
If you get cash flow from the COVID vaccine, you might try and extract so much value as possible.
Correct.
The share price has been hit hard down. When do you think we shareholders will be satisfied again?
There are lots of macroeconomic points as well. Higher inflation in the world, wars going on. These times are difficult in general for stock exchange markets. I think in the life science industry, there's been quite a downfall compared with last year. That's for sure. That's not only ExpreS2ion, but across everybody. I think even highly successful corona vaccine companies like Moderna and BioNTech have experienced a more than 50% drop in their share prices. I think with our financing in place at ExpreS2ion and our very solid development plans, we can continue, and then I think our data will show the value, and we're going to make sure that we can communicate that to the market and our shareholders. There's a lot of value that should be reflected here. But given the general market situation, it's hard to come through.
There's some speculation here, or asking you to speculate. Do you think AdaptVac should be listed on the share market? Is there some hidden value? I think maybe there's a line in this question, or is that not something that should lie in the cards?
It's a strategic asset, which implies that a lot of things can be considered strategically for that ownership. We continue to have that ownership, and to which extent AdaptVac will progress as an independent biotech company or make a listing or a third alternative, that remains to be seen.
The question also on the breast cancer candidate. You've shown pretty strong data. If you had more funding, finding a partner earlier, could you actually move faster ahead, or are there some steps that simply need to be taken here, that actually cannot be moved faster ahead, whether you had enough money or whether you had all the resources in the company?
That's not really possible. You have to carry on with the studies that you have to do under the regulatory rules. It takes the time it takes. For example, the non-human primate studies that we have to do [meant] that we actually had to prolong the timeline for starting the first clinical trial. We have learned that lesson now. I think we are more clear in our development plan going forward. On the clinical side, we're working on this and are in discussions with various key opinion leaders also to support our development plan, and that will take the time it takes.
Yeah. What you're saying is that you could not use a lot of money right now. There are some steps where you are in a smaller right now, so you could not accelerate. Perfect. I think we have been through all the questions. Thank you to you, Bent, for taking us through your first quarter and pipeline news. Thank you to all the spectators for listening in and asking good questions, getting us around in the case. Everybody, have a nice day.
Thank you.