Hi to everybody, and welcome to today's presentation, where we have the pleasure of presenting ExpreS2ion Biotechnologies. To help us through, we are joined by Bent Frandsen, CEO, and CFO, Keith Alexander. The topics, the 2022 results, and of course, maybe touch a little bit upon the delayed COVID-19. We have a firm end at 3:00 P.M., so you will go through the presentation, and we will try and catch as many questions as possible. The box down below, you can ask the questions in almost every language. I will try and translate. We have a busy schedule, Bent, so I will hand the words over to you.
Thank you very much, Michael, and thank you to HC Andersen Capital for hosting this webinar, where we will be covering ExpreS2ion Biotech's fourth quarter and full year results. My name is Bent Frandsen. I am the CEO of ExpreS2ion Biotech, and I am joined by Keith Alexander, our CFO. We start with the usual disclaimer, as we are a public listed company on Nasdaq First North Growth Market in Stockholm. You can read it yourself when we publish this after the call. Here are our investment highlights. We focus on vaccine development within infectious diseases and oncology, where we have a very strong pipeline, and we are backed up by a strong patent portfolio. We have a vaccine development platform, which has shown very strong track record since we started our operations back in 2010.
We can produce recombinant proteins very efficiently, very fast, very advantageously, and over the years, we have produced more than 500 proteins with a very high success rate. As mentioned, we are 100% focused on vaccine development, and we address a global market, which is now valued at more than $200 billion , which is a 6 x growth over the last five years, obviously driven by the COVID-19 pandemic here in recent years, where ExpreS2ion also have a strong focus. We have a phase III stage asset in our pipeline addressing the COVID-19 vaccine. It is approaching a commercial stage in the near term, which is great for our company. We have a very experienced management team. In light of the time, I will not go through everyone, but I want to highlight Dr. Farshad Guirakhoo up in the upper right corner.
He is our new Chief Scientific Officer since last month, January 2023. He brings more than 30 years of experience in taking early-stage assets from translational research into a clinical development pipeline in the vaccine development industry. He has worked both in big pharma and biotech, both in the U.S. and the EU, and I am super excited that he has joined our management team. We report to our board of directors. Still a board which also has a wealth of experience in the life science industry and fits really nicely with our focus now on being a pipeline-driven company. Our business model, we focus on our ExpreS2 platform. You will notice the S2 in our ExpreS2 platform and in the company name ExpreS2ion, because we work with so-called Drosophila insect cells, Drosophila S2 insect cells.
These are fruit fly cells where we have patented an improved vector system, and we use this across all our work. We focus on the one side on a novel pipeline development, and on another side, on our contract research organization. On the novel pipeline development, we take these assets onwards to clinical proof of concept. That is what we aim to with our breast cancer vaccine project that we call ES2B-C001. We also have collaborations here, where the recent CMV vaccine-focused collaboration with the Danish company Evaxion is a strong example of that. Of course, Bavarian Nordic being a partner in the COVID-19 vaccine is also a very good example of this. We maintain our contract research organization where we offer services making recombinant proteins for clients, and offer licenses to our ExpreS2 system for scientists to play around with the system themselves.
Just very briefly, on the technology side, we have, as I mentioned, the ExpreS2 platform whereby we can make recombinant antigens, and we use this platform across all our pipeline activities. On the other side, we have a virus-like particle technology, a VLP technology, which comes originally from University of Copenhagen and is placed in a company called AdaptVac, which is a very important company that ExpreS2ion co-founded in 2017. Today, we hold 34% ownership of this, and the VLP technology here basically makes for very highly immunogenic vaccine. So we can attach any protein of interest to the surface of a VLP, and thereby making a structure which resembles a virus but is completely safe but highly efficacious.
So the combination of the ExpreS2 platform and the VLP technology, we are applying in our two lead pipeline projects, namely the COVID-19 vaccine, ABNCoV2, as well as our breast cancer vaccine, the ES2B-C001. This is the pipeline as we show it today, led by the COVID-19 asset, which is now in phase III. It is fully out licensed to Bavarian Nordic, a fully integrated pure-play vaccine organization. They started a clinical phase III trials with the ABNCoV2, the COVID-19 vaccine assets in September last year. We are awaiting preliminary clinical phase III data in the middle here of 2023. On the breast cancer side, we have very strong pre-clinical proof of concept data from animal studies we have conducted together with a state-of-the-art research facility at University of Bologna.
We are spending most of our time in the phase actually to progress this asset towards the first clinical trial in 2024. This is 100% residing within ExpreS2ion under a license agreement that we have with AdaptVac. We also have activities in influenza and CMV and malaria. I think it is important to mention the malaria assets here because we also have clinical stage projects here. These are together with academic collaborations, again, validating the ExpreS2 technology in a clinical setting. On the ABNCoV2, the COVID-19 vaccine, as mentioned, Bavarian Nordic sponsors this going onwards, and there is a 4,000 study subject trials now going on. Basically, Bavarian Nordic, just today actually announced that there will be preliminary data from this phase III trial in the middle of 2023. So we look forward to that. On the breast cancer vaccine asset, the ES2B-C001, here we are progressing as planned.
We have the GMP manufacturing in place with GMP manufacturer set up and making the first GMP batches as we speak. With respect to preclinical safety that we need to conduct before we can file for a Clinical Trial Application, here we have a collaboration with a very strong global contract research organization which operates under GLP, Good Laboratory Practice. We have the first tox studies conducted and are moving onwards with a GLP tox study where we expect readout here later in the year. The aim with these activities is that we can file the Clinical Trial Application around the year-end and start the first clinical trial in 2024. For this purpose, it is super nice that we have set up a scientific advisory board with oncology specialists. These are key opinion leaders that are very well-known in the scientific community within breast cancer.
I am actually really proud that these strong scientific capacities have accepted joining our board here, and they have endorsed also our plans going forward and are also excited at what we are doing. On the CMV side, this is a cytomegalovirus vaccine. This is an infection virus which is very common. So every one in three children will actually experience CMV by the age of five, and more than half of the population will have this virus by the age of 40. So most of us carry this. It is a latent virus, which normally doesn't cause any problems. It is in the family with the herpes virus. But there are two instances where this can become a problem. We know in terms of organ transplantations, kidney transplant, liver, lung, heart, stem cell transplants, that there can be a risk if the carrier has the CMV infection.
This can cause serious disadvantages after such procedures. Also, in terms of newborns, there can be congenital CMV infections. The bad thing about this is that in 20% of cases that gets this virus in this manner, you can have debilitating health problems. For example, getting hearing loss. In this connection, we have set up a very nice vaccine research collaboration with the Danish biotech company called Evaxion. They are listed on Nasdaq in the U.S. but also have their daily operations in Hørsholm here in the DTU Science Park, just north of Copenhagen. We just very recently announced this collaboration in December 2022, where we aim to join forces with our respective expertises. Evaxion have very strong expertise with artificial intelligence and knows the bioinformatics behind the target proteins that we aim to work on for CMV vaccine.
With output from Evaxion's computers, from the systems biology expertise, we at ExpreS2ion, we can create and make the antigens that we want to pursue for making a CMV vaccine. We can also apply Evaxion's animal facilities to test the vaccine's targets in animal settings. Then at the end of the day, we expect within a few years that ExpreS2ion then with our first right, that we can take a vaccine candidate and move it onwards in a development program. We find this very exciting that two companies like Evaxion and ExpreS2ion can join forces like this. Looking across our pipeline and near-term milestone triggers, we show it like this with the COVID-19 vaccine, as I mentioned, the ABNCoV2. It is sponsored by Bavarian Nordic. We hope in the middle of the year, as announced today, to get some preliminary phase III data.
Following that, Bavarian Nordic aims to make a rolling submission for the regulatory authorities, and hopefully in 2024, we will have a commercial stage asset leading to potential revenues to both AdaptVac and ExpreS2ion. On the breast cancer asset, our ES2B-C001 breast cancer vaccine. As mentioned, we are progressing on the manufacturing scale-up and on the preclinical safety studies, and we hope to be able to file a Clinical Trial Application around the new year. The aim is to start a human clinical trial in the beginning of 2024. Furthermore, I have not had time to cover our activities within influenza or malaria to that extent. We are progressing on these, bearing in mind these are done in collaboration with academic partners, and we are dependent on obtaining non-diluting funding for these activities in particular. We progress on the CMV asset, as I mentioned.
That said, I will give the word to Keith to go through our Q4 and year-end figures.
Thank you, Bent. Thank you, Michael and Mie. During the fourth quarter of 2022, we continued to focus our efforts on the preclinical development and CMC of our breast cancer vaccine candidate while expanding the pipeline for the future. I will walk through the impact this had on our financials. Starting with this slide, the operating income. We experienced a 64% decline year-over-year in the fourth quarter to approximately SEK 1.6 million and a decline of 55% on a year-to-date basis to SEK 5.1 million. Looking at the trend shown in the chart to the left, you can see that the operating income in the quarter was up slightly from the previous quarter, but still low compared to the long-term average. In the middle chart, we focus on net sales, which reflects revenue from projects, licenses, and our web shop.
They were below the long-term average, and in 2022, they decreased 71% compared with 2021. This is as expected due to our increase on developing the pipeline. In the chart on the right, we show the other operating income. This is essentially grant-related income, which remained at low levels compared to 2020 when we benefited from a COVID-19 related grant. On the next slide, moving to the cost side, which is much more significant than the income side. Operating costs in Q4 amounted to SEK 54.7 million, an increase of 165% compared with the fourth quarter of 2021. This increase is primarily driven by external R&D costs, for which we have shown progression over the last seven quarters in the chart on the right.
These costs increased primarily due to CMC costs for the breast cancer vaccine candidate, and more specifically, the cost of manufacturing for the GLP tox study and clinical activities. We are now producing at a larger scale than we have before. On a year-to-date basis, operating costs increased 115% to SEK 133.8 million. Looking at the other drivers of operating costs, personnel costs decreased 24% in the quarter due to lower non-cash incentive compensation charges, which are reversed in the cash flow statement and increased 28% for the full year 2022 versus 2021. On the next slide, after financial expenses and taxes, we had a net loss of SEK 48.5 million in the fourth quarter, which is an increase of 239%. The year-to-date net loss increased 170% to SEK 118.6 million. On the next slide, we show how our cash balance developed in 2022.
At the start of the year, the company had a cash balance of SEK 139 million. In 2022, we raised SEK 61 million net of transaction costs through the Q2 rights issue and the Q3 2022 warrant subscription. We spent SEK 100 million on operations and investment activities. Of course, this primarily reflects investment in the breast cancer vaccine. Finally, we realized an SEK 11 million gain from currency charges in 2022. Putting this all together, at the end of the year, the company had a cash balance of SEK 111 million. It is important to note that the figures are adjusted for storing some of our cash in our escrow account from late 2021 through nearly the end of the second quarter of 2022. You can read about that in greater detail in our 2021 year-end report and Q1 and Q2 quarterly reports for 2022.
On the next slide, we show the trend in our cash balance, which ended the quarter at SEK 111 million. As mentioned in the Q4 report, the company plans to obtain additional sources of funding in 2023. This could be in the form of issuance of new shares, non-dilutive financing, entering license and research and development collaboration agreements, expense management activities, renegotiating terms for current outstanding debt instruments, or a combination of the above factors. On the next slide, on the final financial slide, I would like to note that the number of investors in the company at the end of the year was approximately 13,000, holding 37.6 million shares. As always, we would like to sincerely thank our investors for their continued support.
To recap, in 2022, the ExpreS2ion team made significant progress with developing the breast cancer vaccine in terms of preclinical development, manufacturing, and pulling together a fantastic oncology scientific advisory board, while at the same time setting up a partnership with Evaxion to strengthen the pipeline for the future, all the while further developing key technologies to strengthen the platform. In 2023, we look forward to achieving further milestones with ABNCoV2, while taking the final steps to prepare the breast cancer vaccine for the clinic. We look forward to continuing to work together to build a brighter and more prosperous future for our investors and for society. With that, we will take any questions from participants.
Perfect. I know we have a need to stop at 5:00 P.M., so I'll be very fast. There's a question about the capital situation, and its surrounding that maybe the delay of the COVID-19 onto midsummer might push out some cash you expected. There's a question also surrounding your cash position or capital situation, whether that can delay that you are starting the breast cancer candidate. So one, will you raise more cash this year? Two, is the delay affecting your planning for something, and could that push out the breast cancer candidate, start of that trial?
Bent, shall I take that one?
Yep, please.
Yeah. As we mentioned in both our quarterly report and I just mentioned now, we do have plans to raise capital in some way, sort, or form or some combination of forms. Of course, we're not going to go into details on exactly how that happens. That we just can't talk about. What it means for the breast cancer vaccine product or strategy, we have to see how much we can raise. If we can raise a large amount, then it shouldn't have an impact. Of course, we're aiming to keep everything going. That's what our milestones are based on.
Perfect. There is a little bit about the delay. When will phase III be fully recruited? Do we have any knowledge of that, any expectations, or is that what Bavarian said this morning that you will repeat, Bent?
I think it is exactly what you said there. It is what Bavarian Nordic said this morning. We cannot comment on Bavarian's phase III trial. They are the sponsor, and they conduct it, and now they provided an update today, which is nice. That is what it is.
There is a little bit about, can you elaborate on the additional safety data requirement by FDA for the breast cancer vaccine? Does it affect your confidence that the molecule will be sufficiently safe for testing in humans?
That is the main purpose with the phase I trial that we are planning is to actually conduct it with a safety perspective. I am not quite sure how the question is going to be interpreted, but I can assure that all the safety parameters, they are, of course, being taken into account in connection with the planning of this study.
And there's a little bit about the COVID-19. How confident are you in powering of the study, given that COVID-19 infections rates are lower? Are further delays possible?
No, I don't think so. This is my personal view. We have all the time said that we have a COVID-19 vaccine that comes with some really strong features in terms of its potential durability, which we have already seen some nice indications of from Bavarian Nordic side, as well as the fact that it's a very stable product. It doesn't require storage in -20 degrees Celsius to -80 degrees Celsius as the most common COVID-19 vaccines, so it can be broadly applied in most regions of the world. Furthermore, it doesn't have an adjuvant, which is very important in this connection when we're talking about a protein-based vaccine as ours. Most proteins, they have an adjuvant, which also actually gives some side effects in itself. We don't. Bavarian Nordic, they haven't got any adjuvant in this vaccine at all.
All these are very strong competitive advantages with this particular vaccine, which is why I'm actually still very confident in the prospect of this.
There's a couple of questions regarding the regulatory or the FDA's recommendation of a requirement for bivalent vaccine strength. Does that strengthen your position? There's a lot of talk about that it will keep some potential candidates out. You're sorted about that development where the FDA seems to be recommending a requirement for a bivalent vaccine. Any thoughts from you?
It's very interesting with this vaccine, ABNCoV2, that it has shown strong protection across variants of concern, also across Delta and Omicron variants of concern. That's just very nice. It's built on the hypothesis that this is a broad protective COVID-19 vaccine. Going onwards, of course, we can always, it's Bavarian Nordic's call, look at the antigens in the vaccine. I would say right now it has shown the broad coverage that we have over time advocated for.
There's a question also. Would the launch of the ABNCoV2 COVID-19 candidate as soon as approval of emergency use or raising this grant, or would you always want to launch in the fall, winter? In other words, do clinical trials entail a risk that you could miss a COVID season from a commercial perspective?
That's a good question. I actually don't know how to answer it correctly. The notion that COVID-19 turns into an endemic disease with a more influenza-like status, I guess that's a reason behind that question. ABNCoV2 will be available all year round, and you will still also be able to catch it in the summer, I'm sure.
There's a little bit of a question here on pricing and as the need for mass COVID-19 vaccination decreases, pricing increases for booster shots are being discussed. I think some of the ones already on the market are discussing a price decrease. When you and Bavarian Nordic, I don't know whether you and Bavarian Nordic discussed this, but what are your benchmark? You also might have a higher efficiency lasting longer and so on. Can you share some thoughts maybe about the pricing strategy that has been discussed or?
I have a hard time commenting directly on such a question. It's 100% Bavarian Nordic's call. That's how it is.
I will choose a question that... There's a question here. Could you elaborate a little bit on the experience you had about in your participation in the JP Morgan Healthcare Conference. How was the presentation received? Did you reach any American investors? I think that's kind of the question, yeah.
Sure. Absolutely. Thank you for that question. That was a very exciting meeting in San Francisco last month. I think it's just one of those events where you need to be. Lots of investors, lots of potential business partners as well, so lots of one-one meetings. So I think it was very interesting, both from talking with the financial community as well as with all those companies that are there with a relevant business angle. So it was very nice. I can't go into specific details on these meetings, but it was very beneficial.
Bent, I'll just chime in further. I would say that even since then, we've been reached out to quite a bit by a variety of parties. Obviously, mostly people trying to sell to us, but also a fair number of investors who've been reaching out. Of course, we need to find if there's a good match for anything. But in a way it's a gift that keeps on giving, having gone there.
There's a couple of questions regarding this delay on the COVID-19 vaccine. Is there some kind of a deal with Bavarian or some kind of a compensation for that? Has there been fixed any timeline that they needed to do it in? Is there anything in your mind, say, in this partnering agreement that compensates you a little bit, if they take a little bit longer to do those phase III trials?
I think I've said before, from ExpreS2ion's perspective, we have actually been very prudent, and not taking into account the prospects of the potential commercial revenues with this. This delay, we are planning still ahead as if it didn't turn up, to be honest. It doesn't affect us in that way. In the overall scheme, I don't think with this delay, I think it's short if you look at it in a broader perspective. I wouldn't be negative about that.
Maybe a follow-up on the breast cancer, the way we said the FDA might have any questions about the security. The one asking the question said that you have mentioned that they had some extra questions regarding that. That was kind of the reason why the question was asked like that. They're just wondering what else FDA needed or maybe have spoken to you about that with that.
Is that a question?
Yeah, that is a question, yeah.
Sorry. The answer is the same as before. We take it into account when we plan our phase I trial, yeah.
Perfect, Bent. I know you have an appointment here at 3:00 P.M. I think we caught most of the questions. We will look through them and see maybe if there are some we can answer in another way, writing or shoot a small video. But thank you, Bent. I know you have a firm deadline here. So thank you to everybody for participating, and thank you for the questions.
Thank you, Michael.
Thank you, everyone.