Hello, welcome to Immunovia Q2 2020 interim report. My name is Val. I will be your coordinator for today's event. Please note this conference is being recorded. For the duration of the call, your lines will be on listen only. You will have the opportunity to ask questions at the end of the presentation. If you are connected by phone, this can be done by pressing star one on your telephone keypad to register your question at any time. Alternatively, you can submit your questions via the webcast. If at any point you require assistance, please press star zero. You will be connected to an operator. I will now hand you over to your host, Mats Grahn, CEO of Immunovia, to begin today's conference. Thank you.
Thank you. Welcome to the Immunovia Q2 report 2020. It's going to be a pleasure today to go through the excellent situation Immunovia is in, moving forward towards our market introduction in Q4. First about the forward-looking statements. We'll jump right into today's agenda. Today we will cover, of course, first the highlights of Q2, the first half year, and the financials. We will move further into some details on our COVID-19 response, remaining steps to the launch, the status there, and some words about the launch preparation activities. We will summarize the target markets of fantastic opportunities that lay ahead for us, and finish up with the question and answer session. For the Q&A session, I will also be joined by our Chairman of the Board, Carl Borrebaeck. You can ask questions to both of us there. Okay.
Let's start with the highlights of the first half year and particularly the second quarter. When we started the quarter, we were ready for launch, of course, all activities there. We had to take actions against the COVID-19 to support the patients, the staff, and public health initiatives and so forth. We all managed to do this very well. We have had minor impacts, I would say. The most difficult was that we had to close our Immunovia Dx laboratories in Marlborough, Massachusetts, U.S., due to the statewide shutdown there. After two months, on May 25th, we were able to reopen. Now we have been fully up and running since then. We'll go into some more details about this in the coming slides. That was a key activity around the COVID-19 impact and our response there.
That was, of course, an important happenings and highlights from this quarter. A second one on the second line as you see here to the left, is that we successfully raised SEK 400 million in a direct share issue very successfully to fully finance the commoditization rollout. Very important to get that done, have a very stable financial situation now when we're building up the sales organization, rolling out very strong marketing activities, and of course, also for the longer term, investing in the reimbursement activities. In this context, I'd like to mention a few things about the financials that you can see in the report, some key things there. As I mentioned, we have a very good cash situation. We have SEK 556 million at hand, which corresponds to approximately $64 million.
The burn rate for the first half year was about SEK 52 million. Slightly less than expected because of the COVID-19 impact of traveling and also the hospitals that couldn't take in patients and so forth. That has come back and we will have a significantly improved rate of patients coming in there. The cost will go up in the second half, of course, as we build also the sales force and so forth. We have now proceeds that will take us more than approximately 3 years ahead at the current business plan and development plans. We are in a very good financial situation moving into the exciting and very important milestone of becoming a commercial company through the launch of IMMray PanCan-d. Secondly, talking about the launch and the launch plans.
We, due to the COVID-19, had to transform our launch plans from the originally planned traditional way of launching a product into a much more virtual and digital activities. That was a lot of work done during the period on that one very successfully, and we now started to roll out many of these activities. One thing we also did was to host a first virtual investor day at June 30. There we covered a lot of detail and information about how we're going to do the launch and what we're going to do and who is doing it. If you're interested, that has been recorded and you can also see it at the websites under investor section from Immunovia.
Even more importantly maybe, we also at the far bottom right at the picture you see, we announced the long-term market penetration target of 30%. For the very large over $4 billion U.S. market that we are going after, where there is no current product available to solve the problem of early detection of pancreatic cancer. This is after reimbursement and broad insurance coverage. That's our long-term target, and we are first to market in that area. Finally, I want to mention just a few things there about the pipeline. The last collaboration we had with the pharma company was terminated during the period. However, we did continue with the fresh samples from there, and based on results from that, we decided to expand the lung cancer program. The next step there will be a discovery study with samples that really mirror the commercial situation.
That is work that goes on in parallel. However, of course, the priority now is definitely on reaching the market for the pancreatic cancer opportunity with the over $4 billion potential market moving forward here for us to penetrate. Okay. Let's move into some of the details first on the response to COVID-19 pandemic. There, we had, of course, continued with the work from home policies and follow the guidelines from authorities and so forth. This has worked really well for us, and we have been able to be very efficient in this way of working, and continues now since the pandemic is not really over. People who can work from home do so. On the other hand, our laboratories in Sweden and in U.S. are fully up and operational. The clinical labs, the R&D labs, and the production is running full speed ahead right now.
The big thing here was that we managed to open the Immunovia Dx laboratory again on March 25th. Right now, all functions, and since then, May 25th, everything has been running in full speed ahead towards the launch in Q4, which is great. When it comes to the two things, one thing one has to make sure, of course, is that our suppliers are able to ship to us. We have stocked the critical reagents consumables, chemicals, and that also we have all the instrumentation in place and get them serviced and so forth. That's worked really well, and we've been able to fully have no problems on that area whatsoever.
When it came to the clinical collaborations, you may remember that most hospitals that take part in the clinical studies for any company in life science closed down all clinical studies during the coronavirus period, and that, of course, affects many clinical trials in that way. However, we only had effects really on the PanFAM-1 study, where the patients, risk people could not come to their regular checkups and so forth. Now during the second half or the end of quarter two, many of these hospitals have restarted our clinical trials and started to bring in patients and samples and expand the study as planned. That is looking much better at the end now at the quarter than it did during April and May. Positive news also on that side. Moving forward then to the remaining steps along.
I wanted to remind you of the picture we have shown. Times to make sure that you know exactly where we are in the process. The first three boxes is what we've done the last years. The third one is the Commercial Test Model Study that we finished at the end of last year, and there will be a webinar now on the 2nd of September for more data results, because now we have the patents in place for that one, which is great. We are now, of course, extremely focused on finishing the verification study that we will have ready here during quarter three, and that's an important step towards the launch. If we, in the next picture here, just highlight the last two steps, the verification study ongoing. We are on track for Q3 completion.
When it comes to the validation study, that needs to be done in the CLIA CAP lab in Marlborough, U.S. For the U.S. market, they are going to use, of course, as you have heard before, the Lux Signature algorithm on blinded samples. We have these samples secured, so that's not an issue. Of course then targeting the Q4 launch in U.S. there.
Please stay connected. The host line will be joined shortly. Please stand by. We are trying to reconnect our host. Thank you. Please stand by while we try to reconnect our speaker. Thank you. Apologies for the inconvenience. Please stand by while we try to reconnect our speaker. Thank you.
I seem to have dropped out.
You are now connected, Mats Grahn. Please go ahead.
Okay. I seem to have dropped out of the call. I need to get back a few of the slides, I guess. Where did I drop out? Can anybody advise me on that one? All right. I will make sure that we start again from here. Sorry about this debacle. As I mentioned, remaining steps to launch. We have the verification study that we are on track for in Q3 completion. That will be followed by the validation study that is done for the U.S. market in our U.S. laboratory, based on blind samples that we do have secured. We are, of course, targeting our Q4 launch right after that. Now talking about the target markets, where I believe I dropped out in this call. The target markets together consisting of an opportunity of over $4 billion. Three different groups.
Hereditary familial, SEK 240 million across Europe and the U.S. We have the early symptoms or differential diagnosis. We have differentiating people who all have symptoms, but only a few of them actually have pancreatic cancer. We can differentiate them. Very important application. That's about a SEK 600 million opportunity. The onset diabetics over 50 years of age, a $ 3.6 million opportunity, because there is over 3 million new people every year in Europe and the U.S. who get the diagnosis of diabetes after 50. As we announced, we are targeting long-term 30% market share of this market. Okay. The patent was filed from the CTMS Commercial Test Model Study during July 2020. There will be a webinar on the 2nd of September for more details on the Commercial Test Model Study results and also an update on the launch activities status of that.
This meeting will be hosted by Linda Mellby, our VP of R&D, as well as our Medical Director, Dr. Tom King, and Laura Chirica, Chief Commercial Officer. There will be information at the end of next week how to log into that meeting. Don't miss that. It's a great opportunity to learn more about the details of this important study. Talking about the commercial launch preparation activities, I just wanted to highlight what was so important during this quarter. That was to transform all the activities to digital and virtual plans and activities. Now we started to roll them out during the quarter two here. That will, of course, increase even further towards launch with numerous activities during the time there.
If we look upon the seven different areas of the commercialization. The key one in the middle is the key opinion leader program, of course. This is an invaluable activity that we worked on for many years, where the key opinions are extremely supportive, giving us access to and guidance where and how to best deploy and use the test in the clinical pathways, access to patients and further important information. Also being very instrumental in some of the activities that we are rolling out. Very important. We also have the clinical study programs, of course. That is to create proof for the adaptation of the tests, not at least for the reimbursement discussions, but also for proofs that each clinician want and needs to have before using it for their patients.
Of course, making the DX laboratories ready, in terms of being able to take orders and deliver results, including all the logistics that pertains into that one and all setting up all the systems there. Moving to the upper left corner, we have mapped all the target key customers in priority geographies. We are building the sales force right now. Extremely important activity that goes really well. During the coronavirus period, we have been able to run the recruitment program. Have been very successful in finding the top candidates for these areas in the sales organization. We continue to do that. Will be ready at launch. We also work with the reimbursement, which is a longer term, of course. There we have a program with guidance experts in each geography where we are active.
We are conducting and preparing health economic studies, even more detailed, that is also moving forward as planned. Collaboration with the patient organization is a big program that continues. You have, for example, the iWalk now that you can participate in. Just log into our homepage and help create awareness around pancreatic cancer by doing that. We have some great photos there and great things also uploaded from potential customers, target people, from clinicians, from investors, from employees and so forth. It is really getting a real community towards solving this problem of pancreatic cancer. Then, of course, marketing and communication activities, press homepage updates that are on the way, media, social events, and so forth. It has been a large program and there will be more updates in detail on this on the webinar on the 2nd of September. Okay.
We are, as you know, rolling it out first in U.S., followed by Scandinavia and the key markets where we have prospective site centers after that in PanFAM-1, PanSYM-1, and PanDIA-1, meaning the other key areas in Europe. U.S. first and followed by Europe in step by step. To summarize, we have been going through the COVID actions taken and successfully, in spite of all the problems with this pandemic, been able to have a very active, very diligent way of moving forward. Therefore, we are on track for and focused for the launch of IMMray PanCan-d in Q4 2020. Thanks to the successful raise of money, SEK 400 million, we have a fully funded commercial rollout. We are long-term targeting a 30% market share of the $4.4 billion market.
Remember, we are first to market for the solution of early detection of pancreatic cancer. Incredible opportunity for the company now, moving from a development stage company to a fully commercial company. The most exciting times of this company this far, and it has got maybe more to come with the future. Thanks a lot for listening. With that, I would like to move over to question and answers.
Thank you. As a reminder, if you would like to ask a question via the audio line, please press star one on your telephone keypad. To withdraw your question, please press star two. Please ensure your line remains unmuted locally. You will be advised when to ask your question. Alternatively, you can submit your questions via the webcast. Again, it is star one via the audio line. We currently have no Oh, apologies. We do have a first question that just came through via the audio line, and it is from the line of Lars Hevreng from Danske Bank. Please go ahead.
Yes. Thank you. Can I just ask about the I know the near-term focus, of course, but the lung cancer project, you touched upon that, but can you just, and that's not the topic for the pending updates, but can you just remind us about where you are? You have these slides comparing it to the pathway for the pancreatic test. When can we expect progress, and what will you communicate, at what level of detail, so to say, will you communicate that the next stage?
Right. I put up that slide on the screen now. Hopefully, some of you will see it. This product is in a much early stage than, of course, the pancreatic cancer that is now approaching launch here. We are in discovery studies phase there, where we have the results from the first studies that we now base our next step on, where we are collecting samples that mirror the commercial situation very close. The commercial situation is that you want to differentiate, for example, samples from patients who have been diagnosed with low-dose CT that have been turned out positive, and most of them are not really having lung cancer. They are false positives, and some are true positives. That's one thing you want to differentiate.
You want to be able to differentiate between people with symptoms or lumps in the lung that is not lung cancer versus the ones that are lung cancer. It's important to get them samples that truly are of these two categories. That's what we are doing right now. We'll come back on the timeline there. It's a little bit hard to know how fast they will be able to sample this one, given the corona situation that affects all lung cancer departments in the world. It is actually ongoing in spite of the corona. We will have to wait until we have a more clear situation on how long time it's going to take because they open and close and so forth.
Okay. Thank you. Just going back to the near-term events. Since you're going to have this presentation in a couple of weeks' time, I guess you have the patents filed-
Yes
that you want to have filed, so to say. Can you just maybe touch upon typically the time frames after the filing of the patents, maybe by key regions, U.S., for example, what we will hear from these patent filings? I guess that this opens a bit for you to communicate more and also to publish the results where we could learn more about the actual design of the test in a bit more detail.
Yes, that is correct. The timing, as you see here, on the whole patent portfolio, we have seven families. The first one filed already by Academia in 2018. Each family consists of patents that are first, of course, in the PCT stage, covering globally, but then are moving in the system down to country by country. Each of these families consists of very many patents per geography. That's something what people have to understand. It's really crucial to get the first filing done, because then from that date, you have the protection for the contents of the patent. That's why it was so very important to get this filing done. The timing until they are, and you're of course protected during that time as well, until they are approved, provided they are approved, of course.
That goes country per country, the approval, basically, after you've done the PCT, the global one. There's a different timeline per country. All of these families, 1 to 7, here as you see on the picture, are moving through that process where the first ones in PDAC are approved, and so forth, and the other ones are in various stages of approval. They all have the same structure. The principle has been passed through and been approved. It's just that we add for each of these families more information that is not known from before and so forth. It takes a long time. It takes years for all of them. The important thing is here, from 2020, we have 20 years protection for the product because we have now filed the patents that are really covering the final product.
That's why this was so important to get this done, and also we have been able to get patents that are wider than the previous ones through the very extensive work we've done on this one during the spring here. That's what I can say, but you can never predict exactly when they are approved in a country. It takes years normally, one, two years, whatever.
Yeah.
That doesn't matter. The important thing is the filing date for protection.
Okay. Thank you. Since now it seems like we are just a few months away from the first commercial delivery of your first product. I guess that's going to happen both in Marlborough as well as in Lund, that you will send out the first test results. I know, of course, what you have said about pricing, et cetera, out-of-pocket status initially. What can you say today about the expected out-of-pocket price? It's only a few months away now, what kind of price would you expect people to pay initially?
Please stand by. We might have lost our connection with the speaker again. Thank you for your patience.
Well, I'm going to take this opportunity while Mats calls back in to remind everyone. First of all, this is Julie Silver, Director of Investor Relations. Also we would love to have you join us on Immunovia Walks to create awareness for pancreatic cancer, you can find the registration right on our homepage at the top.
Hey, can you hear me yet, Lars?
We've got you back. Great.
Okay. Sorry about this. Our operator pushed me out again for some reason or the system. Lars, I was answering your question there on the price levels. As I said, we've done service among self-paying risk people that we have met, tens of thousands actually in these meetings with patient organizations. It indicates that our price level of 600 will be well-tolerated. We will, of course, for a very short period, have some introductory pricing and so forth. We have asked them, if it costs less than SEK 1,000 without talking about the details of the pricing, would you be willing to pay? Over 90% answer yes. Now we have to see what happens, of course, when we start selling. All indications we have is that our price assumptions are realistic.
Okay. Thank you. The blood collection now, since in the current environment, do you think, in reality, is that primarily going to take place at people's homes or at other sites?
It will be both, because we are also targeting gastro centers that would like to use it, and that will be done there, of course, because they have the patients in place then. When it comes to, for example, the hereditary familial risk group, that will very often be taken in people's homes or offices through our collaboration with the remote phlebotomy function. That's going to be a real advantage in penetration as we have been building that up.
Okay. Since you mentioned gastro clinics, would you expect to see some initial bulk orders, more of significant size clinics acquiring?
I think-
Yeah.
Yeah, that's very hard to say, since we have contacts with many of them, I think it will be a period where they start to use it and try it out, so to say, as soon as they feel that this is really helping their patient flow situations and so forth, you will have a hockey stick effect on that one. You will have initially that they will try it step by step. That's my guess. You never know. We might be positively surprised.
Okay, great. Thanks for that.
Thank you. The next question comes from the line of Alex Klivie from Kempen. Please go ahead.
Hi. Thank you, Mats, for the update, and it's great to see that everything is on track. I think Lars kind of asked in a way one of my questions, but given the uncertainty around the pandemic.
Yeah
What steps have you taken to be able to launch the test, assuming there's another resurgence on the U.S. East Coast?
Yeah
More zooming in on those gastroenterologist centers. Do they see the patient flow coming back, or how do they see your launch unfolding there?
Yeah, that's a very good question. Geographically, we start on the East Coast, most intensively. The states that were hardest hit in the beginning, New York, Jersey, Massachusetts, and New England, are now the ones that have opened up in the most stable way. Yes, they have a little bit of an increase there as well, they are the ones that are most open now, including the hospitals. They're all open. They're actually our collaborations. In that sense, we are lucky that our initial first-month target areas geographically are the ones that are in the best shape in U.S. Then, of course, it remains to see how the rest of the country is developing during the coming months here. That's correct. That's a risk that is there.
We have focused all our, when it comes to the marketing, the awareness, the participation in relevant events, creating our own events and so forth. We turned them all virtual, and that has worked really well. We have put sales package support programs for the salespeople in place that also can be used either direct or virtual. We have to have sales trainings virtually and so forth. Some of these things are actually more efficient than before. The whole troublesome situation with COVID-19 has also triggered new ways of working that have proven to be more efficient. For example, what we call lunch seminars or lunch and learn seminars. You can't get access to the gastro specialists during work hours normally.
If you invite them to lunch at the hospital, you come there and do presentations, you bring a key opinion leader in for, you really get attention with really all the people that you need to meet. That's a little bit difficult when the hospitals were down. We have turned them also digital, because we can run them digitally, and that's been very appreciated, and it's an efficient tool going forward, as an example. There are many others as well. Yes, U.S. one day has to start, of course, to go down, that may happen in terms of the spread of the pandemic. Currently, the situation looks best at the areas where we target first, which is great.
You have also rather good handling of the situation in these states, and they have not opened up too early, and they do it in a cautious way. Some other states are in more difficulties, of course, and hopefully, they will come back to a better situation in half a year, and then we will have no problem. We're following that, of course, in detail all the time.
Got it. Thank you. Given all the marketing efforts that you've done, when would you expect to receive some pre-orders, or would you be open to that, or is it really commercially available as of now?
Yeah. We have a list of people who are interested to get the test, but the test has to be ordered by a clinician. Otherwise, we are in problem. We give them all the tools they need to make it very easy for their clinician to order the test. That's important part of the challenge.
Just a final one, could you confirm for us the timelines for the interim readouts of the prospective studies?
Yes. That will be done on the validated test afterwards for all of them actually, step by step. That's going to happen starting towards the end of the year and early next year.
Okay. Basically still in H1 2021.
Yes.
All right. Thank you.
Thank you. There are currently no further questions coming via the audio line. Just as a further reminder, please press star one on your keypad if you'd like to ask a question. Now I would like to hand over to the webcast question. Thank you.
Great. Thanks, Val. This is Julie Silver, I'll be moderating the webcast questions. We've got quite a few here that I'm going to sort of lump together on our validation and verification process. The first question that came in is, are there any concerns regarding the success of the verification and validation results?
No. We are confident that this will go well, of course, you never know before you have the results. Given all the work we've done with the optimization and the commercial test model study, we feel confident about working with this. It's a lot of work, but it's in its final stage for the verification, then it's, of course, the blinded study. We'll get there.
Great. Thanks. The next question is, will the validation study take shorter time to complete?
Yes, compared to the verification and the CTM.
Exactly.
Yeah, definitely.
Exactly.
Yeah. That is to run through a number of blinded samples and make sure that results come out as expected. Yeah, much shorter time.
Great.
For the U.S., particularly. It takes a bit longer. It's more extensive for Europe, and it's some other more regulatory documentation things. That's why Europe comes after U.S., but U.S. is going to go as said.
Great. Do you have any estimates on when we can expect the results from verification and validation?
For verification, definitely before the end of Q3 as planned. Validation will be Q4, including sales start directly at the same day, basically, after results in U.S.
Great. We have a question asking if we have any preliminary initial results that we can talk about today.
No. We don't have the results before. In all our studies, we don't have the results ourselves before we have done all the analysis and so forth. We will release them as soon as we have them, and have quality check them, of course, so we know that they're correct. You'll know as soon as we know.
Great. Now there's a question here that I think talks a little bit more about how the test works. The question is, are you able to detect cystic tumors of the pancreas? Currently, these are monitored via MRI according to Fukuoka protocol.
Yeah, these are IPMNs they refer to. That is a more difficult one, and we will come back to that. It's an important one to differentiate between pre-cancerous lesions like IPMNs, if they're malignant or not, but that's a different clinical question. We can detect early-stage cancer, if we can go even earlier than that, we don't have currently full data on, so we can't talk about.
Great. Thanks. We have a question on our market penetration projections. What happens to the market share penetration rate if there are no true competitive products out there within the pancreas sector? Do you have the capacity to cede 100% of the market share?
Producing is extremely efficient. The test, so to say, is extremely efficient to scale up. Already now, we can, with our printers, produce 240,000 to 250,000 tests per year. We can very easily scale that up by putting in more printers and producing more antibodies to put on them, which we have all control of ourselves. That's with limited investments, actually. The facilities for production are already so large that we can easily roll in more and more of these printers. That's one thing. Then, of course, one has to add more people to the laboratories, so the Immunovia Dx laboratories. It's a very scalable situation, and we can react very quickly to an unprecedented positive large demand. I'm not so concerned about that. If you get lots of orders, you're really going to solve them and deliver, and we will.
Great. Thanks, Mats. That concludes the web question section. Maybe we have another call-in question.
There are currently no questions coming via the audio line. This is a final reminder. Please press star one if you'd like to ask a question via the audio line. Thank you. There are no questions coming through via the audio line, so I'll hand the call back to our speakers for any concluding remarks.
All right. I'd just like to summarize. We have handled the COVID-19 situation. We are in good shape there, we continue to monitor of course what happens and react to any potential changes. Key activities on target. We remain focused on launch Q4 in U.S. We have a fully funded company for the commercial rollout. We are targeting a long-term 30% market share in a market where there is no other product currently. First to market solution for early detection of pancreatic cancer, addressing a $4 billion market. To all investors, thanks for being with us and making this possible. Hope to continue having you with us during the fantastic journey we have in front of us. Thanks a lot for today.
Thank you. Thank you for joining today's call. You may now disconnect. Host, please stay on the line and wait for the instructions