Earnings Call: Q1 2021

Apr 28, 2021

Thank you, operator, and warm welcome to everyone joining this call. Bedevils' 1st quarter numbers and highlights. Slide number 3, please, operator. You will find our presentation on our homepage, and I do recommend everyone to read our cautionary statement, which you find on Slide number 3. Let's jump to Slide number 5, please. We will briefly present an overview of the company's main projects and partners and highlight a few numbers for the Q1. So we continue with our CFO, Magnus, to present a broader picture of our, what we believe strong financial position, followed by an update on our recently announced partnerships, then we'll be touching up on our 818 project for liver cancer and round up the presentation within Q and A. Slide number 6, please. Our proprietary asset, 818, is a liver directed nucleotide prodrug and has received orphan drug designation both in EU and the U. S. We did recently announce the safety follow-up of the lab patient has been completed and recommended dose for the upcoming combination therapy has been determined. As previously communicated, we will announce next study in more details later in this quarter. Our internal goal is to initiate the next study during second half of this year. We did in the quarter out licensed Brinavant to IT and Biosciences and have also out licensed one of our preclinical projects, USP 72, ubiquitigent. In parallel, we have completed a successful financing of the company, specifically to drive the next phase of our 818 molecule, in the right issue, the specialist investor HealthInvest has become a new major shareholder and we did receive good support from existing shareholders, Link AB and Nordea. And we do also have 2 programs partnering, that is brematinostat and MIM-seven eleven. Slide number 7, please. A snapshot of our clinical assets, where we have our proprietary project 818, which is a liver directed leblicap prodrug. Currently, as I mentioned, completed the monotherapy Phase 1b, where the recommended dose has been determined, where we can now continue into a combination study phase. Our partnered asset, IGM, where we continue to expect initiation of a Phase I trial later this year. And we do have our 2 other assets, romanatinostat and MIIV-seven eleven. Romanatinostat, a topical HSTAC inhibitor, where there have been conducted clinical trials in CTCL based on cell carcinoma and also a smaller trial squamous cell carcinoma, where data has still has not been disclosed. For 711, the company has in the past concluded an osteoarthritis Phase II study. With that, I'll hand over to Magnus Christensen, CFO of the company, for financial highlights of the company. Thank you, Ilmat. Please go to Slide 9, please. And here you can see the financial summary for the quarter 1 this year compared to quarter 1 last year. And bear in mind, all numbers are SEK 1,000,000. And you can see in the Q report and the last year and this Q1 report for this year, Medeville has been very, very cost conscious. And for example, we have reviewed all our external agreement. And as a result, you can see the cost base is much lower now as a result of that. And then if you look at the numbers for Q1, you can see the turnover quarter 1 amounted SEK 9,900,000, which is an increase of SEK 2,600,000 compared to last year and that really relates mainly to the out license of Brinavant to our Jiam Biosciences, which Gilmas described earlier. And as we continue to be very cost conscious, for example, we have received this quarter a refund from previous clinical studies, and this is shown as other operating income. Overall, we have lower external expenses, which amounts to 18.8% compared to 20.7%. And please note that the revenue share to Tetalogics regarding the advertising of RGM of €1,000,000,000 is included in this figure. Lower cash net cost relates to less number of FTE employed in amounts of SEK 5,800,000 compared to SEK 7,300,000. And the loss for the quarter 1 is around SEK 8,000,000 improvement from SEK 23,000,000 last year. And the cash flow from the operating activities this quarter amounted to minus SEK 1.5 billion, which is a nice improvement from last year of SEK 16.6 billion. And if we sum up, the cash position at the end of Q1 is NOK 269,000,000 and the increase relate mainly to the write issue and directed issues cut out in Q1 and to the SEK 223,000,000 reported contraction costs. And according to our current plan, the cash run rate is well into the year 2023. Next slide, please. Finally, secured to bring mid-eight eighteen study into the next phase. I think we have informed you earlier about the right issue was completed successfully and Oberto Sky with 93.5%. And with the directed issues carried out in Q1, Medeville received in total SEK 223,000,000 before transactional cost. And with this, Medeville has now very strong ownership base with 3 strong institutions. LinkAP, especially invested with around 10.5 percent shareholder Nordea, one of the largest bank in the Nordics with almost 9% shareholders and helped invest, especially investor with around 6.5 shareholders. And thank you all, existing shareholders and the new shareholders for participating in the right issue and directed issue. And with that, I turn back the call to Gilmer. Thank you, Magnus. Let's jump over to describe our latest partnerships. Slide number 12, please. As mentioned during the quarter, we did sign a licensing agreement with IGN Biosciences, a California a clinical stage biotechnology company focused on creating and developing engineered IgM antibodies. Brinavant is intentionally initially intended to be combined with IGM-eight thousand four hundred and forty four. This is an IgM antibody targeting of 5 being developed by ITM, where Brinavant has been shown to enhance antitumor activity preclinically. After signing, we did receive an upfront payment of $1,000,000 which has now been recognized in the numbers, as Magnus mentioned. This will be followed by an additional $1,500,000 when Brinapant is included by IGM in a clinical Phase I study. Should Brinavat be successfully developed and approved, Medevir is entitled to receive development and regulatory sales milestone payments up to approximately $350,000,000 plus tiered royalties from the mid single digits up to mid teens on net sales. As mentioned, a portion of the milestones and payments received from IGM will be distributed to Tetra Logic, but the majority of the payments will be in the hands of Medeville. Next slide, please, Slide 13. Slide 13 is a picture presented by IGN Biosciences, while they do believe in the combination of 84.40 together with Brinapant. As you can see in this triple negative breast cancer model, we see that the combination of 8444 with Brinapant inhibits the tumor growth almost completely. Whilst Bruna pump itself do not have any impact on the tumor growth, and IDM44 have had a slight impact on the tumor growth. Slide 14, please. In February this year, we concluded a licensing agreement with Ibukigen, and that was based on our preclinical research program, USP7. The agreement grants ubiquitgen an exclusive global license to develop and commercialize all of the programs related substances in all therapeutic indications. In exchange, we get an agreed revenue sharing upon successful development or commercialization. Also remember, last year, in the Q1 2020, Medevir entered into a licensing agreement with the U. S. Biotech company, Tango Therapeutics, for the preclinical USP1 research program. Tango recently announced that they will conduct a SPAC IPO and that they expect to file an IND for the USP1 inhibitor in 2022. Next slide, please. Now we'll be jumping over to Property Project 818, I will hand over next two slides to our CSO, Fredrik Ober. Thank you, Gilmer. So moving into the MIB-eight eighteen project. During the development of 818, the focus was to achieve an orally administered prodrug, which was stable in the gastrointestinal tract, stable in blood, but rapidly metabolized when entering the liver. So by that, we sought to achieve high exposure of the drug in the liver, while minimizing systemic exposure that we don't need to treat the liver cancer. So the prodrug is taken up by the liver, and it's converted in liver cancer cells to troxocitabine triphosphate, which is the active metabolite. This is done by a separate series of enzymes, and it does several things. First of all, the generated metabolites, the phosphates are charged and get trapped in the cells. 2nd, you increase the potency as compared to Trussocytobid by doing this adding this product, Moridic, to the molecule. Once the active metabolite is formed, it's incorporated into DNA and replicating cells, only proliferating cells are damaged by this mechanism. It causes DNA damage. It causes cell death in the cancer cells. So if we move to Slide 17, we have, of course, in the Phase 1 study has a primary objective to explore safety and tolerability. But we have additional objectives, and those were to establish a proof of concept. And what we do see by analyzing the biopsies that we obtained from tumors, from patients, is that we have a very clear selective effect signal in the liver cancer cells. So we measured it by measuring DNA damage response. We observed that in the tumor cells only, normal liver is minimally or not at all affected and pre dose biopsies show that this is induced by drug, it is also across different types of primary liver cancers, so both metastases from other tumor sites, hepatocellular carcinoma and gliocarcinoma. So all indications are affected by the drug, specifically in the tumor and not in the normal liver. And then I'll hand over to Gilmars to describe the markets. Thank you, Fredrik. Slide 18, please. We have and continue to believe that the HCC market is an attractive segment of the cancer market at the moment. We believe it will grow rapidly in the coming years. Factors that we believe will drive the market is the entry of new combination therapies, which will drive increased usage of drugs, improved survival rates and treatments of patients earlier in the disease. We believe this is just the beginning, and with 818, we intend to become part of these future combination therapies. As mentioned by Fredrik and the mechanism of action, we believe 818 can be combined with multiple other drugs, both approved and in clinical development. As mentioned, we will update you on the next study for 2018 during this quarter. It is also gratifying to see that global data and other sources of data that compile the future growth of this market has updated their numbers to become more aligned with our and others' view of the coming development in this space. Currently, the market is expected to grow fivefold in the coming years. Next slide, please, Slide 19. During the quarter April 2019, it was announced that last patient had undergone the safety follow-up, and the results were positive with a good safety and tolerability profile. Starting dose was Determine for the 2nd part of the Phase Ib study, where 818 will be given in combination with other therapies. The combination therapy is planned to be initiated in the second half of twenty twenty one. The results from the Phase Ib monotherapy will be presented at an upcoming conference. We should mention that there are still 3 patients on treatment in the Phase Ib monotherapy study. Next slide, please. Slide 21. We have 2 clinical stage assets for partnering. Rematinostat is a topical HDAC inhibitor, where we do have positive Phase 2 data in CTCL. In the CTCL study, we saw an overall response rate of 40% at the highest dose treated and a decrease in pruritus of 80%. In basal cell carcinoma, the study conducted by the Stanford investigators, the top line data has been disclosed. The overall response rate was approximately 70% in this study. However, detailed data still need to be published, and we expect that to be published in the future. And we are still awaiting top line data from the squamous cell carcinoma study also conducted by the Stanford Group to be published. We hope to keep you updated when that data is available. Next slide, please, Slide 22. Finally, I think the company has made great advances in the last 6 months. We do have strong finances to aggressively bring 818 into the next stages of clinical development. We have created a strong shareholder base, and we have licensed out Brinavant to attractive terms. If all goes according to plan, we should have initiated our next study with 818 in the second half of this year, and our partner, IGM, should have initiated the combination therapy with Brinavant also in the second half of this year. And in connection with the Annual General Meeting, I will leave the operational role as the CEO of Medevir. I'm pleased to be proposed as a Board member of Medevir and look forward to continue to contribute to the company's development in that role. The Board's work to recruit my replacement as CEO is in full swing, but not yet fully completed. During this interim time, our CFO, Magnus Christensen, will head the company. I would like to thank my competent and dedicated colleagues at the company for this exciting and inspiring period and assure my successor that Medevir has good prerequisite requisites and a very strong potential to create value for health care and patients as well as for our shareholders. We do stand on strong grounds. With that, operator, I would like to open up for a Q and A session. Thank you. Our first question comes from Joe Pantginis from H. C. Wainwright and Co. Please go ahead. Your line is open. Hey, guys. How are you doing? Thank you. Thanks for taking the question. I have just 2 logistical questions at this point. So First, definitely looking forward to the expansion studies for 818 in combination and was just curious if you could just remind us about the supply chain for 818 and manufacturing capabilities and readiness. Absolutely, I think I will hand that question over to Prenic. He's much more closer into the supply chain. Yes, we have available drug for the combination study. So it's a question of labeling and distribution. So that has already been produced. Got it. Got it. And then, the other thing is on the management front. So, Yilmaz, thank you for your tenure, and I'm glad you're staying on the board with the successful turnaround that's been going on at the company, and you really have a new strategy in play. So thank you for that. So I guess the question that I have for you being now on the Board as well as like for Uli, as the Chairman is what are the leadership characteristics or qualities that you're looking for in a new CEO candidate? Thank you for the question, Joe. I think there are a couple of aspects. I think the first aspect, given that we are we do have strong financial grounds in place right now. It's all about keeping the speed up in the clinical development. So operationally, it's one of the focus. But also in Corporate Development, we still have 2 assets that need to be out license, for example, find partners for. So I think that's one of the characteristics that we are also looking for, Trapp, these two experiences an upcoming leader of the company. Got it. And I appreciate the details, guys, and thanks a lot. Thank you, Joe. Thank you. Our next question comes from Niklas Elhammer from Red Eye. Please go ahead. Your line is open. Yes. Good afternoon. Thank you for taking my question. I was I apologize. I thought I missed something you said about the income sharing with CatraLogic, how is that booked? Thank you for the question, Niklas. I will hand over that to Magnus, our CFO. Hi, Nico. Thank you for your question. No, it's according to the revenue share agreement that we have with Sotalobics, a part of the revenue that we received from IGM regarding Brinepant will be shared to Tetelogix, and that is booked as other sale, the refund for clinical costs, could you remind us what that is about? You mean the refund? Yes. No. Is that like we are reviewing all agreements that we have today and passed and really reviewing the terms and condition. And so it's really a renegotiation that we and the summary of that is that we will receive a refund where we have received a refund from the trial that we've done, the clinical study. Okay, okay. Okay, great. Thank you. Thank you. Thank you. There appear to be no further questions. I'll return the conference back to you. Thank you, operator. Thank you, everyone, for all the questions and for listening to our Q1 financial highlights and also operational highlights. I think we are standing on 2 strong fundamentals, and we believe we can create some good value for patients and shareholders going forward. Thank you.