Ladies and gentlemen, welcome to the Medivir AB Q3 report 2021. For the first part of this call, all participants will be in listen only mode, and afterwards there will be a question and answer session. Today, I am pleased to present Magnus Christensen, Interim CEO and CFO, and Fredrik Öberg, CSO. Please begin.
Thank you operator, and welcome all to Medivir Q3 webcast. Please move to slide two, please. Today's presentation will be held by myself, Magnus Christensen, CFO and Interim CEO of Medivir, and Fredrik Öberg, our Chief Scientific Officer. Next slide, please. I will not go through this, but recommend you to read it or visit our homepage, where you can find the presentation as well. Please move to slide five. Today's agenda, I will start off with an overview of Medivir, then highlight some major events during Q3. Then I will continue with the financial highlights for Q3 before handing over to Fredrik, who will present MIV-818 in more detail. I will conclude with expected upcoming milestones this year, before we open up for a Q&A session. Next slide, please.
Medivir was established well back in 1988, and today we are focused on oncology since a number of years ago. The company is listed in Stockholm, NASDAQ, since 1996. End of Q3, we had SEK 226 million in our cash balance, and according to the current plan, the cash run rate is well into the year 2023, which is very positive. We focus both personnel and financially on our wholly owned asset MIV-818, which is a liver-directed nucleotide product. We are currently in phase Ib clinical development, and Fredrik will present more details later in the presentation. MIV-818 has received orphan drug designation both in the U.S. and the EU by FDA and EMA. Next slide, please. Here's an overview of our clinical projects.
As I said, we have a focused clinical program, MIV-818, targeting liver cancer and currently in phase I with pembrolizumab, and we're looking forward to start a combination study later this year. We also have a partner asset, birinapant, which will enter phase I clinical development by IGM later this year, according to IGM. Birinapant is initially planned to be combined with IGM's IGM-8444 in solid tumors. When IGM will start their combination study, we will receive another $1.5 million. The potential total package deal is worth, if birinapant should be successfully developed and approved, Medivir is entitled to receive development, regulatory, and sales milestone payments up to a total of approximately $350 million.
On top of that, Medivir is entitled to receive royalty levels from the mid-single digits up to mid-teen on net sales. We do also have two clinical programs for partnering and out-licensing, Remetinostat and MIV-711. Regarding Remetinostat, we have shown good data in a phase II study in cutaneous T-cell lymphoma, as well as in two investigator sponsorship studies in basal cell cancer and squamous cell cancer. Furthermore, in the OA phase, we have MIV-711, where we have conducted a phase II study that showed positive effects in both bone and cartilage in joints in OA patients after only six months of treatment with MIV-711. Please move to slide number nine. Here are some highlights that we accomplished during Q3 this year.
In September, Malene Jensen joined Medivir as Vice President of Clinical Development, and we are very happy to have Malene on board, and she's part of the Medivir team. She will work with the clinical development and for MIV-818. In August, the positive results from the phase II study with Remetinostat against basal cell carcinoma were published in the scientific journal Clinical Cancer Research. Furthermore, we announced in August that we have renegotiated the original agreement when Medivir acquired Remetinostat. It's very positive now that the original agreement has been renegotiated so that the compensation that we are obliged to pay in a potential future out-licensing of Remetinostat is based solely on the distribution of actual future revenues to Medivir. We believe that this agreement in place will help improve the condition for potential out-licensing or sale for Remetinostat.
At end of August, Medivir received regulatory approval from the Medicines and Healthcare products Regulatory Agency for the upcoming phase Ib/IIa combination study with MIV-818 against liver cancer. It's very important so we can start the combination study according to plan. At ESMO Congress in September, the result from the completed dose escalation part of the phase Ib monotherapy study were presented. A total of nine patients with various types of advanced cancer in the liver were included and evaluated, and Fredrik will present more details about the data later on in the presentation. Very positive, in October, we have announced that our new CEO, Jens Lindberg. Jens Lindberg has extensive experience from the pharmaceutical industry and the field of oncology. He joins from Sedana Medical, where he has been vice president, commercial operations, and also acting CEO.
Before that, he has worked at AstraZeneca for many years in different leading roles. It has not yet been finalized when Jens will start, but maximum 6 months from the announcement. Please move to slide 11. Financial summary for quarter three. All numbers are in million SEK. The turnover for Q3 is almost SEK 1 million, which is slightly lower compared to last year and relates to lower royalty from Xerclear. Cumulated, the turnover amounts to almost 12, which is not far from last year's turnover. Other external expenses are higher than last year and relate mainly to high costs for clinical studies and mainly preparations for the upcoming combination study. Personnel costs are lower and relates to fewer FTE compared to last year. The loss for Q3 is around -12, which is lower than last year.
The lower result mainly relates to the positive effect of the renegotiated leases per year, which is shown as other operating income. The cash flow from the operating activities for Q3 is around SEK -20 and year to date, SEK -43 compared to SEK -57 last year. The cash position at the end of Q3 is SEK 226, which is enough to complete the ongoing clinical activities. According to our current plans, we have our cash well into the year 2023. Please move to slide number 12. With this, I will hand over to Fredrik Öberg that will present more details about MIV-818.
Thank you, Magnus. Our lead project MIV-818 for treatment of liver cancer. Could I have the slide number 13, please? Hepatocellular carcinoma is a rapidly growing market, predicted to reach over $5 billion in 2029. As you probably are aware, there's been recent advances in the treatment of HCC. Despite this, there is still a large group of patients who will either not respond to this therapy or be intolerant to the current treatments. This means that the hepatocellular carcinoma still constitutes a continued very high unmet medical need. The market growth within HCC is mainly driven by new combination therapies, especially combinations with immuno-oncology therapies.
More patients are also receiving therapy when patients are living longer and treated earlier in the disease. There's also an increase in liver cancer incidence and mortality. Still, the five-year survival for advanced HCC is really very poor. There's a big market here that needs new therapy. If we move to slide number 14. In the third quarter, we reported the phase I monotherapy data at ESMO. The bottom line is that these new results we think are very exciting to us. We think that this supports our continued development of MIV-818 in HCC. Most specifically, the objectives were to analyze safety and tolerability in this patient population.
The patients that were recruited into this study were patients with HCC, but also with liver cancers derived from other primary sources, so liver metastasis from colorectal cancer, for instance. A broad patient population, heavily pretreated, that had exhausted other approved treatment options. In terms of safety, what we observed was that we saw a decrease in blood cell counts at higher doses, which was expected. That was the most common side effect. These resolved quickly when treatment stopped, and they're easily monitored. We think this is a very good safety profile to this patient population.
In terms of efficacy, which we of course wanted to monitor as well, although they're of course not the primary objective, we observed as the graph to the right indicates that four patients out of seven with primary liver cancer, and that is hepatocellular carcinoma and cholangiocarcinoma, had stable disease as best overall response. One of them actually stayed on treatment for eight months. On the right, you see the changes in these liver target lesions over time, measured for the different diseases that were included in the study. We also as proof of concept took liver biopsies and analyzed.
These liver biopsies demonstrated that both that we deliver the drug to the liver, we can measure metabolites that cannot be found from any other source than MIV-818, so we know that we have delivered the drug to the liver. We also observed a selective effect of MIV-818 on the tumor cells, so in induction of DNA damage in the tumor but not in the surrounding normal liver tissue, which is great and really what we were hoping for. This confirmed the initial observations that were found as seen in the early phase I A dose escalation part. With that, we feel very confident in moving on in our clinical development of MIV-818. If we turn to slide number 15.
A difference now that we're moving on in our clinical development program is that we're focusing in on hepatocellular carcinoma. Going forward, we see this as a good entry point. It doesn't of course exclude other cancers in the liver in the future, but now we're focusing on HCC. These primary liver cancers develop from liver cells themselves. There is a large number of patients across the world as you probably know, this is a very common cancer in Asia, whereas it's much more uncommon in the West and therefore we have sought and gotten orphan drug designation for MIV-818 in HCC. The majority of these primary cancers in the liver are hepatocellular carcinoma.
In this treatment schedule that you see on the slide highlighted with red, you see the patient population with advanced HCC. These are the patients that get systemic treatment, so these are the patients that we mostly talk about when they get immunotherapy, et cetera. This is the patient space that we're entering with MIV-818. If we move to slide number 16. In this space, in the advanced HCC space with systemic treatment, MIV-818 constitutes a unique new tool by its mechanism. The current development pipeline in this space consists of a variation of different combination trials mainly. They usually contain two main mechanism actions. One to stimulate the immune system, and marketed drugs here are the immune checkpoint inhibitors, mostly anti-PD-1 or anti-PD-L1.
Two tyrosine kinase inhibitors, TKIs. They do many different things, but one of the major things they do is block blood supply to the tumor, so they're anti-angiogenic. Combinations of these are the main two mechanisms that are both marketed and also in late stage clinical development. If we move to slide number 17. With MIV-818, we aim to be a new improved second-line treatment. This is how we view the entry into this market. The approval last year of Tecentriq plus Avastin, a combination of immune stimulation and blocking blood supply to the tumor, created a new second-line space. There are actually, strictly speaking, no approved second-line treatment after Tecentriq and Avastin.
Now, of course, not all patients will get Tecentriq plus Avastin for different reasons. A large portion of these patients will still be either primary resistant or have a response and then progress on their treatment. This creates a new second-line opportunity. With MIV-818, which has the mechanism of inhibiting DNA replication, we see that opens an opportunity to combine with the two main types of therapies in this space. That's where we think we will enter. MIV-818 plus one of the anti-PD-1 antibodies, Keytruda, or MIV-818 with one of the TKIs, Lenvima. If we move to slide number 18. The upcoming phase I B/A combination study in second-line HCC.
Here, we're focusing on a patient population that has advanced inoperable HCC. They're either progressed or are intolerant of standard first-line therapy for HCC. That could be, in most cases perhaps, Tecentriq plus Avastin, but other possibilities exist for patients that do not tolerate Tecentriq plus Avastin, for instance. They should also be candidates for Keytruda or Lenvima. What we're looking at is a study that is divided into two phases. A phase I-B part, which is a dose escalation, based on the recommended phase II dose for monotherapy. We're entering a bit lower here in this dose escalation to identify a combination recommended phase II dose. This dose might be different for the different combinations. These arms or streams are parallel.
After this dose escalation part, we aim to have a dose expansion part where we expand the number of patients at the correct dose to still obviously look at safety and tolerability, but also take a closer look at signs of efficacy. We're on track to initiate this combination study as planned. We will do the study in the U.K. We have regulatory approval in the U.K., and we will add additional sites. We're also working towards opening sites in Spain and South Korea. This is important, not only to recruit patients but also from a strategic point of view, having patients in South Korea, I think, will be an advantage for MIV-818 going forward. If we move to slide number 19.
The key advantages summarized in one slide that we see for MIV-818 going into HCC is that it's once-daily oral dosing. It's one pill a day, it's convenient. More importantly, it's targeted to the liver. This selectivity that we have seen in phase I-A and I-B monotherapy, selective for tumor cells in the liver, really is an advantage in terms of getting good effect in the liver, reducing systemic exposure and toxicities. There's also something that we haven't spoken that much about, but the fact that the pro-drug design allows us to bypass several common resistance mechanisms for nucleoside, normally found for nucleoside drugs, such as deaminases, transporters, etc., which increases the efficacy of MIV-818 over the nucleoside type of drug.
Also, in the HCC space, we see that MIV-818 has a unique mechanism of action, which makes it attractive for different combinations, as the resistance profile and the efficacy profile will differ from the other agents, the other therapies in this space. As we've mentioned, we're entering with a combination of a new therapy with MIV-818 and a tyrosine kinase inhibitor and MIV-818. Obviously the fact that we're unique opens up other possibilities in the future. By that, I will hand over to Magnus.
Thank you, Fredrik, and please move to slide 21. Here we have highlighted the expected milestones for the remaining part of this year. Firstly, we're looking forward to start a combination study with MIV-818 later this year, as Fredrik mentioned. Then secondly, IGM has announced in the future report that they plan to start a combination study with birinapant and IGM-8444 later this year as well. When they start, we receive another milestone payment of $1.5 million. We are really excited to follow the progress of these clinical studies. With that, next slide, please, I will hand over to operator and open up for a Q&A session.
Thank you. Ladies and gentlemen, if you have a question, you have to press 01801 on your telephone keypad. We have a first question from Joe Pantginis from H.C. Wainwright. Please go ahead.
Hi, guys. Good morning and good afternoon, and thanks for the details. I have a two-part question. The first one really looks to this upcoming combination, 1B, 2A. First, it revolves around benchmarking about, you know, what benchmarks you have for success. Obviously, we can get those from the labels for both lenvatinib and Keytruda in their respective HCC populations. I'm curious, will you disclose at some point or discuss now, to some degree, you know, what you believe is the benchmark to beat? Like, what do you wanna see to be able to move from 1B to 2A?
Well, obviously this is something that we have discussed quite a lot internally. I don't think we're ready to put a number on that publicly yet. As you say, we do know what the current treatments have achieved, although in a slightly different setting as these were approved after sorafenib, as first line treatment. It gives a good indication of where we need to be or what we need to be, of course, anyway.
Absolutely.
I think that what we're going to see here initially is objective response rates and most likely the overall survival in the end will be what really counts. There will be several numbers to benchmark against eventually.
Sure, sure. My next related question is definitely forward-looking, but I guess it's an open question prior to the study, during the study, and after the study, that you know, investors commonly ask, as well as the medical community commonly asks, and that is: How would you look to be able, other than seeing you know, improvements over the label, you know, other ways you can discern the contribution of MIV-818 to potentially enhanced efficacy since it's not randomized?
As you say, this study is open label and it does not have a comparator arm. I suspect that the data will be guiding us in that respect with really good data. The question is easier with data that is good, but not that good, we would probably need to include a comparator at some stage.
Got it. Thanks for the added color, and looking forward to the start of the combo study, guys. Thank you.
We are too.
Thank you.
Thank you. Next question from Hans Ingló from Private Investor. Please go ahead.
Hello, guys. In an article in Science, which I know you have seen, it is claimed that the immunotherapy to really work, DNA cells must be damaged. In relation to this, what is your view on MIV-818 in relation to this with damaging the cells?
Yes, that was a very interesting article. It essentially said that the maximum stimulation of immunotherapy would require damaged but not dead cells as well as dead cells, which in essence meant that the maximum dose was not the optimal dose. I think this is very interesting. It's still model systems, but very similar results we actually saw from MIV-818. We published that on a poster in a complex in vitro system with different cell types that actually we stimulate the immune response towards Keytruda in the combination with MIV-818. I think it's very interesting. I think that MIV-818 at a correct dose would do the same, namely, achieve some level of cell killing but still induce DNA damage in cells that live and perhaps are immune stimulatory. That's just a speculation.
In the upcoming combo, you study advanced HCC, in intermediary HCC TACE is a sort of chemo embolization is used. Do you see that it's possible for MIV-818 to replace TACE entirely in the future?
I mean, that's a very ambitious goal obviously, with TACE being very much an established method. We do see future opportunities in patients that are in intermediate or earlier in their disease. I think that our current focus is the right focus to get the quickest way to approval, and that is to target the advanced stage patients. Because in the intermediate stage and the patients who have adjuvant therapy, for instance, to surgery, those are quite long and costly studies. I think that our best play is to move into the advanced HCC space.
Okay. Thank you. One further question. The protein degradation is being very hyped at the moment with deals by Pfizer and Novartis recently. Your licensee of USP7, Ubiquigent, it's hard to say. They last week announced that they had extended its discovery cooperation with Bristol Myers Squibb. Does the new agreement include your licensed product, USP7?
I mean, that's a question for Ubiquigent. But of course, we're happy that we have licensed this project to a company that's very active and very competent within the DUB field.
Yeah.
Of course, these are very early molecules, but we hope they will be successful in the end. This is a long-term goal still. I couldn't really comment on their deal with their collaborations.
Okay. Okay.
From our point of view, we think that it's a good partner. It's simply.
Yeah. Yeah. You have to follow up on that one then. It's been quite huge amounts that Pfizer and Novartis are committing, and the BMS has quite an experience in the area. Do you believe that material revenue can come out of the revenue sharing agreement Medivir has with Ubiquigent?
Absolutely. I mean, that's our hope, and that's what was our intention when we did the deal. Yeah.
Yes. Can you say anything about timing of that?
No. I think unfortunately, this is something that will be completely driven by data and the deals that Ubiquigent can make. It's really impossible for us to say anything about the timeline.
Okay. Thank you. It sounds exciting, definitely. Thank you very much.
Yes.
Thank you. Next question from Niklas Elmå from Redeye. Please go ahead.
Okay. Thank you, and good afternoon. I was just wondering about business development following your new results and renegotiate the deal for deal terms for Remetinostat in the summer. If you're seeing any renewed interest or intensified discussions with potential partners.
Thank you for your question, Niklas Elmå. Of course, that's a very difficult question for me to guide on really. Of course, with the positive data from the studies that were announced in quarter three and with the new Remetinostat revenue share agreement, of course it attracts some interest. It's very difficult to guide on when and if we could accomplish a deal. Of course, we are working on it. That's what I can say.
Okay. Thank you. Regarding the upcoming phase I-B combination study. You mentioned starting doses there will be a bit lower. How soon do you think you will reach, you know, therapeutic dosing?
Again, very difficult to speculate. We've reached a dose of 40 milligrams per day for five days in the monotherapy study. We're entering the combination study with a 60% reduction. That means at 20 milligrams per day. We have these 3+3 design cohorts of three patients at a time. We don't expect to go that much higher. Again, we don't really know. Once we have gone through the dose escalation, I think we will be able to guide better the timing of the phase II expansion phase and when we will get data. Because if the first dose escalation part is so elastic depending on what we see.
Okay. Thank you. That's informative. Thank you.
Thank you.
Thank you. Next question from Richard Ramanius from Redeye. Please go ahead.
Hello. I had four questions. Maybe I can continue with a follow-up from one of the previous questions.
Yeah.
Do you ever have any kind of perfect or optimal partner for Remetinostat? What kind of company do you think would be your best partner for that project?
That's a tricky question. Of course, we would like to see someone who is competent within dermato-oncology and has the resources to really. I mean, key for out licensing is that we have a competent partner with the resources to actually do the studies. I mean, that's why we're really happy with the deal we made with IGM Biosciences. Very competent company and also backed with good money. That type of situation, of course, is the ideal situation for Remetinostat as well.
Okay. I had two questions concerning maybe MIV-818, so I can take both of them at the same time. First question concerning the timeline. How and when do you plan and prepare for exit? Second question, have you had any discussions with or interest from Merck or Eisai?
Whose substance is here doing the combination study with Keytruda and Lenvima. I was thinking, for example, a supply agreement or something like that.
If I take the last question first, as you know, there's probably slightly under 2,000 studies going on with anti-PD-1s, and a large part of those are Keytruda studies. It's a very big space, very many combinations of different kinds. There's something to be said about having a collaboration agreement or a supply agreement, and that does restrict you in what you can and cannot do going forward. Of course, you would save money, but at the same time, you would tie yourself to that product. Having that financed by us gives us a rather larger freedom to operate after we have generated data.
That's one important aspect. We cannot say anything about if we're talking to them or not. I mean, that's that would be confidential. We have considered different ways forward, and we think we have a really good way that we think we're confident we have the finances to do and that will give us the best opportunities after completion of this study. The timelines for an exit, again, I would hand the question to Magnus. It's a very difficult question to answer.
Yeah. Thank you. I think we've said it before. I think we can have different routes to the market. If you look at the Western world, we hope and we see that maybe we can manage to do ourselves the whole way to the market. Of course, it will be data-driven from the phase II-A that we're going to perform soon. For the Asian part of the world, what we see now that we think is the best for the project is to find a partner from the Asian part of the world. That's what we can say at the moment. We will see and after we have progressed in the study, we might guide you a bit more on that later on. At the moment we're really focused on starting the clinical study.
Of course, there's, I mean, it's no secret that companies in Asia do want to see data from Asian patients, and they do want to see a bit later data than just the first phase I study data, in general. This is also our experience talking to different potential partners. That's why I think we think that actually opening sites in South Korea is an important strategic move in order to open up that possibility and also increase the value of potential deals.
Yeah, that makes sense. Absolutely. Especially having an Asian partner. My last question, financial. How do you see the cash flows changing in the next couple of quarters as you start or as you continue or ramping up with the next part of the MID-820 trial?
What I could say that some of the cash flows that we are now preparing for the combination study and of course for the substance and so on. What I can guide you, what I said before is that the cash run rate is well into the year 2023 according to the current plan. We don't really split up into the quarters, but the money will last well into the year 2023.
Okay. Thank you.
Thank you.
Thank you. For the moment, we don't have any more questions. Looks like we don't have any more questions. Back to you for the conclusion.
Thank you, operator. Thank you all for participating in this webcast and some very great questions. Have a great day. Thank you. Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your line. Thank you.