Good day, and welcome to the Oncopeptides third quarter 2022 earnings call. All participants will be in a listen-only mode today. Should you need any assistance, please signal a conference specialist by pressing star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Jakob Lindberg, CEO. Please go ahead.
Thank you. Warm welcome to the third quarter 2022 webcast for Oncopeptides. My name is Jakob Lindberg. Before we start, let's jump to slide number two. Here you can see today's speaker, speakers. It's myself. It's also Sofia Heigis, Chief Commercial Officer, and Annika Muskantor, Chief Financial Officer. On slide number three, you will see the regular disclaimers. There's nothing special in here. If you want to read this carefully, it is available also on our website. On slide number four, you see an overview of today's presentation, where I will give a general update regarding the company as well as the clinical and regulatory update. Sofia Heigis will give a commercial update given our ongoing launch in Europe, especially the German market.
Annika Muskantor will give a financial update, and then towards the end, we will all be here available for Q&A as well as some closing remarks held by me. Let's just stay a little bit on slide number five before going into the presentation. I would just like to look back at the year behind us. Almost 12 months ago to the day, we as a company were in a very, very difficult spot. We had just had to withdraw from the U.S. market, and frankly speaking, we were in a very, very bad situation. Since then, we have successfully reshaped the organization from a cost point of view in a very painful but also very successful process. We received a full European approval, to some extent, I think, to the surprise of some of you, given the events with the American regulatory authorities.
It was a very clean approval, full approval, no post-marketing commitments or requirements. After that, we successfully financed the company at good terms for the shareholders, and we have now started the launch in Europe. Of course, we also have an ongoing discussion with the U.S. authorities. I would just like to state that despite the immense setback that the withdrawal from the U.S. market represents, it has actually been a very successful year to turn around the company and where we are today. We are looking forward to have a much more forward-looking discussion from now on. Going then to slide number six. Some of this I've already mentioned. We received a full marketing authorization for Pepaxti, which is the brand name in Europe for melflufen by the European Commission. We are in the process of submitting.
It has not been submitted yet, the Type II variation in Europe based on the OCEAN dataset. We also had a surprising readout of the LIGHTHOUSE data, which was a prematurely closed phase III trial, comparing melflufen plus daratumumab with daratumumab. Despite the low patient numbers, it showed significance on basically all endpoints. We have continued an FDA dialogue post the Oncologic Drugs Advisory Committee meeting held in October. We have also started the commercialization of Pepaxti, where Germany is the first launch country in Europe. We also received a grant regarding our NK cell engagement platform, which is a biologics platform, with an antibody mimetic multispecific construct that engages NK cells to then also kill tumor cells from Vinnova. That sort of proves the innovation that is in our pipeline as well.
As mentioned, we successfully conducted a directed share issue of approximately $41 million during the summer. We also get an authorization to issue new shares, and this is just a precaution to enhance flexibility to not be in a situation where we have to call an extra general meeting in case of any potential deal that comes our way. With that, I would like to go to slide number seven to briefly just talk about the LIGHTHOUSE trial. As mentioned, this was a surprising result to some extent, not that it was positive, but that it reached nominal statistical significance.
This was originally planned to be 240 patients randomized 2 : 1, where patients would either receive melflufen plus dexamethasone plus daratumumab, and in the control arm, they would get the approved regimen of daratumumab with dexamethasone support. That's a lower amount of dexamethasone than in the experimental arm. The primary endpoint was progression-free survival. The secondary endpoint was response rate and overall survival. This was halted due to the FDA safety warning last summer when only 54 patients had been randomized in the trial. As previously disclosed, the results were surprisingly good with this small amount of patients speaking about the additional efficacy added by melflufen. Let's go to slide number eight.
Here you see, for the 54 patients, the progression-free survival curves, and you can see that there is a very clear separation of these curves to the benefit of the melflufen plus daratumumab arm. You can see that the p-value, despite the small numbers, is 0.0032, which is an extremely good result. If we go to the survival curves on slide number nine, you can see that they also look very, very good. You can see that there are only two deaths in the melflufen plus daratumumab arm, while there are four deaths in the daratumumab-only arm, and they are all early. The reason why the curve dives like that is because it's just the last patient that died, so there's no patient with follow-up after that. That is why it looks a bit funny.
You can see a hazard ratio of 0.47 clearly indicating a survival advantage of the melflufen plus daratumumab arm, but it does not, of course, with these small numbers, reach statistical significance on the nominal value. As you also know, the European Commission, or rather the European Medicines Agency, sorry, they saw that there was only one group of patients that really benefited from melflufen treatment. They did not see any detriment or problems in the other group, but there was one group that benefited. Looking at that specific group on slide number 10, you can see also that LIGHTHOUSE really confirms this. Here you see the PFS for the recommended population verified by the European Medicines Agency. If you actually look at these numbers and compare with the other PFS curve, you realize the entire benefit is here.
There is no detriment in the other group, but this is where the benefit is, sort of validating the recommended population that EMA identified together with us. You can see that the p-value here, despite the small number of patients, is 0.0005. If we then look at survival, it becomes even more surprisingly positive. You actually see that in this small group of patients, there is actually statistically significant survival advantage in the identified population by EMA and us in this with melflufen plus daratumumab over the approved variant of daratumumab. To those that have claimed that, you know, that it's not okay to just look at daratumumab in the comparator arm, roughly 1/3 of all anti-CD38 use in market right now in Europe and the US is daratumumab single agent. This is a widely used regimen out there.
This is clearly an interesting and important result from a clinical point of view with clinical relevance. If we then look what this means on slide number 12, I have mentioned many of these points already. This is actually the second phase III trial to confirm the clinical benefit of melflufen, OCEAN being the first, fully acknowledging that there is some ruckus on the other side of the Atlantic regarding that result. In addition, it confirms the population identified by EMA, and I think this is maybe the most important piece in this, that this offers a prospective dataset that confirms the population with benefit. Furthermore, it also says that there's no detriment in the other population. There's just a lack of benefit, which is exactly EMA's conclusions.
In another way, personally, I think that EMA did a fantastic job in the analysis of our OCEAN trial. Going to slide 13, as already mentioned, Pepaxti was approved in Europe in the recommended population that we have just discussed across the EU plus countries that recognize EMA as a regulatory authority, which includes, for example, the European Economic Area countries Iceland, Liechtenstein, and Norway. This approval is based on the phase II study HORIZON, but it's also utilizing the phase III study OCEAN. That is why it was a full approval and not a conditional approval. There were no post-marketing commitments, and they saw a highly positive benefit to risk profile in the indicated patient population.
Going to slide number 14, you see the exact text of the label, which is that these are patients that are relapsed refractory multiple myeloma patients with at least three prior lines of therapy and whose disease is refractory to at least one proteasome inhibitor, one immunomodulatory agent, and one anti-CD38 monoclonal antibody. If a patient has had a prior autologous stem cell transplantation, the time to progression post that transplant should be at least three years. This is the key for the recommended population. This is basically then that we are approved for patients with triple-class refractory disease, to use more commonly used language. If you look at the efficacy results in the indicated European Union population, you saw for these triple-class refractory patients and response rate of 29%, a duration of response of eight months, and a time to response of two months.
You can see the decimals and the confidence intervals on the slide. They also concluded that the overall survival result in the phase III OCEAN study constitute a case of true survival heterogeneity when comparing melflufen and pomalidomide, which has been our scientific stance from the beginning, and they also then verbalized this in the indications taken. Here comes a detail that many miss. The reason why this is in the indication statement and nowhere else is because EMA saw this as fundamental differences in benefit risk. If they would have seen a safety signal or a potential detriment to the other patients, this would have been in the warning and precaution section or the contraindication section of the label. The fact that this is in the indication statement is because they didn't see that.
They saw fundamental benefit risk differences between the two drugs in OCEAN, namely melphalan and pomalidomide. Just to highlight the population then that sort of underpinned this in OCEAN. Just to reiterate, this has been published, but just to show so that you understand. This has not been published, I realize now. Sorry. Go to slide 16. This is the progression-free survival curve in the population identified by the European Medicines Agency. You can see a doubling of the progression-free survival with a median of 9.3 months over 4.6, a head-to-head against an active comparator with a p-value of 0.0001. This is a really good result. You can also see on slide number 17 that you see a clear and continuous separation overall of the overall survival curves on the population level.
Of course, as we have talked about before, you still see separation by age where this, these curves separate more and more the older the patient is, and this has to do with pomalidomide, where pomalidomide has a lower and lower benefit with increasing patient age. This was the interaction that we also talked about at the ODAC. This is not known. This is not part of the current label information of pomalidomide, and it's a critical piece of information to understand the OCEAN trial. These two curves represent the foundation of the planned Type II variation in Europe. Going to slide number 18. In summary, regarding the OCEAN trial, EMA then confirms that there is no toxicological safety signals in the trial. There is, however, true heterogeneity of benefit to risk between these two drugs, melflufen and pomalidomide.
That results in that for patients with a prior ASCT, time between transplantation and disease progression should be at least three years. Not because they are hurt by melphalan, just because it's limited benefit and pom is a better alternative or other medicines are a better alternative. This means that the non-transplanted, often older patient population, which represents the largest group of RRMM patients in total, the median age of patients being treated out there right now is 74, particularly benefits from Pepaxti. Going to slide number 19. Of course, this has resulted, we have an early access program across Europe, and we have currently 74 patients approved with two patients that discontinued. These here we follow basically the recommended population based on the OCEAN trial for who can get access to the early access program.
We just want to show you these numbers to show that there is interest out there and that the drug is being utilized to treat patients. On slide number 20. I don't want to comment too much, but as you know, we had an ODAC that was surprisingly competitive, was also surprising to us. I feel that we have a good dialogue with the FDA. That does not mean that we agree, but we have a good scientific exchange. We'll see what happens next in the U.S. I don't want to promise, I can't promise anything. As soon as we have a firm decision by the FDA about what the next step is, then of course we will have to disclose that, and we will disclose it as fast as we can to the market, and we will continue this discussion with them.
At the time, if the decision would be negative, we will also confirm to what extent we are willing to fight this. We believe that we are right from a scientific point of view, and this is not just about us as a company, it's about patients because the identified interaction for pomalidomide is critical for them, not only from the perspective of melphalan, but also from the perspective of pomalidomide and other IMiDs. We have an ethical obligation to not just give up that. In light of this, there was some very interesting developments this week. Looking at slide number 21, this is a slide that we showed at the Oncologic Division Advisory Committee meeting. We showed studies that all represent close copies or carbon copies of each other.
Where OCEAN was the first that we negotiated with the FDA in 2016, a head-to-head comparison with pomalidomide plus low-dose dexamethasone, the most used treatment regimen for RRMM. Takeda did a copycat of OCEAN in a phase II trial with their proteasome inhibitor ixazomib plus low-dose dex. Here you see that the PFS results are very similar. The OS result is significantly higher for the proteasome inhibitor of 1.43. You see the same HR heterogeneity that we did in OCEAN, but even worse. With 1.6 for the younger patients and 0.87 for the older. The point of this is, like we have said all the time, the heterogeneity is not driven by melflufen, it's driven by pomalidomide. The dissociation between PFS and OS is not driven by melflufen, it's driven by pomalidomide. DREAMM-3 is the third copycat.
Top line results were reported Monday. We don't have the age subgroup data yet for OS. We expect that to be published within some future, that is probably around the ASH timeframe in December. Of course, we expect that to show exactly the same heterogeneity now with an anti-BCMA agent, and hopefully put to rest the topic whether the heterogeneity was driven by melflufen or pomalidomide from a scientific point of view. Being right is not the same thing as having the right to be right in the end, so we'll see how that goes. Scientifically, that would be, from my point of view, the nail in the coffin regarding that topic. Going to slide number 22. Our NKEngage project, we have disclosed a few details about this. This is a pipeline project.
We call them the spikes, and it's actually an antibody mimetic platform, a pure biologics construct that is multivalent. That is, it can bind to multiple targets. Given the science, it has superior biodistribution, as well as that it can reach targets with very small epitope surfaces such as BCMA. We got a grant from Sweden's Innovation Agency, and this sort of demonstrates we were really at the top of the innovations list here with this construct. We are participants in the Eurostars program, where the Department of Cancer Immunology at the University of Oslo, Pharmatest Services in Turku, and Oncopeptides together with the Royal Institute of Technology here in Stockholm. We hope to conduct all the toxicology studies next year, and hopefully we can be doing first-in-man studies in 2024.
With that, I want to leave the word over to Sofia Heigis to give a commercial update given the ongoing launch in Europe.
Thank you, Jakob. We can move to slide 24 please. We are excited to have a commercial launch ongoing in Europe, and the first market out, as mentioned by Jakob, is Germany. Germany is the largest multiple myeloma market across Europe with a prevalence of 59,000 patients. 9,200 patients are newly diagnosed each year. If we look at our current indicated population with older people being triple-class refractory with three prior lines of therapy, and then in our recommended target population, that is that they did not have a transplant or succeeded on their transplant, we're concluding a population of 2,500 patients. This gives us a great potential to make a difference for patients in Germany. Slide 25, please. The German market is not only the largest market, it also enables early patient access.
Once you have submitted a reimbursement dossier, you can start to sell your drug while the data is being assessed and while you're negotiating the price. Despite the bumpy journey we have been on, we managed to develop a dossier that we submitted on the first of October this year. This means that we are now able to sell in Germany at the price of EUR 5,450 per vial, which corresponds to an average price of EUR 10,900 per cycle a month. It's important to say that this price is valid for the first year and will then be subject to negotiation with the National Association of Statutory Health Insurance Funds. The high unmet need and the benefit we can make to patients triggered us to prioritize Germany and start to initiate the process of launching.
Slide 26, please. We are a lean organization, and that has forced us to think differently on how to launch. We are launching with our own team with a very focused model. The team has an in-depth experience having launched everything from IMiDs to CAR-T within the myeloma space. That of course comes with excellent knowledge and understanding of the market, how to launch in multiple myeloma, but also a network of trusted relations that we can engage, partner, and collaborate with. We are working with a very focused account activation model, and I will touch upon how we're doing that a bit more in a short while. The essence is that we know the accounts where we can make the biggest difference, and we are complementing a great focus there with a broad awareness plan.
Because we do believe it's important that all hematologists that treat patients that are within our target population in Germany are aware of Pepaxti and learn how and when to use Pepaxti. We are building the team to broaden the outreach across Germany, and that will be ongoing for the coming quarters. It's also important to say that now once we have a price in Germany, we are also providing entry into Austria and Switzerland. With all the learnings and experience we will gain in Germany, we will pave the way for commercialization across Europe. Slide 27, please. If we double-click on how we work with account activation, which you all know is a key to a successful launch. Within hematology and oncology, it's not a matter of working with one stakeholder.
It's the full account that needs to be engaged with many different stakeholders. To do that, you need to have different competencies. You may need promotional efforts, you definitely need medical and scientific communication. You need to support in how to prepare, administer, and manage the patient. There are logistics to handle, and you of course also need to show the value of your drug. If we look into how most companies work with account activation and look towards the left of this slide, the traditional model commonly means that you hire multiple roles to cover all of these competencies. That gives you a broad approach, and it's in particular needed if you have very promotionally sensitive indications.
This means that you have several persons to share the stakeholder contacts, and if you do promotion, which is needed in promotional sensitive indications, you need at least one sales force and one medical force. Of course, demands a higher degree of face-to-face access to stakeholders. The field teams are always of course both supported but also complemented by marketing and market access. To show you the differences of what we are doing, to the left you have our more focused model. To the right, sorry. We have decided to have a limited number of roles with focus on the key competencies for Pepaxti. We have a targeted and scientific-driven approach to meet the high unmet need that you see in rare disease, and in particular in incurable disease such as multiple myeloma.
This means that there is one primary stakeholder contact with trusted relations in our case that allows very effective execution. This model also enables more virtual interactions, and it facilitates customer access as you only have one person trying to reach the account from the company. We complement our model with marketing and market access, again to ensure that we can showcase the value, but also to give every single hematologist in Germany seeing these patients the opportunity to learn about Pepaxti. Slide 28, please. If we take a step away from Germany and look into Europe, we have made a roadmap, and we will continuously inform you on the progress. Our objective is given. We are here to maximize the value for patients and all the shareholders by ensuring patient access to melflufen, and we have a great opportunity to do so in Europe with the European approval.
I've already touched upon the German launch and furthermore touched upon that we're working with hospital in the individual patient space in, for example, Austria and Switzerland. What we have done in addition is that we have initiated the market access preparations in the high-potential countries. Market access is a local exercise as the different payer bodies and authorities operate fairly differently across Europe. The timeline for market access varies between 12 months-24 months approximately. There are many synergies to be used, and you can drive effectiveness by starting to focus on these countries, develop the necessary tools that you can then use to initiate general market access across Europe. That is the approach that we are taking. Slide 29, please. Finally, the multiple myeloma market in Europe is growing. It's an incurable disease.
There is an unmet medical need for convenient, efficacious, and tolerable options, and that need is high. Hematologists easily adopt new therapies, and that is due to that they of course do everything to prolong the life of their patients and ensuring that they have as good quality of life as possible. Our target population, that is commonly older people, more frail, given that they are in later line, is growing due to the advancement of innovative treatments in earlier lines. This means that we have a great opportunity to make a difference for these patients. If we look at the European market to the right, we have an annual incidence currently of approximately 40,000 patients.
Looking towards the Type II variation, and should we get an OCEAN indication approved based on the data that Jakob just showed, we are looking towards a target population of 17,000 patients across Europe. Granted that the price negotiations in the different countries will reflect the degree of innovation of the drug as well as the clinical benefit to the patient. We see an annual market potential between SEK 1.5 billion to SEK 2.0 billion. By that, I would like to hand over to our CFO, Annika Muskantor.
Thank you, Sofia. Perfect. If I could ask you to turn to slide 31, please. If I may just give you a quick recap of the timeline and go back to Q3 of last year. That quarter reflected a situation in which the company was a fully integrated biotech company with a significant presence in the U.S. It was not until the end of October of last year, i.e., Q4, that the company voluntarily withdrew the Pepaxti from the U.S. market and restructured operations. Hence, non-recurring restructuring costs did not have any material impact on operating costs in Q3 of 2021. With that said, we can see here that the decisive measures initiated at the end of last year lowered costs significantly. The operating loss decreased from SEK -338.9 million to SEK -88.9 million.
As a note, now, if you were to compare net profit for Q3 this year with Q3 of last year, you will note that last year this reflected the reversal of deferred tax assets that arose on temporary differences in the group during the year. The largest decrease in operating costs compared to the same quarter last year is, as can be expected, in marketing and sales. That decreased from SEK 148 million to SEK 80 million. The cost last year included extensive commercialization activities, while the cost for the quarter that just ended reflects the first market, European market entry with the new focus model that Sofia just presented. G&A has also decreased from SEK 53 million to SEK 23 million. Hence, not as much as some of the other areas, given that certain administrative resources are required to support ongoing operations.
I can just conclude that we are still running a tight ship that is very conscious of spend. R&D has also decreased from SEK 150 million to SEK 50 million. The R&D expenditure support our preclinical pipeline development. R&D expenditure reaches minimum during Q2, but as communicated in conjunction with the capital raise in July, Oncopeptides will continue to develop our new drug candidates and expand into new indications, which is why we see a slight increase in R&D spend during the third quarter if you were to look back at R&D spend in the second quarter of this year. At the end of the period, the company had 40 employees, plus a few specialists who provided counsel on an hourly basis, which is a significant reduction from the 321 last year.
Cash flow from operating activities amounted to SEK -17.8 million, to be compared to SEK -336.5 million for the corresponding period last year. To tie into that, the EIB loan is under renegotiation to update tranches' definitions in order for us to align the company needs with the current regulatory situation. With that, if I can ask you to turn to the year-to-date data on the next slide. Operating losses decreased to SEK 248.8 million, which is to be compared to a loss of SEK 1,031.1 million for the comparable period last year. Cash flow from operating activities decreased from SEK -1,069.9 million to SEK -342.9 million.
In the beginning of this year, the company announced that it was aiming to extend cash run rate and bring costs down to an absolute minimum. During Q2, we did meet that target announced at the beginning of the year, and the company continues to operate to ensure high impact while remaining cost-conscious. If I can ask you to turn to the next slide, which will be slide 33. The company conducted a successful capital raise that was closed on July 14. The proceeds of SEK 435.6 million , about $41 million, as Stig completed earlier, before transaction costs, will be used to allow us to act from a position of strength to execute on our strategy to initiate commercialization in Europe, as announced.
File for marketing authorization earlier lines, which Sofia spoke to, build on our pipeline to secure the next generation of drugs, establish a foothold in the U.S. ahead of a possible agreement with the FDA. With that, I'd like to ask you to turn to the next slide 34. To recap, on September 23rd, the EGM authorized the board of directors to decide on issuance of new shares, since the authorization given on the AGM resulted in the directed share issue announced in July. The purpose of this is, as mentioned earlier, to increase the financial flexibility for the company and allow for the board to consider financing options to capture opportunities. I believe we already touched on the EIB. With that, I will hand over back to Jakob.
Thank you, Annika. Let's go and just before the Q&A conclude a little bit about the milestones ahead in the near term on slide number 36. Of course, we will keep you updated on the progress regarding the commercial launch in Germany. I think it's very important to note, and I mentioned this during an interview earlier today, that normally it takes two full quarters to evaluate exactly where you are. Given that we are launching a bit into the fourth quarter this year, in all honesty, you basically need the two first quarters of 2023 to fully evaluate exactly where we're heading in the German market with Pepaxti. We will of course keep you updated along the way, but the core piece here early on is account activation, as it's called, what Sofia mentioned earlier. That doesn't show up as revenue.
That is about educating the physicians and the different stakeholders about the drug, which patients should be treated, the value of it, and where it fits in the treatment algorithms. Then once you have established that, get the right patients on treatment. We will of course keep you updated along the way. It's not like it magically will come a lot of numbers, early next year that can tell you a lot of things. It's much more the qualitative statements that are important at that stage. We are of course continuing, and we will keep you updated on the Type II variation submission to the European Medicines Agency based on the OCEAN data. We will also present data at upcoming conferences, especially pre-clinical data at the American Society of Hematology meeting now in December.
The FDA is not here because it's unclear to me exactly what the timeline is. As soon as we know, we will let you know. With that, I leave the floor open to questions and answers. Thank you very much.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause just momentarily to assemble a roster. Again, that is star then one to join the queue. With no questions at this time, we will conclude our question-and-answer session. I'd like to turn the conference back over to Jakob Lindberg for any closing remarks.
Thank you very much. If any questions should arise, do not hesitate to contact us. I thank you for listening in to this quarterly webcast. I also thank you for staying put as shareholders. This has been a very tough year for all of us. I hope we convey that we think that we are in a position of strength again. Of course, big question mark, what happens in the U.S.? But nevertheless, this is a significant European opportunity, and we are really looking forward providing this product to those patients that need it. With that, thank you very much, and see you next time.