Welcome to Oncopeptides Q3 earnings call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over to CEO, Sofia Heigis, and CFO, Holger Lembrér. Please go ahead.
Hi, everyone, and welcome to the Oncopeptides presentation for investors and media of our report for the third quarter. These are the standard disclaimers. My name is Sofia Heigis, CEO of Oncopeptides, and with me on the call, I have our CFO, Holger Lembrér. After my introduction, Holger will give you the financial summary for the second quarter, followed by commercial and strategy update by myself. Looking at the third quarter, sales for Pepaxti in Europe continued to show a positive trend, with SEK 2.6 million in revenue in Q3. While more volumes remain at relatively low levels, the important upward trend continues. The number of sold vials in Germany has tripled in Q3 versus Q2. While this presentation will focus on Q3, I'm happy to also share that the positive trend continues into the fourth quarter.
As the number of sold vials in Europe in October alone almost reached the number of the entire third quarter. We use the numbers of sold vials as a key metric, given it illustrates and allows for comparability across markets and time, regardless of price level. That said, we will, of course, continue to report net sales as one of our main metrics. In addition to Germany and Greece, where we have ongoing sales, European market access is advancing in Spain, Italy, Netherlands, Ireland, and Norway, in the face of benefit assessment, taking us one step closer to more launches. With the current cash position and maintained strong financial discipline, we expect liquidity to last until the end of the second quarter, 2024. Ensuring capital until we become cash positive in 2026 is naturally among my key priorities.
I am certain we will be able to finance the company. What we are looking into currently is how and when, which is influenced by multiple factors. Among the key events for the quarter, I want to highlight a positive opinion on the Type II variation from CHMP and the successful price negotiations in Germany. I will come back to both of these events soon, but before that, let me hand over to Holger for a financial update.
Thank you, Sofia, and good morning, all of you, also from my side. Starting with a financial summary of the third quarter, sales ended at SEK 2.8 million, and as Sofia said, we continued to see a very strong growth trend in Germany and Greece in the quarter. Cost of goods sold was plus SEK 1.9 million for the quarter, with SEK 1.9 million related to potential reversal of the written down inventory from when the company was restructured in 2021 after the withdrawal in the US.
Operating expenses decreased significantly in the quarter from SEK -90.9 million last year to SEK -47.3 million, partly due to vacation period with lower activity in all our functions, but also as a result of a one-time item of SEK 14 million in refunds from a completed phase three study, OCEAN, but ended lower in the cost than we had anticipated. EBIT for the quarter was SEK -37.3 million Swedish kronor, compared to last year's SEK -88.9 million. Net financial items was SEK -3.1 million in the quarter, mainly due to the revaluation of our currency accounts. Looking into operating expenses, in total, we see a sharp decrease from last year with 53%.
R&D cost was down full SEK 44 million compared to the third quarter due to the fact that phase 3 study in OCEAN was completed in the quarter, and we also received a refund of SEK 14 million from one of our CROs in the study. Don't expect R&D to remain on this low level going forward since the underlying cost in the quarter was SEK 20 million, and that also included vacation period in Sweden with a bit lower activity. Sales and marketing expenses is continuing to increase as our commercial activities in Europe is building up. Since we are onboarding people also in the fourth quarter, this cost will continue to increase quarter by quarter, slightly, fully in line with our commercialization plan, and rollout in Europe.
The general administration expenses was low in the quarter, due to a reversal of accruals for incentive program related to personnel that had left the company in the quarter. But we also had a lower share price, which reflects in the lower LTI cost for the personnel in general. Expect general admin costs to normalize back when you're coming into the fourth quarter. Cash flow from operating expenses was minus SEK 58 million in the quarter. Taking a look then on the liquidity situation, we ended the quarter with a cash level of SEK 238 million, compared to SEK 294 million last quarter. Depending on how sales is developing, our current cash is expected to last until the end of the second quarter, 2024.
When it comes to capital raise and refunding, we, as many other biotech companies in the startup phase, is continuously evaluating the options based on the market, as Sofia described. Given the comment about the cash run rate in the report, we expect that the company will need additional cash within the coming 12 months. With that, I'm giving back to you, Sofia.
Thank you, Holger. I would like to take this opportunity to thank you for your contribution to Oncopeptides. Even though it has been fairly short, we are progressing fast, and we have really advanced during the time we have been working together. It has been my great pleasure working with you, and I wish you all the best in the future. As previously announced, Henrik Bergentoft will take over as CFO, which will happen within shortly. I will now give you a status update on our European commercialization efforts, and in addition, give you an update on Oncopeptides' strategic priorities and considerations. To start with, I'm happy to share that we have delivered on important milestones in Germany. First, we have a price negotiated in line with our financial expectations. Second, we now finally have a full team in place.
Third, we are starting to see a step up in awareness. Our market research concludes unprompted awareness among office-based physicians going from 10% last October to 62% this July. New accounts are being activated, and in addition, customers are reordering for both old and new patients, which is confirming the value Pepaxti brings, and of course, support the positive trend in sales. We are still at low volumes, but with the pattern of breadth and depth, I'm confident we, during 2024, will continue to accelerate. Even though Greece is a much smaller market, we do see continued patient identification based on positive clinical experience, which again tells us the importance of having experience in a market to drive the uptake of Pepaxti.
We are in parallel working on our second launch phase, and I'm proud to see how the team, through hard work, have managed to exceed the timelines in our plans for big markets such as Italy and Spain. Before I get into details on our progress, I wish to briefly share the market access process to ensure you have a good understanding. The process of gaining market access includes several different steps. First, a value dossier needs to be submitted, including evidence and arguments for the price we are suggesting. The second step is a benefit assessment by authorities that is leading to the third phase, which is the negotiation phase. In most countries, drug prices are negotiated between the government or insurance companies and the pharmaceutical company.
In addition, there may be a fourth step, as quite a few markets require regional negotiations and guidelines work based on a decentralized healthcare system, such as Sweden and Spain. The process for marketing authorization to establish sales in a country or region differs vastly across Europe, and this slide shows average timelines for the various steps. Regular processes that we are running through in Italy and Spain commonly take much longer than simplified paths, and the team is working hard to speed up the processes. On that note, I'm proud to see how we are ahead of our plans and share that we have managed to submit value dossiers in Spain, Italy, and today in Ireland. This means we now have moved five markets one step closer to gaining market access and launch.
During the quarter, we received a positive CHMP opinion for the type II variation, and while we believe the decision was very positive, as it again confirms our scientific argument for why Pepaxti helps address a high unmet medical need, we did, on September the twenty-eighth, announce that we have opted to abandon the indication. For all of you to understand this decision and why it is the right thing for us to do, I will quickly walk you through multiple myeloma and the evolving treatment landscape. Multiple myeloma is an incurable disease, and here you can see what the disease course looks like. After a diagnosis, the patient gets an initial treatment, which is either a transplant or a combination of the most common drugs.
At some point, the tumor will start to come back, and the patient will relapse, moving through lines of therapy with shorter time in between every worsening. Towards the later lines, there is commonly a rapid acceleration of disease burden, where the most commonly used drugs don't work anymore, partly due to the exhausted immune system that is now struggling to fight the tumor. This is where Pepaxti can make a big difference, being a cytotoxic drug that is not dependent on fighting through the immune system, but rather control the tumor through a cytotoxic mechanism of action, which is to simplify killing the cell by breaking the DNA.
Many late-line patients are too frail to tolerate the higher doses needed of conventional cytotoxic drugs and due to tolerability, but the smart delivery system of Pepaxti is providing efficacy needed with an acceptable tolerability, leading to maintained quality of life, and this is truly important for these patients. With this in mind, let's look at the treatment landscape for multiple myeloma. What one should remember is that it is always of help to the patient to try to attack the tumor from different angles with different mechanism of actions. Majority of all drugs are working to activate and support the immune system in different manners to fight the tumor. All patients should always get the three most common drug classes as long as they are effective and tolerated, and these drugs can be combined and are used in earlier lines.
The multiple myeloma landscape has, due to intense research, evolved a lot the last years.... and many new drugs have entered late lines, and companies are now generating evidence to move to earlier lines, giving the patients more options upfront. While new drugs are supporting patients to live longer, they will advance through more lines of treatment, and the late line population is growing. At the same time, the immune system of the patient will still get exhausted, not allowing them to get the efficacy they need from immunotherapies. That is why Pepaxti will play a critical and important role in the late line setting and why Oncopeptides can really make a difference, as there is no current pipeline assets for multiple myeloma that includes improved alkylation. Hence, there is no innovation that will compete on the exact same mode of action.
Given that we have such a great opportunity in the late line setting and that we would risk lowering our price significantly in earlier lines without the opportunity to access more patients, I hope you do understand why we believe the decision to remain in our current indication makes sense, both from the perspective of a patient and the shareholder. Our current core business is clearly Europe, with a market potential of plus SEK 1.5 billion. If we look beyond our current focus, sales in Europe for Pepaxti, I believe there is a lot of untapped value in Oncopeptides. And while we are not ready to specify that in Swedish kroner just now, we will from now on keep the market updated on a regular basis on our progress of what we call our next step value drivers.
As there is a high unmet need among patients across the globe, we are looking into how we, through partnerships, can bring Pepaxti to other geographies. Currently, we mainly focus on business development for China and Japan. We are also looking into different scenarios for a way forward in the U.S., which will naturally be dependent on the outcome of the FDA appeal process, and we hope to get clarity on this process before end of the year. We, regardless of the decision for Pepaxti, do see potential in the U.S. for our pipeline assets. Our pipeline consists of two innovative platforms, the SPiKE platform and the PDC platform, from which Pepaxti comes. The SPiKE platform takes advantage of natural killer cells, which is the immune system's first-line defense against foreign cells like cancer.
NK cell therapy has the potential to become the next breakthrough in cancer treatment and has generated much excitement in the oncology research industry. Our constructs are highly innovative and present an opportunity to create efficacious immunotherapies that comes with improved tolerability compared to many other drugs, and in addition, convenient administration, which is truly needed. Concluding that we have the potential to generate a high value for patients and shareholders also through this platform. I am truly excited about us getting closer to selecting our first candidate drug from the SPiKE platform early next year. In addition to Pepaxti, we have two more candidate drugs in the PDC platform. OPDC-5 is a sister molecule to Pepaxti and has an investigational new drug application granted by the FDA already. OPDC-3 is built up on Pepaxti's benefit, designed to bring the potential of being even more selective.
All of our pipeline assets have the potential to treat different types of tumors and indications, opening up for multiple opportunities, and we are working through our R&D strategy currently to ensure we select wisely how to prioritize and focus, and are, of course, in parallel, navigating the interest for partnerships. I hope our efforts to be transparent and share a clear path forward for the company is valued, and I do look forward to continuing to strengthen our dialogue with the market and shareholders together with my team. We welcome all questions and comments, and I want to thank all our shareholders for supporting us through the early stages of what I believe is a very exciting journey that we have ahead of us. With that, thank you for listening, and let's move to Q&A.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Luisa Morgado from Van Lanschot Kempen. Please go ahead.
Hi, team. I have just a couple of questions. Maybe first starting out with the market strategy. So you've shown that you're now going to proceed to try and reach the Netherlands, Ireland, Norway, Spain, Italy. So looking at the timelines, well, there is a broad range of time. So how long do you estimate that it will take for you to get there?
Thank you, Louisa, and good morning. I don't want to speculate on timelines, and that is due to that the market access system in Europe is highly unpredictable. We have done what we can to submit our value dossiers now, actually ahead of our plans. But when it comes to the negotiation phase, as you probably know, it can take everything between 1-6 months for a simplified pathway, up to several years for the regular pathways. So the only way for us to control this is, of course, to submit the dossier with a clever strategy, considerate price, and that is what we have been doing. But I don't want to speculate on the exact timelines, as there is too much uncertainty on how the negotiations will run.
Okay, makes sense. And maybe moving on a bit to your other programs. So, on the Spike and the PDC platforms, which do you already have an idea of which indications you're considering going first? And when will we hear a bit more on the development for the two candidate drugs in the PDC platform?
So we are, as I stated, currently working through our R&D strategy. As I told, we're looking forward to choose our first candidate drug from the SPiKE platform early next year. When it comes to the other PDCs, we are putting kind of all of our assets and the two platforms together in one discussion to ensure that we both prioritize our efforts, but also navigate the interest of different partners wisely. So to conclude, it's too early for me to give you more details, but I will, of course, keep you posted both on our progress for the two platforms and any decisions we will take that is of interest for all of you.
Okay, thank you very much. That was very helpful.
Thank you, Luisa.
There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you. We have one written question from Torleif. Torleif, if the FDA upholds its withdrawal decision, are there any legal action in the US that you would consider?
Hey, Torleif, and thank you for the question. So as we have been stating many times, we don't want to speculate on the outcome of the FDA process, and we also don't want to share any of the scenarios that we have been discussing ahead of knowing the exact feedback from the FDA. So we will keep you posted once we get a feedback and the outcome on our next steps. And by that, I would like to thank all of you listening in, and again, any questions, comments, feel free to contact us, and I wish you all a nice day.