Good morning, everyone. Delighted to present the Q2 results. I will follow through the slide deck. If we could move to slide two, forward-looking statements. Slide three. Today, together with me, we have Robert Maiorana, who is our Acting Chief Financial Officer, but also our financial manager, Till Fredrik Järrsten will effectively join us. All right. On slide four, I would like to go through high level the achievements during the quarter. First of all, we believe that we've made significant progress with regard to Elevar in acting with Apealea. There is this agreement that has been signed off for the commercialization of Apealea in the Middle East and North African region. This is the Taiba deal. The first market will be Saudi Arabia. Elevar has implemented a global named patient program, mainly ex-U.S., it's called the Tanner program.
That means that on request, a physician can have access to Apealea. There is also certainly, and I will come back to that, a clear path now for the regulatory submission in the U.S. for ovarian. Initial prescription, and I'm pleased to report that despite the COVID-19 situation, initial prescriptions have been recorded in Finland. We will obviously continue to monitor these prescriptions. On another note, our cost control program that Robert will go through a bit later on is certainly enabling us to continue investment in XR-18, XR-19. That means our core technology platform. We're making some preparation for our clinical trial, the phase I-B with Docetaxel micellar. At the same time, we've been able to reinforce the IP protection during this quarter with regard to XR-17 and Apealea.
Above all, we've been able to continue strengthening the recruitment of high-level executive at the management team level, but also below the management team level. Let's go now through the slide five. I will give now the floor to Robert to comment on the Q2 financial highlights.
Thank you, François. Good morning, everyone. My name is, as earlier mentioned, Robert Maiorana, and I am the Acting CFO of Vivesto until Fredrik Järrsten is on board. I'm very pleased to announce that I will remain with Vivesto and take on a position as financial manager after Fredrik's arrival. I would also like to say that it's a pleasure to be here with you today and to provide an update on the second quarter results. First thing I'd like to mention is that the sales figure is not part of the slides since our present sales are at a very low level, considering that Vivesto is an innovation company. However, in transition, today still not yet an earning stock. We are, as seen in the first bullet, in a strong cash position with close to SEK 330 million in short-term investments and on our bank accounts.
That is to be compared with SEK 29 million a year ago. We are on the right track to reach our target with a burn rate closer to the range of SEK 10 million-SEK 12 million per month. That will include all the investments that François earlier mentioned. We have had some several one-off costs during this quarter. We were charged SEK 3.1 million in a fine from Nasdaq due to the previous boards of directors' breach of good stock market practices. This will, for your information, be added to our existing SEK 30 million claim on the previous board. We also made a SEK 3.4 write-down due to a reduced need of our premises in Uppsala following the earlier communicated reorganization and redundancies. That leads us also to our employee expenses, which reached SEK 18.1 million compared to SEK 14.4 million a year ago.
This relates mainly to the staff redundancy. We were 59 employees at the beginning of the quarter and 49 at the end of this quarter. We have, as earlier communicated, begun to amortize capitalized development cost for Apealea paclitaxel. This accounts for SEK 4.1 million compared to the quarter a year ago. Operating profit and loss is -SEK 53.6 compared to SEK 46.4 a year ago, a difference of SEK 6.3 million, but as just explained, relating to what can be referred to as one-off cost plus the amortization. Net profit and loss after tax is -SEK 53.5 compared to SEK 18.3 a year ago. This difference is explained by a positive tax difference of SEK 33 million recorded a year ago. Earnings per share -SEK 0.12 compared to -SEK 0.6.
The last bullet is relating to the increase in our inventory with SEK 20.5 million compared to the beginning of April this year. This is partly explained by replacement of write-downs made in the first quarter and partly explained by Elevar inventory financed by them. The latter also explained part of the increase in our accrued expenses and deferred income during this quarter, a change of SEK 20.4 million from SEK 65.8 -SEK 85.1. I leave the word back to François.
Thank you, Robert. Let's now move to slide six. As I said earlier, during the quarter, we've been able to strengthen the management team by adding key executives such as Fredrik Järrsten, Peter Selin as a CBO, Chief Business Officer, Robert in the finance managing capacity. Also we've been able to attract and retain two senior scientists that will certainly help us to develop further our platform, our technology platform XR-17 into XR-18 and XR-19 as well. That's an important point for Vivesto. On the slide seven, you see that our portfolio, I have already presented that slide. I would like to remind the audience that we're also planning to add more compounds that would fit very nicely with our portfolio on the oncology side. Let's have a look a little bit into details. We have Apealea in ovarian cancer.
In the U.S., there is a clear path towards approval, and I will come back to this a bit later. In Europe, as you know, we have an approval and the commercialization has started in the Middle East and North African region. The Tanner agreement provide access to physicians with Apealea on a demand basis. There will be, excuse me, the announcement of a partner in Europe is to be done relatively shortly, and that's an important move also towards the commercialization of Apealea. Docetaxel micellar in prostate cancer. The phase I-B is foreseen and on track with the SAKK Group. You know that we are working with a new API, and we will be disclosing the results of this investigation and preclinical relatively shortly. XR-19 combination is continued to be assessed in various cancer, but also outside oncology. We have our animal health portfolio.
We have Paccal Vet and Doxophos Vet in phase II-B. For those compounds, we are looking for a partner, mainly in the U.S. On slide eight, this is the four pillar of the Vivesto strategy as presented earlier, and that remain the same strategy for next year onwards. First of all, the pillar one, which is the execution on the Apealea global partnership with Elevar. The pillar two is the clinical development and partnering of our technology platforms. The pillar three relates to the clinical development of Docetaxel micellar, new API and other compounds to be added on. The pillar four is our in and out licensing strategy. Right. Let's move to the slide nine. Clearly, during the quarter, Elevar Therapeutics did make substantial progress with regard to Apealea. Let me emphasize perhaps the clear path that now has been disclosed with regard to the U.S. regulatory submission.
You know that Elevar has had a number of interactions with the FDA. You know that different regulators have different requirements with regard to study endpoints, for instance. Elevar has decided to work on two additional studies in order to support the NDA filing. One is a PK study that will be initiated during the first half of 2021, expected to take about 12 months. The other study, which is a superiority study, it will be an efficacy study of Apealea in ovarian cancer. The goal here is really to strengthen the label in the U.S. and in Europe down the road. It's really positive news as well. I have to say that Elevar will be working with the GOG Foundation, which is one of the best institutions in oncology in the U.S. to perform this study.
At the same time, Elevar is, as we speak, exploring the potential of Apealea in other new indications that will be disclosed later on. Let's move to the slide 10. On slide 10, we are addressing the pillar number two, which is the development of our new technologies. With regard to XR-17, we have mandated a boutique firm in order to strongly drive the partnering of XR-17. In this way, we hope to achieve partnering with this technology. XR-18. I think this is the first time that I am introducing the concept of XR-18. XR-18 will be the next generation of XR-17 solubilizing platform. That means that we will be working on a number of technical improvements and in order to also secure long-term IP protection of this technology platform. XR-19.
We continue to work with this dual encapsulation process of two APIs or one API and one excipient. We've had some promising preclinical results that show that XR-19 has the potential to deliver compounds in one single IV administration. Further studies obviously are underway in order to revalidate those initial results before we can fully disclose them to you. Let's move on slide 10. That relates to the pillar number three, which is mainly clinical development. In this slide with Docetaxel micellar. As I said earlier, we are perfectly on track to initiate the study during the first half of next year. This study will be in metastatic castration-resistant prostate cancer patients. The clinical design will be disclosed at the right time once we have approval with the ethical committee. On the next slide number 12.
We've been working internally with regard to the animal health portfolio and decided that we would like to give the mandate to an investment bank in order to drive the partnering of our animal health business. We've been pleased to report that a specialist team of experts in this business, coming from blue-chip companies in that sector, will be looking after this portfolio. I also would like to remind you that this is a growing market, mainly in the U.S., with the expected sales in a couple of years from now reaching close to $300 million for the cancer drug market in dogs. On slide 13, you see the four pillars. I have been going through the Apealea pillar, the technology platform, pillar number two, the three, the clinical development. We continue to screen the market.
That was when I started with the company mid-March. We've been performing a number of due diligence. We've been assisted by external boutique firm, and we hope to be able to share concretely our progress within a relatively short timeframe in that area. Looking ahead on slide 14. Clearly, with Vivesto, there are a number of potential near-term and mid-term value drivers such as the partnering of Apealea in Europe, the initiation of the Docetaxel micellar clinical study, the partnering of animal health business, partnering with XR-17, the disclosure of the XR-19 proof of concept, the development of XR-18, and our M&A and in-licensing opportunities as we continue to have this end goal in mind to become a specialty pharma company with a focus on oncology. Having said that, I would like to open up to Q&A at this stage. Operator, the floor is yours.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of John Priestner from Edison. Please go ahead.
Thank you for taking my questions. I have three, I'll ask them one at a time. Following the update on FDA interactions and the requirement for additional trials in the U.S., when can we expect additional indications for Apealea to be announced and these trials to start?
Right. This is in the hands of Elevar, as you know. If you did listen to the conference call on December 3rd, so clearly the initiation of the study will be done in the first part of 2021 and is expected to take up to 24 months. CEO of Elevar mentioned about nine months up to 12 months in order to wrap up for the submission. We are talking about a couple of years from now.
For additional indications, though, can we expect those to maybe be announced while these trials are ongoing or?
With regard to the new indication, we are working with Elevar on choosing the right one. This will be disclosed later on. I cannot give you any precise timeframe at this point in time. It will be disclosed during 2021.
Okay. Thank you. Apealea was launched in the Nordics early this year. I was just wondering if you could provide some early insights into how it's been received by oncologists and maybe their thoughts.
Yeah. As I said, we've been pleased to record initial sales, initial prescriptions in Finland. There is interest in Sweden and Denmark. However, given the COVID-19 situation, that has not been easy to really promote the drug since we launched, as you know, in March, late February, beginning of March of this year. Clearly we've been hit by the COVID-19 situation almost immediately, preventing us to have physical interactions with physicians, which, of course, for a new product, that didn't help. However, we are doing our best through other means in order to generate prescriptions in Sweden and Denmark.
That's great. Thank you. Docetaxel has utility across a range of cancers. I was just wondering if you could discuss any potential next indications you're looking to develop Docetaxel micellar and potential timeline for this?
Well, provided that the initial phase I-B study will be giving us positive results with regard in prostate cancer, we intend to continue that route in prostate through a phase II.
Okay, great. Thank you very much, François.
You're welcome.
The next question comes from the line of Joseph Hedden from Rx SECURITIES. Please go ahead. Joseph, go ahead.
Hello?
Yes, we can hear you.
Hello. Okay. Yeah, I just wanted to delve a bit deeper into the things you said in the release about the Nordic launch, the negative HTA assessment in Denmark.
Right.
What was it that the agency found uncomfortable? Can you give us any more color on what the problem essentially is and how you might address it? I see you're talking about clinical data in there. Are we talking about a new European study?
Well, with regard to Denmark, clearly the regulators would ask for health economic data that we didn't perform a start of our European package, so that was the hurdle to overcome.
Okay.
That does not prevent physicians to prescribe Apealea, but it does prevent us to, let's say, to promote widely Apealea in Denmark. Clearly, we are not anticipating large-scale prescriptions due to that.
Okay. Is there anything that you've identified that you can do as a short-term fix to get that reimbursement situation resolved?
We have addressed that to Elevar. Elevar is also planning to have health economic data as part of the next package submission in the U.S. Short term, it takes some time to do a health economic data. We will be counting of our partner in order to generate the appropriate set of data needed.
Okay, great. Perhaps on Sweden, you talk about some positive feedback in a few centers. Are those particularly important centers for oncology in Sweden? What steps do you foresee are left to get to first sale there?
Yes. There is a positive interest, obviously given the improvement in the formulation, given a number of benefits of Apealea versus classic paclitaxel. The question is how to transform that into real prescriptions. Again, the lockdown of most of the hospitals in Sweden does not help. This is what we are against. You understand that active promotion and active detailing would be needed in order to convince those physicians, and this is what we cannot do at the present time.
Okay. Great. Thank you. Perhaps one more on XR-17, the partnering. You talked about bringing in consultancy to help with that process. Can I just confirm, are you talking about partnering for other companies bringing their APIs to you for formulation improvement, or are you talking about novel compounds coming out of your platform as opportunities for companies to license, or both?
That's a good question. Mainly, that we are exploring the opportunity for other companies to use our platform. Whether we're talking about CDMO that would like to use our platform with their clients where they have any new API or existing marketed API in order to see whether our platform can really help them to produce an improved formulation. This is in that way that we are working with this consulting firm.
Okay, great. Thanks very much, François.
You're welcome.
The next question comes from the line of Ingemar Risari, who's a private investor. Please go ahead.
Okay. Thank you, François. Maybe I missed some of the start of this presentation. I'm wondering a little bit about the XR-19. You have spoken of it as a very interesting new way of bringing two APIs into the same IV. What is the timeframe for bringing that to the market? Is that the same as doing it with XR-17 in an API or is it something that will go faster? Can you comment on that?
The line is pretty bad. I'm not sure that I really understood your question. Can you repeat it, please?
Yeah. I can repeat it. Maybe you can hear me better now. The XR-19, if I say it very shortly. One question I didn't say that before, is there a demand for it and how long until that could reach the market? Is it the same kind of procedure as you have with XR-17? You need to test it clinically, or how does it work? Can you explain that?
Okay. XR-19 is a different way to look at our technology platform. In a way that dual encapsulation is quite a new concept, and yes, it will have to follow through the same kind of steps like XR-17. What we know is that we need to really make sure that we can use clinically the outcome of such a platform. Let me tell you how does that work. In oncology, we are always working in milligram per square meter. Therefore, in a fixed combination, oncology may not be the best therapeutic area to work with XR-19. Maybe other therapeutic area that do not necessarily require a dosage in milligram per square meter.
In some other words, we're looking at either one API and an excipient that could be combined altogether or two API in a therapeutic area that does not require a dosage per square meter. Yes, further studies will be required and from a timeframe standpoint, that will be very similar to XR-17. There is no shortcut in this area.
Okay. Can you also comment on, we heard before that there are some interest in the XR-17 platform. Can you comment any further on how is the interest in, does any other company want to use this? Can you comment on, is there interest in using it, or are you just going out there trying to find someone that, please use this. Please buy it from us. How is that ongoing? Is there still an interest for the platform?
Yes, of course. We are facing with a lot of interest in the platform, at the same time, we need to be quite structured internally. That's the reason why we have mandated a firm, in order to appropriately select the right kind of potential partners we could be working with.
Could the shareholders expect something to happen during the XR-17 platform during next year? Could there be some announcements around it that maybe someone has taken an interest of it?
What I can commit to is that we are doing absolutely our best in order to work in this direction. I cannot give you any timeframe, but certainly as soon as we have some positive news in this area, we will communicate this to the market.
One thing about the M&A as well.
Is there anything, any company or any API or anything you're looking at right now? Is there something going on there?
As I said earlier, we've been extensively looking at a number of companies and compounds in the Nordic area and outside the Nordic area. We will be able to share with you as soon as we can, positive news in that area. The question is not to do a quick acquisition or licensing in, the question is really to find the right compound, for instance, that would fit nicely a portfolio that could be used with XR-17. This is exactly what we're looking for. Quality is important and speed should follow.
I have a final question regarding the extended or the new study being done by Elevar on Apealea in the U.S. You spoke of how it can strengthen the label to other markets. They're looking for superiority in that. How will that strengthen Apealea in other markets? Will that just be happening automatically or do you need to file the new, what do you call it? Do you have to file again for the EMA and different kind of organizations to have it be looking at again to get that, or it's just something that will happen?
We will be submitting to the European authority an extension of the labeling. This is quite a common practice in the industry, and that will certainly, once approved, give some further strength to the label of Apealea in Europe, enabling potentially further price increases or a change of category in the reimbursement in Europe. That will be extremely positive.
Okay. Thank you, François.
You're welcome.
The next question comes from the line of Pierre Anderson, who is a private investor. Please go ahead.
Yes, hello. My first question is for François.
Yes.
In June, you said that the upcoming value assessment of XR-19 should be expected this calendar year. What is the timeframe as of now?
Well, you understand that it takes some months in order to do trials. Okay. What I can tell you is that as I said to you today, we have promising preclinical results with XR-19 that has the potential to deliver compounds in one single IV administration. The question is around, what can we disclose? We need to continue to revalidate the trial for which we've got some positive results, and then we will let you know. Again, we prefer to communicate solidly on XR-19 once we have the results of the second round of investigations.
The hurdles you're facing in Denmark, is there a risk that the future partner of Elevar will face the similar problems in other European countries?
I don't expect so because each country has different regulations and requirements. I don't expect that it would be a similar situation in major Europe.
Okay. You mentioned that you are depending on Elevar's studies to overcome the hurdles in Denmark. Are you talking about the 12-month study or the 36-month study?
Good question. I was talking about the 36-month study. Yes. The efficacy study.
Okay.
The superiority study. Yes.
Mm-hmm. The studies of Elevar that they are planning for the American market, will that help make Apealea first-line treatment?
The design, as expressed by Elevar, will be in platinum-resistant ovarian cancer as a single agent or in combination with bevacizumab, which is Avastin as a trademark. As far as I know, it will not be in first-line platinum resistance. Okay? Second-line.
Okay. Thank you.
You had a question about Europe, whether that will be strengthened in Europe. Yes, of course. The study will be done in the U.S., there will be also some European centers, by the way.
Thank you.
You're welcome.
Just as a reminder, if you do wish to ask a question, please press zero or one on your telephone keypad now. We have one more question from the line of Andreas Benjamin, who is a private stockholder. Please go.
Good morning. My question to François is that we now know that we have two studies, just like we know in America. Now, with the partnership with Elevar, can we expect milestone royalties in the upcoming year, in 2021, in order to get in some money to the company?
Elevar said recently that they are in relatively close to announce the partner in Europe. That will be certainly generating sales through the partner, and therefore you can expect some royalties out of this situation.
Okay.
You have also the same in the Middle East and in some other territories as well.
Okay. With the two ongoing studies that Elevar is going to do now.
Yeah
Do you expect that the burn rate of Vivesto will remain at this level and we will have cash flow from the upcoming partners of Europe or the Middle East?
Well, these two studies will be sponsored by Elevar, and fully sponsored by Elevar. The cash burn of Oasmia is, as Robert said, between SEK 10 million and SEK 12 million per month, including a number of trials that I mentioned in my presentation. We expect to have a runway of more than two and a half years in this setting, without counting the royalties and milestones coming out of the Elevar deal.
All right. Thank you so much for your time.
Yep. Thank you.
We have one more question from Frederick Hagen, who's a private investor. Please go ahead.
Thank you. Hello, and thank you for-
Morning.
-for the great work. Good morning. I was wondering, are you still expecting Elevar to close a commercial deal in Europe before year-end?
I'm not the CEO of Elevar, but I know that at the December 3rd call, he clearly mentioned that that was relatively close. The answer is yes.
As there are no further questions, I will hand it back to the speakers for closing remarks.
Thank you very much for this conference call. Thank you for your attention. We look forward to 2021 with optimism and confidence.