Q2 20/21

Dec 9, 2020

Good morning, everyone. So delighted to present the Q2 results. And I will follow through the slide deck. So if we could move to Slide 2, forward looking statements. Slide 3, so today, we have together with me, we have Robert Majorana, who is our acting Chief Financial Officer, but also our Financial Manager, Till Peter Gjersten will effectively join us. All right. So on Slide 4, I would like to go through high level the achievements during the quarter. So first of all, we believe that we've made significant progress with regard to Elevar in acting with Apellia. So there is this agreement that has been signed off for the commercialization of Apellia in the Middle East and North African region. This is the Taiba deal. The first market will be Saudi Arabia. Then we have Elevar has implemented a global name patient program, mainly ex U. S. It's called the TANF program. That means that on request, a physician can have access to ADILIA. 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. And initial prescription, and I'm pleased to report that despite the COVID-nineteen situation, initial prescriptions have been recorded in Finland, and we will obviously continue to monitor 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 XR18, XR19, that means our core technology platform and the we're making some preparation for the clinical trial, the Phase 1b with docetaxel missile. At the same time, we've been able to reinforce the IP protection during this quarter with regard to XR17 and Atellia. And above all, we've been able to continue strengthening the recruitment of high level executives at the management team level, but also below the management team level. So let's go now through the Slide 5. I will give now the floor to Robert to comment on the Q2 financial highlights. Thank you, Francois, and good morning, everyone. My name is, as earlier mentioned, Robert Mirona, and I am the acting CFO of Wasmia until Frederik Kersten is on board. I'm very pleased to announce that I will remain with Wasmia and take on a position as financial manager after Fredrik's arrival. I would also like to say that I'm that it's a pleasure to be here with you today and to provide an update on the 2nd 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 Wassmia is an innovation company. However, in transition, but today still not yet an earnings stock. We are, as seen in the first bullet, in a strong cash position with close to €330,000,000 in short term investments and on our bank accounts. That is to be compared with €29,000,000 a year ago. And we are on the right track to reach our target with a burn rate closer to the range of €10,000,000 to €12,000,000 per month. And that will include all the investments that Francois earlier mentioned. We have had some severe one off costs during this quarter. We were charged €3,100,000 in a fine from Nasdaq due to the previous Board of Directors breach of good stock market practices. This will, for your information, be added to our existing €30,000,000 claim on the previous board. We also made a $3,400,000 write down to due to reduced need of our premises in Uppsala following the earlier communicated reorganization and redundancies. And that leads us also to our employee expenses, which reached SEK 18,100,000 compared to SEK 14,400,000 percent a year ago. And 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 costs for apilia facdisol. This accounts for SEK 4,100,000 compared to the quarter a year ago. So operating profit and loss is minus CHF 53.6 million compared to CHF 46.4 million a year ago, a difference of CHF 6,300,000 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 minus $53,500,000 compared to $18,300,000 a year ago. This difference is explained by a positive tax difference of 33,000,000 recorded a year ago. Earnings per share, minus €0.12 compared to minus €0.6 percent. And the last bullet is relating to the increase in our inventory with €20,500,000 compared to the beginning of April this year. This is partly explained by replacement of write downs made in the Q1 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 20 point €4,000,000 from €65,800,000 to €85,100,000 And I leave the word back to Francois. Thank you, Robert. Let's now move to Slide 6. So as I said earlier, during the quarter, we've been able to strengthen the management team by adding key executives such as Fredrik Jersten, Peter Selin as a Cbo, Chief Business Officer, Robert in the finance managing capacity, but also we've been able to attract and retain 2 senior scientists that will certainly help us to develop further our platform, our technology platform, XR17, into XR18 and 'nineteen as well. And that's an important point for OASMEA. On the Slide 7, you see that our portfolio, I have already presented that slide, but 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. So let's have a look a little bit into details. So we have APELIA in ovarian cancer. Now in the U. S, there is a clear path towards approval, and I will come back to that to this a bit later. In Europe, as you know, we have an APELIA on a demand to physicians with APELIA on a demand basis. There will be the announcement of a partner in Europe is to be done relatively shortly, and that's an important move also towards the commercialization of APELIA. Docetaxel Mesilla in prostate cancer, the Phase Ib is foreseen and on track with the SAC group. We know you know that we are working with a new API, and we will be disclosing the results of this investigation in preclinical relatively shortly. Exon19 combination is continued to be assessed in various cancer, but also our cell oncology. And we have our Animal Health portfolio. We have Pacalvett and Luxoforzvett in Phase IIb. For those compounds, we are looking for a partner, mainly in the U. S. On Slide 8, this is the 4 pillar of the OASMEA strategy as presented earlier, and that remains the same strategy for next year onwards. So first of all, the Pillar 1, which is the execution on the APILIA global partnership with Elevar. The Pillar 2 is the clinical development and partnering of our technology platforms. The Pillar 3 relates to the clinical development of docetaxel miscella, new API and other compounds to be added on. And the Pillar 4 is our in and out licensing strategy. Right. Let's move to the Slide 9. So clearly, during the quarter, Elevar Therapeutics did make substantial progress with regard to APELIA. And let me emphasize perhaps the clear path that now has been disclosed with regard to the U. S. Regulatory submission. And you know that Eleva has had a number of interactions with the FDA. You know that different regulators have different requirements with regard to study endpoints, for instance. And Elevat has decided to work on 2 additional studies in order to support the NDA filing. So one is a PK study that will be initiated during the first half of twenty twenty one, expected to take about 12 months. And the other study, which is a superiority study, it will be an efficacy study of APELIA in ovarian cancer. The goal here is really to strengthen the label in the U. S. And in Europe down the road. So it's really positive news as well. And I have to say that Ellevar 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 Let's move to the Slide 10. On the Slide 10, we are addressing the pillar number 2, which is the development of our new technologies. So with regard to XR17, we have mandated a booting firm in order to drive strongly the partnering of XR17. And in this way, we hope to achieve partnering with this technology. XR18, I think this is the first time that I am introducing the concept of XR18. So XR18 will be the next generation of XR17 solubilizing platform. This 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. XL19, so we are we continue to work with this dual encapsulation process of 2 APIs or 1 API and 1 Excipients. And we've had some promising preclinical results that shows that XR19 has the potential to deliver compounds in 1 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 3, which is mainly clinical development. And in this slide with docetaxel miscella. As I said earlier, we are perfectly on track to initiate the study during the first half of next year. And this study will be in metastaticprostateresistantcancerpatients. And the clinical design will be disclosed at the right time once the we will have approval with the ethical committee. On the next slide, actually Line number 12. So 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. And we've been pleased to report that a specialist team of experts in this business will be coming from blue chip companies in that sector. We'll be looking after this portfolio. And 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 US300 $1,000,000 for the cancer the cancer drug market in So on the Slide 13, you see the 4 pillars. I have been going through the pillar the APILIA pillar, the technology platform pillar number 2, the 3, the clinical development. So we on the 4 so 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 booting firm. And we will be we hope to be able to share concretely our progress within a relatively short time frame in that area. So looking ahead on Slide 14, clearly, with OASMIA, there are a number of potential near term and mid term value drivers, such as the partnering of APIDIA in Europe, the initiation of the docetaxel mesela clinical study, the partnering of Animal Health Business, partnering with XR17, the proof of concept, the development of XR18 and our M and 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. So having said that, I would like to open up to Q and A at this stage. Operator, the floor is yours. Thank Our first question comes from the line of Jon Preissner from Edison. Please go ahead. Thank you for taking my questions. I have 3, so last time one at a time. So following the update on FDA interactions and the requirement for additional trials in the U. S, when can we expect additional indications for APELIA to be announced and these trials to start? Right. So this is in the hands of Eleva, as you know. And if you did listen to the conference call on December 3, so clearly, the initiation of the study will be done in the first part of 'twenty one and is expected to take up to 24 months. So and then CEO of Elevar mentioned about 9 months to up to 12 months in order to wrap up for the submission. So you're talking about a couple of years from now. Yes. So for additional indications, can we expect those to maybe be announced whilst these trials are ongoing or? With regard to the new indication, we are working with Elivar on choosing the right one, and this will be disclosed later on. I cannot give you any precise time frame at this point in time, but it will be disclosed during 2021. Okay. And then Opelio 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. Yes. So 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-nineteen situation, that has not been easy to really promote the drug since basically we launched as you know we launched in March, late February, beginning of March of this year. And clearly, we've been hit by the COVID-nineteen 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. And then docetaxel has utility across a range of cancers. So I was just wondering if you could discuss any potential next indications you're looking to develop docetaxel micellarid and potential timeline for this? Well, provided that the initial Phase Ib study will be giving us positive results, we will be in prostate cancer, then we intend to continue that route in prostate through a Phase II. Okay, great. Thank you very much, Francois. You're welcome. And the next question comes from the line of Joseph Hedden from Rx Securities. Please go ahead. Yes, we can take you. Okay. Yes, 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. What was it that the agency found uncomfortable? Can you dig 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 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. Well, I mean, that does not prevent physicians to prescribe APPEA, but it does prevent us to, let's say, to promote widely APHILIA in Denmark, clearly. I mean, we are not anticipating large scale prescriptions due to that. Okay. And is there anything that you've identified that you can do as a short term fix to get that reimbursement situation resolved? Well, you we have addressed that to Eleva. Eleva is also planning to have health economic data as part of the next package submission in the U. S. But short term, I mean, it takes some time to do a health economic data. I mean, so we will be counting of our partner in order to generate the appropriate set of data needed. Okay, great. And then perhaps on Sweden, you talk about some positive feedback in a few centers. Are those particularly important centers for oncology in Sweden? And what steps do you foresee a left to get to first sale there? Yes. So there is a positive interest, obviously, given the improvement in the formulation, given a number of benefits of APELEA versus classic paclitaxel. Now the question is how to transform that into real prescriptions. And again, the lockdown of the most of the hospitals in Sweden does not happen. And this is what we are against. Against I mean, 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. And then perhaps one more on XL17, the partnering, We talked about bringing in consultants 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. Well, mainly that we are exploring the opportunity to for other companies to use our platform. So whether we're talking about CDMO that would like to use our platform with their clients, whether 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. So this is in that way that we are working with this consulting firm. Okay, great. Thanks very much, Francois. Peel it down. And the next question comes from the line of Ingmar Risarraf, who is a private investor. Please go ahead. Okay. Thank you, Francois. Maybe I missed some of the start of this presentation, but I'm wondering a little bit about the Exxon 19. You have spoken of it as a very interesting new way of being into API into the same ID. But what is the time frame for bringing that to the market? Is that the same as doing it with XR17 in any 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? Yes. I can repeat it. Maybe you can hear me better now. I mean, what's the XR19, if I say it very shortly, what is one question I didn't say there 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 XR17, you need to test it clinically? Or how does it work? How does it work? Can you explain that? Okay. So XR19 is a different way to look at our platform, our technology platform. So in a way that dual encapsulation is quite a new concept. And yes, it will have to follow through the same kind of sets like XR17. What we know is that we need to really make sure that we can use clinically the outcome of such a platform. So let me tell you how does that work. In oncology, we are always working in milligram per square meter. And therefore, in a fixed combination, oncology may not be the best therapeutic area to work with XL19. Maybe other therapeutic area that do not necessarily require a dosage in milligram per square meter. So in some of the words, we're looking at either one API and an excipient that could be combined altogether or 2 API in a therapeutic area that does not require a dosage per square meter. But yes, I mean, further studies will be required. And from a time frame standpoint, that will be very similar to XR17. There is no shortcut in this area. Okay. Can you also comment on we heard before that there are some interest in the XR17 platform. But can you comment any further on how is the interesting? Does any other company wants to use this? Can you comment on is there interest in inducing it? Or are you just going out there trying to find someone that please use this, please buy it from us? Or how is that ongoing? Is it is there still an interest for the platform? Yes, of course. I mean, we are facing a lot of interest in the platform. But at the same time, we need to be quite structured internally. So that's the reason why we have mandated the 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 XR17 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. And one thing about the M and A as well. Is there anything you any company or any API or anything you're looking at right now? Or is there something going on there? Well, 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. And 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 XR17. So 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 the PLEA in the U. S. There's you spoke of how it can strengthen the label to other markets, so it will be they're looking for superiority in that. But how will that strengthen the PDM and other markets? Will that just be happening automatically? Or do you need to like to file a new what do you call it? 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? Yes. So we will be submitting to the European authority an extension the labeling. So this is quite a common practice in the industry and that will certainly, once approved, give some further strength to the label of APPEA in Europe, enabling potentially further price increases or a change of category in the reimbursement in Europe. So that will be extremely positive. The next question comes from the line of Pierre Anderson, who is a private investor. My first question is for Francois. In June, you said that the upcoming value assessment of XR 'nineteen 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. So what I can tell you is that, as I said to you today, we have promising preclinical results with EXR19 that has the potential to deliver compounds in 1 single IV administration. The question is around what can we disclose. So we need to continue to revalidate the trial for which we've got some positive results and then we will let you know. So I again, I we prefer to communicate solidly on XL 19 once we have the results of the 2nd round of investigations. Okay. 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, the superiority study, yes. The studies on Elevar that they are planning for the American market, will that help make APELIA first line treatment? The design, as expressed by Elieva, 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 1st line platinum resistance, okay? So second line. Okay. Thank you. And you had a question about Europe, I mean, whether that will strengthen in Europe. Yes, so of course, I mean, the study is will be done in the U. S, but there will be also some European sensors, by the way. Thank you. You We have one more question from the line of Andreas Benjamin from who is a private stockholder. Please go. Good morning. My question to Francois is that we now know that we have 2 studies just like we know in America. But now with the partnership in with Elevar, can we expect milestone royalties in the upcoming year, in 2021, in order to get in some money to the company? Yes. So, Elevar said recently that they are in relatively close to announce the partner in Europe. So that will be certainly generating sales through the partner. And therefore, you can expect some royalties out of this situation. Okay. And you have also the same in the Middle East and in some other territories as well. Okay. So with the 2 ongoing studies that Elevar is going to do now, do you expect that the burn rate of Oasmia 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 OASMEA is, as Robert said, between SEK 10,000,000 and SEK 12,000,000 a month, including a number of trials that I mentioned in my presentation. And we expect to have a runway of more than 2.5 years in this setting without counting the royalties and milestones coming out of the Elevard deal. All right. Thank you so much for your time. Yes. Thank you. And we have one more question from Frederik Hagen, who is a Private Investor. Please go ahead. Thank you. Hello and thank you for the great work. I was wondering, are you still expecting LMI to close your commercial deal in Europe before year end? Well, I'm not the CEO of Elevar, but I know that at this December 3rd call, he clearly mentioned that that was relatively close. So but the answer is yes. Okay. Thank you. And 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 and thank you for your attention. And we look forward to 2021 with optimism and confidence.