Q3 20/21

Feb 18, 2021

Pleasure to be here with you today to provide an update on our Q3 and year end results. So just would like to say that from January 1 this year, OASMIA will change the use of the calendar year at its financial year. So to make it this happen, this presentation does include an abbreviated financial year covering the period from May 1 until December 31, 2020, that means 8 months. And the comparative figures for the previous year report the same period in of last year, which means 2019. So I think it's important for you to understand that. All right, so moving to Slide 2, this is the forward looking statement. And on Slide 3. So as you heard, so today, I will be joined by Robert. Robert is our acting CFO but also our Finance Manager. And I would like to move to Slide 4. So 2020 has really been a year of delivery and transformation. Since I joined the company in March last we have already made significant progress on delivering on our objectives. We have a clearly defined growth strategy, which I will talk to you a little bit in more details. That is summing up in 4 pillars. We are maximizing the potential of APIDIA together with our partner Elevar in the U. S. We are building our pipeline through our in licensing activities and our own research and development activities as well. We are focusing our resources to make sure that we are investing in the technologies and products for compounds that will bring future success from a commercial standpoint. And finally, we've been building a new leadership team to deliver on this strategy. The goal remains the same. The goal is to build a sustainable, profitable specialty pharma company through in house R and D, M and A and licensing in of late stage assets. On Slide 5, so referring to these 4 pillars. So we have took us some time to put in place this 4 pillar strategy for growth. And obviously, we are measuring our progress against each of our objectives over the last eight ones. So first, the execution on Ophelia on our global partnership with Elevar. So clearly, the U. S. Regulatory pathway proposed by Elevar has been disclosed end of last year. Enevar has announced a number of commercialization deals signed for Europe, etcetera, for Middle East and Africa with Tyba. We have also announced a global named patient program with Tanner and further planned commercial partnership in Asia and Latin America will be announced by L'Ennevar. The Pillar 2, which is our technology platform, I mean, clearly, there is significant work underway to potentially enhanced XR17, we have also started to work, and I will come back to that, on the next technology platform. And clearly, we have been increasing our focus on partnering in order to leverage proven R and D and regulatory skills. The Pillar 3, the clinical development of docetaxel miscella that is ready to enter into Phase Ib perfectly on target and on time, as communicated earlier, this is an agreement that has been developed with the Swiss Cancer Research firm, SAC, addressing a large market opportunity in prostate cancer. Pillar 4, very important pillar. Clearly, we've been having extensive discussions to acquire promising oncology assets, we've been also working with boutique investment firm to drive the process of out licensing our animal health assets and also our XR17 platform. And I will continue during the next few months to refer to this 4 pillar strategy in order for you to basically evaluate our progress against those objectives. Slide 6 refer to the financial statements. So I will give the floor to Robert for that slide. Thank you, Francois. I'd like to repeat what Francois said. Please note that from January 1, 2021, Wassa Mi has changed due to use the calendar year as its financial year. Therefore, this presentation includes an abbreviated financial year covering the period May 1 to December 31, 2020, that is 8 months. The comparative figures for the previous year are the same period in 2019, May to December. Cash and cash equivalent and short term investments are SEK287,000,000 compared with SEK 326,000,000. The net cash flow for the year, minus SEK 154,000,000 includes one off costs relating to the restructuring and staff redundancies. The cash burn we'll continue to be reduced over the year, targeting approximately SEK 12,000,000 per month, a reduction with approximately SEK 100,000,000 per year. The operating cost for the period amounted to minus SEK 131 SEK 31,000,000 compared with minus SEK 117,000,000 for the same period 2019. This was mainly due to one off staff severance costs from the staff reductions implemented in the Q1 of the year 1st 2 quarters of the year, I should say, total employee benefits expenses were minus SEK 45,000,000 compared with minus SEK 39,000,000. Towards the end of the last financial year 2019, the capitalization of development costs for Apilia Pactlikall was halted and amortization for this project started. This has contributed to a significant increase in depreciation for the year. While Smir has incurred additional restructuring costs during the period. These relates primarily to production equipment and previously capitalized leasehold improvements, which were written down in an amount of SEK 5,700,000 Capitalized right of use assets in properties were also written down with SEK 4,100,000, Which also contributed to the increase in depreciation and amortization impairment. Total depreciation and amortization impairment costs were 28% compared with minus 8%. As part of alignment with the partnership agreement contracted between Wassmia and Elevar in March 2020, commercial production of Aphelia was closed in the autumn as Elevar took control of this. In addition, the staff reductions have enabled Osmir to lease smaller premises for its operation, accordingly, notice have been given to on the current premises, Envosmia will be moving its operation to these new premises within the next few months. The laboratory operations will remain in Uppsala. That was all for me. Thank you. I'll hereby lead the word back to Francois. Thank you, Robert. So let's now move on Slide 7. So this slide shows the commercial rollout of APIDIA by Elevar that has been indeed progressing quite well during the past few months. So as you know, Eleva has signed a commercial partnership agreement in Europe, Middle East, North African region and discussions with potential partners are progressing well in Asia, Latin America. And even more importantly, ELEVOR has now a clear has now articulated a clear pathway to commercialization in the U. S. An inpatient program has been launched outside the U. S. To make OPIDIA available to patients. We need it in market where it's not yet commercially available. And although this is not at all a company guidance, I have included into this slide peak sales estimates that is coming from one of our analysts that covers Oaxmiya to give you an indication of the potential assuming obviously a full registration and launch in the U. S. Okay, let's move to Slide 8 now. So this is a slide about our portfolio, which is based on our proprietary technologies. So as well as APELIA, which is already approved in Europe for adult patients with first relapse of platinum sensitive epithelial ovarian cancer, primary peritoneal cancer and fallopian tube cancer, we are about to enter into the clinic development stage with a new approach to prostate cancer with docetaxel misalign. As you know as well, we're working also to add new candidates this pipeline through in licensing focus on oncology. And as you could see from this slide as well, you know that we have an animal health portfolio that we are planning to partner as it is not clearly the focus of our company. Let's move now on Slide 9. So as we are working at bringing new compounds, new drugs through our pipeline, we are also improving and expanding the use of our technologies. So we have hired a specialty consulting firm to drive the partnering with XR17. At the same time, we're also planning to initiate significant collaborations with academics to better profile XR17. We have started research on XR18 that is potentially the next generation technology, which we hope will have a greater versatility and potential. This could be viewed as an upgrade of XR17 to overcome some of the shortcomings of XR17. And we will continue to work with XR19, where we are in a process to establish pool of concepts to demonstrate the ability of a dual encapsulation process, enabling combination therapy to be delivered in one single IV administration. Let's now move on Slide 10. So coming behind APIDIA, we have this docetaxel missile program in development for the treatment of prostate cancer, if I may remember you that prostate cancer is the leading cause of cancer in death in men worldwide. 1 out of 7 will be diagnosed in lifetime, 1,300,000 men are newly diagnosed with prostate cancer every single year. You may know that docetaxel is commercialized worldwide under the brand name of Paxotere. It's actually widely approved for a range of solid malignancies and is actually the standard of care for advanced prostate cancer. With docetaxel micellar, we are using XR17 to enable an IV administration of a water insoluble docetaxel without the usual solubility enhancers. As I said previously, we are working with the Swiss group for clinical cancer research to initiate this Phase Ib trial in H1 of this year that is perfectly on track. And SAC is certainly a highly experienced partner. They coordinate around 50 clinical trials per year involving essentially new cancer therapies. So Slide 11 address some of the license in licensing opportunities that we are looking at. So we are fundamentally looking at in licensing oncology products in preclinical or let's say from preclinical stage up to Phase 3, we are doing that in a very systematic and independent way as well in order for us to make the best possible choices. And we're also looking at products that are poorly soluble in water that may benefit from our XR17 technology. And to that end, as I mentioned earlier in this conversation, we will pursue external collaboration to address this. So let's now turn to Slide 12 so we have a process in place underway looking at partnering our animal health assets that includes 2 oncology products, Pacalvets, that is a new XR17 based formulation of paclitaxel intended for use in dogs. Doxophos Vet, also a new formulation of doxorubicin in combination with XL17, again intended for use in dogs for the treatment of lymphoma, which is one of the most common cancer in dogs. I want to remind the audience that having completed the strategic review, we've been able to identify those cost savings that Robert mentioned earlier and synergies as well. So the annualized cost savings are around SEK100 1,000,000 per year, and that's been delivered. We've been able to reduce the cash burn rate between that is now between SEK 10,000,000 12,000,000 per month. The number of employees has been reduced significantly. We have rightsized the company in order to best move the company forward to its next step. So we have now a total account that is less than 30 people. Therefore, we believe we have a lean focus and agile structure. And on top of it, we have decided to move the small staff headquarters that we'll be moved to Stockholm, while we will keep our laboratories in Uppsala. All right, so let's move on Slide 13. We all know that nothing has been done without a great team, and I'm very pleased to report that we've made very significant strides in this area. The management team is now let it Peter Selin joined us as the Chief Business Officer by the end of last year. Fredrik Jesten will be joining us very early March as a CFO. And Doctor. Heidi Ramstad has actually very recently, a few days ago, joined us as our Chief Medical Officer. Right, so looking ahead on Slide 14, we have multiple near and midterm catalyst and investment drivers in 2021, as you could see from the slides, we believe that all in all, we have a strong case to invest in Neuascia. We are one of the few companies at a commercial stage, one of the few biotech company that is at the commercial stage with proven capabilities to bring new compounds to the market, we do have a validated technology platform, XR17, with the potential for upgrade and expansion, XR18, for instance, we have a growing oncology pipeline addressing large market potential. And this deal with Elevar was certainly transformational for the company, excluding milestones and revenues, the cash position is strong. That will help us obviously to pursue high value licensing in and or M and A opportunities. So we are all in all positioned for strong growth. And this is where I will end this presentation and take any questions you may have. Thank you for listening. Thank Our first question comes from the line of Joseph Henn from Rx It seems that you have had some good success in implementing the cost controls that you announced last year and bringing down the cash burn rate. Now that we are looking at your Phase Ib trial of docetaximycelev starting up, just wondering how the R and D costs of the Pedia closing in autumn, being transferred to Elevar. So can you confirm that this will be the end Building inventory the way sorry, inventory the way that you have been in the past year or 2 And that it will just be production for the Nordics. Is that the right way to think of it? And in that case, what kind of a CapEx spend are we looking at to maintain your technology platforms and the production you do have this year? Thanks. I would say, Robert here, that we don't foresee any major increases in the laboratory and development parts. And what was your other question here? On the CapEx, so can you have I got Am I thinking the right way in terms of the production of Ophelia? You've now transferred most of that to Elevar. So you're not going to be building inventory in the same way that you have been? Yes. That's absolutely correct. And the certainly, the goal of the lab that we remain in Ixara will be to continue to do research for XR1718, that we are not we will not be engaged in any commercial production for any compounds in the near future. Was one of the main reason why we closed down the commercial production facility in Ypsilah basically because I don't think this is our core business. And also this is not part of our mission, which is to become a specialty pharma company cash profitable. Okay. So with that in mind, is there any guidance you could provide on CapEx for this year and maybe going into 2022? Robert? Yes. No, we cannot disclose that today. Okay. Then one on Dosto Tex and Marcella, if I may. The Phase Ib starting, I just wondered if you could give us a refresh on what you think the route to market is there. If the Phase Ib is successful, is that looking at Phase II and then at Phase III? Or is there a dialogue to be had with regulators about A quicker route, I. E, straight into Phase 3? Yes. So first of all, Ludo, we are in a process to get the final stages to be approved by the SAC, therefore, we will be able, hopefully, very soon to disclose the design of the Phase I that hasn't been disclosed yet and then provide some further insight about the Phase II and Phase III. But I think the first step is really to disclose the first the design of the Phase but clearly, we the intention will be to develop on our own the Phase II if the Phase Ib is successful. Okay. And then lastly, on XR18, appreciate that there's not a terrible amount that you can say at this stage, but is there anything that you can say about the differentiation from XL17? Is it still micellar technology? It will be yes, it is vital technology. There are a number of shortcomings of XR17 such as light sensitivity, the storage conditions and so on, so we are working we are at the feasibility stage at this point in time, so I want to raise reasonable expectations, and I will be able to communicate the progress on that later on. But we have initiated that work. Okay. Thank you, Francois. Thanks, Robert. You're welcome. And the next question comes from the line of John Preissner from Edison Investment Research. Please go ahead. Hi. Thanks for taking my questions. So I have 3. So I'll just ask them once at a time for simplicity. So can you provide any additional clarity on the kind of external interest that you've had in the Animal Health business and really the kind of companies that you've been in contact with? Yes, but this is certainly still confidential. So I cannot disclose the name of the companies. There is a great deal of interest out there, absolutely from midsized to big size animal health players. And that work has that started actually very end of last year. So bear with us. We will communicate in due time some progress around that. That's great to hear. And then given the XR17 platform is applicable to a broad range of kind of solubility related APIs, can you discuss kind of what the ideal target for M and A specifically would be? Yes. 2 things. I mean, first of all, we will be looking at licensing compounds, especially small molecules that could benefit from the platform. But that's not our exclusive intent. The intent is also to beef up the pipeline in oncology by in order to get a critical mass. So we are pursuing those 2 ways in parallel. That's great. And so Elavar has obviously signed the licensing deal for Ophelia with for Europe and the MENA region. I don't know if you could just provide any guidance on when you'd expect to start seeing royalties from sales in these territories. Well, that I cannot provide any guidance on royalties. That is kept confidential under the agreement between Elevar and ourselves, and you know that Inceptua is the 3rd party supplier for Europe, so there will be a transfer of MAH, as we say, manufacturing authorization holder from us on to Enabar through INCEPTRA, so that's the first step that is currently happening. And then we'll INCEPTRA obviously will start the commercialization process of APIDIA in Europe. We have one more question from the line of Ted Hagen, who is a private investor. Please go ahead. Good morning. Thank you. What are the main concerns from institutional investors? And when do you expect to see them investing in the stock? And also the same question For board members. Okay. So let me take the question about board members. I mean, we are not disclosing anything on the choice of board members to invest or not into the company for reasons you would easily understand. And then on your first question, I have certainly started a number of first round discussions with institutions related to osmir, that has happened during the last months. And obviously, I was the focus was on other things such as a strategy, such as the right sizing of the company, implementation of the strategy, hiring the right people. So but now I'm focusing my efforts on these institutions and clearly, we the feedback is positive. I mean we are in a good position should be attractive towards these institutions. Some institutions probably are expecting a catalyst to happen with regard to licensing in or an acquisition in order to continue the and materialize the dialogue with us. So this is what I'm working on. Okay. Thank you very much, and thanks for all the good work. Thank you. And as there are no further questions, I'll hand it back for closing remarks. Thank you for listening to this quarterly report. And more than ever, I would like to thank the investors for their patience, for their commitment to Aurasmia. The turnaround that has it's been initiated under my leadership close to a year ago. It's now in its final phase, and now we can certainly look to the future in a very favorable way, and I would be delighted to report to you any significant news in the very near future as soon as we get them. Thank you again for your attention today, and stay in touch.