Hello, everybody, and welcome to this webcast in relation to our quarterly report, the third quarter of 2024, Xbrane Biopharma. I am Martin Åmark, the CEO, and I have with me also Anette Lindqvist, our CFO, in this call. We will, as usually, go through the highlights operationally and financially of the quarter, and then we will open up for questions, both via audio as well as on the chat. So let's start here, and most of you who are calling in probably are aware of our business model. We are engaged in development of biosimilars. We have portfolio that consists of four biosimilars and biosimilar candidates under development. All in all, addressing reference product sales expected to reach about EUR 26 billion by 2026.
Our first program, Ximluci, biosimilar to the eye drug Lucentis, approved in Europe and launched in Europe since March 2023 by our partner, STADA, and going through a regulatory process for approval in the U.S., and subsequently, post-approval, to be launched by our U.S. partner, Valorum Biologics. We have then two programs, Xcimzane and Xdivane biosimilar candidates, respectively, that are in the late pre-clinical stage. We have successfully scaled up the respective production processes and demonstrated the comparative analytical similarity to the respective reference product. And we are ready to take the programs into clinical trials during the course of next year.
And for these two programs, we're also running very active out-licensing processes with the ambition to identify and tie up commercialization partner that also can co-fund a significant portion of the continued development of these biosimilar candidates up until they reach approval stage in Europe and U.S. Then we have early-stage development of biosimilar candidate to Darzalex. But we'll start off with Ximluci. And this is a snapshot of where we, together with STADA, are from a commercialization perspective across Europe and Middle East. We are continuing to see a solid volume growth. We had a volume growth of about 23% Q3 versus Q2 this year, and that is to say, units being sold to end customers.
Despite that, we saw more or less a stable net sales level, which then was due to a slightly negative mix effect, which is essentially the relative volumes coming in from different regions with slightly different pricing, essentially. And that is most likely going to vary a little bit from quarter to quarter as we continue this journey. But I think the important thing here is that we are continuing to see the strong volume growth trend, and we're very pleased with that. And STADA is making good progress across a multitude of the different countries that the product is launched in, in Europe.
Overall, then, we estimate that Ximluci has a value market share of a little bit above 1% in a market of about EUR 1.2 billion , and that is then considering annual net sales of the originator product, Lucentis, and the Lucentis biosimilars on the market in this region. We're happy to see also that Ximluci is number two from a market share perspective across the different ranibizumab biosimilars in this region. I think continued development according to plan when it comes to the ongoing commercialization efforts of Ximluci in Europe. We're also starting to see approvals across some countries outside of Europe.
We've seen approvals in Bahrain, UAE, and Uzbekistan, and Switzerland coming in in the recent past now, and we are expecting to see launches across these countries in the near-term future, along with more approvals in additional countries, particularly in the Middle East region, where we have ongoing regulatory processes, and we are working according to a previously communicated plan to resubmit the BLA to FDA in the fourth quarter of this year, so for those of you who have followed us, we received a Complete Response Letter on our initial BLA, or that is to say, Biologics License Application, to FDA for Ximluci. We received a Complete Response Letter in April, and we've since then worked through the deficiencies stated by the FDA, stated in the Complete Response Letter.
And that entailed, on the one hand, the qualification of a new reference standard, since FDA wanted to see a slight stricter band, when it comes to the for one specific analytical method on the reference standard to be used for release of the product to the U.S. So that is going according to plan, and we're also working together with our respective contract manufacturers to address certain observations and deficiencies identified by the FDA in the pre-approval inspections that took place as part of the original procedure. And it's a six-month review process for a resubmitted BLA, hence, we are expecting to have a new so-called PDUFA date, or decision date, in Q2 next year.
We then hope for an approval, and that we, after that, subsequently can move towards supporting our US partner, Valorum Biologics, with launch of the product in the US. We're also working together with STADA on pre-filled syringe for regulatory process in Europe. We hope that we can get an approval of the pre-filled syringe, and that that can be launched during the course of next year. Moving on to XB003, our biosimilar candidate to Cimzia. Here, as you might recall, we regained the full rights to this program from Biogen at the beginning of August this year. And we have since then been running an active out-licensing process, trying to identify a new suitable commercialization partner.
That is moving along and supported by an advisory firm specialized in this kind of processes. We have received the first non-binding proposals for such arrangements, and due diligence is ongoing by several different potential counterparties. We are optimistic in being able to finalize this process and identify a suitable new commercialization partner for this program. I think we also have made a quite significant progress in the development. We have successfully scaled up the production process on the drug substance side, which we were very happy with, and we've confirmed analytical similarity versus the reference product at scale.
So the product is getting ready for going into clinic, and we are planning to have scientific advice meetings with both EMA and FDA in the near-term future to discuss and align on a suitable clinical development plan for this program. And then we come to Xdivane, our biosimilar candidate to Opdivo. Here, we have also successfully scaled up the drug substance process and confirmed analytical similarity versus the reference product at what is going to be clinical and commercial scale on the drug substance side. So we're very pleased with that. We also have had interactions with both EMA and FDA, and we have reached an alignment and acceptance on a clinical development plan, which is streamlined in comparison to the guidelines for development of biosimilars.
We're planning one single pivotal trial, and in that streamlined approach, we were able to significantly reduce the envisioned development budget or clinical budget, which we're very happy with, and significantly improves the prospects when it comes to identifying and tying up a suitable commercialization partner for this program. In that process, we are also making quite some progress. We have entered into agreement negotiation phase, and we are hopeful that in the near-term future, we are going to be able to finalize an agreement with a commercialization partner for this program. That we then can move into initiating the clinical trial during the course of next year, together with a future partner. So that's a brief update where we're at from an operational perspective.
So with that said, I'm probably gonna hand over to Anette to go through the highlights, on the financials.
... Thank you, Martin. My name is Anette Lindqvist. I'm the CFO of Xbrane. I will and I have the pleasure to take you through some of the financials for the quarter. If we start to look at the net revenues, and just as a bit of repetition, let me take a few seconds to take you through the diagram, which can look a bit complicated at first glance. The first thing is to notice that the bars represent the revenue streams by quarter, and the line is then representing the gross margin. The bars fluctuate quite a bit as revenue will and do fluctuate for Xbrane, and that's driven by, well, two major things. The first one is product deliveries to STADA, which happens occasionally and at greater scale.
That said, that sale is with little or no margin. Second is contractual payments, can be milestones or other contractual payments with various gross margins. So this quarter, we have a total revenue of SEK 67 million, with a gross margin of 45%. Last year, for Q3, then similarly, we had 59, with a gross margin of 4%. And on this occasion, that is explained totally by the fact that last year we had product deliveries to STADA. In fact, we haven't had any product deliveries to STADA this year, as we have quite a considerable inventory with STADA. The net profit share for Ximluci was SEK 16 million, as Martin said, somewhat lower than Q3, Q2, and that was driven mainly by one-time marketing cost and a slightly lower price mix than we experienced in Q2.
We have a milestone attributable to the license agreement with Biogen. For the gross margin, we have some cancellation fees with our CMOs related to Ximluci and also some negative product deviations. Looking at the expenses, the overall expense in the quarter versus Q2, Q4 was a decrease by 34%. That is driven mainly because of Xdivane. As we received the positive feedback from EMA from a reduced clinical program, the program met all the capitalization criteria. Hence, from July onwards, we are capitalizing the majority of the cost for Xdivane, and that impacts P&L in the quarter with SEK 12 million . The overall cost saving scheme and also in addition, a very conscious cost management with OpEx being held to a minimum.
Of course, we have prioritized program spend, but overall, all other OpEx is really held to a minimum. Majority of the R&D spend in the quarter relates to a successful engineering run with our CMO for XB003. I also would like to repeat that of the launched cost saving scheme launched in November last year, we have now realized SEK 22 million savings, and we have staff reductions of 35, of the roundabout 40, as was communicated by the program. We are well on track to deliver the SEK 15 million annually in generated savings. The cash position, I'll take you through some of the major cash flow implications. At the end of June, we had SEK 73 million.
The first, the first waterfall shown is prepayments and net profit generation from STADA, which gave us SEK 56 million in the quarter. We have Ximluci production cost, 37. Majority is cancellation fees and production costs, and also some PFS, production cost. We have Xdivane development expense, the 12 million, as I was referring to, that was then capitalized later. XB003 upscaling activities, 9. Ximluci development, and that, that's where the PFS activities should be, so around about 12 million. Organizational costs, like salaries, office, consultants, et cetera, is 23 million. And then other is really interest, patents, and everything else is 4. So we leave the quarter with a cash position of 31 million.
And hence, again, we leave SEK 31 million, and the operating cash flow is SEK 15 million, and obviously, that is then impacted by the capitalization activities and also agreed deferral payment plans with our major CMOs. And by that, I'll turn the word to Martin.
Yeah. So the key takeaways from the quarter, revenues of SEK 67 , coming then from Ximluci profit sharing, as well as milestone from Biogen. And as we said, we're happy to see the continued growth from a volume perspective on Ximluci across Europe. We are progressing on the out-licensing effort from both XB003 and Xdivane, and we are optimistic in being able to perhaps well commercialization partners on both programs and get to a finalized agreement with Xdivane in the near-term future. So that's probably the highlights and also ties together with the priorities going forward, as you're very well aware, and consistent with our recent communication via press releases.
Very much focused now on finalizing these out-licensing deals on both Xdivane and XB003 to resubmit the BLA for Ximluci or Lucentis, which is gonna be the U.S. brand name, in the fourth quarter to FDA. And then going into next year, together with partners, advance Xdivane and XB003 towards clinic, and support STADA in continued sales update for Ximluci in Europe, and also introduction of the pre-filled syringe. And then, of course, also support both STADA and Valorum in launches in additional countries and for Valorum, of course, U.S., dependent on an FDA approval. So those are the priorities going forward here. And with that, I think we probably conclude the presentation and open up for potential questions, and we can start with questions via audio.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Filip Eneberg from Redeye. Please go ahead.
Hello, everybody. So I'm curious, are there big quarterly volatilities related to STADA's Ximluci-related costs, given that the profit split in Q3 is lower than in Q2, despite the growth of 20%, and even more in volume?
I would say that it hasn't historically been a huge volatility, but a consistent, you know, from a percentage perspective, trend towards a stable level. But we had some one-time marketing costs coming in in this quarter, which we expect not to see in the coming quarter, at least. But we cannot rule out, of course, that such efforts will have to be done in the future as well. But it was a one-time effect, this quarter.
Right. Thank you. So the next one relates to the Xdivane out-licensing. As you mentioned, you're in the negotiation stage. Can you provide any guidance on what parts of the deal which is currently being negotiated on?
So, this is Xdivane and, the purpose here is to find a commercialization partner to whom we then are granting an exclusive license to the whole program for commercialization in a certain region, if you will. So we are having different dialogues, which some of which are on a global basis, other which are on, let's say, one out of the two big territories from a market potential perspective, at least being Europe or U.S. So that's the nature of the arrangement, and as we also have been quite explicit about previously, we're seeking a partner who can bear a rather significant portion of the upcoming development spend, including particularly the upcoming clinical trial.
And of course, who we believe successfully can eventually commercialize the product.
Got it, and I understand from your answer that there is more than one interested party at this point.
Yes, it's still more than one, so that are in the process. Yep.
Right, and the last one on this deal then is, I mean, given the circumstances and the press releases you have sent out recently, how certain are you are gonna be able to secure a deal with Xdivane, and what happens if you don't? Any comments on that?
Yeah. No, I mean, we are optimistic, given the stage we're at. And yeah, the alignment on timelines with respective counterparties, if you will. So we're optimistic, but of course, we are also, as we've always been in close dialogue with existing shareholders as well as potential new investors, both on the debt and equity side. And we're having continuous such dialogues, and we would be hopeful that, if we weren't to be able to meet the dictated timeline, we could find a solution in those discussions to further prolong, let's say, the deadline we would have until finalizing such an agreement.
Got it. And the last one for me, how should we view the R&D cost base in the coming, let's say, two quarters, given the ongoing activities?
Yeah, I mean, we, we do still have quite significant commitments and undertakings on the, the three first programs. I mean, Ximluci, when it comes to the BLA and the FDA approval, as well as the prefilled syringe, we have a quite significant development undertaking there. And then on Xdivane and XB003, we also have undertakings with regards to finalizing all preparations for going into clinic, including finalizing production of clinical material, as well as preparing all documentation for a clinical trial application.
So we have still quite significant undertakings and commitments from a development perspective on all these three programs, which makes me believe that R&D spend is gonna. It goes up from quarter to quarter, but overall should look quite similar to what the way it has been seen the last quarters. I think as far as when we come into Q2 next year and onwards, where we are coming out from these undertakings and in a more significant way are going to be able to reduce the R&D spend. And then, of course, dependent on where we are from a financial perspective and what resources we have can consider initiation of new programs or, let's say, acceleration of the fourth program in our portfolio, the Darzalex biosimilar candidate. And then, of course, we can...
Those decisions will also determine the R&D spend from that point and onwards.
All right. That's all for me. Thanks a lot.
There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Okay. Thank you, speaker. So the first question coming in from Magnus Tillberg, but I think that we have regarding the backup plan in case an agreement is delayed from November and pushed out into December or onwards. I think that you just responded to that, Martin. So we will go to Magnus Hillerström. "So what's the reasonable upfront payment for Xdivane and for XB003 if the deals are completed? Can investors hope for a + $10 million upfront for the products combined?
Yeah, I think that's a reasonable aspiration. I can remind you that when we out-licensed Ximluci to STADA, we had an upfront of 8 million EUR, and when we out-licensed XB003 to Biogen, we had an $8 million upfront. So that gives an indication of, let's say, normal and previously seen upfront payments in license deals like this.
Next question comes from you, Joachim. "How long is the expected approval time for the PFS after EMA has received the application?
Yes. A little bit dependent on the amount and nature of questions received, but I think the timeframe is between four to six months.
Okay, so next question from Joachim again: "Any possibility to provide any insight on the planned Phase III studies? Which indications or, I guess, labelings are you planning to study in clinic for Xdivane and XB003?
Yes. So in Xdivane, we have planned a study design for the upcoming trial. And here, the most likely indication is in melanoma. That is the main indication of the reference product and the one which we believe is most feasible from the perspective of being able to recruit patients within the shortest possible time, and also find a setting where we can do this trial in a monotherapy setting, which simplifies a lot when it comes to particularly measuring pharmacokinetics, which is gonna be key in this upcoming trial.
When it comes to Xcimzane and XB003, we are in the phase now of actually designing the clinical trial, and we're going to have interactions with the regulatory authorities first quarter of next year, and I guess ambition is to do a Phase I, and I guess ambition is that that also could be the single pivotal trial, and to do that in healthy volunteers, because that's possible for that product. If not, then if a study in patients would be required, it is probably going to be done in a psoriasis indication, but we haven't fully decided yet, as we're going through the design of those respective planned studies and are also having the scientific advice with EMA and FDA pending.
Okay, then it's about the attractiveness for Xbrane biosimilars regarding EMA and FDA's positive feedback on the streamlined clinical development plans. How do you feel this will help in securing a larger upfront payment from the non-binding proposals that we already received, versus now an agreement on the table?
I think it more will be reflecting. So a smaller investment needed to be done on a potential partner side. I think more is going to then reflect a higher profit sharing on behalf of Xbrane than what would otherwise be the case if two separate Phase I and phase III trials would have to be conducted with a budget that would have been more than the double compared to what we currently are looking at. So I think it's more that aspect that is gonna be impacted rather than the up-front itself. We discussed in a previous question what has previously been seen and what reasonably can be expected when it comes to up-fronts on this specific program.
Okay. So then, next question from Magnus Tillberg. In case the share is significantly higher than, 0.29, the end of the year, how do you plan to manage that?
I think this question is probably related to the outstanding series of warrants-
Mm-hmm
... which have a strike price of SEK 0.29. So if those warrants would not be in the money, that would mean they would most likely not be exercised, and it will be a shortfall in cash influx into the company, which otherwise would be the case if share price would be above 0.29 or SEK 0.29 , and warrants would be in the money and as a consequence, most likely being exercised. So I guess this is the consequence, but that is just one other uncertainty when it comes to upcoming cash flow in combination with a few others, let's say. So that, I guess, is the way we're handling it.
Oh, okay. I don't see any more questions. So operator, is there anything more from the audio? From-
There are no more questions on the teleconference. You can proceed with your final greetings.
Okay, then we thank all of you who participated in the call. And, as always, we are here should you have any further questions, we're available over email or phone, and we hope to be able to communicate back to all of you in the near-term future with hopefully being able to be successful in our endeavors and finalize license agreements with both Xdivane and the XB003, and then follow on with our other ambitions for the upcoming year. Thank you.