Good day and thank you for standing by. Welcome to the Xbrane Biopharma Q2 2022 Report. Currently, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. If you wish to ask questions via the webcast, please use the Q&A box available on your webcast link or on your screen at any time during the webcast. Please be advised that today's conference is being recorded. I would now like to hand over to your speaker, Mr. Martin Åmark, CEO. Please go ahead.
Thank you. Welcome everybody to this presentation of our Q2 report. I'm joined today by Annette, our CFO, and I will start to provide an update on the activities from an operational perspective for the second quarter of this year, and then Annette will go through the financial highlights. We can shift slide here. We can look through our development portfolio. Our first product here, Xlucane, which is the development name of our Lucentis biosimilar candidate. We are in the registration phase in Europe, and we expect approval for the product later this year and subsequent launch beginning of next year by our partner, STADA. We'll go through more details on the timeline in the following two slides here.
I will also talk more about the process for the BLA to the FDA. We have our Cimzia biosimilar candidate, which we now have development name BIIB801, and this is the development name by our commercialization partner, Biogen, which we now have adopted as well. Here we are working together with Biogen, but also together with our production partner, AGC, to scale up the production process and essentially produce clinical material and make preparations for being able to initiate clinical trials with this biosimilar candidate that hopefully could be initiated during the course of 2023. We have our oncology biosimilar candidates, Xdivane, our Opdivo biosimilar candidate.
We are working very intensively here internally to set the production process, and I think we're making good progress. I think we reported last year as a result of this work that we now have five granted patents that has come out of this development work, which we believe will give us a competitive position with regards to production costs. As you'll probably remember, what we intend to do is to get to as high yield of activity as possible, leading to an as low as possible production. Quite a strong platform being developed in Romania, and it's now also coming particularly from this development program.
Roughly speaking, just to get some indication of timing on this one, this program is, you know, one and a half years after our Cimzia biosimilar candidate. We're also trying to find a suitable production partner. As you remember, for our Cimzia biosimilar candidate in September last year, we signed the agreement with AGC Biologics. We're now looking into who we could partner up with from the production perspective on our Xdivane program. Hopefully we can conclude something towards the end of the year or beginning of next year, and then move into scale up. We are conducting dialogues with the potential commercialization partners.
We haven't kind of provided a firm timeline for when we are going to conclude such a deal, but we are conducting dialogues with interested parties and hope that we'll be able to come back on that end as well. I think this program is moving ahead in a nice way, and then biosimilar candidates to Keytruda and Darzalex respectively. Here we are working with cell line development, it's more early phase development essentially. We're leveraging the same platform technology that came out of our Xdivane program here, which again, we believe shall give us competitive production cost position. That's kind of the highlights on the portfolio.
I think we can move to the next slide and go a little bit more into depth on the Xlucane program. So here is an updated timeline. If we start with Europe and the regulatory process versus EMA. We submitted the Marketing Authorization Application September last year. STADA submitted a Marketing Authorization Application in September last year. We have responded to the questions which according to the process comes at day 120 in the process. They came in January. We submitted our responses to those questions in April. We received remaining questions back from EMA in June, and we're now working to respond to these questions, and our plan is to submit our responses mid-August.
Hopefully that should then lead to a positive opinion from CHMP, the Scientific Committee for Medicinal Products in September, led or followed by an actual approval by the European Commission in November. That's kind of the regulatory plan. We're also working a lot to prepare for a launch of the product in Europe by our commercialization partner, STADA of course. We are awaiting the expiry of the last patent by the originator surrounding this product. I mean, we're very cautious and have a policy of course not to infringe any third-party IP. So we are waiting that this last patent will expire now end of July before initiating commercial manufacturing of the product and to produce the launch volume.
If all goes well then we go to look forward towards launch of the product in Europe in first quarter of next year. It's very exciting, of course, and I will talk more about the prospects in Europe on next slide. I want to spend some time on FDA and U.S. as well here. As you all probably know based on the latest communications, we submitted the BLA for Xlucane to FDA in March this year. FDA has a 60-day period where they review the file for completeness, essentially, after which they take a decision to actually file the application and initiate the review process.
Now, what happened in the case of Xlucane was that FDA came back to us and, after the filing review, concluded that additional information was required in the BLA or the application, for them to be able to file the application and initiate the actual review. That led to us withdrawing the application, now in May, and we have now received a general advice letter from the FDA with comments and recommendations with regards to the BLA, which we now need to take into consideration for a resubmission of the BLA.
This general advice letter contains a number of items, and they're mainly related to actually the supply chain and additional information required by the FDA to make a full assessment, which we now are working on together with our contract manufacturers and suppliers to put into the BLA for resubmission. We're also going to engage with the FDA in a couple of meetings prior to resubmitting the BLA to make sure that we understand fully their views and their requirements for resubmission so we are sure that the resubmission will be successful and that it will go through the filing review, and that it then will be filed and an actual review can be initiated.
Very cautious now, of course, to work very intimately with the agency to ensure a successful resubmission of the BLA. We've said from a timing perspective that we shall resubmit the BLA during the course of 2022. I think we cannot at this point in time provide a more specific timing than that. It's dependent on the time it will take for us to gather this additional requested information, but also the outcomes from a continuous dialogue with the agency. But we'll get back with a communication once we have more clarity and once we are going to be able to resubmit the BLA.
That I think is what we can say now with regards to the U.S. We can shift the next slide and talk again a little bit more about Europe. We're very excited of course, about now being so close actually to be able to launch Xlucane in Europe. We all in the company have worked a long time together with STADA, our partner, on this product. We're very excited now to being so close to actually see the fruition of all the hard work we've been going through. We truly believe that we're going to be able to bring something valuable to the market. We're looking at an addressable market in Europe of around EUR 5 billion if we think about the retinal VEGF-A inhibitor market.
That contains mainly Lucentis and Eylea, the main approved products in this space. It's a big market in Europe we are addressing, and we know that there is a great need of more cost efficient and more affordable alternatives in order to be able to alleviate the burdens on the healthcare budgets, but also to make this treatment more accessible in parts even of Europe where accessibility is an issue. We truly believe that we're going to be able to bring something valuable here to the market, and we're excited about that. We still believe that Xlucane will be one out of three biosimilars to Lucentis coming to market during the course of next year.
We believe that STADA is a very strong partner for us here, and that they will do an excellent job in commercializing this product and really optimizing the potential value in this product in Europe. They're working, as you can imagine, very intensively in preparation for a launch as we speak. We're very involved in that of course. It's very, very exciting times. As most of you probably recall, as per the co-development agreement we have with STADA, we're entitled to 50% of the profits generated from the product.
I think it's interesting to see how launches of biosimilars have gone previously in Europe, and we can see that on the graph on this slide on right-hand side where we've seen more rapid uptake in the biosimilars from a kind of a volume market share perspective in the more recent launches. We could see biosimilars to pegfilgrastim, Adalimumab, taking beyond 35% volume market share at month 12, which I think is extraordinary. You know, one could apply that to the situation of Lucentis, and of course pricing is an unknown here and we don't know exactly where prices would land.
If one would calculate on a 50% price discount versus the originator and a 35%, volume share towards the end of 2023, that's still approximately EUR 350 million market for biosimilars that could have been generated at that point in time on an annual level of course. It's a substantial market that could be generated rather quickly, for the biosimilars coming in on Lucentis. I think there are great prospects, for Xlucane in Europe and, we are very much looking forward to see how this all pans out during the course of next year. Good. We can probably move on to the next slide. We're also growing as an organization. We're now 70 employees.
I think still we've had a rather easy time to recruit and attract professionals in this field to the company. I think we have a good reputation in Sweden particularly. We're certified as a Great Place to Work since last year. We actually redid this during this year and even increased our scoring the surveys. I think we have been able to in an environment where we've been growing a lot, we've been able to maintain a satisfied workforce and a good culture in the company, which I think is actually crucial to be able to grow this company continuously. We're very happy with that. I think we can move on to the next slide.
We're also then planning to have, as we did last year in May, we had a capital markets day, which we arranged ourselves. Where we were able to go a little bit more in depth with regards to our business compared to what we can do participating at arranged capital markets days by financial advisors. We want to do this again this year and we want to arrange such a day towards the end of August. We're going to get back to all of you with the timing for this capital markets day, but that we're planning for. We hope that we're going to be able to go into more depth around the business.
We're also going to participate in Pareto's annual healthcare conference in September. We're most likely going to be able to participate in more capital market days arranged by financial advisors during the course of this year, but they still need to be scheduled. I hope that we can interact with all of you in a more in-depth manner in these upcoming events. That's probably all from me at this point in time, and I will hand over to Annette here.
Thank you very much, Martin. We'll start to have a look at some of the financials. This will be quite brief as usual. I will start with some operating expense. They amounted to around SEK 39 million in the quarter, which is then totally in line with last year, even though the split between R&D and G&A is somewhat changed, meaning the G&A costs have showed a slight decline, and the R&D costs have increased somewhat. What's really interesting to see is if you look at the split of the spend in R&D, we also now see an increased spend in reference to both the BIIB801, which is the biosimilar to Cimzia, but also the expanding oncology portfolio.
That's really pleased to see that. For those of you who've been here for a while, you would remember that last year we started to capitalize the R&D development cost for Xlucane, that's highlighted in red. In this chart. Comparing like for like, we have a 10% increase between the two years. This is the fourth quarter we now capitalize the development spend for Xlucane, and as you can see it's only SEK 5.7 million in the last quarter. This is exactly as expected. Xlucane is now moving into the next phase, and the development costs are not as significant as the preparations for supply chain, and those costs are not entitled to be capitalized.
Hence, we have a total now of SEK 86 million on the balance sheet leaving the second quarter. We leave the quarter also with SEK 250 million in the second quarter. For those of you that remember, we did a share issue in June last year. However, that cash didn't actually hit the books until Q3. Still we leave the quarter with quite a strong cash position. I think that was it. Martin, any Q&A?
Yeah. Let us. Please submit any questions you might have in the chat here. We have a couple of questions already. We'll address them now. You can add questions here. We'll try to address them as good as we can. Okay. Let's start. Can you comment more on the day-to-day questions? Do you feel comfortable with number and quality of the questions, and were you able to reduce the number of questions after 120 days? Yes, we feel comfortable. Of course, we were able to reduce the number of questions from the end of Q1 quite significantly. While we feel comfortable that we're going to be able to respond in a satisfactory manner on the remaining questions by mid-August, as I mentioned.
Planned timing for submitting the responses. Next question. Solid acceleration with new projects could be seen. How much faster do you think you're able to develop Keytruda and Darzalex compared to Xdivane? I think as per now the programs are following more or less along a standardized timeline, which we now have as per our development process and based on the learnings we've accumulated particularly in the Xlucane program. I think the timelines will be, roughly speaking, the same for each program. Just that they are differently geared in time, so to say. I think that the Xoncane and Xlucane cell line selection phase with about similar candidates are probably a year and a half after the Xdivane program. Okay.
Next question. Can you please comment on launch dates of the other two Xlucane biosimilars in Europe? Is your partner a major competitive advantage versus your biosimilar competitors? Do they have partners too? When are you expecting you would start production of Xlucane for Europe? Okay. Quite a few questions here in one, so let me take those. Launch dates of the other two Xlucane biosimilars in Europe, we don't know. We cannot comment on that. Next one, is your partner, Amneal, a competitive advantage versus your biosimilar competitors?
I mean, again, as you probably are aware, the other two Lucentis biosimilars expected to come or be launched in Europe are on the one hand the product developed by Samsung Bioepis, partnered by Biogen, and the other one developed by Formycon and to be commercialized by Teva in Europe. I think that STADA has a great capacity to commercialize biosimilars across Europe. They have great experience, and they have launched and are commercializing quite a few biosimilars already. They've been doing it successfully. I also do believe that we have a very strong position from the cost perspective in Xlucane. When are you expecting you will start production of Xlucane for Europe?
Well, we are initiating that from a commercial perspective end of this month, when the last patent expires, essentially next week when the last patent is expiring on the originator. We need to await that before initiating commercial manufacturing, but essentially it's starting next week. Next question. Byooviz is launched in the US at a 40% discount compared to Lucentis. Discount higher than expected. Could you leave a comment? Well, I think we've always, since quite a few years back actually, been calculating on a 50% price discount versus the originator, both in Europe and the U.S. Yeah, maybe this was higher than expected, compared to what we've seen in the past, but it is not higher compared to what we've been expecting at this point in time.
Yeah, again, we've always been thinking about the level of 50% the discount versus the originator. Next question. Okay, let's see here. Regarding the FDA advice letter, you mentioned that item from mainly to the supply chain. Just to clarify, are there any items that the FDA requested that has to do with the outcomes of Phase III trial or analysis of the clinical data either being safety or efficacy available? That's the first question. Answer to that one is no. Next question. Was there overlap between the EMA questions and the information that the FDA requested that led to the refuse to file the withdrawal? Yes, certain items on the general advice letter we received from FDA were indeed same questions we received from EMA throughout the procedure.
I think actually there's a difference between how EMA and FDA operates, where I think that the EMA have a high degree of acceptance for getting additional information throughout the procedure in the question rounds than FDA. Quite a few of those items in the general advice letters we've already worked on as responses to questions to EMA. Next question. Could you please specify what in your view would be the time frame in which decision for EU approval for Xlucane would fall the latest? Our plan here, as we communicated in the report, is that we hope that we can get a positive opinion from the committee, CHMP in September, followed by an approval by the commission in November this year.
This is the current idea of the plan. Have the regulatory submissions been Xbrane's sole responsibility, or are your partners also involved within this process of the BLA and MAA filing? Our partners are involved to a very high degree. The MAA to EMA was submitted actually by STADA. We've been working very intimately with STADA in preparing that file, of course. I mean, needless to say, we have a co-development agreement with STADA since a long time back, and we've been working very intimately with the development of the product.
With regard to the BLA, Xbrane is actually the one submitting the application to the FDA, but we'll be working very intimately both with STADA and also Bausch + Lomb for that application and also with the regulatory advisors in the US. Next question. With the current cash position, what is your runway? As Annette mentioned, we came out of the second quarter with SEK 250 million in cash. What we can say that at least, you know, shall take us to EU approval of Xlucane. We have quite a high degree of flexibility in our burn, so to say, particularly considering what we do in the more early-stage portfolio. The oncology portfolio, particularly how fast we accelerate that.
We have the unknown of when we will be able to do commercialization deal with the Xdivane. That makes it a little bit hard to actually put down the foot specifically on what is the cash runway into 2023. At least to you know approval of Xlucane, we have cash runway. We are having discussions with you know potential financial partners as always. I think other financing opportunities are being opened up now as a consequence of us actually getting closer to an approval of our first product in Europe and also getting closer to a potential launch of the product.
Non-dilutive financing, you know, on the debt side or, you know, as some companies are doing, selling off, some royalty rights to existing products, things like this. Such opportunities are being opened up, given where we are now from a development perspective, and we are also exploring such non-dilutive financing options. Okay, next question. Xlucane in the US, are you 100% certain that you do not need to do further tests? Yes. The items which we received in general advice from the FDA does not include that we need to do further tests, so to say if one is considering here, you know, additional clinical trials or such things. No.
It might be so that we need to submit now the data from the first commercial batches that we're producing, which again are starting next week already now. I don't think that is a big issue from a timing perspective. But that needs to be clarified with the agency if that is needed. But again, I don't see that would be an issue from a timing perspective. Next question. Is the injected volume in Xlucane the same as Lucentis? Answer is yes. Will it be the same for all three biosimilars you are expecting in the market? Answer is yes. Next question. With regards to the prefilled syringe submission to EMA, is this still likely to be approved and launched together with the vial, is the question. Answer is no.
We have submitted the vial presentation to EMA, and we are developing, yes, a prefilled syringe, but that was not included in the initial application to EMA. Are there issues that could cause delays for the prefilled syringe? The idea for the prefilled syringe is that we'll seek an approval from EMA on the prefilled syringe post getting approval for the vial. Of course, things could emerge in that process, which could cause delays that cannot be ruled out. I think we have a solid plan for that, and I think it's something that we are going to be able to update on during the course of next year as we're getting closer.
Are you aware of any other competitor that has managed to submit a prefilled syringe, or are you still the only one at that stage with the prefilled syringe? I don't think we can comment so much on the competitors. We can just note, which is public information, that the approvals that were granted to the two competitors were on the vial. Seems to us that they were not submitting prefilled syringes either. With regards to any potential plans on prefilled syringe of the competitors, we couldn't comment. Next question. Consideration for how much market share for Xlucane is achievable given that you're not the first to launch? Well, I think actually in Europe that we're going to be able to launch approximately at a similar time point as expected competitors.
I see no reason why biosimilars to Lucentis wouldn't follow the same penetration curve or volume market share uptake as we've seen in previous biosimilar launches. I see no reason why Xlucane wouldn't capture its fair share of that market to be generated. I mean, that has been our ongoing assumption into this all the time. I think that assumption still holds true. Comments on strategies to protect market share from incumbents reformulation and so on. Well, nothing really to comment there more than what I comment on the vial and the prefilled syringe question previously. Next question. Are you having to generate any further clinical data to meet the additional requirements from the FDA? Answer is no. You mentioned you're planning additional meetings with the FDA ahead of submission.
Have you a date for this first meeting yet? Answer is no. We are intending, and this has also been the way we've understood the FDA in the communication we've had with them, that we're going to be able to engage in a series of informal meetings with the FDA to make sure we understand the guidance on the general advice letter as clear as possible. Our hope is that we're going to be able to have such informal meetings with rather short notice during the coming months. Next question. Partnership on oncology portfolio, can you comment on how advanced the discussions are and whether you think you will partner on the portfolio or just Xlucane first?
We're having early stage discussions, I would probably say, with potentially interested commercialization partners. Our ambition here would be to find a suitable commercialization partner for this whole oncology portfolio. I think that would be very beneficial. I think it will be easier to have one partner to work with for that full portfolio. I think it's also particularly biosimilar candidates to PD-1 that are, let's say, closely interlinked. I think that would be the best way to go, and that's our ambition. Next question. Do you expect with your partner to generate profits from Xlucane during the first year of Xlucane in Europe? Yes, definitely. Profits should be generated from the first phase, essentially, as compared to our expectations. Yes. Next question.
You've always claimed that Xbrane technology is cheaper compared to other biosimilar companies, but given the substantial margin for all biosimilars, is that competitive advantage really that important? Good question. Well, actually, when it comes to biosimilars to Lucentis, I don't believe that advantage will be needed, is maybe the right word. Because again, if discount versus originator is 50%, we're still talking about average net sales price of, let's say EUR 350 a unit. Still at that level, production cost is a very small fraction. A benefit on the production cost side is not that important if pricing is as expected. If you look at our Cimzia biosimilar candidate, I think the picture was different.
I think the reason for us actually being the only biosimilar developer working on Cimzia biosimilar candidate is due to our platform technology and our ability to reach what we deem to be a commercially viable yield or production cost. I mean, we started that program and said that we need to be able to have a production cost which gives us at least an 80% gross margin with a 50% price discount versus originator. You can calculate backwards what that means in terms of yield or productivity or essentially grams per liter fermentation media we get in the production process. We put that as a threshold in the development, and eventually we were able to reach that. That was fully thanks to our platform technology.
I do believe that other developers would have thought about this in a similar fashion. The reason for some of them dropping biosimilar candidates to Cimzia particularly probably has been due to not being able to reach that yield. There's a situation where actually I do believe that our platform technology not only provided competitive advantage, but actually enabled us to develop a biosimilar candidate and a product where others couldn't. Next question. Can you provide some guidance on your expected cash burn for this year? This question we already addressed. Is it still the strategy to outlicense the whole oncology portfolio at once? We've already addressed it. Next question. Can you comment on the cost profile for STADA, joint venture on Xlucane? When will it break even? At which levels of sales?
I think the development costs we've been taking over the development of the product. There's still some expenses from a development perspective that needs to be taken during the remainder of this year. Then it really comes down to the profit generated from the sales. I think that break even should be reached during the course of 2023. Okay. Next question. Are there any updates on the status of Xoncane? Okay. I think we also mentioned that in the Q2 report. Xoncane is a biosimilar candidate to Oncaspar. This is a program where we no longer are conducting active development with, so to say paused the development.
We believe we need to, we want to find someone who potentially would want to take this program forward. We believe there are greater opportunities for us to spend our time on, frankly speaking. I think particularly on the oncology portfolio we've been talking about, which, you know, addresses the market thinking about peak sales expectations of EUR 45 billion, compared to current sales of Oncaspar of some EUR 200 million. I think, you know, it's just a different ballpark of opportunity, and that has been our reasoning that we better focus and spend our time on the most attractive opportunities out there. We needed to deprioritize the Xoncane program, so it's currently put on pause so to say. Okay, good. I think that concludes the questions that we can see at least on the chat here.
It was quite a long list of questions. We thank you all for that, and I hope that we were able to provide satisfactory responses to the questions. If that was not the case and some of you would want further clarification, please get back to us over email or phone and we'll try to clarify further. Otherwise, I wish you continued rest of the day, and we can conclude the call. As I said before, we're also looking forward to be able to go more into depth on the business and discuss further with all of you in upcoming Capital Market Day towards end of August, and we'll get back on that. Thank you all.
This concludes today's conference call. Thank you for participating.
We'll get back on that. Thank you all.