Hello, and welcome to Xbrane Biopharma's presentation in relation to our Financial Report, First Quarter of 2025. My name is Martin. I'm the CEO of Xbrane, and I have with me today Jane, our CFO. So we will go through an operational update in relation to the quarter. I'll start with that, and then Jane will take over and go through a financial update, and then we will open up for questions, both via those calling in and also over the chat. Yeah, we'll move on. The big event during the quarter was our agreement with Alvotech to sell one of our programs, XB003, our biosimilar candidate to Cimzia, as well as parts of our organization, the part which is engaged in laboratory activities, as well as the actual development lab, which we have established here in Campus Solna, close to Karolinska Institute.
This was a very important transaction for us. It puts us in a better financial position. We are getting a total proceed of SEK 275 million, and with that, we are going to be able to repay some of our current debt, including the outstanding convertible bond of about SEK 150 million, as well as certain accounts payables in relation to our manufacturing partner for this specific program, XB003. We are also reducing our fixed cost base as we are reducing our organization. We are going to have approximately 25 employees post this transaction, and we believe we are going to have a fixed cost base of about SEK 40 million annually. A very important transaction for us, and it is going to close end of May.
The transition of the employees is going to be active beginning of June, and the proceeds are also going to come to Xbrane in the beginning of June. Okay. What this does to us is that we are going to be able to be fully focused on particularly Ximluci, our Lucentis biosimilar, as well as Xdivane, our Opdivo biosimilar candidate. That is going to be our primary focus during the coming years, and we're going to be very much oriented towards trying to optimize our cash flows with these two assets and await initiating development of further biosimilar candidates until we potentially come in a position with financial resources which allows that. A snapshot of Ximluci here. As you probably know, this is our Lucentis biosimilar.
We developed together with STADA, was approved November 2022, launched in March 2023 in Europe, and it's now launched across 23 countries. The last country where the product was launched, and that was in March, was France. That was the last of the five big European countries. It's also launched in a few select markets outside of Europe, and we have ongoing regulatory processes together with STADA in a few other Middle Eastern Asian countries as well. The arrangement we have with STADA is essentially a 50-50 deal where we receive 50% of the profit contribution generated of sales of the product. The net sales minus production cost minus sales and marketing expenses on STADA's side, right? We get 50% of that. We can move to the next slide, and I think first quarter was a good quarter.
We've seen historically quite strong quarterly growth from a volume perspective, around 20% last quarter, jumped up a little bit in Q1 to 36% volume growth versus Q4. There is some volatility in the growth dependent on launches in certain countries and specific orders from different countries. I think we shall expect an average going forward of about 20% on a quarterly basis. As a consequence, the profit sharing that came in also jumped up a bit in relation to Q4. I think we had close to SEK 20 million coming in as profit share from STADA during this quarter. The volume market share, if we look at the month of March, was about 7%, and that is considering Lucentis and Lucentis biosimilars, so the randomized market, 7% volume market share across that European market. We can look at the table in the bottom corner here.
Yes, some scenario analysis, if you will, what different volume market shares would mean in terms of profit sharing. That is assuming average net sales price from STADA to customers as we saw in 2024, and also the average sales and marketing expenses as a percentage of net sales as we had in 2024. Now, these numbers are fluctuating a bit due to mix effects since pricing is somewhat different across different countries and also due to specific sales and marketing activities in specific countries in the quarter. In 2024, the volume market share on average was at about 2.5%, so that corresponds to a profit share of SEK 36 million or so. As you can see, we are a little bit above the 5% you can see in the table, but 5% would mean about SEK 70 million on an annual basis.
I guess our ambition still is that this product should be able to reach a level of 25% volume market share as we've seen that biosimilars to other biological drugs have taken collectively about 75% of the volume of the originator. We have two other biosimilars on the market, so 25% would be the fair share, if you will. As you know, those of you who have been following us, the sales ramp-up has really been slower than what we initially anticipated due to more educational activities required due to Lucentis biosimilars really being the first biosimilars in the ophthalmology segment. Also, biosimilars coming in vials while as the originator, the majority of the sales of the originator is in the prefilled syringe, which provides a certain benefit to the clinics in terms of time saved in the administration procedure.
Now, we are working on a preface arranged as well and plan for submission during the course of this year to EMA for European approval. That is a snapshot of similarly Europe. We can speak a little bit about the U.S.. We have an ongoing approval process with FDA. The BLA was resubmitted in December last year, but FDA requested certain additional documentation from one of our manufacturing partners. That was completed mid-April, and the review was then initiated by the FDA. We do expect to get the PDUFA date communicated mid-May. According to existing procedure, FDA shall communicate the PDUFA date 30 days post submission of a resubmitted BLA. If they judge that they have all documentation to formally initiate the review, we should get the PDUFA date mid-May. We will communicate that to the market as soon as we receive that communication.
We have a partner in the U.S., Valorum Biologics, and they are making the appropriate preparations to be able to launch the product as soon as approved. The U.S. market, we're quite excited about it. It poses a significant opportunity: $10 billion U.S. dollar market if you consider a full retinal anti-VEGF market. Sizeable market, a lot of things happening though. We have, of course, Lucentis and the Lucentis biosimilars. We have a big chunk, which is Eylea, where biosimilar entrants have initiated with Amgen's product being launched. We do believe that the other Eylea biosimilars are going to be held off until mid-2027 due to waiting out certain IP.
It is a dynamic marketplace, and we hope, of course, that we together with Valorum are going to be able to capture a portion of initially, of course, the randomized market, but also nag into the other part of the market, including Eylea, since we hope for a launch prior to multiple Eylea biosimilars coming to market, but also to be able to take part of current Avastin off-label usage. Again, here one can play around a little bit with certain volume market shares, which one can think about from a scenario perspective, and also average selling price. This leads us to believe that profit sharing of between SEK 120 million-SEK 220 million for Xbrane could be feasible on an annual basis.
We do hope for an approval during the course of this year and then a launch during the course of next year after Valorum having a Q code approved and in place. That is probably an update about Ximluci. We can move on to Xdivane. Xdivane is then our Opdivo biosimilar candidate. Opdivo will be the one inhibitory immuno-oncology drug sold for about $9 billion last year, expected to be selling for $14 billion in 2028. December 2028 is a loss of exclusivity and opens up for potential entrant of biosimilars to Opdivo. What we see currently, ongoing clinical trials by Sandoz and Amgen when it comes to Opdivo biosimilar candidates, and probably we expect that we'll see something coming in from Teva as well.
Given the size of this originated product, we feel that the competitive pressure from a biosimilar perspective is limited. We do believe in a scenario that we could be one out of four biosimilars on the market in the U.S. upon patent expiration. We are very excited about our partnership with Intas, an Indian pharmaceutical developer with strong knowledge in development of biosimilars. They have a handful of biosimilars approved in Europe. Accord is the fully owned sales and marketing subsidiary of Intas, very successful in commercializing pharmaceuticals across Europe. A third of all oncology injectables in Europe are being sold by Accord, so they have made a very strong footprint across Europe and are now making very strong inroads into the U.S. with the recent acquisition of Coherus pegfilgrastim biosimilar. We feel we have a very strong partner for this program.
For those of you who don't remember, this entailed an upfront payment of EUR 10 million, which came in last year, and development milestones of EUR 3 million during the course of the development. Xbrane's development responsibility lies within CMC-related activities, process characterization, and validation on drug substance and drug product side, which entails an investment of about SEK 200 million net of commercial material being produced in the process. Intas' development responsibility lies within the clinic, which is a sizable investment. We do expect initiation of clinical trial during the course of this quarter. We made all the preparations with regards to documentation for the IMPD, production of the clinical material, and Intas have signed up with Global Zero for running this trial. We do believe that this clinical trial can be done in a timeframe that allows for BLA submission Q4 2027.
It's a trial which includes 340 patients within melanoma. We believe that's feasible to be able to recruit in this timeframe. We are very much targeted on, together with Intas, a Q4 2027 submission, which would allow a launch by loss of exclusivity in the U.S.. Yeah, we're quite excited about this opportunity. If we look at the U.S., then we can look at penetration curves and pricing curves on the left-hand side. This is essentially the collective volume market share of the biosimilars versus the originator product over time from launch of the first biosimilar. We can see that the oncology products have had an average penetration of 75% versus the originator three years post-launch.
It has been quicker for these kinds of products, which goes via Medicare Part B and are sold via the hospital channel in comparison to biosimilars going via the pharmacy channel, where we have pharmacy benefit managers, which has a quite strong position in the U.S. Of course, pricing varies quite a lot from the molecules we've seen historically, but it drifts down towards discount versus the originator pre-patent expiry pricing of about 40-70%. If you play with the numbers again in kind of different scenarios with different volume market shares and different discounts on the pricing side, we do believe that this biosimilar candidate has a substantial upside potential for Xbrane, could lead to annual profit sharing of about SEK 1 billion.
Sizable, but of course, dependent on what you choose to believe in with regards to volume market share and discount to the originator. As I said initially, we do feel that the competition from other biosimilar developers, given the size of this molecule, is quite limited. Okay, that was a brief operational update. I hand over to Jane to go through the financials.
Yes, hello. I will be speaking a little bit about the financials of the first quarter of 2025. The revenue amounted to SEK 93.2 million, which corresponds to a gross profit of SEK 52.9 million and a gross margin of 57%.
The revenue is generated from product sales of Ximluci, corresponding to SEK 46.6 million, and also outliers in sales amounting to SEK 46.6 million, which is directly connected to the agreement with Intas that was signed in the last quarter of 2024. The sales correspond to a volume growth of 36% versus the last quarter of 2024. The average volume growth since launch amounts to 29% for Ximluci. The administration expenses amount to SEK 11 million, and the R&D expenses amount to SEK 46.8 million, whereof SEK 24 million have been capitalized in connection with the Xdivane program. As you all know, we have signed an agreement with Alvotech to divest part of the R&D department of Xbrane and the XB003 program, which means that the expenses for R&D will be significantly decreased after the second quarter.
The cash position at the end of the first quarter amounted to SEK 25 million, and the operating cash flow amounted to negative SEK 69 million, which is mainly related to sales of inventory items and decrease of accounts payables and also of accounts receivables.
Yeah, key takeaways from Q1 report 2025 for Xbrane, revenues of SEK 93 million, continued strong growth for Ximluci in Europe, and then the Alvotech deal, which we've talked quite a lot about. Priorities going forward, of course, navigating through the FDA process for Ximluci to get an approval during the course of this year, get clinical trial for Xdivane started, and then continue to support our partners when it comes to sales and marketing of Ximluci. That's really where our focus lies.
With that said, we can probably shift over to Q&A, and we first welcome any potential questions from participants calling in.
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 Dan Akschuti from Pareto Securities. Please go ahead.
Hello, and thank you for taking my questions and congrats on the progress and turnaround. Just two questions. One is a bit on suppliers and how they have been kind of willing to postpone some of the payments that should go to them, and how you think about financing now going forward post-May, post-cash receivables from Alvotech. And also with regards to Ximluci, I mean, the financials are fluctuating a lot because of all the deal structures.
Is it a way to look at what is actually coming from the profit sharing to kind of take the note two in the report there where we have the license revenue of SEK 46 million, product sales SEK 46 million, and we take the COGS away so that it is around SEK 6 million that is actually coming from the profit sharing part, not from the shipment of product to STADA and then getting paid for it. Thank you.
Yeah. Let's start. Yeah, we worked very actively during the last 12 months or so with our three main manufacturing partners with regards to different agreements on deferred payments, and they have been very accommodating and understanding of our situation. We have all intentions now to settle all this debt in June, essentially, when we get the proceeds from the transaction with Alvotech.
We need to look at what would, how we shall finance the company from that point onwards. We have very much reduced fixed cost base, as we talked about, about SEK 40 million, and now we feel that profit sharing coming in from Ximluci in Europe covers that by some margin. At the same time, we need to make a substantial investment into Xdivane program. As I mentioned, that net of actually the value of material that can be commercialized is at about SEK 200 million. We also have an inventory coming in on Ximluci, which we expect to be able to convert into cash during the course of 2026 and 2027. That is at about SEK 180 million. All in all, it nets out, but there are some imbalances in cash in and cash out, if you will.
We need to find a proper way to, yeah, finance the business and make sure that it balances out. Over a time period from now, essentially up until, yeah, launch of Xdivane in 2028 or so, we do expect that it should all balance out. Coming to your question on the profit sharing, I can comment a bit on first quarter. We had a profit sharing coming in in cash terms now of about SEK 20 million or close to SEK 20 million. At the same time, we made a shipment of finished goods to STADA during this quarter. As you remember, we do that at cost, but there are some discrepancies in the kind of the average at cost supply price and the true to be accounted for cost for the specific shipment that was done.
I think that there we had a small negative figure, if you will, which leads to this number you, I think, rightly calculated based on the figures in the Q1 report. That is probably my comment. Maybe Jane wants to clarify something.
No, that is right. Also, the shipments that are made to STADA currently have already been prepaid by STADA in 2023. That is still being settled with those shipments coming in currently. By the end of this year, that will have been settled in full, and we will actually be able to receive proceeds in terms of cash coming in from those shipments. Any other questions?
The next question comes from Filip Einarsson from Redeye. Please go ahead.
Hello, everyone. I just have a few short ones.
The first one, will we be able to see a fair representation of the new company and cost base after the Alvotech deal now in Q3? I would also like to know if there is an update on the negotiations relating to the upfront from Valorum that we spoke about last quarter, and also if we could have a few words about the PFS that are used there. Thank you.
Sure. Yeah, I think in Q3, the Q3 report shall portray a fair picture of the organization post the Alvotech transaction. As we said, the Alvotech transaction is going to be closed end of May, so it is kind of two months in Q2 of still the old Xbrane, if you will, and one month with the new Xbrane. Q3 will be a fair representation. That is correct. We had a question about Valorum.
Yeah, we are going to, together with STADA, pick that negotiation up again now when we hopefully get the timeline cleared from the FDA, with the communicated PDUFA date. As soon as we have that, we have the intentions to pick that up again, and we'll make sure to communicate to the market as soon as that is settled. The PFS, yeah, the prefilled syringe. We are working on the development of the prefilled syringe. We are going through, if you will, the last validation step of validating the sterilization, the auto-sterilization of the syringe, which is a requirement both from EMA and FDA, actually. We are targeting a submission to EMA during the course of this year as a variation to the existing approval. We will make sure to get back as well as soon as we are there.
All right. Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Yeah. I do not know if there is a mistake here, but we see no questions coming in over the chat. That is somewhat surprising because we typically have quite a few questions coming in over the chat, but we can see none now. Probably what we will do is that if there is kind of a technical glitch here and there are questions coming in over the chat, we will have to respond to them in written format and put that up over.
No.
No questions. No webpage. No. Okay. No questions. Okay. Then we close the call, and thank you very much for participating.
Thank you.