Good day, thank you for standing by. Welcome to the Xbrane Biopharma Q3 2022 Report Webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time during the webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Martin Åmark, CEO. Please go ahead.
Thank you very much and hello everybody. We're going to present the Q3 report of 2022. We can go on to next slide. First we're gonna have a look at our development portfolio and I'll talk a bit about the progress we've been making on the respective programs during the quarter. First of course we have our Xbrane biosimilar candidate Ximluci. As some of you know, this was called Xlucane previously, the development name, but the brand name in Europe is going to be Ximluci. We now call the product candidate Ximluci. I'll get back to this program particularly on the coming two slides. We'll comment on the other programs as well then.
Our synthetic candidate, which we now developed together with Biome. Here we are going through a process of scale up of the production process together with Biome, but also together with our contract manufacturer, AGC Biologics. Our next milestone is really going to be during the course of next year to successfully perform first scale up batches. Something which we will get back to when we are shooting and after that it's going to be about taking the program further into clinics. On our oncology portfolio biosimilar candidates to Opdivo, Keytruda and Darzalex, we are advancing from a development perspective. We are getting towards finalization of establishing the production process at pilot scale on our Xdivane biosimilar candidate.
We are in the process of selecting an adequate contract manufacturer for the drug substance, hopefully this year, during the course of this year, to be able to initiate the process of tech transfer and scale up for this program. For our biosimilar candidate to Keytruda and Darzalex, we are going to finalize the pilot scale process during the course of next year and then proceed towards scale up. As we talked about in the recent Capital Markets Day , we have an ambition to find a suitable commercialization partner for these three programs during the course of next year. We are in the process as well. We have a couple of discussions ongoing with interested parties. It's very exciting of course. Yeah.
Getting back to Ximluci. Here is what our timeline, as most of you are aware, we got a positive opinion from CHMP in September, which will lead to an approval in Europe in November this year. The product can be launched across Europe starting in the fourth quarter of next year. We're going through a process now of start producing launch material together with our contract manufacturers to be able to support a commercialization partner start up and launch. The approval is expected to be on the vial only. As some of you know, the originator have two presentations, the vial and the pre-filled syringe.
What we are going for is, of course, the biosimilar is a vial, and that's also what we're now producing commercial volumes of course. We have developed a pre-filled syringe, which we intend to take to market later. It's something which we plan to seek approval for at a later stage after getting the formal approval of the vial. It's something which we are going to be able to come back to during next year. Moving us to the U.S. and the regulatory process there. We have had a meeting with the FDA, and we can confirm that we shall resubmit the BLA during this year. During this quarter certainly. Have been asked to complete everything we have to do for recognition.
We should count on 12 months regulatory process with regard to the FDA, and then therefore expect to have an approval in place towards fourth quarter of 2023. After that, enabling a launch of the product. Now really looking ahead for the launches in Europe, very exciting of course. Europe alone is a very significant market when it comes to the injectable glucose for recognized disorders, EUR 4 billion market. It's going to be very interesting to see how quick the uptake is going to be of the next-generation biosimilars generally speaking, and of course, specifically how the sales are developed on Symlezi
For those of you who were able to listen in on the Capital Markets Day, we had Bryan Kim, the head of the specialty business at STADA, presenting generally about the setup within STADA of the biosimilar business and what they've done in the past. There are five biosimilars on the market already, and what they now are doing to prepare for a successful launch of Symlezi. Since you haven't listened to that yet, I think that's very interesting to hear. There are preparations ongoing, of course, within STADA in terms of preparing all the training materials to be used with physicians and the patients.
A ramp up of sales force that is going to be deployed and for the specific product. A lot of preparations ongoing, and we believe that STADA is getting itself ready for a successful launch of the product in the course of next year. As we looked back on the Capital Markets Day that we held, apart from, you know, Brian speaking about Ximluci and the upcoming launch, we also had David Vikström, our CTO, presenting our technology platform more in depth. I think that was very interesting. We're making good progress there. 10 approved patents, 15 pending, and five of the approved patents are also in the mammalian protein expression field, which we believe applies for our oncology biosimilar candidates.
That's very interesting. We reiterated our previously stated ambition to get to Phase III ready by the end of next year, beginning of 2024. Something we still believe it is achievable and in fact it is our clear ambition. In that, also our ambition to build our patent portfolio over the course of next year to conduct some co-financing for the continued development of this program. If you haven't listened to the Capital Markets Day yet, I think that's a well time spent. Okay. In the near-term future, we're going to participate in at least two Capital Markets events. One in Jefferies in London in November, and then ABG's Life Science Summit in Oslo in December.
Hope to be able to meet many of you on some of these occasions. I think that we are going to be able to participate in a few other conferences as well, but this will have to come back to me. On the team front, we're growing as an organization. We're now 74 professionals. We're growing with the maintained strong culture, I would say, and some satisfaction or high satisfaction among the workforce. Low turnover and high scores on, among others, the Great Place to Work survey, which we're now doing yearly. I think overall we can continue to use the time actually to attract competent people to our organization, which of course is key given that we're conducting.
Yeah, so I think that's that when it comes to an operational update, and I think we'll hand over to Siavash Bashiri on the financial side.
Thank you, Martin. Before diving into the financials, I would like to express my apology. We understand that we have a technical issue, and you are not likely to see the slides. Just after this, we will do a Q&A on the phone lines to switch to that. Also, we post the presentation on our website immediately after this, and you can listen in to the recorded version. Sincere apologies for that. We're not really sure what's happened, but rest assured that you will be able to see the slides. Looking into some of the financials, our total CapEx increased with 28% in the quarter, and it's mainly caused by the production preparations as Martin mentioned for Ximluci.
Also the R&D costs of the remaining for Ximluci related to regulatory work and also the expanding portfolio in which both the 11801 as well as the oncology portfolio is now accelerated. As many of you would remember, it's only Ximluci R&D costs, the remaining costs that are capitalized on the balance sheet. Whilst the other costs related to the portfolio is expensed on the profit and loss. Looking at then the adding kind of the capitalized R&D costs, looking like for like, you can see that actually we are now coming to close or hold on the R&D expenses. Only SEK 3.8 million were put on the balance sheet in this quarter versus SEK 27 million last year.
The total value for Ximluci on the balance sheet as of September thirtieth was SEK 89 million as opposed to SEK 90 million. Also, noteworthy is that despite the fact that we are growing the organization, our G&A costs are still relatively low in percentage and also lower than last year. Last year we had some one-offs caused by the move to our new premises. Last but important, we end the quarter with SEK 165 million in cash position. As communicated last week, we managed to do a capital raise of SEK 170 million before transaction costs. This despite the very harsh market conditions. We are very humbled by the trust and the confidence placed in Xbrane by our investors.
All the impact and effects of this raise will then obviously not be visible on balance sheet, more on the equity side until the next interim report, which is due in February. With that, I think, if we can ask the operator to help us with some Q&A please.
Thank you. If you wish to ask a question, you will need to press star one one on your telephone. Then you will hear an automated message advising, your hand is raised. That's the star one and one on your telephone keypad in order to queue for a question. Please press star one one if you wish to ask a question. There are no questions at this time. Would you like to give a couple of minutes more in case anyone wants to press star one one?
Yeah.
Okay. We have one question. One moment, please. It comes from the line of Benjamin Billiard from Pareto Securities. Please go ahead. Your line is open.
Yes, hello. I had a quick question, actually. You know, how do you ensure that the production is going, you know, to be flawless basically, you know, do you know, are you sure you have the capacity? What's the risk about, you know, quality defects? How much control do you have over, you know, production partner? Yeah, I mean, can you give more details around that part of the business, please?
Sure. We work with the contract manufacturers for all the steps in production, and we select the best possible contract manufacturer for the specific product we're working with. We preferably go with the contract manufacturers so that, you know, have commercial product already on the market and are GMP certified by the main regulatory bodies. When it comes to the specific product approaching market, as is the case for Ximluci, of course, then by that time the production processes are validated as part of the regulatory process. We will have produced at least more than 10 commercial scale batches also as part of of regulatory requirement.
By then we kind of have come to a stage where we can produce reliably. Also, we enter into supply agreements long in advance of producing commercial material where we essentially lock in production slots with our contract manufacturers to make sure that we have the required capacity to fill the demand of our commercialization partners.
Great. Thank you.
Thank you. Once again, as a reminder, if you wish to ask a question, please press star one and one on your telephone. There are no more questions at this time. Please continue.
We have three questions that came in over email. Let's read them out, try to answer them. First one, pre-filled syringe at the later stage, any visibility on how fast that could be developed and brought to market. Is that still in 2023 or will it be 2024 is the question. We have to get back on that one from the development perspective. We have it developed, so to say, but there's a regulatory process that needs to be gone through. We will have to get back during the course of next year with exact timing of that, of the potential launch of a pre-filled syringe. Next question.
For the biosimilar candidate, can you go over how the current partnership is set up with STADA and go over the economics of the deal? Specifically, can you give a ballpark indication of the royalties that you will receive? Yes. We entered into in February of this year with STADA. It was an upfront payment of $8 million. There will be a milestone payment of another $18 million during the course of continued development, and then royalties on sales. We will not disclose the exact figure, but rather refer to what is common practice for preclinical deals.
The split of responsibilities, which is rather important in this deal, is that Xbrane is responsible for development to the end of the preclinical phase, essentially successful scale up of the production process. After that, STADA takes over the development responsibility into doing the clinical development. As we also talked about in some depth at the Capital Markets Day, we feel that this is a very advantageous deal for Xbrane. Because essentially, when we get to the first milestone, we believe we can reach breakeven on that program, since we're not going to have significant investments from that point and onwards. I think it's a very good deal from that perspective for Xbrane.
If you look at it from the return on investment perspective, it's really good. Okay, next question. Can you also go over what stage the biosimilar candidate is currently, and what will be the next major items on this specific project? We're going through, as I said, the scale-up process together with a contract manufacturer, AGC. We expect to successfully run the first scale-up batches during the course of next year. That will also be the point in time when we communicate that as a milestone. That's what we want to be the next big communicated milestone on this specific program. These were the three questions that came in over email, and someone having difficulties to call in or to ask a question via the phone line.
Any other questions on the phone?
Not at this time. As a reminder, it's star one and one.
Yeah, okay. Another email came in with another person having the same issue. So let's take these questions as well. I looked through the 2022 biosimilars report from Cardinal Health. In one of the surveys with 65 ophthalmologists, 80% agreed or highly agreed the success of biosimilars will shift utilization away from off-label Avastin. In contrast, of the same ophthalmologists, 65% answered not having any safety concerns, an additional 32% that the cost effectiveness of off-label Avastin outweighs any concerns with container repackaging. This seems counterintuitive. Could you elaborate on your view on why that is? Well, I can agree that it to some extent can seem counterintuitive. We...
The way that we have looked at this is that we would expect to see somewhat of a shift, but very hard to see how big that would be. I think it will come from a slightly on the margin to see the better safety profile of bevacizumab biosimilars versus off-label Avastin. Not having to take the risk involved in using an off-label unlabeled product, which you would like to avoid as an ophthalmologist. Of course, it's going to be a question which I think it's unknown to this summit and the survey, what will be the price eventually of bevacizumab biosimilars. How high will the premium be versus an off-label Avastin.
I think that breakthrough will drive the degree to which you see a shift in volume from off-label Avastin to Lucentis biosimilars. I think without having that piece of the puzzle, it will be hard to tell even for ophthalmologists responding to such a survey. I guess that there's deliberation to do. Next question. We have not heard anything about Primm Pharma divestment in a while. Could you give any updates? Yeah, no, the only update we could be giving at this point in time is that we still are in the process of divesting the subsidiary. We are in discussion currently with one interested party. We still have to see how that process goes.
We hope again on this one that we're going to be able to come back during the course of next year, with some news. As all of you noted, this takes a much longer time than what we believed and anticipated, but we're still working on it. Any other questions on the phone?
No, not at this time.
Okay.
Maybe we can conclude that we will post a link to the webcast on our webpage just straight after this conclusion of this call. In case where you can see the recorded version. Again, with the apologies for the technical issues today.
Yeah.
That does conclude our conference for today. Thank you for participating. You may all disconnect.
Thank you.