Welcome to Xbrane Biopharma Q4 Report 2025. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Martin Åmark and CFO Jane Benyamin. Please go ahead.
Thank you, and welcome all of you who are listening in to our webcast in relation to the fourth quarter report of 2025 for Xbrane Biopharma. As usual, I will go through a brief operational update, and Jane will thereafter go through the financials for the quarter. And then we will have a Q&A session, where you can either ask questions via audio or via the chat. So we're going to start off with talking a little bit about Ximluci, our biosimilar to the eye drug Lucentis, which we have co-developed together with STADA, and STADA is commercializing across Europe and select countries in the Middle East. It's a quite straightforward setup, where we are splitting the profit contribution, post-production cost, and sales and marketing expenses 50/50.
The product is now launched across 24 countries, out of which 20 in Europe and including the five big European countries. It is a significant market opportunity across Europe. We estimate the market size to about EUR 5 billion, and then we're talking about VEGF inhibitors for retinal disorders. So that includes Lucentis and the Lucentis biosimilars. That's the dark blue chunk, ranibizumab, which is the active ingredient on the bottom of this chart. But then also the other VEGF inhibitors for retinal disorders present in Europe, being Eylea and the biosimilars, who now have been starting to be launched on Eylea and then Vabysmo, and then also some usage of Avastin off label. I think what we are seeing is a continued volume growth.
We've seen about 7% overall volume growth the last couple of years. What we're seeing now is increased competition, I think mainly due to entrance of biosimilars to Eylea. Patent went off in November last year, and we've seen at least three biosimilars to Eylea having been launched and an additional five being approved and expected to be launched. We are seeing increased competition and an increased importance of price across Europe. I think that's also reflecting what we're seeing with regards to sales evolution, where we saw constant volume when it comes to Ximluci compared to Q3 2025. We are at about an 8% volume market share, looking at only the ranibizumab market.
So, Lucentis and the Lucentis biosimilars, out of which then Ximluci is one. But still compared to 2024, year-on-year, 2025, we saw about 60% volume growth and a 20% volume year growth, Q4 2025 versus Q4 2024. So looking at it in a longer perspective, we still see growth. We have generated SEK 160 million in profit contribution from this product, out of which a little bit above SEK 100 million having been paid in cash from our partner STADA so far. As we've had for quite some time, we have a significant inventory, mainly consisting of drug substance, at a net value of about SEK 170 million.
Our expectation is that this will gradually, gradually be converted into cash during the course of this year and next, as we are producing and shipping more product to STADA, and in doing that, converting this drug substance inventory into into cash. What we also are doing when it comes to Ximluci are important initiatives to reduce the production cost. As Jane will talk about later, we did a significant investment during the fourth quarter into cost reduction measures. We believe that this is going to be absolutely crucial for us to be long-term competitive in the European market and something we have to do. But these things take some time, and it will bear fruit from 2027 and onwards.
But that is the key focus for us right now to further bring down production cost to ensure long-term competitiveness of the product. We're also working on resubmission of the BLA to the U.S. FDA. As some of you might recall, we received a Complete Response Letter from FDA in October last year. In that Complete Response Letter, FDA mentioned unresolved observations at one of the production sites involved in the supply chain of Ximluci or Lucamzi, which is the intended brand name in the US. We have since worked with this contract manufacturer to remedy these deficiencies observed by the FDA, and it's going according to plan. We are then planning for a resubmission next month to FDA.
We do expect a six months review process by the FDA as per guidelines. So therefore, we do expect a decision date or a so-called CDER date in September 2026. And then shifting a little bit to our second program, Xdivane, biosimilar candidate to Opdivo, which is one of the immuno-oncology products, the PD-1 inhibitor. And it's used in treatment of several cancers. It's a quite sizable product, sells for about $9 billion, currently expected to reach $14 billion by time of patent expiration, which is in December 2028. And we believe we are in a good position here.
As far as we can tell, we're one out of four biosimilar candidates which are in clinic and have a timeline which could allow a launch shortly after patent expiration of the originator. We are working together with our partner, Intas, on this program. Xbrane, as you might recall, is responsible for the so-called CMC-related development activities that entails process characterization and validation on both the drug substance and drug product side. We are working with one of the 10 largest contract manufacturers on this program, where both of the production sites related to drug substance and drug product are approved by U.S. FDA since a long time and have successfully cleared multiple FDA inspections and are supplying commercial product to the US.
We believe that we significantly have reduced the risk in relation to the regulatory process with the FDA in relation to potential pre-approval inspections by the FDA and potential delays that that could cause, as we've seen in the Ximluci program. This is all going according to plan, and our partner, Intas, have initiated the clinical trial, and the recruitment of patients is ongoing, and it's going according to plan. As you might recall, we are then doing a comparative trial in about 340 patients with melanoma. Recruitment is going according to plan, and it's a critical component, of course, of being able to meet the timeline of submission to U.S. FDA latest Q4 2027.
So far, we're keeping that timeline, and that is crucial, of course, in order to get this product approved by patent expiration, again, December 28 in the U.S. and have it launched shortly thereafter. We still believe that this product has a huge potential. We've talked about this before. We do believe in a profit-sharing potential of about SEK 1 billion annually at peak. Here are a few scenarios dependent on what you choose to believe with regards to number of biosimilar competitors and the price discount versus the originator. If you look at the history in the U.S. with regards to biosimilars on oncology drugs, we can see that on average, biosimilars, three years in, had taken 75% of the volume.
We can see on the lower graph on the left-hand side here how the prices decline over time, which is natural. That they can go down to at about 50% or so below pre-patent expiration originator pricing, some three years in or so. We do believe, given all this, and if the competitive situation remains with Xdivane being one out of four biosimilars to Opdivo in the U.S., we do believe that it can lead to more than SEK 1 billion annually being generated.
We had an external valuation firm also looking into this, confirming our forecasts and beliefs in relation to the potential of Xdivane just recently, something which we most likely will get back to later during the year. With that said, I will hand over to Jane to go through the financials.
The revenue for the quarter amounted to SEK 9.1 million, whereof SEK 8.9 million were referring to product sales to STADA. The COGS amounted to SEK 7.4 million and was higher than expected due to some problems with production of one batch. This led to a gross margin of 18%, which would have been 39% had we not seen the problem in the production. We are expecting some continued deliveries to STADA during the upcoming quarters and have secured manufacturing slots with our production sites.
As Martin mentioned, previously, we're working on some cost reduction measures together with STADA to make sure that Ximluci can stay competitive in the market as the competitiveness is being harsher and the prices are being reduced. The administrative expenses for the quarter amounted to SEK 6.6 million, and the R&D to SEK 17.8 million, of which SEK 2.8 million were referring to amortization of intangible assets, and SEK 3.5 million refers to non-recurring R&D activities. SEK 24.3 million have been activated as intangible assets over the quarter. So the breakdown of the cash outflow and inflow looks like this.
We had an incoming balance of SEK 94 million, more or less, and took a loan from Fenja in the beginning of October of SEK 60 million, which was SEK 57.6 million net of transaction fees. The profit sharing from STADA came in at SEK 13 million, and we had some production of finished goods, which are not the same as the COGS, at SEK 8 million. Fixed cost amounted to SEK 18 million, and the investment of Ximluci, the price, production price for the production cost, reducing activities, are mainly consisting of these SEK 26 million. The Xdivane project, which was SEK 25 million, due to CMC-related activities that we are contractually bound to conduct. The closing balance of the period was SEK 86.6 million.
So if you look at the operating cash flow, it amounted to SEK 68 million, and it's very important to highlight that we have reduced the short-term payables from SEK 538 million per December 2024 to SEK 53 million per December 2025. The long-term payables have been reduced by SEK 38 million.
Yeah. So the key takeaways, Ximluci on 24 markets in Europe and the Middle East, and volume market share maintained in Europe. We are focusing, when it comes to Ximluci, on bringing down production cost, and we believe that that will bear fruit in 2027. We are planning to resubmit the BLA when it comes to Ximluci in March this year. And Xdivane development is proceeding according to plan, and we still target a submission of the BLA to U.S. FDA second half of 2027. So with that said, I think we are moving over to Q&A, and I think we start with-
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 Einarsson from Redeye. Please go ahead.
Hi, everybody. So a few questions on my end. I'll start by asking relating to the revenue figure. And just to confirm, is it correctly interpreted that there was no profit split in Q4 and that the revenues relate pretty much solely to the shipment of finished goods to STADA?
That is more or less accurate, yes.
Okay, good. Thanks. And the second one, I'm a little curious to... if you could help me understand on the inventory levels and help us calibrate expectations for shipments throughout 2026, or at least maybe the coming quarters here. What's the reasonable expectation to have?
I mean, I said we have a net inventory value of SEK 170 million related to Ximluci and our expectation, which is grounded on our production schedule during the course of this year and the next year. We believe that the absolute majority of this inventory shall be converted into cash when 2027 comes to an end. That's the current plan, at least, so it's probably as much as we can say.
Okay, that's clear. So I'm also a little bit curious if... I understand it's maybe hard for you to be too specific or say too much, but I'm thinking about the launch of Eylea biosimilars and the impact you're seeing, as you touched upon, on Lucentis biosimilars. I mean, what's the recent expectations for the coming quarters here?
Good question. I mean, what we are seeing for sure is, an increased, price pressure, I would say, across the market, and that being due to launch of, Eylea biosimilars or increased competition, for other reasons within the ranibizumab segment. Hard to tell, but that for sure we're seeing, and, I think we need to... Well, we're, we're trying to focus on what we can impact on our end, which is to bring down the production cost. Which, again, is going to be absolutely crucial, in mid to long-term perspective. But apart from that, I think it's, currently in a situation where it's a little bit hard to, you know, predict how volumes are going to, develop during the course of this year or next.
Right. Just a short follow-up there. As you mentioned, you're working with STADA to reduce production costs and increase the gross margin of Ximluci. But when do you expect this to be sort of materialized, or do you have an expectation on that?
I mean, starting to be materialized in 2027.
Okay, good. So the last one on my end is a little bit on the cost expectations. Would you say that Q4 is sort of a good starting point for the coming quarters, or would you see an increase from here?
On the cost side?
Yeah, exactly.
Yeah, yeah. I mean, I think now we have an organization post everything what we did during the course of last year with the divestments of part of the organization to Alvotech, and after that, we also did few recruitments. But now we have an organization which we believe is perfectly fit for our endeavors during the course of the next coming years to execute on, on the one hand, the development responsibilities on Xdivane, but then also to execute on these important aspects of Ximluci, on the cost reduction measures, as well as the BLA and a future, hopefully, launch in the U.S.
So I think, you know, Jane showed SEK 80 million of fixed costs, which, entails, you know, personnel, general administrative expenses, and so on and so forth. I think that's a reasonable expectation on a quarterly level, I would say, for 2026. It's, it's going to somewhat be reduced, but I would say marginally due to, you know, shift, out of consultants in favor of, of employees. But I think that's, that's a reasonable, level to kind of, forecast from.
Okay. Great. Thank you.
As a reminder, if you wish to ask a question, please dial #5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Yeah. So we have one written question, which is referring to an out-of-stock situation in Sweden. And it says that the company... Yeah, it I think that the question is why do we have an out-of-stock situation in Sweden? And the simple answer is that we provide products to STADA, who is the responsible party of commercializing the product into the markets. Depending on demand and price levels in the different markets, STADA make the decision on where to deliver the product. And Sweden is a market where you have tenders with the hospitals.
So in case you did not win a tender with a hospital, there is not, really no reason to maintain a stock level in Sweden, which would be mainly the reason why it's out of stock. I hope this answers the question. Let's see. There is also one other question. What about the PFS?
Yeah. As we also discussed in the last quarterly call, we have put the pre-filled syringe in Ximluci on hold as of now, and instead, we are focusing our limited resources on these cost reduction measures, which we're going through, since we deem them to be more important, essentially, for the product and the company for the time being.
Yeah. That was all questions online.
Okay. If no further questions, we're going to end the call now, but we are available over phone or email, should you have any follow-up questions. Otherwise, thank you for now, and wish you all a good day.
Thank you.