Thank you for standing by. Welcome to today's Xbrane Biopharma presentation of year-end report 2021. At this time, all participants are in a listen-only mode. If you require any further assistance, please press star and zero. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker for today, Martin Åmark. Thank you. Please go ahead, sir.
Thank you and welcome everybody to this call for presentation of our year-end report for 2021. My name is Martin. I'm the CEO of Xbrane. I will just start by giving a brief overview of what we've been up to during 2021 from an operational perspective. Then Annette, our CFO, who's with me here, will go through financial details of fourth quarter. Then I will end the call with talking a little bit about our focus for 2022. I'll just start here with an overview of our portfolio of biosimilar candidates.
As you all know, our leading biosimilar candidate is Ximluci, with the reference product Lucentis in the registration phase, with EMA and BLA soon to be submitted to FDA and partnered with STADA and Bausch + Lomb. Second product is we call Xcimzane, biosimilar candidate to Cimzia, which we recently partnered up with Biogen. We have a portfolio of three biosimilar candidates to Opdivo, Keytruda, and Darzalex respectively, that are in earlier stage development.
We're targeting to be able to bring this product to market by the time of the respective patent expiry of these reference products, which is from 2028 and onwards.
All in all, this portfolio addresses EUR 32 billion of annual sales of the respective reference products. If we look back on 2021 and our accomplishments in relation to what we said we should do at the beginning of 2021 and what we managed to do. First, in relation to Xlucane, we reported top-line data from the phase III trial Xplore, both an interim readout in June and then later full 12-month data a couple of weeks ago. We, together with STADA, submitted the marketing authorization application to EMA in September last year.
Now as I said, the BLA to be submitted to FDA in the U.S. is still pending, but we are going to submit it in the upcoming months in March. There's been an ongoing process to try to complement our set of partners for commercialization of Xlucane in certain territories, primarily China, Latin America, and Japan. As most of you probably know, the full commercialization rights of Latin America and Japan belongs to STADA, while as for China, it belongs to Xbrane. We're working on the China side while STADA is leading the efforts on the other regions.
This is still pending for 2022, and we hope that we'll be able to get back with some updates on that during the year. When it comes to Xcimzane, our Cimzia biosimilar candidate, we signed an arrangement with AGC Biologics for scale-up of our production process. It's now an ongoing process to go through that work to scale up and produce a drug substance at a suitable scale for initiation of clinical trials. Also for the Xcimzane program, we signed the deal with Biogen as a development and commercialization partner for that product, which we're happy about and which we discussed in a previous webcast.
We also said we would initiate at least one new biosimilar development program annually. Actually, last year, we initiated two biosimilar candidates, Darzalex and Keytruda. I think all in all, we managed to complete many of the targets and ambitions we had for the year. We're pleased and happy about that. Also, in our ongoing development of our products, we continuously develop our platform technology, and we developed IP portfolio around our platform technology.
We now have 10 approved patents and 15 pending patent applications. Very pleased about the development during, I would say, last two years with regards to IP protection of our platform technology.
Particularly, six of the approved patents are related to different technologies with regard to protein expression in mammalian cells, more specifically CHO cells, which are the host cells that we're using for our oncology portfolio. It's of course very important for the long-term future and also with attempt of course to get to very competitive production costs of these respective products. We're also happy about our certification as a Great Place to Work, which we received mid-year roughly.
We're happy to see that we're perceived as an attractive employer within the life science community here in Sweden. I think we've had an easy time to attract competent people to our organization. We're now close to 60 employees.
Roughly 40% having a PhD background, so strong academic background and long experience from pharmaceutical industry. We're very happy about how we've been able to grow the team throughout the year as well. I think during 2021 we participated a couple of capital markets days. Now what we have scheduled for the first half of 2022 is to participating in actually today the Erik Penser Bank's Healthcare Day, and an upcoming capital markets day arranged by Kempen in April, and also by ABG in May. Those are the main capital markets day we're going to be participating in during the spring.
That's probably kind of briefly about 2021 from an operational perspective, and then I can hand over to Anette to go through some of the financial highlights.
Thank you very much, Martin. Good morning everyone, and welcome to the finance section. That's going to be very brief. My name is Anette Lindqvist. I'm the CFO of Xbrane. Starting off with some of the company expenses. As you can see, the operating costs have decreased significantly during the fourth quarter of 2021. This is mainly driven by three things. The reclassification of the development cost for Xlucane amounting to close to SEK 23 million in the fourth quarter.
Those of you who listened in on the quarter three call would remember the Xlucane met the criteria to be classified as an intangible asset as of July this year. Last year, sorry. The net R&D costs are also less costly than previous quarter.
The remaining portfolio is now in a less costly stage. Third, we also see a drop in the G&A overall cost, mainly related to the move into the new premises that are now covered, and we also move into more of a steady state. However, comparing like for like, the total costs are still reduced with close to 10%, and expected outcome as Xplore, the clinical phase III study came to an end during the quarter. However, the gross R&D expenditure amount is 90% of our total cost in the quarter, includes the continued regulatory work and start preparations for supply chain processes.
I also would like to mention that the total value related to Xlucane on the balance sheet is now almost 50% at year-end, or SEK 50 million at year-end. Lastly, ending with some cash details. We leave the quarter with close to SEK 300 million in cash, somewhat less than anticipated, as the payment from our co-development partner STADA was delayed to January. Lastly, you see some details around our equity position amounting to around 420 million SEK at year-end, so significantly stronger than last year. That concludes the finance section. Back to you, Martin.
Thank you. If we look ahead here for 2022 and what our focus areas shall be for the year, to start with the Xlucane program, of course, to submit the BLA to FDA for Xlucane that's due in March, and then navigate through the regulatory process versus FDA, and obtain marketing authorization from EMA, which we expect shall take place in the second half of this year.
Of course we are preparing the supply chain and making sure to book the relevant capacities at our contract manufacturers in order to be able to start production of the launch volume post the patent expiry of the reference product, which is July this year.
Of course we're working closely with our two partners, STADA and Bausch + Lomb, for preparation of the subsequent launch of the product. A lot of things ongoing of course when it comes to the Xlucane program. For Xcimzane, it's the process of scaling up the production process together with AGC, and then also in parallel with that, preparation for initiation of clinical trial, which is really under Biogen's responsibility.
That's also of course an activity which will be started during the year. When it comes to Xdivane, our Opdivo biosimilar candidate, we are working now in-house to establish the production process at pilot scale.
The CHO cell line development is completed, but we're now in the phase of establishing the production process. We're working on that during the year, and I hope to be able to lock that process during the year and then being able to demonstrate analytical comparability to the originator at pilot scale so that we can then follow to the next step in the development, which then will be to scale up the process with a selected contract manufacturer. When it comes to the newly initiated development programs on biosimilar candidate to Keytruda and Darzalex, we are in a cell line development stage.
We complete that during the year and we're going to be able to initiate the process development work here internally as well during the year. That's what we're going to focus on for 2022. I think now we have a very strong platform technology. We are increasing the IP protection around the platform technology. The benefit with this technology is, as many of you know, yield, which is translated into lower production cost when it comes to drug substance.
That's really, we believe, being our edge in the biosimilar development space. We have a strong team in place. We have the competencies required really to take a program from initiation to regulatory approval.
I think we now are demonstrating that with our lead program, Xlucane. We're also set up to be able to run multiple programs in parallel, both from a team perspective but also then from a facility perspective, where we're now operating since a while back in our new laboratory environment here in Campus Solna, with significantly expanded capacity. All this together really sets us up to be able to efficiently run multiple biosimilar development programs in parallel.
That's really what we want to focus on doing now going forward. Just getting back a little bit to what we communicated with the more long-term ambition at the Capital Markets Day in May last year.
Our ambition is still what we said then, that we're going to initiate at least one new development program annually. We want to continue to partner up our programs at the preclinical stage to get suitable co-funding from commercialization partners. I think we now have demonstrated that we can do that. We've done it both with Xlucane and with Xcimzane, as we demonstrated with the Biogen deal. I think particularly the nature and the terms of the Biogen deal demonstrated that we can get a very high return on investment on such development.
I think what we want to do is really then to leverage the platform and everything we have and just broaden the portfolio and be able to do this again and again and again. That's really what we want to do, and focus on what we believe we are best at, which is really the preclinical part of the development. Of course, we're excited about the upcoming launch of Xlucane. We still believe that the product has a strong commercial potential. We actually saw rather significant growth in the underlying market during last year. 14%, I believe, worth EUR 11.7 billion.
It's a very sizable market which we are addressing now when it comes to anti-VEGFs for ophthalmic purposes. Of course then the income we expect to be able to generate from Ximluci, we still believe, shall make it possible for Xbrane to come into a positive operating cash flow environment during end of 2023, beginning of 2024. Still that we shall be able to broaden the platform as per our ambition and also partner up gradually with different products in the pipeline at the preclinical stage.
That ambition, what we talked about and communicated at the Capital Markets Day in May still holds true, and that's what we're working against.
I hope that provided some clarity around what we're focusing on for the year to come. I think we now can shift over to address the questions which we have here on the chat. Okay. Let's start here. I'll read out the question and then answer it as well as I can. First question. I would like to ask if Xbrane has already read out analytical similarity from pilot scale batch size for Xcimzane. Can you comment on that? We have done what we typically do, three batches at the pilot scale to lock the process and we are now in the process of receiving all analytical data from those batches.
We don't have all the analytical data from those batches in comparison to the originator, but we have sufficiently to feel comfortable around the process and that also underpinned of course the you know due diligence performed by Biogen in entering into a deal around this program. We feel comfortable around the process, but we haven't received all the analytical data yet from the pilot scale batches that's going to come in gradually during the coming months. But we're not waiting for that to kind of go through with the tech transfer and scale up process with AGC.
Next question. Could you comment on R&D costs during 2022?
How much Xlucane requires spending until it has been approved, and how much R&D spending left in Xcimzane project before completing the preclinical phase? I think this is a question where it's a little hard to go into very much details, but it's clear that the development spend when it comes to Xlucane is now coming down as we are completing the Xplore trial, which of course has been a main driver behind the expense when it comes to Xlucane. Still of course, there's still some development expenses left as we go through the regulatory process.
As you probably saw from the financial walkthrough of Anette, some of that reduced spend in relation to Xdivane is now replaced by an increased spend on the Xcimzane program, which now is going into a more kind of costly phase in relation to scale up of the process together with our partner AGC. I think it's probably fair to be assuming that all in all together the expenses could be at a similar level in totality as has been seen in the quarters during 2021.
Mm-hmm.
Okay. Next question. In the Capital Markets Day, you guided that Xbrane aims to be cash flow positive since Q3-Q4 2023. However, in that presentation, there was also presented SEK 50 million R&D costs for Xcimzane being in clinical phase. Could you elaborate this Capital Markets Day's guidance now after Biogen deal? How much R&D costs would be in 2023? Yeah, no, as I said during the presentation, that ambition still holds true, to reach a state of cash flow positive, end of 2023, beginning of 2024, which is what we said at the Capital Markets Day.
The clinical costs for Xcimzane program will be taken by our partner Biogen, that's clear. There still is some development costs that are under our responsibility for that program, as I said, related to the scale up process.
That guidance still holds true and it's the same as what we said at Capital Markets Day. Third question. Could you comment on administrative expenses for 2022 and 2023? Maybe this is a question I hand over to Anette.
Yes. Yeah, sure. As you can see, kind of the overall administrative costs have been somewhat reduced in the fourth quarter. At the same time, we are also building kind of our structure, our housekeeping areas. That said, we expect that to continue, but to a less aggressive stage. I would say that's what we see in 2022. More of a stable, steady stage, that is what we forecast.
Yeah. Okay. Just one more question about Xdivane. After scale up has been completed and material for clinical trial produced, would Biogen be in charge of arranging and initiating clinical trials, applications, et cetera, or would they only be player? Does Xbrane need to use its resources for Xdivane product after preclinical phase? Good that we clarify this. No, the responsibility goes over to Biogen after the preclinical phase.
Biogen would indeed be responsible for everything in relation to the clinical trials, applying for initiation of the clinical trials and running the clinical trials. The resources from Xbrane's perspective would. We wouldn't dedicate resources to this program post the preclinical stage. I think that's the right way to put it. Okay, next question.
Are there any updates on Xoncane development and potential partners? Will Xoncane enter the clinical trials this year? As you probably noticed, Xoncane, which is our intended or biosimilar candidate to Oncaspar, is not in our lists of programs under active development. It's still a program which we initiated, and we've been saying for quite some time that we're seeking ways of partnering up with someone who is willing to continue that development, but also to finance the continuation of the development.
I have no updates as of today with regards that. I hope that we'll be able to get back with some updates on it throughout the year. If Xoncane will enter the clinical trials this year, answer is no.
Next question: With Biogen being responsible for the clinical development of Xdivane, can you say anything regarding potentially going for interchangeability? How do you view it under current circumstances? This is an interesting question. As some of you probably know, the FDA approved the first biosimilar with interchangeability designation.
I think this was last year. There is a clear guideline from the FDA, what you need to do clinically speaking to get interchangeability designation. This is something which could be of value for Xdivane since Cimzia is sold in the retail channel and therefore interchangeability could be of value.
We have sketched on the designs of phase III trials, which would incorporate going for interchangeability designation as well, and that's fully feasible, and it has been done with other TNF-alpha inhibitors or biosimilar candidates or TNF-alpha inhibitors. Ultimately, this will be a call which Biogen needs to make, whether they do that or not. That decision, frankly speaking, has not been taken yet. Next question. Will you start selling Spherotide in Iran should there be a deal between U.S. and Iran that lifts sanctions? Okay.
We provided a brief update on our subsidiary, Primm Pharma, a week ago or so, where we stated that actually Primm Pharma has now outlicensed IP and also production equipment in relation to Spherotide to its production partner, ICI. We've also reduced the costs or eliminated the costs essentially in our subsidiary Primm Pharma. Under that license, ICI can and are producing Spherotide to sell into different countries. Or Primm Pharma is getting a royalty on that outlicensing. That's the current arrangement.
With that arrangement, we're happy that the subsidiary is now cash flow positive, so that we from Xbrane side do not have to, we don't have to make further cash injections into the subsidiary. Still the process is ongoing to try to find a suitable acquirer for Primm Pharma altogether that then hopefully could be taking the investing behind and taking the development further of this program into European, particularly European market. That's the situation there.
Okay. No, I think that was a good set of questions, and hopefully that provided some further clarification. It was also the last question on our list here. With that said, I think we can conclude the call, but we're always here.
Should you have any further questions, you can reach out to either myself or Anette over email or phone, and we shall happily get back to you as soon as possible. With that said, I thank you very much for listening, and we can conclude the call.
Thank you very much. That does conclude our conference for today. Thank you for participating. You may all disconnect.