Good day, and thank you for standing by. Welcome to the Xbrane Biopharma Q3 2021 report. At this time, all participants will be on a listen-only mode. Please be advised that today's conference is being recorded. Friday the twenty-ninth of October, two thousand twenty-one. If you require any further assistance, please press star and zero. I would like to hand the conference over to the first speaker of the day, CEO Martin Åmark. Please go ahead, sir.
Yes, thank you very much. My name is Martin. I'm the CEO of Xbrane Biopharma, and we will, myself and Annette, our CFO, present the Q3 results and provide a business update. There is a possibility to ask questions via the chat, please do that throughout the call and we will do our best to answer the questions towards the end of the presentation. Okay. Let's start with a brief update on highlighting the key activities and milestones during the third quarter when it comes to the Xlucane program.
As you all know, we reported positive top-line data from the interim readout from our phase III trial, XPLORE, in end of June, which then triggered the submission of the Marketing Authorisation application to EMA in September. The file was validated by EMA and the procedure officially started on September thirtieth and will then follow standard timelines. That's a very significant milestone of course for the company. It was a significant job by the team here and also by our colleagues at STADA. We're very happy and pleased of having accomplished this important milestone.
We are then working towards submitting Marketing Authorisation application also to FDA, targeting an approval also in the U.S. We are working on that and we will submit it sometime in the period fourth quarter this year, first quarter next year. We will communicate when we have submitted the file and then also when FDA has validated the file or registers the file based on them assessing the file to be complete for assessment.
That typically happens 30 days post submission. Then of course there's a lot of preparation for a potential launch of the product provided the approval of course. We are signing supply agreements with our respective contract manufacturers, and they are preparing to manufacture the launch volume of the product. It's a lot of work ongoing on that front. All exciting and very good and promising. That's very good. In connection to that, there's also work ongoing to try to tie up additional commercialization partners in territories where we believe that is needed.
As you probably know and recall, Bausch + Lomb will commercialize the product in North America, Stada across Europe, Middle East, select Asian countries. We are primarily together with Stada trying to tie up additional partners in territories like Latin America, Japan, a few other Asian countries. Hopefully we will be able to get back on with regards to some news on that during the coming 12-month period or so. That's good development, I think, for Xlucane.
When it comes to our Xcimzane program, our Cimzia biosimilar candidate, we are now completing or closing the production process internally in what we call pilot scale, what we do here at our lab in Stockholm, Solna. We signed an agreement with the contract manufacturer AGC Biologics. We will together with them scale up the production process to commercial scale and then subsequently produce clinical material.
That will probably take place during the second half of next year, allowing us to be able to initiate the clinical trial during 2023. That's the plan. As we've been discussing previously, we have the ambitions to out-license the rights to this program to a suitable commercialization partner at the preclinical stage. I think that process is going in definitely in the right direction.
I think there's strong interest in this product. As far as we can tell, it's still the only ongoing development program of biosimilar candidate to Cimzia globally, which I think also make this a stronger case, if you will, for out-licensing. Also on this one, I hope that we'll be able to come back and update you more concretely in the coming 12-month period. With regards to broader pipeline, we work on our Opdivo biosimilar candidate Xdivane.
We are also, as we discussed in our capital markets day in May this year, we have the ambition to start one new program on an annual basis, and we're now going through selection process. Also that one we'll get back as soon as we have gone through that process and provided a portfolio update. Apart from that, it has been an active month now in October from an IP perspective.
We had six new patents granted in October, and most importantly, four of them relate to broadening of our platform technology from E. coli into mammalian cells or CHO cells particularly. These were you know inventions coming out of our Xdivane or Opdivo biosimilar candidate program. I think this is very promising. We started that process some two years ago or so with a strong ambition to broaden the platform into CHO and with the Opdivo biosimilar as the first development program.
I think this now proves that we've been able to broaden our platform technology into that space. That's very promising and very encouraging. That's the main highlights for the quarter. Looking ahead then, coming 12 -months, what we have as key milestones then as discussed, submission of marketing authorization application to FDA for Xlucane, and then trying to tie up a few additional partners in select territories for Xlucane.
Together with AGC Biologics, scale up the production process for Xcimzane and then prepare for the start of clinical trials, which then could happen in 2023. Tying up commercialization partners for Xcimzane with eyes particularly on Europe and the US. Start development of at least one new biosimilar candidate added to the portfolio. That's what we will try to accomplish during the coming 12 -months.
Here is a little bit more clarity, I guess, on the timeline for Xlucane. As I said, September submission of the file to EMA, and as you all recall, that's done on the basis of interim readout when all patients have completed six months of treatment. The study is continuing until last patient has fulfilled 12 -months of treatment. So we get full data in the first quarter of next year, and we're then going to complement the regulatory file to EMA and to FDA with the full clinical data.
And then submission to FDA sometime in the period Q4 this year, Q1 next year. And we can count on the regulatory processes of 12 months. That's what we, that's in accordance to the standard timelines and what we are going to try to accomplish, which then could lead to approval in the second half of next year, and then allow for subsequent launch. That's the timeline we're working towards.
As I discussed from an IP perspective, we're really now seeing the fruits from our since I think roughly two years back established IP department, where we are focusing more on harvesting all our different development programs from an IP perspective and trying to submit patent applications on all inventions that come out of our development programs.
Six new patents granted during October. Four of them related to broadening of the platform into expression of protein in CHO cells. As I said, this is very important. Also because all of our new programs we're going to add to our portfolio are going to be biosimilars expressed in CHO. Therefore, this broadening of the platform technology was very important to us.
We have 14 pending patent applications, which we hope to be able to come back around during coming 12 months or so. Since before, two approved patents. All in all, now we have eight approved patents in our portfolio and 14 pending patent applications. From a team perspective, 54 employees as of end of Q3. I think we have a very strong culture in the company and positive spirit. We measure this with a metric called employee net promoter score.
It has been increasing over time, and we're now at a rate of 47% and just to put that in relation to something, I think, global average as far as I recall is 6%, the higher, the better, and 4% is actually very, very good. We're very pleased about that. We're doing something right from, you know, building the team perspective and establishing a strong culture in the company.
I think we are recruiting experienced and competent people with long experience from pharmaceutical development, and many of them also being PhDs. Roughly 40% of our employees have a PhD, so it's a high degree of scientific level, if you will, among our employees, which we're very happy about. That's good. When it comes to capital markets events, what we're going to participate in during the remainder of this year, we have the LSX conference, which is actually still a virtual one, in November. Kempen Conference, which is a physical one, actually, in London, second of November.
The Jefferies conference in London, physical and virtual, actually. A couple of events together with Redeye. We're going to participate and present at their Life Science Day, which is the 11th of November. We're going to be participating in two After Works in December, ninth and 16th of December in Malmö and Stockholm, respectively. Yeah, there will be opportunities, hopefully, for you to hear us, particularly on these Redeye events. With that, I probably will hand over to Anette to go through some of the financials.
Yes. Thank you, Martin. Before diving into the numbers, I just wanted to highlight a few things. The first one is that one new accounting principle has been implemented as part of the Q3 report. Another one implemented already in Q1 has been subject to some further additional work during the quarter. With that, starting with the first one, it's a new accounting principle implemented in Q3, having a direct impact on the P&L and also hence the net result for the quarter. It's good news.
It's the Xlucane work that met the recognition criteria for capitalization, meaning that following the interim readouts result that we received in late June, the remaining development risk has decreased, and hence Xlucane is now considered as an asset as of July 1, rather than just a cost on the P&L. That means that as of that date, all development costs will be added to the asset and not expensed over the P&L.
For those of you who's been with us for a while, you would have noticed that up until this date, all our R&D charges has been expensed. There's nothing on the balance sheet, but Xlucane is actually the first one. This will continue until we launch the product. The value as of September 30 is close to SEK 27 million, SEK 26.9 million. Needless to say, this is then deemed extremely positive, as we have secured the way that Xlucane is now considered an asset, first thing, and also that will protect our balance sheet and more specifically, equity, moving forward.
The next one is, as I mentioned, it was implemented as of Q1 when we published our intention, we signed a letter of intent regarding Primm Pharma. The request classification was that we kept that as an asset held for sale, meaning that all balance sheet P&L items should be separated out of the normal business, so to speak. For the balance sheet, all of these changes were already implemented in Q1, and as of now, Q3, all effects have been implemented.
This has no impact on the group level, but there might be some minor effects on various line items for the quarter and also for the previous comparable quarters. With that said, moving on to our costs, the cost development for the quarter amounted to a total of SEK 45.3 million. Actually, that is then a decrease, obviously then, you know, massive impact of the capitalization of Xlucane, which I'll come back to later. But even so, it's the R&D cost for the total company is still or close to 8% of the total operating cost as of September 30.
As you would notice, the G&A costs, we are focusing to be, you know, sharp, for all our G&A expenses, so they are much in line with the previous quarter. The next slide, if you then comparing like to like with previous quarters, adding back kind of what we deemed as an intangible asset of the Xlucane, capitalization effect. You would see that the total cost is actually like for like SEK 72.2 million. Meaning, that actually R&D is now stepping up to SEK 63 million, 88% of the total cost in the quarter.
In addition to this, the capitalized cost for Xlucane, we also have some other R&D costs that are expensed, the SEK 36.5 million. That includes all the regulatory work, establishment of supply chain for Xlucane, but also for the remaining portfolio, for Xcimzane and also Xdivane and other exploratory work. On the next one, we wanted to also share with you the impact of the capital raise we secured in June, but where all the payments happened in Q3.
You would remember that we raised more than SEK 380 million in June, and hence that leaves us with a fairly strong capital position in the quarter still of more than SEK 380 million. That was SEK 380 million and a net of SEK 356 million that actually strengthened our cash position. With this over to you, Martin, for the Q&A.
Thank you. Okay. We have a couple of questions here coming in from the chat. I'll read the question, and we will do our best to answer. First question, when can Xbrane expect results from comparative quality studies to demonstrate biosimilarity? Yeah, it depends on which product we're talking about here. That's of course already done when it comes to Xlucane. It's a crucial part of the whole package that goes to the regulatory authorities.
That's of course done already. When it comes to Xcimzane, it is being done gradually. We are doing that now based on our internal pilot scale production. Then we are going to update that based on commercial scale produced batches in second half of next year. We will communicate upon having performed that step, let's say, at pilot scale. That we can come back to in the first half of next year. Yeah. Okay, good. Next question.
Do you know about ranibizumab competitors' protein production platforms? How is yield compared to limo? We do not know exactly what technologies when it comes to cell lines and the gene constructs that our two ranibizumab biosimilar competitors are using. We have no direct comparison when it comes to yield compared to, you know, other ranibizumab biosimilars or the originator for that matter.
However, we feel comfortable that we do have a competitive production cost based on the commercial partnerships that we've been able to do, and knowing that production cost is a crucial element in the valuation process when these companies are in licensing biosimilar candidates. That's probably what we can say there. Next question. How strong protection do you get from approved patents from your point of view?
Do you know technologies not claimed in the patents that could yield higher amounts of protein and are used by the other companies? You know, I think that we as a company amongst biosimilar developers, generally speaking, are much more focused on technologies related to yield. We can scan the IP landscape and the IP activity and compare ourselves to other biosimilar developers.
As we see that we have much higher activity when it comes to gene constructs and cell lines, which are the factors mainly impacting yield, while others maybe are more focused on devices, formulations and things like that. That's an area of course, where we need to also over time be more active. I do think that we have an edge when it comes to technologies impacting yield. We are now trying to seek patent protection of everything which is patentable.
Of course, there is also technologies which is publicly known, which then can be used to different extent and in combination we know how to further improve the yield. Again, these are things we do not know when it comes to our competitors. We know what we do ourselves, and we feel comfortable with that we are very competitive when it comes to yield and ultimate production cost.
I think that Cimzia, our Xcimzane biosimilar is a great example for that, where I do believe that our ability to get high yield is the reason why we now are the only developer, as far as we can tell, going for that target. Since actually yield and production cost is very important to make that a commercially viable product. Okay, good. Next question. Do you see there would be new products in wet AMD market in near future?
New devices compared to previous versions that might affect the market shares. Yeah, there are novel developments in this space. I think the main kind of intent of novel developers is to increase the time between injections for the patients so that the patients have to come to eye clinic fewer times during the year. We saw Beovu from Novartis come to market two years ago with a label where a subset of the patient population could be injected every 12 months compared to what's on the label for Eylea every eight months, and Lucentis every four months.
All those clinical uses probably used in a similar fashion as Eylea every eight weeks. Now, we have a couple of more products in that category. There's one product from Roche in that category, for example. It could be so that there come novel products that are trying to, again, at least on the label, prolong the time between injections. Again, we will have to see if that translates to a different injection behavior in the clinical setting. We also will have to see the pricing of those products.
We are of the belief that if nothing comes to the market which has, a superior efficacy in terms of, visual improvement compared to the established drugs, Lucentis and Eylea, then, the majority of the market will be, Lucentis biosimilars and eventually also Eylea biosimilars because they will be more cost efficient. So far we've seen nothing in the development pipeline which, seems to have a superior efficacy compared to, Lucentis and Eylea.
Okay, next question. When can we expect more license deals for Xlucane in the markets that are missing? Here I discussed a little bit earlier. I hope that we shall be able to, come back and, communicate around something in the coming 12-month period. We're together with the STADA working actively on this, front. We'll have to come back on that one. Next question. The report reiterates your previous assessment that Xoncane is the only biosimilar in development globally.
Could you add some more flavor to that? What is this assessment based on, and how certain are you on this? Well, we track the landscape with regards to information that is public, and there we cannot see any public developments. Of course, what we cannot rule out is ongoing development which is not public. However, we have been discussing this product with many companies at conferences and so on and so forth, and we haven't become aware of any ongoing development program yet. That's our basis.
We cannot of course be 100% certain, but we feel very comfortable that that is the case. Next question. Previously you communicated that you would have a meeting in August, September with the FDA regarding the filing of market authorization. Can you comment on this meeting? Is the outcome what caused the potential timeline slip of the FDA market authorization submission to Q1 2022? No, yeah, we had that meeting and one question in that meeting was related to the timing from submission to FDA and complementing the file with the full clinical data, the full 12-month data from all patients.
I think based on that discussion, we can submit the file in December, but there are also other work that needs to be completed in having the file ready. Therefore, we want to keep it open in time span between Q4 this year and Q1 next year when the filing could happen, and we'll communicate upon submission. That's the background. Next question.
Can you talk about Xoncane? Do you see any interest from potential partners who want to finance it? Some interest, but as many of you probably are aware, this is a biosimilar candidate to Oncaspar, which is a smaller product and some $200 million or so of annual sales. It's a limited set of companies out there that are interested in commercializing such a program. Some interest, but not in the magnitude what we saw with Xlucane and what we see with Xcimzane.
But still, we hope to be able to come back on with something on this one. Are there any updates? Okay. Are there any updates on Xlucane development and potential partners? When will Xlucane enter into clinical trials? Yeah. Okay. We'll have to get back. It's dependent for the development on that program, it's dependent on tying up partners. That would be the trigger, we'll have to come back on that one. Next question. A question on the emerging competitive landscape.
With Biogen and Samsung's biosimilar for Lucentis approved in the U.S. September 20, and also in light of the fact that they hold a license from Genentech to enable launch in June 2022 in the U.S., that appears to be roughly six to nine months prior to you possibly launching. Thoughts around Xlucane possibility possibly being the third entrant into this market, assuming Coherus BioSciences is approved on the FDA target date in August 2022, and what the brief history from U.S. biosimilars would guide us in terms of market shares in relation to timing of market entry.
Please elaborate. Okay, yeah, a good question. No, that's true that Biogen got the approval in the U.S. and Europe. In that communication state, a potential launch in June and July 2022. That could indeed be some six months ahead of potential launch of Xlucane. Cannot comment on process of the Coherus BioSciences product. I do believe that we would be launching roughly at the same time as that one. Now, when it comes to U.S., we believe that we have an edge when it comes to our commercialization partner.
We believe that Bausch + Lomb is the best company to commercialize Lucentis biosimilar among these three companies that potentially will be having an approved Lucentis biosimilar in the portfolio. Bausch + Lomb is the only company among the three who has the sales force established in the ophthalmology segment and has a portfolio targeting the retina clinics and the retina specialists. We believe that is an edge, and they have a strong brand name in that segment.
We believe that is an edge in terms of driving sales and market share of the product in the U.S. That's probably what we believe is the main strength when it comes to Xlucane in the U.S. Okay. Next question. Can you comment on your cash position with regards to burn rate? Will it be enough to fund the business until Xlucane reaches the market, or do you anticipate the need for further funding?
Well, I think we discussed this also in last call, and I think the answer is the same now. It depends on two main things. First of all, number one, that the timeline is kept with regards to Xlucane reaching the market. The regulatory timeline and then subsequent launch. Number two, timing and nature of a potential deal with the commercialization partner for Xcimzane. As you can imagine now, which is normally the case when we signed a deal with AGC Biologics, this also will lead to that during next year, there's going to be an increased capital requirement from the Xcimzane program.
We are confident in being able to tie up a commercialization partner, but also, the burn rate will depend on the nature of, that deal. As you know, these deals can be front-loaded or back-loaded or somewhere in between. So that will dictate a lot. That's probably what we can say here, and I think we need to get back on this one, when we can comment a little bit more on those two current uncertainties, let's say. That was the list of questions. With that said, shall we see, are there any questions that can come from people participating on voice? No. No one is calling.
No questions.
Okay. That was all the questions. As always, we are at your disposal. Should you have any further questions, don't hesitate to reach out to us via email or phone. With that, I think we can close this call. Thank you all for calling in and listening and asking questions.
Thank you. This concludes our conference today. Thank you all for participating. You may all disconnect. Have a good day, everyone, and stay safe.