Xbrane Biopharma AB (publ) (STO:XBRANE)

CMD 2021

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May 17, 2021

Good afternoon, everybody, and welcome to Xprains Capital Markets Day. This is our first Capital Markets Day in our new premises here at Campus Solna in Stockholm. My name is Annette Lindqvist, and as the CFO and also Head of IR, it's my pleasure to guide you through the next couple of hours. Some practicalities before we start. We would welcome questions and any feedback that you would like to give us. We will end the sessions today with a Q and A. We sincerely hope for good questions. So you will see 2 windows on the screen. 1 is the speaker and 1 is the presentation. And in the bottom left corner, there should be a button named Write a Question, so please use that feature for later. With that, I would like to introduce the 1st speaker of the day, XBRAIN's Chairman of the Board, Anders Tullgren. Anders has a Master of Science degree in pharmacy from Uppsala University and brings more than 35 years of experience from the global biotech pharmaceutical sector. Anders has had senior executive roles in multiple countries, including the U. S, the U. K, Germany, France and the Nordic countries, having worked both for AstraZeneca and Bristol Myers Squibb to name a few. Today, he's an appreciated member of several international boards, and he's been the Chairman of XBrayne since 2015. So with this, please, Anders. Thank you very much, Anders. And I'm Very excited to be here together with all of you and to the senior management team of X Brain to talk about X Brain and also What we have done so far, but also the journey ahead of us. And there's 3 things we will focus on today. First is talking about exlucane, Our first product. And I'm very happy to say that last week, we actually had the last patient's 6 months visit. So that means that we are in line to actually be presenting the top line results from that study mid year. And then filing for the Europe and the U. S. End of this year and the planned commercial launch towards the end of 2022. The second thing we want to talk about today is our investment in R and D. We are doing a significant upgrade of our R and D capacity and that's also of course one of the reasons that we are moving into the new facilities at Campus Solna and we will talk more about that And also our new target to develop 1 new candidate, 1 new biosimilar candidate per year moving forward. And the third point we want to talk about today as well is that we do this additional investment in R and D, But we also, of course, is calculating on the revenue for our first product, exlucane. And this together will make us cash flow positive. That's our ambition at the operational cash flow positive by the end of 2023, early 2024. But let me go to the first slide, if I can have the first slide. Okay. And on this slide, we can see that it all started with actually the LEMO technology. This was a scientific breakthrough from the Stockholm's University And the company was founded back in 2,008 based on this technology. And this technology We'll talk more about this LIMO technology. But what in principle, what it means is that you can get out more proteins. You have a higher yield. And what is the consequence of a higher yield? That is actually that your production cost can go down. And When it comes to this biosimilar market, this is of course very important to stay competitive is that you can have a very low production cost. But we will come back to that. But that was a scientific breakthrough that led to the formation of the company. In the beginning, the company was actually working with major pharmaceutical companies like a fee for service. We helped them with our LIMU technology to develop their biologic products. After a while, there was, of course, a question about could we not do this ourselves? And instead of going for a novel Biologic, we said, why not go for the biosimilars? The biosimilar market or a company working in that market, It's interesting because you need a very high level science and at the same time you actually have a lower risk than what you have when you produce a novel product. And Martin will talk more about that. So we think it's a very interesting market. You have to be very careful of choosing the right biosimilar products. For some of them, there is a couple of biosimilars. From other biologics, There is many. So you have to be very strategic in that choice. The first product we choose was XLUKAY. So we started with a preclinical program. We moved it into a major clinical trials with 583 patients called EXPLORER. And that is the study where we are waiting for the top line results in mid-twenty 21. The company also developed a strategic partnership and commercial partners. The first agreement we signed was with Starda in 2018. Stata is a major German generic and biosimilar company with more than 10,000 employees. And they are looking for biosimilar targets. They did a thorough due diligence of ex Brain And we signed an agreement in 2018. The agreement in short is that we develop we are responsible for The preclinical and clinical research and also the scale up of the production and the production capacity. And they will do the commercial launch with their major sales force around the world. But the way that we did this partnership was also very strategic Because we formed a sort of joint venture. So we as a small company growing very fast could also Piggyback on their experience, when it comes to clinical trials, we come to production, supply chain and all of this. So we were growing also our own capacity with that collaboration. In 2020, we signed another agreement with Bausch and Lomb, one of the major eye companies in the world for the U. S. Market. So we have very good commercial plans and together with them we are of course now planning for the commercial launch of Hex Lecane Day at the end of next year. When it comes to the company, we went out on the NASDAQ. We did an IPO back in 2016. And you can see from this slide is the development of the market cap. In 2019, we went up to the main market, small cap. And today, we have a market cap of around SEK 3,000,000,000. If I now can have my next slide. Here we can see the biosimilar market and the projected growth in the biosimilar market until 2025. And you can see on this chart that you're actually growing 25%. This is one of the markets with the highest Growth in the pharma market. The overall global pharma market will in this year's the projected increase In revenue for the overall markets, only 2% to 3%. So if you compare that with 25% in the biosimilar market, It's a very interesting segment to compete in. And the other thing is that we are quite unique. In the Swedish stock market, there is probably more than 100 life science companies. We are the only one that's focusing on biosimilar this fast growing market segment. And our vision is to become one of the global players here. There is other companies like us in the U. S, In Europe, in Asia, but we want to be one of the leading company and that's another vision that we have. The second thing is, of course, which is always one of the most important thing, is to build your teams, build your competencies. And then, of course, we also need new facilities. And that's why we today want to introduce the new facility as Campus Solna. And that's an opportunity as we'll continue to grow, attract very important scientists and grow in the company. And the 3rd point here on the chart is actually how we are going forward. And what we're going forward with Is the launch of ex LUKAINE generating revenue. The second thing is actually To be investing in the R and D, and you can see from the chart to the left, we are continuing to investing more in R and D. We're planning to do that. But because of the revenue that we can get from ex Lucane, we feel confident to have an ambition to be cash flow operational cash flow positive by the end of 2023 or beginning of 2024. So this is a little bit of a snapshot of where we are as a company, Where we're heading and I want to leave it back to Annette and the team for going into more of the details of our journey Thank you. So many thanks, Anders, and I'm sure that there will be some interesting questions for you later. Day. So with that, I would welcome I would like to welcome XBRAIN's CEO, Martin Ormark. Martin has been the our CEO since 2015. And you will share some insights into the biosimilar market and also the on the ex Lucane give us a status update. Martin holds a degree in Industrial Engineering and an MBA from INSEAD, followed by a successful career as management consulting consultant with Bain and Company, working primarily in the life science and pharmaceutical sector. With that, welcome, Martin. Thank you very much. Day. So I'm very happy to be able to arrange this Capital Markets Day and be able to spend a little bit more time With all of you who are investors or considering to invest into XBrayne. And Although circumstances are as they are and we do it in a virtual manner, I really would like to urge you to try to make the most out of it and ask as many questions as possible to us. We should try to clarify that and have a discussion around it when we come to the end. But first of all, since we have a little bit more of time, I wanted to Go through maybe in a little bit more depth than I typically do the market that we operate in, the biosimilar market. So if we look at the pharmaceutical market, it's typical to split it up in 2 distinct segments. We talk about Small molecules, which are produced chemically. And we talk about biologics, which are Much larger molecules and they are produced via so called recombinant DNA technology. They are so complex in the structure, so large that they cannot be produced chemically. And if you want to get an analogy of the difference in terms of Size and complexity, what you see on this picture, a bicycle versus an airplane, is something which resembles the difference in complexity. Day. And if you look at the biological market, it currently represents 40% of the global pharmaceutical market, And it significantly outgrows the Small Molecule market. We're looking at some 10%, 15% annual growth in the biological segment. And then if you look at the small molecule market, as many of you know, when the patent goes out on an originator product, which has a small molecule as active ingredient. We talk about generics. We can produce an identical copy of the active ingredient And come out with so called generic post patent expiry. Now in the biological world, something similar has to exist, of course, and the similar concept is biosimilar. Now this is because these molecules are so Large and complex in the structure that you cannot come up with an identical copy. You come up with something which is highly similar, and you demonstrate it to be highly similar Analytically and clinically, and therefore, it's called biosimilar, but it's launched post patent expiry of the respective originated product. That is what we do. We develop biosimilars. And we like this segment. It allows us really to develop products quicker, cheaper and with lower risk than if we were to be doing novel drugs. It typically takes us 6 to 7 years to develop biosimilar. We need to invest approximately €100,000,000 into such a program, But we do it at a significantly lower risk. For example, when we go into Phase 3, we typically stand at 95% probability of getting to market approval, and this is judging by the history of biosimilar development programs. Now that stands in contrast to similar success rate of a novel biological drug, which is approximately 50%. So the risk when we go into Phase III is really reduced And really much, much, much lower than if we're talking about a novel biological drug. And the process, yes, to get an idea, when When we start the preclinical development of a biosimilar, what we do is that we procure on the market several batches of the originated product, we analyze it and we set up a production process Internally, we then look what we get in terms of the protein, and we can demonstrate it to be highly similar, analytically speaking, with 20 or so different analytical methods compared to the originated product. Now as per the regulatory framework, we need then to demonstrate that the product also It's similar from a clinical perspective. We do that, typically speaking, in 1st Phase I trial where we need to demonstrate bioequivalence and then a Phase III trial In a well selected patient population where we need to demonstrate equivalent efficacy and safety compared to the originator. So that's the rough development process. Now also what we like with the biosimilar market is that this product has been received very well by the market. You can look at the so called penetration curves here. So that is to say The volume market share of the biosimilars respective to their respective originator product over time from launch And in Europe on the left hand side and the U. S. On the right hand side. Now we can see both now in Europe and the U. S. Actually in the most recent launches that biosimilars took 40% volume market share at month 12 compared to the respective originator chloride. So that is really quick update. And you need to take into consideration here that we're talking about markets which typically are several 1,000,000,000 of euros. So these are big markets, big products which the biosimilars are introduced to. And as an average, for all these situations, we've seen 2 to 3 biosimilars per originator product and that has resulted in a price discount of some 20% to 40% compared to pre patent expiry pricing of the originator. It's a really strong market uptick. And we're very happy to see now that we've seen almost a shift, paradigm shift in the U. S. During 2020 With some really successful launches which reached or resembles more the experience we've had in Europe. And the reason that we actually see so few biosimilars per originated product, 2 to 3 biosimilars, that is because This is a market with high barriers of entry. There are 3 main things we need to consider here. 1st, The competencies and the capabilities required to develop a biosimilar in the first place. You need to have the competencies with regards to cell line development, With regards to fermentation, purification, analytics and so on. And not so many companies globally have all those competencies under one roof to be able to do this. The second thing is the need for technologies which allow for what Anders described in the beginning, high yield, which then translates into low cost. More important in some segments than others, but generally speaking, important, of course. Day. And then if you are a pure play developer like we are, you need to be able to find a way to the market, to the patients somehow. So then you need to have The capability to outlicense or partnering up with companies engaged in commercializing the biosimilars. Now I do believe that we have a proven track record what we've done with exleucane. We have developed a biosimilar from Cell Line soon to approval. It's in Phase 3. We'll talk more about that later. We have a patented platform technology, which David will talk more about today, which gives us Significantly higher yield compared to standard systems and therefore also a low production cost. And we have established partnerships with Great companies that are going to take our first products to market in Stade and Bausch and Lomb. Yes, to mention a few things here. With regards to our platform technology, which we call Limon, It has been demonstrated to give a significantly higher yield compared to standard system. What is then yield? Well, it's Gram of target protein per liter fermentation media what we get in the process. You need to imagine that Day. We have the cells which are expressing the protein in larger fermentation tags. And we go to contract manufacturer, and we pay a fixed cost for occupying that site at a certain time at a certain scale. And of course, if we can get 5 grams instead of 1 gram of the target protein, we have as an active ingredient in our biosimilar And it has a radical impact on the unit cost per syringe you buy. 5x yield can lead to 80% cost reduction for the drug substance. That's very meaningful. It's a very powerful technology that we have as a foundation for all our development programs. Day. And it's really interesting market development now. The market is predicted to grow at some 25% per year coming 5 years. So it's really rapidly growing market, probably one of the fastest growing segments in the pharmaceutical market Really sound growth drivers behind. On the one hand, of course, patent expirations of multiple blockbuster biologics within this time frame, An increased usage of the biosimilars by physicians and patients, And it's due to and over time, since we've had biosimilars on the market in Europe since 2016 and in the U. S. Since 2015, An increased knowledge and understanding of biosimilars and also the fact that we have had biosimilars so long time on the market without any severe adverse events, It really gives an increased acceptance to be using these products instead of the more expensive originated products Amongst physicians and patients. And then also, of course, the pressure from the payers who ultimately are paying for the pharmaceuticals. There's a strong pressure From them to be driving towards the most cost efficient alternative. And we are, of course, tapping into this market, but we're doing it in an ecosystem. And we are engaged in The so called the development of biosimilars. We take products from cell line to approval, but we do not have the infrastructure or capability ourselves to sell and market the products. For that, we partner up with larger pharmaceutical companies like we've done with, For example, Stata for our lead Protex, Lucane. And what we need to consider With regards to what we need to get right in our development programs in order to be able to strike such partnerships Are the following things. We need to select wisely the price we go for, biosimilars where we I believe that there's going to be a great desire or need amongst the pharmaceutical companies engaged in sales and marketing of biosimilars And also limited competition from a development perspective. We also, of course, need to and make sure that we have all the capabilities to take the price to market and we're credible in doing so. We want to be a credible partner. It's like almost Buying a house, which we in a way are selling when we put the foundation, if we're talking about doing a partnership deal at the preclinical stage and we need to be credible with regards to that we're going to be able to finalize the house in time. And we need to plan our programs and initiate our programs in such a manner that we can bring the biosimilars to market almost at day 1 post patent expiry. We need to ensure low supply cost. And to an extent it's possible, we need to be Incorporating certain value add into our developments, which can be done still for biosimilars considering The device, shelf life and so on and so forth. So we're acting in an ecosystem, and we are a developer, and we're really Seeing the larger pharmaceutical companies as our customers and doing partnerships with them for our respective programs. Day. And our current portfolio then consists of exlucane, our biosimilar to Lucentis, which we're going to spend quite some time on in the next section of this presentation. And then preclinically, we'll mention them towards the end of the presentation. We have a biosimilar to CIMZIA under development and biosimilar to OPTivo under development. And I think for all these programs, we are trying we have selected products to go for where we believe that we can Strike these key success factors we discussed on the previous page. We shall be able to be there day 1. We shall be able to have an attractive and low cost production, and we shall be able to incorporate somehow some value add into the programs as well. Okay. So that was a little bit more in-depth on the biosimilar market. So let's Then shift to our lead program, Exleucane. So Exleucane is then biosimilar to the eye drug Lucentis. And it's a drug used in treatment of several severe eye diseases, Mainly age related macular degeneration, but also a disease called diabetes related macular edema, which Affects 1% to 3% of individuals affected by diabetes, so also in the working age. Day. And essentially what happens is that the central field, visual field is blurred out or blacked out, Day, which of course leads to an inability to lead a normal life for the ones affected. So it's disease which really affects the lives of many people. And we estimate it to be some 18,000,000 Affected ice globally by these diseases. It's a big, big disease. And €5,000,000 or so across Europe and the U. S, €13,000,000 in the rest of the world. And you can see from the graphs here on the right hand side, a high proportion of the affected ice actually goes untreated with regards to being treated with anti VEGFs, which is standard treatment of biologics to be used for these conditions. So high degree of untreated patients, Day, which is due to high pricing of the originated products in combination with lack of or restrictions in reimbursements, different in different parts of the world, of course. And if we look at the eyes being treated, Lucentis, of course, is one of the drugs, but then also EYLEA, which is a similar drug from pricing, safety, efficacy and usage perspective, But also the cancer drug Avastin, which is used off label for these diseases. And it's done because it can be done at a lower cost, but also at the cost of an elevated safety risk. So both the high degree of untreated patient and the high usage of off label Avastin really gives us the message that this market is in need of more cost efficient Alternatives. So it's an interesting prospect to bring a biosimilar to this market. And that is what we are doing with exelucane. And exelucane is in an ongoing Phase III trial, and it's a big trial. We've recruited 5 83 patients with isolated marker degeneration across 15 countries, 135 clinics. It's a big trial. And the objective with the trial is to demonstrate equivalence from an efficacy perspective and from a safety perspective. Day. Now as Anders mentioned in the beginning, last patient had its month 6 visit last week, Day and we are going to present top line data mid this year on the back of An interim readout we did when last patient reached month 6 in the treatment schedule. And we're also going to submit the regulatory submission to EMA in Europe and FDA in the U. S. On the back of this interim readout. So We're targeting Q3 for EMA in Europe and Q4 for FDA in the U. S. And counting on the 12 months of regulatory process, We expect to have the approval in place second half of twenty twenty two and then allow for a launch by our 2 respective commercialization partners. Day. And looking at the market here, if we look only at the on label product, which is what we can follow. It's a market of €10,000,000,000 It's a very sizable market, and it has been growing with some 10% per year last couple of years. It had a dip in 2020 due to the COVID-nineteen pandemic, but I'm confident that this long term growth trend will continue as the COVID-nineteen pandemic is getting under control. It's a big market. And the centers constitute some €3,000,000,000 of that market and Eylea, euros 7,000,000,000 But these are really similar products from an efficacy, safety, pricing and usage perspective. So we believe that Lucentis, biosimilar, generally speaking, can tap into this full €10,000,000,000 market. And then as I said initially, Avastin is used in an off label manner, but at the cost of an elevated safety risk. I think we have 2 great partners to take the product to the market and to the patients. We have a co development arrangement with the German generic and biosimilar specialist Stata since 2018, And we're very happy with this collaboration. We have worked very intimately throughout the development up until this point and also Maybe more intensively now than ever in preparing for filing. And I'm absolutely confident that STAADA will do an excellent job in commercializing exlucaine across Europe, Middle East and select Asian countries. They know how to do this. They have a handful of biosimilars on the market already. They have proven commercial success with many of these products and have a dedicated team Across these different territories that is prepared and able to take the product market. I think we have a good commercial arrangement with Stardom. It's a deal which essentially entails fifty-fifty split of the development costs and also of the profits to come from sales eventually. Now for the North American market, we have a partnership with the eye specialist, Bausch and Lomb. And we're very happy with that partnership. Bausch plus Lomb is known, of course, the eye care product, But also it's getting stronger and stronger in the prescription drug segment towards the eye segment. And What is great here with Bausch and Lomb as a partner is that they have the infrastructure put in place already. They have Salesforce, which is targeting already roughly 2,500 eye clinics currently procuring and administrating Lucentis in the U. S. Today. We have a great branding towards ophthalmologists. They participate in all the conferences and conferences where The ophthalmologists participate, so they have the infrastructure set up to efficiently market and sell exelucane. So it's more of a plug and play situation where I'm confident that they're going to be able to slot in, execute into their existing portfolio and be efficient and successful from day 1. And here is a more traditional license arrangement put in place where they paid an upfront Upon entering the arrangement and then there are going to be milestones on approval and launch of the Plurit eventually and then there's a gross profit sharing mechanism put in place. Okay. So what we said Already 2 years ago, I believe, we put a stick on the ground and we said that we're going to generate €100,000,000 annually From X LUKOILEN as X Brain into X Brain, 3 years after the launch of the product. And we felt confident back then in that target. We feel even more confident now with considering how the development has progressed and where we are now from a development perspective and also Having added Bausch and Lomb into the picture. And this really rests upon only Looking at and addressing the current Lucentis market of roughly €3,000,000,000 and an ambition to take 25% volume market share At a price discount, which over time, I'm not saying at the 1st year, but over time could go down to 50% of the Originated product pricing, pre patent expiry. And then if we deduct the production costs and sales and marketing costs and agreed upon profit splits with our partners. That's when we get to the €100,000,000 of expected net income generation. So it's really net income into Experian as a company. So meaningful commercial upside in this product. And we even do believe that there's an upside beyond that On the one hand, taking market share from EYLEA, as I said initially, EYLEA is a product with similar efficacy, safety, Usage and pricing as Lucent is and it's a bigger market. It's a little bit harder to put a finger on exactly how big this could be, but it's a meaningful opportunity to also nag into that market. And the same goes when it comes to the off label usage of Avastin. I am personally convinced that we will see a shift in volume from off label usage of Avastin into Lucentis biosimilars Day due to it being products which are on label and limits the risk that Ophthalmologist has to take In terms of using an off label product, superior safety profile and also coming fit for the purpose in prefilled syringes Day for easier administration. So I think I see an opportunity there also. And then, of course, Looking at the rest of the world, where it's more a question about actually driving an increased Penetration of the treatment as such. And that has to be done, of course, at a sufficiently low price. And I do believe that That's possible to do with ex LUKOILE given the low production cost that we have. Day. Okay. So that was a little bit about the biosimilar market and ex Lecane. And then I want to hand over again to Annette for the next point on the agenda for today's event. So thank you very much, Martin. And Eksterkein is really an exciting prospect, and that readout is getting really close. So now it's my pleasure to introduce 1 of XBRAIN's first employees. David, you started already in 2010, is that correct? Yes. And now you are heading up the you're Head of R and D and also Chief Technology Officer, and that's what you are going to elaborate a bit on today. You have a PhD in expression and targeting of proteins in E. Coli. And as I said, you represent the platform technology, which is a key enabler in XBrayne's strategy. So please. Yes. Thank you very much. Yes. So at TechSpring, we have a toolbox, and that toolbox is It's our platform and the platform consists of lots of tools. So all these tools we can use when we develop our biosimilar. When we use our tools that we've developed here at Techsprain, then we can really get high yield and low cost biosimilars exactly like Anders and Martin explained. So how is a biosimilar developed and produced? 1st of all, as you can see on the picture, there is a gene construct. This gene construct is really the blueprint for the cell. This blueprint describes everything that the cell needs to know to produce this biosimilar. This blueprint is then introduced into the host cell and this host cell could be either E. Coli cell or a mammalian cell. The wholesale can be seen as a factory for the production of the biosimilar. The blueprint together with the wholesale is then grown in bioreactors. In these bioreactors, it's very important to keep the The cell is happy. If the cells are happy, they grow better and they produce more of the biosimilar. Once the cell has produced the biosimilar, then it's important to purify away all the other proteins that the cell Has manufactured at the same time because, of course, it's a living cell. So the cell also need other proteins except for our biosimilar To be able to function. It's purified in the downstream department at several different steps. Day. And once you have the purified protein, then it's analyzed by the analytical team To make sure that the quality of the biosimilar target is good. It has to be very similar to the originator molecule. The The analytical team is also aiding the other teams to make sure that the process is guided in the correct area so we can know what to achieve and what to make better in the process development. At X Brain, we have several different tools along every way of the process. So for the gene construct, the blueprint, we have several different ways to control the expression. So we can control the expression with our LEMO promoter system and also with the RamEx promoter system. On the next slide, I will go through more about the LIMO system and how that works. We can also increase the expression With translation and initiation sequence and translational initiation regions. We have also optimized signal sequences and codon optimization. So once we have developed and optimized the gene construct here at X Brain, It will be put into a host cell and we have also developed and optimized the host cells. So here in house, we have a library of specialized E. Coli cells And these cells are really perfect for the gene construct that we have developed. So a really good blueprint, A very good host cell is then grown in the bioreactors. In the bioreactors, we have very good understanding for How to make the cells how to make them be happy and to thrive. We optimize the cell growth. We designed the growth media. We add nutrients, and we also control the feed rate, which also controls how quick the cell grows. So once our Upstream team has developed their process, It is then for the downstream team to develop the process The downstream process, the purification methods. As Martin pointed out, The purification process is usually several different steps, normally 3 to 4 different steps. And each of these steps has to be Really optimized for the target protein. Our analytical team And we have a very good analytical team with really good equipment and very good knowledge. Day. They guide both the upstream team and the downstream team to make the process perfect. So without our analytical team, the other teams are essentially blind. So analytics and to have analytics in house is really key. The analytical team is also analyzing and characterizing the biosimilar once it has been purified. And this is done, as Martin mentioned, with between 30 and 40 different methods. You need to look at every angle of the biosimilar to make sure that it is as similar or very similar to the originator. Otherwise, it will not be approved. So this is very, very important that it is very similar. The toolbox at Xbrain is currently protected by 2 approved patents, and we also have 11 pending applications. So our Limo technology, it really enables us to get high yield at a low cost. So how is this done? What you can see on the upper part of this slide It's the standard setup. In the standard setup, you have the blueprint, the gene construct. It's put into a host cell And then you start manufacturing your protein of interest in the bioreactors. This is done in an on off fashion. So either you produce it or you don't or either you produce a lot of it or you don't produce anything. Day? For many targets, this is not beneficial. So what happens then is that lots of the target protein actually Ends up in toxic protein clumps and very few of the proteins that you want to express Are properly folded, and the protein has to be properly folded to be functional. In our Limo system, we use our Limo promoter. And we put our gene construct into the Limo promoter system. We put this into the host cell. Again, the host cell is like a factory. And then we don't have an onoff system anymore, but we have what we call a dimmer switch Or an assembly line control mechanism. So If you see this as a car factory and the cell is really the car factory and the cars are all the proteins, We can control the speed of the assembly line. If the speed of the assembly line is too high, you will end up with lots of toxic protein clumps. But in the LIMO system, we can really control the assembly line speed, and therefore, we can really control how much each cell is producing at a certain time point. So the cells are much more happy in the bioreactors. If the cells are happy, they are also producing more protein. And with the LIMO system, we can make sure that the protein quality is very high. Several different studies have shown this, independent studies. So, we know that for different targets, we can get anywhere between 3 to 12 fold More protein with the LIMO system compared to the standard setup. And this, of course, leads to low cost and high quality product. Another more recent example is with our Exim Sane program. We have used several key technology of our toolbox. So the tools that we have used is first for the blueprint, The gene construct, we have used the raw mix promoter system, several different signal sequences and the signal sequence has been optimized. And the signal sequence is like an address tag in the cell. So the protein ends up in the right place of the cell to fold properly. And again, folding is key because correct folding means good quality. We have also optimized the translational initiation region to make sure that we can produce as much protein as possible. This gene construct was then introduced into E. Coli cell, and what we had done with that was to do strain engineering. So, we have gone into the chromosome of E. Coli And removed certain enzymes. These enzymes would otherwise degrade our biosimilar and therefore, we managed to remove these first, we identified which enzymes we should remove, and then we removed them from the chromosome. So now we have a strain that is optimized for this target that is not degrading the target. In the process, we then used design of experiments. In design of experiments, you can look at several different parameters at the same time And make sure that whatever you do, if you change one parameter, it does not influence another parameter in a negative way. This enables us to make maybe 10 or 11 experiments instead of 110 experiments. But with our 10 experiments, we still get more information out about the system and how to optimize it compared to if we would run 110 experiments without a design of experiment. And this has really paid off. So what we can see is that if we use the standard system from the originator that produces CIMZIA, With our system, we can get 4 to 5 times the yield. So our toolbox is really helping us to give a high yield and this, of course, will lower the cost for the biosimilar. We're currently expanding our platform to mammalian cells and the reason why we move into mammalian cells is that we want to develop more targets. So what you can see in this slide is on the left side, we have the yield and on the X axis, We have the number of tools that we have used, the number of X Brain tools that we have used in the mammalian cells. For our first target in mammalian cells, XD Vein, we teamed up with the CDMO. This CDMO has developed their own cell line, their own gene construct, the blueprint, and also optimized the process for the last 15 years. We then used a number of tools in combination with their setup. And again, they had developed this for 15 years. We could immediately see a significant increase in the yield With our setup compared to the setup that we ran in parallel, which was only their setup. So we can immediately see Very good progress in our development. For the next target, we are currently developing our own expression vector. This can be seen as a bigger blueprint. So we have several different factors that we put into this expression vector, and we expect to get an even better effect from this to get a higher yield. Beginning of next year, we will also be able to scale up at 200 liter scale, and this is very beneficial for us. If we can scale up to 200 liter scale, we can produce more material for biosimilarity studies. This will be at a lower cost, and we are also not so dependent on other service providers. For the future, we are also looking into our own mammalian cell line. And again, this will add into the tools that we can use and we expect an even higher yield then. Day. So the future is very exciting for XBrayne. Thank you very much, David. And yes, One of these days, even I will be able to fully comprehend the complexity around this. Day. As for our next speaker, our Deputy CEO, Siavash Basiri. You've also been with the company for a very long time. Day. You started already in 2012 and then you came from a Master of Science in Molecular Biotechnology from Uppsala University. And today you will share with us, take us through the Yext Brain's broader capabilities and show a virtual tour of the Biotech Lab. Day. So welcome. Thank you, Annette. Yes, I will have the pleasure to show you or tell you a little bit more about the new facility, but also Show you our virtual tour explaining what David presented just recently. So Express new facility is based at Campusona, just outside of Stockholm. This is a 2,000 square meter facility where we can take on the full biosimilar process development from small scale to what David told to a 200 liter pilot scale. With this new facility, we have now expanded into mammalian cell lines and we can start developing show cells and also process development. And as many of you might know that many of The future biosimilar targets are monoclonal antibodies which are produced in show cells. With this new facility, we have expanded tenfold in our scale. And as David mentioned, This helps us to not rely on external service providers for upscaling development, but also we can use it internally for our own biosimilar studies. With the new facility, we have also invested in the latest analytical tools, which gives us A better insight in our process development where we can much easier and faster identify any discrepancies between our biosimilar and originator where we can adapt the process to it so that we are as similar as possible. With the larger facility, We can work much faster, but more importantly, we can develop several targets in parallel. And I will now show you a virtual tour from this facility. So Campus Sona is a leading Swedish life science initiative to create one of the world's leading life science clusters. Here you will find 1 of the world's leading medical universities and this one of the world's leading university hospitals, the new Kalineska. With this, also a lot of Swedish biopharmaceutical companies have moved in here and we have our pleasure it's our pleasure to be also part of it. Here you can see what David told, a wholesale put into a bioreactor where we in parallel can check different processes And then identified the optimal process that gives us the highest yield and the best quality. When we have identified The best process we can start the upscaling activity in our own labs. David also mentioned that when you're producing proteins in these living cells, there are other proteins that you want to get rid of. And what you do is to purify them. All proteins have different characteristics, and you can separate them Based on different attributes, such as size, charge or affinity. These proteins are then flown through this type of columns, And they will then travel at different speeds. And here you can see that with these different peaks are different proteins eluting at different times. And then collected in this fraction collector based on the time you know that are eluted. With this new facility, we have also invested heavily in new analytical equipment. With this, we have the capability to identify the correct amino sequence compared to the originator. We can identify that we have the same folding, the same structure, but also to see that we have the same functionality that our protein binds The same way to the target that it wants to inhibit. With this internal capability, we have also the possibility to much Fast to get the results compared to before where we it could take several months to get data. We can now get it in a matter of weeks. We can also, with this new equipment, do more in-depth analysis, where we get more data point compared If we would do it externally. For example, you can see here on the next sequence Where we with sorry, with this equipment, the LCMS, we can, with one machine, identify 4 different attributes in a single protein, the size, the mass, the structure and the folding. With these, we have enabled a much faster development here at Xbrain and also a greater know how in our process development. X Brain has also grown tremendously from when I started Almost 9 years ago when we were only 2 people, me and David sharing a lab bench to now where we can take on the full biosimilar development From the cell line to clinic to an approval, we have had the opportunity to recruit from best of 2 worlds, From Swedish and International Biopharma colleagues with leading pharmaceutical development know how, but also Top talents from universities with specific research within future technologies within biopharmaceutical production. This is also our knowledge intense industry. And we have at Xbrain been able to maintain a high scientific background within our company, where over 38% of our employees holds a PhD degree. We have had also very easy to recruit, and that's due to our reputation within the Swedish biopharma. And it's also reflected by our employee Net Promoter Score, where we have a score of 42 compared to the industry average of 6. And this is a measurement on employee satisfaction. I believe that to create a great company, You cannot only rely on great technologies. I think you need to have also a sound culture within the company. And this might be perceived as corporate lingo. But compared to others, this has been developed specifically by X Brain employees. The combination of the team, our culture and the technologies will make us becoming a world leading biosimilar developer. Thank you very much, Sjavas. And as a new camera, I can certainly certify that XBRAIN has an excellent reputation on the market. So then, Martin, could you please take us through the next steps in our strategy in becoming a world leading biosimilar developer? Yes. Thank you very much. Thanks to David and Sjavas and hope that you all enjoyed Getting a little bit more into depth on the platform technology and also seeing our newly established biotech lab. So really, I really do believe that we have Day. Strong role to play in the society in a broader sense. So Biologics have really We've proven to be revolutionary with regards to treating several important diseases. We've talked about anti VGFs in treatment of several eye diseases, which are revolutionary. But there are also the field of Immuno oncology where the so called PD-one inhibitors have been able to treat cancers which before were Untreatable. And also when it comes to autoimmune disorders, also biological drugs have been able to Provide treatments which can bring people back to pain free lives. So this really have been revolutionary treatments, but there is an issue with accessibility due to high costs of the originated products. And this is a statement you see on this slide From previous Head of FDA, Scott Gottlieb, less 2% of the Americas Used by LOGICS, but they account for 40% of total spending. So there is an issue with accessibility in the U. S. But also in many countries, in Europe And not talk about the rest of the world, right? And this is an unsustainable situation. We can look at the 17 Sustainability goals of the United Nations where this directly hits 2 of them in an important way. So there is an issue here. And Experian's purpose is really to bring about the change and to being part of enabling Greater healthy quality globally and being able to bring people back to healthy lives by providing affordable biologics in terms of biosimilars to the market. And this purpose, we talk a lot about the purpose internally here in the organization. I really do believe that that's the fuel that really powers this R and D engine, which we have set up, which in a way consists of the platform technology we have, which David described, the team that we built and also the facility. All these Things together provides a foundation for our continued development. But the purpose, in a way, is really the fuel coming into this engine. Okay. So let's spend some time on Our next coming programs here are biosimilar to CIMZIA XIMZANE and also our biosimilar to OPTivo X DEVIN. So CIMZIA is a tinafalfa inhibitor is used in treatment Of mainly rheumatoid arthritis and psoriasis. And it's a product, I would say, is of €1,800,000,000 a sizable product. Patent expiry 2025. And Perot really has been growing with some 10% per year up until now. And it's due to a niche within this field. It's the only tinafalpha inhibitor demonstrated clinically to be safe for usage by pregnant and breastfeeding women. So it's an important niche, constituting some 10% of rare motile treated cases and 20% of psoriasis cases. So it's an important subsegment of the market, if you will. And what makes this really interesting for us is that it seems to be so that we have the only Biosimilars development program ongoing globally with regards to a biosimilar candidate to CIMZIA. And the reason we believe Lies in the requirement to get to a very high yield to come to a commercially viable production cost and also to be able to produce This product installed fermentation scale capacity around globally. And as David mentioned, this is thanks to platform technology. We have 4 to 5 times the yield, what we believe, compared to the originator. And this is really now at the threshold which we set out when we started this development, where we need to be To be able to do this at the commercially viable production cost, essentially saying that we are going to be able to we need to be able to withstand a 50% price reduction Versus the originated pricing and still be able to generate 80% gross margin. We are at that level, we believe, now. Day. And when it comes to the fermentation scale, typically, these products over the scale that you can be producing the products At this 3000 to 5000 liter. And if you are going to produce at that scale, you also need to have a high yield to produce the volumes required by the market. Now the originator works at a much larger scale, but those really large scale fermentors are Not many around in the world. So you need to also have a high yield in order to be able to produce the product at the installed capacity of fermentation scale Existing. So that's an exciting program. And then next one is Extiva in our OPTivo biosimilar. And OPTIVO, of course, is a bigger product, €6,000,000,000 of sales annually and €28,000,000,000 patent expiration. And here also, we do believe we have a high yield, low cost process set up. We are on track to get take this product to the market by the time of patent expire in 'twenty eight. And we do believe that we're one of the front runners compared to other biosimilar developers in this space. Day. So this also make this interesting, and we are convinced that we're going to be successful in terms of partnering up with a suitable commercialization product even for this program And make it a commercial success. Okay. And then looking ahead here, because we said That we are now going to initiate 1 new development program per year. And then let's talk a little bit about our target selection process. So we set up a couple of criteria which we're looking at in selecting the next targets to go for the next biological drugs to do biosimilar on. The first one really is time to patent expiry where, As we talked about earlier, it takes us 6 to 7 years to develop a biosimilar. And if we shall be there by day 1 post patent expiry, we really need now to look at Biologics patent expiration 2028 and onwards. So that's really the first criteria. The next one is technical feasibility. We shall be able to, technically speaking, develop a biosimilar to the priority and also preferably Have a significant competitive advantage in our platform technology. And we want to go for products where there is an issue with accessibility, Where there is a high unmet medical need, we can do something for the patient instead of providing a more affordable option. And also to make the business case to work, we are looking for products with beyond €1,000,000,000 of annual sales. So just to give a glance on the left hand side here, naturally speaking, in selecting our next target to go for, we're looking at Plurals with Patent expiry 2018 onwards. And you see here a couple of exciting products which have patent expiration in that time frame. I think when we look at only the window 28 to 30 patent expiry, there's a combined sales of Biologics with Of some €30,000,000,000 So it's a segment with sizable products going off patent. Day. And really, we believe that Extrokaine now shall provide the blueprint For our upcoming development programs, of course, as David and have described with our Continually evolving platform technology and the new facility, we shall be able to do things faster and better than before. But fundamentally speaking, Extracaine provides the blueprint. And just to give a rough picture of that development program, It started, of course, with the preclinical development process where we had an approximately year development spend of €5,000,000 Euro annually. Then we had a co development arrangement, as we've talked about, Before going into clinic and we are then doing clinical phase, which also coincides with Commercial production of the biosimilar product in order to generate the needed data from an analytical comparative perspective for filings. So then We had spent of some €15,000,000 annually throughout the clinical phase and then regulatory process, which is What's coming later this year, of course. So that's somehow a blueprint for looking ahead and what we want to do with our programs going forward. We want to do the preclinical development and we want them to seek partnership With companies that are going to be able to commercialize the product, we want to do that at that stage because then we can get some co funding for the clinical development and also have A commercialization partner engaged in the process from that point onwards. And that's perfectly feasible and doable in the biosimilar world Because we can do it on the back of analytical comparative data, which demonstrates high similarity, analytically speaking, to The originated product and by looking at that you can judge the clinical risk to be very limited and we have found that Commercialization partners are willing to step in at that point in time. Okay. So then coming back to The statement which I understood at the beginning of the day where we now put forward an ambition to become cash flow positive Late 'twenty three, early 'twenty four. And when we say that we mean it on a monthly basis and we mean operating cash flow, just to be clear. Day. And to walk this through a little bit to explain to all of you our thinking here. First of all, we talked a lot about ex LUKAINE and the commercial prospects we see with that product. And we do believe that this is a part which shall Generally, it's €100,000,000 as net income to XBrayne 3 years after launch, 20 25 and onwards. Day. Then we have as an ambition to initiate 1 new development program on an annual basis. And we believe we can do that with the setup we have now with this new facility and also the team we've built. We want to partner up our programs at the preclinical stage as we did with exelukraine, so using really exelukraine as the blueprint here. And in doing all this, we are also confident that we shall be able to become Cash flow positive on monthly basis end of 'twenty three early 'twenty four. And then we can look at the right hand side here just to illustrate How we envision this to pan out. If we look at 2025, We expect them to be running 2 clinical programs, which then would cause A development expenditure of some €30,000,000 combined. And then we expect to have some 3 preclinical programs running and 1 in the regulatory phase altogether Constituting a development expense of some €20,000,000 So €50,000,000 roughly speaking, of development expenditure if we were to be Developing such a portfolio at that point in time, again, using exlucane as the blueprint for how this would pan out. And if we have The €100,000,000 of net income generation, at that point in time, of course, we're going to be generating a healthy positive operating cash flow. Day. And we expect that we shall be able to hit the positive sign there sometime 'twenty three or early 'twenty four on a monthly basis. So that's really the way that we reason and the way that we want to build this business. Okay. And up until that point in time, up until 2020 Day. There are plenty of milestones to come. It's going to be healthy news flow from the company. On the one hand, driven by ex Lucane where we have Top line data, of course, coming up mid this year and then filing in Europe and the U. S. And then ultimately approval and launch, of course. And then also we expect to be able to do complementary deals in territories where we need additional partners to kind of Create the full picture, we're talking about China, Japan and Latin America. And then our preclinical pipeline, where we have an ambition to close the deal with the commercialization partner for XMCA in our Simcenter Biosimilar during the course of this year and then Being able to take that product towards clinic during 2022 and then proceeding with our X Divain program In a similar fashion. Okay. So then coming to an end of the formal presentation here At the same picture which Anders presented in the beginning. So we're really tapping into one of the fastest growing segments in the pharmaceutical market, so 25% of annual projected growth coming 5 years. And we now have the foundation to really take the next step in the company's development. We have the platform technology, which has evolved in a very good way lately and we have the team put in place and now the new biotech lab which is which we've established here at Campus Sorna. And with these components, we really now put forward this ambition we've talked about today. On the one hand, with regards to extra gain and income generation from that product to initiate 1 new development program per year and That we are going to be able to do that and become a cash flow positive in near term future. We're talking about late 'twenty three, early 'twenty four. So that is really an ambition for what we want to do with this company, how we want to build it. So that's Probably where the formal presentation today ends, and we are going to open up for questions. Thank you very much, Martin. And yes, this concludes then the official program for the day, and we open up for questions. I would also like to say Before we start, this presentation is recorded and will be published as soon as possible on our new website, which was really actually launched yesterday evening. So please don't hesitate to visit us at xbrain.com. Day. With this, let me see. Day. So the first one is around our existing resources. Can you please comment on your cash runway based on existing resources? Sure. I can take that briefly. So we went out of Q1 with SEK240 1,000,000 in cash, Which we've communicated previously will take us to end of Q3 this year. Thank you. It's the same theme, I believe, for the next one. All the wage market, a biosimilar is expensive business. Explain aim 1 biosimilar per each year. How would these be financed? Will revenue from Mexican will be enough? Yes, exactly. I think that this picture what we showed here is how we Intent to make that happen that we can with the combination of early partnering up with commercialization partners and getting some co funding Of the clinical journey and the income, of course, to be generated from ExtraCain can balance these things out to become cash flow positive within that time frame. Thank you. This is a fairly lengthy one. May I ask that you take over, Marcin? Okay. So I'm going to read the question here. Firstly, a question on your PD-one targeting biosimilar XT vein, But I guess the question can be applied to how you think in general when selecting a biosimilar candidate for the future pipeline as well. There are now 7 FDA approved PD-1s and more expected to be approved within the next year. Is a marketplace like that really suitable for a biosimilar with so many other proprietary molecules working On the same mechanism of action and some patent expiration, that will happen later than the 1st generation Like nivolumab. Is it not better with 1 or few which may reduce share of voice by the originator once patent expire, leading to price being More important to Windshare than otherwise may be the case. Secondly, talk about whether you would consider to integrate forward over time And keep marketing rights for certain regions and products or at if not marketing, keep rights further than pre clinical stage, maybe past Phase III to possibly extract more of the economical upside for XBANE. Okay. So Day. Let's take the first part of that one. And I can just comment briefly, but then I think it's great that we have Anders on board who knows the market for PD-1s Very well, I would say. So I can say like this. I'd rather do biosimilar to Opdivo than a novel PD-one Considering the clinical investments that needs to be done into novel developments of PD-1s to get approved for all the different indications, I do believe that Opdivo is a great choice here. Actually, we will see when time goes right, but I do believe there's going to be less Biosimilar competition on that one then, for example, Keytruda. So I feel quite happy about the choice of product, but I can leave it over now also to Anders to elaborate a little bit further on this question. Thanks, Martin. We've been working with Opdivo for many years, and I was actually also launching the product across the world when I worked for Bristol Myers Squibb. And the PDL-one product has really revolutionized the oncology treatment. But what we have to remember with this product is that it's not just one market. Each indication, we started with malignant melanoma, we went into lung cancer, we went into renal cancer. Each of these markets require their own Documentation. And there is a vast majority of indications that have been documented now and more will also be documented as the program will go forward further. So Opdivo and the other PDO arms will be very large products by 20 28. I think Everybody agrees on that. It could be in combination with other product, but they will grow tremendously. And Opdivo will be one of the product with Most indications approved and therefore also a very interesting target for biosimilar. Thank you, Anders. And just on the second part of that question, we can just mention that as we described now in this presentation, our current business model is to Seek partnerships with commercialization partners that can take the Perko market. We want to focus on what we believe we are best at, which is really the development of these Products. Okay. So I'm going to move on to next question. Is there a risk that Spring's process delivers a superior product so that XBrayn is not a biosimilar, but a biosuperior. Well, I can say like this, that what we do is development of biosimilars. If it's superior in any way From a clinical perspective, it's no longer a biosimilar and cannot follow the regulatory process of a biosimilar, But then we have to go into novel drug development and going through all the phases that clinically speaking that novel drug needs to go through. So our focus right now is really to be doing biosimilars. But we can, as I alluded to a little bit in the beginning there, do things which can, On the margin, differentiate on the market. We can elaborate with the device. So the syringe, for example, when it comes to Exelukraine, we can elaborate on shelf life and a few other aspects to create few beneficial factors around the product To the physicians and patients, and this can be lifted forward from a sales and marketing perspective. And I think I don't know, anyone wants to mention Yes. I mean, I think the risk is I mean, when we develop the process, we really the analytical team at X Brain It's really guiding us. So when we develop the process, we make sure that we have a biosimilar and not a bio better. We don't want to produce a bio better at this stage, but a biosimilar. So the analytical team is helping us optimizing the process for biosimilar and nothing else. Okay. Next question. How is the situation with regards to getting the required talent and retaining it? Is there an increase in competition for specialists with relevant biologic drug development experience? So maybe, Sjos, you Touched a little bit on this topic in your part of the presentation. Do you want to elaborate a little bit further? Sure. I mean, so far it has been Marie. We have been able to retain the specific talent and know how within the company in terms of specialists. And also I believe that we are one of the few growing and larger biopharmaceutical companies within the Stockholm Nopsoil region. So that makes us a very attractive employer for many of the talents that are around the Stockholm area. And David, you? No, I mean, we really try to be competitive and we do that by Lots of communication within the company, make sure that the entire company is seen as a team, that every member of the team is important and that Constant communications, and we make sure that everybody is happy. And basically, by doing this, we can attract other people to the company. Okay. Next question. What has driven the U. S. Market the last couple of years after a relatively slow start versus Europe? Is it the stream of large products coming off patent, For example, Avastin and Hirsopting or have there been any changes to the federal level, for example, new FDA guidelines and so on and so forth. Previously, state laws have been, in many circumstances, blocked interchangeability of biosimilars. Has there been any federal laws that have superseded the state law. And 3, will next look into be fully interchangeable to Los Angeles from day 1? Okay. So yes, as we showed on one of the pages earlier, we've really seen a shift in the U. S. Biosimilar market in 2020. And indeed, Biosimilars to Avastin and Herceptin performed very well and took 40% volume share today at month 12 or so. And I believe what lies behind this are on the one hand a couple of regulatory changes which have been put in place with regards to education of biosimilars, for example. And I know that a lot of more things are happening from an administration perspective On that end, but also I do believe, as we saw in Europe, that is just a factor also about an increased understanding and knowledge of biosimilars and therefore also willingness to go for the more cost efficient alternatives. So I think that these are the main factors coming together to create this shift. And then a related question maybe that We all focus on the U. S. Market size, but can you talk about how we see the market opportunity for Europe, Japan, Rest of World being in relation size to the U. S? Yes. I think this question is specifically for Lucentis. We're roughly speaking, it's What we see, 60% of the market, if we think about anti VGS for ophthalmic purposes, being in North America and the rest Day in the rest of the world. So that's the rough split what we see. Yes. Another question is about interchangeability, just to clear that concept. There is indeed a guideline in the U. S. For interchangeability of biosimilars with specific clinical requirements. Now we have not gone through That clinical journey for exlucane. And it's actually more or less impossible, we believe, because it entails comparing The so called pharmacokinetic patent over time over several doses, which becomes complicated since Lucentis is an intravitreal injection Day, resulting in a very low systemic exposure of the product. But we are going to consider this when it comes to other upcoming programs And it can be an important component, particularly if we're looking at the product which mainly sold via the retail channel. Anyone want to add something on the cost and effect interchangeability? Okay. Next question. Can we expect the announcement of new products within 2021. So we've said we're going to initiate 1 new development program per year. It's not necessarily so that we Announce it on the day exactly the day when we start, but we announced when we've gone through the first Couple of steps in the development so that we feel comfortable about that we're actually going to be able to pursue that specific target in consideration. So we will have to get back on this question and see whether it's going to be announced in 'twenty one or 'twenty two, the next biosimilar we'll go for. Okay. Next question. We consider annual sales Of €400,000,000 that you mentioned as very conservative considering the biosimilar sales observed in 2020 for Avastin and Hirschtin in particular, What is the potential further upside that you see? At least Amgen might already hit blockbuster status in 2021 while addressing smaller markets Compared to exlucane and the VGF market. Okay. I alluded a little bit to this in the presentation already, but maybe I should hand it over to you. Anders, do you want to mention a little bit something your thinking around this? Thanks, Martin. Yes, I think I mean, we looked at this. And as we said, if we look at the Lucentis sales today, we look at Price reduction of 40%, 50%, and we look at the net income for X-ray, not we've taken out the cost and do the cost splitting, we come to the SEK 100,000,000 as we presented. But as Martin said, there is much more opportunity and we have to also look at the huge unmet medical need. Martin talked about this as well. I mean, there is 50% of the ice in the U. S. And Europe that are untreated. It's 80%, 90% in the rest of the world. And of course, when you come out with a product that has a lower price, there will also be a volume And we can also take from EMEA. So we are firm with our sort of base case of what we believe. But of course. As Martin said, we also think that there can be an upside on this opportunity for exlucane, Especially as we see that the biosimilar and the high quality biosimilars, which has done proper Phase 3 studies, Have a faster uptake than what we have seen before. And we are quite confident that, that trend will continue. And that's also why Different independent companies are projecting a 25% growth of the biosimilar markets in the next 5 years. Thank you. Okay. Shifting to next question here. Supporting positive top line data from Xplore Phase 3, Who is taking the lead in marketing authorization application? Will you get support from Stata or Bausch and Lomb? That's the first question. And I since it continues with more question, I'll answer it because I otherwise probably forget. Yes, we get support from particularly Stata in the process of filing in Europe as well as in the U. S. Next question. Do you believe there is sufficient time for BLA acceptance to approval? The average time between BLE acceptance to approval from all biosimilars approved in the U. S. Market was 16 Month, standard time is 10 months. To not miss a first mover advantage in comparison to Fornakon or Samsung BUF is as you intended to file BLA in Q333 2021, okay? Well, so we plan to file in the U. S. Q4 2021, as we said in today's presentation. The time for approval can be shortest 8 months and then it can be longer than that. I think actually 16.6 months must include some outliers on the longer end. I think that the average for biosimilarism is more like 12 months last Time I did the analysis. So then provided we can get an approval in place Q4 2022 and allow for Bausch and Lomb to launch the product Shortly thereafter, I think that we are within the same time frame, let's say, as we expect Our 2 competitors from a biosimilar perspective to come to market. Okay. Given you claim to have a competitive edge in terms of production cost, What is your pricing strategy going forward? Will you act more aggressively on pricing in the market? Well, I can mention like this on this question. Now that with regards to our partnership with Southern Barcelona, they are actually responsible for the pricing and they're going to dictate the pricing, but our production cost, of course, can allow for being more aggressive if one would choose during A period of time. And but I do believe that what we've seen so far in the biosimilar space is that prices have been set More like an originator pricing minus something rather than production cost plus something. But of course, I do believe That our partners view our low production cost as a way an insurance for a long term future, which No one really knows how it will develop, right, although that we believe that, that pattern will continue. Okay. Let's see here. Next question. If Exim Sain would reach the market as the only biosimilar to CIMZIA, could you say something About what price discount and market share you would expect. Okay. I think Like this and you can develop further that if we would be the only biosimilar to CIMZIA, price discount would be lower. We've seen it in In biosimilar market as well as in generic market that what most strongly correlates with the price discount versus the originator pricing pre Patent expiry is the number of competitors. If you're alone, it can be 10%, 15% below originators still generate Very significant market share. So it's a different dynamic. I don't know, Anders, do you want to elaborate a little bit maybe on this question? No, I agree with you. I think it's too early to speculate on this. But, and we also know that, that seems One of you called sort of difficult to produce biosimilars. So we don't know. Perhaps that we'll be other competitors. We have not Any indication from this and I think our research team has done a fantastic job to optimize the production and we feel Very confident of moving forward with CIMZIA and we think we have a good potential there. Okay. Next question. When XBAREN says that the capabilities will be 1 biosimilar per year. Is that 1 biosimilar Phase 3 each year or in preclinic? So essentially what we mean to initiate 1 program, we We start with the preclinical phase, of course, and then we move it along the development journey as we described in the presentation. Okay. Annette, you had some further questions? Yes, I had yes. And I think we don't Really have covered this, but can you talk about the legal patent situation we face for ex LUKANE, whether there may be barriers put up around Lucentis, delivery technology, formulations, etcetera, or whether there's now basically zero legal risk remaining should Exelukain gain market approval? Well, what we can say is that we have done our so called freedom to operate analysis, which essentially Entails looking at the potential patent landscape surrounding a particular product and making sure that you know which patent you need to await expiry of or to circumvent somehow. And we can mention that Stade in their due diligence have done the same thing and also Bausch and Lomb. So we do believe that we have Full understanding of the patent landscape surrounding Lucentis. Then in the U. S, we cannot outrule That there can be discussions with the originator with regards to the IP situation. We've seen that for pretty much all biosimilars seeking FDA approval, but we've also seen that typically end up well. As far as I can see from the statistics, 70% of biosimilars that has been approved by FDA has also been launched close after approval. And the 30% remaining Are mainly Jumeirah biosimilars, which are held back with the settlements with AbbVie, the originator of Jumeirah, which lasts up until $203,000,000 So they eventually will come to market also, although it was delayed due to settlements. So that's roughly speaking what we can mention. And we can also say that we're happy that Bausch and Lomb will undertake the responsibility for the whole IP process in the U. S, and we're happy to have them to lead that. And if I may add also that by having our own proprietary technology, we compared to maybe other competitors doesn't need to rely on standard systems. Day. So we have a better freedom to operate position compared to many others by using our own technologies, I believe. I think Anders want to say something as well. Yes. And I think also part of our strategy is, of course, to put a lot of resources in the research and development, but we also have our own in house IP lawyer. So we're working very close with the development team and also looking at this from this because for a company like Of course, the IP is a very important strategic component of our strategy. So I don't know, David, do you want to say a little bit about how that collaboration is with the research team. Of course, for me that's very critical. Yes, of course. Exactly what you mentioned is very critical. Also what Martin session. We do freedom to operate analysis on everything that we do. So whenever we develop something, we have very close contact With our IP department to make sure that we keep to our policy to never infringe a patent. So very close collaboration with IP to make sure that no infringements take place. Okay. And then I had one remaining. But although I might I think that we might have already answered this, Martin, but it's Basically, if we can expect a €60,000,000 end market sales already in 2024 for exlocane. Is that roughly the ballgame for 2024? This goes back to your picture. Yes, I think the picture what we have here illustrates this rather well. So we can look actually at 2023 where we expect to be running 1 clinical program and then 3 preclinical. So that, roughly speaking, would constitute a development expenditure of some €30,000,000 If you were to take that down to a monthly basis, we're talking about monthly development expenses of 2.5 €1,000,000 and what we've said here is that we shall reach operating positive cash flow on a monthly basis. So that means monthly net income generation from Excluding of some above €2,500,000 So that's what we're saying. And what is that then? Well, as we've shown on some previous pages, that would mean roughly speaking €10,000,000 of product sales and that can be translated into if you average out what we talked about with regards to Prices to maybe some 30, 35,000 patients going on treatment with exlucane and put that in context with roughly 5,000,000 Affected Ice in Europe and the U. S. It's really something we believe is achievable. Okay. While we were speaking, a few more questions came in here. So given Xprints seems to turn cash flow positive relatively soon, how do you look at look to Xprints Capital Allocation policy Going forward for the longer term. Anders, maybe do you want to comment on that one? Day? I think Martin, you can take that one. Yes. Norbert, we want to invest Day into programs which we believe are then going to generate returns which are superior to what otherwise could be achieved by our shareholders. That's what we want to do. And we're going to seek for Biosimilar targets which are as attractive as possible coming back to the target selection process which we talked about earlier today. And as long as we See such attractive targets and have the resources and the capacity to undertake development for such programs. And as We alluded to earlier in the presentation, there are plenty of attractive targets to go for if we now look at Patent Expiry 'twenty eight and onwards. Our focus is to try to broaden our portfolio and do as many of those that goes through our selection process and allocate capital to that. Next one, on Bausch and Lomb. Yes, okay. Bausch Health is looking at its ownership of Bausch and Lomb and other of its assets. Is there a change of control clause in the agreement? How has the collaboration progressed with Bausch and Lomb recently? No, there's not a change of control clause in the agreement. And I do believe that the collaboration has Progress very well. So far, we have, together with Stalla, set up different working groups working on On the development from a regulatory perspective, IP perspective, supply chain perspective, so I think we have a good collaboration both with Stade and Bausch and Lomb. Okay. Next one. On expected end market uptake, what end market sales Does your forecast on cash flow positive by end 'twenty three, early 'twenty four entail? And how should we see The group operating cost, excluding development cost, develop over coming years. Okay, I think we answered the first part of that question yes now. And yes, I think we answered that. Okay. Thanks for the replies. I appreciate it. One last question. How Xpryn is going to finance after Q3, okay. New share issue or other solutions? So As we've done throughout the development of Xpring, we have been looking into different sources Of capital, we have been talking to equity investors, but also with debt investors. Now we haven't Engaged with the latter yet, but we are engaged in such discussions now. And we're going to continue these discussions up until we come to that point in time. And then the Board will decide upon the best financing strategy for the company, but these are the 2 sources which we currently are, let's say, seeing as the sources bridging from a financing perspective Ex Sprain 2, cash flow positive stage. Okay. Can you tell us anything about the ethical study of exelucane in the test period. I think this question relates to The blinded Safety Data Monitoring Board, which is done throughout EXPLORER, as is done with any clinical study in order to catch potential abnormalities with regards to adverse events, which potentially would cause a more in-depth analysis And potentially even an early close down of the study if something would emerge which would Cause worries that the product would cause adverse events which are serious and beyond expected. So what we can say now that that has been done, of course, and no such event has occurred. And as a result, of course, the study is Continuing. Okay. Next question. Samsung BUF has filed for approval to FDA and Formicon is in Phase 3 for runabismab biosimilar candidate, Same as ExtroChain, but it impacts targeted revenue for ExtroChain overall. So the competitive situation with regards to Lucentis has been taken into consideration when we have done our forecast and projections and get into this €100,000,000 So that's why we have an ambition to take 25% volume wise of the Lucentis market. That is considering biosimilar penetration, but also that we take our fair share onethree or so amongst the different biosimilars expected to come to market on Lucentis. Okay. So I think that, that If no other questions on okay. There are common questions, continues, which is very good. That's great. I saw 2 more popping up here. Okay. What is the current setup agreement you have with Stata on further drugs in the pipeline of X Brain? No. So we like very much the collaboration with Stata. Stata has been a great partner to us. We have had a great collaboration around Exelukraine and back in, what was this, 2008 when STAAD also decided to invest into Exelukraine, we signed a so called Right of first refusal. We gave them a so called right of first refusal on European license for our ExSimsane and ExDevain programs. So that's the only kind of, let's call it, agreement we have put in place and which we also communicated at that point in time around other products and exlucane in our portfolio. But we're very happy with the partnership with Stada. We have a continued discussion with them with Things that we potentially could be doing together in the future, and we would love to partner up with them for other programs we have under development as well. Okay. Can you elaborate on the size of profit sharing the deal with Bausch and Lomb? The answer is no. We decided not to disclose the actual exact figure with regards to the profit share With regards to Baartan Dam. So we cannot communicate on that, unfortunately. Okay. That, I think, concludes the question as far as I can tell. Day. Thank you very much. And please submit any additional questions that you might have through our IR mail at xsprain.com or at our new website xsprain.com. And with this then, a few final words. Anders, Do you just want to say a few things? Yes. Thank you very much. Thank you, everybody, for listening in, and thanks to the team For the presentation, I think it comes back to what we said. We have the exlucane product coming very close to Having the top line results and the filing by the end of the year, we upgrade and we invest in R and D with 1 program, New program per year and we are looking forward to have an ambition to be cost flash flow positive by By the end of 2023, 2024. So I think these were the key messages, and we hope for talking with you all soon again and give you further update on the progress of Day. Thank you very much. Martin? No, thanks a lot for everybody listening in to this Capital Markets Day. We hope that you found it fruitful and that you got a little bit better picture of Ekspen and particularly now also Hearing from our Chairman, of course, but also hearing from David about our platform technology and Salvage providing a virtual tour to the facility. And as Annette said, please come with any further questions that you might have. This presentation and the recording of this event Will be put on our website within short. So that's, I think, Day. No one has other concluding remarks. So much, David? No. No. Thank you. I think that then concludes this event. And again,

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