Earnings Call: Q2 2021

Aug 13, 2021

Quarterly report

Thank you very much. Hello, everybody. Thanks for calling in. We are here to present the Q2 report of Xbrain Biopharma. And we go to Page 3. X. So just going through some of the highlights of the Q2 of 2021, we can start with our exlucane program, our biosimilar candidate to Lucentis. We were pleased X2 receive a positive top line data from the interim readout, which we did in the ongoing pivotal Phase III trial. And that then triggered a confirmation of our plan to X SUBMIT, the marketing authorization application to EMA, the European regulatory authority, and that will be done next month. It's practically finalized. We worked a lot with that document throughout the year, but intensively during the summer, and it will be submitted during the course of September. When it comes to the Biologics license application to FDA in the U. S, it's now planned for the Q4 of this year, but we are going to have a meeting with the XGA in August where that exact plan and the final date will be confirmed the final date will be set. X. So it's all proceeding according to plan when it comes to filing of the product to the authorities. XLEC. Then of course, an important element for exlucaine is planning for the launch of the product provided that the purchase approved, of course. And we are now finalizing the negotiation of supply agreements with our respective contract manufacturers to secure the capacity for production of the product during the 1st couple of years on the market. And X. We are looking forward to getting back on this topic during the course of this quarter, but we plant to sign those firm agreements in this quarter. So that's very important, of course. I think these are the highlights on exlucane side. Then on Eximzane, our CIMZIA biosimilar candidate on the development, I think it's progressing well. As well, we are finalizing the process in pilot scale now internally. Also here, we are we have finalization of negotiation with the contract manufacturer for the scale up of the production and also producing clinical material. I think we'll close-up agreement during the course of this quarter and then proceed with a scale up together with selected contract manufacturer to be able to take the next step in the development and also take the product into clinic. We are also, as we've been discussing before, X in discussions with potential commercialization partners. We have the ambition to ex partner this program up at the preclinical stage, and we hope to be able to achieve that during the course of the coming 12 months. So X. That's an exciting element here, Zoila, of course. So I think our Exim Sane program is also moving along nicely here. Looking at the broader pipeline, Extravin, our Opdivo biosimilar candidate. We have an ongoing process development internally. And then we are also, as we discussed in the Capital Markets Day held in May this year, we have the intention to select 1 new biosimilar candidate this year, and we XR going through a selection process currently. But that, as discussed, are going to be targeting products, which hadn't expired in 20 28 onwards. Then we conducted a directed share issue end of June, beginning of July. We raised approximately SEK 380,000,000. Swedish krona. And we're very thankful for the support from existing shareholders and also we welcome new shareholders to the company in connection with that share issue. Also, we are very happy to be certified as a Great Place to Work by the Great Place to Work Institute. And I think this kind of X. It's a testament that we have a good working atmosphere and a strong culture here at the company and that will come together nicely as a team here. So we're very pleased about that. Then looking ahead in the coming 12 month period with regards to milestones. Of course, then submission of marketing authorization applications to Eman FD as discussed for ex UKN important, very important. X. So I'm going to work to find some additional partners for some remaining territories, let's say, for sales and marketing of exelukin, thinking about Latin America, China and Japan. So that's still ongoing. And I hope that we're going to be able to get back with something on this front during the course of the coming 12 months. Then on the X Insane program, as I said, starting the scale up of this product together with a select contract manufacturer. And also our vision is to tie up commercialization partner for the program during the course of the next 12 months. So I think we have it's an exciting time ahead for us here. Okay. If we move to the next slide. This is a little bit more in detail the timeline for exelukraine. X. So the interim readout, which we presented the top line data of in end of June, that was based own 6 months data from all patients. And we are then continuing the EXPLORER trial. And last patient will have concluded 12 months of treatment in November, and we will then have the full 12 month data in Q1 of next year. But we are submitting the marketing authorization application now to EIM on the basis of the interim X readout and then we're complementing the file with the full study data in the Q1 of next year. X. Yes, then it's a regulatory process of 12 months or so. And we hope that we shall have the product approved during the second half of twenty twenty two, so shortly after the patent expiry in Europe of the originated product, which is in July 2022. And then provided that the product is approved, we can look forward to launch of the product sometime late 2022 by, of course, our 2 partners, Stata and 1,000 numbers activity. So that's the high level time line. If we move on to next page. The top line data from the interim readout in EXPLORER. But just from a high level, it was a positive readout. We met the primary endpoint, which is defined as the difference in the change in visual acuity at week 8 between exelucane and the reference work Lucentis. And 95% confidence interval around the difference needs X2B confined within a defined AQLS margin of plusminus3.5 letter, which was the case. So we met the primary similar patterns of our biosimilar candidate exocrine versus the originate product and no signals from the safety front or anything like that. So I think it was a positive readouts, and we are moving forward towards submitting the marketing authorization application on the back of this interim readouts and looking forward to the full data in Q1 next year. And so that's probably the highlights of quarter. And with that said, I am leaving over to Annette for the more financially related update. Thank you, Martin, and good morning, everyone. Let me just take a few moments SEK 6,000,000 versus SEK 5,300,000 in last year. And those of you familiar now with the X Brain, you would recognizing that we accrued the 1st milestone payment from our licensing part of Bausch and Lomb that we received in Q2 2020, so a year ago. On the right, our expenses amounted to SEK 61,000,000 somewhat higher than last year. And this increase of SEK 6,300,000 is totally explained by the increased R and D cost, now close to 85% of the total spend AXXO as a result of the increased activities related to the broader pipeline, e. G, Eximsoin and Extivane. So the next slide, please. So the net result, meaning the summary of the 2 earlier. Diagrams amounted to a net loss of close to SEK 60,000,000 from SEK 59.2 versus SEK53 last year. Of course, this is then a result of the increased R and D expenditure that I just mentioned. Also, I would like to remind you that as good accounting practice, our R and D costs are up until now fully expensed And nothing is capitalized on the balance sheet as of Q2 2021. This practice though may be subject to review during 2021 as we received the positive data from the EXPLORER study. But we'll come on to that in future calls. The shareholder equity amounted to SEK 149,700,000 versus 191.3 in Q2 2020. And this might look odd, but this is as the successful direct share issue that we made in June in which we raised SEK180,000,000 ExVision as well on the next slide. So for operating cash flow, we ended negative X for one of the reasons I just mentioned, but also normal variations due to our reinvoicing mechanism that we have with our commercial partner Strada. Again, as you can see, we ended the quarter with a cash position of 129.3 Not then accounted for the direct share issue of SEK280,000,000 before transaction costs that we received early July. So The impact of that will be seen in the 3rd quarter, so in the next interim report. So that is all for the financials. Thank you very much for Xtning. And back to you, Martin. Thank you. And we're also happy to note that we're growing the team. We're now 60 employees. And I think we have had an easy time to recruit talented people and we were growing to be able to meet our commitments and undertakings on the exelucane program, but then also to be able to drive our sort of portfolio of biosimilar candidates. And I think we are growing the team in a good way. We are maintaining a very diverse team from a gender, ethnicity and experience perspective. And we are measuring the satisfaction with the team. And I think we have a very satisfied team. Generally speaking, we're using a measure here internally, which is called employee net promoter score, where we now a score of 42, which I think can be related to within the global average of some 6% or so. So I think it's very good. We're very happy about that. And I think that's also reflected in the outcome of this Great Place to Work survey and certification. Yes, great place to work. Certification, so we're very happy XBA being certified. And I think they mentioned this trust index, and I think we came very high on that one. And of course, there are also some elements that we can take from that work and so I will continue to work on with the aspiration of really being the best X Workplace worldwide when it comes to Pharmaceutical Development. X. Okay. Capital Markets events, we are going to present at the Pareto Conference coming up here in the beginning of September. X. We are going to be at the Kempen Conference in London in November. And we're also going to participate in the virtual LSX Investial Showcase Conference in November. Probably we're going to add a couple of other events to this list as well, but this is what we for sure have in the planning. So we hope to be able to meet some of you of some of these events or in other instances throughout the rest of the year. XB. So with that said, that I guess is the end of the formal presentation here. We can Xmove towards Q and A. And we'll go through the questions that we have here from the chat, and then we're going to move over to potential questions coming from people who are called in. X. Okay. So first question. Do you have any updates on X on cane development and partner is the first question. X. For everybody on the call, Exxon Cain is our oncastpar biosimilar candidate. X. And I do not have a particular update right now, but hope that we will be able to come back X during the course of this year with an update. As we've said previously, this is the program where our intention has been to find a partner for this program who is willing to take it onwards with limited remaining requirements from us from an investment perspective. And we hope we should be able to accomplish that and be able to communicate something around that during the course of the year. XINs. Next question. Could you leave a comment regarding your view on the FDA's first approval of an interchangeable insulin biosimilar? I understand this could be relevant for X Insane, but what difference is there from a development perspective? X. Yes. No, indeed, FDA has a guidance on interchangeability of biosimilars. And essentially what has to be done is a switching study where you compare the pharmacokinetic patent of your biosimilar candidate versus the reference product during the course of, I think it is 4 switches between the products. X. And I think this becomes relevant from a commercialization perspective on products who are mainly sold via the retail channel. X. And it makes sense, I guess, for an insulin biosimilar as has been done now. This is something we are looking into when it comes to our Exane program. It's possible to design the Phase III trial in such a way that you conduct this switching study as a part of the Phase III trial and then also go for interchangeability designation by the FDA. That will be the most natural way to do it. But we have made no decisions of that yet. And as I described earlier, our intention is to tie up the commercialization partner to this program preclinically. And we also expect that such a commercialization partner will provide meaningful insights into the sale of ability of going for interchangeability designation or not. X. But it's good to see, of course, that this first interchangeable biosimilar has been approved by the FDA and paved the way for ex FFO interchangeable biosimilars in the U. S. Okay. Next question. Can you update on exokayne's registration readiness, I. E, mock inspections and also your supply chain CMOs you work with? What has and what has not been cleared already by EMA and FJ. Yes. So we have 3 main contract manufacturers, you can see, in the supply chain of exelukin. It's a drug substance manufacturer, Biotech Pharma located in Lithuania. It's Swiss Filon filling the substance into vials and previous syringes located in Switzerland and then PCI doing the final packaging. X. And Biotech Pharma is previously approved by Lithuania now towards us and thereby by EMA, but not yet by XDA. Swiss Filon is previously approved by both Swissmedic, which has a mutual recognition agreement with EMA and then also by FDA. BCI is previously approved by both MHRA and the U. K. Site and FDA. XB. So I think when it comes to this question, the main element which we are working on is ensuring that our drug substance X manufactured biotech pharma is prepared and ready for the pre approval inspection by the FDA, Xcelaxitib to be triggered by our submission of the Biologics Licensing application to the FDA. X. And I think that worked well, it has been ongoing for quite some time, and I think it progresses well. So we will probably be able to report back on that as it's getting closer with the potential pre approval inspection by the FDA. X. Okay. Next question. What are your takes on the many changes in the U. S. For biosimilars? Yes, last month, the FDA approved the first interchange by insulin via similar by similar yes. And also in terms of your competitors, U. S. Partner Coherus Biosciences, which embarked on a new journey as drug developer within immuno oncology. X. Yes, so we are very happy to see that the recently launched Biosimilars in the U. S. Has fared very well from a sales perspective. And I think Amgen's Avastin Biosimilar is targeting $1,000,000,000 of sales actually being a blockbuster. So that's quite phenomenal to have a biosimilar as a blockbuster. And I think the situation now in the recent launches both of Avastin and Herceptin Xtimbiosimilars more resembles the European experience. I think we had like they had 40% volume market share by month 12, which is similar to what we've seen with launches recently in Europe. So we're very happy to see this development in the U. S. For us, it's had always been a question of time more than anything else when XBiosimilars really will get traction in the U. S. And we're happy to see that happening now. When it comes XB. When it comes to Coherus, we're noting that they are moving into novel drug development, which hasn't comment so much on other companies in that sense. We have interest, of course, also in the immuno oncology space since we're working on OPTIVO biosimilar. And I've said that before, actually, I'm more comfortable in developing a XB biosimilar to Opdivo then going into development of novel PD-one inhibitor. I think it's these products in particular, the clinical journey is quite significant if you're going to get approval for all the different indications. And that's really benefit we're doing a biosimilar in this space with because with one Phase III trial in one well selected indication, you can get indication extrapolation in all the indications approved of the originated fluoride. So I'm pretty happy actually with going on the biosimilar track when it comes to the new oncology space. And we're very much looking forward to the continued development of our own OPTivo biosimilar. Next question here. In what regions have licensing deal negotiations for executing progress the most? Yes. And I guess that's referred to regions where we have communicated we want to complement with additional partners, Latin America, Japan and China. I would be saying that currently, wheat together with Stata. Our most advanced is in the Latin American territory. And I hope that we shall be able to get back with something on that, but also in the other territories during the course of the coming 12 months. Okay. Moving on to the next question. With the recent directed share issue of SEK 380,000,000 combined with the sale of Finn Pharma of approximately SEK140 1,000,000. Do you expect this cash position to be sufficient until XLUKN can bring in enough revenue? I'm not at all going to promise that. The PRIM is 14, it's not 140. Yes. And first on the pre pharma, we have, as you have noted, a non binding term sheet with a company called Newfaden to divest Primm Pharma. And although the total proceed is SEK 40,000,000, roughly SEK 140,000,000, SEK140 1,000,000. It's not non binding agreed upon as an immediate payment in the transaction. A part is an immediate payment, but then part of that complete transaction sum is milestone based. But we can only focus on the SEK 380,000,000. I think the main thing here If this will take us all the way to Extrokane bringing in enough ex cash that will become cash flow positive is related to 1, that we are progressing on exelucate according to plan with the regulatory approvals and launch. That's one critical thing, of course. And the other thing is that we are XIMS successful in doing a deal with the commercialization partner for our XIMSANE program and that, that deal X is of such a structure that we get the meaningful payment and also meaningful financial support for the continued development, thinking mainly about the start of the clinical trials. If both those events come through, it could be so that we that this can bring us all the way to cash flow positive stage. But nothing that we can at all promise now because it hinges up on these two events, which we X and are going to report back on during the course of, well, let's say, the coming 18 months when it comes to getting the approval in place for Exelukraine and also getting the product to market. X. Can you talk a bit about X on chain? Do you see any interest from potential partners who want to finance the project? Yes, we talked about this earlier. And there's nothing so much more to say. We are We hope that we should be able to come back during the course of the year with an update on that program. And it's a smaller product, as many of you are aware. But still there is some interest in such a program for specific companies engaged in that space. Okay. Opdivo is an approved drug in many cancer indications. What is the biosimilar regulatory pathway in this case? Does every indication need a separate clinical Phase 3 biosimilar equivalent? I think I answered to this question earlier. XB. Although we have not discussed this with the regulatory authorities yet, the general way that our orders look at this is that you do 1 Phase III trial in one indication and then get indication extrapolation to the other indications. And there's nothing that makes us believe that, that would not be the case for Auroptivo is biosimilar. So that's clearly what we plan and believe should be the case. Last question, will exoncane enter into clinical trials this year. Cleo asked that that question is no, it's not going to happen this year. And again, We'll have to come back and update on this program a little bit later during the course of the year. Okay, excellent. Those were all the questions that we received over the chat here. So thank you all very much for those. I think we are going to hand over and see if there are any questions coming from people who have called in. Yes. We have one question from the line of Matthias. Please go ahead. Your line is open. Yes. Good morning. Matthias Sigve from Handelsbanken. Two questions, please. Maybe if you could Elaborate a bit about the upcoming meeting with SBA here in August that you alluded to what in particular in terms of guidance For clarity, are you looking for from that meeting that you can share with us on future Update. And secondly, on the biosimilar for CIMZIA discussions, is the current thinking to have a similar Structure like Exelukraine with cost and profit sharing? Or are you contemplating other deal structures as well? Thank you for the question. I think the first one was related to the upcoming meeting we have with the FDA. X. The main question here is really what is the timing that the FDA can accept between submission of the Biologics license application and complementing that file with the full study data. And since we know when the full study data will be in place, that's Q1 this year, let's say the response to that question from the FDA will dictate when we're going to be able to submit the file. So that's there are some other questions, but that's the main thing which will dictate the time line. Exim Zane. So X1. Potential structure which is on the table is, of course, a cost sharing arrangement, which similar to what we have for exelukraine with Stalda. But I think a more natural way, which most potential partners are more used to working with our more strict license deals. So I would probably be saying that it's more likely to end up in such a way, but for sure Our ambition is to at least get half of the investment of such a program financed by a potential partner, hopefully more, of course, but that goes without saying, but at least half, so we'll get the meaningful support from a financial perspective in the development phase from a partner. But then again, probably the most important thing when it comes to such a selection is finding a partner, which we believe really can bring the product to market in a successful way. Thank you so much. Thank you. Thank you for your question. Exane. There are no questions. I will hand back the conference to Martin. Please go ahead, sir. Yes. One One more question coming in from the chatty. What is your cash runway following the capital increase? So as I discussed a little bit earlier, X. It's very much dependent on what we do from a deal structure on X Insane and when we do it. I think the best one could do to kind of come to base case on that one is to look at our negative cash flow the last couple of quarters, which has been around, let's say, SEK 50,000,000, SEK 60,000,000. And let's extrapolate that into the future. I think the best that's the best that anyone can do to forecast the cash runway because then again, it's very much going to be dependent upon well, these two events what I discussed earlier that we are following the time line for X LUKAINE and also the nature of the deal we do around X Imaging. X. Okay. So that was probably the last question. And I thank all of you who called in. I thank you for all the great questions that you asked, and I hope that we were able to provide somewhat helpful answers. X. I encourage you to otherwise reach out to me or Annette via phone or e mail for further discussions. X. And I hope that we can meet and discuss further during the course rest course of the year. So