BioArctic AB (publ) (BIOAB) Earnings Call Transcript & Summary

Hello, and welcome to the BioArctic webcast with teleconference. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. Please go ahead with your meeting.

Thank you, and good morning, and welcome to BioArctic's Third Quarter Report 2020. I I'm Gunilla Osswald and I'm the CEO of BioArctic. I will share this presentation with our CFO, Jan Mattsson. I think it has been a great quarter for BioArctic and lecanemab. Our partner, Eisai, has after discussions with the U.S. FDA initiated a rolling submission for an accelerated approval for lecanemab in the U.S. If it gets approved, lecanemab could thereby potentially be helping patients even earlier than previously expected, and I will talk more about that in the presentation here today. Next slide, please. BioArctic is listed on nasdaq.com midcap, and this is our disclaimer. Next slide, please. BioArctic is a unique Swedish biopharma company with the aim of improving lives for patients with CNS disorders. When I say that I think it's a unique company, I base that on 4 different areas. The first one is that we focus on R&D of innovative treatments for brain disorders with high unmet medical needs, like Alzheimer's disease and Parkinson's disease. These diseases affect large patient groups and the relative, and it comes with a large cost for society. Today, there are only symptomatic treatments available, and we work on disease-modifying treatment affecting the underlying disease and slowing down the disease progression. The second aspect is that we have a great organization with very experienced and engaged coworkers and important fruitful collaborations from universities and our 2 strategic partners, Eisai in Alzheimer's disease and AbbVie in Parkinson's disease. The third aspect is that we have an attractive and well-balanced project portfolio. with projects from early discovery all the way to late-stage Phase III and now even in the regulatory process. We have partner projects that are generating revenues by milestones, and where our strategic partners carry the cost for the clinical trial, and we have then the fully owned projects with substantial marketing and out-licensing potential. The fourth aspect is that BioArctic is well financed, and we have a strong cash position with close to SEK 900 million in the bank, which is approximately USD 100 million. We have valuable collaboration agreements with Big Pharma like Eisai and AbbVie at a value of up to SEK 8.9 billion plus royalties if we come all the way to the market. I think that BioArctic is a dynamic and very exciting company with a huge potential. And our most advanced program has now initiated the regulatory process towards market approval. And at BioArtic, we have started to build a commercial organization. Next slide, please. As I said, that BioArctic has an attractive and well-balanced portfolio, focusing on brain disorders. Alzheimer's disease is our largest area. For lecanemab, which is our most advanced program, our partner Eisai has now initiated the regulatory process in the U.S. in parallel with the 2 large Phase III program. And even if this is the first step for disease modification treatment to be successful for Alzheimer's patients. There is still a large medical need for more treatment options and for combination of therapies. Therefore, it's very important that we continue with our other early programs. And at BioArtic, we have 6 early disease modifying programs for Alzheimer's disease, of which 2 of them have been combined with our Brain Transporter technology. In Parkinson's disease, our partner AbbVie recently presented encouraging results from the Phase I program. And I'll talk a little bit more about that here today as well. And I'm pleased to see that our whole portfolio is progressing really well. Next slide, please. We have 2 long-standing successful partnership with Eisai in Alzheimer's disease since 2005, and Eisai are very committed to dementia and lecanemab. We have so far received EUR 66 million, and we have an ongoing research collaboration with Eisai, which was recently prolonged. We have a total aggregated value of agreement of up to EUR 222 million with Eisai. So there is still a lot left if the program continues to progress well. And if we come all the way to the market, we will be able to get substantial royalties. So that could be like blockbuster revenues for BioArctic, which means more than USD 1 billion per year without any cost for the clinical program. And BioArctic will also have rights to other indications outside of Alzheimer's disease, and we have the right to commercialize lecanemab in the Nordic region for Alzheimer's disease. And that's something that we have started to prepare for and we are really looking forward to. In Parkinson's disease, we have a successful collaboration with AbbVie since 2016. We have so far received USD 130 million out of the total aggregated value of up to USD 755 million. So there is also here a great possibility to get more substantial milestones and if we come all the way to the market, substantial royalties. As we have mentioned that they will start with Parkinson's disease for ABBV-0805, but they are also looking into other different potential indications, like multiple systemic atrophy and Lewy body dementia. So this could also lead to substantial revenues for BioArctic, if it continues to progress well. So in summary, I think that we have 2 great partners with successful collaborations, and I think we have a great business model. Next slide, please. So if we think about this -- quarter 3 this year, I think it has been an exciting quarter, where our partner, Eisai, has agreed with the FDA to submit the BLA for lecanemab as a rolling submission, utilizing the accelerated approval pathway, and I will talk more about that in just a minute. At the latest Alzheimer's Congress AAIC in July, Eisai had several presentations on lecanemab. Data continued to support what we have seen previously. Importantly, a rapid and profound clearance of amyloid deposits from the brain. And also importantly, continued low frequency of the side effect area. At this occasion, it was also the first time that Eisai presented some clinical efficacy data from the Phase IIb open-label extension study. And those data support the efficacy that has been seen in the Phase IIb study. Furthermore, Eisai presented blood biomarker data, which mirrors the amyloid pet results, and this could then potentially be a convenient way to monitor the effect of lecanemab in patients in the future. In September, at the Movement Disorder Parkinson congress, AbbVie for the first time presented data from the Phase I program, showing very encouraging results with a good safety and tolerability profile and a half-life of about 30 days, supporting a once a month dosing. In addition, BioArctic presented the preclinical data on ABBV-0805 showing that the antibody has a very strong preference for binding and eliminating the aggregated harmful forms of alpha-synuclein, while sparing the alpha-synuclein monomers, which have important physiological function. During this quarter, BioArctic has also taken the first step in building a Nordic market organization in order to prepare for a potential launch of lecanemab. The introduction of new drugs require careful preparation in order to provide the right patient access to pretreatment. And we are, therefore, pleased that Anna-Kaija Grönblad, who previously was General Manager of Sanofi in Sweden, has taken the position as a Chief Commercial Officer to lead this effort for BioArctic. Our confidence in lecanemab is the driving force in this initiative, of course. But we also see that other drug projects at BioArctic could benefit in the future from establishing a marketing organization in the Nordic region. Next slide, please. So now a bit more focused on what has happened with regard to lecanemab during this quarter. So based on the breakthrough therapy designation, which the FDA granted lecanemab in June, since then Eisai has interacted with the FDA to seek the most optimal regulatory pathway. They have agreed 3 important things. The first one is to submit the BLA for lecanemab as a rolling submission. This means that Eisai will submit completed sections of the application on a step-by-step basis, which can be reviewed by the FDA on a rolling basis. The second one is that they agree to use the accelerated approval pathway, which is based on clinical efficacy and biomarker data and safety data that is already available. So this is primarily based on the comprehensive Phase IIb study in 856 patients that was concluded during 2018. Data from the ongoing open-label Phase IIb extension study and blinded safety data from the ongoing Clarity AD Phase III study will also be included in the application documentation. In other words, the FDA does not need the clinical efficacy data for -- from Clarity AD for an accelerated approval. The third important thing that they agreed was that the result from the Phase III Clarity AD study can serve as the single confirmatory study to verify the clinical benefit of lecanemab. So I think that this was really great news for lecanemab and for BioArctic. Next slide, please. Our partner Eisai is strongly committed to lecanemab, and they have a broad program and now with 4 clinical studies underway. Clarity AD, which probably is the most important one right now, it's the Phase III confirmatory study in early Alzheimer's disease patients. The study is progressing really well, and patient enrollment was completed in March this year with 1,795 early Alzheimer's patients. Eisai is targeting to have the 18-month data available in late September next year. The Phase IIb open-label extension study is ongoing in early Alzheimer's disease patients. And new data here is coming along continuously since this is an open study, and data will be reported at congresses. And the data we have seen so far further strengthened the positive Phase IIb results. And we look forward to future congresses with more data coming from this study. The other large Phase III program is called AHEAD 3-45, and this is compromising on 2 substudies, A3 and A45. And this is driven by Eisai together with Alzheimer's clinical trial consortium and a total of approximately 1,400 subjects around the world will be included in this program. This program is intended for preclinical asymptomatic Alzheimer's subjects. Maybe we can call them presymptomatic AD subjects. They have intermediate or elevated amyloid levels in the brain. The program is aimed at evaluating the therapeutic effect of lecanemab on the progression of the disease. Then the news for this quarter is that Eisai has recently initiated a new clinical study with -- for a subcutaneous formulation of lecanemab. And I think this is an important alternative for the patient, which can make the administration of lecanemab more convenient for patients. We are really looking forward to the progress of this impressive broad program that Eisai is driving in Alzheimer's disease. Next slide, please. I think there has been a lot of progress in the Alzheimer's field this year, which is looking very promising for the patient. If we start with the diagnostics area, the blood biomarkers are continuing to progress quickly and will be important to facilitate diagnosis and possibly also important to follow disease progression in Alzheimer's patients. If we then turn to treatment. The first disease-modifying product was approved in the U.S. by the FDA. And that was Biogen's ADUHELM, which is an antibody against amyloid beta. And this was approved in June by an accelerated approval with further requirements by the FDA. The decision was based on very complex data from 2 early terminated Phase III studies and on biomarkers that are reasonably likely to predict clinical effect. I think it's important to understand this, and it was not based on proven clinical effect. And that is needed in order to get the full approval. And I think that to start a new study in this field will take several years to get those results. Following the U.S. FDA's approval, lecanemab as well as Lilly's donanemab and Roche's gantenerumab have all 3 been granted breakthrough therapy designation by the FDA. And this is based on encouraging biomarker data. And out of these 3, lecanemab is so far the only one which has initiated a submission to the U.S. authority. Going forward, it will be interesting to see how other regulatory authorities in other regions will respond to the advancement of the field. And I think it's important to understand that the regulatory requirements are a bit different at different regions. For example, we expect that in Europe, the CHMP will shortly come with its opinion of ADUHELM. And their statement will, of course, guide on what data that will be required for an approval in Europe. I just want to point out that from our perspective, both a negative and a positive opinion for ADUHELM could be good news for BioArctic. If we start with the potential of a negative opinion for ADUHELM, then that could lead to that lecanemab potentially could be first in line for an approval in the EU, of course, pending a positive Phase III results. And those data we will know about this time next year. A positive opinion on the other hand, would help to pave the way for a possible future launch on lecanemab. So I think in both cases, lecanemab stands on its own merits, and we are impressed with Eisai's work to ensure high-quality data for future lecanemab submission. Next slide, please. Now we are moving and turning to ABBV-0805, a potential disease-modifying treatment for Parkinson's disease. As I just mentioned, a highlight for us at BioArctic was that several presentations were held at the Parkinson Congress in September and all giving strong support for further development of ABBV-0805. I just want to point out a couple of things. And one is that the high selectivity of more than 100,000 is a differentiating factor for ABBV-0805 versus competitors. We have previously shown our very strong preclinical proof-of-concept data and news in our presentation at the Congress was also then that we have been able to show 0805 has a strong binding to the target in the brain of Parkinson's patients. And as we presented Phase I results, which supports Phase II development with dosing once monthly. Next slide, please. But I just want to mention that in addition to lecanemab and ABBV-0805, our broad early clinical stage portfolio continues to progress well. Next slide, please. So by that, I hand over to Jan Mattsson for the financial summary.

Thank you, Gunilla. For those of you who don't know BioArctic so well yet, I'd like to inform that we currently don't have any steady revenues, but we have a business model that is focused on partnership agreements, which means that our financials are very much linked to milestone payments and that income is related to research projects with our partners. With that, let's start looking at our numbers and my comments relate to the quarter's number. Net revenue were SEK 4 million for the quarter compared to SEK 11 million in the same quarter of last year. The major part of the revenue is derived from the research collaboration agreement that we have with Eisai. Looking at OpEx. Total costs amounted to SEK 42 million in the quarter compared to SEK 32.2 million last year. And operating result amounted to minus SEK 37 million in the quarter compared to minus SEK 21 million in last year. And we have lowered our expenses outlook for the current year with around SEK 10 million, thanks to a more efficient work in the projects. But going forward, costs will increase as we start building a commercial organization. And as we further progress our expanded portfolio. Next slide, please. Looking at our cash and net result. And the cash balance amounted to SEK 892 million at the end of the quarter. Our cash flow from operating activities was minus SEK 35 million compared to minus SEK 9 million in Q3 of last year. The net result for the period was minus SEK 38 million compared to minus SEK 21 million same quarter last year. And in summary, we continue to be in good financial shape. And with that said, I hand back to Gunilla.

Thank you, Jan. So I will finish with some upcoming news and some closing remarks. So if we go to Slide 16, please. If we look at Alzheimer's disease, Eisai are progressing the broad clinical program with lecanemab. And data with lecanemab will continuously be presented at international congresses. And the next one we are looking forward to is CTAD in November. This will also be a hybrid meeting, partially virtual and partially on-site in Boston, where our founder, Professor Lars Nilsson, will be presenting data comparing lecanemab with late-stage competitors. And lecanemab will also be included in several other presentations. So this is definitely something we are looking forward to. And after this congress, the next important congress for us will be ADPD in March. And we are also looking forward to when we can provide more information to, for example, on some of our development programs in the not-too-distant future. So next slide, please. I just closed today's meeting by saying that BioArctic is built on great science. We have great projects. We have great partners, and it's all being done by our great people working for BioArctic. And everything we do is with patients in mind. Our aim is to help patients with brain disorders, and I really think that we are on our way to help Alzheimer patients. Next slide, please. So by that, I thank you for your attention, and we're happy to take some questions.

[Operator Instructions] And our first question comes from the line of Joseph Hedden from Rx Securities.

I've got 2. On the first one, the report today is talking about the commercial -- the ramp-up for commercial operations in the Nordics for the first time. And the hiring of a Chief Commercial Officer there. Could you just perhaps go into a little bit more detail, please, about your expectations for the commercial team, size, pace of recruitment, anything on costs, that would be great.

Thank you so much, Joseph. Great question. And I think it's an important great first step that we have recruited Anna-Kaija Grönblad with all her experience in having done many, many launches in the Nordic region. So I think that we -- I'm so happy that we have recruited her. Then we will, in not too long time, come back with more information about our next steps in how we are going to build this organization a bit further. So I will not reveal much more information today, more than saying that we are extremely happy with this that she is now working full-time for us and started to build the organization. So I will come back on this.

Okay. And second question, we've seen Biogen's results yesterday and very sluggish uptake of ADUHELM, and that's really because of the absence of a coverage decision from Medicare, and that's due to happen January or the final decision in April. And it's interesting to see that their decision relates to the whole anti-amyloid mab class, presumably affecting lecanemab. Therefore, I just was wondering what your understanding of that process is? And any expectations you have because this seems like a key decision that doesn't just affect ADUHELM?

I think -- I mean, the benefit here is that there are 4 different programs that all support each other in one way. Of that all 4 have shown that you can take away amyloid deposits from the brain, 3 of them have also shown clinical efficacy signal and all 4 have shown that they have the side effect ARIA-E, where lecanemab then has shown that we have the lowest frequency of -- considerably lower frequency of ARIA-E than the others. I think that it will, of course, be important when they take this as a class decision to look at all the data together. Otherwise, I will not comment more details about this. But of course, this is an important part for all Alzheimer patients and future treatment.

Our next question comes from the line of Gergana Almquist from Redeye.

I also have 2 questions. My first one is about the European submission for lecanemab. When do you think we will hear news on that?

I wish I could tell you. But I can't. So I think that we just have to stay tuned and wait until Eisai communicates something with the us. But I just want to point out that U.S. and Europe have different regulatory processes. So it's not the same in the U.S. as in Europe.

Okay. So that will be probably after Phase II results?

I will not comment.

Okay. And my next question is on the Parkinson's project. We were wondering about the space 2 initiations. When do you suppose that would be or?

I wish I could tell you, I wish I knew. What I can say, I think I'm great -- I'm really pleased to see the data from the Phase I program. And that we presented very strong, encouraging preclinical data and that AbbVie had 2 presentations now in September, where they are stating that the data supports progressing in Phase II. And I am as impatient as you are and I'm just looking forward to when we know more about the next steps.

Okay. And actually, a third question, I want to know what the pipeline of those projects which are now in research phase and above interclinical, which one do you think has the -- I mean which one has the most potential?

As you know, I'm very excited about our whole portfolio as such and that we are taking such a broad commitment in Alzheimer's disease with several different mechanism of actions, in order to give the patients an opportunity for several different treatments and also an opportunity in the future for combination. So I think that is an exciting part. And definitely, now that we can see that we can combine it with our Brain Transporter technology, which you know I'm very enthusiastic about and to see that it has progressed as far that we now can start to link this to our internal program. Then, of course, as that -- so I think -- I mean, I just want to say that the Brain Transporter technology, that platform, I think, has enormous potential because it can, of course, be combined with our internal programs, but also with potentially doing several nonexclusive licenses in the future to help other antibodies or proteins to come better into the brain. It could also be like brain cancer and other things. And then I just also want to mention ND3014, which I'm also very excited about. And we'll see when we can come back with more information about that, which is a bit different than the other one.

[Operator Instructions] And since there are no more questions registered. I'll hand back to our speakers.

Thank you. Have a great day.

This now concludes our conference. Thank you all for attending, and you may now disconnect.