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

Welcome to BioArctic Q2 Report 2025. [Operator Instructions] Now I will hand the conference over to CEO, Gunilla Oswald; and CFO, Anders Martin-Lof. Please go ahead.

Thank you. Good morning, and welcome to BioArctic's presentation for the second quarter of 2025. BioArctic is now entering a new era. It's an era of profitable growth. And I think it's signified by yet another strong quarter and a lot of activities throughout the different parts of the business. We see increasing Leqembi royalties, and we are very pleased with the new partnership with Novartis. It's the third partnership utilizing our BrainTransporter technology and it's the first of its kind. And I'll talk more about that in today's presentation. Next slide, please. BioArctic is listed at Nasdaq Stockholm Large Cap, and this is our disclaimer. Next slide, please. I'm Gunilla Osswald, and I'm the CEO of BioArctic. And today, I will share the presentation with our CFO, Andres Martin-Lof; and also with our Chief R&D Officer, Johanna Fälting and our Chief Commercial Officer, Anna-Kaija Gronblad. Next slide, please. I will start our presentation, and I will be giving some key highlights. Next slide, please. But before I do that, I just want to do a high-level introduction to BioArctic if we have any new listeners today. BioArctic is among world-leading innovators in precision neurology. We have 2 different platforms. The first one is innovation and generation and development of highly selective antibodies that are targeting aggregated misfolded forms of toxic proteins like lecanemab or Leqembi and exidavnemab. The second part is utilizing our brain transporter platform in innovative ways in order to deliver antibodies and different modalities better into the brain. In today's presentation, we will talk more about both selective antibodies like Leqembi and exidavnemab as well as the BrainTransporter technology, which we have utilized now for all our internal targets and is also now being used for external projects. And an example of that is the just signed deal with Novartis. Next slide, please. During the second quarter this year, we held our first Capital Markets Day. And there, I presented our ambitions for 2030, and we have already started to deliver on our ambitions. And I'll just go through them briefly. The first one is Leqembi to be established as a treatment for Alzheimer's disease. The second one is balanced and broader pipeline with projects in all stages of development. And the third one is additional successful global partnerships. And this is an area which I enjoy and engage heavily in. And the fourth one is, of course, also very important to be profitable with recurring dividends, and Anders will come back to this later during the presentation. Next slide, please. So as I said, we have already started to deliver on our 2030 ambitions, and I will tell you how. If we start with Leqembi, it's well on its way to be an established treatment for Alzheimer's disease. Thanks our partner, Eisai and their great work, Leqembi is now approved in close to 50 countries and also in Europe since the 15th of April this year. The European launch has been initiated this week with Austria started this Monday, and Germany is preparing for initiation of launch on Monday next week, 1st of September. Our partner, Eisai, has submitted the HTA dossier in the 4 Nordic countries, Sweden, Finland, Denmark and Norway. And at the world's largest Alzheimer Congress, which was held in Toronto in July, more very encouraging data was presented. It was a great congress with about 10,000 participants with a lot of positive in the field. There were many presentations of Leqembi, including long-term data over 4-year treatment increased over time. And real-world data for Leqembi being used in clinical practice was also presented, both from the U.S. and from China. And here, data showed that the benefits and the safety profile were in line with the Phase III results, which also is very encouraging. Eisai also presented data with the subcutaneous administration of Leqembi. And this supports a great opportunity for patients to administer Leqembi in an easier way by getting the injection by an auto-injector at home, for example. I think it was a very positive meeting with a lot of hope for patients. There was also reporting on blood-based biomarkers and the great progress and the launching of guidelines for them. The second aspect I want to talk about is the pipeline and that we are growing with further projects in development and the projects are progressing well. An example of that is exidavnemab, our alpha-synuclein antibody, which is currently in Phase IIa. And during the second quarter, it passed its safety evaluation and has now progressed into the next part of the scope of the study with higher doses. And that is now both in Parkinson's patients and in MSA patients. So we are broadening indications for exidavnemab. We're also very happy that we got orphan designation in both the U.S. and in EU for exidavnemab with regard to the MSA indication. We have also broadened our portfolio linked to the new deal with Novartis with a new neurodegeneration project with BrainTransporter, which, of course, is their project, but we are supporting. Then we come to partnership. And here, we said we should do additional successful global partnerships. And as I said, I'm very happy with the new collaboration with Novartis regarding an undisclosed target for neurodegenerative diseases. We will reengineer our antibody to include our BrainTransporter technology, enabling a better penetration into the brain. Our BrainTransporter collaboration that we had previously and which is ongoing with Eisai on BAN2802 is progressing according to plan and the tech transfer of BAN2803 to Bristol Myers Squibb is on track. It's also great to see that we have continued strong interest for our BrainTransporter technology. Our financials are strong, and we are highly profitable with record royalties as well as the European regulatory milestone from Eisai during the second quarter. And the new agreement with Novartis will bring further on an upfront of USD 30 million to BioArctic. Next slide, please. I'll just talk a little bit also about the agreement with Novartis, which is our third agreement to include our BrainTransporter technology. And it is the first one where another company brings naked cargo antibody for us to reengineer into a new antibody to introduce our BrainTransporter technology. I think this agreement shows that BioArctic now is also a platform company. Importantly, the BrainTransporter platform is BioArctic's proprietary technology. And in our business model, we are making these linked to different targets while keeping the platform to ourselves. Novartis agreement encompass one undisclosed target for neurodegenerative disorders, and it is distinctly different from our other collaborations and targets. The Novartis agreement starts with the generation and evaluation phase, after which Novartis has the option for a full license. BioArctic is entitled to USD 30 million upfront, and the total deal value of this agreement is up to USD 802 million plus mid-single-digit royalties if the product reaches the market. The 3 agreements we have so far with the BrainTransporter technology platform are all with antibodies. But I also want to mention that we are investing and expanding our efforts into other modalities as well, where we also would like to see better brain penetration in order to have a better efficacy. We have further business development discussions ongoing, and we aim to establish more collaborations in the future, but we have to realize that these kind of discussions take time. Next slide, please. So by that, I will now hand over to our Chief R&D Officer, Johanna Fälting, for an update on the R&D. Thank you so much, Gunilla.

Thank you so much, Gunilla. Next slide, please. So starting with an overview of our R&D portfolio, we have 2 world-leading platforms, as Gunilla described, in precision neurology with cross-program synergies. First, we have our antibody projects with highly selective antibodies targeting aggregated forms of toxic proteins intended for the treatment of severe neurodegenerative diseases with high unmet medical need. And then we have projects based on our BrainTransporter platform that delivers biopharmaceuticals better into the brain. And for those of you familiar with our portfolio, you will now note a new project in the portfolio, the ND-BT8825, and that is the Novartis collaboration on an undisclosed target in neurogeneration, combining the Novartis antibody with the BioArctic BrainTransporter technology. We're very happy now to have 3 BT collaborations in the portfolio with distinct and different targets. And importantly, like Gunilla said, the BrainTransporter technology is BioArctic's proprietary, and it will have possibility to generate more collaborations in the future. So to summarize the portfolio, our R&D portfolio is a combination of fully funded projects run in partnership with global pharmaceutical companies and innovative in-house projects and technology platforms with significant market and out-licensing opportunity. Next slide, please. So a major challenge working with brain disorders is that only a small fraction of the antibody or the biopharmaceutical administered via the blood enter into the brain. So the aim with our BrainTransporter technology is to improve the brain exposure, allowing for lower doses, improved dosing convenience, reduced manufacturing and cost of goods and potentially also improved efficacy and better brain distribution. So we have a unique approach targeting active brain transport via the transferrin receptor. And this platform has been preclinically validated in nonhuman primates, showing an improved brain exposure up to 70-fold without affecting reticulocytes, which is a safety concern with this approach. And what we now are doing is that we are currently working with different modalities, as Gunilla described, such as antibodies and enzymes, but we are evolving the technology also to other modalities such as proteins, peptides or even antisense. And this will also bring new modes of actions and expand the target space in the brain. So the brain transporter technology platform unlocks an enormous potential, not only for internal projects, but external opportunities. And as Gunilla mentioned, we see a high external interest in our platform. Next slide, please. So exidavnemab is an antibody that selectively targets pathological alpha-synuclein aggregates while sparing the physiological monomers. Exidavnemab is in Phase IIa in the EXIST study, and this is a study with the primary endpoint safety and tolerability of exidavnemab, but we are, of course, also exploring a wide range of biomarkers, both biochemical, digital and imaging biomarkers. And this is a very innovative study, I would say, and unique in its approach of including the right patients into the study, and we do this by a smell test and also a CSF seeding amplification assay to ensure that the patients included in the study have the correct diagnosis and have the alpha-synuclein pathology that we are targeting. And in June, we had a safety review after Cohort 1 with Parkinson's patients supporting progression into the higher dose and Cohort 2 is now intended initiated both in Parkinson's and multiple systemic atrophy. So exidavnemab is progressing well in Phase IIa and the study report -- study results are expected mid-'26. As Gunilla mentioned, exidavnemab has reached orphan designation for MSA, which is a rare progressive neurodegenerative disorder, both in the U.S. and in EU. And following the EXIST study, we see several possibilities for further development in different synucleinopathies such as Parkinson's, MSA or DLB, and we are currently evaluating and preparing for the next phase of development. Next slide, please. And as Gunilla mentioned, everything that we have seen coming out from the AAIC meeting in Toronto this summer has been very positive, especially when looking at the Leqembi data. Eisai presented new data from the Phase III open-label extension study and new data from patients treated with Leqembi for up to 48 months as shown on this slide. And to start with efficacy, treatment effects continue to expand compared to the natural course of disease shown by ADNI or BioFINDER data. And another way of describing the efficacy is to talk about time saved or time that you stay in an earlier stage of disease. And in this analysis, time saved is up to 13 months after 48 months of treatment. And also in terms of safety, long-term safety profile continues to be in line with previous data. So next slide, please. So in the full CAD study results subgroup analysis has already begun, and I'd like to highlight this in patients treated with lecanemab and patients that have a low tau. So this subgroup is likely to have an earlier stage of the disease and they seem to benefit even more from treatment looking at the CDR Sum of Boxes and a large percentage of patients being on stable -- being stable or even improving after 48 months. And this is, of course, very, very exciting data, but it's also smaller studies. We have to be mindful that this is a small population, but it shows the importance of starting treatment early on, and we are really looking forward to the AHEAD study results testing Leqembi in earlier AD patients. So next slide, please. So in addition to the presented long-term efficacy and safety data of lecanemab, important presentations during the Congress covered real-world evidence data on Leqembi being used in clinical practice. And these data confirm the Clarity AD Phase III data, and it's very reassuring that the real-world evidence data is in line with the clinical study, both with regard to safety and efficacy. Also, Eisai presented encouraging data on the subcu auto-injector maintenance treatment. And of course, the more convenient subcu dosing will allow patients to easily be treated at home, enabling continued treatment without visiting infusion centers, and Anna-Kaija will talk more about this. And also in addition to the Eisai presentations at AAC, new guidelines for blood biomarkers were presented, and Anna-Kaija will talk more about this as well. So taken together, all of the data presented would help to expand Leqembi usage. Next slide, please. And I now will hand over to our Chief Commercial Officer, Anna-Kaija Gronblad, for a commercial update.

Well, thank you, Johanna. Well, as Gunilla mentioned earlier, Leqembi, as you can see, has now been approved by 17 health authorities globally covering 49 countries, of which the latest approvals since the last quarterly report were in Thailand, Saudi Arabia, Qatar, Kuwait and Bahrain. Meanwhile, in the U.S., we are eagerly awaiting the FDA decision any day now on the subcutaneous auto-injector for the maintenance dosing. And Eisai is also planning to shortly thereafter submit the application also for the initiation treatment for the same auto-injector. Anders will soon comment more on the actual sales. But in short, Leqembi is growing steadily in the different regions and markets. And in the U.S., we can see that the usage of both blood biomarker tests and PET and CSF testing is increasing, indicating that more patients are being investigated for Alzheimer's disease. As for the European Union, after the European Commission approval in mid-April, it's really exciting news now that Austria launched earlier this week on Monday and that Germany is planning to launch next week, Monday. These are usually the early launch countries where there will be a gradual rollout of the expected launches in the European Union throughout 2026 and into '27, following the regulatory requirements and their national pricing and reimbursement processes. In France and Spain, on the other hand, there is an opportunity to provide Leqembi sooner through an early access program, and this will probably be in place in the last quarter of this year. As Gunilla mentioned, in the Nordics, Eisai has submitted the dossiers to the authorities in 4 of the Nordic countries for the health technology assessment, which is the start of the whole pricing and reimbursement process. There are no fixed time lines for these processes, but we are aiming to launch in the Nordics later in 2026. Next slide, please. So I would like to come back to what Johanna referred to earlier regarding the development in this field presented at AAIC in July, both in regards to blood-based biomarkers and also Leqembi's competitive edge and growth opportunities, thanks to the subcutaneous auto-injector. Firstly, I think that the fact that we now have both clinical practice guidelines from the Alzheimer's Association in place in the U.S. and the first blood test approved by the FDA in May, which was the Fujirebio test, and there are probably more to come soon. This clearly offers a simplified diagnosis pathway. In the future, the usage of PET and CSF will probably decrease, which also means less cost and infrastructure needs for the health care. As an example, also here in Sweden, the Sahlgrenska University Hospital also offers clinics the possibility to analyze blood samples in phospho-tau 217 since July this year. This will clearly simplify, as I said, the diagnostic flow since it will be easier to evaluate which patients need to be investigated further, while other patients can have the results much quicker if their cognitive issues are not due to Alzheimer's disease. In the future, it can also be used in the primary care as a triaging tool, detecting patients earlier, improving the referrals, i.e., making sure that the right patients are referred to the specialist clinics. Secondly, I already mentioned the subcutaneous autoinjector. This also offers a choice for both the patients and the health care professional to choose which treatment option is best suited for that specific patient. Not only could it be a freedom for the individual to self-inject at home, but the usage of the autoinjector will also free up infusion capacity at the hospital and mean less cost for payers. Eisai expects that the potential approval of the subcut initiation treatment could come in the first half of 2026. And finally, the 4-year study mentioned AHEAD 3-45 with more than 1,400 people with presymptomatic Alzheimer's disease was fully recruited in October last year and offers new opportunities both for the science to evolve, but also for the potential growth for Leqembi. So it's really exciting times ahead. Next slide. So -- and then just a few words on the Nordics, where we have been gradually building a team of very experienced and knowledgeable and I would say, very motivated pharma professionals. We are about 20 people in the commercial operations team at BioArctic, working very closely with our colleagues at Eisai. And since the European Commission approval, we have onboarded some additional field-based people that can help prepare the health care for the coming launch. We have supported Eisai in the FDA submissions and we will continue to do so in the upcoming price negotiations. Our objective is to help optimize the early AD patient journey and the infrastructure and educate on the value that Leqembi brings. We have engaged in several collaborations with health care, mentioning only a couple here, such as the EU prominent project and the Real AD study in Sweden. We can now also promote Leqembi proactively in 3 of the 4 Nordic countries, and we experienced a big interest from the health care professionals in learning more about the field and Leqembi. And next slide. So just in my final slide, I have just selected a couple of additional examples of initiatives that we have prepared to roll out in the Nordics to support our launch. On the left-hand side, you can see the HCP web portal called Campus Alzheimer, which will be launched in Sweden in the coming week and in the coming months in the rest of the Nordics. The education need is big, and so we have strived to create a hub where Nordic health care professionals can find all the relevant and updated information about the diagnosis and treatment of Alzheimer's, new research findings, training opportunities, upcoming events, et cetera. Also on the right-hand side, you can see the invitation to what is expected to be an annual high-quality Nordic educational event in Stockholm, happening only in 1 weeks' time. This has been organized together with an external scientific steering committee who has put together an excellent program. So all in all, we are very excited to enter this new chapter in Alzheimer's disease with the expansion of Leqembi globally and with the launch of Leqembi in the Nordics. And with that, I hand over to Anders for a financial.

Thank you, Anna-Kaija. If I start with the Leqembi development, we see very strong growth during the second quarter. The sales -- global sales increased to JPY 23.1 billion or $160 million, which represents a 57% increase quarter-over-quarter or roughly a fourfold increase from the same quarter last year. This is partly due to a stocking effect in China, where sales were JPY 7.7 billion or $52 million, which is a 300% increase from the first quarter. And this is due then to the threat of tariffs, which meant that the large inventories were being built up in China during the quarter. But Eisai calculated that if you remove the stocking effect that the growth in China would still have been 24% or global growth would have been 20% if you remove the onetime effect. So all in all, the underlying growth is really very strong, and it was further boosted by this onetime effect in China. And if you look at the different markets, Japan, I would say, is still the strongest market that has come farthest along in the implementation of Leqembi treatment. They are now well into the demand expansion phase with sales of JPY 5.5 billion or $38 million. That's a 23% increase from the first quarter. And here, they're already starting the second disease awareness campaign for mild cognitive impairment, which is the earliest phase where you can use Leqembi and is the largest area where we believe growth can be seen in the future. And they have also been very successful in setting up a big network of 1,500 follow-up facilities that are collaborating with the sites where the patients get their initial treatment, so they can be moved over to these follow-up facilities after roughly 6 months of treatment. And this is a pattern that Eisai is now replicating in the U.S., where we're also seeing solid growth even though there is more competition in the U.S. where Eli Lilly is very active. Sales of Leqembi in the U.S. were JPY 9.1 billion or $63 million in the quarter. That's a 14% increase from the first quarter. And there were some currency headwinds. So at constant currency rates that increase would have been 20%. And here, the market is growing fast. There is competition from Lilly, but Lilly is also helping to build the market. And the market growth is now expected to continue and it will be further boosted by the initiation of usage for blood-based biomarkers for diagnosis and not just for triaging. So we do expect to see a continued market growth boosted by this. And here, Eisai has now launched a targeted direct-to-consumer campaign, and they will spend more efforts on involving primary care in the second half of this year, roughly what they have been doing in Japan quite successfully. And this will, of course, be supported by the approval of the subcutaneous version, which makes it much easier for the patients to take the treatment at home. And all in all, this means that the primary care segment will be much more active in the whole treatment chain. It will also be interesting to see what will happen in the EU. As Anna kind of mentioned, Leqembi now launched in EU for the first time. However, it will take some time. We see a significant impact of this takes a couple of quarters to establish the treatment as we have seen in the U.S. and Japan. But it's, of course, very encouraging that we're now finally on the way in EU as well. If we now turn to the forecast, we think that this very positive development that we see now means that Leqembi is fully on track to reach the forecast of JPY 76.5 billion in the fiscal year of 2025. And this is Eisai's forecast that they have issued and covers the second quarter 2025 until the first quarter of 2026. And what we can see now is that they are above plan in several markets. For example, if we look at China, as you can see here, they expect to sell JPY 9.5 billion in total in the fiscal year. And in the first quarter of the fiscal year -- sorry, JPY 7.7 billion. So they just need an additional JPY 1.8 billion in the coming 3 quarters to reach the forecast. And the same, if you look at Japan and the U.S., calculate what growth do they need to reach the forecast, it's roughly 6% in both markets, and they're currently growing at roughly 23% in both markets. And there is really nothing that says that growth is going down significantly. As stated that July, which is well, the first month of this quarter that we are in right now, was the strongest month that they've ever seen. So all in all, we think there's a very high likelihood that Leqembi will be forecast when we close the year. If we then turn to our own numbers, our second quarter revenues were SEK 392 million, which is quite a big increase from SEK 50 million same quarter last year. And this is then, of course, due to the milestone payment that we received of EUR 20 million. But the recurring revenues are increasing and will continue to increase. As you see now, the royalty was SEK 162 million in the second quarter. Co-promotion still that big, but as Anna-Kaija going next year, we expect to see an increase in co-promotion revenues as well. The Novartis upfront payment that we talked about earlier of $30 million will not be recorded fully this year. It will be recorded over the old research collaboration phase of that project. And I would estimate that roughly 20% of the upfront payment will be recorded during this year. If we then turn to our expenses, you see that our operating expenses increased to SEK 193 million from SEK 121 million a year ago. But roughly $32 million of that is currency effect. So the underlying operating costs were roughly SEK 161 million compared to SEK 120 million 1 year ago. And we spend heavily on R&D and so 70% of our operating expenses are spent on R&D. For the remainder of the year, we do expect to see an increase compared to last year. I have previously stated that we expect operating costs of 2025 to be roughly 60% to 80% higher than 2024. We now see that it's going to be lower than that. So now we estimate that it's going to be roughly 50% to 70% higher than it was last year. If we then turn to the operating profit on the right-hand side, you see that was SEK 179 million for the second quarter. It's a steep decline from the first quarter, but that was then heavily impacted by the $100 million upfront payment that was fully reported in the first quarter. I should remind you that the second half of the year will most likely be less profitable than the first half of the year, but we do expect that the operating profit for the full year will be above SEK 1 billion for the year. On the next slide, you see our net profit on the left-hand side. The net profit was SEK 97 million, which is roughly SEK 82 million less than the operating profit and that then explained by negative financial net due to currency effects and accrued tax of SEK 75 million. And in the mid graph, you see our walking cash flow, more than SEK 1.1 billion plus in one quarter that will be hard to beat for the coming quarter. But that's, of course, explained by the SEK 100 million received from BMS and the SEK 20 million received from Eisai during the quarter. So very, very strong cash position, SEK 1.9 billion at the end of the second quarter, and that's the equivalent of roughly 3 years of underlying costs currently. So we have a very, very strong financial position and it will continue to strengthen during the last quarters of the year since we will receive the $30 million from Novartis during the fourth quarter. So I expect to end the quarter with more than SEK 2 billion in cash and cash equivalents. With that, I hand back to Gunilla for some closing remarks.

Thank you, Anders. So we are coming towards the end of today's presentation after some look at the news flow and some closing remarks. So next slide, please. So we just informed about the initiation of Leqembi launch in Europe, which started in Austria this week and planning for Germany beginning of next week. We're eagerly waiting for the response from the FDA regarding the subcutaneous autoinjector for maintenance dosing in the U.S., where the PDUFA date is 31st of August. Our partner, Eisai, is preparing for U.S. filing for induction dosing with the subcutaneous autoinjector thereafter. And we are hoping for an approval first half of next year. I think the subcutaneous autoinjector will be an important further treatment option, making the administration much more convenient for patients [Technical Difficulty]. We're also expecting further regulatory responses on lecanemab. The next countries for commercialization with early access in the EU is expected to be France and Spain. And we are looking forward to further European launches next year, including the Nordics, which, of course, is very exciting for us at BioArctic. During the first half of next year, we also expect the exidavnemab Phase IIa study to be concluded and a decision on next steps for development. And there, we see several different opportunities [indiscernible]. So in summary, we have a lot of exciting things ahead of us. And next slide, please. So some key takeaways from today's presentation is that BioArctic has now entered a new era, an era of profitable growth, and that is signified by yet another strong quarter. We see increasing Leqembi royalties, and we are very pleased with the new partnership with Novartis. We are starting to deliver on our 2030 ambitions, both with regard to Leqembi, which is well on track to become an established treatment in Alzheimer's disease, where we also have seen now further regulatory approvals, further launches, reassuring data both on long-term treatment and real-world data and continuously increasing revenues and number of patients that we are helping on a global level. The second part is exidavnemab, which is progressing very well with the high dose part of the Phase III study being initiated in both Parkinson's disease and MSA patients. Our business development efforts continue to deliver with a third BrainTransporter partnership agreement signed. And this is, as I said, the first of its kind, which is expanding BioArctic also to being a platform company now. And the fourth part that we have strong financials with yet another highly profitable quarter with record royalties and cash flow. So I think that the future looks very bright for BioArctic with great hopes for many patients. So next slide, please. So by that, I say thank you so much for your attention, and we're happy to take some questions.

[Operator Instructions]

Viktor from Nordea. Go ahead, your line is open.

I have 3 from my side, please. So maybe first on the Novartis deal. I just wanted to see if you could elaborate how long you expect the evaluation of your BrainTransporter technology together with the antibody from Novartis to take before we could reach a stage when Novartis could exercise its option and perhaps what kind of data they would be looking at if it's preclinical or if they need kind of more advanced data? Secondly, also with this onetime stocking in China that was announced for Leqembi in quarter 2. I just wonder if you heard from your partners that this could lead to lower sales in China in Q3 or Q4 or any other information on this? And just finally, I have noticed on your pipeline that I didn't see BAN2401 in Down syndrome. Just wanted to understand if this has been dropped from your development program or yes, if it was in any kind of evaluation or if it was driven by any data you generated?

Together with Novartis. And I think that period is preclinical and it's about 2 years.

Your second question with regard to Leqembi in China, I think Anders want to comment on that one.

Sure. So no, we don't have any specific details, but I think it is to be expected that sales will be lower in the coming at least 2 quarters than it would have been without the destocking effect. So at least that's a fair assumption, even though I don't have any details to share.

And then we also have a question with regard to lecanemab or BAN2401, lecanemab in Down syndrome. And it's definitely not dropped. It's just not on the slide anymore because we don't do so much work right now. But of course, Down syndrome is an important patient population that potentially also could benefit from Leqembi. So it's definitely still on the radar.

Okay. And just a quick follow-up on Novartis. When they do exercise -- or if they would exercise the option when data has been generated, could that trigger an additional upfront payment? Or would it just enable Novartis to take over the rights of the program and then pay you milestones further out?

So we are not disclosing details about the rest of the milestones, but I can say that there is a next milestone linked to if they exercise the full license fee. So that is also a milestone at that stage. But I'm not disclosing how big one is. And then, of course, it's a normal approach to the rest of the milestones, development and commercial.

The next question comes from Joseph Hedden from Rx Securities.

Congratulations on the Novartis deal. Just wanted to dig a little deeper into the deal. Is the target that Novartis is pursuing is a target that's related to one indication? Or is it perhaps something that could span several neurodegeneration indications? And then could you say whether these are rare diseases or broader indications like Alzheimer's disease?

Yes. I really can't disclose much about that program, but I can say I think it's a very interesting target that can help many patients potentially. And it can be several different indications, but I'm not going to reveal any details.

Okay. And then just on the research collaboration agreement with Eisai, where they have an option on a BrainTransporter candidate. Is that still progressing well and perhaps on track for a decision from them in 2026, I think was the initial target.

So our collaboration with Eisai is progressing really well according to plan, and that is with BAN2802 that you're talking about. And I cannot comment exactly on the time lines there, but it's progressing according to the plan and it looks good.

Okay. And then just a quick question on the rare diseases portfolio where you're using BrainTransporter vector to look at candidates in ALS and Gaucher preclinically. Just a question on the overarching strategy when considering these rare diseases. Is it -- will you take these candidates into the clinic to kind of progress them a bit further down the line before looking for a licensing deal? Or are these available for licensing straightaway has kind of been your historical model apart from exidavnemab at the moment?

Thank you so much. Another good question, Joseph. So I think based on that, we now have a strong financial situation. We have all possibilities. So I mean, we could try programs much longer, potentially all the way to the market when we talk about rare diseases. But we still have an open door policy. But if we get a good deal proposal, we might partner. So it's -- I think it's a great strength for BioArctic that we could partner. We don't have to partner. So we can do what we think is the best for the projects. And both of those, I think, are very, very exciting and rare disease indications with huge opportunities for us to potentially drive them ourselves longer.

The next question comes from [indiscernible] from Van Lanschot and Kempen.

I'm calling in for Luisa from Van Kempen. First, congrats on the Novartis deal. I had a few questions. Considering the Novartis deal, do you expect from here onwards to establish more deals using the BrainTransporter tech also as an option deal or more similar to the deal with BMS? Secondly, could you remind me what are the next steps for exidavnemab? And could you provide more color on what difference BioArctic BrainTransporter from other shuttle technologies using the same transporter?

Thank you for 3 great questions. So the first one with regard to the brain transporter. I mean this is our proprietary technology. And I think that we can foresee several different opportunities in the future. We could foresee more deals like the one we did with Novartis, whether another company comes with their assets and want them to be reengineered into a new asset, which has better brain penetration. So I think that's one possibility in our business model. We are also working on other modalities, and we're open to discussions for collaborating with others on other modalities as well. And we have then combined the BrainTransporter with all our internal targets. And that could potentially be deals more like the one with Bristol Myers Squibb, where it was combined with one of our internal programs. So I think the beauty with BioArctic's portfolio and the approach that we're working is that we can drive ourselves or partner with our own assets. We can also now since we are a platform company, work with other companies' assets and improve them or we can do own further development of the BrainTransporter technology ourselves or together with others. So we have a lot of opportunities and great possibilities, I think, for the future, both with our own therapeutic targets and with our BrainTransporter technology. And maybe, Johanna, do you want to allude a little bit to what's different with our technology versus others?

Yes, absolutely. Thank you, Gunilla. So I think that, I mean, yes, we are working with the transferrin receptor and many companies are pursuing the same target for transport -- active transport into the brain. And I think that's great because this target actually has clinical validation from the Trontinemab Roche Brainshuttle program. What is unique with our approach is that we have done extensive screening, and we have a lot of structural data that has made us identify unique epitope on the transferrin receptor that is different from the other companies as far as we understand it. And this epitope and the binding site then enable us not to interfere with the normal function and the normal transport function of the transferrin receptor and also its positioning our antibody very -- our therapeutic antibody close to the cell membrane, and that is something that is very important, we believe, from a safety perspective and interacting and not interacting with reticulocyte that has been a reported potential side effect with these kind of approaches. So I think that we have a unique way of interacting with the transferrin receptor, enabling us to have a better safety profile. And we have seen great data in the nonhuman primate study with an almost 70-fold increase in brain exposure. So we think that we have a really unique approach in that sense.

Thank you, Johanna. And maybe you want to talk also about the exidavnemab question?

Yes. So where we are heading -- yes. So the exidavnemab, of course, I mean, we are now eager to think about what's going to be the next step for exidavnemab. There are several different opportunities there in terms of MSA, Parkinson's or DLB, and we are, of course, looking into how the competitive world is evolving. And we know we are, of course, encouraged also for the target that Roche has now pursued prasinezumab into Phase III and Lundbeck has pursued their amlenetug compound into the Phase III in MSA, whereas Roche is going for Parkinson's. So we see many opportunities there for further development.

The next question comes from Natalia Webster from RBC.

I have 3, please. The first 2, just on Leqembi. The first one is fairly broad. Just curious to hear a bit more color on the progress you're seeing in infusion capacity in the U.S. and the impact you've seen from recently approved blood-based biomarkers and also how quickly you expect the subcu maintenance and initiation potential approvals to have an impact on adoption going forward? Secondly, if you're just able to comment a bit more about your expectations for the European launch. I appreciate it's early days, and you said it will take a couple of quarters to see impact. But curious if you're expecting to account for some of the challenges that you saw in the U.S. around capacity and if there's anything you're doing at the moment that can help mitigate that? Thirdly, just on profitability, you've maintained your long-term ambitions of sustainable profitability and recurring dividends. This year should be helped by milestones, but just wanted to check that you're still confident on reaching sustainable profitability from 2026 onwards. And also, if you're able to comment at what point you may expect to start paying dividends?

Yes. Thank you so much. I think we start with Anna-Kaija on Leqembi question, please.

Yes. If I remember the question right, it was about the U.S. and the kind of development of the growth and related also to the subcutaneous. And what Eisai has communicated is that we can expect maybe a kind of increase of Leqembi starting beginning of next year, thanks to a potential approval of the subcutaneous auto-injector for the maintenance treatment. So it will take some time, I guess, through the system before that we can see that growth coming. And I think also mentioning the different data we see from lab companies, it's encouraging to see that, as I mentioned, the use of different blood-based biomarkers, but also CSF testing increasing, which would indicate that the growth is really starting to expand for the use of Leqembi. And we haven't seen any, let's say, signs of decreasing growth also after [indiscernible] launching. So it seems to be that we have 2 companies driving this need of changing the infrastructure and the patient journey through in a smoother way. So I think it's encouraging to see that growth to continue and we expect it to continue even more beginning of next year.

And the blood-based biomarker?

Yes. And of course, the blood-based biomarkers mentioned many times during the call already today. I mean this -- I mean, it's been talked about many years, but now it's really happening. So this is really encouraging. But it will take -- if I then go to the European launches. As I mentioned, there is this regulatory requirement to implement this cap controlled access program, so which need to be done by a national level and also that the different pricing and reimbursement process are different in the European countries. So I think you will see the launches roll out gradually during next year mainly. But we know that there are a lot of quite a few centers already in France, for instance, ready to initiate Leqembi usage through this early access program. So it will take some time. We will probably see the same kind of infrastructure challenges as in the U.S. And we've heard from our Eisai colleagues in Austria, how they have worked on this. And what is a key takeaway is that you really have to be close to each hospital clinic because the challenges might be different from one hospital to another. And that's what we're doing also in the Nordics now, really visiting the main hospitals that we think will start to see what kind of challenges they have and how we can support that.

And then we continue to the profitability, Anders, those questions.

Sure. Yes. So we have mentioned earlier that we expect to be profitable from this year and onwards based on the royalty revenues, especially then from next year. And no, we haven't changed anything there. We do still expect to be profitable from 2026 and onwards. As for dividends, I can't really answer to that. It's a Board call. I said at the Capital Markets Day that I think it's likely to happen within 1 or 2 years, but it really depends on what happens with Leqembi. And I do expect that our Board would like to see that we are profitable on a sustainable level with -- based on Leqembi...

The next question comes from Rajan Sharma from Goldman Sachs.

I also had one on the Novartis deal, also collaborating with Sironax on a Brain Delivery Platform. And I just wanted to understand how your technology compares to Sironax and whether the target that you're working on is different to that being explored by Novartis with Sironax? And then just a couple on Leqembi. So firstly, just on the Nordic launch. Could you provide just a little bit more color on that? Is that going to be in the first quarter of next year? Or is it more likely at some point during the first half? And then the other one was just on subcutaneous Leqembi, what's your expectation for approval in Europe? And do you expect that to move the needle on some of the reimbursement decisions and discussions that you're having?

Great questions. The first one we have a very short answer, and I will not comment anything on Novartis. That's for them to comment on their other collaborations. And then we turn to Leqembi in the Nordics.

Yes. I mean, as I mentioned, there are no fixed time lines for these kind of processes. So we are expecting launches throughout 2026. So it's -- I can't kind of be guessing from my side exactly when this will happen. So 2026 -- throughout 2026.

And subcutaneous in Europe?

Yes. So I mean, we're hoping that this will be a decision from Eisai to also launch subcutaneous in Europe, but we haven't heard anything yet on that.

And for the authorities to review to, of course.

Yes. So not much more we can say there. So next question, please.

If we do not have any more questions, we have a few that have been written sent in. So I'll read them and then maybe we'll help direct who should take them. So a couple of ones from Fredrik at Redeye. And he's asking on -- in relation to the deal with Novartis, I guess, should we expect more option or valuation agreements for the brain transporter platform when it comes to using external drug candidates. I think you touched on that already, Gunilla.

Yes. And the answer is yes. But we cannot say anything about timing. I mean you should be aware, I mean, these kind of discussions take time. So -- but definitely, we have a lot of possibilities for the BrainTransporter in the future, in different...

Yes. Then maybe a couple for Anders. The stockpiling effect that we saw in China, have we had any indications of anything similar happening again? Or is it likely just a Q2 thing? And then secondly, if you can talk a bit about the tax cost in more detail.

Well, if nothing extreme happens, I don't expect any similar effect in the future. However, there may be new initiatives coming from the U.S. government that will have an impact. So if that happens, of course, I can't promise that there won't have an effect on this. As for the tax recorded, what is based on an estimate of the full year, not a very exact estimate, but we have to do that according to the tax regulations in Sweden, and we are just following what we have to do.

Good. Thank you. And then there was a question here from Peter, but I think we've already answered that. That was about the time line for the evaluation of BAN2802, and I think you already made a statement there, Gunilla. So those were the questions we had online. And I don't think there are any more questions in the telephone queue either. So with that, I guess we can conclude today's call. Thank you, everybody, for joining, and see you next quarter.

Thank you so much.