BioInvent International AB (publ) (BINV) Earnings Call Transcript & Summary

Welcome to the BioInvent Q4 Report 2019. Today, I am pleased to present CEO, Martin Welschof; CFO, Stefan Ericsson; and CMO, Andres McAllister. [Operator Instructions] Speakers, please begin.

Okay. Thank you very much for the introduction, and good morning, everybody. So we'll give a quick presentation. And basically, what we are trying to do is to keep as much time as possible for Q&A. I would like to start on Slide 3, just to remind everybody about the company background. So obviously, we have, at our core, a very interesting discovery platform, which provides antibodies and targets. And as you might remember, we're using this in 2 ways: first of all, within our own portfolio, and currently, we have 5 programs in our portfolio. We will come back to that later in more detail. But also, we use this platform for collaborations. We have done so in the past. Last year, we had 2 interesting milestones, one with Mitsubishi Tanabe and another one with Takeda. And obviously, also 2 milestones with the Pfizer collaboration. And we will continue to have milestones also throughout this year. So Slide 4 is the very brief reintroduction of the platform, and I will only focus and highlight the unique features of this platform. It's called, F.I.R.S.T., as you know. Just to remind you also, it's patent protected. And we are one of -- I would probably say, the only company who is really screening on primary patient material. And this is due to, first of all, the technology advancement that we have made during the development of the platform because we are able to handle minimal amounts of cells -- of primary cells. But also, I think, over the years, we have built a very, very tight collaboration with the university hospital in Lund, such that we receive high-quality fresh material. And this high-quality fresh material we're using then for the screening of our high-quality n-CoDeR antibody library that has been validated now through a number of collaborations. And I mentioned the names already, Mitsubishi, Daiichi, Takeda, but also more recently, with Pfizer. And then we generate specific antibodies. And the current cells that we're interested in are cells from the tumor microenvironment of those patients. Specifically, we are focusing on T regulatory cells and tumor associated myeloid cells. And once we have specific binders, then we go through a very rigorous functional screening. So we have all the important in vitro and in vivo models, mouse model in-house, such that we can select all those specific binders, we have the strongest therapeutic pages in our assets. And for only for those antibodies, then we also do the target identification. And that works very well, but we use it internally and obviously, successfully for Pfizer. And they have selected last year 2 targets that we have identified, and the bar for that was actually quite high because Pfizer was not interested at all in something that they're already in-house or to other collaborations. As I already mentioned, so now going to Slide 5. We used the platform also significantly in-house and have build a portfolio, as you can see on this slide. And this slide is just a quick overview, and then I will go into more details regarding the different programs. So currently, we have 5 programs active. Two are in the clinic and 2 will go into the clinic during the first half of this year and then the fifth one beginning of next year. So starting from the top, we have this very interesting target of antibody checkpoints at FcyRIIb. And then we have 3 programs, 2 different antibodies. The lead program is the antibody called BI-1206 that we are currently developing for Non-Hodgkin Lymphoma and for solid cancers. And I will get to details a little bit later. And then we have a second antibody called BI-1607, and this is scheduled to go into the clinic first half of next year. Then if you go into the category below, these programs that have been derived from our screening onto regulatory cells from the tumor microenvironment that we have 2 very specific interesting programs. One is called BT-001. This is our proprietary anti-CTLA-4 antibody that we're currently developing in collaboration with Transgene with their oncolytic virus platform, and I will come back to that later also in a minute. And then we have a second program, which came out of the screen, called BI0-1808. And this is the lead out of our anti-TNF receptor 2 program, which is a very interesting and [indiscernible] upcoming target in immuno-oncology and has shown very strong preclinical results that we also will publish soon. So both of those programs will go into the clinic during the first half of this year, such that by the end, we will have then 4 programs in the clinic, which means -- which basically means that we're really building a pipeline of multiple value drivers, or as I always call it, multiple shots on goal, which we feel is very important since clinical development is risky. And what we want to do is to build a risk diversified product candidate portfolio, different antibodies, different targets, different mode of actions. So that kind of the strategy that we are following through. Beside our collaboration, I will come back to also later on the details just so much over the year. So it's very active. Pfizer selected 2 targets. We have also extended the collaboration such that Pfizer can pick more targets, and we're also expecting that they will select the significant -- the specific antibodies to those targets that they already have selected also throughout this year. This brings me to Slide #6. This is a little bit more detail on 1206. I mentioned already 1206 blocks the FcyRllB receptor, and that was actually a very challenging program to generate antibodies, which are really specific for this inhibitory receptor on the innate immune cells. And we're using this target in 2 ways. First of all, as already mentioned, we use it to block the inhibitor receptor on innate immune cells in the tumor microenvironment, and this is basically the approach that we do in solid cancer. But they also exploit that target when it's expressed directly on the tumoral B-cell in Non-Hodgkin Lymphoma. So the opportunity here is really quite broad. And the initial development or the development that we have already started and what already is on way into the development is Non-Hodgkin Lymphoma. This could be in's a very quick way to approval. But then we're extending the opportunity by also now going into solid cancers in combination with pembrolizumab. And I will come to the clinical trials a little bit more back in detail a little bit later. So basically, going then to Slide #7, which gives you a quick outline of the trial design that we're running for Non-Hodgkin Lymphoma. It's a Phase I/IIa study. We are focusing on patients who are not responding anymore to anti-CD20-based therapy. And obviously, the compound that they're currently focusing on is rituximab, which is still the standard of care. But to mention here already, so our combination treatment also works with other CD20 -- anti-CD20-based reagents or antibodies. But currently, the trial is focusing on rituximab. And we are currently in the dose escalation phase. We are already at doses where we see 100% receptor occupancy. We have also published some first data that was during the lymphoma congress in Lugano last year and planning an update during ASH this year. So we see first signs of efficacy. So we have some patients where we can see responses, but we don't call it efficacy yet because this is still early days. And we are basically planning to go into the dose expansion phase by the second half of this year such that we have early Phase I results by the end of this year, beginning of next year. And of course, the study objectives in this new standards, safety, tolerability, pharmacokinetics and pharmacodynamics, the recommended Phase II dose, and then the observation, as already mentioned of early signs of efficacy. Important thing here is really if we see the trend that we're currently seeing confirmed during the Part B, then we can expand that and go for basically conditional approval. So this could be, as I already mentioned earlier, a quick way to registration. Slide 8 shows you the potential. So we have the initial focus, Non-Hodgkin Lymphoma, but that we can go into solid cancers. And this we have on Slide 9. This is the trial, which is now ready to go. This is in collaboration with Merck. We are basically focusing here on patients who have not or do not respond anymore to anti-PD1, anti-PD-L1 therapy. We're basically ready to go and hope to start recruitment soon such that we have early Phase I results by the second half of 2021. That means we'll have result this year for the first study and then towards the second half of next year for the second study. And this is, of course, a quite dramatic application, a broadening of the application of 1206. And I think the strategy really is here to have a quick way to approval through the first study and -- but also the second study is constructed after the same principle, which means if we see strong data then also, you could think about expanding the RP and then also going here quickly for breakthrough designation. So then on Slide 10. This is our TREGS and TAMs program in solid tumors. Maybe starting with tumor-associated myeloid cells, the TAMs first. So this is a collaboration with Pfizer. Important to mention here, so Pfizer has selection on 2 targets, and they are looking forward to do more first half of this year. And then I mentioned also, hopefully, the antibody selection around those targets. But I think what I would want to mention, so obviously, Pfizer doesn't have any exclusivity on the screen on TAMs as such. So the exclusivity comes in once they select targets and antibodies, which means that all the other targets and antibodies that we have worked on, which is quite significant that they are not selecting, and they will -- might not select them because they already have activities in-house, or it doesn't fit their strategy. They will come back to us such that we can use it ourselves or in other collaborations. I think that's a very important thing because we have actually generated quite a number of antibodies and targets under this collaboration. Then our T regulatory cells screening. This is completely proprietary to us. There, we have generated the 1808 program that I already have mentioned, and we will file in a clinical trial application during the first half of this year. And this is actually a very important and interesting program, as I already mentioned, since this is one of the upcoming interesting targets in immuno-oncology with our current need, 1808. And we will also have some news going forward during the first half of this year around data and some progress in this program. So coming then to Slide 11. This is basically just an illustration for those different screens. On the top, you see the T regulatory cells, in the bottom, the tumor-associated myeloid cells. And just to mention, in general, in the T regulatory cells screen, obviously, we're looking for candidates, a target and antibodies, which allow for efficient depletion of the T regulatory cells because they inhibit the response of the immune system towards the tumor. In the TAMs screening, there, it's a little bit different. There, we're looking for 2 different categories. On one side, we are also identifying targets and antibodies, which allow the efficient depletion of inhibitory tumor-associated myeloid cells, but we also have identified another category of target and antibodies, which are targeted antibodies, which allow for reeducation, which means that we can maybe turn the tumor-associated myeloid cells from inhibitory status into activating status. And this is what we're currently doing with Pfizer. Then on Slide 12. This is BT-001, which also came out of T regulatory call screening. And obviously, there we have then identified our proprietary CTLA-4 antibody, which is a significant -- differentiated from the antibody, which is currently used in the clinic, which is Ipi. So if you look at the CTLA-4 depletion -- sorry, CTLA-4 inhibition, those 2 antibodies are actually quite the same. So they're really overlapping. But it's important to mention and very interesting to emphasize that our proprietary CTLA-4 antibody is a much more efficient T regulatory cell depleter, much more efficient than Ipi, which is currently used in the clinic, so nicely differentiated. And we have decided to develop that in collaboration with Transgene in order to combine it with their oncolytic virus platform. And on Slide 13, a nice cartoon and a little bit more background on this program. So basically, Transgene has a very interesting oncolytic virus platform based on the senior virus, and we have cloned the anti-CTLA-4 gene into that virus. And then the application would be intratumoral, which means you inject the virus containing the gene for our anti-CTLA-4 antibody into the tumor -- into the solid tumor. And then the virus would infect the tumor cell, will start replicating and by replicating will produce anti-CTLA-4 in the solid tumor environment. And with that, to achieve 2 things. First of all, you will have a much higher efficacy because you get a very high concentration of the anti-CTLA-4 antibody in the solid tumor environment, but also you have a much -- more reduced systemic exposure because you would not apply this antibody systemically. And also by this, you will have a much better toxicity profile. And that's also what we've seen preclinically, very strong efficacy and very good toxicity profile. And here, we also will publish some data soon during the first half of this year. The program is on track, and we will file an IND or a clinical trial application very soon. So this, I think, is where I would like to end, such that we will keep, as I promised, enough time for Q&A. And I will hand over to Stefan for the financial part.

Thank you. Please go to Page 14. I will present the financial overview for Q4 and the 12-month period, January to December. Unless otherwise stated, all amounts are in SEK million. In Q4, 2019, net sales were SEK 25.4 million to be compared with SEK 10.4 million for the same period in 2018. This is an increase of SEK 15 million. Net sales for January-December 2019 were SEK 93.7 million. In 2018, we had SEK 38.5 million, that's an increase of SEK 55 million. Net sales in 2019 are mainly from production of antibodies, revenues from research funding. We got 2 milestones from Pfizer of each $0.3 million and a EUR 0.75 million milestone from Mitsubishi, and finally, a $0.5 million milestone from XOMA. These milestones amounts together to SEK 18 million. The net sales increased in 2019, but it's good to remember that the net sales will fluctuate, depending on utilization of our manufacturing capacity for customers, received research funding and if we receive potential milestones. Continuing on cost. In Q4, operating costs have increased with SEK 23 million from SEK 43 million in Q4 2018 to SEK 65.8 million in Q4 2019. January to December, increase of operating cost of SEK 70 million and SEK 161.8 million in 2018 to SEK 231.6 million in 2019. The increase of operating cost is mainly due to that projects are advancing and moving towards the clinical phase. We had higher costs in the BI-1206 solid cancer study and also had higher costs for BI-1808, BT-001 and BI-1607. These programs we are preparing to enter the clinical phase. The loss was minus SEK 40.9 million in Q4 2019 and minus SEK 138.6 million for the full year 2019. The rights issue and directed issue completed in April 2019 amounted to SEK 220 million after issue expense. And at the end of the year, we had liquid funds of SEK 154 million. That was a summary of the period. Over to you, Martin.

Okay. So I think that's been basically the presentation that we wanted to cover. So there is maybe just a few final comments from my end. So first of all, I really want to emphasize and stress that 2019 was really good. So we had a couple of key milestones for our internal programs as well as the external problems. So I think we really delivered as promised, which I think is a good indication for the good execution of the company and team. And I think going forward now, so this year, next year will be quite critical because then we hopefully can see a couple of good clinical data points. And I'm quite excited now of really establishing this multiple shots on goal concept. And I'm quite optimistic that we will see some good data soon. So with that, I think I would like to open the Q&A.

[Operator Instructions] The first question is from Klas Palin, Redeye.

I have a couple of questions, if I may. And firstly, about 1206 study in NHL, and if you could provide some further details about the recruitment of patients and how it is progressing? And maybe also, if you could give an indication when you expect to move forward into the Part B of that trial? And also, if you just could perhaps give some explanation of the design of the 1206 study with pembro and particularly, about what you will be focusing on in the expansion cohorts?

Yes. Thank you, Klas. So I will maybe start addressing those questions, and then I will also handover to Andres, our Chief Medical Officer. First of all, starting with your first part, the Non-Hodgkin Lymphoma. So as I already mentioned, so we are at a dose where we have 100% receptor occupancy, and we expect to move soon into dose expansion. And I think that will happen, as I already indicated, during the second half of this year. And then regarding the pembro and details, I'll leave to Andres. So maybe you can maybe just repeat your questions regarding the pembro.

Yes. If you could explain a little bit on the design and particularly, about the expansion cohorts, what you will be focusing on?

Yes. Yes. Okay. So I -- maybe, Andres, you start with that point, and then you can also get to some more details on the NHL.

Sure. So hi, everybody. This is Andres speaking. So concerning the design of the BI-1206 in combination with pembrolizumab, we will be looking in the first part. I know your question relates to the expansion, but in the first part, we will be looking at patients with advanced malignancies. So different kinds of issues, et cetera, that will allow us to have a first look at how the things look in all kinds of patients. We said, there will be patients who will have received PD-1 or PD-L1 targeting agents prior to entering the trial. So patients need to be either resistant or have progressed on after treatment to one of these agents. And then they will enter the trial, and we will be re-administering pembrolizumab and now in combination with BI-1206. This puts -- give the program -- gives the possibility of very early readouts in terms of potential recovery of patients who were perhaps borderline or that sort of thing. And then in the expansion cohorts, since we are looking at patients that have received those agents in the past, we are most likely to see patients who have lung cancer. Obviously, this is a very important indication where there is still a huge medical need for immuno-oncology agents. And in particular, if we were able to recover, enhance or make further responses against pembrolizumab better, that would be a huge achievement. So that's -- we will be -- what is currently -- what we currently have in the protocol is looking at patients with lung cancer. We also have another cohort looking at patients with melanoma. And -- but we do -- integrating the protocol with possibility of looking at other malignancies since this is a moving [indiscernible]. There is a little bit of time to go until we get there. We have implemented in the protocol, a certain degree of flexibility to be able to create additional cohorts as we move forward. And those cohorts can be in a number of different indications. You know that pembrolizumab is now approved in a number of different indications, and it is making a good way forward. So there is a good chance that we will be adding other cohorts in order to test the efficacy of the combination. That I think -- I hope that answers your question. And I don't know -- you had another question concerning Non-Hodgkin Lymphoma?

No. No, I think it was answered by Martin. But I have one additional question, if I may, and it's about the statement in the report that you mentioned that you are in several business development discussions. And it would be interesting to hear if you could give us some further details about this? And how far such discussions have reached?

Yes. So as you might remember, we started a quite broad approach last year already. We're basically focusing on the 4 main areas, which is the U.S., Europe, Japan and China. And obviously, I cannot give you any specific statement, but I think we have several discussions on several programs. And the hope would be that we can implement something this year. I think, though, I can't say at the moment because it is with business development discussions. If you go into terms, several things could disappear. So I can't give you further guidance. What I can tell you is that we have good interest in various programs and also discussions about the discovery platform first.

The next question is from Joseph Hedden, Rx Securities.

On the Pfizer collaboration, just please confirm what you think the next milestones are going to be? And are they going to be at the levels similar to what we saw for the targets chosen last year? And then on BI-1206, and similarly, some commentary on the CRUK trial. Just wondering if we can expect the results from that trial this year being as it looks like it's close to finalizing recruitment?

Yes. Thank you, Joseph. So very briefly on the Pfizer. So the milestones that we can expect, hopefully, we will get further antibodies -- further target selection as well as antibody selection milestones. And the target selection milestones, you already have seen. And the antibody milestones, so we didn't disclose that, but it will be significantly higher than what you have seen for the targets. And both would be expected also this year because the intention was clear when we extended the collaboration that they want to have more time to look at additional targets in addition to the 2 that have been selected, plus implementing them the next step, which will be the antibody selection milestones. So I hope that answers your question around Pfizer. Then on Cancer Research UK. So obviously, this is under the control of Cancer Research UK, whenever they want to release that data. So that, I think, was one question. Please remind me, there was another aspect to it. That was all?

Yes. It was -- yes, it was just around what we think results might be reported. And maybe some commentary around difficulties to recruit CLL patients. Actually, I wonder, do you know the balance of recruitment in that trial? Has it -- is it shifting much more towards NHL patients? Because presumably, that's more helpful for you in terms of the strategy with the other trial anyway?

Yes. I give that to Andres. But before Andres, before you start, maybe just a general comment here. Obviously, the clear positioning, even though we know 1206 has single agent activity in Non-Hodgkin Lymphoma is combination therapy. So that's why thanks to Andres, when he joined a little bit more than 2 years ago, really pushed the company to start our own trial for that reason. In addition, obviously, Cancer Research UK, you would know, Joseph, they can only recruit in the U.K. They cannot go anywhere else, which of course, will hamper or has hampered the recruitment of the trial. So first of all, they're only single agents, which we think doesn't do justice to the proper positioning of 1206. And then, of course, CLL is very competitive and a lot has changed there over the years since the Cancer Research UK is running the trial. And then in any case, they can only recruit in the U.K., it will go very slow. So that's a little bit of background here. But from my perspective and BioInvent's perspective, we're really happy that we have the combination trial going, which we control ourselves, which is developing very nicely. And of course, I can't talk much about Cancer Research UK. And maybe Andres, you would like to add a couple of comments here.