Biovica International AB (publ) (BIOVICB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Biovica International Teleconference for Q4 2020/2021. [Operator Instructions]. Today, I am pleased to present CEO, Anders Rylander; and CFO, Cecilia Driving. Please begin your meeting.

Thank you very much, and hello, everyone. We can start directly to move to the first or the second slide. My name is Anders Rylander. And together with me, I have Cecilia, our CFO.

Hello, everyone.

And so let's move to the agenda slide, Slide #3. So today, we will talk about first, a short introduction of what Biovica is and what we do. Then we'll go through the Q4 highlights. Then Cecilia will talk about the financials. And then at the end, we will have time for a question-and-answer session. So next slide. So just a few words about Biovica, what we do. So Biovica develops and commercializes blood-based biomarker assays to improve monitoring of modern cancer therapies. And the way we do that is through our product DiviTum, which is a biomarker assay that measures an enzyme, which is closely related to cell proliferation. And the product test has been part of several clinical trials where we have demonstrated the capabilities and the value of the products. And the focus for us is to use it within metastatic breast cancer in order to monitor the treatment during -- yes, monitor the outcome of the treatment during kind of metastatic cancer phase. And this is to contribute to a more informed decisions for physicians that will need to best possible treatment outcome for cancer patients. So both patients and the healthcare providers benefit from more effective use of resources and more effective cancer monitoring. And if we move to the next slide, I'll talk just a little bit about technology and how it works. And as I said, we're measuring an endpoint with thymidine kinase, which is present in the blood stream. So we can, with our sensitive biomarker assays, pick it up and measure it. And it's been shown in several clinical trials that this enzyme correlates very closely to cell proliferation rate and also the aggressiveness of the cancer disease. And this makes sense as cancer, of course, is defined as an uncontrolled cell proliferation. So with digital, we measure proliferation that will eventually result in increased tumor volume. And currently, cancer treatment are being monitored with imaging as a standard procedure. And with imaging, you measure the change in tumor volume. And that requires a couple of months to be able to follow up with the result. On with DiviTum, we've shown that, already after 2 weeks into treatment, we can see significant changes for patients that respond to therapy. So we can, with DiviTum, offer a quicker and more efficient follow-up as it's very simple to take a blood sample from the patient. So that's the high level about what the product does. And the product is also implemented on a stellar platform, which makes it easy to adopt for the different clinical labs on the around the world. So if we move to the next slide. We have a summary of the most important events during the fourth quarter, just -- but it's, of course, the fourth quarter that ended in -- end of April for [ by it ]. And first of all, when it comes to clinical results within breast cancer, we did at -- in a collaboration with Karolinska University Hospital, a clinical trial that was performed 7 years ago, within locally advanced breast cancer that now was published in the ESMO Open journal. This is important for us for several reasons. We would like to expand into locally advanced breast cancer from the metastatic area, where we have the most of our documentation. And it's also important for us to show that we correlate well to the well-established Ki-67 biomarker, which is based on tissue based and require a biopsy. And of course, that we can do -- provide similar information from a blood-based assay is a great advantage for patients and the treating physician, of course. So that's an important outcome of that clinical trial. Another important thing is health economics and being able to get into the U.S. reimbursement system. And in order to provide -- take first step in that process, we've developed budget impact model, which was presented at a conference in May this year, health economic conference. And the conclusion from that model is that for every dollar spent on DiviTum, you'll get [ $3 ] back in savings, and that's basically within cost of treatment. And the modest pace on our clinical results so far and also other assumptions regarding costs for treatments and diagnostics being used currently. So this is important for our reimbursement process and our discussions with payers that we have initiated, and this will also result in a publication going forward. Another important thing is to have a strong team in order to execute our business plan. And this quarter, we have strengthened the team both within the commercial area with Helle Fisker and the regulatory area with Joakim Arwidson. And after the end of quarter, we presented results outside the breast cancer area also in collaboration with Karolinska. And this was within the metastatic melanoma area where patients are being treated with immunotherapies. And results were also very interesting and promising we were both prognostic and predictive before start of the treatment. And that opens up an opportunity, which we'll pursue further to widen the use outside of breast cancer and both within metastatic melanoma, and we'll further look into the use to monitor fitments within immunotherapies. So that was a short summary of the highlights. So if we move on to the next slide, which is a summary of the FDA process that we are currently in. And this is important for us since the U.S. market is our key market, which is the first one, we will -- we're looking to launch the product. And to be able to do so, it requires regulatory clearance. And in this case, it's called 510(k) by the FDA, and that clearance would allow us to market the product on the U.S. market. And we made our submission already in September last year, and we passed the first 2 milestones during autumn of 2020. Before the process was halted and that was due to the pandemic situation as the FDA reallocated the resources to COVID test processes. The process was prolonged but we were lucky to one of the few applications that was restarted and this happened already in January -- late January this year. And since then, we've been in what they call substantive review phase and been interacting with FDA. And the process has been a lot slower than normal and for several months, we read the first part from the FDA. But it has been restarted, and we are now in a good dialogue with the FDA, which is very promising. And so the milestone that we have set out to get clearance during the third quarter this year, it's what we still are working towards. So that's short summary about the FDA process. And if we move on to the next slide, it's another area, which is really important to us, and that's the Laboratory Partnerships. And as we're looking to launch both in U.S. and Europe, we are in discussions with potential partners on both these markets. And the reason for that is that we offer a kit, a test. But of course, we need partners can perform the analysis as a service to the customers. And we also are looking to team, make agreements with lab partners that has sales force. So it can be complementary to the sales force that we're working to set up in order to target the customers. And we're working here in 2 steps. We are -- before we get the regulatory clearance, discussing and will soon agree -- come agreement that makes the test available for testing within research use only, which we are allowed to do already before clearance. And then as soon as possible after clearance, we will move into a commercial agreement that offers the product-as-a-service for clinical-use-only markets. This way, by doing so, we can cut the time because there's a lot of activities that can be performed already before clearance. For instance, the validation process and so on. So that's a short update about the lab situation. So if we move on to the next slide, we have a slide about our commercial road map and the market potential within these different areas. So if we start at the top, the focus area now is to launch the product in -- on the U.S. market, which we expect to do later this autumn after clearance steps in. The first phase is to meet the first market phone we've set out. That we should be able to realize 15% of the market potential 3 years after launch of products. That will require hard work in order to get into the reimbursement system, expand coverage and reimbursement and the way of doing that is through guidelines, which also, we're working to get inclusion into, widen our commercial partnerships and building our sales force in order to reach out to the customers. And in this setting, we have a great foundation to build on with a strong key-opinion-leader network that we have established from many clinical collaborations we've done with this area. And long term, we believe that we can realize 50% of being a market potential. And as you see to the right, for the metastatic breast cancer area in -- on the market U.S. selected markets in Europe, that is the 5 largest countries plus Nordics and Japan. We believe the market potential is around USD 400 million to USD 700 million, per year. And that's based from extensive market research we've done, where we have interviewed payers for feedback about the value and the pricing, oncologists and also combined with a number of patients living with the disease. The next area -- the next area to expand into is the locally advanced breast cancer area, where we can reuse a lot of the channels that we established within the best key opinion leader network and so forth. But it seems to require regulatory expansion in order to widely use within the locally advanced area, and, of course, clinical data to support the value of the current product. But we already are active within that area, and we have some ongoing trials in the area to build the evidence needed. And the locally advanced area will extend the market potential further within the breast cancer area with 30% to 40%. And we already are looking to expand outside of the breast cancer area where we have done some initial clinical trials, proof-of-concept, as we call it. The metastatic melanoma is a very, very good example. We also have a proof-of-concept data within the lung cancer area. And the third area we are looking into target is metastatic prostate cancer. And those 3 together will further add the new market potential with USD 1 million to USD 1.5 million. And the last area we're looking into, and we are in an early space where we have collaborations with KARMA, they are buying our product currently and using it in the development of new products. And the next natural step is to try to move into to benefit, build on that collaboration and do co-development projects, so called companion diagnostics in order to complement new cancer therapies with complementary diagnostics. So this is the commercial road map long term, and the initial focus now is to launch the product within the U.S. market. So if we move into the next slide, we will move into the financials and Cecilia will guide us through that.

Yes, I will. thank you, Anders. We start with the sales numbers. And the fourth quarter sales has been SEK 318,000 and they are derived from 2 new customers. It is both encouraging and satisfying that we are adding new pharmaceutical companies as customers, and they are using the DiviTum for developing new promising cancer [ therapy ] and we look forward to work with them going forward as well. During the third quarter, we see 2 major orders and made the first we reported on the locked time. And we haven't delivered anything more of these orders yet. So they still remain and we can deliver when the customers need more kits for their trials because this is research-use-only orders. And as you know, we focused on our efforts on taking dividends in the clinical markets and expect to see more continuous sales after launch. And now we're -- going over to the cash balance on the right-hand side on the slide. The closing amount was SEK 145 million at the end of the year, and we are well capitalized ahead of commercialization in U.S. and Europe. Our run rate now is about SEK 3 million for the last 12-month period. And going forward, this will increase when we invest in the launch activities.

SEK 3 million per month.

Yes, per month. Cash assets are sufficient for more than 2 years of operations without factoring in the expected increase in sales. And as you know, the higher level of expense compared to last year is attributable to the DiviTum projects associated with the preparation for commercialization. . And also, the organization has been growing, and we are now 20 employees compared to 17 last year. And this will continue growing a little bit. The increase is in line what we have planned for. And I'm handing over to you, Anders.

Thank you very much. So just to sum it up before moving on to the Q&A on the next slide, the summary slide. So we have DiviTum, our product, that addresses an unmet need within this area for more personalized treatments within metastatic cancer and specifically within the monitoring area. And the product has been part of several scientific collaborations with some of them world leading key opinion leaders. So we have a strong foundation for our commercialization process. And that's what we are in the middle of. So the upcoming milestones are not related to that. So 510(k) clearance and launch within the third quarter, which, of course, launch of product means that we need to have a signed agreement with a lab partner that can offer the product as a service. By end of year, we are in to get our first reimbursement on the U.S. market. And also -- and before end of year, we are looking to launch within our first county in Europe, in Nordic areas. And that will also be a commercial product and a partner that can offer it as a service plus regulatory approval on the Nordic and CE marking discipline in Europe. So with that, we have a very exciting '21 follow-ups. And with that, I'm opening up for questions.

[Operator Instructions] We have a question from the line of Rickard Anderkrans from ABG Sundal Collier.

Could you please outline, in a little more detail, the steps that are left from achieving a 510(k) clearance to the first order being placed and shipped, so to speak, by a treating physicians in the U.S.?

So what we need to do, of course, first, to apply for clearance and that's enough because we need to have a service agreement with a lab partner, which we, together, can offer to the oncologists, which is making the decision to order the test in discussions with the payment -- with the patient. But we also need in that, that comes with a logistics solution to get to the samples sent to the lab because we will start initially with a decentralized model. And we have the advantage here that the thymidine kinase, TK, allows for shipping of samples. Initially, we expect out-of-pocket sales until we get into the reimbursement system. And in order to get into the reimbursement system, we will, together with our lab partners, set up a capability to claim reimbursement and has been negotiated with the payers to do so. We also need to create awareness of the product. So we're working with that as well, both with our key opinion leaders to be present on upcoming conferences. And we also have initiated discussions with patient organizations. We just recently, this week, have our first patient advisory board in order to create awareness of the product and also, of course, get the patient feedback in -- so we can tailor our messaging going forward.

Right. Perfect. And on the partnership side, you seem to indicate that you could have more than 1 agreement in discussion in several regions. How should we look at it in terms of the number of potential agreements in place in the U.S. and EU in the next 12 to 18 months? What's feasible and...

No. I think initially, we'll see with getting 1 agreement is important because we can serve centrally because you can ship samples. And then over time, we will add partners. So initially, you can expect during -- only 1 agreement initially on the U.S. market and same thing on the European market, and then we will widen from that. We won't be -- we won't have exclusive agreements initially, which -- that's not our plan.

Yes. Yes, sure. Sure. And how short, after potential clearance, could you have a partner in place, I mean, hypothetically?

I don't know. We want to, of course, minimize the time. That's why we're doing -- we're already now initiating -- in the discussions with partners to be able to initiate validation before clearance, so we can cut the time. So then it's more a commercial discussion after that. So I can give you a number, because we're dependent on an external party, but we are working to minimize that so we can do it as soon as possible as it is.

Sure. And just a quick 1 on the PROMIX study. How should we think about the findings in that study given that measuring thymidine kinase is typically not compatible with the use of chemotherapy? Just so we understand the results there.

No, that's good that you point that out. And that's a trial that we initiated and actually a couple of years ago. And since then, we are more focused towards endocrine therapies as CDK4/6 inhibitors, which is our focus area. So I think it's more the value, it's more towards the prognostic -- we can have a prognostic value also in the locally advanced setting, that's interesting. We already have other [ products ] within that area. So that further confirms that. But also that we could be in a liquid alternative to Ki-67, that's also valuable to us in other settings. But when it comes to the treatment regime, you're right, that's not a focus area. We see more clarity and we see the opportunity in local advanced more that when -- because we expect the CDK4/6 inhibitors to move into that area of more and more positive patients.

Okay. And just a final one. Do you have any examples of launches of ELISA-based biomarkers in oncology in recent years? I just thought that it could perhaps guide our thinking in terms of launch trajectory, et cetera? Or should we just stick with Oncotype DX type trajectory?

Yes, I think you should because we're not exposing sort of the platform to anyone else in the lab in that sense. So we will offer it as analysis service to the customer. And then with a lab that performed essentially when you ship the samples, you're able to get -- up the volumes and have an efficient process and possibly automate the ELISA, which kind of takes away the biggest disadvantage with the ELISA, which is the manual process.

So there is -- the laboratories that you're just speaking with -- they have been and they are currently integrating automation solutions for ELISA, new ELISA test kits that are coming in essentially and this sort of standardized procedure for them?

Yes. So we've been discussing that as well. And then they have a different infrastructure per lab. So some -- like for instance, in Europe, it could be that they have an instrument that's possible to automate which is, honestly, more, I think, cleared. In U.S., it could be a different situation. So that's a discussion you have to take per partner.

Our next question comes from the line of Johan Unnerus from Redeye.

A few remaining on the FDA process, could you -- is it possible to be more specific where you are? Are you in the interactive review stage or?

Well, we are in a substantive review, and we -- I don't know if they are already following there -- because the interactive review is when you are in discussions -- in discussion with -- when you know to stop the clock. In this case, the FDA themselves have stopped -- have caused for a couple of months before coming back and so on. So it's a special process. We, at least, can't say -- tell you that much. We have received in -- it's a hairy route, actually, questions. We responded, and now we get further questions that we are now working to respond to. So -- and we have a good dialogue. We think the questions that we get are reasonable. We understand the rationale. And we've been working with -- we're coming back with an answer to them. So yes, that's why -- we're not definitely not following the normal processes with interactive review and additional information. That's, I mean, not the normal process.

That's helpful, and that's a step towards my next question. These questions and the final clearance, will that involve some indication as to precision? And could this also have a bearing on how you calibrate the test? And what sort of position that could be described?

Yes, I'm not sure -- I was thinking. But yes, those discussions are ongoing. It's -- the FDA has both high and low, but very detailed, but also some more on the intended use, for instance. It's not changing then the use, but it's just wordings, but that could actually -- that will affect how you calculate the performance outcome and so on. So that's why we will communicate data like after we have a conclusion agreement with the FDA appearance. But I think the main message here is that, we're really happy that the process has restarted, and we are in discussion with FDA. We know what to come back with, and we feel confident that we can respond to the questions.

Excellent. And just a clarification as to the earlier presentation and questions regarding nonexclusive partner in the lab market from the U.S. side. Is there -- so as we -- should we understand it like that the most likely is that you will have this agreement with 1 partner in the lab market, and that will move on to the clinical in the next step with the same partner? And then thirdly and more...

Yes, that's correct. That's our ambition now. And that's -- because now you can start the validation already. And yes, so get the collaboration going and cut the time to a commercial agreement while we offer this to customers' clinical use. So we will already offer the customers for research use initiative. This is an area where we'll be struggling a bit due to the pandemic situation. The labs have shifted focus to great deal due to the high demand of COVID testing. So even labs that has there their focus within oncology normally has been occupied during COVID testing. And their business development work has been reduced. The good thing here is that we see an improvement as the pandemic situations are getting better, and that opens up the opportunity to move forward for us within this area.

Excellent. And remind the piece regarding how many prospective studies that are sort of ongoing and even better when we can expect from first results?

Yes. Yes, that's a good question. So the first trial that has been completed. It's the PYTHIA trial. It's with the IBCSG and BIG Against Breast Cancer Network, a very strong key opinion leader network in Europe. That was presented at the San Antonio Best Cancer Conference. And Dr. Luca Malorni presented that at our Capital Markets Day as well. So that is -- as Luca, at the Capital Markets Day, said, it's about to be submitted to a journal -- scientific journal to be published, yes, hopefully later this year. So that's the first one. Then we have ongoing trials. One is the Johns Hopkins in the U.S. where we -- the patients have been enrolled and the trial is -- yes, is ongoing. And it's -- you won't see the result this year, but later next year, you can expect the result from that trial. And then there's a third one that has been mentioned that Luca Malorni, for instance, mentioned at the Capital Markets Day, and that's the BIOITALee trial where we also have been involved. You haven't seen in our official communication since we are not involved in actual work. We just sold the kits basically. But as Luca communicated that one is also about to be completed and will be presented on an upcoming conference pretty soon. Those are the 3 ones that have been mentioned. Then, of course, we are looking to strengthen our -- yes, that was actually essentially for promotion about -- today it's CDK4/6 as well. And that, Luca also mentioned in his presentation. So that one is also being started up. And then we are looking to initiate smaller, more targeted trials for reimbursement processes that we haven't specified exactly which one.

Excellent.

This was presented by Amy Williams at the Capital Markets Day also, how we're thinking within that area.

Yes. And just allow me, again, it's that for-trial, is that the Novartis trial?

That's the BIOITALee. So that was mentioned by me. I mean, I forgot the -- yes, the trial, which we have in our own communication because we are a collaborator in that as well.

Excellent. I think -- just have a lot -- yes. Finally, advanced breast cancer, you've been clear innately that, that would probably request-modified label later on. Could you give some indication on time, let's say, that we will have that, say, 510(k) position in Q3. What -- can you get the advanced breast cancer within a year? Or is that too early?

I think I need to be careful to commit the time lines here. I can talk about the process, though. The big effort now is to get the products cleared, 510(k) cleared, including both analytical and clinical validation. And the clinical validation is specifically for the metastatic breast cancer area. In order to widen the use for locally advanced area, we can do a supplementary process. So it's an easier process, but it requires clinical data supporting the value within local advanced breast cancer. And that, how, we haven't specified. So I think we can build on the fact that we appeared, the product, in that case, and we don't have to do -- it would only help us to do a supplementary process.

Excellent. Can you -- would you expect to be in a position where you can specify the time line by end of this year?

Yes, we will need to come back with a time line. I realize that around that as well.

[Operator Instructions] We have a question from the line of Dan Akschuti from Pareto Securities.

Just a brief follow-up on the FDA discussion. You mentioned that there are open questions that you're now preparing answers to. Can you shed some more light on what the exact questions those are? And if there are some concerns from the FDA?

No, I don't want to get into details more than I've done, but I can say that it is around the different parts of the application. It's around the performance part and the clinical validation. And it's more of discussion, the feedback from the FDA, there -- it's reasonable. It's about how you interpret different standards. How you interpret the clinical trial setting and so on. And it's always based in science and facts from the FDA. So we think the feedback is reasonable. And also, we believe that we will be able to sort -- come to an agreement with the FDA. Sometimes, it has been that the FDA understands more that we have explained better. So they understand and accept. Sometimes it's been that the FDA point out that we need to add some documentation in our application. So it's a good discussion, and we feel that we can respond well to the FDA, yes, their feedback.

Okay. Maybe just regarding time lines, when do you think will you respond to these open questions?

Now we will be working -- we're working right now and we have been doing so for, yes, about a month. So that -- the real worrying thing for us was during that period when the FDA kind of paused the process. So we're actually very happy to get these questions and get back into the discussions because then the process is progressing. So we've been working with this for a month, and we will be working -- continue to work a couple of weeks into the summer. And yes, basically, in order to make that deadline in biannual third quarter that we've set out.

Okay. And just one more question on the partnerships. Can we expect kind of that the FDA approval will ignite the cascade of payer reimbursement agreements on top of that and partnerships? Or can we even expect some signings prior FDA approval?

Yes. We have had the ambition to do it prior, but I think it's realistic to do -- like you said, that this -- the FDA milestone is important in the commercial discussions and could ignite this as well. That's lab discussions. But also -- it's an important milestone also in the discussions with pharma partners and payers. So yes, it's an important milestone in many ways for us.

There are no further questions registered. So I hand back to the speakers for any closing remarks.

Well, thank you very much for your attention and the questions, and we will get back to you on the next quarter report in the same as well. Thank you very much.