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

Welcome to the Biovica International Audiocast Web Teleconference Q2 2021. [Operator Instructions] Today, I am pleased to present Anders Rylander, Cecilia Driving and Henrik Winther. Please begin.

Thank you very much, and hello, and welcome, everyone, to the Biovica second quarter interim report, a quarter that ended in October for us. And if we move to Slide #2, we have the list of the presenters today. So my name is Anders Rylander. I'm the CEO of the company. And together with me, I have Cecilia.

Hello, everyone.

Being the EVP and CFO of the company; and Henrik Winther, our SVP, Business Development and Clinical Development. Henrik?

Hi, everyone.

And if we continue to Slide #3, the agenda, I'll just give a very short introduction about the company and what we do. We'll go through the different highlights during and after the quarter. We will give an update about the FDA process. And Henrik will go through some of the clinical development and results that occurred during this quarter. Cecilia then go through the financial part of the report, and then I'll just summarize and open up for a question-and-answer session. So if we move to the next one, Slide #4, the short introduction to Biovica is that we focus on developing biomarker assays, blood-based biomarker assays, in order to monitoring targeted cancer treatments; in order to, of course, improve the launching process. And we have in several clinical trials proven the effectiveness of the product and how it compares to the current ways of monitoring these patients, and this is something that Henrik will also cover a little bit in his presentation. And of course, the better and more personalized monitoring will be beneficial especially for patients being on treatment but also health care providers and payers will, of course, benefit from that as well. Our initial focus area is the metastatic breast cancer area and monitoring of patients within that area under treatment, but there's an unmet demand also outside of that area, and we have the ambition to expand the use outside of that area. We also have proof-of-concept data supporting the test works well also outside the initial area. So if we move to the next one, Slide #5. This slide that describes how this is done. So we do it with our product DiviTum, which stands for dividing tumor, and we combine the blood sample from the patient with our unique assay. In the reagents, there is a reaction between the blood sample and our reagents. And from that, you can get a readout and measurement of how that tumor is -- or tumors are proliferating. And as you all know, cancer is defined as uncontrolled cell proliferation. And that way, you get an important information about the aggressiveness of the disease, but also if a patient is under -- is monitoring during treatment and the treatment is supposed to inhibit the cell proliferation, we've shown in clinical trials that you can get -- you can do that and get feedback if the inhibition works as planned. We have also, in several clinical trials, shown that you can get a feedback already 2 weeks into treatment and the baseline value before treatment also has a prognostic value. And this is, of course, a great advantage compared to the current method being used as standard method, which is imaging diagnostics where you are comparing the size of the tumor before and during treatment, which requires several months before you can do a follow up. And it's also costly, it's invasive and requires some patient logistics, which is simplified with a simple blood test, like DiviTum. So that's very short about the product and how we intend to use it. If we move on to the next slide, there's a summary of the significant events during and after the quarter. And one important thing is, as U.S. being our initial and our largest single market, there's a lot of focus on preparing for the upcoming launch on that market. And for that, Warren Cresswell has started as President of Americas being responsible for the launch of DiviTum on the U.S. market and to build an organization in order to do so. And Warren has vast experience within this area, both as a CEO for Prometheus, a company within GI, gastrointestinal testing, but also within Dako, where he was commercially responsible for several markets within the diagnostics and oncology area. I'll also give an update about the FDA process on a separate slide, and Henrik will cover the areas regarding clinical development and the results that we have presented during this period. And I'll also comment the budget impact -- well, that has been presented -- or has been published on a separate slide. So let's go into the next one, Slide #7 to talk about the FDA process. So the FDA process started several years ago and the 510(k) classification or the feedback from the FDA was that we should use a 510(k) process based on the classification of our products. And a product that is cleared, 510(k) cleared, is allowed -- then you allow to market the product for clinical use on the U.S. market, and so that's the reason behind our application. And it started 25th of September, but it is actually 25th of September in 2020 when we submitted our application after being involved in discussions with the FDA since the start was in 2017, actually, when we got the classification in the guidance which process to use, and we have also done several pre-submissions to get feedback on both analytical, that is the performance validation and the clinical validation. So a lot of work had been put into that application that was submitted a little bit more than a year ago. And the way you see to the left, the FDA have a very structured process, and we quickly passed the first 2 steps before the FDA announced the COVID pause that was caused by them reallocating resources to focus on COVID applications. The process was then restarted in January, which we were very grateful for because it was a lot of processes that had to wait a lot longer than that. But in practice, we did not receive any feedback until end of May. And since then, we have been working with the FDA in order to resolve the open questions that was raised in end of May. And as you see, this is a lot slower than their common standard process where they have days that they need to live up to and also that the applicant needs to live up to, but that is now -- they're not committing to that process due to the situation with the pandemic situation. So that's also why the process has been so much slower than what it normally is. But during the summer, we could resolve most of the questions raised by the FDA on -- in our application. And as there were just a few remaining questions, it was decided that we will go into an interactive process. And since then, we have continued the discussion and resolved most of the questions, and we have been given informal feedback, and we are now waiting for the formal feedback because that's a precondition from the FDA that we should get that before we summarize and update our submission and send it back in. So it's been a couple of months here where we have been waiting for that input so we can complete this process. And the FDA had the ambition to provide it during November, and it didn't happen, but we believe it will hopefully come pretty short now into December. And so we can complete the submission and continue the process and hopefully get clearance pretty soon. The advantage for us with this interactive feedback is, of course, that after submission, the question should have been cleared on the discussion, that part of the process should be quicker. So that's the rationale for an interactive process from the FDA side. So that's actually the status. And of course, it's -- the challenge here for us is that it's less predictable than the normal FDA process. But of course, this is the situation caused by the pandemic situation. Okay. So if we move on to the next one, we are on Slide #8. And we have the introduction to the clinical development area. So Henrik, maybe you can take over here.

Absolutely. Thank you, Anders. So during the next 12, 15 minutes, I'll take you through some very exciting and important achievements we have had within the clinical development area during our second quarter. So the topics I'll cover, they will include the BioItaLEE study, which was presented at ESMO in September; DiviTum TKa results from the published SWOG trial, and this is not the clinical validation data but additional data from the SWOG analysis. I'll also look into the 3 studies, with DiviTum TKa to be presented at the upcoming San Antonio Breast Cancer Symposium in Texas. And then finally, I'll dive into the initiation of the TK IMPACT study, which we do together with Washington University, St. Louis. So next slide, #9, please. Okay. Let's start by looking at the TKa results from the Novartis BioItaLEE study presented at this year's ESMO Congress, which, as I said, took place mid-September. This was an independent study undertaken by Novartis, Italy, and it showed TKa's ability to predict and only 2 weeks into CDK4/6 inhibitor treatment which patients will do excellence on this type of treatment. So 3 different TKa patents were identified, and it was actually the same 3 patents we observed in the PYTHIA study, which we presented last year. And remember, BioItaLEE is Novartis' ribo drug, whereas PYTHIA was on Pfizer's palbo drug. It's just showing that we, in TKa, have a generic CDK inhibitor biomarker. Now looking at the 3 patient TKa patterns, as you see here. So pattern number 3, the top red line is where there is no treatment effect, and hence, TKa stays high. This indicates a tumor that's completely resistant to CDK4/6 inhibitors, and hence, patients have a very short progression-free survival. You can see in BioItaLEE, progression-free survival was only 10 months, and in PYTHIA even shorter with only 5 months. In pattern 2, the yellow line, TKa drops to an extreme low level at day 15 of CDK4/6 inhibitor treatment. But then there's a rebound in TKa level when drug treatment is forced, representing the tumor dividing again during that 1 week of drug holiday. These patients do fairly well. As you can see, they have median progression-free times of more than double the pattern 3 patients, in both PYTHIA and BioItaLEE. The pattern 1 patients, the blue line, also undergo a complete drop in TKa level on day 15 of CDK4/6 inhibitor treatment. But this TKa level is more durable and does not appear to be impacted during the drug holiday, as we saw for patent 2 patients, indicating tumors that are fully responsive to the CDK4/6 inhibitor treatment. This patient group, the blue line here, shows that pattern 1 patients have the longest median PFS, or progression-free survival times, 17 months for PYTHIA and not reached for BioItaLEE after 27 months of follow-up. These patients certainly have benefited from CDK4/6 inhibitor treatment. So in essence, we have a strong biomarker, TKa, that can predict a patient's response to CDK4/6 inhibitor treatment by help of only 3 measurements. Next slide, Slide #10. So the key conclusion from the BioItaLEE study is that TKa is a very strong predictive and monitoring biomarker for personalized medicine, also called the companion diagnostic or CDx biomarker. A persistent suppression of the TKa biomarker identifies those patients who will have the greatest benefit from CDK4/6 inhibitor treatment. Today, most companion diagnostics assays are used upfront to select patients for specific treatment. We believe DiviTum TKa has the potential to become a monitoring CDx or companion diagnostics deciding on the continuation of a CDK inhibitor treatment. So I believe we have mentioned before, the companion diagnostic area has a very attractive business model to diagnostic companies because you enable product development fully funded by pharma, while you still keep the ownership of the product. Next slide, #11. Another study, you might have heard of is the SWOG S0226 trial. We use samples from this study to perform our clinical validation study, used in the 510(k) filing sitting with FDA, as Anders just mentioned. However, the SWOG team also undertook a broader scientific analysis of TKa on the S0226 samples. And in September, they published their results in the high-impact clinical cancer research journal. One of the key findings was the ability of TKa at baseline, meaning before treatment is initiated to predict whether patients would best benefit from an aggressive combination therapy, which means endocrine therapy combined with a CDK4/6 inhibitor or a less aggressive monotherapy only using endocrine treatment. So this is yet another example of TKa as a predictive biomarker for making decisions with regards to treatment. Next slide. And jumping to the most recent TKa results announced to be presented at the upcoming San Antonio Breast Cancer Symposium here in December. This year, we have 3 studies in which our DiviTum TKa is being applied as a predictive and monitoring biomarker. The PROMISE study, together with Mayo Clinic, and the PROMISE study was originally a genomics biomarker study in hormone receptor positive metastatic breast cancer patients. But DiviTum TKa is included as a non-genomics biomarker to evaluate the potential of TKa as an informative biomarker. Interim results on about 30 patients were reported at last year's San Antonio meeting. And this year, confirmatory results are reporting on -- reported on additional 30 patients. TKa is shown to be predictive for progression-free survival at baseline, again, meaning before actual treatment is initiated and this is for patients who undergo first-line treatment with a CDK4/6 inhibitor plus endocrine treatment. So again, data illustrating the use of DiviTum TKa as a biomarker suited for personalized medicine guidance. In the second study, at San Antonio, Carrick Therapeutics, an Irish pharmaceutical company, is using TKa as a monitoring tool during their development program of next-generation CDK inhibitors. Carrick's latest CDK inhibitor has been designated fast-track mode at FDA. DiviTum TKa has been used in several studies together with Carrick. And data clearly indicates that TKa dynamics and DiviTum's predictive and monitoring capabilities also work for the new CDK inhibitors. In fact, we are actually experiencing an increased interest and demand in TKa testing service to pharmaceutical companies developing these next-generation CDK inhibitors. Actually, we are even getting requests from pharmaceutical companies developing other types of drugs, but drugs which are to be used in combination with CDK inhibitors. So you could say that DiviTum TKa has really become a preferred tool in the monitoring of CDK inhibitor treatment. Finally, additional results from our budget impact model of DiviTum TKa in clinical use will also be presented at San Antonio, and Anders, he has a separate slide on this later on.

Yes. Next slide.

I have one more. That's me. I have one more. I think I have -- yes, and then you will come back.

Sure.

#13, the TKa IMPACT slide. So apart from TKa's monitoring strengths in relation to CDK inhibitor treatment. We have earlier, in the palbo dosing study, demonstrated DiviTum TKa's monitoring ability to identify metastatic breast cancer disease progression significantly earlier than imaging exams, in average, actually 83 days earlier and, in some cases, even 6 months earlier than imaging. Based on these important data and the fact that reduction in imaging exams has been identified as a huge unmet need by oncologists and payers, we have, in this second quarter, signed an agreement with Washington University, St. Louis, and we have also initiated the TKa impact clinical trial to prospectively show TKa as an alternative monitoring tool to imaging. This study will monitor 55 metastatic breast cancer patients receiving CDK4/6 inhibitor treatment during first-line treatment. I should also mention that we have the option to actually expand the number of patients in this study. The study is registered on clinicaltrials.gov, where you can collect more detailed information if you want. Handing back to you, Anders.

Thank you, Henrik. And if we move on then to the next one, Slide #14. I have a slide about another topic being presented on the upcoming San Antonio conference, the world's largest breast cancer conference later this month. And it's our budget impact model. It has been previously presented also at ISPOR, a more -- a conference targeted towards health economics, but now the model has also been published in the Journal of Medical Economics. And of course, a publication that has gone through a peer review further strengthens the evidence. And the work has been performed by researchers at the Fred Hutchinson Cancer Research Center and the University of Washington, not to be mixed with the one in St. Louis that we did the TKa IMPACT trial. And the model shows -- it's based on the clinical data that we -- that Henrik briefly covered, and it shows the value -- that have economic value of DiviTum within 2 areas. One is reduction of monitoring costs. The other area is a reduction of futile therapy by discovering progression sooner using DiviTum, which has been supported by the results from clinical trials. And to summarize the economic benefit, for every dollar spent on DiviTum, the savings will be 3x that. This is, of course, very important information for us moving on in the commercial process, launching the product since we are aiming, of course, to get included into the reimbursement system and want to be able to argue and prove the value the product can contribute to when we are discussing the price for the product. And in the analysis or in the model a price of $400 per test has been used. So you can say it also validates the price levels we have been communicating earlier as well. So that was it for the budget impact model. And if we move to the next one, Slide #15, we move into the financials of the report, and Cecilia, could you please take us through that?

I will do that. Thank you, Anders. And so we start with looking at the accumulated sales. And we have the net sales for the second quarter. It's SEK 268,000, and compared to last year, it is a big increase from SEK 44,000. And for the half year, you can also see an increase. And going back to what Henrik said, that we see an increasing interest from pharmaceutical companies. This is expected that kind of price because it's research years only. Since we haven't launched to the clinical market yet, it's only research-use only sales. So it's 2 CROs and pharmaceutical companies. And we expect the sales to keep on increasing during this year, but it still will -- still only be research-use only sales if we don't get that approval very soon. And -- but it's still increasing, and we were glad for that. And we turn to the next slide, Slide 16. Here, we have the cash balance. And we ended the quarter on the 31st of October with SEK 118 million in cash, and we have a good cash position for the commercial launch in both U.S. and Europe. And we have estimated that the current level of capital is sufficient for approximately 2 years of operations, including the expected increase in sales after launch, obviously. Commercialization in U.S. will be somewhat delayed from what we have planned, but we expect that to come further on. And we expect that with this increase in savings will come for -- when we have got the approvals and launched the product. And we have a good cash position. So we don't have any need for -- capital need right now. And we don't see any impairment loss on the capitalized development cost of DiviTum TKa. And we have obviously a little bit higher expense compared to last year. But we will -- and we will keep on increasing this because we're preparing for the launch, and the organization has grown from 21 last year to 25 this year. And we will continue growing the organization in preparation for the launch, but we have delayed that a little bit. So it's not -- we are still planning for -- to do it in conjunction with the FDA approval. Handing over to you, Anders.

Thank you very much, Cecilia. If we move then to the last slide, the summary slide, #17. Yes, to summarize it, we have a unique product here that can really address an unmet need and improve monitoring of treatments within metastatic cancer, metastatic breast cancer initially and to be expanded over time into other areas and to the benefit, of course, for patients and health care providers. And we are planning our commercialization and it's built on strong scientific collaborations with some of the leading key opinion leaders and academic centers in the world within this field. And together with them, we have performed clinical trials and the outcome, the results from those trials is a really strong foundation for the upcoming commercialization activities including the regulatory approval, including reimbursement and inclusion guidelines, et cetera. We were planning for a 510(k) clearance before end of this year. Unfortunately, as I explained, this has been delayed. We're still waiting for that feedback to be able to update and submit our application according to the FDA feedback. We hope to be able to do that soon, and we'll communicate that. In the meantime, we are preparing for U.S. launch right after we have the approval, and we have taken measures to expand. We expand the organization with Warren Cresswell, and we have now 3 employees in the U.S., but we are -- have put on hold, of course, hiring the sales force as we need, of course, the clearance first -- sales force and market access, but we are planning and preparing so -- of course, it will take a couple of months after clearance, but we are prepared for it and can soon be launched on the U.S. market. And the next market we'll move into is selected countries on the European markets, and we'll do that after the launch in the U.S. after 510(k) clearance. That's a summary for this report, and we open up for questions on that slide.

[Operator Instructions] And the first question is from Johan Unnerus, Redeye.

Thank you, Johan Unnerus here. Yes, the first question, before you have the FDA process was the third process. Now it's an interactive process, even though, of course, it's clearly interrupted by the priorities reflected by the pandemic. But perhaps you could give us a sense -- I presume there is some sort of regularity in sort of informal contracts, even though they obviously won't give any material feedback, but I presume there is some sort of regularity in contacts between you and the FDA.

You mean frequency? The way it works is that the FDA has... [Technical Difficulty]

I'm afraid we have technical issue. If you could please just stay on the line, we will resume this conference shortly. Thank you. Ladies and gentlemen, thank you for standing by. We will now resume the conference call.

Yes. Hello. We now understand we have some technical difficulties. So I'll repeat the question, so I'm sorry if you'll hear this answer twice. But I think the question was, if we can develop how the process, the interactive process, works with the FDA. And since we completed the third process by end of July, we went into the interactive process because we only had a few outstanding questions. And those are within different areas with different resources on the FDA side because they are organized by specialties. So that's part of the problem. They need to involve several of these specialists, and they're not available at the same time, which creates the delay. Also, I commented on the tone and like the progress on a very high level. Since we're still in discussion, it will be a bit early to conclude. But it's been a positive discussion where we feel that the FDA has guided us and also helped us finding solution how to get an optimal intent use, for instance, which we're very happy with. As the discussions progressed and we feel that we and the FDA have a common goal of making -- getting our product DiviTum cleared, 510(k) cleared. So the real challenge and struggle has really been the resource situation that they are in, which is due to the fact that they didn't review anything other than COVID applications for a long time that has built up a backlog that they are now trying to work off. And I think we are still fortunate that our review started early in that process. So it could have been worse, but of course, it's frustrating. I think it sums it up.

Excellent. And can you give us any flavor of the sort of informal contracts? I presume you have some sort of informal contact with FDA as well.

Yes. Yes. And most of the questions we've been discussing, we believe we have come to a conclusion and agreement, and there are some remaining things that we are discussing. But in order to be able to submit our application, we need that formal written feedback from the FDA at an explicit instruction from them. So it's difficult for us to deviate from that and go against their instruction. So that's basically what we're waiting for. The written feedback that summarizes it, that's formal. That's also hopefully a bit more structured because then they need to collect all the different specialists area and put it into writing. And based on that, we can update our application that -- so we will cover all those areas. But of course, since we've been able to discuss this informally and we have meeting minutes and some mails covering part of these areas, we have been working in parallel to shorten, of course, the time required for us to complete the response after their formal written feedback.

Yes. And the way things plays out, it could be that the San Antonio comes -- well, a few months before approval in a positive scenario. And what do you expect to get out of that? You have a clearly good momentum in terms of building clinical evidence and some of them are featured directly in the -- but there is also a great place for meeting people and expanding network, of course.

So Henrik, I understand the question was, will we be presenting several results and posters on San Antonio, what can we expect to get out of that conference in the situation where we are a commercial process-wise? Can you elaborate on that a little bit?

Yes. I mean as I mentioned and as we've seen lately, I think one thing we will get out of the San Antonio meeting is the fact that we are now more and more collaborating with the pharma partners, developing new CDK inhibitors. So we actually expect to have even more of that kind of service that we are currently undertaking for pharma and more intense collaboration. And as you could see from the BioItaLEE results, we really believe that TKa is a very, very strong biomarker in that regard, monitoring and predicting. So we would expect to see more of that kind of work and more strong clinical data to be established.

If I can build on Henrik's answer. This is also the first physical meeting or it's a hybrid meeting now, it's virtual, but the first meeting in quite some time where you have opportunity to meet people, and we've always used this meeting to strengthen our network, to get our message out. And we're able to do that despite not being 510(k) cleared, we can still talk about our results and generate demand for the product in this really, really important stakeholder group, the leading oncologists within breast cancer. So it's an important meeting for us, and we want to be present to display our excellent results from clinical trials so far.

Okay. Can I say that you are approached by -- or contacted by distributor network, not that we are proactive, of course, in this situation, but I presume if you ask us, we will answer it.

Well, you could say that so far, Henrik told about the Carrick collaboration. We've since before announced Novartis and Pfizer a couple of years ago, did a clinical trial with our assay. And those are examples of how our results so far has generated interest from customers. So the outcome of our clinical trial generates interest and demand. And so far, it's for research-use-only products and collaborations, but it's the same way that we generate demand based on the results in clinical views going forward.

Yes. Plus, I would also mention, I mean, the fact that you actually is hard of Phase II activities is obviously very important, even if it's still research-use only. There's not -- it's too far away from actually being built into something more serious than just in case.

Very good. And finally, Warren is on board. What is he up to now in December and January.

Well, so Warren is planning for the launch. So we are ready when we get that clearance. And that means that he has already identified candidates to hire and will also make some hiring before that. But -- so we know -- we're not starting to building the organization while we get the clearance. We're already doing that. It's also looking into -- because we need, of course, to have the product in a lab where it can be analyzed. So he's working within that area to get the product up and validated in the clinical lab that can offer the product. So that's another area. A third area is to set up processes for market access, invoicing, reimbursement, et cetera, and he's looking into that also. So that's example of some of the areas that he's covering and together with Amy and Robert Dann -- Amy Williams, more in the scientific area and Robert Dann in the marketing area. And within the marketing area, we're planning also all the materials required to get our message out as soon as we are allowed to communicate within that intended use that comes with the 510(k) clearance.

[Operator Instructions] And we haven't received any further questions. I hand back to the speakers for closing remarks.

Well, thank you very much for listening in to our presentation, and we will, of course, keep you updated when it comes to the FDA process being the most important news that we expect in the near future. Thank you.

Ladies and gentlemen, this now concludes the conference call. Thank you all for attending. You may now disconnect.