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

Hello, and welcome to the Biovica International audiocast with teleconference Q4 [ 2022 ]. [Operator Instructions]. Today, I'm pleased to present CEO, Anders Rylander. Please begin your meeting.

Thank you very much, and welcome, everyone, to this fourth quarter interim report earnings call for Biovica. So if we move right away to Slide #2, we have the presenters for today. So first of all, it's me, Anders Rylander, the CEO of the company. We have Cecilia Driving, our CFO; and then Amy Williams, Head of Clinical Development and Medical Affairs that will also present. And the agenda for today, if you move to next slide, Slide #3, is that I will be performing an introduction, short -- very short about the company and the product. We'll go through the highlights of the fourth quarter, and then Amy will take us through the clinical results that we presented during this period. And Cecilia will take us through the financials before I summarize, and we open up for a Q&A session. So with that said, we move on to Slide #4, the short overview of the company. Biovica is a company that spans from academic research at Uppsala University since many years back, and the company was founded in 2009. We are traded on first -- Nasdaq First North Premier, and we were IPO-ed in 2017. We still have our headquarters in Uppsala, where we have research and development, our lab and also our production facility. We have also opened up our headquarters in U.S. in San Diego, where we also are building up a CLIA-certified lab in order to serve our customers on the U.S. market. I'll come back to that later. The regulatory standards that we are fulfilling is the ISO certification since many years, and the product is CE labeled. Our big next milestone is the 510(k) clearance for the U.S. market that will open up the opportunity for us to introduce the product for clinical use on the large U.S. market. And the focus area, the initial application is for monitoring within metastatic breast cancer. So that's very short about our company. And if we move to the next slide, Slide #5. Just going to introduce the product as well. So the product name is DiviTum, stands for dividing tumor, and by -- our DiviTum measures cell proliferation from a simple and convenient blood test. And as you all know, cell proliferation is essential when it comes to cancer, and we have shown in many clinical trials that this offers a great value to the treating physician and the patient to get feedback on the cell proliferation levels incurred by the tumors in the body. Amy will go through this a little bit more in detail, but we've shown that both the baseline sample and a sample already 2 weeks into treatment provides very important feedback for the treating physician when it comes to the disease aggressiveness and how the patient responds to the treatment. And over time, also that we can follow the treatment and provide early feedback on treatment efficiency. The standard method to follow up patients currently being used is through image diagnostics, where patients are followed through serial image -- taking several images and measuring the tumor site and volume, comparing that over time in order to draw conclusion if the patient is responding or is progressing to the treatment. So we believe we have a product that offers advantages both for the patient as well as the treating physician, as well as the health care providers and the payers for these treatments, being able to monitor and tailor the treatment in a better way. Moving on to the next slide. We have a summary of the highlights that we just presented in our report for the fourth quarter. We have had 2 updates around the FDA process, which I'll come back to. We also announced that we're opening up a CLIA lab in U.S., which I'll also talk a little bit about. And then we have several new publications and presentations on the clinical side, providing even more evidence about the value of the product. And Amy Williams will talk us through that later in this presentation. With that said, I'd like to move on to Slide #7, which is a summary of the FDA 510(k) process. So this has been going on for quite some time. And this has been affected by the pandemic situation, where the FDA has allocated resources towards COVID tests. The good news is that they have now started to work on their backlog, and we received feedback early this year in beginning of February. We were able to respond to that and submit feedback that addressed all the questions raised, and so now -- we are now in the final part of the substantive review, and the FDA has also provided feedback that they have started to do that assessment. And that means that we still believe that the milestone we laid out that we expect to get a decision during third quarter in this year, is still valid. And we are looking forward to that. Moving on to the next one, it's Slide #8, where we summarize the rationale and the background for opening up CLIA lab in San Diego, and we've done that because we see several advantages doing so. And the primary one is that we will be able to interact directly with our key stakeholders, such as physicians and payers, but also the payers. This way, we will manage these relationships, and we get some market intelligence and can develop our salesforce and sales efforts. It is also a great advantage when it comes to the reimbursement process, which is a critical success factor when it comes to the U.S. market. And since we in previous trials have shown the big -- the largest value of the product, we're also able to make sure that we can achieve value, a price that reflects that in discussion directly with the reimbursement and not go through a partner. So we see a great value in being able to manage that process ourselves directly. Another great advantage that we see is that we can ensure that all patients have access by [ sending out ] efficient logistics. We will make sure that we can have quick turnaround times back to the treating physicians and the patients with -- responding to the patients and physicians. And in order to do so, we've also developed a large collection kit to support this logistics process. So the access is actually a great advantage as well. This will also give us a lot of market data, which I mentioned initially that we can use to further develop our go-to-market strategy and process -- sales process. And another long-term advantage is that with an informed consent from the patients, which we will ask for, we will be able to store the samples, creating a biobank that we can use to further develop new products to further enhance the value for patients -- cancer patients on treatment. And at the same time, we'll provide extra value for the patients being able to show not only their latest result but also a trend result so they can easily interpret how the disease develops. And of course, one thing that is not mentioned on this slide is that we -- by doing this ourselves, we will improve the margins. So -- and we made progress within this. We have a secured facility that meets the requirements, and we are now building up the lab and would soon submit the application for CLIA certification. So that work moves on according to plan. Moving on to the next one. So it's not only the lab, we've also put together a really strong and experienced team in the U.S. in order to drive commercialization activities over there. Responsible for that team is Warren Cresswell, and he has a long experience within both diagnostics and pharma, launching products on the U.S. market and other markets. For example, he was responsible for U.S. commercially at Dako and also other markets in APAC and South America. So Warren has a great experience of doing this. He also has a similar experience from Prometheus that had both the Diagnostics business unit and a Pharma business unit. So very, very happy to have him head up the team. And within sales, we have Kendon Richards, who also has long experience both within pharma and diagnostics, specializing in sales and has been shown in the past that he's been able to develop successful sales organizations. And heading up the lab is Dan Kiser, who has experience of doing so, both for CLIA lab and IVD and also have a great experience within regulatory. So it's also strengthening [ the team ]. And last but not least on this slide is Amy Williams, who is our Head of Clinical Development and Medical Affairs, with a long experience from oncology and breast cancer that recently came from Novartis Oncology, working with drugs like the CDK4/6 inhibitors that [ Novartis ] has, very relevant experience to this area that we are focusing in. So if you want to want more detail about this, where all these members of our U.S. management team did a presentation of their respective area, I strongly recommend that you go to our home page using the link below and listen in to the Capital Markets Day that we did only about a month ago. And with that said, I'd like to hand over to Amy in order for you to go through the latest clinical results that we presented during this period. Amy?

Thank you, Anders. Let's go to the next slide, Slide 10. So good day, everyone. As Anders said, I would like to highlight several recent clinical data publications from this year, where patient blood samples were analyzed with DiviTum TKa. And the first is data from the PYTHIA trial by Dr. Luca Malorni and colleagues from the Prato Hospital in Italy. This work demonstrated that TK activity levels measured during the first month of therapy could identify metastatic hormone receptor-positive breast cancer patients, who would go on to respond or not respond to a CDK4/6-based therapy of palbociclib, plus fulvestrant. This work was published in the European Journal of Cancer in March. Next slide, please. Also in March, Dr. Krishnamurthy and colleagues from the University of Nebraska and Washington University in the U.S. published this Nature Breast Cancer journal article, where DiviTum TKa was used to monitor metastatic breast cancer patients for disease progression. And the data showed that DiviTum was able to predict disease progression on average almost 3 months before it could be detected by standard imaging. Next slide. And then last week at the ASCO Annual Meeting, we were all very excited to see DiviTum TKa highlighted in an oral presentation. The presentation was a direct comparison between ctDNA and thymidine kinase activity measured from the BioItaLEE trial. The data looked very good, which we were really pleased to see. And I'd like to summarize the data for all of you, so you can understand why we were so excited. Unfortunately, the slides that were shown during the presentation are copyright protected, so I cannot include them here, but for anyone who has registered to attend ASCO, you can download the slides directly from the ASCO website. Next slide. The BioItaLEE trial was a Phase IIIb single treatment arm study sponsored by Novartis. 47 Italian cancer centers participated in the trial, a total of 287 patients enrolled in the study, and of that 287, 241 patients had blood samples that were available for analysis. The goal of the study was to identify blood-based biomarkers that can predict how well a patient will do when treated with ribociclib. Blood samples were drawn from patients at baseline before any treatment, again at day 15 and then once again 2 weeks later on the first day of cycle 2. This, as I said, was a multicenter, independent trial. Two biomarkers were compared, ctDNA and TK activity. The analysis was performed by Novartis and the study investigators independent of Biovica. Next slide. They first compared the prognostic value of only the baseline samples for ctDNA and thymidine kinase activity separately. So for the ctDNA, patients were stratified by whether they did or did not have a detectable tumor DNA mutation at baseline. And for the thymidine kinase activity patients, they were stratified according to whether their TK activity values were above or below the median TK activity value for the entire group. Each biomarker was then analyzed for an association with progression-free survival. The results were presented as hazard ratios, which, in this case, represent the percent reduction in risk that a patient's disease will progress on treatment. So the hazard ratios for ctDNA and TKa were nearly identical. As you can see on the slide, for ctDNA, the hazard ratio was 0.41. And for TKa, it was 0.45, meaning that patients with no ctDNA mutation or who had a low TK activity value at baseline were between 55% and 59% less likely to have disease progression versus patients with a detectable ctDNA mutation or with a high TKa value. So the conclusion from this baseline analysis was that both biomarkers have equal prognostic and predictive ability at baseline, with the caveat that no optimization was done for the TKa cutoff level. They simply used the median TKa value as the high versus low cutoff point. Next slide. Next, the investigators look at the on-treatment dynamic pattern of ctDNA and TK activity separately. For ctDNA, they compared the day-15 samples to baseline. To thymidine kinase activity, they assessed only the on-treatment TKa levels at day 15 and at cycle 2 day 1 to stratify patients and then look at correlation with their outcome. On-treatment TK activity dynamic pattern were better able to stratify patients according to outcome versus ctDNA dynamic patterns alone. So if we compare hazard ratios again for ctDNA, if a mutation present at baseline was no longer detectable at day 15, the hazard ratio was 0.51 with a p-value of 0.0228. Thymidine kinase activity, if TKa was not detectable at day 15 and still not detectable at cycle 2 day 1, that hazard ratio was 0.18. So with a p-value of less than 0.0001, so highly significant. And this much lower hazard ratio for thymidine kinase activity suggests that TKa is a better predictor of good outcome than ctDNA. Next slide. So next, the investigators did a combined on-treatment dynamic analysis of ctDNA plus thymidine kinase activity. And interestingly, the combined TKa and ctDNA data showed better correlation with outcome in the patients who were not likely to respond to ribociclib plus letrozole versus either biomarker alone. But for this analysis, they compared the median progression-free survival times for each biomarker alone, and then what was it when they combined the biomarkers. So as you can see on this slide, for ctDNA alone, the median progression-free survival time was about 12 months. For TKa alone, the median PFS was about 10 months. And for both biomarkers combined, the median PFS drops down to 6.65 months. So the conclusion is that TKa is a very strong biomarker on its own for identifying responders to ribociclib and letrozole. Combining data from both ctDNA and TKa is slightly better for identifying non-responders than either biomarker alone. Next slide. So to summarize, for baseline samples, ctDNA and TKa both work equally well to predict clinical outcome for ribociclib and letrozole patients. When using on-treatment samples, the TKa dynamic patterns were a bit better able to stratify patients according to outcome versus ctDNA dynamic patterns alone, especially for the patients likely to have a good response and do very well. For the combined on-treatment sample analysis, there appeared to be a better correlation with outcome in patients not likely to respond to ribociclib plus letrozole versus when TKa or ctDNA data were combined than when either biomarker we used alone. This data provides further evidence that DiviTum TKa can serve as a valuable biomarker for CDK4/6 inhibitor treatment response and disease monitoring for metastatic breast cancer patients. All right. That ends it for me. Next, you will hear from our Chief Financial Officer, Cecilia Driving. Thank you.

Thank you, Amy, for handing over to me, and we turn to Slide 18 and should focus through the financials, and we will look into the revenues. And as you can see, this year's revenue is almost the same as last year's revenue, and it's still only research-use-only sales to the research market. And this is going to stay at that for a while, given how our FDA clearance. And we have a very positive trend in the research market because we have more and more collaborations starting together with pharma. And we have had an increased interest from pharma to use our biomarker in their clinical trials when they are developing new drugs. And we will turn to Slide 19 and look at the cash balance, and we spend the year with almost SEK 90 million in cash. And the operating cash flow for the period was SEK 16.6 million, and it has increased some but not more than expected since last year then we had SEK 9 million in operating cash flow. And we are well capitalized with the current capital, and we expect it to last more than 12 months our operations. And we have grown the number of [ employees ] during the year, and we are now 25 [ employees ] in average. And compared to last year, we had 20. And we have a lot of -- we will increase this further on when we are launching...

[indiscernible].

Yes. And I will hand over to you, Anders, for summarizing.

Thank you very much, Cecilia. So just to summarize, as I said initially, we have a product and a biomarker that addresses a very important clinical unmet need to more convenient and quickly provide feedback if the patient's treatment is effective or not and thereby, being able to manage the treatment better. This -- the product is supported by several key opinion leaders, oncologists within this field, especially within the breast cancer, where we have the majority of our scientific collaborations. We have now over 25 published clinical trials and some more to come, as Amy presented [ sensitive ] BioItaLEE trial. And these collaborations and clinical trust has generated strong clinical data, supporting the value of the product, including the ones presented today, where we are complementary to ctDNA as well as a strong biomarker stand-alone. We already have a research -- [ share ] for research use and in pharma collaboration, and that is also we see an increase in the interest of that, driven by these great clinical results primarily. And the first area that we intend to launch the product for use, clinically, is for metastatic breast cancer on the U.S. market. And then we are working within other indications outside the breast cancer indication to widen the use to several areas. The upcoming milestones to look out for, we expect we're in the final part of the 510(k) process, as we said. We expect to get feedback and clearance during the third quarter this year that will enable us to scale up the U.S. organization, adding salespeople in order to launch it by end of this year. And for next year, we're looking to launch it on the first European market as well and then expand to other markets in Europe. This was our presentation. Thank you very much for listening, and we open up for questions.

[Operator Instructions] We have a question from the line of Jakob Lembke from ABG.

This is Jakob Lembke at ABG. I have a few questions. And my first question is on the CLIA certification of the lab just on the timing there, if you assess that it will be in place before or when you get a potential clearance you can start to sell in Q4?

Yes. We expect it to be -- we get the clearance around the same time as the 510(k) clearance and at least way before the expected start of sales by end of this year. So yes, it's -- we don't see that as being on the critical path, although it's an important milestone.

Okay. And just to understand...

Sorry, it's a lot more straightforward process than the 510(k) process.

Yes, that was going to be my follow-up, if there's any material, like moving parts or if it's more straightforward.

It is more straightforward, but it still requires some work. For instance, you have to be very specific on the instrument, down to instrument ID numbers. You have to have a medical director, et cetera, and you have to form [ transgenic ] data that shows that you've validated the product. So -- and all that is in place or in progress. We have the medical experts required, and we have instruments -- the facility and instruments being implemented.

Okay. Sounds good. My second question is on the costs, and the personnel costs seem to be a bit higher in the quarter. And I think you ended the year at 25 employees and now also when you're looking to recruit the U.S. salesforce, just how should we think about costs and maybe the increase to head count going forward?

Yes. So we will -- we have a lot of key resources in place with the 25 that's currently working for the company. And we have chosen not to staff the last critical resources for the launch, which is -- the majority is within the salesforce as we can't keep them busy, but we will -- as soon as we have achieved the clearance, we will roll on salespeople. And we've already identified candidates and are keeping them [ warm ]. So we have prepared for it. That will, of course, increase the personnel costs slightly. These people will have, of course, a base salary but have a variable pay component, which is -- which will be significant.

Okay. And just lastly, I mean on the more data you talked about here today during the presentation and the publications you have had recently. Just looking at it, sort of what are, I guess, the results and conclusions to draw? How do you go forward to sort of position the test to provide value to the market and the clinic?

Yes. I think it doesn't change our key strategy that we have really, really strong results on our own. But I think it is interesting that within some areas, we can improve the performance even further by combining it with ctDNA. So that, of course, opens up opportunity to collaborate with ctDNA companies that are interested to improve their value proposition like us towards the patient.

[Operator Instructions] There seems to be no further questions. So I'll hand it back to the speakers.

Well, thank you very much for your attention. We will be back with our next report by end of August, and I wish you all a great summer in the meantime. Bye.

This concludes our conference call. Thank you all for attending. You may now disconnect your lines.