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

Welcome to the Biovica International Market Update FDA Clearance. [Operator Instructions] Today, I'm pleased to present the CEO, Anders Rylander. Please begin your meeting.

Thank you, Jerry, and welcome, everyone, to this market update as a result of our recent 510(k) clearance. So if we switch to the next one, Slide #2, you see the team that I have brought together with me today to make this presentation and give you some background about the clearance and the process going forward. So it's me Anders Rylander as the CEO, and together with me, I have VP of Regulatory and QA, Joakim Arwidson; SVP Business Development, Henrik Winther; and Warren Cresswell, President of Biovica Americas. So if you move on to Slide #3, you will see the agenda for today. First of all, I'll just give a very short introduction about the company and the product. Then Joakim will take us through the 510(k) clearance, what it means and some details about it. Henrik will talk about the clinical application, what this clearance gave us in terms of that. And Warren will take us through the U.S. go-to-market plan that we are -- have been working for quite some time and now are finishing up in order to bring the product to the U.S. market. And after Warren and my short summary, we will open up for a Q&A session. So if we move on to Slide #4, starting with Biovica overview. I'll just mention that the company is founded in 2009, and it has sprung from research performed at Uppsala University focusing on enzymes related to the cell proliferation cycle. The company IPOed in 2017 and are currently being traded on the NASDAQ First North Premier. We have our headquarters in Uppsala where we have research development, production of the assay and also commercial researchers for the European markets. And in U.S., we have established our headquarters in San Diego where we both have a commercial team and a lab offering the product as a service to the U.S. market, which Warren will talk a little bit more about in his presentation. On the regulatory side, we have since many, many years the ISO 13485 certification, which is our quality system, which is prerequisite for getting different regulatory approval for different markets. We have CE -- the product DiviTum is CE-labeled since many years, which is required for use on the European market. And now we received a 510(k) clearance for the U.S. market which we will talk a little bit more about in detail on the upcoming slides. So that was a very, very short summary of the company. And if we move on to Slide #5, we have a short summary of the product as well. The product name is DiviTum, and it stands for dividing tumor, and as the name indicates, we're measuring cell proliferation. And as you all know, cell proliferation is essentially what defines the cancer or uncontrolled cell proliferation. So by measuring cell proliferation, we can provide very important information both for the treating physician and for the patient, giving a quick response on -- quick feedback on the aggressiveness of the disease, and also during treatment, how well the patient is responding to the treatment in terms of how the cell proliferation is affected. Currently, these patients are being monitored during their treatment with image diagnostics, which requires an image both before and several months into treatment. And with DiviTum, there are several advantages. One is that it's convenient with a blood test, and another one is the quick feedback that we can provide on treatment. We've shown in clinical trials that we can see significant changes only 2 weeks into treatment and also another clinical trial has shown that DiviTum in median [ candidate ] progression almost 3 months ahead of the imaging diagnostics. So we believe we have a product that is superior to the current best process that is being used, and we also will show some data during the presentation to support that. If we move on to the next one, Slide #6. We have Joakim Arwidson. Maybe Joakim, you can introduce yourselves and your background before moving into the 510(k) clearance.

Thank you, Anders. So I'm Joakim Arwidson, and I'm very happy to present our 510(k) clearance, but first a few words about me. I have been working as Vice President for Regulatory and QA at Biovica since 2021, and I've been in the medical device industry since 1995 and held similar positions in other companies with a focus on regulatory. And apart from IVD, I have also been working with theranostics and molecular imaging. So in total, I have done actually 15 510(k) applications where we have success. But the last one here, with DiviTum TKa is the one I'm definitely the most proud of. So -- and even if the pandemic had a big impact on the time for FDA to complete the review, we had a very positive and good communication with FDA throughout the project, and the FDA realized early that this product has a value for the patients, which has also been a very good motivator or extra motivator for us in the team. So if we move to the next slide. So we received the 510(k) clearance on the 29th of July. So -- and what does the 510(k) clearance mean? So this means that Biovica now can legally market DiviTum in all of the states in U.S., and the marketing must follow the DiviTum's labeling and indication for use, which states the reason for the product's use and condition, like -- it's like the disease and the patient population. And as I mentioned before, through what the project, we had a very good collaboration with FDA, which also understood early on the value of DiviTum and for the patient population. If we move to next and the predicate device. So when you work with a 510(k), you always need to identify a predicate device, and the predicate device is used to demonstrate the device to be marketed is as safe and effective by proving substantial equivalence to legally market a device. And for Biovica, a pre-sub meeting was held in 2017, and then Biovica was recommended by FDA to use CYFRA, and that's a device from Fujirebo that had a 510(k), which was the closest in comparison to the indication for use for DiviTum TKa. And actually, this pre-sub meeting saved us a lot of time. Otherwise, the regulatory path have ended up in a de novo application or PMA. However, the method, disease and patient population differed between the devices, and the clinical effectiveness and validation of DiviTum TKa was done through the SWOG study. So we used the predicate device from CYFRA as a paper predicate device. If we move to next. For DiviTum TKa, there is also a unique product code, and the name and product code identify the generic category of a device. So in normal cases, when you have a 510(k) application, you use the same code as for the primary predicate device. Based on PMA or de novo applications, the FDA usually creates new product codes. However, in this case, DiviTum TKa was unique and the code QTE was created by the FDA which we are very proud of. And the definition of QTE is for the device, it's thymidine kinase activity, and the definition is in vitro test to measure thymidine kinase activity to aid in monitoring disease progression of breast cancer patients. So the conclusion, DiviTum TKa is the first in class. Next page. And in parallel with the 510(k) process, we also proactively adapted processes production and post market to be in compliance with applicable rules and planned audits by FDA. And this includes everything from GMP, like the good manufacturing practice to be in compliance with the Part 820, and also, of course, to the end, like the medical device reporting, tracking of the device and so on. So we are working a lot with -- to have the FDA readiness in the organization. How to extend the indication for use? So if we want, we don't -- if we don't do any changes, we don't need to do -- redo the analytical validation with additional clinical data. So can we expand use? And we will have a good platform to work from. And that was my last slide in the presentation, and I'm handing over to Henrik for further presentation of the DiviTum as a clinical application.

Thank you. Thanks, Joakim. So my name is Henrik Winther, and I'm heading up the Business Development at Biovica. I have done so for the last 2, 3 years now. And the reason for me to participate on this meeting here is really that I have been heavily involved in the DiviTum TKa clinical validation study and the 510(k) process. That's due to my many years of experience with analytical and clinical validation of biomarker assays and also my experience in bringing them to FDA at all classification levels, that being both Class 1 products, Class 2 or 510(k) products and also a couple of Class 3 or PMA products. Next, Slide #12, please. So listed here, you see now the 2 topics I'll cover over the next 4 slides. Initially, I'll go through the key takeaways with regards to the FDA clinical utility of our DiviTum TKa assay. And then afterwards, I'll provide some clarification to some of the frequently asked questions with regard to the assay clinical application. Next slide, please, #13. Let's start by looking at the 5 key takeaways from the FDA-cleared intended use of the DiviTum TKa assay. So number one takeaway is that DiviTum is a completely new way of monitoring hormone receptor positive metastatic breast cancer patients, which is reflected in what Joakim said, FDA providing a unique code to the assay. In contrast to imaging, our assay monitors metastatic breast cancer patients through blood samples. Secondly, in the clinic, the assay will assure the patient and the oncologist that disease progression has been inhibited, which is the same as saying that the patient treatment is effective. Thirdly, the assay is recommended to be used on a monthly basis, the first 7 months after treatment initiation and then quarterly. This is actually also what we originally assumed in our calculations of the market potential of the assay. Key takeaway number four is that the assay application is kept broad by FDA, which means that the assay application is not restricted to any specific antiproliferative treatment, but can be used together with today's standard treatment in hormone receptor positive NBC patients. This assumption was also part of our market potential estimation. So you can see, the key takeaways number three and four really confirms our business case on the number of expected tests per year. Next slide, please, #14. Last key takeaway relates to the performance of the DiviTum TKa assay. FDA was very impressed by the assay's high NPV, which actually became a key driver for FDA in getting the assay out in the clinic. So what is this NPV or negative predictive value? Well, NPV of the DiviTum TKa assay reflects the likelihood of a negative test result equaling no disease progression. So with DiviTum TKa, the negative test results is equal to a 96.7% likelihood of no disease progression within the next 30 days if you stay on your current treatment. This is obviously very useful to the patient and the oncologist. With a monthly DiviTum TKa testing, the oncologists can monitor and assure the patient of the continued effective inhibition of disease progression. We actually also looked at a time frame of 60 days beyond assay testing, and also here, the assay provided an impressive NPV of 93.5%. So if you are test negative, the likelihood of no disease progression over the next 60 days is 93.5%. So those were the key takeaways. Now we switch to the key clarification. Next slide, please, #15. So here in the next 2 slides, I'll focus on making clarifications to some of the typical questions we have received following the 510(k) clearance. Let's start by looking at the assay's clinical specificity and sensitivity. An assay's clinical specificity is the assay's ability to correctly identify those patients without disease progression. In the clinical validation study, holding a total of 1,164 patient samples obtained during treatment, 1,101 samples showed no disease progression within 30 days and 888 of these, which equals to 81%, were correctly caught by our DiviTum test, and they were caught by having a low TKa value, meaning below the 250 cutoff. When looking at no disease progression within 60 days after testing, the clinical specificity is 82%. Now if we turn to the assay clinical sensitivity, which is the assay's ability to catch disease progression, we have a couple of comments here. When we designed the assay and when we carried out the clinical validation study, we did not focus on the clinical sensitivity because we were aiming for a high specificity and a high NPV, and we also knew that the clinical validation study couldn't provide us with a fair estimate of the clinical sensitivity. The reason for this is to be found in the way the clinical validation study made decisions regarding disease progression. In the clinical validation study, imaging, especially of CT scans, was used as the truth when it comes to deciding upon disease progression or not. We also knew that CT imaging will only state progression if you have a tumor volume increase, which is above 20%. Otherwise, the CT imaging technology is not safe enough to conclude on progression. DiviTum is measuring self-proliferation, and we pick up disease progression much earlier than volume-based imaging, which has been shown in other studies. For example, the palbo-dosing study which we referenced here and which we have also discussed in earlier calls. So when you use imaging and especially CT scans as a truth in your 2 x 2 tables to calculate DiviTum's sensitivity, the assay will be judged incorrectly because many of the progressions detected by DiviTum are truly progressions, but they are not detected by imaging. And if you actually dive into some of the materials which is out there on the FDA homepage, you can actually find this 2 x 2 table. And if you by yourself move the false positive samples into the true positive, you will find a complete different clinical sensitivity of our assay and actually, obviously, our specificity will also go up. So the clinical sensitivity of the assay has to be established using better ways of evaluating progression, which means using a combination of different imaging technologies, CT prospect, biomarkers and patient symptoms, just like they did in the palbo-dosing study. Next, Slide #16, please. The last clarification relates to a sentence that FDA asked to be included in our instruction for use because FDA asked us to state that the assay can't be used for serial testing. Now it's important to understand that the term serial testing is a specific FDA term. It really has nothing to do with the number of tests we recommend to perform, and hence, we can still recommend repeat testing and testing on a monthly basis as approved by FDA. The FDA serial testing term describes a test in which you need to perform 2 tests in a row with a certain timeline in between and where you compare the 2 test results and look for a certain percentage change in your measurements because you have based your cutoff on this certain percentage change. DiviTum is not such a test where you need to compare to a former test result and calculate percentage change. Therefore, FDA wanted to clarify that in our IFU. DiviTum uses a fixed cutoff at 250 DuA based on the expression of TKa in a normal healthy population. And as a user of the test, you don't have to store results from a former test or perform calculations to find the percentage increase. We believe this is safer and easier. So thanks for listening, and over to you, Warren.

Thank you very much, Henrik, and good afternoon, everyone. My name is Warren Cresswell, I'm the President of Americas for Biovica. I've had the pleasure to work in the diagnostic industry for almost 25 years in device, PMA, 510(k) as well as CLIA lab market with laboratory developed tests and have developed high-value multi-analyte algorithm-based assays. As of August 1, I celebrated my 1-year anniversary with Biovica, and with that, I'm very excited to share the progress we have made in the U.S. So if we can advance to the next Slide #18 titled U.S. update. Great. Thank you. So today, I'm going to touch on 4 core areas of the business, which include the CLIA lab sales, marketing and reimbursement. If you can advance to the next slide, Slide 19, labeled U.S. CLIA lab. I'm happy to report that in a short duration of time, we've made significant progress with our CLIA lab. In late quarter 1 of this year, we signed a lease for a laboratory property located in San Diego, California. In April, we hired our Head of U.S. Operations and Regulatory. Soon after that, we contracted with our Medical Director and our Clinical Laboratory Scientists, which are positions required to apply for and operate at CLIA lab. With both positions, we signed consulting agreements, so that we could minimize operating expenses pre-DiviTum launch. In light of supply chain delays, we were able to creatively source and install all necessary laboratory equipment. And with the help of our colleagues in Sweden, we were able to draft and implement our U.S. quality system. Not only does our quality system align with the standards in the U.S. but we wanted to ensure alignment with our organization in Sweden. And during this timeframe, we developed a blood-based collection kit that will be manufactured and distributed from our San Diego facility to serve U.S. customers. And as of this week, we have completed the validation and verification of all lab equipment. So our next step is to submit our CLIA lab application to the California Department of Public Health which we will do in the coming weeks. And as of today, the application process is about 95% complete. According to our last communication with the California Department of Public Health, once an application is submitted, the lead time to receive certification is 4 to 6 weeks provided there are no unforeseen delays. If you can advance to Slide #20, titled U.S. Sales. Our focus in the U.S. organization prelaunch has been on commercial readiness. We want to ensure that we are ready to launch DiviTum. We have people and processes in place without incurring unnecessary cost. When we hired our U.S. Head of Sales in February of this year, we quietly initiated recruitment process to identify high-caliber sales professionals that had overlapping experience with our specific needs and had the motivation and commitment to learn about Biovica, DiviTum, the unmet clinical need, read and study peer-review publications, develop territory strategies and other critical factors that will enable them to be productive almost immediately upon hiring. We also conducted where we also constructed a sophisticated customer targeting strategy to maximize sales force effectiveness. These highly targeted approach uses several variables to ensure we're focusing time and energy on the highest value opportunities, and some of the value variables for our model include key opinion leaders and regional thought leaders, institutions designated as NCI and NCCN centers. Existing relationships are very important, especially with the folks from Biovica and also with new sales reps. We did acquire drug prescription data, so we do know quantities and types of particular drugs that are prescribed by physicians and specific institutions. We have information on payer reimbursement mix as well as valuable for us to understand the mix of public versus private insurance and what specific health providers or specific geographic regions; also high-density regions, as we want to maximize the number of daily sales calls and minimize travel costs; and institutions where blood sample access channels are available and cost-effective. So taking this highly targeted approach is not only a tool for our sales force to be successful but it also enables us to measure performance and improve our targeting model. Advance to the next Slide, 21, titled U.S. Marketing. For approximately the last 6 months, our marketing efforts have been focused on launch readiness. Some of the critical materials we're focused on designing and developing include test requisition form, test report, interpretation guide, sales aids, product information and promotional slide deck. We also recently conducted market research with medical oncologists where we had 15 1-hour interviews. After discussions -- discussing the role of TKa in the cell cycle, oncologists believe that TKa thymidine kinase had an important role in managing patients with metastatic breast cancer. Moreover, when we shared our data and our very high NPV, most oncologists believed that there could be multiple clinical utilities for DiviTum. This we felt is very exciting. It should be noted that together with our global clinical team, we're very focused on continuing to build and strengthen our relationships with key opinion leaders and regional thought leaders as they are critical to our success. And at launch, we will also engage and collaborate with regional and national breast cancer advocacy groups. As we feel very strong about the clinical benefit of DiviTum, we want to bring awareness to patients. If we can move to the next Slide 22, titled U.S. Reimbursement Strategy. Our reimbursement strategy takes 3-pronged approach, which we will execute in parallel. At launch, we will immediately engage our Medicare Administrative Contractor. These are also known as MACs. We will initiate the process for DiviTum to have a technology assessment and determine if a similar assay that have received a Local Coverage Determination, also known as an LCD, aligns from a technology perspective with DiviTum. If the MAC agrees that there is similarity with another assessed assay, we can essentially piggyback on that assay's LCD and qualify for reimbursement in a very compressed timeframe. We will also file for a proprietary laboratory analysis for PLA code, which will be unique for DiviTum. The benefit of this is the ability to list DiviTum's PLA code and approved reimbursement on CMS' national fee schedule. The PLA strategy also aids us in getting reimbursement with private insurance carriers, and it should be noted that this represents approximately 50% of our total available market. At the same time of launch, we will drive value-based collaborations with hospitals and general reference labs. With these collaborations, the institutions leverage their existing agreements with payers to obtain reimbursement. This methodology enables Biovica to invoice these institutions for services renders rather than private insurance companies. This process not only provides payment certainty to Biovica but eliminates the need to engage private insurance for payment. Also, this process opens channels for oncologists to send patients for blood draws. We believe that 25% of our total business can be driven through this channel. And concurrently, through our revenue cycle team, we'll engage private insurance companies and submit claims under a miscellaneous code for reimbursement. Until we're able to obtain a coverage decision from private insurance providers, we will provide medical necessity and exercise the appeals process for payment to Biovica. In this particular channel, we will also offer a patient financial assistance program to minimize financial burden to patients, and we anticipate this channel to represent approximately 25% of our business as well. And with that thing said, I'll hand it back to you, Anders.

Thank you very much, Warren. If we move to Slide 23 and then directly to Slide 24. I'll just say a few words to summarize this before we open up. Hang on, I think we have a sound issue. Here you go. Sorry for that. So I hope the sound is back now. So on to Slide 24. I'd like to summarize by saying that we have a very exciting product that addresses an important clinical -- unmet clinical need. It can really make a difference, both for patients, physicians and for health care providers. And this has also been confirmed by some of the leading key opinion leaders within this field of breast cancer. And together with them, we have done several collaborations, have generated strong clinical evidence to date. It's more than 20 trials being published with DiviTum supporting the value of the product. And that's, of course, also a really important foundation and factor for us being able to go through the regulatory process as we've done now. Our first application will be for metastatic breast cancer or for monitoring of patients' metastatic cancer as they are being treated, but we already have clinical evidence supporting a wider use over time. And milestones, of course, the 510(k) clearance that we've gone through today is a huge one for us as it opens up launch of the product on the single largest market, which is the U.S. market. And as Warren talked about, we have a plan which we're executing now to be able to launch the product in U.S. before end of this year. And the next step for us is, in the beginning of next year '23, we expect to announce and to launch also the first European market that we will launch the product. Thank you very much, and we are now taking questions from the audience.

[Operator Instructions] And we have no questions on the telephone lines at this time. Please go ahead, speakers.

Yes, we have had some questions from the web, and I'll read them and I'll see if we can -- I think we can answer them here also. So the first question is from Jakob Lembke, and he asks, it sounds like the cutoff value is important for the performance of the test. Is it possible to say anything about what the value is or how it is determined? And then maybe, Henrik, if you could answer that question?

Yes, absolutely. Yes, I totally agree. The cutoff is extremely important for an assay and in a way we set that cutoff, and that pulls back sensitivity and visibility of disease. But also, we look at what is the expression of TKa in a normal population, and then we look at the 95 percentile of a normal population. And we use that as a way of setting our cutoff at 250 DuA. DuA is our measuring unit that we have defined within Biovica.

Thank you very much. And the second question from Jakob is, if there's any particular customer segments that you will target initially or identified as potentially early adopters? And Warren, maybe you could elaborate a little bit on that. You covered it briefly in your presentation, but maybe you could give some more background on that.

Yes, absolutely. Thanks for the question, and certainly, we'll use our model to be able to identify which of the highest value oncologists and institutions to call on, but I can tell you, most likely, it's going to be key opinion leaders that we have worked with, key opinion leaders in the field and institutions that are most likely NCI and NCCN institutions also.

All right. And the third one from Jakob is, if we have any internal targets in terms of sales, testing volumes, patients tested, et cetera, for the first fiscal year? And I can shortly answer, yes, on that one. But I guess there's a follow-on question is that something that you have we'll communicate, and we can say yes on that as well, but not at this point. What we have communicated so far is that we -- our 3-year goal is that 3 years after launch of the product, we will -- we should be able to address 15% of the identified market potential. And we can say that this process with the FDA clearance has strengthened our belief in that since it has verified the market potential, and we have also continued working with both key opinion leaders and payers in the U.S. and received positive feedback, as Warren explained. And we will, of course, bring that back to further detail our plans and break down to more detailed targets as well. So we'll come back to more details, but still, the 15% market potential after 3 years remains, and it has now been, say, further verified. All right. Okay. We have another question from Johan Unnerus here at Redeye, and he asked -- Warren, this is for you. When can we expect visual support from the Medicare segment? You touched upon this in your presentation. Maybe you can elaborate a little bit further?

Yes. When we engage the Medicare Administrative Contractor, we would anticipate being able to get feedback relatively quickly, and that's a matter of months. So most likely within -- probably about a 3-month period, we would receive back pretty firm information back from them that would give us some visibility on coverage. It doesn't -- and just from a point of clarity, it wouldn't mean in 3 months, we would gain coverage from Medicare, but we would certainly receive information back from that. Most likely coverage would come in a time frame of kind of 6 to 12 months.

All right. We have another one from Johan, which is also maybe something we can comment on. What's your latest feedback regarding the pricing? And I can start and maybe you can follow on, Warren. What we have communicated when it comes to pricing, the market potential estimates has been based on a range on the U.S. market on $300 to $500 in average price. It can -- in different categories, as Warren described, there are different customer categories that have different price levels in the -- on the U.S. market. So we have estimated an average price on these different categories, and that has also been verified since before in a health economic trial that has been -- or modeled, to say, not trialed, that has been published -- peer reviewed and published before verifying that price levels. And we have had also further discussions with players in this field in the U.S. And I don't know if you want to -- if you can add something to that, Warren, please do.

Yes, absolutely. I think with each channel, there's going to be a little bit of a different price. From a Medicare perspective, there will be negotiations with Medicare just like there would be with private insurance or hospitals and institutions. So I think once we engage Medicare, then we'll have a very good feeling for what that Medicare price is, which will cover 50% of our total business. Most likely, as we submit claims to private insurance and provide medical necessity along going to the claims process, the reimbursement may be a bit less until we are able to get coverage directly from private insurance. And I would assume that most likely the negotiations with hospitals and general reference labs should be in alignment with Medicare as well.

All right. That was our last question. I'd like to thank -- I know that it's been a big audience, so thank you very much for all the interest you've shown in Biovica, and the great milestone we have achieved. And I'm looking forward to keep you updated on how we're progressing with the exciting times that we have had now going forward. Thank you very much.