Circio Holding ASA (CRNA) Earnings Call Transcript & Summary

Hello, and welcome to Redeye. Today, we are hosting Circio for their H2 report and a business update.

Welcome to circa and our webcast today. My name is Erik Digman Wiklund. I'm the CEO at Circio, and together with me today, I have CFO, Lubor Gaal as well as Richard Ramanius, equity analyst at Redeye who will run -- be running a Q&A session at the end of the presentation. So what is the challenge we're trying to solve at Circio? Gene therapy for rare genetic disease is rapidly gaining momentum in the industry, both with investors, pharmaceutical companies as well as regulators. FDA is actually changing the regulatory pathways to enable gene therapies to move through development faster. And this is because these gene therapies deal with rare diseases where really there is no treatment available. It's a massive medical need. So FDA are now implementing the learnings from project Warp Speed, which was implemented for COVID and used very successfully there to rare disease to expedite the development pathway. For this reason, gene therapies are expected to see great momentum in the next few years with several approvals going forward. So it is expected to be the area of medicine with the highest number -- or highest increase in approvals going forward and the highest growth. And we're actually already seeing some of the leading therapeutics in the space now becoming blockbuster treatments. Zolgensma is the example on this slide here is a gene therapy that was approved by Novartis a few years back, and this is seeing strong commercial success. Now if you look at gene therapy today, there are actually only 8 gene therapies that have been approved and 6 of them has been in the last 2 years. So this is really a young and emerging field. One thing we note is that all of the approved gene therapies are based on viral vectors. So you deliver a virus that expresses a missing protein in a specific disease. And 6 out of the 8 are based on the AAV virus. So the AAV virus is the mainstay, the gold standard, you could call it, for current gene therapy. And although AAV has been successful, we've seen these approvals, and these are being massively helpful for a large number of patients. There are actually some very significant drawbacks with AAV gene therapy as it stands today. AAV is only achieving a relatively low expression level of the protein it's delivering with the current approach that is being used. And this means that it's sometimes not sufficient. Several diseases are untreatable with AAV as we're using it today. Secondly, the low expression means you need to give a really high dose. And the high dose becomes a problem in terms of toxicity. You can have liver toxicity as well as immunological toxicity as a consequence of giving such high doses and the high doses in the end, drive up costs. You may have heard that some of these gene therapies had extremely high price tags, and this is partly due to the high dosing requirement that is required. Circular RNA can help overcome several of these issues with AAV. So what we are developing at Circio, our lead program is using circVec technology, our core platform in AAV to improve the potency of AAV, and this will enable us to reduce the dosing of AAV or access new diseases where AAV so far haven't been potent enough. So let me explain a little bit more detail the circVec approach. With circVec, we're starting from a DNA starting point or a virus starting point. So we're delivering a vector, which is DNA or virus can be AAV as we just discussed. Our DNA structure carries a recipe, a genetic asset, you can call it, that codes for a circRNA, and circRNA subsequently codes for a protein that you want to deliver in a genetic disease or an antigen if you want to make a vaccine. So you gave the vector either the virus or the DNA, inject it into the patient and the circRNA is generated in the patient and the circRNA in a durable way will express the protein. And circRNA can do this much more effectively in the mRNA because circRNA is more durable. It lasts longer. So you will get more protein output, and that's why we can use it to improve the potency of gene therapies such as AAV. We have now worked on our circVec platform for over 2 years. We've tested in a variety of settings, and we've expressed a variety of different proteins. To date, we have expressed roughly 20 different proteins this way. These are both intracellular proteins, membrane-bound proteins and secreted proteins, and it works effectively for all of these classes of proteins. We have expressed various reporter genes which enable us to do research and get how the circVec is performing as well as antigens for vaccines. So as an example, we've been able to express the COVID spike protein using this strategy. We can express this broad size range of proteins using our approach. We've gone from 20 kilodaltons up to 170 kilodaltons. This is a really small to a really large protein. It's a big range, and we don't think we've reached the maximum yet, we are still attempting to express larger proteins to see how far the technology can go. And we have also validated the functionality of our constructs in several different cell types and several different mouse tissues. And I'll show you some of that mouse data in this presentation today. First of all, let me just show you in a very simple graph here how circVec is outperforming mRNA-based expression. So in this experiment, we take a simple DNA vector. We make a report, a luciferase reporter. This comes as a gene from firefly that makes a firefly light up. And then we code this into our constructs and look at the light or the signal in an in vitro experiments. And then we compare circVec expression using circRNA versus standard mRNA expression. Yellow line on this graph is the mRNA. The mRNA has much shorter half-life. And that's why you get this pattern where the expression decreases. The maximum level is reached after 48 hours and then it drops off. The circRNA behaves the opposite way. So it starts off not too different from mRNA, but then it lasts, it has longer durability, so then the expression builds over time. The circRNA is accumulating to a higher concentration. And this leads to at day 8 in the experiment, almost 10x better expression. And it's simply driven by this increased durability of the RNA in addition to the RNA being able to make more protein. And if you can validate this, it will be for gene therapy vector format, this will be a massive advantage for gene therapy, we believe. We've now done a number of in vivo experiments to test how our system performs in the real biological system. So in this experience, I'm going to show you now, we're taking the exact same vectors that I've shown on the last page. It's based on our circVec 2.1 design. We inject the circVec in the left leg of the mouse. And then in the right leg of the mouse, we inject an equivalent mRNA vectors. The only difference is whether the luciferase is expressed from circRNA or mRNA, this is a single intramuscular injection, 1 injection only at day 0, and then we track the mouse. In our initial pilot study, we tested a variety of different dosing methods delivery alternatives to understand what works best for our circVec constructs. And then we select what is the optimal procedure and bring that forward. And in this pilot experiment, we saw this one particular example here that was very powerful. So this mouse, you can see you start from day 1. In the left leg, we inject the circRNA and the right leg we inject mRNA. It takes a bit longer for the circRNA to get going. But after 2 weeks, we're getting robust expression, as you can see indicated in the red circles and they're equivalent. mRNA and circRNA performs the same after 2 weeks, but then the mRNA starts dropping off. And you really see the difference if you look from week 4 or day 28 here and onwards. circRNA consistently, it stays the same level. It keeps expressing then mRNA drops out. This mouse, we kept alive for 4 months. And still at 4 months, the circVec expression, the signal from luciferase was still going in equivalent and mRNA had been very low for 3 months. So this made us really excited. And then we want to test this with this particular setup in a larger experiment. So the experiment is now ongoing in the larger group of animals here, I show you an example of 4 animals in the repeat experiment. And this has now gone for 3 months. Note in this case that the circRNA and mRNA has been reversed, the circRNA now is in the right leg, the mRNA is in the left leg in these animals. And the pattern actually is the same as we saw before. That takes a little while to get started. But from week 4 and onwards, consistently and basically every single animal, the circVec is outperforming the mRNA. Take a look at the pictures at day 90, you see clearly a right leg signal is stronger consistently across these animals. So we now have established what I believe is a robust technical proof-of-concept that circVec is efficient and is superior to mRNA expression in vivo. And then we ask ourselves, how much better is this? So we've done a variety of statistical analysis to try and understand the level of improvement we are achieving. So now I'm going to show you 2 graphs where we statistically analyze the difference between the circVec expression and the mRNA expression. In this first example here, now we're looking over the 90 days and then we analyze how much more circVec signal is there relative to mRNA. So mRNA is one, and then the solid line shows you the circRNA expression and how it's improving over time. And what's interesting is that you can see it gets better and better and better. After 25 days, circVec is 1.6x better than the mRNA. After 50 days, it's 2.3x better than the mRNA. And at the end of the experiment, the experiment is still ongoing, but at the last time point, day 90 in this case, we're actually at 3.6x higher expression level. I see there's a type on the slide that should say day 90 and not day 50. But 3.6x better is a strong advantage. And we keep -- we look at the graph here, you expect that this will keep improving. So as we continue to track the mice, it looks like this shape will continue and enhance the expression over time. So we'll get better and better. In fact, you can see also that this is statistically significant. The gray area represents a 95% confidence interval, so this is a very robustly statistically significant advantage we're seeing over the mRNA-based expression. What could this mean over time? This is just for 3 months. Well, this can be a substantial advantage if you look into the future. And we have done some statistical modeling to try and understand if you were delivering this over a period of 2 years, which is sort of a time frame that is relevant in gene therapy, the advantage would be massive. By estimates, we would be roughly 20x more protein produced from circVec 2.1 compared to the mRNA over a period of 2 years. and the red area here indicates the potential of the circRNA, the solid line is where the data suggests it would go, but because it's difficult when you predict into the future, you can see the potential is actually that it can be even much better than this. And again, it's clearly circRNA being superior to mRNA is clearly statistically significant to a very low level. Now what I just showed you is data in a DNA format, research-type vector. Now we want to transport this into actual gene therapy vectors. So now I come back to the AAV. So what we're working on at the moment is putting our circVec constructs, which are now validated in vivo into an AAV vector and understand whether we can improve AAV the same way as we have improved on the DNA vector. So we're now looking at 2 very simple constructs that we compare. A standard mRNA expression in the AAVs and the AAV via mRNA will make a protein and the circVec is the comparator where we make the same protein just using our circRNA approach. And then you look at this head to head. We've generated and validated such constructs in vitro. And we've also shown that these are better. And that's an example you can see in this graph here. The mRNA represents a standard mRNA AAV and then the circRNA and circRNA AAV, and we do 2 time points series 2 and 4 days and clearly at 4 days you can see that the circVec is more than double the expression level of the mRNA AAV just as we anticipate. Also, it increases. That's what we expect, right? It will be more and more because it's more durable, whereas as you see on the graph, the mRNA stays flat. We validated this construct by a variety of methods, experimental methods in vitro and now we're bringing them into mouse models. So far, we're again exploring how does it work in the mouse model, how do we best deliver it. So we have some early pilot data where we inject the AAV into the tail vein in this case, and we look in the mice to see if we get a signal again is the luciferase like we showed before for the plasmid DNA vectors. And as you can see here, we're getting robust signal in the mouse both in the body, in the liver where the AAV is expected to go and in the tail is the strongest signal because that is where we inject. So this is day 14 after injection. We are planning subsequent experiments, again. We would do these larger setups, just like we did for the pDNA first, we try to understand how it works. And then once we have established an experimental setup, we do it in a larger context to try and do a real head-to-head comparison versus mRNA. So that is now the next step. How are we going to apply this therapeutically? The lead indication we have selected is a genetic disease called alpha-1 antitrypsin deficiency, which is a complicated name and usually, it's shortened to AATD. This can sometimes be confused with COPD, COPS or COAD in Norwegian, which is a lung disease, which manifests in a similar way to AATD, and actually many patients with COPD or COAD is actually are AATD patients. AATD is a genetic disease that is actually rather common. It affects more than 200,000 people in the European markets and the U.S.A. So it's both a very major medical need and largely an untapped commercial opportunity because at the moment, there are no effective approved therapies. There are 2 problems you need to solve with AATD. Number one, the AAT protein is mutated in diseased patients. And this mutant form of the AAT protein accumulates in the liver and causes toxic deposits that over time can give you severe liver issues, and may require liver transplant and there is no treatment available that deals with this liver problem. The lack of the functional AAT protein causes problems in the lung. You get emphysema. You get extensive mucosal formation and you get problems breathing over time, and this can be rather severe. And this builds up also like the liver problems. It gets worse and worse. So you need to both replace the functional form of the AAT protein to deal with the lung symptoms and in parallel, you need to remove the toxic form of the protein to deal with the issue in the liver. And this is where circVec comes in because we have the unique ability to deal with both problems with one product. We call this our remove and replace concept. So here, we've made the construct. You can see the genetic cassette that makes the circRNA first, so this green and blue bit makes a circRNA that expresses the wild type or natural form of the AAT protein to replace the functional AAT, which is missing in the patients. Then at the backside, here you see the yellow bit. This is what we call a remover element. This remover element actually targets specifically the mutant form of the AAT and degrades it. So then we're removing the toxic variant of the protein, thus killing 2 birds with 1 stone. This we have validated the in vitro that our constructs work. These gels here on western block just simply show you that we are, one, able to knock down, remove the mutant form without impacting the natural wild-type form expressed from the circRNA. So we can do both in one go without causing problems. The graph here quantifies it, you can see very clearly the black, the mutant form of the protein is removed the gray, the natural one is retained. And this is actually an important nuance. Doing this with mRNA would be much more difficult because it's difficult to use our remover strategy if you had a linear mRNA. It works much better because we're using circular RNA. So the fact that this is circular RNA-based makes the remove and replace work more cleanly and more efficiently. So these constructs are now being tested in vitro, and we're bringing them into in vivo models as we progress, and we're starting to test our AAV format, AATD disease concept in mouse models in the coming months. We have talked a lot about AAV virus for gene therapy. And I just also want to stress at the end that this is not the only path we are exploring. It's the first approach we're taking. We believe it's the lowest hanging fruit, and we can clearly improve on the existing AAV gene therapy. We still see a variety of other alternatives. We've also validated circVec with adenovirus. For those of you who followed us for some time, you may know that our historical ONCOS-102 product was based on an adenovirus, and we also engineered that to express circular RNA and that works effectively, and this is something that may be applicable in the context of vaccines. And then we're working on synthetic DNA format vectors to see how they are able to express and function with circVec. And synthetic DNA is what's expected to become the gene therapies of the future, so this is a bit more long term. It's technically a bit more challenging but also a high reward if we're successful at the end. So we start with AAV, but the opportunities are broader. So with that, to summarize the R&D update, we are tapping into here, the gene therapy market, which is rapidly expanding. We're dealing with some of the major issues in the gene therapy market that we think circVec is a technological platform that really can enhance gene therapy as it is today. And there is an urgent need for these type of enhancement to make more effective and more affordable gene therapies in the future. Our solution is circVec. This can improve expression. It can improve durability. It can make gene therapy more powerful, and we can make it cheaper. It can reduce the dosing need. And we have this unique remove and replace functionality, which allows you to kill 2 birds with 1 stone. As we look forward, we have established already an in vivo technical proof-of-concept for circVec. This is done during Q1, I showed you the data before. It's highly robust. It's statistically significant. We're now moving that to show a proof-of-concept for our AAV vectors. These experiments I showed are ongoing. We are expanding them. In the middle of the year or Q3, we expect to have our AAV proof-of-concept data pack in place. And then the next step after that is to validate it in AATD, the disease we're targeting models in animals and that will roughly occur in the next 9 to 12 months. And as this data package grows and becomes more solid, our aim is to enter our first partnering deals during the next 12 months. So with that, I hand over to CFO, Lubor Gaal, to take us through an update on the '23 financial results for the company as well as the planned financing we are intending to do during Q2 and which was announced this morning. So over to you, Lubor.

Thank you, Erik, I have now the pleasure to present the result 2023 and the outlook for 2024. Before I do that, I want to highlight or stress that these are unaudited numbers. Our official number, our audited numbers will be released very soon. I want to use this as an opportunity to recognize my financial teams, [ Matson Linda ] for producing a lot of good work to make this possible. As I -- the priority of 2023 was reducing the cost for the operations. And I'm happy to announce that this objective was achieved, in the second half of '23, we reduced the cash burn rate in half versus the first half year of 2023, and now, as I said, NOK 30 million versus NOK 59 million in the first half of the year. This was mostly achieved or mainly achieved by reduced payroll and related expenses. We cut those expenses by 45%. This was achieved to a large degree, of course, in reducing headcounts but also in lower payments to existing team members. We have, for instance, not recognized any bonus payments for 2023 to date. And also, we have the management and the team in Norway have taken a pay reduction in the fourth quarter of 2023. So overall, payroll expenses have been reduced quite significantly. Also, of course, we have reduced the R&D expenses. And in the second half of '23, we now -- basically, the expenses are recognizing the investment in circRNA and of course, also payments for the externally sponsored TG studies. In addition, I want to highlight that in the other operating expenses, about half of the expenses, about NOK 4 million are related to expenses that we have to make as a publicly listed traded company in Oslo Stock Exchange. And there are one-off expenses like NOK 2 million that are related towards the liquidation of our subsidiary, Targovax Oy. In addition, I want to highlight, of course, here on this slide, the large write-down that we had to take in 2022 through the intangible assets of ONCOS-102 which is related from the acquisition of Targovax Oy. And with that, I would like to focus on our attention on 2024 and basically say what we have done in terms of organization. As you can see, we have reduced the team from 23 to 10 full-time equivalent in line -- which really reflect the change in-strategy and the change in focus. And we think now we have a very lean team in place. This, of course, as said has been achieved with making some positions redundant in line with the new research strategy but also with voluntary departures and many of which, which have not been refilled. I want to highlight the entire Circio team, everybody on the team has taken on additional responsibilities and taking on new roles to really compensate for the departure of some team members and also, of course, to really enable us to run such a lean infrastructure and still have a fully operational biotech company. In line with that, we also have done -- we streamlined the Board and the management. The Board number has been reduced from 7 to 4, and also the management team has been reduced from 7 to 5 people. Clearly, in the future for 2024, the R&D staff is prioritized. We will focus all our resources on the R&D and the team and see that they are fully equipped to generate the data that we need in order to run our business and generate value. And we're trying to minimize the back office as much as possible, but we think that we have achieved or reached a level where further reductions are very difficult to achieve. With that, I would to follow up what is our R&D strategy. As Erik was already saying, we have done great progress, and we're continuing to make progress. We have to build on a strong technology platform. I would compare it similar to maybe a race car like a Formula One team. We already have a very good race car. We have to keep engineering, we have to keep improving the risk in order to really have a winning car that's what we're doing. And the R&D team is doing a great job to do that. In order to do that, we have to give them the right resources to continue working on this. As Erik is saying, we'll focus on those on gene therapy and AATD is our lead program, which we have strong hopes and we think that we have a unique concept for this disease. We are, of course, complementing our internal team with external collaborations. As I said, our technology relies on many different factors. Some of which we are not developed in-house, and we are sourcing them from external parties in order to complement the separate platform technology. So what does that mean for our cost base in 2024? We continue to control cost versus the 2023 levels. I think we have achieved already a very high cost control, and we can operate on a low level with a fully functional company. We are basically assuming now a cash burn of about NOK 5 million per month. This lets us allow to fund the R&D activities to a level that we think is sufficient and to achieve the objectives we have set out to us and really reducing the payment on everything else. So right now, all the -- right now, actually, like looking at 2023, we have spent about 70% of the cash in R&D. In 2024, the goal is to move that to 75% or even 80%. But clearly, there's a limit because as a publicly listed company, we have expenses that we have to maintain as a publicly listed company, but we are doing everything we can in order to put the money where it generates value. Clearly, we need -- so this brings me to the next topic, as Erik already pointed. This morning, we announced that we are planning to do a financing, and this financing is a partially guaranteed rights issue, which we want to complete by June 2024. The target size is between NOK 50 million and NOK 60 million gross proceeds, and I'm happy to say today already, we have a precommitment from the Circio Board and the management of NOK 1.5 million to participate in this rights issue. Our Atlas is supportive and will contribute to the transaction. What will this financing achieve? The financing will extend our runway to achieve multiple value inflection points in the next 12 months. Primarily, of course, we have to generate the data that Erik was alluding to and really show that we can really develop novel gene therapy medicines using our circVec platform, which are superior to what's currently available. And really important for us, of course, is we think that this data will allow us to enter into one or more strategic partnering deals. It is our -- we know that our technology can do more than just generating gene therapy development, and we want to generate data that allows us to do partnering deals and that will bring in nondilutive revenues to the company. And we have selected Redeye as sole bookrunner for the financing as they are uniquely positioned to help a company like Circio as they have a very, very strong presence in Scandinavia and will help us in conducting this financing in the next few weeks. And with that, I'd like to concluded presentations, and we'll move now to the Q&A session.

So thanks, Erik and Lubor for your presentations. Now let's proceed with the Q&A session. And you've shared some vivid questions with me before this, which I will integrate into my questions. But to start, do you have a comment about the press release you released this morning about the termination of the IOVaxis deal?

Yes, that's correct, Richard. This morning, we announced that we were terminating the arrangement with IOVaxis. They have the license to our TG01 cancer vaccine in China. Unfortunately, IOVaxis has not been able to meet their financial obligations under the agreement. And we mutually agreed that it's better to terminate the agreement now. And this also makes us free to explore other partnering alternatives in China. IOVaxis continue to be interested in the product and are seeking financing to continue to bring products into the clinic. And if their financial situation changes, we may reconsider in the future. But for now, the deal is terminated.

I understand. It's simply due to financial problems on their part.

That is correct.

Continuing on the TG01, which this is also a viewer question. Could you give an overview of the progression of the 3 trials that you're doing? And when -- could you first present some efficacy type of data or biomarker or something like that?

So we have 3 ongoing clinical trials with the TG01 in KRAS-mutated cancers one in Norway in multiple myeloma, and then there are 2 trials in the U.S.A., one in resected pancreatic cancer, pancreatic cancer after surgery and another trial, which is very interesting. It's a triple combination trial at Georgetown University, which is in lung cancer and later stage pancreatic cancer. So all of these are active and enrolling patients. I would say that the trial in Norway and the Georgetown trial are progressing very well. Recruitment is looking promising in number of patients enrolled early on. The one at Kansas unfortunately, has been slower to recruit. So there, we're looking at the alternatives to improve the recruitment rates. Of course, these trials are academic and sponsored by the investigators. So we have limited insight into exactly how they're operating. We are getting routine updates and also it's not in our hands to make decisions as to how they progress or when data are released. But we do expect that we will start to see the first data emerge second half of this year. We would expect to be able to release interim biomarker and immunological data during second half of the year. And next year, we should be starting to see clinical efficacy data emerge from all of these trials is what we expect.

The Georgetown -- sorry, that's the one with Janssen, correct?

Correct. So the Georgetown trial is financed by Janssen, the oncology or therapeutics division of J&J, and it's run by Professor Samir Khleif at Georgetown University.

Yes. That's where we see the most potential probably.

Obviously, there is a partner already involved and it's a kind of high-profile trial. So if the data is positive there, we would expect that it creates several opportunities.

Yes. And we should move on to your circVec program. And you've talked about -- a lot about the AAV use. Could you explain a bit about that why -- what's so different about that, about why you're doing it?

So we are convinced that circVec is a great way to increase protein expression and make the protein expression more durable. And this is one of the issues that are holding back AAV from reaching its full potential today. As I mentioned in my presentation, the low expression creates challenges for cost and durability and limit the number of diseases you can target. So we basically -- we see the opportunity very simply. You put circVec and express via circRNA instead of mRNA. And by doing that, we estimate somewhere between 10 to 100-fold improvement in the overall protein production. And it's at earlier data that we've quantified, now in vivo indicated a 20-fold advantage over 2 years. So 10 to 100, I think that's where the potential is. If you can improve the expression level by 10 to 100-fold it would be a massive difference for AAV. Number one, you could simply exchange existing AAVs for circRNA expression and reduce the dose and reduce the costs. That in the self is great, and you could do a simple head-to-head comparison. The other scenario or opportunity is that you could start using AAV in diseases where AAV don't network. And AATD, which we are targeting is actually an example of that where AAVs have been tried in the past, but they weren't able to reach high enough expression level. And we expect that by switching to circVec expression, now AAV is going to be addressable using AAVs.

Excluding AAVs sort of a suboptimal way doing gene therapy, it makes sense to try to improve it the way you're doing it.

Exactly. It's what works. It's what's clinically validated. It's the only commercially successful gene therapy to date, but still, there are major caveats and the field we'll need to find improvement.

And what about the other bit formats you mentioned a bit about the DNA constructs?

Exactly. So precisely for those caveats of AAV, the low expression, you can't repeat dose them. They are -- by many of you, this not the long-term solution for gene therapy. So we believe AAVs is a good place to start. It's what's there. It's what works. We know how to manufacture it. First step for a proof-of-concept, also other viruses are relevant. So we already validated adenovirus, and we're still exploring how adenovirus could be deployed in the context of circVec. Longer term, we think that gene therapy will move to DNA formats, synthetic DNA formats. These would be substantially easier to manufacture. They could be repeat dose and be permanent fix for genetic diseases in the future. The challenge with the DNA vectors is that delivery has not been solved and the body has evolved elaborate systems to deal with this particular problem to avoid foreign DNA invading. So that immunological response has to be overcome and the delivery has to be overcome, but I'm convinced the field will get to that point. And if you look into the future, the gene therapies will be DNA-based. So that's why we're also exploring that. I think from a partnering perspective, that's attractive. We show circVec being efficient in various vector types. Short term, it's AAV, longer term, higher risk, higher reward is the DNA formats.

There will be, some exceptional sense, it will be a lot more convenient if you could just get those.

Absolutely, absolutely.

Take your medicine sort of instead of this complicated procedure. And how about AATD? Why did you choose particularly -- could give us some more details about why you choose specifically this one from all the thousands of...

AATD is a disease where our circVec technology fits particularly well because we have this remove and replace functionality. Many genetic diseases, it's sufficient to replace missing or mutant protein. But in AATD, you actually need to remove the mutant form and replace the functional form. And we think we have a uniquely positioned technology in circVec that can achieve both effectively. So we picked it partly because it's a very elegant proof of concept, for circVec remove and replace. In parallel, you need to express in the liver, the missing AAT protein and liver with current delivery technology is the easiest organ to traffic to get expression in, so it's a lower technological hurdle than to deliver to other tissues with current delivery technology. So that's another reason why we picked it. And third, AAVs have been tried. They were closed but they didn't get enough expression, and we think that circVec can get us over that bump. So in total, these are the rationale. In addition to it being a major medical need that hasn't been solved, the significant commercial opportunity because this is a large patient pool.

I would like to add two other points is that normally, gene therapies are rare diseases with very few patients. This actually diseases are -- very common disease, there about 200,000 patients worldwide, so you can't really call it a rare disease. So there's a huge commercial potential there. And secondly, as I was saying, the FDA has already established some criteria that could really accelerate approval. You have to just show a certain expression level. You don't have to actually have to run long-term clinical studies and show health clinical benefits. But if you just achieve that kind of plasma level of the protein, we could actually get approval very quickly. So I think we're looking at it from a development point of view, it's simple. From a patient point of view, it is a large number. So it's a huge commercial potential. And as Erik said, we think it's a perfect fit for our technology.

So I guess that would reduce the development time lines. And then since there's a large unmet need, you probably have the assistance mechanisms like breakthrough therapy and so on, that's...

We're already seeing the FDA implementing rapid regulatory pathways for these types of diseases.

Yes. And just to summarize the scientific reason, if I understand you correctly, then it gets -- the vector gets to deliver like a sponge, which drains the damaging proteins while at the same time, expressing the needed ones, and they get this contributed throughout the body?

Exactly. They will be expressed in the liver and secreted into the bloodstream and then it will be active. We're also going to explore whether this can be delivered by other routes. So we are in the next step of our in vivo experiments. We're going to be testing in IV delivery to the liver. We're also going to test intramuscular delivery. So we will test and explore various designs and delivery formats to understand what is the best strategy to create therapeutic formats that you can bring to patients for AATD. We have to start that work later this year. Our aim is to have an in vivo proof-of-concept in AATD disease model in, as I said, 9 to 12 months. And after that shortly or maybe in the middle of next year arrive at the lead candidate that we then want to take forward to clinical development.

And I guess a lot of these experiments that you've been doing have been after consultation with potential partners. For example, in the AAV therapy, I guess, that seems a very logical we're moving forward. But what do the companies want to see before you can do a licensing deal? And what kind of deal are we talking about, for example, platform deals or the AATD program is little more classical deal?

We're in constant dialogue with potential partners. I would say we experienced a lot of interest for the technology platform itself. And then it's a question of how we show that it works or where we show that it works. So all the data that we've shown today, we have been discussing with prospective partners, and they have certain questions and requests for follow-ups. We're currently doing experiments that are addressing some of these requests, and then we will revert. And maybe the lowest hanging fruit here is, as you said, in an AAV type transaction because that's the kind of short term, the most concrete plan we have. So that's certainly an avenue to a partnership. So we're starting experiments now and in the next 2, 3 months then we'll start generating data that directly addresses some of these specific questions and the second half of the year, if all goes well, you never know what if experiments work on the first try, but we will start to have a data package that I think will put us in a good position to execute the future transaction. And maybe Lubor can comment on what type of deals we're looking for.

Yes, absolutely. So I mean we are talking, of course, constantly with the pharmaceutical companies and other partners. And as Erik was saying, our research program is very much in response to what we hear from those partners and what kind of data they need to see in order to do a collaboration with us. And in terms of collaboration, it could be very simple asset driven, like I said, with a partnership for AATD or it could be a much more, what we're looking for now is strategic partnerships where we want companies to basically try our technology in a certain therapeutic area or in an intensive indication or for a specific protein that we want to express at a high level in the body, so we are open to different kinds of relationship. The good thing about our technology because our technology is so versatile and so broad, we can look at multiple deals with different pharmaceutical companies for different therapeutic areas. So I think once we have the right data back in place, we expect there will be not just one but many partnership opportunities.

I guess, one absolutely obvious way would be companies working on AAV product and they can't get forward because of issues then they need this.

And I think this is going to show to be so powerful in expression technology, if you're an AAV company, you really going to want to have a hold of this technology because it could make you uncompetitive if someone else does. Think that's the aim. We want to generate that data that makes people compete for the technology.

Yes. That will be put the company quite different situation. So let's continue with funding discussion. As you mentioned today, the rights issue. Will you announce the rights issue you're doing. And the first question, I think people would ask is, why are you doing the rights issue? Why not continue with the Atlas convertible funding?

Well, from the start, when we announced the Atlas convertible financing in 2023, this was supposed to be a temporary solution. It was never meant to be a permanent solution for our future funding needs. And we were contemplating, looking into different financing also from our shareholders have communicated to us that they don't want us to continue relying on the Atlas financing. So we think that this is the best path forward. It really generates the best -- put us at best position to generate value in the future, and this is what is going to be achieved right now in this situation.

And maybe to add, also when we entered the Atlas facility, the conditions were different. The markets were different. The trading volume in our share was different. And unfortunately, the market in general is developed in a way that makes it difficult to operate this facility as foreseen. And we believe it's in the best interest of the company and shareholders to do this rights issue financing raised NOK 50 million to NOK 60 million. It will fund the company for a year. Also, we don't intend to draw any further tranches on Atlas, certainly not for the next 12 months. So hopefully, we will not have to draw on it again in the future.

So you said you're going to take you 1 year ahead more or less. And what you expect to achieve during this period?

The major aims for this financing is to fund the company for 12 months. That is correct. We think that is the time we need to, one, establish a strong data package, particularly in the AAV format and AATD, as we talked about. So we want to reach important development milestones for the platform and have enough time to execute on our first partnering transaction after that. And from where we are today, realistically, this is going to take 12 months to achieve. And therefore, it will be the right thing to do is to finance the company for the next 12 months.

Yes, I think for us, I mean, as Erik was saying, the major drivers are to have sufficient time to really generate multiple value inflection points and really to bring in revenues from partnering transactions. So the key will be, of course, to leverage this data and to do the transaction we just talked about, the partnership with either the AAV companies or with pharmaceutical companies and really sort of take this technology to the next level.

Okay. So yes, thanks for answering our questions, that ends this session.

Thanks, Richard.

Thank you very much, Richard.