Circio Holding ASA (CRNA) Earnings Call Transcript & Summary

Welcome to Circio. My name is Erik Digman Wiklund. I am the CEO. Today, we are presenting our first half year results as well as an update on our circVec R&D program. Together with me, I have CFO, Lubor Gaal; as well as Thomas Hansen, CTO. I will begin with a short highlights session as well as an update on relevant market conditions. Importantly, during the first half of the year, we've been operating under funds raised in the warrant exercise end of 2024 as well as the Atlas facility, and this has enabled us to have a stable cash flow into the company. We've also extended the financing commitment with Atlas. This secures capital to fund our operations until end of the year with an option for further extensions into 2026. On business development, we have been very active. We entered 7 R&D collaborations during first half of the year, and Lubor will come back to these in his presentation. And importantly, we made substantial progress on our circVec platform. We have now showed convincing strong proof of concept in vivo, both with our AAV circVec program as well as in vivo CAR delivering DNA circVec constructs into the spleen, and Thomas will be covering these programs in his presentation. I'd also like to bring your attention to a publication we had in Nature Reviews Genetics by our scientists in the beginning of 2025. This is a very comprehensive review of the circular RNA space and their therapeutic potential. So anyone interested in circular RNA, I highly recommend you tune in and read that review in Nature. In addition, we presented our data at ASGCT in New Orleans in May. This is the preeminent global leading cell and gene therapy conference and an excellent platform for Circio to showcase our currently quite compelling data. We are as a lead focusing on gene therapy with AAVs as our main prioritized program at the moment. So the first gene therapy was approved in 2017. And already now, we have 7 approved AAV gene therapy. So when you hear about gene therapy, the AAV vector is really the workhorse of all of these. Now there are some major challenges with AAV. They require really high dose levels because they're not particularly active or potent when injected into humans. And that high dose level, it drives up toxicity and it drives up the manufacturing cost. And this is making many of these AAVs struggle commercially for those reasons. And there has been substantial news in this field in this -- the past few months. There was an issue with the Danon disease AAV program by a company called Rocket Pharmaceuticals, where there was a patient death in a clinical trial, again, probably driven by the high dosage level of the AAV. So it's an area where the AAV is active, but the toxicity is very severe in the patient. And for that reason, the FDA required a clinical hold, so the trial had to stop. There has also been substantial discussions around the company called Sarepta. This is one of the leading gene therapy companies in the world and they had to pause trials in LGMD muscular dystrophy, again, for safety reasons. And this is where Circio comes in and our circVec technology can really help solve some of the key challenges. So we have data now showing that you can improve the activity level of an AAV gene therapy by 10 to 40-fold if you switch to our circVec-based expression. If you can reduce the dose by tenfold, that would be massive for this space. It will reduce the toxicity level, probably also reduce the cost and maybe eliminate the need for co-administration of immunosuppressant medications. So based on what we're seeing today, we believe that in the future, everyone is going to switch to circular RNA-based expression because it's looking like it's simply more potent than the way it is done today. And Thomas will come back to this and explain in more detail. So our lead program gene therapy enhancing AAV vectors, and we're looking at multiple disease areas in this space. In parallel, as we have communicated before, we're also pursuing a cell therapy program with the aim of developing an in vivo CAR approach utilizing circVec DNA vectors. So in this case, we're not dealing with viral AAV vectors. We're dealing with DNA format, which is redoseable and enables the possibility of a more durable in vivo CAR cell therapy. So with that, I hand over to Thomas.

Thank you, Erik. Thank you all for tuning in. I'm a little taller than Erik, as you can see, so I need to step down a bit. Yes, thank you all for tuning in. I'm very pleased to give you this R&D update. We have some very interesting data to share with you this morning. But before we get to the recent data, I'm just going to bring us up to the same page. So just to remind you all what we are doing at Circio that it is we are developing our circVec platform. And that is basically a DNA cassette that when it enters the cell, it uses the host cell machinery to produce circular RNA. And those circle RNAs are then designed in a manner that they will engage in cap-independent translation and produce your protein of interest. And the reason we believe that this circular intermediate is a good approach is because the circular RNA is extremely stable within cells. Much more stable than mRNA. And as a consequence, you see longer expression. But more importantly, in gene therapy, you get an accumulation of RNA within cells. You can sort of imagine you get constant production of circular RNA that will hang around for a long time. So the steady-state level of the circular RNA in the end is much higher than the mRNA. And in return, you get higher protein expression per DNA copy number basically. So it's a more effective way of producing proteins in cells. So that cassette, we can simply take that and put it into a vector system. And of course, we're working a lot with AAV vectors because that is still the most well-described system for gene therapy. So instead of expressing an mRNA from the AAV, we put in our circVec cassette. And as a consequence, the AAV will then produce the circular RNA in cells, and you'll get those benefits that I just described from the circular RNA namely that enhanced expression of your protein which will be very important in gene therapy, as Erik just mentioned, you get a better, more effective expression of your therapeutic protein. Now before summer, we already -- we were very excited about our AAV data. So what we did there was we expressed our circVec using a heart-specific promoter, which stimulates expression in heart specifically. And we compared how would circVec compared to an mVec, the mRNA -- the conventional benchmark in terms of expression. So if you look across the mouse and you measure how much luminescence so we express this reported gene that's easy to monitor over time. We see a tremendous increase from circVec, ranging from 9x improvement in the high dose to 35x improvement in the low dose, which was a significant improvement. But something that was a little fly in the ointment back then is that we've been working on the generation 3 in vitro, and we had -- we thought that hold -- that was a promising new a new design for circVec expression. But unfortunately, in this experiment, at least, we did not see that benefit in in vivo, as you can see if you compare the circVec 2.0 to 3.0. But we were not ready to give up on the generation 3, even though that data did not translate fully from the in vitro to the in vivo data. So we kept modifying the generation 3 circVec and we tried multiple different things, and we came up with this circVec 3.2 as we call it, and this is all based on some elements that we positioned at the very end of the cassette as is depicted to the right. And interestingly, when we then use that in the same setting as before, namely injecting the AAV systemically, monitor the luminescence in mice over time, we see this remarkable increase in expression if you compare the different circVec generations. So here, we now have 32x improvement over mVec and 3x improvement over the previous circVec generation based on the whole body luminescence of the mouse. So that was very exciting data that we were able to gather here over the summer. But it gets even better because when we sort of monitor the expression in the heart specifically, you can monitor -- you can take the profile of expression. You can look at the heart region specifically. So you see to the left is basically how the signal -- the circVec 3.2 is most notably for that vector because it drives up the expression so immensely in the heart. And if you then quantify that area under the curve, you actually reach more than 40x improvement over mVec in the heart specifically. So I would say that mildly said, that is a massive improvement that we are now observing specifically in the heart. And of course, going back to what Erik mentioned with Rocket Pharmaceuticals in Danon disease that is a disease that is affecting the heart. So that is where you basically want as effective heart expression of the missing protein, which in Danon disease is called LAMP-2. If we are able to reduce dosing 40-fold in Danon's disease, I think all those toxicity issues that Rocket Pharmaceuticals is currently facing would probably be less problematic. So this is something that we are very interested in pursuing in more detail going forward. So that's extremely exciting, but that's not all. We have also been very interested in characterizing circVec performance in ophthalmology. So that is sort of in the eye. So what you can do here is you can actually inject AAV vectors intravitreally as it's called. So we basically inject it in the eye. And then similar to what you saw before, you can monitor luminescence over time. And very encouragingly, we also see a substantial increase in circVec expression in this setting. And I'll just point your attention to the fact that this is not even the 3.2. This is an older circVec that carries a ubiquitous promoter that allows expression in the eye, but we are definitely pursuing this and doing further because a 15x improvement with circVec 2.0 in this setting is very encouraging. And there's a lot of rare diseases where AAV technology would be very suitable in such a setting for different ophthalmology indications. So that is very, very encouraging for the AAV gene therapy using circVec. So yes, so that basically brings me to the summary. So what I've shown now is that we're able to outperform mVec significantly, depending on the context and the circVec cassette, it's more than tenfold, even more than 40-fold in the heart specifically. And critically, we see a circVec advantage across different settings. So we not only see that in the heart, but we also see it in the eye, and that is basically using different promoters, in this case, also using different AAV capsids. So clearly, this is not only sort of validates circVec as a versatile platform, but it also -- it's very encouraging to see that circVec specifically, but I think also circular RNA in general, is a very promising technology in gene therapy, namely because it can drive our protein expression much more effectively than an mRNA equivalent. Moreover, we've seen now that the most recent 3.2 design actually improves expression by roughly threefold in the heart. So that's very encouraging as well. So coming back to, for instance, some of the toxicity that's been currently observed in the AAV field. If we are able to reduce dosing just by tenfold, let's say, without losing clinical benefit, that would be a game changer in gene therapy because the safety profile would be different, reduced toxicity, much safer for the patient. And I think that will definitely be a new avenue for AAV gene therapy overall. So I think we are very, very excited about this development at Circio. So we keep pushing forward. We still, for our gene therapy pipelines have a huge focus on heart and muscle still, specifically with focusing on heart, given the current data. We have some ongoing studies in the CNS and in the eye, as I just showed you. So we will, of course, also deploy the most recent circVec designs in those settings and see what improvements do we observe and is this -- and what benefits are we seeing from the most recent circVec designs. And we are gearing up now to start looking into more therapeutic avenues looking into what specific indication would be a good fit for circVec. I mentioned Danon disease where Rocket Pharmaceuticals are struggling. So this seems to be a good fit. So this is something we are looking into in more detail. We are looking at different ophthalmology indications given the data that we can likely get at least 15x improved expression. So there's a lot of avenues that we are currently evaluating, looking into CROs that have the relevant mouse models and designing the constructs that would be relevant for the given indication. So this is all ongoing, and we hope to be able to initiate some of these therapeutic sort of relevant studies by the end of the year. Also, we are not touching much upon that in this webcast, but we also have a program on in vivo CAR. Here, we are looking in -- this is a nonviral approach. So this is not AAV-based, but this is where we want to target the spleen or target T cells specifically using some type of delivery technology, likely an LNP that would carry the circVec vector into the target cells. And so we are discussing this with multiple different partners and try to identify the best path forward here because as you've seen in the past, we have some very encouraging data with circVec expression and robust circVec expression in the spleen. And then in parallel, in the lab here in Stockholm, we are, of course, also pushing forward towards an even better circVec cassette. I would be surprised if we reached the ceiling now. I think we can still improve on circVec. So this is going on in parallel, namely producing circVec generation 4. So exciting times to be employed at Circio. So I hope you've enjoyed this R&D update. And now I would like to hand it over to Lubor, who will give you the corporate update.

Thanks, Thomas. Very exciting. So it will be difficult to follow this exciting presentation about this really interesting results, but I will give you an overview of our financial activities and business development activities over the last 6 months and our plans going forward. So we started the year in a very good position following the warrant exercise in the private placement in December of '24. As you all know, the warrants were oversubscribed, which showed a strong interest in our technology. And so we were able to finance the first half year of 2025 on the combination of that warrant exercise plus calling selected tranches from Atlas Capital. And of course, we had ongoing discussions with investors during that and I will give an update on that later. Very importantly, we were able to extend our runway. The finance commitment with Atlas, which ended in 20 of June was extended and now we are -- I can say that we have safe operation until the end of the '25. This is, of course, possible because we continue to control our costs tightly, and I will talk a little bit more about the impact in the financial figures on the next slide. And then very importantly, I think we have to compare ourselves to where we were about 12 months ago same time last year. We reduced the outstanding bonds from NOK 35 million to less than NOK 10 million. So reduce the financial risk, which taking our cap table with new investors, who've taken strong positions in Circio and also, of course, with some of our major shareholders increasing their position. So we have a much stronger cap table now than last year. And importantly for us, of course, as you just heard from Thomas, we made great progress with our technology. And now we have really validated the technology in different tissues and different technologies, different aspects, and we are now very, very confident about the benefit of this technology. So together, we feel like we're in a much stronger position at Circio compared to where we were 12 months ago, we have a much stronger data package, stronger technical program, and we have a much stronger financial position. So let me walk you through the numbers of the first half of 2025. They're very much in line with the 6-month periods previously in 2024. As you can see, we continue, of course, to invest in R&D. This is very important, as you can see from the presentation of Thomas, we need to run more experiments to test technology, different aspects of technologies and we have found a very cost-efficient way to do that. So we actually are very productive and going to generate a lot of results based on a relatively modest budget. Also, of course, this is also only possible because we have a very efficient R&D team. Our team are, of course, the leaders in circular RNA. We have the most experienced people who can really apply this technology in the settings and we'll continue to operate with a small team very efficiently. As we said, we have to control our costs, where in the operating expenses will be clearly as low as possible, but there are certain expenses as a public company, of course, that we have to have. And so we'll continue to operate as small as possible. But as you can see on the total operating expenses, we've been very stable compared to the last 6 months. And you can now say that we're operating on a budget of less than NOK 4 million per month. And we can continue on this basis going forward. But of course, we would like to increase our activities if possible. On the financial -- net financial items, just quickly highlighting the difference in the numbers between '24 and '25 is that in '24, we recognize the wave of the ONCOS-102 R&D loans that we received much earlier. Otherwise, the operating lenses recommend financial expenses that we have a cost of the Atlas agreement. And we want to draw -- yes, the net cash at the end of the period is quite low but this is low by design. We, of course, as we said, we will call tranches from Atlas only on an as-needed basis. So we won't keep the money quite low right now. Okay. What are we doing in terms of financing, of course, based on the new data that we just generated, we're going to go, of course, continue our discussion with investors. We are quite confident that this new data will generate a lot of interest from investors. But of course, we also need to say that the market conditions remain challenging. I mean not just for biotech company, but globally, you're all aware of what's going on in the world. That also has an impact on the behavior or decisions of investors and biotech companies and what we have seen, of course, over the last 6 months is that while we do get quite a lot of interest we also get in discussion a moving of the goalpost with some of these investors will keep then demanding more and more data. But with the new data package, we're quite confident that we can address many of those questions. We also, of course, quite happy with our relationship with Atlas, we are able to negotiate a financing commitment until the end of 2025 based on the strong performance in the first half of this year. We are -- have a good relationship with Atlas, and we continue to explore different options of working with Atlas and of course, raising financing or so. So we're grateful to Atlas for giving us reliable access to capital in tough market conditions. But of course, we're looking elsewhere, of course, to generating new funding. Business development, as Erik was already saying, we continue to establish strong technology collaboration, and I will give into more details on the next slide. We will leverage the new data that Thomas just presented in talking to gene therapy companies which we then hopefully can releverage into early-stage technology collaborations. And we continue to monetize our technology in noncore or complex areas in collaboration with other companies, and I will give an example on the next slide. So let me give you an update. So we are showing here 5 business development collaboration, but with the title says 7, that's because 2 of them remain confidential. What do you have this technology collaboration in common? Well, our circVec cassette needs to be delivered to the right tissue to the right cells in the body and that we need to do with another technology. So we always need to combine our circVec cassette with another technology, either wither a vector, a virus or an LNP. And these companies enter such as new region, they have different product delivery technologies that we need. So we need to do these combinations and need to test which combination works best for us. Some of these collaborations are complementary and some of them are competing with each other. So meaning that we can have different delivery technology to go to different tissues in the body or we just have different formulations of the same class of delivery technology. So we don't expect all of these collaborations to work out or we are -- even if they do work out, we will compare them versus each other, and then we will expect to take the best technology forward for the different purposes. So I won't go too much details here. If there are -- if there is interest and learning more about them, of course, send us an e-mail, and we can explain them more in details but we're just saying quite exciting about having established so many collaborations in such a short period of time. I do want to highlight a little bit the collaboration we have with Lonza, which is that one of it says it's a novel use as Thomas has said or shown, our technology is extremely efficient in expressing proteins and expressing proteins, of course, is very important, a lot of the manufacturing of therapeutics of antibodies and other proteins. And what we're trying to hope with this technology or with this collaboration, Lonza is one of the -- or maybe the imminent manufacturer of biologics in the world, and they have a proprietary technology or expression system and we are working together with them and seeing how our technology could benefit in their system. So we are quite excited if that leads to positive results, of course, that could be an additional benefit to leverage our technology in areas where we would not be active ourselves. And them with that, let me wrap up what are the next milestones on BD activities. So as I said, we're going to -- we have ongoing discussions with AAV gene therapy companies, but we're going to go and talk to more companies of trying to get them interested in our technology and test them in-house. We will be pursuing or are pursuing discussions with cell therapy companies that Thomas alluded to before and leverage the technology in that area as well. And of course, as I said, we are working with the existing companies and delivering the results and we expect to have some results later this year, but would not -- maybe not announcing all of these results because sometimes for a competitive or IP reason, but also because we may not decide to go forward with certain technologies and then focus on some others. So don't expect to hear anything soon, but there will be a lot of activities ongoing. And with that, I hand over to Erik.

Thank you, Lubor. So to summarize, take-home messages. We have a platform here in circVec that delivers unprecedented durability and protein expression advantage over conventional mRNA-based expression system. And this is versatile and that it applies both to viral vectors and nonviral vectors. Focus for us now is deploying that in enhancing AAV gene therapy to enable reduced dosing and more safe gene therapies in the future and LNP or other delivery technologies to enable DNA delivery to in vivo CAR approaches. This technology has a true platform potential. It's a best-in-class, industry-leading circular RNA expression system. We're not aware of any other companies or academics that have a circular RNA expression system that perform as well as circVec does. We have multiple opportunities in several disease areas and we plan to both the partnering and develop programs in-house. So with that, we conclude the presentation part of this report and we can move to Q&A.

We have received several questions. And maybe Lubor, you want to start with finance and business development.

Sure. Happy to.

So we received questions on our cost base. We have operated on NOK 4 million per month as a budget for the past 1.5 years. Are you able to extend this and do you expect the same cost basis going forward?

Absolutely. No, we have now a very well-established operations. Clearly, we need to operate under at the NOK 4 million to NOK 4 million budget because that's the tranche size that we can draw from Atlas but we found a way to be very efficient in our operation, and we can maintain this level for the foreseeable future. As I said, of course, it does come at a cost. I mean, of course, we cannot do too much like we have to operate efficient with a small team. But of course, if we had more money, we could do more, we couldn't have faster progress. But we can definitely operate at this level going forward. There's no problem.

We received several questions on business development. You mentioned Lubor that there are ongoing discussions on the AAV gene therapy. Could you elaborate on the time line? And what kind of deal you would expect?

Well, I mean, deals will happen overnight. Sometimes even when the companies are interested in working together, it does take time to negotiate contracts because these collaboration can be quite extensive and complex or contract negotiation can take months, unfortunately. So I mean, we would like to enter this collaboration, of course, as soon as possible, but we have to be cognizant that pharmaceutical companies or other companies take their time in making these decisions and also in negotiating these contracts. So like you said, we have ongoing discussions. We are confident that some of them will lead to a successful completion in this year, but of course, it would be very difficult for me to predict the month, so -- but you can be assured that, of course, we're working as fast as possible to have them signed or established as soon as possible. But yes, we're very confident. We're very encouraged by the discussions we have ongoing. We get the right signals. So we're very confident that this will happen in this year.

And fair to say, we will now also be going out there and marketing the new results, which I think are substantially stronger than what we had before.

New results will definitely help in our discussions, and we can already see that in some of the conversations that we're having. So this definitely will be a much better discussion going forward.

So we have a few technical questions as well. Maybe I invite Thomas to take those.

Sure.

Generation 4 circVec, Thomas what kind of advantage could you expect? And is this in any way delaying or impacting the advancement of the circVec program in terms of therapeutic programs?

Yes. So we are currently characterizing the new generation of circVec vectors in the lab, we have a very strong R&D team here in Stockholm working hard to namely build and optimizing circVec cassettes. And I think now we are -- I mean, I think it's too early to say, but I think we hope to see at least a significant improvement on top of 3.2, but let's see how that translates into a mouse. You can never know with certainty how that looks, but we are very encouraged already now by the 4.0. But yes, a little early to say. Regarding then the development of therapeutic program, I think this is something that could easily go in parallel. This is not something that necessarily will pause or change the pace by which we develop the circVec 4.0. A lot of these in vivo experiments are -- we are not doing that in-house. This is, in many cases, done by either an animal facility here at KI or by other CRO. So that work can definitely go on in parallel. But I think it's also interesting now with the data at hand I think we are ready now to embark on some therapeutic proteins and do these mouse models because that is, of course, a little bit more expensive. It takes longer time. It's more complex to interpret the data, but I think now the technology is ready to fully dig in. And I think we will, as mentioned, probably look close at Danon disease and different ophthalmology indication to start with. And hopefully, as I mentioned, we aim and hope to initiate some of that this year.

Thank you, Thomas. We also had some questions around the disease models and timing, but I think you covered that in your answer. Given the data that has been produced, is this impacting your thinking around these areas to prioritize and what may be your lead indication?

Yes, of course, we are following the data. And clearly now, the strongest data we have is in heart 44x improved heart expression from circVec compared to mVec. So clearly, this is something we are looking at. And I think that given the data, that's where circVec has the strongest profile. Eye data, also looking extremely promising. So I think these as mentioned, these 2 avenues are something we are looking at in more detail and identifying CROs that have the suitable know-how and mouse models to help us with these particular mouse models is ongoing work. And just to stress that eye data, of course, is with circVec generation 2. And the circVec generation 2 is actually performing better in eye than it did in the heart. So we're very curious to see how our 3.2 variant will perform in eye when we get around to doing that experiment.

Yes. And this is something that we are setting up as we speak. Thank you, Thomas. A couple of more questions we've received that I can cover. There is a question around Certests. So this is a collaboration partner we have with an LNP technology that we used to deliver to the spleen. There is some concern we've heard that they have done a deal with a company called Emervax and whether that impacts Circio. I'd like to stress that Emervax is doing something completely indifferent to us. That's a circular RNA in vitro transcribed circular RNA company. Remember, we are making DNA and viral vectors. So Certest and Emervax have entered an exclusive relationship when it comes to delivery of circular RNA but this is different to what we're doing. So it has no impact whatsoever on our programs, which are DNA delivery when it comes to that collaboration with Certest. There is also interest and questions around the TG program and when we can expect data from that. This is -- these are clinical trials. We have 2 ongoing clinical trials with TG01, one at Georgetown University in the U.S. and the second one is in Norway. The Norwegian trial, we published data in June of this year, which looks very encouraging. So that's a good start. That trial should be fully enrolled, hopefully, by end of the year, and then data will be coming out next year. For Georgetown, we have less insight. These studies are investigator-initiated. So it's not controlled by Circio, how they progress when data is reviewed, but I would expect that during this year, we should be able to get updates and probably presentations at the suitable conference next year. There is also interest still in IOVaxis and questions around that. I can say that we still have a dialogue with IOVaxis. They are trying to set up clinical studies in China. But due to financial market conditions, they so far have been unable to finance those efforts. Lastly, around our in vivo CAR program, we received a question that there are many of these programs now in development. We saw multiple acquisitions by big pharma in the space. but they're all looking more or less the same. What is the circular differentiation. And I think this is a very important question. As far as we know, most or all of the in vivo CAR programs are either based on delivering mRNA or synthetic circular RNA. And that's proven very effective in NHPs, so in monkeys. And the first programs are now moving into clinical trials. So that will be very exciting to see how it progresses. What's important is that when you use RNA, you get really short expression windows. With mRNA, 1 to 2 days and then the expression is gone with a circular RNA -- synthetic circular RNA that is extended to maybe 1 week, but it's still transient. What we have shown with our spleen delivery data is that we can express in the spleen, specifically in B and T cells for 3 months or more. So it's a completely different temporal window. We can get much more durability because we're expressing from DNA. That is the fundamental difference. So we believe that we can deliver an unprecedented stability of expression, durability of expression, which would enable less frequent dosing. And we are now actively going around and discussing the data that we have with in vivo CAR companies. And the aim would be to try and enter into research collaborations with such companies where we can test delivery of circle vectors to T cells to the spleen and compare directly with the technology of those companies. So that would certainly be an aim to try and get a head-to-head benchmark with one or more of the in vivo CAR companies. That, I think, concludes what we received in terms of questions. Thank you all for the interest. And we will sign out from Circio. We'll keep you out posted on progress. and we will plan for another webcast update probably in November. Thanks again, and have a nice day.