Egetis Therapeutics AB (publ) (EGTX) Earnings Call Transcript & Summary

Welcome to Egetis Therapeutics Q3 Report 2024. [Operator Instructions] Now, I will hand the conference over to CEO, Nicklas Westerholm. Please go ahead.

Thank you, operator. Good morning, and a warm welcome to Egetis Therapeutics webcast for the quarter 3 report and results. For those I haven't had the privilege to meet before, my name is Nicklas Westerholm, and I am the CEO of the company. With me today, I also have our CFO, Yilmaz Mahshid; Karl Hard, our Head of Investor Relations and Business Development; and Henrik Krook, our Head of Commercial Operations globally. What we are planning to cover today are updates on several important milestones delivered during the quarter. We will touch upon the progress for our marketing authorization application for Emcitate with the EMA. The guidelines for diagnosis and management of Emcitate deficiency issued in July by the European Thyroid Association.The new data published through an abstract concerning survival. The data was presented at the 46th Annual Meeting of the European Thyroid Association in September. The [ ReTRIACt ] status, obviously important, recognizing its being a pivotal randomized controlled study for the U.S. submission. We'll also touch upon the patent application we submitted to the U.S. Patent and Trademark Office regarding process of preparations of [ tiratricol ]. And also touch upon the news that will feature during October and early November, which was the directed share issue of around USD 30 million. We'll then move into a financial update from Yilmaz and then subsequently move into Q&A from the audience. So, starting off with the marketing authorization application for the approval in the European Union. We are very pleased to call out that we remain on track according to EMA's stipulated time lines. As many of you would know, the marketing authorization application was submitted in October last year. And subsequently, we received in February, the 120-day questions, which we responded to in August. Subsequent to that, as per the stipulated timelines, we received on the 17th of October, the day 180-day questions and plan to respond to these by November 12th, i.e., beginning of next week, according to EMA's published procedural timelines. Subsequent to that, the ball is, of course, in the EMA's court, but we're looking forward to a CHOP opinion towards the back end or early next year. Along the lines of Europe, we also had some guidelines that was issued in July. The guideline was issued by the European Thyroid Association, ETA, covering diagnosis and treatment of Emcitate deficiency, amongst others. This is somewhat unusual, recognizing that Emcitate deficiency is an ultra-rare condition with no therapy approved today. These guidelines recommend the use of tiratricol or Emcitate as a long-term therapy for all patients with Emcitate deficiency, but also for certain patients with a different indication such as resistance to thyroid hormone beta, RTH-beta. This is, of course, valuable for us moving forward. It will be important for the commercialization in Europe where there are now clear guidelines existing and will support also driving disease. Page 2, some new data that was published in quarter. So this data derives from a retrospective ReTRIACt study by the Erasmus Medical Center Rotterdam, where they investigate of tiratricol on mortality in patients with Emcitate deficiency. The abstract was published ahead of the ETA and the data presented is really valuable for us. It illustrates that tiratricol treatment had an approximately 3x lower risk of all-cause mortality, which is, of course, again, very much to our benefits moving ahead, especially when it comes to payer interactions in Europe as well as the forthcoming U.S. drug application. On top of that, a peer-reviewed publication is in progress, which will hopefully be published at the beginning of next year. Turning our attention to the ReTRIACt study, where we have had better progress in quarter 3 compared to previous quarters, which is very important to underline. As a reminder, this is a study that was agreed with the U.S. FDA, a pivotal randomized placebo-controlled study in at least 16 evaluable patients with MCT8 deficiency to support the NDA. We all recognize and we need to be humble that the recruitment in previous quarters hasn't been up to our expectations and to increase the recruitment study. During the summer, we added 3 additional clinical study sites, commercial study sites, which was opened in July in the U.S., one in Texas, one in Georgia and one in North Carolina. So at this moment, we have 6 study sites open, 2 in Europe and 4 in the U.S. The current study status includes the 2 patients we expected to be randomized and which we called out in our quarter 2 report. Furthermore, the 6 patients planned for screening, which we also mentioned in the quarter 2 report resulted in 4 new patients that are now in the run-in period. So, in total, we now have 17 patients included, where 8 patients are evaluable and 4 patients are in the so-called run-in period. Please note here that as for any clinical study, there will be a few dropouts and hence, not all patients included will be randomized. Going forward, we have more than 10 eligible patients identified and remaining for recruitment going forward, of which a couple of patients are already scheduled for screening in the coming weeks. As previously communicated, we have full focus on the recruitment in the ReTRIACt study, and we will update the market as soon as recruitment of the study is closed. And at that point in time, we will also be able to provide information on expected top line results and when we plan to submit a new drug application. Moving on to our patent application. As many of you know, today, Egetis holds orphan drug designation, ODD for MCT8 for treatment of MCT8 deficiency as well as RTH-beta, both in U.S. and Europe. That provides marketing exclusivities of 7 years and 10 years, respectively, from the date of regulatory approval. We were very pleased with the submission of our first patent application concerning processes of preparation for tiratricol and in layman's word, manufacturing patents. If granted, this will be a significant patent and important for us. And generally, the exclusivity term of a new patent is 20 years from the date of which the patent application for the specific patent in question was filed in the U.S. Let's turn our attention to our directed share issue. We announced the share issue -- the directed share issue on the 30th of September. This was a directed share issue for approximately USD 30 million or SEK 300 million. The directed share issue was oversubscribed and included both existing and new international and Swedish institutional investors. We are very proud considering the challenging market conditions that we executed this on the subscription price at market. And more importantly, the directed share issue was led by Fraser Life Sciences with SEK 10 million or roughly 1/3 of the share issue executed on their behalf. So with that, let's turn our attention to the financials for the quarter, and I hand over to our CFO, Yilmaz Mahshid. Yilmaz please go ahead.

Thank you, Nicklas. Looking at the numbers, revenues for the first 9 months of the year were SEK 35.3 million versus SEK 25 million in the same period last year. Revenues for the third quarter of the year were SEK 9.4 million versus SEK 12.2 million in the same period last year. The lower numbers in the quarter versus comparison period in 2023 are due to lumpy order patterns from countries where the drug can be reimbursed at the pre-approval stage. Results after tax for the third quarter of the year were minus SEK 86.2 million, which also was the same number in the same period last year. Operating cash flow for the third quarter of the year were minus SEK 62.5 million versus SEK 93.1 million in the same period last year. And the cash position at the end of September was approximately SEK 130 million versus SEK 85 million per end in the same period last year. And, as Nicklas mentioned, it was very gratifying to see that we have a good support from existing and new shareholders, which did result in a net cash injection to the company of SEK 282 million that occurred post the period close. And, while mentioning cash, I would also like to highlight that [ Emcitate ] has been granted rare pediatric disease designation, which gives Egetis the opportunity to receive a priority review voucher in the U.S. at approval. And as a guide to your modeling regarding the cash position for the company, the base case should be that we will transact and sell the PRV. And the public figures, as many of you probably are aware of, for the last 2 transactions of PRVs are in the range of USD 150 million to USD 158 million, which would mean approximately SEK 1.6 billion to SEK 1.7 billion on current dollar value and of which we are eligible to 50%. With that, I would like to hand back to Nicklas.

Thank you very much, Yilmaz, for the financial overview, and that takes us to the end of our presentation, and I'll hand over to the operator for question and answers.

[Operator Instructions] The next question comes from Chien-Hsun Lee from Pareto.

A few questions from me. Regarding the U.S. trial, you have included 17 patients and 8 have completed and 4 in running phase. Does it mean that the 5 patients, they have dropped out or they are still subject to screening? And for the ones who dropped out, is there any reason that you can possibly share?

Chien-Hsun, thank you for your question. And I think I will reiterate what I said before, just to set the scene. Yes, we have made good progress during quarter 3 when it comes to recruitment. As we called out in the second quarter report, the 2 patients we were planning to be fully randomized, has been fully randomized. We were planning 6 patients for screening. Those 6 patients were screened and led to 4 patients in the running period. You're absolutely right when it comes to dropouts that as in any study, one will have dropouts. It's fair to assume that the dropout rate would be around 20% when it comes to screen patients as well as patients being studied. The dropouts though, I need to be very, very clear here that the dropouts are not related to studied drug. As you can imagine, I can't give specifics around specific patients, but could be related to things like an illness in the family where the parents or caregivers subsequent to that didn't have the bandwidth for their children to continue in the study. So I think it's very important to recognize, yes, we have had dropouts and we'll continue to have dropouts most likely, but it's not driven by study drug.

And also a question regarding the European process. So regarding the day 180 list of questions that you plan to submit next week, could you share a bit like is there anything that unexpected that you received from the EMA or you believe it would be just some minor issue? And if the European approval will be on track and let's say, if it's later this year or early next year, so what's the go-to-market strategy in Europe?

Thank you, Chien, and yet another good question. And you rightly so that on the 17th of October, we received the day 180 list of outstanding questions or issues. We plan to respond to these according to the stipulated time lines, i.e., 12th of November. One can draw a conclusion that since we are not asking for an extension, these questions are manageable for sure. I really want to thank the whole team in Egetis for their outstanding work in responding to the 120-day questions in Europe because that removes a lot of the concerns, potential concerns or questions the EMA had. So I see personally that based on the list of the 180-day questions we received in October, we have a path forward without any surprises to a CHMP opinion. And then I missed your second part of the question, Chien, if you don't mind repeating that.

Yes, what would be the go-to-market strategy in Europe once it's approved?

Yes. So the go-to-market strategy is very simple and doesn't differ compared to other companies when commercializing in Europe. One should recognize that post the CHMP opinion, it's up to 67 days until you get the European Commission approval. So one can't commercialize until after that. Then as many other companies, we will initially focus on EU4, Germany, France and Italy and Spain and going in parallel with reimbursement dialogues, obviously, where the country where we can recognize sales earliest is, again, as for any other company is in Germany. And there, as I'm sure you are familiar with, there it's free pricing through commercialization during the discussion of reimbursement for up to 12 months. So, that's our go-to-market strategy. And then subsequent to that, of course, Italy, France, Spain, I can't give you guidance on exactly how long the reimbursement period will take there. It will take time, but it's roughly 1 to 2 years. And in parallel then, we, of course, will go broader after the reimbursement dossiers have been submitted in EU4 for rest of Europe.

The next question comes from Oscar Haffen Lamm from Bryan Garnier.

Congrats on the execution. My question would be regarding the survival data that you have published. I was just wondering if this is something that could eventually end up in the label. And ultimately, if, in your view, this could impact the pricing negotiations with the authorities, both in Europe and in the U.S.

Yes. No, that's a really, really good question. And obviously, I can't share too much around the data because the peer-review publication is not out there yet. And as I expect and mentioned before, that will be out during the beginning of next year or first half of next year. I think this is, of course, an important piece of the puzzle when it comes to pricing and reimbursement. So, this will definitely be part of the dialogues we have in Germany, France, Spain, and Italy, subsequent to a European approval. So again, a very important piece of the puzzle. It's, of course, also an important piece of the puzzle in the forthcoming interactions with the FDA on the new drug application. So yes, to both of your questions, Oscar.

And maybe just one additional small question. I was wondering maybe if you could provide any insights on the status of the patients that you have last included in the trial in terms of whether most of them were treatment-naive or on treatment with end state prior to the inclusion.

No, that's a good question, and it's a simple response to that. And as we're moving forward with the recruitment and the progress, which I'm pleased with, not happy, but pleased with that we're improving the recruitment pace during Quarter 3. It's reasonable to assume that going forward, the majority of the patients being included in the ReTRIACt study will be treatment-naive patients.

The next question comes from Mattias Häggblom from Handelsbanken.

I had a question around -- curious to hear your thoughts around 2 of the most recent transactions around priority review vouchers have seen a step-up in value from previously historically around USD 100 million to now USD 150 million. So obviously, with you potentially having access to one of those over time, any thoughts from your side, what's been driving this 50% value step up? And then secondly, on the early access program and the U.S., could you remind me about recent progress with regards to that to help me frame expectations, what to expect from that going forward?

Thank you and very good questions, Mattias. And for the audience, and Yilmaz mentioned this as well that due to the rare pediatric disease designation that we received a couple of years ago, we will be eligible for a priority review voucher at the point of approval. And this is, of course, very important for us, as Yilmaz mentioned, when it comes to future cash position and financing of the upcoming launches, both in Europe and in the U.S. This is very much driven, the value of the vouchers, PRV value has been very stable actually during 2021, 2022, and 2023 in the region of USD 100 million to USD 110 million. What we have recently seen actually are the 2 last PRVs that has been sold has been amounting to $150 million and $158 million. And what has driven this hike, so to say, in the value of these are usually driven by demand and supply. I can't speculate more than that, but that's how we see it, which, of course, plays somewhat in our favor for a potential divestment of a voucher in the U.S. Then when it comes to your second question around the expanded access program, which I think has bearing on number of patients being identified in the U.S., there, it's very pleasing to say that the disease awareness activities, despite with a small number of people on the ground or small number of feet on the ground, we only have 4 employees in the U.S., as many of you are aware. We have made some really good strides and the team has, over the last 12 to 18 months, identified now up to 100 patients diagnosed with MCT8 deficiency in the U.S., which is, of course, very important for a potential approval and commercialization to identify as many patients as possible. When it comes to specifically around the early access program or the EAP program in the U.S., we have 10 sites open so far, and we have another 8 sites in process. The important thing here to recognize is that since the ReTRIACt study is in focus to drive the recruitment, we are very restrictive on adding new patients into the expanded access program if they are not eligible for the ReTRIACt study. So we need to focus on the ReTRIACt study. The newly identified patients should be funneled into that for screening. If they're not eligible for any specific reason, we will then, of course, transfer them over to the expanded access or early access program, driven by inclusion criteria such as age below 4 years, as an example. I hope that answered your question, Mattias, questions.

The next question comes from Fredrik Thor from Redeye.

My first question was about this patent application about the processes of preparation. Can you maybe just give us some context to that patent, how useful it actually can be and maybe compare how strong it is compared to the orphan drug designation?

Yes. No, thank you, Fredrik. It's a really good question. And just to reiterate what I said before. This is a patent that resonates within the CMC and manufacturing space. Obviously, one need to recognize that this is not a composition of matter patent, and that's driven, of course, by this molecule is an old molecule that was discovered in the '50s. Having said that, so it doesn't have equal strength, I would say, we need to be humble with that compared to a composition of matter patent. What's important to recognize here that we have done substantial improvements in the process, such as crystallization, impurities, et cetera. And that is really valuable going forward that if one could get protection on that, that will, of course, help us from an exclusivity perspective. On top of that, it's also worthwhile recognizing that the drug substance manufacturing has a couple of chemical steps that includes high energy reactions. And that hence, needs to be manufactured in bunker. So, all in all together, this is an important patent. We need to be humble. It's not as strong as a composition of matter patent, but it will help us definitely from generic penetration going forward, if approved, of course.

And a final question, if possible. Ahead of the potential EU launch, have you received any feedback from payers or key opinion leaders about the results for the trial study about the Triac II results? How much does that impacts their view of the drug candidate, the willingness to pay and so on? Or is it too early to say anything?

No, I think that's a very good question and it comes back to the Triac II results that we announced during the summer. And here, I think it's very, very important to say that when it comes to the regulatory pathway, the results of the Triac Trial II study doesn't implicate that, neither in Europe nor in the U.S. Both agencies has been very, very clear that the regulatory pathway is driven by treatment on peripheral thyrotoxicosis and the clinical effects we've seen in that space. So that is very, very clear. The Triac Trial II study was important, though, from a regulatory standpoint when it comes to safety. So, establishing the safety profile in the younger patient population. And here, we obviously studied patients below 30 months of age, 22 of them, and that generated some very, very important safety data that was incorporated in the response to the 120-day questions submitted in August. When it comes to pricing, we still expect that we will receive orphan premium price, both in Europe and in the U.S. When it comes to Europe, we expect some implications on price due to not being able to show neurocognitive development effects. But on the contrary in the U.S., our price assumptions still remains the same since pricing and reimbursement drivers are different. Thank you, Fredrik. And I think we have time for a final question from Joe.

The next question comes from Joe Hedden from Rx Securities.

Congrats on the progress in the European procedure. Just a point of clarity on that, Nick. You said that if you respond to the day 180 list of outstanding issues on time, you've got a pathway to a CHMP opinion. And can you say whether that is likely to happen in the December CHMP meeting? And then just a second question on the compassionate use sales of the drug. I just noticed that, I think for the first time the compassionate use sales have ticked down. And I just wondered whether that's a factor of the amount of patients treated or the price that you're getting on those now? I know it's a minor thing, but just any color you can give would be great.

Yes, sure. No. And when it comes to the potential CHMP opinion, as I said, we received the day 180 questions on the 17th of October. We plan to respond to that next week on the 12th of November by the latest. Obviously, subsequent to that, the ball is in EMA's hands and the CHMP. They could come back with another batch of 180-day questions or they can well move on to the 210-day, which is a CHMP opinion. So I don't want to speculate on that, but we are comfortable with the responses we will provide next week on the 180-day questions. So I don't want to speculate on that, Joe, because that is somewhat dangerous since it's out of our control. When it comes to our managed access program, here, I think we should be very, very clear that in the quarter 2 report, we refer to around 220 patients being included in the Managed Access program. In quarter 3, we have said above 220 patients. So numerically, we have seen an increase quarter-on-quarter. What we tend to do, Joe, is really reporting in teams, right? So, I think I wouldn't read too much into this. If you look at the run rate over the last 2 years, you have at minimum over 10 patients per quarter being added. Then it is some fluctuations. And, as I said before, also when it comes to newly identified patients in the U.S. we are prioritizing the ReTRIACt study rather than put them on the expanded access program.

But what happened to the Q3 revenue? I mean I know it's not a lot, but it's the first time it went down, but should those 2 not be tracking in line?

Joe, thank you for the question, Yilmaz speaking here. Yes. So we saw a little downtick on the revenues from the managed access program. And I've had the same question to the commercial team. They don't see any trends in the ordering, et cetera. This is just a lumpiness when we get the orders from reimbursed countries or not and from those patients. So we have not heard anything from the organization on trend changes.

And that takes us to the end of the call.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

So, with that, I will take the opportunity to thank the audience for participating in our webcast concerning our quarter 3 results report and thank the team for participating on the GT side and wish you all a happy Friday. Thank you.