Vivesto AB (VIVE.ST) Earnings Call Transcript & Summary

Welcome to the Vivesto Q3 2022 presentation. [Operator Instructions] Today, I'm pleased to present acting CEO, Christer Nordstedt; and acting CFO, Robert Maiorana. Please begin the meeting.

Thank you. Good morning, everyone. This morning, we announced our Q3 2022 results, which we will be taking you through in this presentation. As usual, we'll run through the highlights and financial and then take any questions at the end of the presentation. Next slide, please. Here are some important legal and forward-looking statements that you should be aware of. Next slide. Today, I'll be presenting to you, together with our acting CFO, Robert Maiorana, a short introduction of myself. I joined Vivesto as acting CEO at the end of July this year, and I have a long background in the pharma industry in Sweden and abroad. Next slide, please. First, let me cover some operational updates during the second quarter. As I have said in July, I was appointed an acting CEO. We also announced that following the Russian invasion of Ukraine, ongoing hostilities and international sanctions, we have wound down our activities in Russia. That means that the distribution activities for Paclical, Apealea in Russia and the Commonwealth of Independent States has been paused until further notice. Most recently, we noted the great news of the launch of Apealea in Germany by Inceptua and more on this a little later in the presentation. In November, Vivesto announced that I resigned from the position as acting CEO in order to assume a new role outside of the company. But I'm pleased to tell you that I will remain a senior adviser to Vivesto on a consultancy basis within R&D. I'm also pleased to announce that we've been able to bring in Dr. Nina Herne to spearhead our business development function. Nina has a very impressive background from big pharma as well as biotech. Next slide, please. Before I provide an in-depth update of the business, let's take a step back. As you know, Vivesto is on a journey of transformation. Over the last 2 years, we've been focusing on building a solid platform to support our future growth. We've built our internal capabilities to enable us to specialize in oncology development. We've also accelerated business development and in-licensed Cantrixil last year. We have secured our financial position with our rights issued and have no debt. We have reduced business risk and operating expenditure by settling legacy issues inherited from our predecessors. We've also reduced operating expenditures through rightsizing the company. And this is, of course, an ongoing process. We have a new Chairman in place, and we are recruiting a permanent CEO and CFO to guide Vivesto through the next stage of development. Immediately after I took over as acting CEO at Vivesto in July, I began a thorough review of the entire business. All of investors' assets and projects have been reviewed and evaluated from both a scientific and financial perspective. Next slide, please. The review has resulted in us focusing our time and resources on 3 main areas: 1, to build the research portfolio; 2, to increase the value of existing projects and technology platforms; 3, to further trim our costs in order to be able to use a greater part of our resources to build and run our research portfolio. After the initial review, it's clear that just as previously assumed, our formulation technology could be applied with many more drugs than just paclitaxel. As a part of the work to strengthen Vivesto's research portfolio, we have identified a number of different substances with patent protection or without patent protection. Within modern pharmaceutical chemistry, a strong trend has been seen for several years towards new molecules becoming larger and more difficult to dissolve than before. These molecules often have a higher specificity and better effect, that is they are more effective than previous generations of drug substances. In addition, they often address new categories of targets previously unknown to science or previously not considered drug at all. We are convinced that Vivesto's formulation technology can be valuable for numerous molecules that today cannot be used due to lack of solubility, including molecules with remaining patent protection. We will therefore systematically with the help of various technologies such as artificial intelligence, neural networks and other applicable technologies, search for such opportunities with the aim of establishing collaborations with other pharma companies. In this way, we could grow our portfolio with more value-generating projects to strengthen Vivesto's position as a drug developer. Existing development projects and products form the basis of Vivesto, and we work hard to increase the value of these existing assets. There are several ways to increase the value of a project or molecule. The clinical plan is reviewed continuously with the aim of finding out whether it's possible to make minor changes in study setup or study design to strengthen the chances of success or shorten the time to market. Another way is to evaluate the substance within other indications in order to broaden the target and increase the future market potential. We are currently working on both of these strategies for our clinical cancer program, Cantrixil, and hope to strengthen the value of the project in this way. Next slide, please. There are a few strengths to our business model. First, oncology research and development, which is built around the wholly owned development stage assets like Cantrixil and docetaxel micellar. These will start to drive value as they progress through clinical development. We are working hard to add innovative new programs that will give us a diversified oncology pipeline through mergers and acquisitions and in-licensing. Second, maximizing our existing assets, particularly Apealea. We are also focusing on the underlying science of our proprietary drug delivery technologies to optimize their potential in cancer and in other areas through partnerships. We continue to explore options such as partnering to commercialize our animal health oncology assets. Next slide, please. We're initiating our string of pearls strategy from a strong base, a promising oncology platform ready for further expansion. Apealea is already approved in Europe for adults with first relapse of platinum-sensitive epithelial ovarian cancer, primary peritoneal cancer and fallopian tube cancer. Our commercial partner, Inceptua, launched Apealea in Germany in August. Inceptua are currently engaged with NHS in England to secure reimbursement for Apealea. We are getting ready for a Phase II Cantrixil study, also focused on ovarian cancer. And this year, our priority is to get feedback from regulators and secure drug product for the trial. A Phase Ib study of docetaxel micellar for advanced prostate cancer is underway with our Swiss partner, SAKK. Recruitment is progressing according to plan, and we are planning to initiate preclinical studies with a new formulation of Cantrixil. Next slide, please. While another interesting in-house project is docetaxel micellar, which targets advanced prostate cancer. This is an intravenous formulation of the widely used cancer drug docetaxel, also known under the brand name Taxotere. When using our XR-17 delivery technology, we eliminate the need for solubility enhancers, potentially improving the side-effect profile and eliminating the need for additional drugs for many patients. Our Swiss partner, SAKK, is running a Phase Ib study at 3 major hospitals in Switzerland with the aim of recruiting 18 chemotherapy-naive patients. We are also working on expanding the IP around docetaxel micellar and we are evaluating a formulation using our improved drug delivery platform, XR-18. The trial is progressing steadily, and we look forward to updating you as the trial progresses. Next slide, please. As I mentioned, we're also excited about the potential of our drug solubilization platforms. With regard to XR-18, our scientists have identified and synthesized a promising new candidate for using the platform, and this is already being tested in combination with a widely used oncology compound. At this stage, we can't disclose more information about this for commercial reasons. Next slide, please. On August 15, we were informed that Inceptua had launched Apealea in Germany. U.K. commercialization plans are also progressing. Inceptua secured a maximum list price for Apealea with the Department of Health and Social Care, allowing private market access. Inceptua is also engaged with NHS England to secure reimbursement. Other European markets are also being considered. Other European launches will be implemented on a country-by-country basis over the next couple of years. And first royalties for Vivesto are anticipated in 2023. I'll now hand over to Robert to cover the Q2 financials.

Thank you, Christer.

Sorry, Q3 financials.

Correct. Turning to our finances. Here are a few key numbers from the third quarter. The cash flow from operating activities totaled minus SEK 22.6 million compared with minus SEK 25.3 million in the third quarter 2021, an improvement with SEK 2.7 million. The Q3 operating loss amounted to minus SEK 71.3 million. However, adjusted for the SEK 44.6 million write-down related to Russia and the Commonwealth of Independent States, the operating loss amounted to minus SEK 26.7 million, a reduction with SEK 2.9 million compared with operating loss of minus SEK 29.6 million in the third quarter 2021. Looking at the whole period, January to September 2022, the adjusted operating loss was minus SEK 89.3 million compared with minus SEK 126.6 million previous year, a decrease with SEK 37.2 million. Please note that the SEK 44.6 million write-down did not have any impact on the cash flow. Short-term investments and cash and cash equivalents amounted to SEK 164.2 million at the end of September compared with SEK 149.7 million at the end of third quarter 2021. Given our reduced spending, our strong cash position and the continuous trimming of our costs, I would say that we financially are in a good position to invest in value creations through research and development. That is all for me. So I hereby I would like to hand over the word back over to Christer.

Well, thank you very much, Robert, and thank you for listening. I'll now be happy to answer your questions.

[Operator Instructions]. Our first question comes from [ Fredrik Hogan ].

I would like to ask about the animal part. What do you see? What's your plan regarding that?

Well, I can't give you any really specific details here, but what I can tell you is that this is very much of an emerging area. It doesn't really exist here, to be honest, but we see a great potential there. Animal or veterinary pharmacology and pharma is changing as we speak, trending more towards...

No, I meant with your specific drug, the specific drug of Vivesto, not the industry in general.

How do you mean? What we're planning to do there more specifically?

Yes.

Well, I can't share any of these plans right now, but we will be happy to come back to that at a later stage.

Then I would like to ask about -- you said you're working on reimbursement in England. Is that not Great Britain? Is it only England?

Great Britain, sorry. Yes.

And what is the reason for the delay on docetaxel micellar? It was supposed to be done by end of this year. Now you added another year.

No. Recruitment is progressing according to plans. And no, that was never the idea there.

But why did you communicate that it wasn't the idea?

I don't think we have done that.

That is something we will have to look into.

Yes.

And finally, U.S., can you say anything that's happening in U.S. for Apealea?

Well, we are looking into this. But as you know, this is done with our partner, Elevar, and that is more of a question for them. But the work is progressing there, but that is as much as I can tell.

[Operator Instructions] We seem to have no further questions on the phone line, so I'll hand back to the speakers.

Well, thank you very much, and thank you for the questions.