ExpreS2ion Biotech Holding AB (publ) (EXPRS2) Earnings Call Transcript & Summary

Welcome to today's event where we have the pleasure to present ExpreS2ion Biotech. So for today's presentation, we are joined by CEO, Bent Frandsen. Today's topic, of course, the Q1 results, but I think maybe more the news flow that you have sent out in this quarter and actually also rather last news after the quarter's end. So I think that will be the main focus of today's event. [Operator Instructions] We have already got a lot in advance, but do feel free to ask them. Do feel free to ask them in Danish, and I will try and translate to the best of my ability. But for now, I will hand the call over to you, Bent.

Thank you, Michael. My name is Bent Frandsen. I'm the CEO of ExpreS2ion Biotech, and I'm pleased to be reviewing the status of our company and business and pipeline today, May 15, in connection with the release of our interim report for Q1. So the agenda for this meeting, I'll first go through our strategic and financial review. You will notice that Keith Alexander, our CFO, is not present today. As usual, he is out on some travel commitments. Then I'll cover the ES2B-C001, our therapeutic breast cancer program and where that is, and then the remaining pipeline with respect to our infectious diseases before we go through Q&A. So as a starting point, just to highlight where we are with respect to our strategic focus. So as you know, ExpreS2ion is a vaccine-focused company with a pipeline of cancer immunotherapies and infectious diseases vaccine projects. And we have focused our strategic areas across 4 different areas here, as highlighted here on our pipeline. It's a key focus to progress on our ES2B-C001, our therapeutic breast cancer vaccine, and I'll go into this in details here later in this presentation. Secondly, we have a couple of very important infectious disease vaccine program, which are all in collaboration with organizations that are sponsored by non-diluting funding, including University of Oxford, the VICI Disease Consortium for Nipah virus, University of Copenhagen for influenza on the so-called MucoVax program and other influenza consortium that we call INDIGO. Thirdly, we aim to achieve proof of concept for new vaccine candidates and enhance our platform technology. And we have made extra efforts here to enhance our IP and have very strong patent strategy to support our intellectual property. And this is also the basis for our exploratory pipeline development that we keep progressing on in the early stages. And as well as our platform, the ExpreS2 technology, which makes the recombinant proteins, which is the underlying platform for all of what we do. Fourthly, we have our service activities that we will continue to advance and we are actually reinitiating the proactive marketing of this service. And a very recent example of that is the WuXi vaccines letter of intent that we just announced a few weeks ago, I'll get into detail on this as well. And also increased on partnering activities revolving on our glyco-modified S2 cell lines, which come with properties that can make even enhanced immunogenic vaccines. So across these points, we've had a number of important updates here during the Q1 -- during the fourth quarter of '24, sorry, it says Q4 here, which, of course, during Q1, but also in the presentation of Q1. On the leadership side, we have promoted Max Søgaard to our CSO in connection with Farshad Guirakhoo retiring. The good thing is that Farshad, he continues to be engaged with ExpreS2ion in the form of a senior strategic adviser vaccine R&D role, which is good. I think his fourth decade of vaccinology experience in consideration. Max has been with ExpreS2ion for more than 13 years and is instrumental in our technology platform and early R&D efforts. We provided an update on the 1st of April regarding our pipeline, where we updated on the vaccine Phase I trial that we have just initiated this quarter and a further review of the CMV vaccine program, which we decided to hold. I'll also spend a minute on that later. We announced the WuXi vaccines' letter of intent. We are very happy that University of Oxford and the malaria proof points going on there continue to recruit patients across numerous vaccine trials progressing well. And as we have announced in the autumn of 2024, we made a term sheet with Serum Institute of India and we are progressing with the definitive agreement. Yes, these processes take time and this is still ongoing. Very important, we have just announced only 2 days ago, May 13, that we are amending a protocol -- our protocol for the breast cancer vaccine asset and this is to enable evaluation of our therapeutic breast cancer therapy with antibody drug conjugates or ADCs as well as to expand the study sites. Most lately, we have just yesterday seen from our associated company, AdaptVac, which ExpreS2ion owns 34% of and which hosts the important VLT, the virus-like particle technology that they have published in Nature, a very exciting new scientific article about a modular mRNA platform. So this is, in essence, a new technology platform for AdaptVac that combines mRNA technology with a unique VLP technology. Very exciting. So just going through the financials, I want to highlight the operating income. We experienced a 19% increase year-over-year in the first quarter and had an income of approximately SEK 3 million, and this was due to primarily progression of grant projects. In the middle chart, we focus on net sales, which reflects revenue from projects and licenses, increased 44% compared to Q1 2024. In the chart on the right, we show other operating income that is grant-related income and that remained on a high level, driven primarily by the INDIGO and MucoVax grants with a significant contribution from VICI as well. Moving to the cost side. Operating costs in Q1 amounted to approximately SEK 16 million, a decrease of 1% compared with the first quarter of 2024, reflecting our close cost controls. In the middle and right chart, we illustrate the 2 largest components of operating costs. Starting on the left with external R&D costs, these peaked in the fourth 2022 due to the preclinical development cost at the time for the breast cancer vaccine project and they have decreased since then. Compared with the 1 year ago quarter, these costs were more than 50% lower. Costs in this category are large, volatile and primarily driven by our pipeline activities. Moving to the chart on the right, we have removed the cost of share-based compensation from personnel cost to calculate the underlying personnel cost. And this underlying figure is approximately the cash cost of personnel. It peaked in Q1 of 2023 and was essentially flat compared to the year ago quarter. Note that personnel cost is sensitive to wage inflation and foreign exchange currency since we report in SEK and pay wages in Danish kroner. So moving to the net loss for the period. After financial expenses and taxes, we had a net loss of approximately SEK 11 million in the first quarter compared with a net loss of approximately SEK 13 million in the year ago quarter. In Q1 2025, we started the year with a cash position of SEK 81.5 million. During the quarter, we utilized SEK 12 million in operating activities reflecting ongoing investments in our key programs, including the ES2B-C001 trial. Additionally, we experienced a negative foreign exchange impact of SEK 3.2 million due to currency fluctuations. As a result, our cash balance at the end of March 2025 stands at SEK 58 million. While this decline is in line with our planned spending trajectory, we remain focused on optimizing our cash utilization as we progress through 2025. Looking at our cash balance over the past 8 quarters, you can see the impact of several significant effects that provided a boost to our cash reserves. In Q1 2024, we received an upfront grant payment providing a notable increase in cash. In Q2 2024, we recognized a dividend from AdaptVac, which further supported our liquidity position. In Q3 2024, we executed a rights issue, reinforcing our cash balance to support ongoing programs. In Q4 2024, the cash balance was further strengthened through the warrant subscription causing us to end the year with SEK 82 million. Entering 2025, our cash balance decreased to SEK 58 million, reflecting Q1 spending on operations and foreign exchange currency impacts. However, looking forward, we expect our burn rate for the next 3 quarters to be much lower than it was in Q1, extending our cash runway into 2026. So moving onwards with our pipeline activities led by ES2B-C001, I'll give you an update on that. As you know, we got an approval from the Austrian authority to start a Phase I safety trial at the end of last year and we initiated Q1 with moving into a patient enrollment phase. This is a study, which is a dose-escalation trial, where we start with 50 micrograms with adjuvant and move up to 450 micrograms of with adjuvant. And our Data Safety Monitoring Board decides whether the study can progress to a higher dose. Primary endpoints are safety. Secondary endpoints are immune responses and signs of clinical efficacy. And all the patients you can see here in the bottom are really the typical efficacy endpoints in standard cancer trials that we also include for the secondary endpoint measurements here. The dose escalation will be carried out in 3 cohorts of 3 patients with advanced metastatic breast cancer whose cancers express HER2. This will take approximately 48 weeks from first patient, first dose. Subsequently, additional patients will be dosed to confirm the recommended Phase II dose. That's the important [ part of this ] trial. So we can say that we are now initiating patient enrollment. And we have just this very week, as late as 2 days ago, made an announcement about the recruitment and the amendment to the protocol that we are now doing. ADCs are antibody drug conjugates. It's a type of therapy that has been launched in the last couple of years. ENHERTU, for example, is a huge brand that is already a blockbuster despite having been launched only a few years ago. And we are amending our protocol to ensure that we can combine our ES2B-C001 therapy even in the Phase I trial with, for example, ENHERTU. So this will also allow for further uptake of patients in the trial. We are also expanding the number of clinical trials to boost enrollment. And all this protocol amendment approval, we expect to have a conclusion of here in the quarter following this summer. We are making this Phase I trial in Austria and we have already, of course, a strong collaboration with Medical University of Vienna where the principal investigator for the trial is also situated. And we have now agreements with further 5 oncology clinics in the headquarter -- in the capital neighborhood that can refer patients to Medical University of Vienna. So this will also explain the potential for recruitment of patients in this. So on the time line side, we are still on track as we are right now with the Phase I expectations for enrolling patients and getting outcome of this, potentially preliminary outcome before the end of this year, further outcome in 2026. And the expected time line is still to be able to start a clinical Phase II proof-of-concept trial in the beginning of 2027. So this is important, of course. The start of the Phase II depends on the outcome of the Phase I. If the outcome of Phase I is successful, we can move straight into a Phase II randomized trial. If the outcome is not optimal, we will go through Phase II where we look at a direct comparison study. So in all cases, we still expect a time line with the conclusion of a clinical proof-of-concept trial around 2029. Depending on the business development and partnering side, we will license this out for a co-development partner to take over on the large scale development going forward. On the infectious diseases side, we have quite a number of clinical studies ongoing in the malaria field, all of these being handled by University of Oxford, who have done an excellent job [ with the S2 ] system to make the antigens for all these vaccine. We're talking about 4 different vaccine programs, which are being run in more than 6 different clinical studies. And 2 of these are actually in clinical Phase I/II having an interest of Serum Institute of India, which we have announced a term sheet around in the fall of 2024. We are in progress with making a definitive agreement with Serum Institute of India to get these programs further developed. And just as with the malaria program so far and with the other infectious disease programs, they are largely sponsored by brands. We had the MucoVax project, which is about research into mucosal influenza vaccine together with the University of Oxford, where we got a grant solution from Innovation Fund Denmark a few years ago and are progressing on that and also getting some interesting data from our glyco-modified cell lines in that project as well. We have, for 5 years, been engaged in the INDIGO Influenza Consortium, which is an EU-sponsored project and it's about to be concluded here this year and has an interesting preclinical lead candidates that might be taken onwards. On the Nipah virus vaccine, this is in collaboration with AdaptVac and other consortium partners. This is sponsored also by the EU, and we are looking into the same kind of setup as we've seen with the COVID-19 project back in the days during the pandemic. Finally, on the CMV vaccine, the cytomegalovirus vaccine, that we have been collaborating for a couple of years with Evaxion around, we have now discontinued this following a strategic review. As you may recall, in December 2022, we announced this collaboration with Evaxion, combining Evaxion's AI platform and ExpreS2ion's protein production platform. And after 2 years of discovery efforts, we still see quite a distance to a lead candidate. And in order to focus, on the ExpreS2ion side, we have decided to discontinue this project. So our pipeline essentially looks like this, as we speak, led by the breast cancer vaccine project on top, which is now in clinical Phase I. Then we have the malaria, the influenza and the Nipah virus vaccine projects going on, all more or less sponsored by non-diluting funding. And in the bottom, you'll see the COVID-19 project, which came to Phase III, sponsored by Bavarian Nordic who decided to shelf this project due to the pandemic and their view on the commercial outcome. But after all, we got a -- we met the primary endpoint in the clinical Phase III. So it's a very important project for saying that both our ExpreS2 technology and AdaptVac VLP technology have been clinical Phase III validated. Finally, looking forward, we continue to progress on the clinical side with recruitment efforts on ES2B-C001 safety trial and expect to get a readout on this even before the end of the year depending, of course, getting the first patient onboard here. We will also be looking at immunogenicity and early efficacy signals. And then we have the Oxford malaria trials, which are continuing and will also support the ExpreS2 platform as well. And we are moving onwards with our good discussions with Serum Institute of India to get the license agreement concluded on that. And looking further ahead, we are filing IP successively and have important innovations involving our platform and other important vaccine innovations. And I've said that before, I'll get back to this when we can put some more words on what that is around. And we continue on validation through the grant-funded projects led by MucoVax and INDIGO in vitro disease. That said, I'll be happy to take some questions from the audience. Thank you.

Perfect. Then let's start with one. It's a little bit -- the first one is regarding a little bit your share and so on, and then we will get into all the pipeline news. Have you done anything to attract larger investors since we last spoke with you?

Sure. Yes, you can say we interact where it's possible and we can do that through various conference activities for the institutional investors as well. I've been doing that more during the last year compared with previously. So for example, both in Sweden and Denmark, there have been important events in that aspect where we have been able to promote ExpreS2ion Biotech as an interesting investment case. So yes, there are efforts in that direction, but I cannot be more detailed than that.

There's a question. You just made a reverse share split and your share is trading around SEK 20 now. There's a question here, could you think about doing a share split 1 to 10 meaning that you go back to SEK 2. So a little bit of thoughts about using of the share split.

I think that's an interesting question. I think we would need to get back to the -- where we were based on liquidity and trade in our share 3 years ago and maybe that could be a topic for the Board to consider. It's not an issue at this point in time. And I think that a share price between SEK 10 and SEK 100 or more is certainly not unusual for traded shares.

And then there's a question regarding you're showing good progress. You have hopes for this company. So why not more insider buying? Why are not more insiders buying the share?

Well, as you know, we are listed on Nasdaq First North Growth Market in Stockholm, and of course, we are obligated to report on any insider transactions through the Swedish Finance [ Institute ]. And we do that. We, and when I say we, primarily myself and our Chairman of the Board, we have participated in any issue of new shares that's been there where we have acquired shares in the company. And that's been a premise, of course. But that's how it is.

Yes. Please, could you elaborate what, if any, additional financing you may need to complete Phase I, especially in case of further delays in recruitment?

That's a question I could understand. Before the start of April, we've made a couple of announcements here both 1st of April and here, 2 days ago, 13th of May. If you look at those announcements and you'll see there's an important update. Most recently, of course, on the amendment to the study protocol, which will allow us to combine our ES2B-C001 with antibody drug conjugate therapies such as ENHERTU, which opens up -- we believe, it opens up a lot of opportunities for expanding the potential of our therapeutic vaccine.

Perfect. I will jump a little bit because there's a question. Is it ENHERTU and the success of this product that has actually maybe delayed you a little bit and now when you do this combination, you actually think maybe you can accelerate things after the protocol? So a little bit about the thoughts on this besides, of course, the commercial opportunity, if you can do a combination product, but a little bit here on the trials. Has it been delayed? Or has it been harder to get -- enroll patients because of this success? And is that now why you expect maybe that when this protocol is amended, that you actually can accelerate the take-in of enrollment?

I think there is a relation and that's, of course, motivated us to take this initiative. We don't know for sure, so it's a little bit speculative. We know that in Austria, ENHERTU has given reimbursement during the last year. And in that respect, it's another dynamic than what we looked into last summer when we were drafting the study protocol. So this is a learning. And we see it positively, for sure, because since our product opportunity actually is a first-in-class therapeutic vaccine, we can offer [indiscernible] broad immune response where you basically target all the epitopes on the HER2 receptor as opposed to monoclonal antibodies of ENHERTU, which inherently only offer a single-epitope approach. Our approach could be combined with those efficacious therapies to provide a durable broad immune response, which will help the patients in the long. So that's the important say on this. And we are very, very pleased that we are at this point now to amend the protocol. Of course, as I mentioned, we will get back during the next quarter to see where we are in the protocol amendment.

Perfect. And then actually just to make you understand because following you for the last couple, 3 years, you have been talking about the case and you have this huge market of existing treatments. And now something new is coming in, but that doesn't change your business case, if I understand you correctly. All the new products are also only targeting 1 receptor, is that correct? And that means, yes, there's a new generation of product that might take over a little bit from the older ones, but it doesn't change your business case or business case. You are being more a product that could actually go to market.

We are still a first-in-class opportunity with the breast cancer therapy. And in that respect, we believe there's certainly a market adoption rate that can be very rewarding. So we have -- in our estimates, we believe we will certainly have blockbuster potential and may exceed the EUR 5 billion annual revenue once it's on the market. So we strongly believe in this, obviously.

Then there's actually a couple of questions. As a resident Danish person, can you be in those trials in Austria? And there's a little bit of a question, where can you look for information and try to be adopted in the trial? I know maybe it's a little bit outside what we should talk about financially, but maybe as a broad interest, if you have any information about this, Bent. Whether you as a Danish citizen could be included in these trials if you pay everything yourself and so on. And secondly, we can you look for more information about maybe being included in the trial.

It's a very good question and I will have to confer with my project colleagues just to make sure I get a right answer here. I'm not quite sure how it is with non-Austrian patients here to be enrolled. The Medical University of Vienna there, the central study site, as we speak, and certainly other patients from other sites. And as I mentioned now, 5 other clinics in Vienna will be referred to the Medical University of Oxford. So I cannot say for sure. It's a very good question, yes.

And I think maybe they should send you an e-mail directly to ask you this, then I think you can direct them to the right person maybe in your company that has higher -- perfect. Can you give me an idea of stock triggers for the next 6 months? Could it be influenza or Nipah? If we just jump back to, I guess, this slide and you're thinking maybe you actually went through the stock triggers here, but if you should focus on some of them, and could it be Nipah, influenza? Is that also a potential if you look 6 months ahead?

Yes. We are right, as we speak this year, we're getting the project on the INDIGO wrapped up with the consortium. It's in preclinical stage, and we are discussing how to proceed with a preclinical candidate. So that is where that is at the moment. On MucoVax, it's very much research-driven as we speak. We're supporting new technologies that we have from ExpreS2ion side as well. I mentioned the glyco-modified cell lines where we're generating data based on this mucosal influenza vaccine approach. On the trigger side, I can't give you any specific milestone triggers for these as we speak, but I'll make sure to progress on them every quarter, for sure, to our shareholders.

Yes. And then, in general, I took out the slide here where you are looking forward, that is what you think investors should look out for. And it's up to us to decide whether they could be share price triggers. Is that how I should understood you, Bent?

Yes. And have a look at the 3 times mentioning of ES2B-C001 here. That's obviously a very important trigger, how that progresses there with the Phase I safety trial. And then also on the malaria front where University of Oxford keep on progressing on the many different clinical studies going on and even making publications from time to time in peer-reviewed scientific journals and the fact that we still have good discussions with Serum Institute of India on a license agreement for 2 of those malaria assets.

Yes. Then there's, please could you provide us with a rough estimate of the annual revenue and profit you could generate from the WuXi deal from next year? Can this meaningfully extend your cash reach?

Very good question. We announced the WuXi Biologics letter of intent here in April, 1 month ago. And it's a super interesting discussion we have going on with WuXi. They are also one of the world's largest vaccine manufacturers and a big brand in the space of manufacturing recombinant proteins. And we are very proud that such an organization, they actually reached out to us and find us and want to get our technology platform in-house for their clients' manufacturing needs. And the idea with the letter of intent is that we first test in a pilot study on one of WuXi's clients. And based on the outcome, we will then initiate a 12-month period to take a further discussion about a strategic collaboration. Well, that strategic collaboration will be in the form of merely licensing or some kind of collaboration with further operational revenues. That remains to be discussed, so it's too early to say anything about the revenue projections on this.

And is it in -- is it in the books in your CRO business or in your production? Is it in the CRO where if clients want to develop a new product, they will actually say it might be smarter to do that on your platform? I know I'm trying to make it easy to understand, but I'm probably a little bit too simple. But is that how we should think about it?

That is correct. And it would be a nice, simple setup in a way. Instead of ExpreS2ion actually spending resources on promoting and marketing of this, that we actually have WuXi doing it for us. They have a huge infrastructure on the commercial side. And we announced this letter of intent 1 month ago. And they already, after Easter, at the World Vaccine Congress in Washington spent a lot of time even presenting our platform at various presentations in that forum. So that tells us that, that's a great place to be.

Perfect. Then what is the expected time line for getting data when the first patient is enrolled in the ES2B-C001 study? So any -- have you given some -- have you given indications to market on first patient enrolled and everything else, given what could the time line be before preliminary data?

We -- of course, with the approval of the clinical trial application in place, we expected the patient enrollment to start. And we must admit that here after a quarter, we lack the first patient. And maybe it's related to the dynamics of the breast cancer therapy market and with the introduction of antibody drug conjugates like ENHERTU here most recently in Austria. We don't know. But now at least we're doing something about it and can allow to enroll patients who are also on antibody drug conjugate treatment. And we are also expanding the number of sites in Austria to ensure further patient enrollment. So let's see here, as we progress, we will, of course, give an announcement as soon as there's dose the first time.

Perfect. Let's see here. Yes, there is something about this. An e-mail has been sent to you, but -- yes. Let's see, do I have other questions? No. I think that was the final question, Bent. Thank you for taking us through your results and milestones achieved in this quarter, and thank you for the audience listening in.

Thank you.