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 through today's presentation, we are joined by CEO, Bent Frandsen; and CFO, Keith Alexander. The topic for today, of course, the Q2 results, fresh from the press this morning, but maybe also more the strong data, which I saw you have communicated during the quarter on the breast cancer candidate. So that will be the main topics for today's presentation. As always, there's a box down below where you can ask, feel free to do it during the presentation, but we will take the Q&A in the end. And for information, we have a fixed deadline at 10:30. So we will try and catch all the questions. But if not, then, of course, they are free to send it to you. But that was all the messaging before that. So now I will hand the stage over to you, Bent.

Thank you very much, Michael, and good morning, everybody, and welcome to ExpreS2ion's Q2 2026 Results Webcast. I'm Bent Frandsen, CEO; and I'm joined today by our CFO, Keith Alexander. I will begin with our operational and clinical progress with particular focus on ES2B-C001. Keith will then take us through the Q2 and refer to our financial results, after which we will open for questions. Our agenda is straightforward. First key updates on the quarter since the period ended, and second, our financial results and final Q&A. Forward-looking statement disclaimer in the presentation, which we will publish on our web page afterwards, after this webinar. Since our last quarterly update, we have advanced our clinical program, our platform and our financing activities. During Q2, we published a patent application in Hong Kong, strengthening our glycoengineering platform, highlighted clinical malaria data supporting platform validation and scalability and completed the rights issue and provided a further update on ES2B-C001. After the quarter closed, the related U.S. patent application was published and on 12 August, we reported a positive independent DSMB outcome together with expanded preliminary Phase I data. More about that later. The central message is consistent. ES2B-C001 is progressing. Our platform continues to gain clinical and partner validation and the financing completed in the quarter supports execution towards our next milestones. Our investment case rests on three pillars: First is ES2B-C001, our proprietary HER2 targeted immunotherapy now in Phase I. Second is the ExpreS2ion protein manufacturing platform, which has been validated through clinical development, including Phase III. Third is our 34% ownership of AdaptVac, which gives us strategic exposure to VLP technology and supports a clear partnering pathway. Why is this relevant now? ES2B-C001 has a first-in-class profile. Early Phase I data show drug-specific immune responses with no safety signals of concern identified to date, and we have a disciplined route toward partnering as the clinical evidence matures. This slide shows the structure of our pipeline the top is ES2B-C001, our proprietary and internally sponsored oncology program. Alongside malaria, Nipah virus, and influenza programs are largely advanced through grants, academic consultants, and commercial partnerships. That combination lets us concentrate our own capital on the lead oncology asset while continuing to generate platform validation and potential future value across infectious diseases. Execution is supported by a team and Board with deep experience in clinical development, oncology, vaccines, manufacturing, licensing and finance. Together with our 15 employees and consulting executives, the organization brings more than 200 years of relevant pharma and biotech experience. We believe this is the right capability base to move ES2B-C001 forward towards clinical proof of concept. The strategic potential of ES2B-C001 comes from the combination of three intended advantages. As an active immunotherapy, it is designed to generate durable immune control to be compatible with existing standards of care and to address resistance mechanisms. No approved HER2 therapy combines all three. That is what gives ES2B-C001 its first-in-class profile and provides the rationale for the clinical and translational program now underway. Turning to the clinical program. The Phase I study is an open-label dose escalation trial in patients with advanced HER2-positive or HER2 low breast cancer. Patients received five intramuscular doses across three escalating dose cohorts and the principal objectives are safety, tolerability and immunogenicity. The 50 and 150-microgram cohorts have completed dosing and the 450-microgram cohort is progressing. In the preliminary data set available as of today, drug-specific antibody responses were observed in 12 of 13 evaluable patients. Titers increased across successive dosing visits and remained elevated at later follow-up. Importantly, no safety signals of concern have been identified to date. These observations remain preliminary and exploratory and patient numbers vary by visit as follow-up continues. We're also planning maintenance dosing to assess booster responses and longer-term treatment effects, subject to regulatory approval. This can continue alongside Phase II development. The end 2026 Phase I readout remains on track and will include broader translational analysis of immune quality durability, mode of action and preliminary efficacy signals. The previous slide showed drug-specific antibody responses in 12 of 13 evaluable patients. The next question is what those antibodies may be capable of doing. Unlike the standard of care trastuzumab, which is a single predefined antibody, ES2B-C001 is designed to generate a broader family of antibodies. In exploratory testing using antibodies from vaccinated nonhuman primates, we observed three complementary effects. First, the antibodies activated the complement system, which can damage tumor cells directly, a pathway trastuzumab does not engage. Second, they help immune cells engulf tumor cells, reaching a higher maximum response than trastuzumab in the same test. Third, they recruit immune cells to kill tumor cells with a maximum response comparable to trastuzumab. These are early exploratory findings from nonhuman serum and do not demonstrate clinical benefit or superiority. However, the same tests are now being run using serum from Phase I patients with results expected in Q4 2026. Those data will help us understand not only how much antibody patients -- how much antibody patients produce, but what those antibodies may be capable of doing. If supportive, they should also strengthen the translational package for partnering discussions. Our development strategy remains focused on creating a partnering and value inflation opportunity at clinical proof of concept or earlier if emerging data support it. As communicated here in August, we now expect Phase II initiation in the second half of 2027, representing a one quarter shift from our previous planning assumption. Importantly, the end 2026 Phase I readout remains unchanged. Through 2026, the priority is data maturation and completion of the Phase I package. As the data set develops, we will make the Phase II design decision and continue strategic discussions to progress this asset. The breast cancer market remains large and partner active, but our approach is disciplined, build a robust clinical and translational data set, prepare a focused proof-of-concept study and preserve optionality on timing and deal structure. Turning to malaria. The ExpreS2 platform supports a broad set of University of Oxford-led clinical programs. Across the portfolio, 11 Phase I and Phase II trials are ongoing or completed, including a Phase IIb study expected to read out in 2026. Several trials have concluded, others are fully recruited and the remaining studies continue across the U.K. and Africa. A particularly important milestone is the 2025 licensing agreement with the Serum Institute of India for RH5.1 and R78C, which expands the global footprint of our Express production platform. This portfolio provides continued evidence of clinical utility, manufacturability and scalability for the Express platform, while the grant and partner-led model limits the direct capital burden on our company. Other collaboration projects also continue to advance. The Nipah vaccine program remains fully grant-funded through completion of Phase I. The toxicology batch has been completed, the toxicology study is pending initiation and GMP manufacturing is now in progress with Northway Biotech. In MucoVax, which is approximately 67%, grant-funded influenza antigens have been designed using our ExpreS2 and glyco-modified cell line technologies and coupled to an antigen-presenting platform. Animal testing and comparison of the alternative platforms are now ongoing. The INDIGO consortium concluded in Q1. As previously mentioned, we continue to evaluate whether the future development path can preserve optionality without material near-term investment. Looking ahead, our central catalyst is the ES2B-C001 Phase I primary readout, including translational data targeted to the end of 2026. Maintenance dosing will assess booster response durability while business development activity and Phase II preparation continue. For Nipah, the next steps of CMC manufacturing, toxicology and IND-enabling work, followed by the potential Phase I initiation. And for malaria, we expect selected clinical readouts and potentially additional licensing opportunities. These milestones are forward-looking and remain subject to clinical progress, regulatory interactions, manufacturing outcomes, funding and partner decisions. That concludes the operational and clinical update. I will now hand over to Keith to take us through the Q2 and first half 2026 financial results. Over to you.

Thank you, Bent. I'm Keith Alexander, CFO of ExpreS2ion, and I'll take you through the financial results for Q2 and the first half of 2026. As Bent described, we made significant clinical progress in the quarter, and I'll show you what that looks like in the numbers. Starting with the headline figures. Operating income was SEK 11.5 million, up 238% year-on-year, primarily driven by grant income. CRO net sales were SEK 2 million, up 31% year-on-year. Operating loss increased 2% year-on-year to SEK 12 million. And the net loss for the period was SEK 9.7 million, down 3% from Q2 2025. On cash, we closed the quarter with SEK 34.4 million after SEK 32.4 million in proceeds from a rights issue, including a guarantor set-off issue. The TO13 exercise period begins today, August 20, and runs through September 2. Proceeds from the warrants depend on the level of exercise and the applicable exercise price. The R&D spend figure, SEK 11.4 million was up 483% year-on-year. I would like to address that directly now. A significant portion of that increase relates to VICI-Disease CMC, which is 100% grant funded and fully offset in income. I'll show you that clearly on the next slides. Now looking at income in more detail. The left chart shows total operating income in the quarter since 1Q '24. The step-up in 2Q '26 to SEK 11.5 million is substantial, up 238% against 2Q 2025. That growth is from the grants line. CRO net sales were SEK 2 million, up 31% from Q2 '25, reflecting higher CRO activity in the quarter. That's the fluctuation we expect given the project-driven nature of that business. Other operating income, the grants line was SEK 9.5 million, up 407%. As you can see from the callout on the right chart, this includes grant income associated with VICI-Disease CMC subcontracting activities with corresponding costs recognized in R&D. The program, therefore, has a significant gross of effect on both reported income and R&D expense. The Nipah vaccine project has development momentum and is grant funded, but I want to be clear that the revenue comes with the corresponding cost. We currently expect VICI-Disease CMC activity, and therefore, the associated grant income and R&D expense to be materially lower going forward. Turning to costs. Total operating expenses were SEK 23.5 million, up 56% year-on-year. The left chart shows the quarterly progression. 2Q '26 is elevated but can be explained by the composition. R&D costs were SEK 11.4 million, up 483%. As the callout in the top right chart states, this includes VICI-Disease CMC, which is 100% grant funded and fully offset in income. Strip that out and the underlying R&D trajectory primarily reflects continued ES2B-C001 clinical activity. Personnel costs increased 14% year-over-year in the quarter at SEK 8.1 million versus SEK 7.1 million in the quarter a year ago. The increase primarily reflects higher contractor costs as we head toward completion of the Phase I trial of ES2B-C001 and preparation of a Phase II development plan package as well as nonrecurring items that benefited the prior year quarter. What the headline OpEx number doesn't immediately show is that other external costs fell 30% year-on-year from SEK 4.4 million to SEK 3.1 million. These costs were lower in the second quarter of this year due primarily to higher external consulting costs in the prior year quarter and lower vendor costs during Q2 2026. Putting it together, the net loss for the period was SEK 9.7 million compared to SEK 10 million in Q2 2025. That's a 3% improvement. The bottom left chart breaks down the drivers. The operating result deteriorated by SEK 291,000. Net financial items were immaterial and the R&D tax credit accrual increased by SEK 622,000, up 44% year-on-year, which reflects the higher qualifying R&D spend in the period. Those factors together accounted for SEK 300,000 improvement in the net loss, so it's primarily driven by the R&D tax credit. Looking at the year-to-date loss on the right side, loss decreased 10% in the first half of 2026 compared with the year-to-date 2025 result. The bottom right chart breaks down the drivers. Operating results, financial investments result and the R&D tax credit were all better year-to-date than the first half of 2025, driving a total improvement of SEK 2.2 million. The cash waterfall chart shows cash development over the last year from June 2025 through June 2026. We started at SEK 48.8 million. Operating cash outflows through the year reflects continued investment in ES2B-C001 and grant funded program activities. We closed Q2 2026 at SEK 34.4 million. The single largest movement in Q2 was the financial cash flow of SEK 24.9 million, which was driven by the rights issue. Operating cash flow was negative SEK 12.5 million in Q2 compared with negative SEK 25.5 million in Q1 and was higher than the prior two quarters. Note that the final quarter of the last several years has benefited from the annual payment of the R&D tax credit, which is usually in November. Operating cash flow is still primarily driven by ES2B-C001 clinical development and the VICI-Disease CMC. As I mentioned, looking forward, VICI-Disease CMC costs and income are expected to be much lower. Pulling it together on cash, our Q2 closing cash was SEK 34.4 million. The TO13 warrants have a pricing period starting today, August 20, and running until September 2 of this year, subject to a floor of SEK 1.6, followed by a subscription period from September 7 to 21. If exercised, it could provide potential additional proceeds, subject, of course, to the exercise level and share price at the time. The company's current priorities are to complete the Phase I program for ES2B-C001, support the targeted end 2026 primary readout and translational analyses and advance business development activities. Timing remains subject to clinical, regulatory, operational and funding factors as set out in the presentation. That covers the financial section. To summarize the quarter in one sentence, grant activity increased reported income and supported corresponding VICI-Disease CMC activity, while we continue to invest in the ES2B-C001 Phase I program and maintain focus on cost discipline. I'll now hand back over to Michael, who will moderate the Q&A. Michael?

Perfect. The first question, I think, is to Bent. Congratulations on the impressive Phase I results you've shown so far on the ES2B-C001. I think you already alluded a little bit to it, but the question here is, what are you looking at? And -- can you -- are you actually showing some tumor activity in the end? I know it's a safety study and titers, but a little bit on -- would you actually be able to show something whether the cancer potentially disappears? So a little bit -- you went a little bit into it, Bent, but maybe you can allude a little bit more to it.

It's a good question. As I've mentioned before, the Phase I study is primarily a safety study and the primary endpoints are safety and tolerability. Secondary endpoints are immunogenicity. So we're able to detect the level of antibodies that are increased we see by our immunotherapy. And thirdly, tertiary objectives are actually to see if there any antitumor activity. And that will be measured by scanning of the patients enrolled in this. We don't release that until we have the final scanning by the end of this year. So that's going to be exciting.

Perfect. Then to Keith, if you assume a quarterly burn rate of SEK 10 million, can proceed -- can we then proceed the assumption that your current cash reserve, excluding the TO13 will last you for three quarters. I don't know whether you comment or guide on the cash, but the assumptions here are from the person answering that. Is it totally wrong assumptions, Keith?

I see where we're going with it, and it's a fair question, but we haven't in the past, and we still won't continue to guide on runway publicly. So I think I just have to point to our cash position, SEK 34.4 million, our target of reaching the end of the Phase I study and the translational analysis by the end of the year. And that's where our primary focus is that and, of course, partnering for our main programs.

And then, of course, under partnering, we know this well. It's always, of course, very, very interesting. And there's a question here. Have you seen any increase in partnering interest after you have released the data that keeps showing this? And a by-question is the Moderna, Merck yesterday, maybe it's a little bit too early to see whether that gives a pickup in who calls you, but that was a vaccine. I know it's individualized and mRNA, but it's still a vaccine in the cancer field. So a little bit your data, Moderna, are you seeing a pickup in people calling you? Or is it too early to see that effect yet, Bent?

Well, we can say that we are active with our business development and partnering activities. So every time we release data, that's, of course, encouraging for the ES2B-C001 program and our ability to open doors around the world. And you can say part of what we've also alluded to, especially on this call and the last call was the translational analysis that we now do. We've just seen very important translational outcome from our -- sorry, nonhuman primate serum. We're going to do the same with the patient so here in the second half. Actually, that is even inspired by various dialogues that we have. It will be important to document the mechanism of action, and it's great that we're already now in nonhuman primate serum that even reinforce our hypothesis around this program.