Hansa Biopharma AB (publ) (HNSA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Hansa Biopharma AB Interim Report for January to June 2020. [Operator Instructions] Today, I'm pleased to present CEO, Søren Tulstrup. Speaker, please begin.

Thank you, operator. Good afternoon to those of you in Europe, and good morning to those in the U.S. Welcome to the Hansa Biopharma conference call to discuss the results for the first half of the year of 2020. I'm Søren Tulstrup, CEO of Hansa Biopharma. With me today, I have our CFO, Donato Spota; as well as our Head of Investor Relations, Klaus Sindahl. Today, we'll review the overall progress and highlights of the business as well as near-term milestones. Our presentation should take 15 minutes. And after that, we'll take your questions. Now please turn to Slide 2. Please allow me to draw your attention to our forward-looking statements, which apply to this presentation. Please turn to Slide 3. Hansa Biopharma's evolution into a fully integrated, commercial-stage biopharmaceutical company has taken a major step forward with the recent achievement of 2 landmark milestones. On June 25, we received a positive opinion from the CHMP of the European Medicines Agency for imlifidase in highly sensitized kidney patients in the European Union. We're very excited about this recognition from the CHMP. The positive opinion by the CHMP and the expected launch of imlifidase towards the end of this year brings hope to the thousands of highly sensitized patients across Europe waiting for a life-saving kidney transplant and will take Hansa Biopharma a major step forward to becoming a commercial-stage biopharmaceutical company. A week later, on July 2, we announced the achievement of another landmark milestone, namely the exclusive agreement with Sarepta Therapeutics to develop and promote imlifidase as a potential pretreatment prior to the administration of gene therapy for Duchenne muscular dystrophy and limb-girdle muscular dystrophy in patients with neutralizing antibodies to adeno-associated virus. We're very excited to partner with Sarepta, a leading player in the field, to use the unique features of imlifidase to potentially enable gene therapy treatment in patients, who today aren't eligible for these breakthrough therapies due to preexisting neutralizing antibodies. The agreement with Sarepta also serves as a validation of our enzyme technology as we expand beyond transplantation and acute autoimmune diseases. Last weekend, we raised SEK 1.1 billion or approximately USD 121 million in an overnight placement of new ordinary shares to fund our R&D programs and commercial buildup. The placing received strong interest from leading life science investors in the U.S. and Europe and was multiple times oversubscribed. In the U.S., the proposed study protocol for a randomized controlled trial in kidney transplant was submitted to the FDA on June 17. Once the protocol is formally approved, we expect to set up the specific trial centers in the U.S. and apply for the necessary ethical approvals. Recruitment of the first patient is targeted for the fourth quarter of this year. While we have, overall, been able to maintain a high level of productivity despite the impact from the COVID-19 pandemic, patient recruitment into the ongoing AMR and GBS Phase II studies has been delayed, as a decision was taken to temporarily suspend recruitment and no patients were thus enrolled during the second quarter. As communicated earlier, the impact from the pandemic is therefore expected to extend recruitment time lines by 3 to 6 months. Currently, we expect to reinitiate enrollment in both studies during the third quarter. In the anti-GBM Phase II study, we completed enrollment in the investigator-sponsored program back in January this year, and we expect the first data readout in the third quarter, as indicated earlier. Lastly, I also want to highlight how we continue to build a high-performance organization while adding both capacity and new competencies. In June, we announced the recruitment of Professor Achim Kaufhold as Chief Medical Officer. Professor Kaufhold brings extensive experience as a senior leader in immunology, infectious diseases and oncology and will support the company's expansion outside transplantation. This morning, we also announced the appointment of Katja Margell as our new Head of Corporate Communications. Katja brings extensive experience from strategic, corporate and capital markets communication from leading communications agencies and companies and will be a great addition to the Hansa team. Katja will assume her new role effective immediately. Now please turn to Slide 4. As I said earlier, we are very excited to have received a positive opinion from the CHMP. This brings hope to thousands of highly sensitized patients across Europe waiting for a life-saving kidney transplant and takes Hansa Biopharma one important step closer to becoming a commercial-stage biopharmaceutical company. The decision by the CHMP further served to validate the potential of Hansa Biopharma's proprietary drug development engine to develop approvable immunomodulatory drug candidates for rare and serious diseases and comes at a time when we are significantly expanding our activities into autoimmune diseases, gene therapy and oncology. More specifically, CHMP recommends conditional approval of imlifidase for the desensitization treatment of highly sensitized adult kidney-transplant patients with a positive crossmatch against an available deceased donor. The positive opinion from the CHMP comes on the back of a 16-month review process by EMA, and the recommendation was based on data from 4 completed Phase II studies with imlifidase and kidney transplantation across Sweden, France and the U.S. Throughout the review process, imlifidase was supported by EMA's Priority Medicines Scheme, which provides early and enhanced scientific and regulatory support to medicines that have a particular potential to address patients' unmet medical needs. Adoption of the positive opinion by the European Commission is expected in the third quarter of 2020. As communicated earlier, our immediate goal remains to launch imlifidase in the first clinics in the fourth quarter of this year. Our launch strategy will be focused on leading kidney transplantation centers with the potential to become early adopters and centers of reference. A post-approval study will run in parallel with the launch and will be an additional way for key clinics to get experience with imlifidase. Please turn to Slide 5. In the U.S., we submitted the proposed study protocol for the randomized controlled study with imlifidase in kidney transplant to the FDA on June 17. We aim to commence recruitment in Q4 2020, following receipt of the necessary approvals and the initiation of trial centers in the U.S. However, we acknowledge the risk of a potential time line impact due to the COVID-19 pandemic, which is affecting priority setting by the FDA in clinics. The proposed new trial would include 45 patients with a cPRA score of 99.9% or above at 10 to 15 centers in the U.S. eGFR, which is a measure for kidney function, will be used as a surrogate end point after 12 months to demonstrate a clinical benefit of imlifidase therapy versus patients being waitlisted. The results from this new clinical study could support a BLA filing in the U.S. by 2023 under the accelerated approval pathway, as communicated earlier. Obviously, we'll do what we can to compress the process and time line as much as possible. Please turn to Slide 6. If we look beyond transplantation, patient recruitment into the ongoing AMR and GBS Phase II studies has been negatively impacted by the COVID-19 pandemic due to a temporary suspension of patient recruitment. No patients were involved during the second quarter. End of the second quarter, 4 of the targeted 30 patients have been enrolled in each of the respective studies. As communicated earlier, the impact from the pandemic is expected to delay recruitment time lines for these studies by 3 to 6 months. We expect to reinitiate enrollment in both studies in the third quarter this year, and enrollment in the AMR and GBS studies is now expected to be completed in the first and second half of 2021, respectively. In the anti-GBM Phase II study, we completed enrollment in the investigator-sponsored program back in January this year, and we expect the first data readout in the third quarter, as stated previously. Please turn to Slide 7 and a summary overview of our pipeline. As depicted on this overview slide, thanks to the continued progress over the past years, we have now developed a broad clinical pipeline in both transplantation and autoimmune diseases, and we have exciting preclinical projects ongoing in cancer and antidrug antibodies, augmented shortly by the initiation of preclinical activities in gene therapy by our partner, Sarepta. I will now hand over the call to Donato, who will take us through the recently announced exclusive partnership agreement with Sarepta Therapeutics in gene therapy as well as the financials. Donato, please?

Thank you, Søren. Please turn to Slide 8. As highlighted by Søren, the Sarepta agreement is the first partnership in gene therapy for Hansa Biopharma and serves as a landmark milestone for the company as we expand our enzyme technology beyond transplantation and autoimmune diseases. This is a unique opportunity for both companies to combine efforts and use Hansa's antibody-cleaving enzyme, imlifidase, to potentially enable access to gene therapy for a much broader range of patients while unlocking significant additional potential value. We have estimated that 15% to 20% of patients in each of the 2 relevant indications have preexisting neutralizing antibodies to AAV-based gene therapy, which prevents the patients from being treated. Under the agreement, Hansa grants Sarepta an exclusive license to develop and promote imlifidase as a potential pretreatment prior to the administration of gene therapy in patients with neutralizing antibodies to AAV vectors in Duchenne muscular dystrophy and limb-girdle muscular dystrophy. Sarepta will be responsible for conducting and financing all preclinical and clinical studies to develop imlifidase as a pretreatment to Sarepta's gene therapies as well as any potential subsequent regulatory approvals. Hansa will support the development program with know-how, existing data and regulatory assets as well as by supplying imlifidase for development purposes free of charge. The significant potential value of the partnership is also reflected in the economics. Under the terms of the license, Hansa received USD 10 million upfront and will be eligible for up to USD 397.5 million in payments upon achievement of certain predefined development, regulatory and sales milestones, with sales milestones accounting for the majority of such potential payments. In addition, Hansa will book all sales of imlifidase and earn high single-digit to mid-teens royalties on Sarepta's incremental gene therapy sales when treating NAb-positive patients enabled through pretreatment with imlifidase. Please turn to Slide 9. With the continuing advancements we have made across our operations, we have also seen investments increasing during the first half of this year with regard to our pipeline as well as related to the commercial preparations, as we are getting ready to launch. For the first half of 2020, our SG&A expenses amounted to SEK 88 million compared to SEK 68 million in the same period 2019. Our investments in R&D amounted to SEK 106 million for the first half of 2020, which is up SEK 18 million compared to the first half of 2019. Investing in R&D and our medical affairs activities remain a constant priority for short-, mid- and long-term value creation. The net loss for the first half of 2020 amounted to SEK 193 million compared to SEK 155 million for the same period 2019. Please turn to Slide 10. Cash flow from operating activities amounted to minus SEK 199 million for the first half compared to minus SEK 180 million for the same period a year ago. At the end of June, our cash position, including short-term investments, amounted to SEK 400 million, which is equivalent to approximately USD 40 million. Beginning of July, we substantially strengthened our cash position by successful completion of a SEK 1.1 billion direct placement of 4.4 million newly issued shares. The placement was oversubscribed multiple times and included significant participation from leading life science investors in the U.S. and Europe. The net proceeds of the placing will be used to continue to develop and expand Hansa's R&D pipeline as well as to fund potential launch and commercialization of imlifidase in kidney transplantation. More specifically, the proceeds will enable us to fund the continued development of imlifidase for additional indications such as AMR, GBS and anti-GBM as well as our ongoing commercial buildup in preparation for the expected upcoming launch in Europe. And we plan to invest further in the company's development of next-generation IgG-eliminating enzymes for repeat dosing as well as fund working capital needs and general purposes. With the significant capital injection, we expect our operations to be financed into 2023. With this, I hand back to Søren to give his final remarks.

Thank you, Donato. Now please turn to Slide 11. Over the past year, we've made significant progress across our business and pipeline development operations. Our organization has also expanded as we continue to strengthen our R&D team and prepare for the launch of imlifidase in Europe, expected later this year. We're looking ahead to further value creation with many important milestones in 2020 and the years to come. Following the positive opinion end of June, we expect formal adoption by the European Commission and conditional approval in the third quarter. Assuming the approval is obtained, as expected, we aim to launch imlifidase in the first clinics in the fourth quarter. In the third quarter this year, we should also have the first data readout from the completed anti-GBM study. The readout from this Phase II trial will be the first high-level set of complete data from a Phase II study outside transplantation and will mark Hansa's continued advancement into new indications and therapeutic areas beyond transplantation. In the U.S., our imlifidase kidney transplant trial is expected to be initiated in Q4 this year, following the necessary protocol and ethical approvals. As highlighted earlier, the new study would enroll 45 highly sensitized patients at 10 to 15 centers in the U.S. In summary, 2020 has already been very eventful and will continue to be an exciting year for Hansa Biopharma. We look forward to keeping you updated on the progress of our journey as we transform the company into a fully integrated, commercial-stage biopharmaceutical company that brings life-saving and life-altering therapies to patients with rare diseases and generates long-term value to our shareholders and society at large. Please turn to Slide 11. Before we enter the Q&A session, I wanted to bring to your attention that we intend to organize a Capital Markets Day later this fall. Further details on the format and content will follow shortly, but already now, we would encourage any interested institutional investors, analysts and media to save the date for the event, which is expected to take place first -- October 29, 2020. With this, we're now ready to take your questions. Operator, please begin.

[Operator Instructions] Our first question comes from the line of Zoe Karamanoli from RBC.

Two questions from me, please. The first one, given the recent deal with Sarepta, I wonder if you can give us a little bit more about the discussions with other gene therapy players, and any color you have with regards to the number of companies you are in dialogue at the moment, if this number has increased post the announcement of the deal. And any indication as to how advanced are those discussions and whether we should be thinking another potential deal as a near- or longer-term event?

Well, thanks, Zoe, for that question. So clearly, we are in discussions with a number of leading players in the field. Obviously, the challenge that Sarepta is encountering and seeing is one that other companies is dealing with as well. And so we have had these discussions ongoing for a while. They continue. At what point they will lead to the next deal to be announced, I just can't predict. There is clearly a lot of interest and so we're continuing the discussions. I can't give you any specific number as to how many we're talking to. But clearly, there's a number of companies out there that have significant challenges with neutralizing antibodies. So as you can imagine, it's certainly a reasonable number. So I guess that was the question or did I answer it satisfactorily?

Yes. This is fine. I understand if you can't give more details. And then the second question, from a clinical development perspective and following the recent capital raise, what are your priorities for developing imlifidase in other indications? Is the current indication the main focus? Or we should expect to hear more in additional indication? And any color you can give on the timing of this?

So we're very privileged to have a platform that, so far, has generated very, very good results in a number of different areas, and we're pushing ahead as fast as we can now with additional capital on hand to develop imlifidase for a range of indications. Clearly, within the transplant space, kidney is not the only organ where you would want to enable a transplant. So we're looking at other organs there. But importantly, we're looking at the autoimmune disease space as a very exciting and promising space to further develop imlifidase. As you know, we have 2 ongoing trials there, anti-GBM and Guillain-Barré syndrome, but there are certainly other diseases where you have very strong upfront acute attacks, where dealing with that attack will be critically important. So we're looking at what can be done there with imlifidase. Clearly, the gene therapy space, we're looking at, as we just discussed. And then we have preclinical activities in the oncology space. Our imlifidase is not the only molecule in development. We have the next generation of enzymes also in preclinical development, where we are trying to develop them for repeat dosing. And that obviously, if successful, would open up a universe of diseases where repeat dosing is highly relevant. In the autoimmune disease space, there is a number of very serious diseases, chronic autoimmune diseases, where you have fairly rapid disease progression, and then you have flares and where you would want to deal with these flares very quickly. And so if we could successfully develop a molecule that could do that, to deal with these flares, then that will bring a lot of value, I think, to the patients. So that's certainly an area that we're looking at as well. As you know, we have our lead candidates currently getting ready for IND-enabling tox studies, and we're hoping that we can take it into the clinic in the foreseeable future.

And the next question comes from the line of Ingrid Gafanhão from Kempen.

So as you mentioned, you just received the CHMP positive opinion for Idefirix in kidney transplantation in Europe. And we know that this is going through a conditional approval process. So have you gotten already any insight from the EMA on how the confirmatory trial should look like? Or is that something that you expect to get when the formal approval comes along?

So it certainly has been part of the dialogue with the CHMP, what will be the design of a post-approval study. So that is part of the decision that CHMP has made, and that will then be formally endorsed by -- hopefully, by the commission relatively soon. And so what we overall are saying is that this will be a study that is designed to produce more of the same, right? So it will be a study where we will look at the efficacy of Idefirix to enable kidney transplants in highly sensitized patients. And the specific design, we'll get back to the elements at a later stage. But this clearly will be an important part also of the overall launch efforts because it's an excellent way to actually generate experience in relevant centers in Europe.

[Operator Instructions] Our next question comes from the line of Maneka Mirchandaney from Evercore.

I just had a couple on the anti-GBM results coming up. Can you talk a bit about the expected natural history for these patients over 6 months and what you're hoping to see on the primary end point? Is it the stopping of progression of patients to dialysis? Or do you think there's a potential to see some reversion on need for dialysis as well? And then given the rarity of the disease, what have been your conversations with regulatory agencies on the path forward to registration after the data as well?