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

Hello, everyone. I'm Christine Hofmeister, a member of the European investment banking team at Morgan Stanley. And it's my great pleasure today to welcome Søren Tulstrup, the CEO of Hansa Biopharma, to our fireside chat today. Before we kick off, I just need to read a quick disclaimer so please bear with me. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you're a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, Søren, welcome to the session. It would be great if you could give us a quick introduction to Hansa and the story as it stands now. So I'm happy to hand over to you.

Thanks, Christine, and good morning, everyone. Thanks for your interest in Hansa Biopharma. So happy to give a very brief high-level overview of the company. Hansa Biopharma was founded back in 2007 as a spinout from Lund University in Southern Sweden. And the genesis of the company really was the identification of an enzyme today known as imlifidase, which has the unique property that very fast and effectively cleaves IgG, a very common component of the human immune system. This cleaving happens very, very fast. As I said, it's specific to IgG, all subtypes of IgG. And it happens so fast, so essentially, within a couple of hours from a 15-minute infusion, you see IgG levels drop to below detectable levels, and then they stay down there for up to 7 days before gradually bouncing back. And it was thought that, that could have therapeutic use in various settings, and so the company was founded with the purpose to develop drug candidates initially within transplantation and autoimmune diseases. Very early on, the key focus really was on developing imlifidase as a drug candidate to enable kidney transplants in so-called highly sensitized patients, that is patients who, because of a previous transplant, blood transfusion or multiple pregnancies, have had their immune system primed so that it's very difficult for them to find an organ that is a good-enough fit for them to actually accept it and not reject it. And essentially, if you're highly sensitized today, you're more likely to die waiting for an organ, on dialysis than being transplanted. So there is a very high degree of unmet medical need in that space. We have now completed 4 Phase II trials, a total of 46 transplanted patients. We've had 100% success rate in actually enabling transplants in these very difficult-to-treat patients. And if we look at the graft survival rate post transplant at the 6-month time code -- time period, it's 94%, which is in line with what you've seen in the general population of transplant patients. So based on this encouraging outcome of the Phase II trials, we submitted a marketing authorization application in Europe last year. And we've just received conditional approval in Europe, and we're now moving forward with launch preparations and expect the first commercial sale later this year. In addition to this first indication, we've already started to branch out, and we also have now 2 ongoing Phase II trials in the acute autoimmune disease setting. The most advanced of these is for a disease called anti-GBM or Goodpasture's disease, which also affects the kidney. It's very serious. 2 out of 3 patients end up in dialysis -- they lose kidney function and end up in dialysis and there is no approved therapy for it. We had last patient last visit in July, and we expect to be able to communicate high-level results from this trial later this month and then have more detailed presentations of the scientific results data in Q4. The second ongoing trial in the acute autoimmune disease space is for a disease called Guillain-Barré syndrome, which affects the peripheral nerve system, also very serious. IVIg is approved as a therapy but despite this, you have mortality rates of around 4%, 5%. Up to 40% of patients need respiratory support. And so clearly, there is an unmet medical need in this space. We're currently recruiting patients and we expect to have readout from this study towards the end of '22. In addition to the transplant universe and the autoimmune disease space, we also see tremendous potential for imlifidase and other enzymes in our pipeline in the gene therapy space, where, as you probably know, there is quite a challenge with the neutralizing antibodies, both preexisting and antibodies developing post the first gene therapy course. We made a deal with Sarepta Therapeutics in the U.S., and we play overall in the space but specifically in the neuromuscular dystrophy area where Sarepta then has exclusivity for 2 indications, Duchenne and limb-girdle. And we look very much forward to seeing this program move forward into the clinic. The last broad indication universe that we're looking at it's a bit further out but very interesting as well, is oncology, where the hypothesis is that if we take away IgG as a competitor for relevant receptors for the immuno-oncology therapies, then you might see an increase in the efficacy of these therapies. And here, we're moving forward towards potential proof of mechanism. So we really have a very broad, flexible and versatile platform. We're very excited about the launch near term in Europe and the potential to develop a valuable pipeline of drug candidates. We're approximately 115 employees throughout Europe and in the U.S., listed on NASDAQ, Nordic and Stockholm. And our market cap is around $1 billion. That was the brief intro.

Great. Thank you very much, Søren. Maybe starting off in terms of Q&A at the most near-term developments. And you mentioned very exciting to have your commercial approval just coming in for imlifidase in Europe. So maybe you could spend a couple of minutes just talking about your commercial launch strategy, which countries are you planning to enter near term. And also, I assume you're currently in discussions to set pricing and reimbursement. If there's any update you could give around those topics as well.

Sure. So we don't see this as a kind of traditional launch. I mean this really is a transformational therapy so a lot of work needs to be done to create the infrastructure and the awareness, et cetera. And we will do that in a very center-focused manner. So we're looking at this as a kind of a center-focused launch rather than a countrywide traditional launch, where you move into one country and then you go out broadly in that country. So we have a very clear list of prioritized centers across Europe. It's a very concentrated target audience. If you take the large countries in Europe, up to 80% or so of transplants typically take place in less than 5 centers. And we're clearly targeting the most important centers, not just from a volume perspective but also from an ability to innovate and actually become an early adopter of new innovative therapies as well as having the resources to secure successful early outcomes, which is critically important when you launch a transformational therapy. So we have a very clear list of prioritized clinics across Europe. We don't need an army of sales reps or MSLs but we do need highly skilled people and we have the core in place already. Clearly, there is this underlying matrix of early-launch countries versus later-launch countries from a market access perspective. And so we do expect first commercial sales to be in one of the usual suspects in the early-launch countries. In addition to actually then using commercial sale as a way to generate experience in relevant centers, we also have the post-approval study that we've committed to running as part of the conditional approval. That's a very important way to generate experience in relevant centers. And so typically there, we would set up centers in the later-launch countries and use that platform, if you will, or path to generate experience. Then you asked about reimbursement, pricing and so on. And clearly, we have reached out to payers. We've had a dialogue for quite a while. We've tested our value proposition quite thoroughly. It's based on using dialysis, the cost of dialysis as really the only relevant benchmark because there's no other therapy available for these patients. If you're highly sensitized -- as I said, you're on dialysis and you're waiting for a transplant, and it's very, very difficult to be transplanted if you're highly sensitized. And that value proposition -- or that benchmark as part of your value proposition has resonated quite well with payers. So now we're moving forward. And obviously, in -- we're in final negotiations in some of the early-launch countries.

Yes. Great. And on top of Europe, you're also planning to commercialize in the U.S. at some point and your -- you have ongoing FDA discussions. I believe the latest there was that you submitted a proposed study protocol earlier this summer. Maybe you could also give a quick update on your discussions with the FDA, how the time line is looking and also if you have seen any impact from COVID-19 maybe on some of these discussions as we've been hearing in the space from other peers.

Yes. So clearly, in the U.S., we also see a high degree of unmet medical need for this indication. We've had a dialogue with the FDA for a while, and we have overall agreed on a regulatory path forward that would enable us to submit a BLA, but it will be on the other side of conducting a randomized controlled trial against the U.S. Kidney Allocation System in essence. Obviously, it will be against standard of care, but for these patients, that essentially, in the vast majority of cases, means just remaining on the wait list, hoping almost against hope for an organ to become available. That is a perfect fit. So we submitted -- as you said, we submitted a post-study protocol before summer to the FDA, and we're now in dialogue with the FDA around the specifics. And once we have reached agreement around the final study protocol, we'll certainly move forward and set up the trial centers in the U.S. There's strong interest in participating from very important centers. And hopefully, again, depending on the COVID-19 situation, we should be able to include the first patient in the first half of next year. That certainly is our aim.

Yes. Okay. I mean more broadly, maybe comparing Europe and the U.S., how do you see the markets there for kidney transplantation? Are there any major differences in terms of patient numbers, patient access? And will you have valuable learnings now from the commercial launch in Europe that you can directly apply in the U.S. as well?

That's a very good question. So we definitely see that the 2 markets are rather similar in terms of the addressable patient population, the relevant patient population. In both geographies, overall, there are approximately 100,000 patients on the wait list. And due to the undersupply of organs, only 1 in 5 of these are transplanted on an annual basis. Then, clearly, those patients that are relevant for this indication are the highly sensitized patients. And the degree of sensitization is represented by something called cPRA. And if you're above 80%, meaning that 80% of organs will not be a good fit, then you're generally considered a highly sensitized patient. And 12% to 15% of patients on the wait list in both geographies are in that category and group. So we think that both in Europe and in the U.S., the relevant patient population on an annual basis that we could access is around 3,000 to 4,000. And there are, of course, as ever, some structural differences also within Europe. It's a pretty heterogenous market. There are different approaches in different specific countries. But overall, the basics are the same. There is an attempt through various Kidney Allocation Systems to match organ and recipient optimally, but there are different ways that this is being tried. So clearly, as we gain experience in Europe and as we generate data also from the post-approval study, clearly, that's something that, as a learning, can be applied also to the U.S. setting.

Great. Maybe moving on to some of the other pipeline programs that are currently ongoing. You have 3 -- currently, 3 Phase II studies ongoing related to imlifidase. Maybe you could also give an overview there on kind of near-term milestones. I believe you also announced that COVID-19 may have some impact on the time line. So if you could share a bit of color around that.

Sure. So we have 3 ongoing Phase II trials, 2 in the acute autoimmune disease space: anti-GBM, where, as I said, we expect high-level readout. So there's going to be no impact directly on that trial from COVID-19. We had last patient last visit in July. The second is Guillain-Barré syndrome. We did take a decision there to halt patient inclusion for a while because we wanted to preserve data integrity, but also for logistical reasons. We have taken a decision to commence again. And as I said initially, we expect this trial to be fully enrolled then in the second half of next year, again depending, of course, on the development as far as COVID-19 is concerned. The third Phase II trial we have ongoing is in a second kidney transplant indication. This is post transplant, where quite a broad range of patients actually have episodes of kidney rejection. They are manageable, to a certain extent, through immunosuppressive therapy but not optimally and we think imlifidase could be a good alternative here. We are including patients here. We also, like in the GBS study, decided to halt inclusion for a while. But we have just decided to reinitiate patient inclusion in that study. And we also expect this study to be fully enrolled in the second half of next year. So that's what's ongoing in the clinic at this point in time. Clearly, as we get the anti-GBM study results in, we'll determine how to move forward here. But at this point in time, we have really to see the data first.

Yes. Great. And you already touched upon in your introduction your licensing agreement with Sarepta, your partnership around gene therapy, which is very exciting. Could you give a bit more color around that? What is the vision for this partnership? And maybe also a bit around the structure. How are you planning to work together? Any kind of near-term milestones that investors should look out for on that front?

Yes. So as I said initially, today, we see very important potential for imlifidase as a conditioning therapy ahead of gene therapy in that space, essentially across a range of different indications. Essentially, what you see is that depending on the specific vector that's being used and indication, up to 60% to 70% of patients are not eligible for gene therapy, which obviously is a huge loss for the individual patient, but also, for the gene therapy companies represents a loss of opportunity. And we have decided to embark on a partnering effort here. Clearly, we need access to complementary assets, the gene therapies themselves, but also other resources. And we have decided to do that in an indication-focused manner. And so the first result of that effort was in the deal with Sarepta Therapeutics. We're very happy with Sarepta as a partner. They clearly are a leader in the neuromuscular dystrophy space. They have exclusive rights to develop imlifidase as a pretreatment for limb-girdle and Duchenne with their agents and their approaches in that space. But it will be kind of a joint effort in the sense that we have a joint steering committee. We also have people in the project teams and so on. So clearly, we provide our knowledge around imlifidase and immunology in general into this partnership even though it's clearly Sarepta that takes the lead and actually finances the development efforts, both preclinical and clinical development efforts. So that's the setup. And in terms of the financials, we got an upfront of $10 million, and we qualify for up to $395 million in clinical development, regulatory and sales milestones. And then we also qualify for mid-teens royalty income from the sale of the Sarepta products that are enabled through the use of imlifidase. Importantly, we stay in control of imlifidase sales. So we will book the sales and benefit from that. That's a very important component of this deal and potential success of the deals that we'll be making.

Okay. Great. And you're also investing into preclinical studies around your platform, your imlifidase platform and you have basically 2 focus areas. One is autoimmune and the other one you mentioned is cancer immunotherapy. If you could maybe give a quick overview of those platforms. And where do you see the biggest opportunities coming out of that?