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

Welcome to the Hansa Biopharma AB year-end reports January to December 2020. [Operator Instructions]. Today, I am pleased to present CEO Soren Tulstrup. Please begin your meeting.

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 reporting the year-end results for 2020. I'm Soren Tulstrup, CEO of Hansa Biopharma. And 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 our business in 2020 as well as the 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 the fact that I'll be making forward-looking statements during the presentation today, and you should therefore apply appropriate caution. Please turn to Slide 3. 2020 was overall a very successful and transformative year for Hansa Biopharma, the year during which we achieved a number of significant milestones, including not least the conditional approval of Idefirix by the European Commission for the desensitization treatment of highly sensitized kidney transplant patients. Commercial launch activities have been successfully initiated and implemented as planned, including supply chain activities and productive initial interactions with national reimbursement authorities and key transplant clinics despite the escalating COVID-19 pandemic in Europe during the fourth quarter. Clearly though, the challenging operating environment for the transplant clinics has somewhat impeded the ability by the clinics to aggressively pursue early access to special budgets for innovative new treatments outside national reimbursement schemes as well as the ability to implement new local protocols. We've also made significant progress in our efforts to develop valuable drug candidates outside transplantation. Last summer, we announced an exclusive agreement with Sarepta Therapeutics to develop and promote imlifidase as a potential pre-treatment prior to the administration of gene therapy in select indications. The partnership is progressing as planned. And in the second half of 2020, Sarepta initiated ongoing pre-clinical investigations with imlifidase as potential pre-treatment in the gene therapy setting. Another key milestone was the announcement of positive high-level data from the investigator-initiated Phase II trial with imlifidase in 15 patients suffering from severe anti-GBM antibody disease. Based on the study demonstrated that 2/3s of the anti-GBM patients enrolled achieved dialysis independence 6 months after treatment. These positive data in anti-GBM antibody disease are very encouraging, particularly as we expand into new indications within our community. While 2020 has been a transformative year for Hansa Biopharma with significant progress in key areas, we've also seen the negative effects from the COVID-19 pandemic impacting our operational business and clinical trial activities during the year. Recruitment in 2 of our Phase II programs, Guillain-Barre syndrome or GBS and antibody-mediated kidney transplant rejection or AMR, both had to be paused during a large part of 2020 to preserve data integrity and for logistical reasons. We recently reinitiated patient enrollment in both studies under a risk-based, site-by-site approach. Depending on the development and impact of the ongoing global pandemic, we now expect to finalize recruitment in both studies towards the end of this year. Given the current status of the COVID-19 pandemic, we may continue to see impact on our operational business and clinical trial activities in 2021, noting that we will maintain measures to protect the employees and take social responsibility during this global health care crisis, while working to limit any potential negative effects on our business. Please turn to Slide 4. Hansa Biopharma's evolution into a fully integrated commercial stage biopharmaceutical company took a major step forward in the third quarter last year following the conditional approval of Idefirix by the European Commission. As communicated on previous occasions, Hansa is embarking on a sequenced and focused launch strategy that targets leading kidney transplantation centers to ensure early positive experience in the right patients by centers that have the potential to become early adopters and centers of reference. Commercial launch activities are now underway as planned. During the fourth quarter of 2020, our first commercial product was manufactured following validation of packaging and labeling processes in select European markets. Following the publication of initial pharmacy level pricing in the first markets, supply chains are now being established for the initial distribution of Idefirix to the leading transplantation centers in Europe. Discussions with national reimbursement authorities are overall progressing as expected, and we expect decisions from agencies in some of the early launch countries to be made starting midyear. We're also working with select key centers that have the ability to potentially access funds outside the national reimbursement system for individual patients prior to the granting of national reimbursement status. Despite the raging pandemic in Europe, our front-end MSLs and key account managers have been able to closely and frequently interact virtually with key centers and key opinion leaders across Europe, and the response from key centers has been overall positive. We're also moving forward at speed with preparatory activities to enable the commencement of the post-approval efficacy study we've committed to as part of the conditional approval, which will be a great way to generate hands-on treatment experience in key centers in the later launch countries where it will take some time to get commercial market access. We expect to initiate the study in the second half of the year. Please turn to Slide 5. In the U.S., we are in ongoing discussions with the U.S. Food and Drug Administration regarding a proposed study protocol for a new randomized controlled study of imlifidase for the desensitization treatment of highly sensitized adult kidney transplantations. Despite the current challenging operating environment, we hope to secure alignment near-term with the FDA on the final study protocol. In parallel, with our dialogue with FDA, we have to some time now work extensively with key opinion leaders and centers targeted to be included in the proposed trial as well as key players involved in organ allocation. And as soon as we get green light from FDA, we will proceed to set up trial centers in the U.S. and initiate patient enrollment. As previously guided, under the assumption that we can align with FDA near-term and that the COVID-19 situation in the U.S. does not materially adversely affect patient enrollment, we expect to complete patient enrollment in 2022 and to potentially file a Biologics License Application by 2023 under the accelerated approval pathway. Please turn to Slide 6. As I mentioned early on this call, we recently announced positive high-level data from the investigator-initiated Phase II trial with imlifidase in anti-GBM antibody disease. While we await the full data set from the study, we have started preparations for upcoming engagements with FDA and EMA on a path forward towards BLA and MAA in anti-GBM. Our 2 other Phase II programs in GBS and AMR were both temporarily halted during a large part of 2020 due to the impact from the global COVID-19 pandemic on the ability to enroll patients and preserve data integrity. Patient enrollment was reinitiated in both studies in December 2020 under a risk-based site-by-site approach. Depending on the development of the COVID-19 pandemic, we expect to finalize recruitment in both studies towards the end of this year. As of today, we have recruited 5 of the targeted 30 patients in both the GBS and the AMR study. Now please turn to Slide 7 and a summary overview of our pipeline. As depicted on this overview slide, we have made great progress over the past few years developing a broad clinical pipeline from both transplantation and autoimmune diseases, and we have exciting pre-clinical projects ongoing in cancer and antidrug antibodies and in the promising field of gene therapy where pre-clinical studies with imlifidase were commenced last year by our partner Sarepta Therapeutics as part of efforts to develop imlifidase as potential pre-treatment ahead of gene therapy in limb-girdle and Duchenne muscular dystrophy. I will now hand over the call to Donato, who will take us through a detailed review of financials. Donato, please?

Thank you, Soren. Please turn to Slide 8. As Soren stated at the beginning of our call, 2020 was a transformative year for Hansa Biopharma in which we achieved many milestones, including the company's first product approval. The significant progress we have seen is also reflected in our 2020 financial performance. Revenue for the fourth quarter 2020 amounted to SEK 4 million and to SEK 6 million for the full year 2020. In the fourth quarter, we started to recognize the first revenue from the USD 10 million upfront payment we received under the Sarepta agreement mid last year. So the 2020 revenue mainly comprises SEK 2.6 million under the Sarepta agreement and SEK 3.5 million under our agreement with Axis-Shield Diagnostics. The Sarepta upfront payment will presumably be recognized over a period of approximately 36 to 48 months as Hansa fulfills its performance obligations under the contract. SG&A expenses amounted to SEK 63 million for the fourth quarter 2020 and SEK 203 million for the full year compared to SEK 53 million and SEK 167 million respectively for the same period in 2019. The increase in expenses reflects the progressing activities related to preparing for a commercial launch of imlifidase in Europe, including investments in marketing, branding, market access, patient advocacy and supply chain activities. In 2020, we also increased our R&D -- investments in our R&D programs and our medical organization as we expand our activities outside kidney transplantation. R&D expenses amounted to SEK 50 million in the fourth quarter of 2020 and were SEK 8 million lower compared to the same period of 2019. For the full year, R&D expenses were SEK 227 million compared to SEK 193 million in 2019. Investing in R&D and our pipeline activities is a priority for our short-, mid- and long-term value creation. The proceeds from last summer's fundraise supports our continuous focused the development of imlifidase for additional indications such as AMR, GBS and anti-GBM as well as next generation enzymes for repeat dosing, also known as the NiceR program. The net loss for the fourth quarter of 2020 was SEK 106 million, which is basically on par with the net loss recorded for the same period in 2019. For the full year of 2020, the net loss was SEK 423 million compared to a net loss of SEK 360 million for the prior full year. The increased net loss was driven by increased activities in commercial and R&D, both of which drove costs in 2020. Please turn to Slide 9. Cash flow from operating activities amounted to minus SEK 97 million for the fourth quarter and minus SEK 290 million for the full year, which is 13% below the level of 2019 and positively impacted by the Sarepta upfront payment. At the end of December 2020, our cash position including short-term investments amounted to approximately SEK 1.4 billion equivalent to approximately USD 160 million. Last summer, Hansa strengthened its cash position substantially with a successful placement that raised SEK 1.1 billion or USD 121 million. The placement was multiple times oversubscribed and helped Hansa to further diversify its shareholder base with the participation from leading life science investors in the U.S. and in Europe. With our solid year-end cash position, we expect our operations to be financed into 2023. I now hand back to Soren to give his final remarks.

Well, thank you, Donato. Please turn to Slide 10. Hansa Biopharma's evolution into a fully integrated commercial stage biopharmaceutical company is now becoming a reality. We have an exciting year ahead and are well positioned to execute successfully on our key priorities and objectives for 2021, which are to: first, ensure the successful launch of the company's first commercially approved drug Idefirix in Europe; second, finalize the clinical trial protocol with the FDA and initiate a study in the U.S. to support a future filing of a BLA for imlifidase in kidney transplant; and third, continue the strong momentum to advance our pipeline of drug candidates within auto-immune diseases and gene therapy. Looking at milestones for 2021 beyond the European launch, we expect to receive 3-year data from the long-term follow-up study in kidney transplantation later this spring and to initiate IND-enabling tox studies for our next generation enzymes, also known as the NiceR program. In the second half of 2021, depending on the COVID-19 situation, we expect to complete the enrollment of patients into our 2 Phase II programs in AMR and GBS with high-level data readout in the second half of 2022. We look forward to keeping you updated on our progress in advancing our mission to bring lifesaving and life altering therapies to patients with rare diseases while generating long-term value to our shareholders and society at large. Please turn to Slide 11. And with this, we're now ready to take your questions. Operator, please begin.

[Operator Instructions] And our first question comes from Ingrid Gafanhao from Kempen & Co.

I just have a little bit of -- I was wondering if you can share a little bit of background on what sort of discussion are you currently having with the FDA to define the protocol for the randomized controlled trial? I think in the past, you mentioned already you gave us some idea what the FDA will be looking for. So I'm curious to hear what exactly the estimate to finalize to -- before going ahead?

Yes. So we've had a discussion for some time now. As you know, we submitted the draft protocol during our last extensive meeting, based on the outcome of that meeting, and we submitted that protocol over summer of last year. And we've had an ongoing dialogue with the FDA. I would say that it's clear that this is also a difficult and challenging situation for the agency. And so, therefore, it was little but a rigid interaction that we've had. But essentially, we've had a broad ranging discussion as you would expect when you're preparing for a trial of this nature with a transformative therapy along a lot of different aspects, if you know, from the organ allocation to all kinds of logistics and so on. So it's really a very broadly scoped to discuss I would say. There is no single issues that I would point you that is of clinical importance. It is really broad range of issues. And as I said, we continue this dialogue and we're going to have all matters resolved in the coming months.

Our next question comes from Charles Weston from RBC.

I have 3, please. First of all, in terms of AMR and GBS recruitments, what control can you -- or what can you do in order to improve the probability of recruitment by the year-end? I'm thinking are there extra [indiscernible] you could bring on or do anything else you can do to accelerate that and mitigate COVID risk? My second question regards any discussions you may be having with other gene therapy companies? Presently, that will be confidential, but are those discussions been ongoing? And are you expecting any additional data to be published on the use of Idefirix in this application? And then thirdly, just to continue on the FDA discussion in regard to the clinical study design, in order to meet your expectations for the timing of submission of BLA, when do you need to get approval for the study design, please?

Thanks so much, Charles, for these questions. Let me take them and turn. So starting with the question around GBS and AMR patient enrollment. So clearly, we want to accelerate enrollment in mass. We start these centers and as you indicated yourself, one of the things that we're doing is we're actually adding additional centers. And as you do that, you obviously need to keep in mind that you also have to have a high frequency of interaction and it needs to be in top of mind at the centers. So we're certainly keeping that in mind. We're not going to add a very large number of new centers. But clearly, we are expanding. That's clear. And we also have a strong and very focused team on our end that is ready to and already is interacting with the centers. There are strong interests at the center level. The patients are there. We know. We've seen that. If you look at the number of patients we have missed if you will when the COVID-19 pandemic forced us to hold patient enrollment. So we think it is possible clearly. But we have to look at the COVID-19 situation, and see how it impacts the patient enrollment. But certainly, we believe it is possible in doing what we can to achieve that target. Let me move on. If you have additional questions, we can take them. But let me move on to the second question you asked around our discussions with potential partners in the gene therapy space. So clearly there is very strong interests, I would say. But anything, the interest overall has increased over the last year. Much of space to impact, but exciting pre-clinical data on imlifidase has been published. But also due to the challenges that the gene therapy companies clearly have encountered in terms of much as to neutralizing antibodies per se, if they are preexisting or if they develop post-aid reverse dosing. But also because of the regulatory kind of push-back in the issues that we've seen surplus around response at podium level and the ability of the response. So clearly, strong interest from a broad range of players. Obviously, it's important for us to do the right partnerships with the right partners. So it's impossible to predict if and when will the agency announce additional agreements and we agree short term. But certainly, there is as high liable of activity in the space and I would say. Then you also asked in relation to that when we expect to publish or announce additional results. And that is very, very difficult to predict. As I said already, very strong and promising data are out in -- by an article in nature. There may be additional data coming, but I can't predict that this point in time when and what the format and where. Moving on into your third question around the FDA situation, so in order to -- we think it's going to take approximately a year to fully enroll a trial of the approximate size that we're discussing with the FDA. And that needs to be nailed down in the final protocol. So that's something that can vary a little bit, but it's going to be a limited scoped trial. This is what we are discussing. And as I said, we expect it to take approximately 12 months to full enroll. But that will be under the assumption that we can't enroll patients at the normal level. So we really need to watch for the impact of COVID-19 situation in the U.S. that may not be fully controlled by the time that we're ready to start. Also the specifics starting time, not just setting up the clinics and going through the legal work there and getting the certifications and so on, but also just making sure that they're ready to enroll first patients, and we can preserve data antiquity and so on and to arrive to a scenario may be impacted by the COVID-19 situation. So that is something that is obviously something we're watching. But I would say if we get -- as I said, if we get approval by the FDA over the coming period, coming months, we should be in a position to start the study so that we could have data readout that would enable us to submit a BLA by 2023.

That was very clear. But just follow-up, please, on the last point. You said in the coming months, I know you are not trying to tie yourself down to a specific date, but I guess I am trying to tie you down to -- if you do the counting back and how long it's going to take to enroll, how long it's going to take or you can estimate how long it's going to take to get to the trial centers up and running and to go from approval of the study to first patients and the follow-up, and presumably, you have a date in mind by which we assume that we should have seen the press release from you saying that the pivot -- saying that the study design has been approved. So is that sort of middle of the year, this year? Is it a bit earlier?