Hansa Biopharma AB (publ) ($HNSA)

Good day, everyone, and welcome to the Hansa Biopharma conference call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Hansa Biopharma CEO, Renee Aguiar-Lucander. Ma'am, please go ahead.

Thank you very much, and welcome to this call covering Hansa's out-licensing about in Europe and Mana to Serb. Next page, please. Just wanted to put your attention to the fact that they'll be making forward-looking statements during the presentation, and you should therefore apply appropriate caution. Next slide, please. So in today's conference, we will just have a basic transaction overview, followed by a brief financial update and a close in the Q&A. Next slide, please. So the transaction background, I'd like to just cover that briefly before we go into the transaction details. Obviously, Europe does represent a significant market opportunity as reflected by today's announcement. Europe is also a fragmented market, making scale challenging for a single asset rare disease-focused biotech. And so this partnering really enables a broader, much more commercially consistent reach across the European markets. And also, really importantly, I think, maximizes the potential for appropriate patients in Europe to truly benefit from. In terms of the process, the company saw a significant strategic inbound interest from multiple partners, which led to a more formalized process ultimately resulting in the outlaying agreement that we have announced today. This deal, I believe, is transformative for Hansa Biopharma and truly validates the franchise and the market opportunity. And as mentioned, obviously, also offers greater regional scale and reach in Europe based on Serb's much broader, both expertise, resources and experience in the European market. If you go to the next page, just let me give a brief kind of transaction overview. Business and exclusive licensing of idoferix within transportation in EU, U.K. Norway Lichtenstein, and Mina, it is represented by EUR 110 million upfront payment to be paid at closing. And there is an additional EUR 5 million milestone payment due upon acceptance by EMA filing for full approval of Idefirix in Europe. This transaction is are the customary regulatory approvals, including FDI. So this is for foreign direct investment, and this is expected to take anywhere between 30 and 60 days. Following closing, Hansa will initiate a request to EMA to basically transfer its market authorization holdership to SERB. SERB and Hansa will obviously focus throughout this process and for a long time thereafter, to focus on a smooth and well-coordinated handover. And in terms of the responsibilities, obviously, on closing, as I mentioned, the commercialization, clinical affairs, market access a bit across the license territories will transfer over to SERB. And once EMA has actually affected the request for market authorization holdership that will also transfer to SERB, which will drive the sponsorship of long-term PS follow-up and the pediatric study responsibility will then fall on to SERB as well as the filing and the obtaining of full marketing authorization with EMA. Hansa will be reading out the PAS, which is upcoming in Q2, as previously communicated. And we will obviously also drive the process of the transfer of the market authorization holdership and we will work very closely with SERB, obviously, to support sort of in submission for full marketing authorization. And we will also continue to supply idoferix to the territory. Next page, please. The SERB is a private company based in Europe. It's a global specialty pharmaceutical company, has over 25 years of experience in rare disease, critical care really has a broad diversified portfolio across those areas and has a direct presence in 18 countries today and basically has over almost 600 employees. In terms of -- there's a very strong historical performance of excellence observed, and there's been a lot of growth. So we successfully grown the business in Europe and also obviously has a presence in the U.S. as well through a lot of various kind of M&A transactions. We've been very successful at establishing this business across a diverse portfolio of products in Europe. So we are very excited to be able to partner with SERB with this very important product. And we just think that this deal is extremely exciting. The next page, please. In terms of the transaction time line, I've mentioned this briefly. There is, obviously, the announcement has come out today. There is an FDI review that is required. It's expected to take 30 to 60 days. There will also be an initiation of employee consultations related to those staff that are directly impacted by this announcement. In terms of closing, that will trigger the actual effective transfer of the license and the payment of the upfront of EUR 110 million and the responsibility, obviously, for the commercial medical affairs activities will then be transferred to SERB. And in terms of the -- when the market authorization holdership is transferred SERB step in and become the sponsor of the ongoing relevant clinical trials and will then also file for EMA -- with EMA approval. This, obviously, in parallel with this will be this consultation process regarding employee transfer to SERB. And obviously, the company will follow and observe all relevant local consultation rules and regulations in that process to enable a smooth handover and the kind of well joined up process between SERB and Hansa to affect this. In terms of posiclusinnab positon before closing, it's really for a Hansa perspective, it's very much business as usual. There's really no impact in this period of time on our organization or our responsibilities. And as I've said, our focus is really on our ongoing FDA process as well as the readout of PAS preparations that have been in place for a long time for the filing to EMA for full approval. The other area, obviously, is that we will be very focused on providing all the support necessary to enable us to smooth handover post closing of any employees impacted by this announcement today. Going forward, obviously, a responsibility for the territory will be SERB post closing. We will supply adeferix as mentioned, to the licensed territory. And obviously, there will be an alliance management structure set up because, obviously, we look at this as a very long-term partnership with SERB, and we want to really fully support the success and continued success of Idefirix in Europe. So that's really kind of what we will be jointly working on together with our new partner post closing and going forward in the long term. Next page -- next slide, please. So Hansa going forward in terms of focus. So obviously, this does not change our kind of long-term strategic plans, as we previously have communicated. This is very much preparing for a robust launch for a potential U.S. launch following hopefully, an approval by FDA towards the end of this year. Our U.S. leadership team is complete and in place -- we have -- we're strengthening our field presence, both in medical affairs, market access at this point in time. And obviously, we're also conducting pricing market research in the U.S. We are looking forward to having an oral presentation of the Phase III data at ATC towards the end of June. And obviously, the team is working diligently on a very, very comprehensive prelaunch plan and we are excited about the opportunities of hopefully being able to launch the product in the very beginning of next year. The clinical development of HANSA-5487, obviously, will also continue with targeting GBS, the Ganbare syndrome, and we are having interactions with the FDA regarding the clinical development program. There has been a CRO selected and preparation started, and we are targeting to initiate a clinical development program by year-end 2022. Other key activities are obviously also going to keep on ongoing is our ongoing review with the FDA. We will also obviously continue to drive our early pipeline, where we're hoping to get some kind of information as to kind of where we should be able to hopefully share that publicly sometime towards kind of the end of the year. We have some exciting early programs ongoing, and we're hoping to see some early data from that, which we then will be able to share depending on the outcome of that, those experiments and the data we're collecting. In terms of BD, obviously, there, this has been a very kind of transformative and exciting deal for Hanasa. The focus going forward is really going to be potentially exploring other partnerships or other geographic regions or for gene therapy, where we already have, as we've mentioned, successful partnerships for development there. Otherwise, I think anything else would be more in the medium and long term and really would be subject to a U.S. approval. Next page. So really kind of the key takeaways. So it's EUR 110 million upfront consideration for the out-licensing of Idefirix in Europe, U.K., Switzerland, Norway, Lichtenstein, Iceland and Mena. An additional milestone payment of EUR 5 million upon acceptance by EMA, other submission for conversion for conditional to full approval of issues. This really is a transformative deal for Hansa Biopharma. It really provides substantial non-dilutive financing really ensures that we can optimize, maximize and have a really robust U.S. launch with the path to profitability subject to U.S. approval. It's very much focused on business as usual until closing and really partnering with SERB to ensure that we have a main handover and a long-term successful collaboration. And so with regards to post closing, as I mentioned, obviously, this deal, I really believe will optimize patient access to and really looking forward to working with SERB and the experience, the resources that they have in Europe, which obviously are going to be for those at Hanson its own could have provided to Idefirix. So we're very excited about this transaction, specifically for those patients, and we look forward to having a offers really become available to all appropriate patients in Europe. In terms of [ alliances ] management, obviously, that will be put in place, and we are very focused on ensuring that there will be consistent support over the long term and continue to supply and support serve and idoferic in the territory going forward. Next slide. So with that, I'm going to hand over to our CFO, Evan Ballantyne, who will cover some of the financial estimate kind of financial impact of the transaction at this point.

Thank you very much, Renee. Next slide. pro forma basis, if you use Q1's cash on hand, the company will have almost EUR 1.9 billion or $200 million in cash on hand. In addition, in the agreements, we're able to reduce some of our ongoing costs associated with medical affairs and the commercial organization and some G&A costs as well. As Renee has mentioned, upon acceptance by EMA had that will receive an additional EUR 5 million from SERB. This extends the company's cash runway significantly and possibly through profitability in the U.S., assuming approval at the end of this year. The company will also be using $15 million to reduce its mid-2027 NovaQuest debt payment by $10 million. The balance of which of the remaining payments will go to reduce debt payments in mid-2028 and 2029 and there's also a $3 million lean payable fee. Back to you, Renee.

Thank you very much. Next page, please. So this is about just over a year since I joined Hansa. I believe that, obviously, there's been a lot of structural changes across the business, which have been implemented. And I believe that we have achieved really substantial improvements both in financial stability, runway, pipeline strategy and obviously also bringing significant experience and expertise into the company. All of these things have obviously contributed to the very transformative deal that we can announce today. We are very proud of what we have achieved so far. We're excited about a new partnership and we have a very positive outlook for the year, reflecting, obviously, the readout of the PS data, the presentation at ATC, of the CemFYdis data, and obviously, a potential approval in the U.S. and importantly, also obviously a filing for full approval in Europe with regards to EDF. And so with that, we are hoping to also share some of this information with you at a later stage. We have organized the Capital Markets Day on June 25 in New York. And if you go to the next page, this really will feature both European and U.S. KOLs, there's a separate invite that has been sent out that has been available as well. And so we're really looking forward to this. There'll be a lot of real insights from the field in terms of physicians really working with idoperic has been part of the Phase III trial, a lot of observations with regards to the use of Idefirix in the real world. And so we're very excited to do that as well as obviously share with you some of that data that we will be presenting at the ATC. And so I hope that you can join us either in person or virtually on June 25, to hear some of that as well. So with that, I'm happy to take any questions from the list of audience.

[Operator Instructions]. Our first question today comes from Christopher Udi from SEB.

Congratulations on the deal, you obviously you certainly moved quickly. How should we think about the financials of the supply agreement going forward, how will it be booked? What's the cash flow impact? That's the first thing I was wondering. And if I could ask a second. It would be perhaps this is a good time for an update on the 5487 plan. Obviously, you've talked about GBS. So perhaps there -- are there any updates you can give us on the program there and any other potential applications.

Thank you. So the -- in terms of kind of the supply, so this really will be a very simple kind of sharing of costs in terms of kind of the COGS of the production. So that's really how that will be will be affected. In terms of the kind of 5487, the -- there has been kind of -- there's kind of, I would say, ongoing kind of conversations with the FDA -- and so we're in the process of following up and kind of having some follow-up questions and kind of clarity from what the initial information that we received. So we're hoping to actually have a fuller picture of exactly what impact that may have on the design that we proposed. But hopefully, we'll be able to share that, and our plan is to try and share that in June at the Capital Markets Day when we will have more clarity as we've been able to then receive some of these answers back from the FDA that we're seeking at the moment.

Our next question comes from Farzana from Jefferies.

Evan mentioned about Patti profitability. So what are the underlying assumptions and the U.S. adoption curve you are modeling for that?

So I think what we've indicated previously or earlier is obviously that experience so far in terms of kind of inbound requests and the interactions that we've had in the U.S. and our ability to kind of go out and speak kind of to physicians there indicate that there is a potential kind of significant demand in the U.S. for this product post a potential approval. In terms of what I've also what we also talked about, obviously, that the call point here is actually very is very kind of limited what I could say, we're kind of a tight call point. And so the amount of capital that is required to invest and build up that kind of platform, that kind of commercial presence is not kind of -- within the context of kind of launches in the U.S. by biotech is quite limited. So it's really on that basis, we think we might need kind of 18 to 20 salespeople in total in the U.S. and the entire organization, including SG&A, et cetera, in the U.S., we expect to be somewhere around fully loaded, kind of maybe 45%, slightly more, but around that kind of size. So from that perspective, we believe that there is an opportunity to reach profitability within a reasonably short period of time from launch. So it's really those components that drive our view that this could really kind of be sufficient for us to reach profitability based on those kind of components. I think in terms of the uptake curve, I think it's always very, very difficult to kind of have very specific views on that. I think we will be informed by that as we kind of get to the market. But I don't know, Maria, if you have any specific comments on -- apart from this in terms of kind of the expectations or structure kind of the U.S. market.

Thank you, Renee. No, I think you covered it well. I mean it's a tight call point is a small organization that is required to launch this product. And I think when you think about the market, we're looking at potentially 7,000 patients that have a CPRA over 98%. And that is the population that I think it's fair to assume that we'll see the highest usage of in life days. But as Renee mentioned, we've had significant sort of inbound requests already. So I think time will tell when we launch, but we do believe that this is a significant market opportunity for us.

Great. And then I have a quick follow-up. Are there any additional milestone payments tied to commercial performance, regulatory approvals and any sales pace royalties with SERB?

No. There are no other kind of subsequent payments apart from those that have been communicated.

Our next question comes from Thomas Smith from Leerink Partners.

Congrats on the deal here. Just with respect to the terms of the deal, can you comment on whether there's any part of the EUR 110 million upfront payment that's contingent on the Pay top line readout?

There are no contingencies related to the upfront team and apart from, obviously, in order for the payment to be affected at a transaction to take place. There are some typical closing conditions including the FDI review.

Got it. Okay. That's helpful. And then could you just elaborate on the alliance management structure that you mentioned and whether that includes any consultation on sort of the pricing and reimbursement in these territories. Just wondering how much influence console will have over the ongoing pricing levels in Europe as you think about U.S. commercialization and the potential impact of most favored nation pricing?

Sure. So I guess in terms of MFN or Nation, obviously, rare diseases are excluded from that. It has been set since the beginning of that being brought up, and that's still certainly is the case as far as I'm aware. Obviously kind of as a market authorization holder, it is my expectation that SERB would absolutely be in charge of pricing decisions in the market and the territory. Obviously, in terms of the alliance management, this is something where, as I mentioned, I think we're very committed to making a very successful handover and transition. And we want to really be long-term good partners with everyone that we partner with. As such, there will obviously be discussions and information flow that's going to be very consistent. And I think it's in everybody's interest to obviously kind of align as much as possible around scientific information around publications, around everything else really that's relevant in kind of the success of the product overall. But as I said, I think those are kind of really my comments both with regards to pricing and

Our next question comes from Matt Phipps from William Blair.

Congrats on the deal. I wanted to ask about the NovaQuest royalty. If I remember correctly, upon FDA approval, there's a royalty on global sales worldwide sales. will SERB pay the European portion of that to NovaQuest?

So in terms of the Nova question, you are correct that basically in terms of the upon an FDA approval in the agreement with NovaQuest has, there is kind of a royalty payment that is triggered. And yes, it has been on a global basis. In this kind of scenario that we have entered into, this is actually why, to some extent, this has been contributing to the fact that obviously, we are prepaying some of the kind of payments that are upcoming with regards -- in relation to the closing of this transaction. And so there is a $15 million deleveraging really that the company is undertaking that goes towards all 3 repayment changes predominantly to that tranche that is coming up in 2027. Now part of that obviously takes into account any kind of potential impact from that type of kind of those European kind of royalties not being seen following kind of AUS approval. So in this case, the serve would not expect it to pay any royalties in the territory that they have licensed following closing.

Our next question comes from Douglas Tsao from H.C. Wainright.

I'm just curious, Renee, if you could talk a little bit about what this does for your balance sheet in terms of being able to fund R&D for 5487 as well as the early launch of in the U.S.

Yes. So obviously, this is why, I mean, from a Hansa perspective, we do think that this is a very transformative deal and also kind of really provides us with significant optionality going forward. This is about -- it's a SEK 1.2 billion, it's about EUR 110 million. And obviously, as I've mentioned already, part of these proceeds obviously, will go to delever the company. But obviously, it still leaves the company with a very, very substantial tax balance post deal. And I think that we are acutely aware, obviously, of not only we really want to kind of manage this as well as we possibly can. I think we've always been very fiscally prudent and I think we want to continue to be fiscally prudent, but this obviously gives us an opportunity really kind of to ensure a very robust launch in the U.S. And yes, it does allow us post approval in the U.S. to really look at how else could we kind of really continue to grow and create value in AMSA on this basis. And I think that is really kind of a process that we will undertake over the next 6 months or so to really, I think, craft this into a more clear plan on subject to that, where would we like to kind of potentially deploy additional capital. Do we want to do this within our R&D pipeline? Do we want to in-license kind of R&D projects? Do we want to potentially leverage our commercial presence in the U.S. So I think it gives the company lots of different options. And I think that we want to be very thoughtful and again, very kind of clear about what these -- how does that bring value to Hansa, how do we really kind of continue to build on this very, very successful foundation that I believe that we've created.

And Renee, just 1 quick follow-up. I'm just curious. Was this the result of SERB coming to you and approaching you? Or had you been sort of looking for potential partners to sort of basically bolster the balance sheet?

So this process really came out of a significant inbound interest from a multitude of partners. And so it's really over time that we continue to get inbound request and inbound interest that then kind of shaped the idea of actually having a more formal process, really kind of try and explore what these kind of inbound request really could result in to. So this was not kind of a -- it wasn't the company who kind of initiated a strategic process, it was very much kind of driven by inbound interest.

Our next question comes from Suzanne Cam. Worten Housen from Kempton.

This is Suzanne from Kempen. Congrats on -- on the process, -- you mentioned a couple of times the inbound interest -- but I'm just interested to understand better what drove that momentum? Was there an increase in inbound interest? And maybe additionally, with regards to the deal terms, is a straightforward upfront and a small milestone, no royalties, was that upfront basically the most important metric to Hansa or are there other considerations that drove this sort of front-end bolted structure? And then another one, maybe for Evan, for the SG&A expenses, how should we think about how this mine item falls over the coming months or so? Because on the 1 hand, the European sales force will phase out, but you plan the U.S. launch. So how should we directionally maybe think about this number?

So basically, in terms of the process, I would say that this really has probably been building over time in terms of as the company has been kind of executing on its strategy. And also, I think as the data that we released kind of with regards to COFIDE, that really is the -- I think the first time that there's really been kind of a characterization of the profile elicits both in terms of efficacy, kind of in safety in terms of just how that kind of Phase III kind of came out. I really think it's been a process that's been building over time. I don't think that there was any specific trigger that enabled this. I think it's just really been the consequences of being very consistent, having a lot of interactions going to a lot of conferences, getting Hansa kind of out there in terms of people knowing that the company exists and what the company does. So I don't think that there were any kind of particular triggers in that. I think that obviously kind of from a kind of corporate perspective and the structure of the deal, I would say that from a Hansa's perspective, again, looking at kind of where the company is in terms of its development and what's kind of coming next. Obviously, having something where there is a more significant upfront component is very attractive. And so I think that is certainly something that we felt was an attractive component of this particular proposed structure. And I don't know, Evan, if you want to address the second question.

Yes. Thanks, Susan. And as you correctly noted, Hansa will be able to reduce its cost of medical affairs and commercial and some G&A expenses associated with Europe. So you're correct.

And our next question comes from George Burke from ABG.

This is George Tigana from ABG. Congratulations on the deal. I have 1 question, please. So is there any cash in the agreement regarding Hansa 5487, that could have any impact in the future what extend from GBS to kidney transplantation?

So the contract really covers imlifidase. It does not kind of cover any other products of the company or any other development candidates -- so the contract is limited to imlifidase. And obviously, in terms of 5487, it is a completely separate product. And really, from that development program, the company has obviously decided really to kind of develop that in GBS. So that will really be the focus of 5487.

[Operator Instructions] And at this time, and showing no additional questions, we'll conclude today's question-and-answer session. I'd like to turn the conference call back over to CEO, Renee Aguiar-Lucander, for closing remarks.

Thank you very much to everybody who's listened into this. We are super excited about this transaction. We are very happy to welcome another partner that we can collaborate with. We really think that this is going to be exciting, and we look forward to having you join us, again, hopefully, in June at our Capital Markets Day. Thank you.

The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.