Immunovia AB (publ) (IMMNOV) Earnings Call Transcript & Summary

Hello and welcome to Immunovia's Q2 2020 Interim Report. My name is Val, and I will be your coordinator for today's event. Please note, this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Mats Grahn, CEO of Immunovia, to begin today's conference. Thank you.

Thank you, and welcome to the Immunovia Q2 Report 2020. It's going to be a pleasure today to go through the excellent situation Immunovia is in moving forward towards our market introduction in Q4. So first about the forward-looking statements. We'll jump right into today's agenda. And today, we will cover, of course, first, the highlights of Q2 and the first half year and the financials. We will then move further into some details on our COVID-19 response, remaining steps to the launch and the status there, and some words about the launch preparation activities. And then we will summarize the target markets of fantastic opportunities that lay ahead for us and finish off with the question-and-answer session. For the Q&A session, I will also be joined by our Chairman of the Board, Carl Borrebaeck, so you can ask questions to both of us there. Okay. So let's start with the highlights of the first half year and particularly the second quarter. When we started the quarter, we were ready for launch, of course, and all the activities there. And then we had to take actions against the COVID-19 to support the patients, the staff and public health initiatives and so forth. We all managed to do this very well, and we have had minor impacts, I would say. The most difficult was that we had to close our Immunovia Dx Laboratories in Marlborough in Massachusetts U.S. due to the state-wide shutdown there. And then after 2 months on the 25th of May, we were able to reopen. And now we have been fully up and running since then. We will go into some more details about this in the coming slides. So that was a key activity around the COVID-19 impact and our response there. That was, of course, an important happenings and highlights from this quarter. Then a second one on the second line, as you see here to the left, we successfully raised SEK 400 million in a directed share issue very successfully to fully finance the commercialization rollout. Very important to get that done and have a very, very stable financial situation now, when we're building up the sales organization, rolling out very strong marketing activities and, of course, also for the longer term, investing in the reimbursement activities. In this context, I like to mention a few things about the financials that you can see in the report, some key things there. As I mentioned, we have a very good cash situation. We have SEK 556 million at hand, which corresponds to approximately USD 64 million. The burn rate for the first half year was about SEK 52 million, slightly less than expected because of the COVID-19 impact of traveling and also the hospitals that couldn't take in patients and so forth. But that has come back, and we will have a significantly improved rate of patients coming in there. So the cost will go up in the second half, of course, as we build also the sales force and so forth. So we have now proceeds that will take us more than approximately 3 years ahead as the current business plan and development plans. So we are in a very good financial situation moving into the exciting and very, very important milestone of becoming a commercial company through the launch of IMMray PanCan-d. Then secondly, talking about the launch and the launch plans. We, due to the COVID-19, had to transform our launch plans from the originally planned traditional way of launching product into a much more virtual and digital activities. That was a lot of work done during the period on that one very successfully, and we've now started to roll out many of these activities. One thing we also did was to host first virtual Investor Day at June 30. And there, we covered a lot of detail and information about how we're going to do the launch and what we're going to do and who is doing it. And if you're interested, that has been recorded, and you can also see it at the website under Investors section from Immunovia. Even more importantly, maybe, we also, at the far bottom right at the picture you see, we announced a long-term market penetration target of 30% for the very large over USD 4 billion market that we are going after, where there is no current product available to solve the problem of early detection of pancreatic cancer. So -- and this is after reimbursement and broad insurance coverage, so that's our long-term target, and we are first to market in that area. Finally, I want to mention just a few things there about the pipeline. The [ long ] collaboration we had with a pharma company was terminated during the period. However, we did continue with the fresh samples from there. And based on results on that, we decided to expand the lung cancer program and the next step there will be a discovery study with samples that really mirror the commercial situation. So that is work that goes on in parallel. However, of course, the priority now is definitely on reaching the market for the pancreatic cancer opportunity with over $4 billion potential market moving forward here for us to penetrate. Okay. So let's move into some of the details. First, on the response to COVID-19 pandemic. There, we had, of course, continued with the work-from-home policies and follow the guidelines from authorities and so forth. This has worked really well for us, and we have been able to be very efficient in this way of working and continues now since the pandemic is not really over. So people who can work from home do so. And on the other hand, our laboratories in Sweden and in U.S. are fully up and operational, clinical labs, the R&D labs, and the production is running full speed ahead right now. So the big thing here was that we managed to open the Immunovia Dx Laboratory again on the March 25. And right now, all functions, and since then -- May 25, everything has been running in full speed ahead towards the launch in Q4, which is great. When it comes to the 2 things, 1 thing that one has to make sure, of course, is that our suppliers are able to ship to us, and we have stocked the critical reagents, consumables, chemicals, and that also we have all the instrumentation in place and get them service and so forth. That's worked really well, and we've been able to fully -- have no problems on that area whatsoever. When it came to the clinical collaborations, you may remember that most hospitals that take part in the clinical studies for any company in life science closed down all clinical studies during the corona period. And that, of course, affects many, many clinical trials in that way. However, we only had effects really on the PanFAM study where the patients, risk people could not come to their regular checkups and so forth. Now during the second half of the end of quarter 2, many of these hospitals have restarted our clinical trials and started to bring in patients and samples and expand the study as planned. So that is looking much better at the end now at the quarter than it did during April and May. So positive news also on that side. Moving forward to the remaining steps to launch. I wanted to remind you of the picture we have shown all times to make sure that you know exactly where we are in the process. The first 3 boxes is what we've done the last years. The third one is the commercial test model study that we finished at the end of last year, and there will be a webinar now on the 2nd of September for more detailed results because now we have the patents in place for that one, which is great. We are now, of course, extremely focused on finishing the verification study that we will have ready here during quarter 3, and that's an important step towards the launch. If we -- in the next picture here, just highlight the last 2 steps. The verification study ongoing. We are on track for Q3 completion. And when it comes to the validation study that needs to be done in the CLIA/CAP lab in Marlborough, U.S., for the U.S. market, we are -- they are going to use, of course, as you have heard before, the lot signature and algos unblinded samples. And we have the sample secured, so that's not an issue. And of course, then targeting the Q4 launch in U.S. there. We -- next term, looking into the [Technical Difficulty]

Please stay connected. The host line will be joined shortly. Please standby, we're trying to reconnect our host. Thank you.

I seem to have dropped out of the call, I need to get back to a few other slides, I guess. Where did I drop out? Can anybody advise me on that one? All right. I will then make sure that we start again from here, sorry about this debacle. But as I mentioned, remaining steps to launch. We have the verification study that we are on track for in Q3 completion. It will be followed by the validation study that is done in -- for the U.S. market in our U.S. laboratory based on blind samples that we do have secured. We are, of course, then targeting our Q4 launch right after that. So now talking about the target markets, where I believe I dropped out in this call, the local -- the target markets are together consisting of an opportunity of over USD 4 billion. Three different groups, the hereditary/familial, $240 million across Europe and U.S. We have the early symptoms or differential diagnosis. We have differentiated people who all have symptoms, but only a few of them actually have pancreatic cancer. We can differentiate them, very important application. That's about a [ $600 ] million opportunity. And then the new onset diabetics over 50 years of age, a $3.6 million opportunity because there's over 3 million new people every year in Europe and U.S. who get the diagnosis of diabetes after 50. And as we announced, we are targeting long-term 30% market share of this market. Okay. The patent was filed from the CTMS, commercial test model study, during July 2020, and there will be a webinar on the 2nd of September for more details on the commercial test model study results and also an update on the launch activities status of that. So this meeting will be hosted by Linda Mellby, our VP of R&D as well as our Medical Director, Dr. Tom King; and Laura Chirica, Chief Commercial Officer. So there will be information at the end of next week, how to log into that meeting. So don't miss that. It's a great opportunity to learn more about the details of this important study. So talking about the commercial launch preparation activities. I just wanted to highlight what was so important during this quarter. And that was to transform the -- all the activities to digital and virtual plans and activities. And now we started to roll them out during the quarter 2 here. And that will, of course, increase even further towards launch with numerous activities during the time there. If we look upon the different -- the 7 different areas of the commercialization. The key one, in the middle, is the key opinion leader program, of course. This is an invaluable activity that we worked on for many years, where the key opinions are extremely supportive, giving us access to and guidance where and how to best deploy and use the test in the clinical pathways, accesses patients and further important information and also being very instrumental in some of the activities that we are rolling out. Very, very important. We also have the clinical study programs, of course, and that is to create proof for the adaptation of the tests, not at least for the reimbursement discussions, but also for proofs that each clinician want and needs to have before using it for their patients. And then, of course, making the Dx Laboratories ready in terms of being able to take orders and deliver results, including all the logistics that pertains into that one. All setting up all the systems there. Moving to the upper left corner, we have mapped all the target key customers in priority geographies, and we are building the sales force right now, extremely important activity that goes really well. During the corona period, we have been able to run the recruitment program and have been very successful in finding the top candidates for these areas in the sales organization, and we continue to do that and will be ready at launch. We also worked with the reimbursement, which is a longer term, of course. But there, we have a program with guidance experts in each geography where we're active. We are conducting and preparing health economic studies in even more detail, and that's also moving forward as planned. Collaboration with the patient organization is a big program that continues. You have, for example, the iWalk now that you can participate in, just log into our homepage and help create awareness around pancreatic cancer by doing that. We have some great photos there and great things also uploaded from potential customers, target people, from clinicians, from investors, from employees and so forth. It's really getting a real community towards solving this problem of pancreatic cancer. And then, of course, marketing and communication activities, press homepage updates that are underway, media, social events and so forth. So it's been a large program, and there will be more updates in detail on this on the webinar on the 2nd of September. Okay. And we are, as you know, rolling it out first in U.S., followed by Scandinavia and the key markets where we have prospective site centers, after that in PanFAM, PanSYM and PanDIA meaning other key areas in Europe. So U.S. first and followed by Europe in step-by-step. And to summarize, we have been going through the COVID actions taken and successfully, in spite of all the problems with this pandemic, being able to have a very active, very diligent way of moving forward. And therefore, we are on track for and focused for the launch of IMMray PanCan-d in Q4 2020. Thanks to the successful raise of money, SEK 400 million, we have a fully funded commercial rollout, and we are long term targeting along 30% market share of the USD 4.4 billion market. And remember, we are first to market for the solution of early detection pancreatic cancer. Incredible opportunity for the company now moving from a development-stage company to a commercial -- fully commercial company. The most exciting times of this company this far. And it's got maybe more to come with the future. So thanks a lot for listening. And with that, I would like to move over to question-and-answers.

[Operator Instructions] We currently have no -- Apologies. We do have first question that has come through via the audio line. And it's from the line of Lars Hevreng from Danske.

Yes. Can I just ask about -- I mean I know the near-term focus, of course. But the lung cancer project, you touched upon that. But can you just -- that's not the topic for the pending updates. But can you just remind us about where you are? You have these slides comparing it to the pathway for the pancreatic test. But when can we expect progress? And what will you communicate -- at what level of detail, so to say, will you communicate at the next stage?

Right. I put up that slide on the screen now, hopefully, some -- you will see it. So this study is in a much early stage than, of course, the pancreatic cancer that is now approaching launch here. So we are in discovery studies phase there, where we have the results from the first studies that we now base our next step on where we are collecting samples that are -- mirror the commercial situation very, very close. And the commercial situation is that you want to differentiate, for example, samples on patients who have been diagnosed with low dose CT that have been turned out positive, and some of them are -- many or most of them are not really having lung cancer, they are false positives. And some are true positives. That's one thing you want to differentiate. You want to be able to differentiate between people with symptoms or lumps in the lung that is not lung cancer versus the ones that are lung cancer. And it's important to get the samples that truly are of these 2 candidate -- categories. And that's what we are doing right now. So we'll come back on the time line there. It's a little bit hard to know how fast they will be able to sample this one, given the corona situation that affects all lung cancer departments or in the world. So -- but it is actually ongoing in spite of the corona, and we will have to wait until we have a clear situation on how long time it's going to take because they open and close and so forth.

Okay. And just going back to the near-term events. The -- now since you have -- since you're going to have this presentation in a couple of weeks' time. And I guess you have the patent filed that you want to have filed, so to say. Can you just touch upon typically the time frames after the filing of the patents? I mean maybe by key regions, U.S., for example, what we will hear from these patent filings? And also, I guess that this opens a bit for you to communicate more and also to publish the results where we could learn more about the actual design of the test in a bit more detail.

Yes. That is correct. The timing, as you see here, on the whole patent portfolio, we have 7 families, the first 1 filed already by academia in 2018. And each family consists of patents that are, first, of course, in the PCT stage covering globally, but then are moving in the system down to country by country. So each of these families consist of very many patents per geography. So that's something what people have to understand. But it's really crucial to get the filing done, the first filing done because then from that date, you have the protection for the contents of the patent. And that's why it's -- was so very important to get this filing done. Then the timing until they are -- and you're, of course, protected during that time as well until they are approved, provided they are approved, of course. But that goes country per country, in the approval basically after you've done the PCT, the global one. So there's a different time line per country. But we have -- so all of these families, 1 to 5, 6, 7 here, you see on the picture, are moving through that process, where the first ones in PDAC 1 are approved and so forth, and the other ones are in various stages of approval, but they all have the same structure. And the principle is -- has been passed through and been approved. So it's just that we add for each of these families more information that is not known from before and so forth. But it takes a long time. It takes years for all of them. But the important thing is here, from 2020, we have 20 years protection for the product. Of course, we have now filed the patents that are really covering the final product. And so that's why this was so important to get this done. And also, we have been able to get patents that are wider than the previous ones for the very extensive work we've done on this one during the spring here. So that's what I can say. But you can never predict exactly when they are approved in a country. It takes years, normally, 1, 2 years or whatever, but that doesn't matter. The important thing is the filing date for protection.

Okay. And just to -- since now, it seems like we are just a few months away from the first commercial delivery of your first product. And I guess that's going to happen both in Marlborough as well as in Lund, but you will send out the first test results. What can you -- I know what you -- of course, what you have said about pricing, et cetera, out-of-pocket status initially. But what can you say today about the expected out-of-pocket price? I mean it's only a few months away now. So what can you say about what kind of price would you expect people to pay initially? [Technical Difficulty]

Please standby, we might have lost our connection with the speaker again. Thank you for your patience.

Well, I'm going to take this opportunity while Mats calls back in. To remind everyone, first of all, this is Julie Silber, Director of Investor Relations. But also, we would love to have you join us on Immunovia walks to create awareness for pancreatic cancer. And you can find the registration right on our homepage at the top and feel free to join.

Can you hear me, Lars?

We've got you back. Great.

Okay. Sorry about this. Our operators pushed me out again, for some reason, out of the system. Lars, I was answering your question there on the price levels. And as I said, we've done a service among self-paying risk people that we have met tens of thousands actually in this meeting with patient organizations, and it indicates that our price level of $600 will be well tolerated. We will, of course, for a very short period, have some introductory pricing and so forth. But we have asked them if it costs less than $1,000 without talking about the details of the pricing, would you be able to pay and over 90% then answered yes. Now we have to see what happens, of course, when we start selling. But it -- all indications we have is that our price assumptions are realistic.

Okay. And the, I mean, the blood collection now since, I mean, in the current environment, is -- do you think -- I mean, in reality, is that primarily going to take place at people's homes or at other sites?

It will be both because we are also targeting gastro centers that would like to use it, and that will be done there, of course, because they have the patients in place then. And then when it comes to the, for example, hereditary/familial risk group there, that will very often be taken in people's homes or offices through our collaboration with the remote phlebotomy function. That's going to be a real advantage in penetration as we have been building that up.

Okay. And then switching to gastro clinics, would you expect to see some initial, sort of say, bulk orders, more of significant size clinics acquiring?

I think -- Yes, that's very hard to say. But since we have contacts with many of them, I think it will be a period where they start to use it and try it out, so to say. And then as soon as they feel that this is really, really helping their patient flow situations and so forth, you will have a hockey stick effect on that one. But you will have initially that I will try it step-by-step. That's my guess. But you never know, we might be positively surprised.

The next question comes from the line of Alex Cogut from Kempen.

It's great to see that everything is on track. I think Lars kind of asked in a way one of my questions. But given the uncertainty around the pandemic, what steps have you taken to be able to launch the test, assuming there's another resurgence on the U.S. East Coast? So maybe more zooming in on those gastroenterologist centers. Do they see the patient flow coming back? Or how do they see your launch unfolding there?

Yes, that's a very good question. Our -- geographically, we start on the East Coast, most intensively. And the states that were hardest hit in the beginning, New York, New Jersey, Massachusetts and New England, are now the ones that are -- the ones that have opened up in the most stable way. Yes, they have a little bit of an opening -- increase there as well, but they are the ones that are most open now, including the hospitals, they're all open. They're actually our collaborations. So in that sense, we are lucky that our initial first month target areas geographically are the ones that are in the best shape in U.S. And then, of course, it remains to see how the rest of the country is developing during the coming months here, that's correct. And that's a risk that is there. But we have focused all our -- when it comes to the marketing, the awareness, the participation in relevant events, creating our own events and so forth, we turn them all virtual. And that has worked really well. We have put sales package support programs for the salespeople in place that also can be used either direct or virtual, and we have to have sales trainings virtually and so forth. So -- and some of these things are actually more efficient than before. So the whole troublesome situation with COVID-19 has also triggered new ways of working that are -- have proven to be more efficient. For example, what we call lunch seminars or lunch and learn seminars. You can normally don't -- you can't get access to the gastro specialists during work hours normally. But if you invite them to lunch at the hospital and you come there and you do the presentations, you really get -- and you bring a key opinion leader info, you really get attention with really all the people that you need to meet. That's a little bit difficult when the hospitals were down. But we have turned them also as we can run them digitally, and that's been very appreciated and it's an efficient tool going forward as an example. There are many others as well. So yes, U.S., 1 day has to start, of course, to go down, and that may happen in terms of the spread of the pandemic. Currently, the situation looks best at the areas where we target first, which is great. And you have also a rather good handling of the situation in these states, and they have not opened up too early, and they do it in a cautious way. Some other states are in more difficulties, of course, and they are -- hopefully, they will come back to a better situation in half a year, and then we will have no problem. But we're following that, of course, in detail all the time.

Got it. And given all the marketing efforts that you've done, when will you -- would you expect to receive some preorders? Or would you be open to that? Or is it really commercially available as of...

Yes. Yes, we have a list of people who are interested to get the test. But they do have to get a -- the test has to be ordered by a clinician. Otherwise, we are in problem. So there is -- but we give them all the tools they need to make it very, very easy for their clinician to order the test. That's an important part of the launch.

And then just a final one, could you confirm for us the time lines for the interim readout of the prospective studies?

Yes. That will be done on the validated test afterwards for all of them actually step-by-step. So that's going to happen starting towards the end of the year and early next year.

Okay. So basically, still in H1, '21?

Yes. Yes.

There are currently no further questions coming via the audio line. [Operator Instructions] And now I would like to hand over to the webcast question.

Great. Thanks, Val. This is Julie Silber, and I'll be moderating the webcast questions, and we've got quite a few here that I'm going to sort of lump together on our validation and verification process. The first question that came in is, are there any concerns regarding the success of the verification and validation results?

No. We are very -- we are confident that this will go well, of course, but you never know before you have the results. But given all the work we've done with the optimization and the commercial test model study, we feel confident about working with this. It's a lot of work, and it's -- but it's in final stage for the verification. And then it's, of course, the blinded study. So we will get there.

Great. The next question is, will the validation study take shorter time to complete?

Yes, compared to the verification and the CTMS.

Yes. Exactly.

Yes, definitely. That is to run through a number of blinded samples and make sure that results come out as expected. Yes, much shorter time for the U.S. base particularly. Then it takes a bit longer, it's more extensive for Europe, but -- and it's more -- some other more regulatory documentation, things so that's why Europe comes after U.S., but U.S. is going to go first, as said.

Great. Do you have any estimates on when we can expect the results from verification and validation?

For verification, definitely before the end of Q3, as planned. And verification -- validation will be Q4, including sales start directly after -- at the same-day basically after results in U.S.

Great. We have a question asking if we have any preliminary initial results that we can talk about today.

No. We don't have any results before. It's always -- in all our studies, we don't have the results ourselves before we have done all the analysis and so forth. So we will release them as soon as we have them and have a quality check them, of course, so we know that they are correct. So you know very -- as soon as we know.

Great. There's a question here that, I think, talk a little bit more about how the test works. The question is, are you able to detect the specific tumors of the pancreas. Currently, these are monitored via MRI according to Sendai protocol.

Yes. These are IPMNs they refer to. That is a more difficult one. And we will come back to that. And it's an important one to differentiate between precancerous lesions like IPMNs, if they are cancer -- if they're malignant or not, but that's a different clinical question. We can detect early stage cancer. And if we can go even earlier than that, we don't have currently full data that we can talk about.

We have a question on our market penetration projections. What happens to the market share penetration rate, if there are no true competitive products out there within the pancreas sector? Do you have the capacity to feed 100% of the market share?

We can build -- producing is extremely efficient to -- the test, so to say, it's extremely efficient to scale up. Already now, we can -- with our printers produce 240,000, 250,000 tests per year, but we can very easily scale that up by putting in more printers and producing more antibodies to put on them, which we have all control of ourselves. So that's with limited investments actually. And the facilities for production are already so large that we can easily roll in more and more of these printers. That's one thing. And then, of course, one has to add more people to the laboratories, the Dx Laboratories. So it's a very scalable situation, and we can react very quickly to an unprecedented positive large demand. So I'm not so concerned about that. If you get lots of orders, you're really going to solve them and deliver, and we will.

Great. That concludes the web section -- questions section. Maybe we have another call-in question?

There are currently no questions coming via the audio line. [Operator Instructions] There are no questions coming through via the audio line. So I'll hand the call back to our speakers for any concluding remarks.

All right. Then I'd just like to summarize. We have handled the COVID-19 situation. We are in good shape there, and we continue to monitor what happens and react to any potential changes. Key activities on target. We remain focused on launch Q4 in U.S. We have a fully funded company for the commercial rollout. We are targeting a long-term 30% market share in a market where there is no other product that currently is, first to market solution for early detection pancreatic cancer addressing a USD 4 billion market. And so to all investors, thanks for being with us and making this possible and hope to continue having you with us during the fantastic journey we have in front of us. Thanks a lot for today.

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