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

Welcome to the Immunovia Q4 Conference Call. [Operator Instructions] Today, I'm pleased to present the CEO, Patrik Dahlen. Please, begin the meeting.

Thank you, and good afternoon, everyone. Thank you for joining us today, and thank you for your continued interest in Immunovia. My name is Patrik Dahlen. I am the CEO of Immunovia and I will be presenting the full-year 2020 and quarter 4 results for Immunovia. Next page, Page 2. Here, you can read our disclaimers and forward-looking statements, and I do encourage you to read these at your leisure. Next page, please, Page 3. Today's agenda is as follows. I will start by discussing the importance of early detection of pancreatic cancer. Second, I will give you a summary of the full year 2020 and the quarter 4 highlights. Under this agenda point, I will discuss the status where we are right now with introduction of the IMMray PanCan-d test and the road to reimbursement. I will then briefly touch upon our pipeline projects in discovery stage, and I will equally, briefly, touch upon the financials 2020. And following the summary, we will go into a question-and-answer session. Next page, please, Page 4. I wish to take this opportunity, again, today to remind everyone how important a mission we're on here at Immunovia. With our blood test, IMMray PanCan-d, we will provide an entirely newer solution to early detection of pancreatic cancer. Early detection of pancreatic cancer is critical for improving the survival of the pancreatic cancer patients. When pancreatic cancer is detected at stage I and II, the 5-year survival significantly improves. It grows to 50% survival rate after 5 years compared to less than 5% when pancreatic cancer is detected at stage III or IV. Today, the median survival rate for a newly diagnosed pancreatic cancer patient in Europe is as low as 4.6 months. And the reason for this is simply that 80% of all pancreatic cancers today are detected too late. They are detected in stage III and IV. Next page, please, Page 5. Now, I will move into the full year 2020 summary and discuss quarter 4 highlights. In this section, I will also discuss the current status of IMMray PanCan-d and a road to reimbursement. Next page, Page 6, please. Year 2020 was a very eventful year for Immunovia. We saw many successes and won challenges. We saw outstanding results from the IMMray PanCan-d verification study and I will go into that further in my discussion as it requires a deeper dive than a one-liner. In June, we had a very successful direct share issue. We raised SEK 400 million in direct share issue. And I want to thank all our shareholders for their support to Immunovia. This capital increase will secure that we can successfully launch IMMray PanCan-d to the U.S. market and beyond. In a webinar in June, we communicated our long-term goal of achieving 30% market penetration in the clinically relevant areas where the IMMray PanCan-d test can be applied to detect early stage pancreatic cancer in 3 risk groups. These risk groups are familial/hereditary group, symptomatic group and the new onset diabetics type II at age 50 or over. We, like many other companies that conduct clinical studies, were in 2020 effected by the COVID-19 pandemic in a way that one might not have anticipated. Many patient blood collection sites closed fully or partially in longer periods of time during the spring and the fall of 2020. This impacted our ability to get all the necessary blood samples for our studies in time, and thus, this impacted the launch of the IMMray PanCan-d test from quarter 4 2020 to quarter 1 2021. On the 1st of November, I became the CEO of Immunovia. I do wish to thank the Board of Directors of Immunovia for the trust they have shown in me. I'm really, really excited to be here at this time. It's an important time in Immunovia's history. We are right in the midst of a commercial launch of our first test. Next page, Page 7. In quarter 4, we discussed the results from the verification study. This was a multi-center case-control study, covering more than 500 patients. Serum samples were collected from 9 different sites in the U.S. and in Europe. We had 81 PDAC stage I and II patient samples. We had 114 PDAC stage III and IV samples. We had 212 healthy controls and 112 symptomatic controls included. We obtained excellent results for the early stage I and II PDAC patients versus healthy controls. The accuracy was 94%; specificity, 99%; and sensitivity, 78%. This is an absolutely outstanding result and shows that the test has a clinical performance that is meeting the market requirements. For early stage I and II PDACs versus all controls, we saw an accuracy of 91%, specificity of 93% and a sensitivity of 78%. We are very pleased with these results. And this shows that IMMray PanCan-d can detect, in serum samples, early stage I and II PDACs with a high accuracy. In a webinar in December, we discussed the more detailed results, and we concluded that we had seen a slightly less specificity for the test when we tested against the symptomatic controls, 81% specificity. Plus we saw the same sensitivity, that is, 78%, when early stage PDAC I and II patients were tested versus the symptomatic group. As concluded in the webinar, we're working on a small quality improvement to help step-up the specificity when we measure serum samples from the symptomatic group. This work is progressing. Continuous test quality improvements is routine in the development phase and even after market launch, and is expected for any diagnostic test. Next page, Page 8. So where we are now, is in the final steps of launching the test. The last and final milestone prior to launch is the validation study, which we will have results from --by the end of this quarter, that is quarter 1 2021. When we have that data, we will file for a CLIA license. Next page, Page 9. We have been working towards the launch of IMMray PanCan-d for may years, and we are excited that we now are so close to introduce the test to the market. The Immunovia Dx Lab in Marlborough, Massachusetts, U.S., is in its final preparations for the blind validation study and applying for a CLIA license. All the logistics for handling of reagents from Sweden to U.S. is in place. The logistics for handling and collecting serum samples from patients is in place. We have a customer support and a sales support group in place in the U.S., and everybody is getting ready and making final preparations. Our final marketing and communication plan is in place, and we will just need to push the button. A sales roll out place -- plan is in place, and the key clinical target customers have been identified. As you know, we work with most of the clinicians who are engaged with pancreatic cancer in the clinical programs, so we know who the customers are. And we also have worked extensively with patient advocacy groups in the U.S. And also through them, we will get excellent communication support and awareness. And we have worked on a reimbursement program since 2015, and we have a clear path forward. I will discuss that on the next page. Please turn to Page 10. Briefly stated, we will follow a route which is well-established for lab-developed tests in the U.S. This has a clear path and clear milestones. As you all know, we will launch the test as a self-pay test. This is very common in the U.S. And the people who order the test will pay out of pocket. In order to get the broadest possible utility, one seeks reimbursement for the test. In our case, this means that we will seek a PLA code, PLA is short for proprietary laboratory analysis code, for the IMMray PanCan-d test, shortly following the data obtained from the PanFAM study in the second half of this year. We will then conduct further studies as needed, illustrating analytical and clinical validity and utility. Furthermore, we will, of course, monitor and collect clinical data from our ongoing out-of-pocket commercial testing. We will obtain endorsement from key opinion leaders and leading institutions. We will then use all of this data and supporting evidence to build a dossier with which we can seek a local coverage determination, or LCD, from the National Government Services, or NGS, who is the Medicare Administrative Contractor, or MAC, for Medicare services providers in New England region of the U.S. This is the process that many have followed before us, and this is a well-recognized path for our reimbursement. We have already, back in 2019, conducted one payer study. It gave us a lot of valuable information. However, we will now start a new payer study with a very specific focus on Medicare. These studies, that is the payer studies, are extremely important so that we get the latest and best possible feedbacks and understand the landscape best possible way. With that, I'd like to turn to Page 11. Our main focus, 100% focus, is right now on the U.S. launch. The next wave will be Europe. As you all know, we have a fully built out Immunovia Dx Lab also here in Lund in Sweden, and that lab will serve the European market. More details will follow on the timelines. With that, I would like to turn to Page 12. Immunovia has been extremely active over several years, building a key opinion leader network that can help us with large studies. We are very grateful for the support from our key opinion leaders around the world. PanSYM-1 is a study where serum samples are collected from individuals with early and vague symptoms. This collection is led by University College of London, and they are collaborating with diagnostic centers around the U.K. We have already, altogether, more than 2,000 samples collected from this study, and expect to report interim results in the second half of 2021. The PanFAM-1 study is a study where samples are collected from individuals who are asymptomatics, or in other words, healthy. However, they have a familial and/or a hereditary risk profile. 23 pancreatic disease reference centers from the U.S. and Europe are participating in this study. We have collected more than 3,000 samples by now, and have little less than 1,300 individuals enrolled in this study. Interim analysis from this study is expected in the second half of 2021. PanDIA-1 is a study focused on the third risk group, that is the new onset diabetes type II at the age of 50 or over. It is a Swedish study with a collection -- with collection at 3 hospitals in Sweden. We have more than 6,000 samples collected so far. We expect an interim analysis in the second half of 2021. We're very excited about these studies as they represent individuals and patients from the 3 target groups we are aiming for. With that, I would like to move to the next page, Page 13. We have discussed in the past the size of the market. I just want to reiterate that the potential of the IMMray PanCan-d test is substantial. We estimate that the total addressable market, when all 3 risk groups are addressed, is over USD 4 billion. And this is only for the U.S. and European markets. We will continue to analyze the total world market over time as we progress. Next page, Page 14. Now, a few words on our pipeline of discovery projects. Next slide, Slide 15. Whilst our main focus is on the launch of IMMray PanCan-d for early detection of pancreatic cancer, we continue to perform early stage discovery studies in the area of rheumatoid arthritis and lung cancer. We have established key opinion leader networks for these discovery studies, both to secure we have the right knowledge mass and, of course, to secure high-quality samples from well-defined cohorts. As you know, collection of samples has been affected by COVID-19 in 2020. As these are discovery studies, meaning they are in the early stage of our R&D model, it is not my intention to give timelines on these 2 discovery studies. We will report data when we have new data and the information to share with you on these important discoveries -- projects. Next slide, please, Slide 16. Briefly, a few words on the financials 2020. Next slide, Slide 17. Our income in 2020 was SEK 360,000. This is some minor royalty income that we have. Operating earnings were a minus SEK 134 million in 2020. This should be compared to 2019, where we had an operating earnings of minus SEK 114 million. More importantly, cash and cash equivalents at the end of the period was SEK 468 million. The direct share issue brought in SEK 400 million in June 2020, as I stated earlier. Thus, we have a run rate of over 3.5 years based on our last year cash burn. We are, however, communicating in our 2020 year report a run rate of over 2 years based on our planned ramp-up of commercial and development activities at Immunovia in the next years to come. If we now turn to the next page, Page 18, which is a summary slide, and then turn again to the next page, Page 19. So in conclusion, when we launch IMMray PanCan-d this quarter 1 in 2020 -- 2021, we introduce the first test based on the serum samples for the early detection of stage I and II pancreatic cancer. This is a major achievement for Immunovia as a company, and it's, of course, a major achievement and will affect patients not the least. We will, with this, be the first-to-market in a very large market opportunity. We are fully on track for the launch in Q1. We have the samples in-house. We are ready. The final step is conducting and reporting the blind validation study. Furthermore, we are well funded. We have the means for a full commercial rollout. And, of course, we continue to stay committed and focused to obtain a 30% market penetration long term with IMMray PanCan-d. Next page, Page 20. Before we go to the question-and-answer session, I would just want to remind everyone that we have posted a series of new tutorials on our homepage. The Immunovia team has been extremely busy lately, as you will see. Hopefully, you will find these tutorials informative. Thank you very much, everyone. With that, we will go to the next page, and we will open up the call for question and answers.

[Operator Instructions] Our first question comes from Viktor Sundberg from ABG.

So first, you mentioned before that there is a waiting list of individuals that are interested in the PanCan-d test. Can you give any more details with regards to this list and give any guidance if you should expect a bolus effect when you get CLIA accredited in quarter 2? Also, on the topic of sales guidance, you talked in the report about your goal of 30% penetration in the long term, but you still also reiterated SEK 250 million to SEK 300 million self-pay sales target for next year. The reason why I'm asking is, of course, that timelines have shifted a bit since you set that target back in 2018, 2019.

So with regards to the individuals, I should call them, who have registered with us with their interest in being tested, that list exists. We have a database of that. We will contact these individuals now, again, to reassure and to update their interest. And they will, of course, be a target group in the beginning. And it's a group of individuals in the sort of mid few thousands. With regards to this year's sales target, I've been in this industry for 35 years, I've been engaged in launching a number of diagnostic tests. It's always extremely difficult in the first year to predict the sales outcome. So I think from my point of view, what we will be looking for is really getting the right traction, getting the trajectory is more important than the absolute number of tests that we will be able to book, so to speak, in 2021. It's really about the trajectory of the acceptance from the key opinion leaders. It is being there to, hopefully, already in the first year, enable identification of early stage I or II PDAC patient that, as out of pocket, enrolled in our program. Those are the types of things we will be looking for much more so than a dollars and cents target.

Okay. And then, another question on the accreditation process as well. Your Medical Director, I think, alluded to the last webinar that the CAP Accreditation might come later than CLIA accreditation. Do you still reiterate that timeline of CAP Accreditation in quarter 2, or when would that be finalized, and perhaps what steps are left in that process? Also, of course, specific states in the U.S. also have their own accreditation standards. I just wonder if you could give any guidance on the process with specific states? Now we should think about the sales ramp up with regards to both the fact that the CAP might come later and that states could be a bit slower on accreditating your lab? I'm guessing, just trying to understand the sales grow here as we talked about in the previous question.

Sure, absolutely. From our point of view, obviously, the most important CLIA license is New England and a Massachusetts CLIA license. And that, we expect to -- routinely, that would be 30 days to obtain that license. So that's pretty straightforward. You are right that there are some states like New York state, where obtaining a CLIA license is a little bit more time consuming. So that will come later for practical reasons. But with a Massachusetts CLIA license, we will be able to cover the majority of the states and be active broadly in the U.S. CAP is something where -- in our thinking right now, sort of a 6-month post CLIA license is a reasonable pipeline. It's not critical right now to obtain that. So right now, I think -- we think that sort of a 6-month timeline for that would be suitable.

Okay. And a final question here on self-pay. I wonder if you could give an update as well on the European launch or the CE mark process, I guess, when do you expect that to be finished? And when can we expect that you will begin recording sales in Europe?

So right now, we are 120% focused on the U.S. launch, and we will be regrouping, so to speak, post launch to look at the timelines for a European rollout, and we will be communicating that later. It's premature for me to comment on that on this call.

Okay. Yes. And just a final, final question here, also on the PanFAM study and the path forward with reimbursement. First, do you think the full results will be available in 2022 as previously communicated? And can you just highlight the road maybe to reimbursement for a screening test specifically? Wouldn't that require also a congressional decision or a grade A or B recommendation from USPSTF in order for Medicare to go ahead with their coverage, if that would be local or national? I guess, local, as you said here in the presentation.

It will definitely be local. And as you are aware, we are going not for a general screening approach. We are not proposing general population screening. And, therefore, we don't see a reason for choosing any other route than the route that I described. So that's how we see the situation. And we think that path is actually very straightforward and well understood, not only by us, but largely by the community in the U.S.

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

Thank you for providing kind of a reimbursement plan for the U.S., but could you also give us a bit of a timeline for all of these steps? And then I have a couple more questions.

Okay. Alex, I think with regards to the process and the steps that we need to take, I think, I have been very clear today. In terms of what to expect from a timing point of view, in my experience, we should be able to obtain a PLA code, I would say, within the first 6 months of the first PanFAM results. And then to get to the actual coverage agreement with the payers, that can vary a bit, and we will get a better and a much firmer idea of that when we get the feedback from the second payer study to understand exactly what the payers are expecting the dossier to consist of. So it's a little bit premature. In my experience, that side of it can also go fairly quickly. But we do need to get the more specific and updated feedback from the payers to be very, very specific on that and get back to you.

Sure. I appreciate that. And of course, with PanFAM results, you mean the full results, not the interim analysis?

Yes.

And for the interim analysis, which you now reiterated guidance to come in H2, maybe just for PanFAM, since that was the press release you released a couple of days ago, what kind of analysis are you actually performing? What data will you be reporting?