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

Hello, and welcome to Immunovia Q1 report for 2021. [Operator Instructions] Today, I am pleased to present Patrik Dahlen, CEO. Please begin your meeting.

Thank you very much. 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 quarter 1 2021 results for Immunovia. Next page, Page 2. Here, you can read our disclaimers and forward-looking statements, and I encourage you to read these at your leisure. If I could have the 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 Q1 highlights. Here, I will review the blind validation study and the optimization study that were presented in Q1. Thirdly, I will touch upon the road to reimbursement and reiterate how we see that process going forward. Next, I will discuss the market opportunity for our blood-based test, IMMray PanCan-d in the U.S., with a particular focus on the market size for the familiar and hereditary risk group. I will then touch upon our pipeline projects in discovery stage. After which, I will touch upon the financials for Q1 2021. And following the financials, we will go into a Q&A session. Next page, please, Page 4. I wish to take this opportunity again today to remind everyone how important a mission we run here at Immunovia. With our blood test, IMMray PanCan-d, we will provide an entirely new solution for 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 in stage I and II, the 5-year survival significantly improves. It goes to 50% survival rate after 5 years compared to less than 5% when pancratic 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 detected today are diagnosed too late in stage III and IV. Pancreatic cancer tumors at stage III and IV are not resectable, which is the cause of the high mortality rate of pancreatic cancer. Surveillance programs for high-risk individuals based on imaging techniques such as CT, MRI or EUS for high-risk individuals are currently in use in many parts of the western world. There are many drawbacks within the current programs, namely high cost, lack of available imaging capacity, time and efficiency, geographic challenges, et cetera. And this leads to the programs being limited in scope. A blood test like the IMMray PanCan-d will significantly change the paradigm for surveillance in our opinion. And this opinion is supported by key opinion leaders in the field. Next page, please, Page 5. Now I will move to discuss Q1 2021 highlights. Next page, please, Page 6. Quarter 1 of 2021 was a very busy quarter for Immunovia. We reported early in the quarter that we had collected the samples that were necessary for the blinded validation study. And late in quarter 1, we reported results from the IMMray PanCan-d blind validation study. I will go further into the results in my discussion today as it requires a deeper dive than a one liner. Furthermore, we reported that we, in PanFAM, have collected samples in a large cohort of more than 1,300 individuals with familial/hereditary high-risk profile. Altogether, we have collected more than 3,000 samples from these individuals collectively. We also reported results from the optimization work that we have formed in our R&D department here in Lund, Sweden. We saw a significant improvement in results when we tested a small cohort of symptomatic risk patients. I will make a dive into those results later in this discussion as well. Next page, please, Page 7. After the close of the quarter, we had a few events worth mentioning. We have submitted our CLIA application to the CLIA office in the state of Massachusetts. Furthermore, we released an update on the market size for IMMray PanCan-d in the U.S., and I will go into more details in today's discussion. And we have reiterated our view on the road to reimbursement, which I will also discuss in more detail today. If I could have the next page, please, Page 8. We reported the results from the blinded validation study performed at Immunovia Inc. in our lab in Marlborough. This was a multicenter case controlled study covering 591 patients' serum samples. The serum samples were collected from 11 different sites in the U.S. and in Europe. We had altogether 167 PDAC samples, of which 56 stage I and II patient samples. We included 203 controls from the familial/hereditary controls from the PanFAM cohort. This was the first time we had used a control group with the relevant family history and/or genetic traits. We also included 221 healthy controls or blood donors, mostly collected from U.S. sites. If I could have the next slide, please, Page 9. We obtained excellent results for early-stage I and II PDAC patients versus the familial/hereditary control group. We saw an accuracy of 92%, specificity of 98% and the sensitivity of 85%. Again, I want to emphasize that the specificity and sensitivity is given for stage I and stage II patients. This is absolutely outstanding results and shows that the test has a high sensitivity for early stages of PDAC, which gives us the confidence that the clinical performance of our test meets the market requirements. If I could have the next slide, please, Page 9 (sic) [ Page 10 ]. I have recently had the pleasure of meeting with a number of experts and key opinion leaders in the field. And I've listed some institutions or universities on this slide where the experts confirm that I have discussed with. We have discussed the extensively the role of IMMray PanCan-d as a test for surveillance of the familial/hereditary risk group. And the feedback has been very positive. For instance, in one discussion, the initial reaction was these are the best data ever reported for detection of early-stage I and II PDACs versus controls in a familial/hereditary risk group. Obviously, many of the key opinion leaders want to see the IMMray PanCan-d test performance in their own surveillance groups and on their own at-risk patients prior to making public statements. However, I have the pleasure of sharing some quotes from some named key opinion leaders with you today. Dr. Stephen Pereira from UCL, University College London, commented, "A blood test for earlier detection of pancreatic cancer, with the performance reported in the blinded validation study fulfills our criteria for a test to be used for monitoring of high risk familial individuals." Furthermore, we hear from individual physicians who see at risk individuals in the U.S. The interest is very high for our test. For example, Dr. Burns from Wellesley Hills, Massachusetts, comments, "As a personalized care physician, I look forward to offering my familial pancreatic cancer risk patients the IMMray PanCan-d test, a clear-cut and informative blood test option to help allay their fears and enhance their own pancreatic high-risk surveillance." The interest for our test among private U.S. persons who have had pancreatic cancer in the family is also increasing, and they are contacting us at an increasing rate. The recent seminar called Latest News in early detection of pancreatic cancer, organized by the patient advocacy group, Pancreatic Cancer Action Network, has certainly spurred interest as well. In this seminar, Dr. Rosalie Sears, from the Brenden-Colson Center for Pancreatic Care, expressed her enthusiasm of our blood-based test. And it has certainly led to increase the awareness among individuals with the family history of pancreatic cancer. I can just summarize that the support and interest for our test in the U.S. is solid. We are excited to soon be able to help the pancreatic cancer community with a blood-based test for early detection of pancreatic cancer. If I could have the next slide, please, Page 9 -- 11, sorry. As we explained in our webinar on December 17, we have dedicated an R&D team here in Lund, Sweden, to look for ways to further optimize the IMMray PanCan-d for use in the symptomatic risk group. We reported in Q1 on a small study we conducted with the improved test. The study included in all 433 patient samples collected from 7 different U.S. and European sites. Out of these, 202 samples were from patients with pancreatic cancer, stage I through IV and 89 of the patients were from stage I and II. We used 231 symptomatic controls in this study. If I could have the next slide, please, Page 12. The results from the optimization study conducted in Lund in our R&D lab showed an accuracy of 89% and a specificity of 92% and a sensitivity of 80% in detection of stage I and II PDAC patients against the cohort of symptomatics. Again, I emphasize that the performance I referred to is for early-stage pancreatic cancer stage I and II. The performance we saw in this study is very close to the performance we saw in the CTMS study, and it looks like we're back on track with regards to sensitivity and specificity also in the symptomatic cohort. If I could have the next slide, please, Page 13. We have discussed the results from the optimization study, and we have had positive response from our key opinion leaders. Dr. Grützmann from University of Erlangen in Germany, commented, "To detect this very deadly cancer, pancreatic cancer, as early as possible is very important. Therefore, it is very relevant to offer IMMray PanCan-d blood test at GP locations and at gastroenterology clinics. The test will be promoted to existing referring GP/gastro networks in connection with local regular trainings performed by the university hospital and the results from this collaboration between GP and gastro clinicians could be published in a main physician journal, Deutsches Ärzteblatt." And Dr. Pereira from University College London commented, "The results presented recently are very encouraging and open the opportunity to further validate the current clinical pathway for patients with early, nonspecific but concerning symptoms suggestive of pancreatic cancer. A minimally invasive test, such as IMMray PanCan-d, which can be made available at primary care level, could help prioritize investigations, accelerate PDAC diagnosis and reduce the anxiety linked with long waiting times." So it seems the steps we have taken to improve the performance of the test in the symptomatic risk group has been effective, and we show improved performance, which now again resembled that of the CTMS study results we saw earlier. Next, we need to confirm this data also in our U.S. lab in Marlborough prior to the launch in the U.S. Assuming we see the same results in our lab in Marlborough, we should be ready to release also this test for commercial use in this symptomatic risk group as well in the very near future. Please turn to the next page, Page 14. Next, I will discuss the road to reimbursement. If I could have the next slide, please, Page 15. Briefly stated, we will follow a route which is well established for lab-developed tests in the U.S., with a very clear path and milestones. As you all know, we will launch the test as a self-pay test, which 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 we will seek a PLA, which is short for Proprietary Laboratory Analysis code for the IMMray PanCan-d test, shortly following the data from the PanFAM study. We will then conduct further studies as needed, illustrating analytical and clinical validity and utility. Furthermore, we will 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 from national government services, who is the Medicare administrative contractor for Medicare services provider in the New England region of the United States. We have already conducted 1 payer study that gave us a lot of detailed information. However, we now start a new payer study with specific focus on Medicare. These studies are important so that we get the latest and best possible feedback from the payers. I again need to emphasize that our test will be for surveillance of high-risk groups, such as the familial/hereditary risk group with tight inclusion criteria and therefore, a well defined, relatively small population in the U.S. Thus, the test is not seen as a screening test. Diagnostics reimbursement expert, David Parker, a Senior Vice President at Precision for Medicine comments, "Market research indicates that surveillance imaging of patients at high-risk for pancreatic cancer is already routinely covered by payers, and is not considered as a screening application of the imaging modalities. Immunovia will be seeking coverage for the same surveillance use in the same population. It seems highly unlikely that payers will view the IMMray PanCan-d test as a screening test, when they cover the clinical alternatives as diagnostic." The medical community and the associations that focus on pancreatic cancer in the U.S. have issued several guidelines and recommendations. All of these guidelines and recommendations are against general screening and for surveillance of high-risk groups. The payers obviously listen to the medical community. On the other hand, in terms of the symptomatic risk group, there is obviously no obstacles either to obtain reimbursement for testing patients in the symptomatic high-risk group. In terms of timing, we fully expect to have a majority of the coverage agreements with payers in place by end of 2022. Please turn to Page 16. Next, I will make a few comments on the updated market size. Please turn to Page 17. Thank you. Organizations such as the U.S. Preventive Services Task Force, National Comprehensive Cancer Network, American Society of Clinical Oncology and the International Cancer of the Pancreas Screening Consortium make regular updates to their guidelines and recommendations. A number of recent updates have led us to reexamine the potential market size in the U.S. The market opportunity for surveillance of familial/hereditary high-risk group is estimated to 315,000 to 350,000 individuals annually. This is based on the understanding of the number of new cases per year, disease association due to familial and hereditary background, an understanding of what's called the average U.S. family of 2 parents and 2 siblings and, of course, the range of recommended surveillance age, et cetera. This means that the potential market size for Immunovia range from 630,000 to 700,000 tests annually, of course, assuming twice a year surveillance. Current programs run once a year surveillance with MRI and EUS. And we think twice a year surveillance could be the future in order to catch stage I and II as early as possible as disease progression is fairly rapid. If I could have the next slide, please, Page 18. Lifting our horizon into the future, we can see now that several opinion leaders and medical organizations such as NCCN are recommending all individuals with a family history to be tested for mutations and included in surveillance programs. This includes persons with just 1 first degree relative. Recent publications do indicate that there is a significant ninefold increase of risk of pancreatic cancer among persons with just 1 first degree relative. There is an estimated 3.1 million individuals in the U.S. in the surveillance age bracket of 50 to 80 years with 1 first degree relative. It is also fair to state that a blood test-based surveillance would be the only way to deal with such numbers of individuals in a surveillance programs. Again, we are not suggesting this happens in the near future, but it is certainly something to consider when we speak about the long-term potential for IMMray PanCan-d in the marketplace. Next page, please, Page 19. Briefly on the U.S. high-risk symptomatic group, we maintain our view on the market size here. It is roughly 0.5 million individuals per year as we have previously stated. If I could have the next slide, please, Slide 20. I will say a few words now about our discovery pipeline. If I could have the next slide, please, Slide 21. Whilst our main focus is on the launch of IMMray PanCan-d for earlier detection of pancreatic cancer, we continue to work with our discovery platform. We currently performed 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 disease cohorts. As you know, collection of samples is still affected by the COVID-19 pandemic. As these are discovery studies, meaning they are in the early stage of our R&D model, it is not my intention to give firm time lines on these 2 discovery studies today. We will report data when we have new data and information. If I could have the next slide, please, Slide 22. Next, I will just have a few words on the financials, Q1 2021. Next slide, please, Slide 23. Our income in Q1 2021 was SEK 123,000. This income is royalty income, and we've seen this type of levels of income in the past. Net operating earnings were minus SEK 23 million in the quarter. Cash flow in the quarter was negative SEK 43 million. Cash and cash equivalents at the end of the period was SEK 425 million. Based on past, that is 2020 and current burn rate, we have a run rate of over 2 years at current full year levels. We will update our view on cash contributions from sales in our Q3 report, thus giving some more color on our cash position in the years out. This was indeed the last slide that I wanted to share with you today, and I want to turn to the next page, Page 24, and we can open up the call for questions and answers. Thank you.

[Operator Instructions] We have a question from the line of Lars Hevreng from Danske.

Yes. Can -- maybe I missed that in your remarks. But can you just elaborate a bit on the phasing of Sjögren's here? I mean, the second quarter, the launch, the early target groups and what kind of -- in some way, if you could -- what you can say in terms of early adopters, the number of hospitals that you would -- or precisions that you would address? Some -- so we could have some color on what -- how -- from the next quarter onwards, I guess -- from the next quarter results and onwards, I guess, this will be seen as a commercial stage company and how we should assess the level of success?

Yes. So actual commercial testing, meaning that we can also invoice for the testing that we're doing. We'll commence as soon as we have a clear number. That should happen within weeks, within a very short period of time. So we are fully expecting that to happen within 9 months. The first target group is obviously a familial/hereditary risk individuals. Many of these are coming to us as private individuals, either directly or through their primary care physicians. Obviously, also, there is a great deal of interest amongst already established surveillance programs that are running across the U.S. There is roughly 60 well-established surveillance programs around the U.S. and included in continuous monitoring in those programs is roughly 10,000 people. So that gives you sort of an idea of the sort of immediate target group, so to speak. As we have said, we estimate that the total number of people in the U.S. that have a familial and hereditary risk profile, it's roughly 315,000 to 350,000 individuals. And obviously, we will work very diligently to identify these individuals and target our marketing and sales efforts towards these. With regards to the symptomatic risk group, obviously, now with the data we have from our R&D lab in Lund, we are going to confirm that data in the U.S. in our lab there. And once that is confirmed and they've run their study there, then we will be in a position to launch IMMray PanCan-d also for symptomatics. The customers there are primarily in the gastro centers. And as you know, we have established a sales force for dealing particularly gastro centers. And we have a group of 5 people in the sales force who will be focusing on the East Coast gastro centers to begin with. It's a little bit early still, I think, to comment too much on how we see sales in Q2 and how we see sales in Q3. I think I'd like to see exactly sort of the take-up and sort of the run rates going here. All I can say and comment on is that the influx of inquiries is steadily increasing day-by-day as we move close to being able to actually commercially launch.

Okay. That's very helpful. And just for us to understand the -- I mean, the sequence of commercial step-up of activities, the level of activities in the U.S. And you -- that was -- the last time it was updated in the CMD back in June last year. But can you just tell us, that you have 5 people today, when you're going to expand the scope? And you can address the other main areas such as the West Coast, Florida, the Texas, some regions around that, the sequence of events and the scale-up of the organization?

I think we'll very safely take a quarter to see how well we progress on the East Coast with regards to the gastro centers there, and be very sure with regards to that we have the pitch right and that we have the sort of the positioning right and everything is correct. And then we'll evaluate that. So I don't think in the third quarter, we'll be doing much in terms of building out the sales force, but probably a start to look at that for the fourth quarter.

All right. I got it. And last question from my side. Which country in Europe of size do you think is going to be the first where -- when the price is going to be available?

So we will update the market with regards to the launch in Europe before the end of this quarter, quarter 2. As you are aware, the reimbursement landscape in Europe looks very different from the U.S. It's 28 EU countries deciding for themselves. And therefore, it takes a very significant amount of work to figure out exactly which sequence one should use in order to approach that. On the other hand, we are very close to certain key opinion leaders in certain European countries. So obviously, that will give you a little bit of indication where we will start. The second thing that's happening, of course, from a European perspective is the regulations, the CE regulations are changing, and there is a new regulation coming, the new IVDR rules by May 2022. And obviously, that's another thing that we will need to take into consideration as we look forward.

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

So I was just wondering on the highly symptomatic group, how do you plan to expand kind of the reimbursements? What would the next steps be from here?

Yes. So what's become very, very clear is that there's a little bit of misunderstanding of the road to reimbursement for this particular group. And as -- I think everyone is agreeing that sort of general screening of the population for pancreatic cancer is not advisable. And it's not advisable from is view of the medical community, and it's certainly not something that we would be advocating for either with our blood-based test. So obviously, for us, in terms of obtaining reimbursement, the key is actually to focus on a high-risk group, such as the familial/hereditary group. Within that group, if one wants to further narrow it, there's obviously certain syndromes like Peutz-Jeghers syndrome that has an extremely highly elevated risk for pancreatic cancer. So if one really wanted to pinpoint a high-risk group, where it would be very, very easy and very fast to conduct studies to point to clinical utility, then there certainly are subgroups within the familial/hereditary that we can work with. We have, however, come to the conclusion based on the work that we've done for years now that the combined familial/hereditary risk group is well accepted as a first starting point for surveillance. And therefore, it's also well-accepted starting point in terms of working towards reimbursement. So that is actually very much our strategy to work towards reimbursement for this well-defined familial/hereditary risk group.

Yes. No, I think maybe I didn't frame my question correctly, but I'm referring to the symptomatic patients. So I know that you plan to redo a study in the U.S. and launch it for these patients. So I was just wondering how do you see getting reimbursement in that broader category?

That group is, of course, equally straightforward, maybe even more straightforward than from the familial/hereditary group. And that, obviously, there, the starting point is symptoms. And that is, of course, I don't think any contingence there with regards to reimbursement. So basically, it's the same process. As for the familial/hereditary group, i.e. we redo the data in the United States. We conduct some local studies with principal investigators in the United States for the symptomatic group. We collect a dossier that shows clinical utility and validity. And with that at end, we approach the payers. So it's very much the same process and roughly the same time lines.

And would an additional perspective study be required given it's larger population?

We don't think so, actually. Given that, again, you have a fairly high group, high-density of patients, very clearly defined current clinical practices. And we would supplement those with the blood-based tests. So I don't see that we would necessarily need large broad-based prospective studies. But indeed, very focused studies for the sort of clinical utility and validity as compared to current practices. So we don't foresee long and cumbersome prospective studies needed.

Got it. And just another question I have. I know that the competitor of yours received a breakthrough designation for their pancreatic cancer detection testing patients with new-onset diabetes. So I was wondering if this would be a basket where you are planning to pursue? And if not, why wouldn't you?

So when it comes to the NOD, which continues for us to be an extremely interesting application for IMMray PanCan-d, I think most recent discussions, whether it be academic or private companies, there's an ever-increasing interest for NOD, and we're very happy that, that's happening because it's also our view that this is another risk group that definitely needs a surveillance approach in order to early catch pancratic cancer in this group. For us, the next milestone for the NOD is actually running the PanDIA study and getting the first indications of what a NOD group looks like in our hands. So for us, that is the sort of next milestone is to report out on the PanDIA and showing what is the performance of IMMray PanCan-d in this particular at-risk cohort. From there, we will then make further projections and milestones with regards to what are the next steps. But obviously, it will look pretty much like what it looked like in the past for familial/hereditary group and the symptomatics. So -- and seeking FDA breakthrough determinations for us is not at this stage in the plans. As we -- at least for the foreseeable future, we'll continue to have an approach where we work with laboratory developed tests.

Our next question comes from the line of Viktor Sundberg from ABG Sundal Collier.

So first one for me is on the PanFAM study. So what expectations should we have on the interim readout going into that event in the second half of 2021? I guess my question is what you start is power defined in interim study in terms of perhaps number of PDAC cases that IMMray would pick up that imaging would also confirm? I mean just in terms of trying to manage expectations for that study, is a 2 confirmed case of PDAC a success? Or would you say that the number have to be 10 in order for you to use that data to apply for coding and subsequent coverage on pricing?

So I think with regards to the PanFAM study, like just about any study of that pertains to familial/hereditary large-scale studies, it's -- whilst one is collecting samples for many years and conducting and enrolling large numbers of patients. There's no guarantee that you will hit X numbers of PDAC cases. We obviously don't know that yet, so we don't know how many there will be. And we don't know either with regards to how many might there be that have not been detected by imaging at this stage. So I think from that point of view, it's obviously too early for me to comment with regards to the power of the study per se. That said, seen from my chair and with my experience in the field, I would say what is important is obviously to show the clinical performance and test performance with regards to the test's ability to detect early stage PDACs in a cohort like PanFAM. And that's obviously -- there are many ways to secure that and do that in a way that we're still prospective like we've done. And where you just secured it, you also get the sort of analytical and clinical sensitivities and specificities at a reliable level. So that's kind of how I think about it and how we will be proceeding.

Okay. Great. So maybe 1 question on screening also and surveillance. I mean the communication earlier for Immunovia has been that the familial group was considered to be as symptomatic and would be considered for screening. And I think that was reiterated as stated in June. What has changed in your communication with experts that have made you pivot away from this line of thinking? Of course, you're the new CEO of the company. So just curious what you have learned that perhaps previous management missed?

I don't want to point on previous management by any stretch of the imagination. I just go by common knowledge and what the medical community are saying, and that is that screening in the area of pancreatic cancer is not recommended, surveillance is. And that there is a -- there are given risk groups where surveillance should be conducted and should be conducted based on certain inclusion criterias. And this obviously limits the number of persons to a very much smaller group than the general population of United States. And therefore, it changes dramatically the view on reimbursement and how to distinct between screening and surveillance. The second thing to say is we've also learned that the current surveillance programs and persons enrolled in those do get their screening process reimbursed by commercial payers. And the commercial payers clearly see the processes that are used and the imaging techniques that are used as diagnostic modalities and not as screening modalities. And that is another learning, obviously, that is a key here.

Yes. And also, 1 question here on next steps after this hereditary/familial group, you have secured reimbursement in that group. Do you think that the symptomatic group is the next in line? Or would that be the NOD group just in your thinking?

Yes. The symptomatic group, we will run in parallel with the familial/hereditary group. So that will go more or less hand-in-hand. I mean those 2 risk groups are not far from each other with regards to time lines and ability to obtain reimbursement for. So actually, those 2 groups will be run in parallel. So that's how you should think about it. But in 2022, we should perfectly in place also for the symptomatic group. The group to consider a little bit sort of out of simply the 2 first ones is obviously do NOD group. And as I said before, very, very optimistic about the NOD group. It's commercially, obviously, a very interesting group. I think it's clinically for the sake of minimizing pancreatic cancer cases going forward, it's obviously an extremely important group to be able to establish surveillance for. But I think for me, the key is to be able to report data from the PanDIA because that is actually the establishment of a sort of baseline for us with regards to test performance in that particular clinical cohort. And I think it's quite important that we get that settled first before I start looking into sort of long-term views on commercialization for that as well as reimbursement -- road to reimbursement.

There are no further questions registered, so I'll hand back to the speaker for any closing remarks.

Great. Thank you so much, everybody. Thanks for the great questions. Thank you very much for your continued interest in Immunovia. And I certainly look forward to reporting again on Q2 update as we progress. Thank you very much. End of call.