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

Welcome to the Immunovia Audiocast Teleconference Q2 2021. [Operator Instructions] I'll now hand the floor to CEO, Patrik Dahlen. Please begin your meeting.

Good afternoon, everyone. Thanks for joining us today, and thank you for your continued interest in Immunovia. Today's quarterly report presentation is a historical one as it is the first presentation as a commercial company. We have now passed a pivotal milestone in the company's history. Immunovia Inc. has launched IMMray PanCan-d as a laboratory-developed test in the U.S. This is a major achievement for all of us here at Immunovia and provides an opportunity for doctors, patients and their relatives to access the first blood test for early detection of pancreatic cancer. It is truly groundbreaking. My name is Patrik Dahlen. I am the CEO of Immunovia, and I will be presenting the quarter 2, 2021 results for Immunovia. Together with me on the call is also our Medical Director, Dr. Thomas King; and Cindy Callahan, our Senior Marketing Director at Immunovia Inc. Tom and Cindy will give some additional color on our IMMray PanCan-d test and its launch in the U.S. Next page, please, Page 2. Here, you can read our disclaimers and forward-looking statements, and I encourage you to read this at your leisure. Next page, please, Page 3. Today's agenda is as follows: I will start by giving you a summary of Q2 highlights and updates on post-period events. Obviously, the launch of IMMray PanCan-d in the U.S. is the key event this time and marks a significant milestone for Immunovia. Then I will hand it over to Tom for a discussion of IMMray PanCan-d testing in the U.S., and he will give you an update on the test performance and the next steps. Next, Cindy will discuss the marketing activities that we have initiated to ensure successful launch of IMMray PanCan-d in the U.S. I will then comment on our pipeline projects in discovery stage. Following that, I will briefly touch upon the financials for Q2 2021. And following financials, we will go into a Q&A session. Next page, please, Page 4. Now I will move on to discuss Q2 2021 highlights. Next page, please, Page 6. The second quarter of 2021 was again a very busy quarter for Immunovia. Immunovia Inc. received a clear certificate of registration, which is a prerequisite to receiving a clinical laboratory licensure, the Massachusetts State Department of Public Health approval that was received after the end of the period. We are extremely proud to have achieved this pivotal milestone. It means a lot to us as a company. It means a lot to people working in the field of pancreatic cancer. And it means a lot to individuals who have a family history of pancreatic cancer or have a genetic predisposition, and therefore, are at risk of pancreatic cancer. As a result of the updated guidelines from U.S. Preventive Services Task Force, The National Comprehensive Cancer Network, American Society of Clinical Oncology, and the International Cancer of Pancreas Screening, or CAPS, we presented an updated assessment of the total market size for familiar hereditary pancreatic cancer risk group in the U.S. Immunovia's new estimate shows that 315,000 to 350,000 individuals have a familiar hereditary risk of pancreatic cancer that would qualify to be included in surveillance programs. This means that with twice-a-year testing, the total number of tests would be 700,000 tests per year. If, in the future, the new recommendations to test all individuals with just one first degree relative affected by pancreatic cancer were to be implemented, the number of individuals at risk increases to roughly 1.5 million individuals in the U.S. Obviously, it is a tremendous importance that key opinion leaders continue to drive this new inclusion criteria. And it is evident that a blood-based test such as IMMray PanCan-d is a prerequisite and a key enabler for managing such large surveillance groups. In the quarter, we also reiterated the road to reimbursement for IMMray PanCan-d as a laboratory-developed test in the U.S. Immunovia, Inc. will start by exploring a positive Medicare coverage and the aim is to obtain coverage and reimbursement agreements with the majority of U.S. payors prior to year-end 2022. Thus, we have a clear strategy and a clear path towards reimbursement. Furthermore, Immunovia hosted a key opinion leader event for investors on the clinical need and use of IMMray PanCan-d. Three prominent experts participated and presented their perspectives on how the test can be used in clinical practice. Dr. Stephen Pereira, Professor of Hepatology and Gastroenterology, University College London; Dr. James Farrell, Professor of Medicine at Yale School of Medicine and Director of Yale Center of Pancreatic Disease at Yale New Haven Health; and Dr. Geoffrey Burns, M.D. from Renaissance Family Medicine of Wellesley, Massachusetts U.S. The conclusion from the discussions were very supportive of the use of IMMray PanCan-d in early detection of pancreatic cancer, not only in the high-risk group of familiar and hereditary, but also in the early symptomatic individuals. That's pointing to the future potential of IMMray PanCan-d as a widely used test for early detection of pancreatic cancer. IMMray PanCan-d was highlighted at the seminar organized by the largest patient organization in the U.S., the Pancreatic Cancer Action Network. Dr. Rosalie Sears, Co-Director of The Brenden-Colson Center for Pancreatic Care and Professor at Oregon Health and Science University as well as adviser to PanCan, expressed her enthusiasm for the test's accurate ability to detect early Stage 1 and 2 pancreatic cancer. Next page, please, Page 7. After the close of the quarter, we, of course, announced the most significant event in the history of Immunovia. On August 3, Immunovia, Inc. received a clinical laboratory licensure from the Massachusetts Department of Public Health. This means that Immunovia, Inc. has been approved to begin commercial testing with the IMMray PanCan-d test in the U.S. exclusively through the laboratory in Marlborough, Massachusetts. The first tests have already been sold. The first tests have now been analyzed in the laboratory and the first invoices have been issued. Next, Immunovia provided 2 updates regarding IMMray PanCan-d test. First, the test is launched at a list price of USD 995 per test. Based on feedback from the payer study, we saw a clear chance to adjust the price as there seems to be a relatively large price elasticity among payors for a blood-based test for early detection of pancreatic cancer in the U.S. In comparison, the price for MRI and endoscopic ultrasound scans are in the range of USD 5,000 to USD 6,000. Second, the test is launched for those individuals with CA99 levels greater than 2.5 units per ml, and Tom will dive deeper on that subject in his section. The overall sensitivity of the test then improves to 89% in Stages 1 and 2 and 92% in all stages. The specificity of the test is 99%. Next page, Page 8, please. And now I hand it over to you, Tom. Tom will you tell -- Tom will tell us about the IMMray PanCan-d testing in the U.S. Tom, please.

Thank you, Patrik. I'd now like to update you on our clinical operations in the United States through Immunovia, Inc. Slide 9, please. Our laboratory is now licensed in Massachusetts, as Patrik has indicated, and that authorizes us to perform patient testing not only in Massachusetts, but in 44 other U.S. states that do not require in-state licensure. While our CLIA certificate from the federal government was issued in the expected time frame, the Massachusetts State inspection, that is required for state licensure was substantially delayed by COVID issues in the state bureaucracy. At the time of our inspection on August 3, we also found Massachusetts procedures for laboratory licensure have changed with COVID. In the past, the initial inspection would have been followed by a reinspection in 90 days, with biannual inspections thereafter. These processes have now been eliminated and we expect no further state inspections of our laboratory. We filed our College of American Pathologists application very soon after we received the state licensure and we expect a visit from the College of American Pathologists within approximately 6 months for that accreditation inspection. Slide 10, please. I next wanted to speak in more detail about how we're applying IMMray PanCan-d in the U.S. As you know, CA19-9 is an important component of the IMMray PanCan-d signature. CA19-9 is an oligosaccharide that is formed by the sequential addition of different sugar units to form a tree-like structure. The final sugar addition that is required to form CA19-9 is catalyzed by an enzyme called the Lewis antigen because it also plays a role in blood transfusion immunology. In this diagram, the Lewis antigen is indicated by the large L, small v in the illustration. If an individual has 2 defective copies of the Lewis antigen gene, they are then unable to add this final sugar to form CA19-9, and the lack of CA19-9 expression will affect the results of the IMMray PanCan-d test. The frequency of individuals for this genotype vary substantially in different ethnic groups. So test performance could be affected substantially in different ethnic groups. Slide 11, please. We found from the literature that genotypic analysis has shown that individuals who are deficient in the Lewis antigen gene have very low levels of CA19-9 measured in their serum compared with individuals with 1 or 2 functional copies of the gene. This then provides an opportunity to provisionally classify individuals with CA19-9 levels below 2.5 units per milliliter as Lewis antigen no. Slide 12. Based on this information, we examined -- excluding Lewis antigen no individuals from IMMray PanCan-d testing. This improved test performance and our blind validation quite substantially, increasing test sensitivity from 85% to 89% for early-stage PDAC and from 87% to 92% for all-stage PDAC without compromising test's specificity. I feel that this is an essential step for the clinical application of IMMray PanCan-d because it both improves its clinical performance and avoids providing inferior results to some ethnic groups in the U.S. Slide 13, please. These sensitivities and specificities that I've described imply positive and negative predictive values that are shown in this slide for at-risk populations with prevalence of PDAC of 1% and 3%. As you can see, the negative predictive value exceeds 99% in both groups. The positive predictive value nears 75% for early-stage PDAC in a group with 3% prevalence and nears 50% in the group with 1% prevalence. I feel that this test performance will be very helpful in guiding clinical decisions in at-risk individuals. Slide 14. I'd now like to say a bit about our next steps or steps that are in progress. As Patrik mentioned, we have now vetted all of our sample receipt, analysis, reporting and billing operations and are currently performing patient testing and will continue to do so as new orders are received. We are nearing completion of a manuscript of our blind validation study for peer-reviewed publication. This work has been accepted in abstract form for presentation at the American College of Gastroenterologist Meeting this fall. Analysis of PanCAN samples has begun in Immunovia, Inc., and we anticipate completion of this analysis in 2021. Evaluation of IMMray PanCan-d performance in individuals with pancreatitis is underway with one of our key opinion leaders in the U.S. We are also preparing to evaluate newly collected samples from symptomatic individuals to confirm and extend results recorded from the Lund laboratory in 2020. Based on our initial results, we are optimistic that these findings will support offering IMMray PanCan-d to symptomatic individuals. I'd now like to turn the discussion over to Cindy Callahan, our U.S. Marketing Director. Slide 15, please.

Thank you, Tom. Hello, I'm Cindy Callahan. I'm the Senior Director of Marketing for Immunovia, Inc. in Marlborough, Massachusetts, and it's my pleasure now to review the launch and marketing activities for the IMMray PanCan-d test. Next slide, please, Slide 16. Well, we certainly had a lot to introduce and reintroduced to the market on August 4, a new laboratory, a new test, a new tool for the early detection of pancreatic cancer. We wanted to introduce Immunovia, Inc. and the IMMray PanCan-d test with a new look and feel versus Immunovia AB. If you haven't visited our website, I invite you to take a look at immunoviainc.com. you'll see we made 3 very important aspects of commercialization very clear and easy to find at the home page. Pay My Bill, where patients can pay for their tests, the Provider Portal, where ordering providers can place orders electronically as well as receive their results in the same manner and the Test Requisition to either download and print or complete the fillable PDF. The goal of the website was quite simple really, appeal the patients and physicians without complexity. We, at Immunovia, Inc. do imagine early detection and the hope that comes with that, and we feel the brightness of the entire site along with the softer color, including purple of course, demonstrates that. Immunovia, Inc. also launched brand-new social media accounts on Facebook, Twitter, Instagram and LinkedIn. This engagement strategy is designed to appeal to all those out there with a hereditary or family history of pancreatic cancer and educate them on their elevated risk of developing the disease. Last, as important as the test of the IMMray PanCan-d test is, it really requires a logo. So with the launch of the website and social media campaigns, we also introduced our new IMMray PanCan-d logo. Next slide, please, Slide 17. From a 4-page brochure designed with a physician in mind to collection kit instructions for the phlebotomist, our goal is to provide all the key stakeholders with the information they need in order to understand the IMMray PanCan-d test and the logistics associated with ordering it. The patient flayer provides information on risk groups associated with pancreatic cancer. And as patients, we know conversations with doctors can be intimidating, and that's why we created some helpful tips that can be used when a patient talks to their doctor about the IMMray PanCan-d test. Patients can feel empowered when speaking to their physicians when they have factual information they can share to improve their health. We also created a 1-page what-to-expect flyer, so patients know exactly what to expect after the test is ordered. This piece includes information regarding the collection kit, remote phlebotomy, result reporting and invoicing. These materials are all available on immunoviainc.com, and we always encourage people to contact our customer support team to answer any questions they may have. Next slide, Slide 18, please. So while we were well prepared for the launch of the IMMray PanCan-d test, it didn't prevent us for being a little busy the past few weeks. The anticipation had been building, which made the launch even that much more exciting. We've always envisioned the campaign around imagine early detection. And after attending dozens and dozens of pancreatic cancer awareness locks, we had a pretty good understanding that early detection and the importance of it meant different things to different people. So we reached out to those folks we met at locks and asked them simply what does early detection mean to you? We had an overwhelming response and no 2 responses were alike. This imagine campaign, as we call it, became our launch campaign. We're told time and time again how relatable it is. It's not just about maybe living longer. It's about a little things in life, a phone call with your mother, tea time with your grandfather, teaching a grandchild to play the P&L. So it's been a very powerful campaign for us. Next, I'll talk a bit about our pancreatic cancer awareness night. Boston, as you know, is home to some of the best hospitals in the country, Mass General, Beth Israel, Dana-Farber, to name a few. It's also home to some of the best sports teams, one in particular, is the Boston Red Sox, which is the baseball team. Strangely, people all over the country follow the Red Sox and they call it Red Sox Nation. There's even a few pancreatic cancer survivors and patient organizations who call Boston Home. Generating awareness is tricky to measure, but we figured since we're in the Boston community, with all these resources around us, would try something a little different. We partnered with the Red Sox to have a pancreatic cancer awareness night at IMMray on August 13. This included purple ribbons for the game-day staff, a pregame ceremony ordering some survivors, a table in the concourse with educational information on the IMMray PanCan-d test and a commercial that played on a large screen. We also invited local members of patient organizations, organizations like the Pancreatic Cancer Action Network, the National Pancreas Foundation Force detect together and the Pancreatic Cancer Alliance. That might generate more buzz than we ever imagined. Many of our KOLs were following the night on Twitter. And I even received text messages from acquaintances in Denver, Colorado, saying they saw Immunovia, Inc. on the Pancreatic Cancer Awareness night. Social media metrics for the night and many days after have been significantly increased. We even had people in the stands requesting purple Red Sox in their T-shirts so they could wear them proudly. Next, the Pancreatic Cancer Network, as Patrik mentioned, is by far the most influential patient advocacy is in the pancreatic cancer space. They have over 1 million constituents and support patients and their families in many different ways. Because of the services they provide, they have a fairly large service -- patient services team to answer incoming calls. On August 11, we proudly in-service PanCAN to patient services team on the IMMray PanCan-d test. They were provided with all of our marketing materials and, of course, the full number for our customer support team. PanCAN will be highlighting the launch of the IMMray PanCan-d on their website. Last, about a week ago, Dr. Tom King was interviewed by a news anchor for a U.S. network called Spectrum TV. The interview was aired across the country and will be featured on our website and social media channels. Next slide, Slide 19. For several months, and for some of us for several years, we've been engaged with many physicians who run surveillance programs. And now that our test is launched with a sensitivity of 89% in Stages 1 and 2, with a specificity of 99%, and it's really important for us in marketing to get feedback on how these order providers will use the test. I won't read all of these, but just to point out a few. We had one physician say, and I quote, "I have been following Immunovia for years and I'm impressed with the data. I am committed to sending at least one patient test per week as I have many worried individuals that don't fit surveillance program criteria. It is tough to get an MRI covered for that type of patients and IMMray PanCan-d is a good option." Another quote I'll read aloud is from Dr. Kay and it reads, "I don't believe current imaging options are very good and believe IMMray PanCan-d should be run in every individual with one first degree relative." Next slide, please, Slide 20. Prior to launch, Immunovia, Inc. has always had a presence at relevant conferences in the spring and fall. And I am very pleased to say that we will have a booth at all the conferences in the fall, whether live or virtual, and we also have several presentations planned with KOLs. However, with the increase in numbers associated with the Delta variant, we're unsure if some of these live programs will be switched to virtual. We will have to wait and see on that. Next slide, Slide 21, please. Some of the other activities that we are planning in the coming months include a ribbon-cutting ceremony or a grand opening in Immunovia, Inc. at the end of Q3 or Q4. As far as World Pancreatic Cancer Day is concerned, we've become known for getting -- building it purple on World Pancreatic Cancer Day. Last year, we were involved with over 300 lightings, and this year, our goal is to beat last year's number. We will continue with the Imagine campaign, but we will shift gears a little bit and invite people to submit pictures and quotes to the question, what does early detection mean to you? And this will be strictly a social media campaign. We have numerous advertisements planned for social media and Google. Those will begin launching over the next week or so. And we have a number of webinars that we are also coordinating with patient organizations, which will be posted on Immunovia, Inc. and social media. We continue to receive requests for interviews from different media outlets, and those will also be communicated on all the digital channels. And with that, I will hand the presentation over back to Patrik. Slide 22, please.

Thank you very much, Cindy. And on Slide 22, I will say a few words about our pipeline. Next slide, please, Slide 23. Our main focus has been on the launch of IMMray PanCan-d for early detection of pancreatic cancer. And this important milestone has now been achieved. There still remains work to be done for Immunovia in the area of pancreatic cancer, such as more clinical studies, particularly in the high-risk group, new onset diabetics or NODs, U.S.-based studies for reimbursement purposes, confirmatory testing of the symptomatics and so on. There are great opportunities for Immunovia to continue to dive deeper in the pancreatic cancer space. We also, obviously, continue to evaluate our discovery platform in other clinical areas. We currently 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 disease cohorts. As you know, collection of samples is still affected by the COVID-19 pandemic, a pandemic that, in the world, now is on its fourth wave. As these are discovery studies, meaning they are in early stage of our R&D model, it is not my intention to give firm time lines of these 2 discovery studies at this stage. We will report data when we have new data and information. Next slide, Slide 24. Briefly, a few words on financials Q2 2021. Next slide, please, Slide 25. Our net sales in Q2 2021 was SEK 38,000. This is some minor royalty income. Net earnings in the quarter was minus SEK 49 million. Cash flow in the quarter was negative. We had a negative cash flow of SEK 44 million. Cash and cash equivalents at the end of the period was SEK 382 million. Based on current burn rate, we have a run rate of over 1.5 years at current full year levels. These projections do not include cash contributions from sales in Q3 nor Q4 2021, nor for the full year 2022. We will report sales numbers for the first time in our Q3 report. As we present Q4 results for 2021, we will give sales guidance for the first time on a forward-looking basis for full year 2022. With this, I want to turn to the next page, Page 26 and open up the call for Q&A. Operator, please?

[Operator Instructions] Our first question comes from the line of Viktor Sundberg of ABG Sundal Collier.

So 2 first, if I may. So on the last changes you made to exclude individuals deficient in the Lewis antigen, what will be the implication on that for the prospective studies currently recruited or ongoing? Will you go back in, for example, PanFAM and remove samples that you collected with a low CA19-9 value? Or can you go through how this knowledge impacts the prospective states or future studies here going forward?

We always when we run -- thank you, Viktor, for your questions. Always when we run the analysis, we start by running the CA19-9 value. So we will know that the individual has a low CA19-9 value and then not to proceed from there if it's a crucial study. But maybe, Tom, it's better for you, as you are deeper into the details, to respond to the question.

Yes, certainly. We're running the PanFAM samples exactly as we run clinical samples. So for reporting purposes, if the CA19-9 is below 2.5, we report it as test not performed. Actually, though, from the preliminary analysis of our blind validation, individuals with very low CA19-9 levels, if we remove the CA19-9 from their signature, there still was substantial predictive value from just the IMMray portion of the assay. So we're looking at that to see if there's a possibility for a companion assay to be paired with it. If that's the case, then I think it makes sense for us to collect that information from the PanFAM subjects as well, as we may be able to use some of that information going forward.

Okay. Great. And on CAP that is now filed, is that would you say critical for a larger sales uptick from here? Or do you see it more of a, if you will, nice to have feature with regards to the uptick of your text?

Well, in general -- yes. Go ahead, Tom.

It certainly is a measure of quality that I think is recognized around the world. So it is important for us. I think in terms of sophisticated clients such as surveillance programs, CAP accreditation will be important. Probably even more important is the peer-reviewed publication and that's moving forward very nicely. We've got responses on that for more than half of our KOL authors. So I'm hoping to move that forward quickly. I think that will give us a really large boost in terms of response from surveillance programs.

Okay. And building on your sales uptick, could you give any comment if you plan to offer any rebates here in the beginning to drive adoption? And what level of rebate are we talking about in conjunction with your new price guidance?

It's very common in our field to have rebate programs. There are rebate programs for people with -- that they directly and upfront they can get the discount for tired payments and then also for people with lesser means that there are discount structures. Cindy, maybe you can comment a bit further on the details?

Sure. So as Patrik mentioned, we do offer a prompt pay discount, which is 25% below list price, if you pay within 14 days. And anything paid between the 14 and 21 days, we offer a 15% discount. We also offer monthly payment plans and the financial hardship program, as Patrik mentioned.

Okay. Great. And just maybe a final one. I don't want to get ahead of your European launch strategy, but can you give any flavor of what requirements the new in vitro diagnostic regulation that is coming into play in 2022 will have on the type of studies you need to perform in a European set in order to get CE-IVD approval in Europe? Is that similar to what you see in U.S. or more expensive? Or if you could give any comment that would be helpful.

So we have communicated that we will give a market update with regards to the European launch, and we will do that relatively soon. We have given priority to the U.S. launch and sort of making sure that, that happens, and we will follow with the update on the European launch and route to market for Europe shortly. So you will have to be a little bit patient with that still.