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

Welcome to the Immunovia Audiocast with Teleconference Q3, 2021. [Operator Instructions] Today, I am pleased to present CEO, Patrik Dahlen. Please begin your meeting.

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 3 2021 results for Immunovia. 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 United States. And we have tested the first commercial patient samples with IMMray PanCan-d in our laboratory in Marlborough, Massachusetts, U.S. This is a major achievement for all of us here at Immunovia and provides an opportunity for persons in a high-risk group of familiar and hereditary risk group to access the first blood test for early detection of pancreatic cancer. Next page, please, Page 2. Here, you can read our disclaimers and forward-looking statements, and I encourage you to read these at your leisure. Next page, please, Page 3. Today's agenda is as follows, I will start by giving you a summary of the Q3 highlights and updates on post period events. Obviously, the launch of IMMray PanCan-d in the U.S. is the key event at this time and marks a significant milestone for Immunovia. Then, I will give you an update on the initial phase of commercialization of the IMMray PanCan-d test in the U.S. Next, I will discuss milestones going forward. I will then move on the financials for Q3, 2021. And following financials, we will go for a Q&A session. Next page, please, Page 4. Now, I will move on to discuss Q3, 2021 highlights. Next page, please, Page 5. The third quarter of 2021 was a historical quarter for Immunovia. Following the receipt of the clear certificate of registration late June, Immunovia, Inc. received the license to operate a clinical laboratory from the Massachusetts State Department of Public Health on August 3rd, 2021. We are extremely proud to have achieved this pivotal milestone. It means a lot to us as a company. It means a lot to the people working in the field of pancreatic cancer, and it means a lot to people, who have a family history of pancreatic cancer or have a genetic predisposition and therefore, are at risk of pancreatic cancer. We provided an update -- actually 2 updates regarding IMMray PanCan-d test. First, the test is launched at a list price of $995 per test. Based on feedback from the payer study, we saw a clear chance to adjust the price, and there seems to be a relatively large price elasticity among the payers 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 $5,000 to $6,000. Second, the test is launched for those individuals with CA 19-9 levels greater than 2.5 U/mL. The overall sensitivity of the test then improves to 89% in stages I and II and 92% in all stages of pancreatic cancer. The specificity of the test is 99%. We also announced in the quarter that we've signed a license deal for 2 biomarkers with JW Holdings from South Korea. The license further strengthens our patent portfolio of biomarkers around IMMray PanCan-d. We have discovered these biomarkers in our own studies; however, JW Holdings patent had priority to our discovery. Furthermore, we are excited to have JW Holdings, as a future commercial partner in South Korea. In the quarter, also the National Pancreas Foundation and Pancreatic Cancer Action Network or PanCAN, informed their constituents about Immunovia, Inc.'s blood test IMMray PanCan-d on the website, in social media, and through direct e-mail contacts. We are very proud and pleased for this support as it is an important step for Immunovia, Inc. in terms of spreading the word and creating valuable awareness about the test. All in all, the reception of the medical community in the U.S. for IMMray PanCan-d has been overwhelmingly positive. Next page, please, Page 6. After the close of the quarter, we announced the appointment of Karin Almqvist Liwendahl, as new Chief Financial Officer. Karin will join the company at the latest by April 1, 2022. Karin has a very strong background in Investor Relations and as a finance leader, both from the international telecom industry and Swedish Biotech. We are very excited that Karin will join us in the new year. Dr. King, our Medical Director at Immunovia, Inc. received a Presidential Poster Award for our poster under blind validation study at the American College of Gastroenterology Annual Scientific meeting. Furthermore, Dr. King was invited to present at the U.S. National Cancer Institute or NCI, Pancreatic Cancer Detection Consortium or PCDC, as a keynote speaker at their upcoming steering committee meeting taking place virtually on December 13th to 14th, 2021. The main objective of the PCDC is to develop and test new biomarkers to improve the detection of early-stage PDAC and its precursor lesions and identify individuals, who are at high-risk of developing PDAC and are candidates for early intervention. Next page, Page 7, please. And now, I will focus on the U.S. market. Next page, please, Page 8. We have decided to focus our efforts on establishment of IMMray PanCan-d on the U.S. market. The U.S. is the biggest single market opportunity for Immunovia, and we have decided to follow the footsteps of all other companies that have commercialized tests for early detection of cancer. And this means a very clear focus on the U.S. The full market potential for IMMray PanCan-d in the U.S. represents an opportunity exceeding $4 billion annually. To support our efforts in the U.S., we have initiated a search for a CEO for Immunovia, Inc. We have a very ambitious specification for the person, and we look for an individual, who are specifically experienced in selling, marketing and developing a clear cap laboratory service for early detection of cancer in the U.S. In our budget for the next year, we are planning to more than double our efforts in sales and marketing in the U.S. in 2022, especially the second half of 2022 will be important, as we anticipate having the first year coverage agreements in place in Q4. As we focus on the U.S., we will continue our efforts in Europe based on key opinion leader collaborations and clinical studies. We are very close with the pancreatic cancer key opinion leaders in Europe, and we will continue to collaborate with them on important clinical studies in Europe going forward. Next slide, Slide 9, please. Typically a certification and a license to operate a clinical laboratory, we can now commercialize our test in 45 of the states in the U.S. To reach the rest of the states, we have filed for a so-called CAP accreditation. The inspection is expected in Q1 2022. This will enable us to initiate and broaden our commercial efforts in the remaining 5 states. We are very pleased with the sales start of IMMray PanCan-d in the U.S. We are proud to be the first company to launch a blood-based test for early detection of pancreatic cancer and pleased to have received such a great support from patient advocacy groups and the medical community. It should be noted that our test is sold out-of-pocket or as self-pay test, which means that the individuals pay for their own testing. We have noted that it takes several weeks, 4 to 8 weeks, for individuals to make up their minds about taking the test. A part of that time is driven by the fact that all individuals that take the test shall have proper consultation with their doctor. COVID-19 has made it slow to make appointments with clinics and several phonics across the U.S. do not allow salespeople to enter the clinic. This is a fact that many other companies have reported on as well. We have now submitted the manuscript for blind validation study to a peer review journal and are hoping to see the article published before year-end 2021. This is another critical step in providing independent peer-reviewed data, supporting IMMray PanCan-d. For many doctors and surveillance centers, having a peer-reviewed article available is important for their decision-making and patient consultation. This continued support from the National Pancreas Foundation and PanCAN are, of course, important to us, and it is a very effective channel to reach individuals at risk for pancreatic cancer. Next slide, please, Slide 10. We have received very positive feedback from the patient advocacy groups and the medical community. Some of this feedback I share on this slide. As you can see, the feedback is very much focused on improved patient care. I quote Julie Fleshman, President and CEO of the Pancreatic Cancer Action Network. "The early diagnosis of pancreatic cancer is key to improving patient outcomes and survival rates. We are encouraged by the results presented by Immunovia's IMMray PanCan-d blood test, and the company's progress toward an early detection strategy for this disease. " Next slide, Slide 11, please. Important next steps in our commercialization includes the peer-reviewed article on the data from our blind validation study. And as I mentioned, we expect to see the article published by year-end. This will certainly help sales going forward. We continue to run the PanFAM study samples. We anticipate completing the testing of all samples by year-end and reporting results from the study in Q1 2022. We have initiated a study together with one of our key opinion leaders in the U.S. on symptomatic patients, patients with pancreatitis. We are roughly halfway in the study and anticipate completion before year-end 2021. The initial results are promising. And if the study comes through as expected, we should be able to commercialize IMMray PanCan-d for the symptomatic patients with pancreatitis in the U.S. by year-end. Next slide, Slide 12, please. We have a very busy schedule with scientific conferences. As mentioned before, Dr. King will be speaking at many of the conferences and also independent scientists are speaking about IMMray PanCan-d at clinical and scientific conferences. It's truly an extremely busy second half of the year for Immunovia, Inc. Next slide please, Slide 13. We obviously continue our commercial launch plan activities of IMMray PanCan-d with a high pace with lots of activities. On the World Pancreatic Cancer Day on November 18th, we hold a grand opening of our laboratory in Marlborough. And we will continue to be extremely active on social media and other platforms and media platforms. Next slide, Slide 14, please. Next, I want to say a few words about our milestones for IMMray PanCan-d going forward. Next slide, Slide 15, please. The CAP accreditation should follow the inspection, which is scheduled to Q1 2022. As mentioned before, the CAP accreditation is an important step for the commercialization in the remaining 5 states. The PanFAM study should be ready by Q1 with the study readout, a peer-reviewed article or publication will follow, most likely in Q3 2022. To those years with documentation of clinical utility and test performance will be compiled to enable us to start player engagements and coverage negotiations in Q4 2022 with subsequent reimbursement in place from the most advanced players in Q4 2022. Next slide, Slide 16. Briefly a few words on financials Q3 2021. Next slide please, Slide 17. Our net sales in Q3 2021 was SEK 377,000. This is sales from IMMray PanCan-d tests in the U.S. and royalty payments. Net earnings was minus SEK 36 million in the quarter. Cash flow in the quarter was negative. We had a negative cash flow of SEK42.5 million in the quarter. Cash and cash equivalents at the end of the period was SEK340 million. Based on current burn rate, we have a run rate over one-and-a-half years at current full year levels. These projections do not include cash contributions from sales in Q4 nor in year 2022. 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 18, and open up the call for Q&A. Operator, please?

[Operator Instructions] We've just had one question come through so far that's from the line of Michael Loughman, private investor.

I was just wondering about the pipeline, what's the status of test and the RA test?

So we have decided that different from earlier quarterly reports that -- where we have stated that -- where we've gone through the pipeline and we've stated that we will update when there is news to update that it's better for us to actually inform the market, when there is truly an update in the discovery pipeline. So we will focus our updates with regards to the pipeline on projects that are in clinical studies and in development phase.

And a follow-up question. New onset diabetes, what's the status of that?

So as you know, we have collected a set of samples from 3 different Swedish hospitals from new onset diabetics, and we are planning a pilot study on a subset of that collection and that cohort here shortly. Again, we are in the process of getting the samples to Lund and getting them into the lab and whether we are able to get the first results before the end of this quarter, quarter 4 2021 or whether it will go into quarter one 2022 is a little bit early to say, but it's our ambition to be able to report on that within the next minimum 6 months.

[Operator Instructions] Okay. There seems to be no further questions on the line at this time. So I'll hand back to Patrik for the closing comments. Actually, we have had a follow-up from Michael Loughman.

Yes. I was just wondering about the sales development in October and the beginning of November, have you seen a pickup in sales after a heated and start or is it still long lag times on that or -- and how do you see the difficulties in getting into the shared groups, already ongoing screening programs.

Yes. So there's definitely been a pickup, because you should, in fact, think of ourselves in Q3, once we got the clearance and approval to go ahead and commercialize the test in the first few days of August. As I mentioned, there is a time lag from the time when an individual makes a decision to take the test until we have the test in our lab and can perform the test for the individual that time lag, as I said, is between 4 and 8 weeks. So effective sales time and effective testing time in quarter 3 was, in that sense, extremely limited. In fact, just down to a few weeks. So definitely, when we are now in quarter 4, the testing has now a much more regular feel to it. Again, we will, of course, report on the sales numbers when we report in February 22, in our quarter 4 and full year report, but there's a definite pickup. And obviously, we are working very closely in terms of getting into the surveillance centers and accessing those and we definitely see a clear pickup. So there is a movement for increased volumes definitely in the quarter.

And there seem to be no further questions on the line now. So I'll hand back to Patrik for the closing comments.

Great. Thank you so much for that. We obviously are extremely proud here at Immunovia for the launch of IMMray PanCan-d in the U.S. and we recognize that this is a big step for people at risk for pancreatic cancer, be that for familiar or hereditary reasons. And we're overwhelmed by the very positive feedback from the community, the patient advocacy groups, the medical community for supporting us in our efforts to help people with regards to the early detection of this devastating disease. To the investors and analysts, I just want to say thank you very much for your continued interest and continued support of Immunovia. Thank you so much. This concludes our quarter 3 2021 report. Thank you.