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

Ladies and gentlemen, welcome to the Immunovia Q1 Interim Report 2022 Conference Call. I'm Alice, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Bülow, Senior Director, Investor Relations and Corporate Communications. Please go ahead, sir.

Thank you. Good morning, and a warm welcome to Immunovia's First Quarter 2022. My name is Tobias Bülow, and I'm heading Investor Relations. With me today here in Lund in Sweden, I have the Immunovia President and CEO, Philipp Mathieu; and our CFO, Karin Almqvist Liwendahl. I also have the pleasure to inform you that we have our new U.S. CEO, Jeff Borcherding with us as well today. [Operator Instructions] We will end at latest 2:00. And for your information, this session will also be uploaded as on-demand on the web. With that, I leave over to Philipp.

Thank you, Tobias, and good afternoon to those investors dialing in from Europe and those who have joined us from the U.S. I would like to welcome you to the Q1 call of Immunovia, and thank you for your interest in our company. As an agenda for today's Q1 call, I intend to cover the following topics. First, the new sharpened strategic focus of the company and how already in Q1, we have executed successfully on the strategic priorities I set out in February during the Q4 call. Second, what were the operational and financial highlights of the past quarter. And thirdly, provide you with additional details how we plan to make IMMray PanCan-d, our groundbreaking test for the early detection of pancreatic cancer, broadly available in the U.S. by executing on our rollout and reimbursement. The shift from being a research and development-focused company to being an early commercial company is a fundamental gear change for any organization. In August 2021, IMMray PanCan-d was launched as the first-to-market dedicated blood-based test for the early detection of pancreatic cancer. This event established 2 things: first, we became the front-runner in innovative early detection of pancreatic cancer; second, Immunovia entered the U.S. as the largest and most profitable diagnostic market in the world. Success at this critical stage of the company's development requires absolute focus on execution. Building on our position as the front-runner in pancreatic cancer testing, we will, from now on, focus all our resources on that particular market and the tremendous underlying opportunity. We will also focus on the commercial execution in the U.S., which holds huge potential for our product. As a logical consequence, we have decided to deprioritize our discovered programs in autoimmune and lung cancer. Of course, we will look for options to leverage their value but will not dedicate additional resources to those programs. In summary, fully focusing on our mission to revolutionalize the early detection of pancreatic cancer for us means building on our strengths as the front-runner in our field, concentrating on the successful commercial launch in the U.S. and executing on our previously stated U.S. reimbursement plan, which is absolutely key to make our test available to as many individuals as soon as possible. Going forward, Immunovia will hence dedicate all its resources to pancreatic cancer and the U.S. commercial execution of our tests. This is because with pancreatic cancer, Immunovia will purely focus on one of the largest unmet medical needs in cancer early detection and one of the most lethal cancers. Early diagnosis is a game changer for pancreatic cancer patients. And with IMMray PanCan-d, we are able to provide this. As of today, pancreatic cancer survival rates are shockingly low at only 5% to 9% at the 5-year interval. In fact, pancreatic cancer tragically has the second lowest survival rate of all cancer types. Pancreatic cancer today is a devastating diagnosis for both patients and their last ones. What makes a huge difference in pancreatic cancer is the timing of diagnosis. Enabling early detection in Stages 1 or 2 allows for patients to have hope and to have options. At this stage, the cancer is the localized and surgically resectable. A treatment option and hope exists, and survival rates significantly increased to above 40%. This, unfortunately, changes very dramatically when the cancer is diagnosed later than Stage 1 or 2, which is the case for most patients, then the survival rate drops to only 3% at the 5-year interval. Today, with the current surveillance and standard diagnostic methods, way less than 20% of patients are diagnosed early enough to have surgery as a treatment option. With our test now, we are able to meaningfully increase the number of patients who are diagnosed early enough and move that 20% number significantly upwards. IMMray PanCan-d, our clinical evidence and most importantly, our first-to-market setters in the U.S. positions us as the undisputed front-runner in innovative pancreatic cancer testing. There are 2 factors which really make a difference for IMMray PanCan-d as a game changer for patients. First, its unmatched performance characteristics. 99% specificity and 92% sensitivity across all stages have not been shown by any other testing method available today. Most importantly, being able to have 89% sensitivity in early-stage cancer, the critical phase when there is still a chance for surgical treatment is a huge benefit for any concern individual. Other differentiating factors of our tests are the convenience and the ease of use. Today's standard methods for pancreatic cancer diagnostics are imaging, mainly CT and MRI, endoscopic ultrasound and biopsy, as you know. All of those methods are time intensive, invasive and costly. Our test in comparison is blood-based. It can be performed at any physician office or even remotely at the patient's home, noninvasive and does not require any anesthesia. Today, our test is the first ever commercially available test in the U.S. purely focused on the early detection of pancreatic cancer. It is also the first blood-based surveillance test of its kind. And as stated, it is superior in terms of performance and costs versus today's standard methods. In summary, our test can make a fundamental difference for patient outcomes in pancreatic cancer. Turning over to Q1. What were the key milestones and what progress did we make? In February, we published a peer-reviewed blinded validation study. This publication provides independent validation of our tests. In all our conversations with physicians, key opinion leaders and patient organizations, we keep on hearing how well received this publication has been and how it fully validated the performance of our test in their eyes. We also achieved CAP accreditation of our laboratory in Marlborough. This accreditation is a requirement for licenses in the 5 remaining U.S. states. Today, we are already able to sell our test in 47 U.S. states. We can now pursue licenses for the 5 remaining states, most importantly, including California and New York. We are currently in the process of obtaining those licenses. During Q1 and also during April, we have also added significant new management expertise to the organization. A new CFO, a new commercially focused leader of our U.S. business and new Head of IR as well as myself. Finally, we recently submitted the application for our PLA code. Now 2022 to date has already been a year of focus and a year where we executed in our previously communicated strategic parties. As I said during the Q4 announcement, it is my intention to be benchmarked throughout the year against those priorities. We will consistently communicate on the advances we are making against those. With 4 out of those 5 strategic priorities, we've made significant progress and delivered. The first one is being advanced. Additional clinical validation was achieved through the publication of the peer-reviewed study. The hire of Jeff Borcherding to lead our U.S. business significantly strengthened our team over there, and provided it with a commercial focus for a successful sales ramp-up in the U.S. And this is just the first step in scaling our U.S. business. CIP accreditation and filing for a PAA code were advances in executing our U.S. reimbursement. And today's deprioritization of our autoimmune and lung cancer programs is a consequent step in order to provide the company with a laser sharp strategic focus on execution, leadership and fundamental success in pancreatic cancer. With that, I would like to hand over to Karin for a summary of the Q1 financials.

Thank you, Philipp. With only a couple of weeks within Immunovia, I would like to start by saying that I'm very happy to be joining a company with such potential and a team of very professional colleagues. Now looking at the financials for Q1. We see that revenue are at very modest levels, and it's also what we should expect going forward prior to we see the impact of a rollout of reimbursement. Earnings have declined compared to the same period last year, and the prime reason is that the company has completed capitalization of R&D costs, and is now -- has now started to depreciate what is activated on the balance sheet. Having said that, our underlying OpEx is also increasing somewhat, which is a result of the focus to build our business. Then looking at our cash position, I'd like to point out that we are well funded to manage operations and building our business for the foreseeable future. And then back to you, Philipp.

Thank you, Karin. It's great to have you on board. As the company has now sharpened its strategic focus purely in pancreatic cancer, we're even more committed than ever before to broadly roll out our test in the hereditary and familial risk group but also as soon as possible advance into the other risk groups. Nuance to onset diabetes and the symptomatic risk group represent a substantial additional market opportunity for Immunovia. In both risk groups, we are pursuing clinical plans to capture this opportunity and capitalize on our front-runner position in pancreatic cancer. Targeting the new onset diabetes group, we have PanDIA-1 as a prospective clinical trial. As previously stated, we will provide an update on this later this quarter. For the symptomatic risk group, we have advanced our work with key opinion leaders to define the most promising clinical pathway forward following our PanFAM-1 trial. Also here, we are going to provide clarity as soon as this work is concluded. In summary, Immunovia is fully committed on establishing itself as the undisputed leader in the early detection of pancreatic cancer across all risk groups. The most critical piece in making our test broadly available is our ability to attain reimbursement for our test. Where do we stand today and how do we intend to get there? I'm pleased to say our plan is unchanged, but we have made significant progress during Q1. Recent milestones on our way to reimbursement insurance payments were the publication of the rehabilitation study, broadly noted, as I said, by the KOL and physician community; receiving a CAP accreditation for our laboratory Marlborough, which is a requirement for the U.S. wide rollout of our test; and also, as you know, we recently applied for a PLA code, which will provide a unique identified code for our tests used by health care providers and insurance companies. And we did what we previously said, we initiated a physician experience program, which is currently in its enrollment phase. We have the aim to have initial reimbursement in insurance payments before year-end. There are a couple of steps to achieve that. First, we are going to conclude the physician experience program over the course of this year. By the end of it, a broad set of surveillance centers will be familiar with the usage of IMMray PanCan-d. I strongly believe that they will play a critical part as advocates with payers for our tests. Another step are the results from our PanFAM study, which we expect from mid-2022. Goals of the study are to assess the performance and diagnostic accuracy of IMMray PanCan-d compared to standard of care imaging. Obtaining a PLA code later this year is another step forward. We expect to have accomplished that during the second half of 2022. And the code, once granted, will be effective as of the first of October. With all of that, we plan to have discussions with payers throughout the second half of 2022. We have a plan to have initial reimbursement insurance payments for our test before the year end of 2022, and look at numbers, which will increase in 2023. With that, all in all, I feel we are in great shape and positioned to execute on this plan. So a bit more details on the physician experience point. As we planned and communicated earlier, we recently launched the physician experience program targeted at high-risk surveillance centers in the U.S. Enrollment for this program started at the beginning of this month. We are targeting centers with high volumes of patients enrolled in their existing surveillance programs. As part of this program, we will provide up to 30 centers with tests with no charge. This program's goal is for physicians to become comfortable with broadly using our IMMray PanCan-d details, and to make it a key part of their standard testing routines. Apart from adopting our test, physician will also provide Immunovia with imaging data for comparison. Ultimately, we want physicians to not only adopt our test, but also act as our advocates with payers and patients as we grow our IMMray PanCan-d brand in the U.S. Now key for our success is the excellence and passion of our team. And as I say, after my initial 3 months as the CEO of this company, on a daily basis, I continue to be highly impressed by the caliber and by the drive of our employees in both Sweden and U.S. During Q1, we have further added considerable expertise to our management team that is crucial for this next phase of the company's evolution. With Karin as the CFO, Jeff as the CEO of our U.S. subsidiary, Tobias on the IR side as well as myself coming on board, we've added sector-focused corporate strategic experience, capital market expertise, commercial expertise in launching and successfully scaling diagnostic brands in the U.S. And considerable experience in global finance and Investor Relations work. Together, our team can run a wealth of experience that will enable Immunovia to strive and be extremely successful in this new chapter as a commercial growth company and leader in its space. With that, I would like to give the word to Jeff, who, as you know, joined us recently from Myriad to briefly introduce himself. Jeff will play an absolutely critical role in leading the scale-up of our U.S. business and making our test broadly available in that market. Over to you, Jeff.

Thanks, Philipp. I am incredibly excited about this opportunity for a number of reasons, but 2 really stand out: first, clinically, it's an opportunity to make an impact for at-risk patients in an area of cancer that has not seen the same survival rate advances as many others. Too many are diagnosed late, too many die, and we can change that with IMMray PanCan-d. And on the commercial side, it's an opportunity to build a great commercial stage company building on the incredible technical achievements by Carl, our founder, and the talented team in Lund to achieve similar greatness in the commercial space. This role really enables me to leverage more than 2 decades of experience building businesses and building teams, and it's a natural next step following the work that I've done before. Most recently, I was at Myriad Genetics as the CMO, leading marketing and product launches in oncology, women's health and mental health. And prior to that, I was the General Manager and Commercial Leader for the mental health business. That was the Assurex Health business that was acquired by Myriad, where I led the growth of the GeneSight test, one of the fastest-growing molecular diagnostics in U.S. history. And those experiences really flowed from a foundation of commercial leadership, starting with P&G Pharmaceuticals and roles in other early-stage technology companies. As I come on board at Immunovia, I've really got 3 focus areas. The first is working on making sure that we've got an effective and scalable sales and marketing model that looks at things like our targets, our message and our tactical plan to make sure that we have refined that model and we are ready to scale it up for growth across the country. The second piece is reimbursement, not surprisingly, continuing to refine our strategy there. We will build out our capabilities, hiring a reimbursement leader. And we'll continue to have additional conversations with payers to refine our message and make progress on reimbursement. And finally, I'm focused on building on the small but tiny talent -- and small but talented team in Marlborough that has put us in a position to succeed. I'll build on that foundation. We'll bring in specialist in areas like reimbursement and add additional capabilities like medical affairs so that we can really bolster our commercial presence and drive the volume that we need to make an impact in this market, both clinically and commercially. So I'm incredibly excited about the opportunity here. The path is very clear, and I'm very grateful to have been brought on board to lead this effort in the U.S. And with that, I'll hand it back over to Philipp.

Thank you, Jeff. I'm really thrilled to have you on board, and I'm very much looking forward to work successfully together with you in what will be a world-class team in the U.S. In summary, as of today, we are fully focused and set to capitalize on the tremendous opportunity the company has in pancreatic cancer. Already today, the company has established itself as the leader in innovative early detection of pancreatic cancer. In Immunovia, that is a very strong base from which we will build. We have all it needs to succeed. And succeeding for us means saving patient lives as well as rapidly commercially scaling our unique test in the U.S. With that, I would like to lead over to the Q&A part of the call and invite for questions.

Thank you, Philipp. With that, we conclude the presentation and move over to the Q&A session. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Peter Sellei with Penser Bank.

Peter?

You might need to move on, and we come back to Peter later.

[Operator Instructions] Once again with Mr. Peter Sellei with Penser Bank.

Peter Sellei with Penser Bank. Really enjoyed your presentation, and it looks really good for my horizon. Could you just please outline what is the commercial potential for these tests? Basically, what are the potential market size for your test?

The commercial potential for our test is the same we communicated in the past. We're still targeting, as I said, we regroup -- the one we already commercial in, the familial risk group and hereditary risk group and also new onset diabetes risk group in the symptomatic vision. With all that together, our assumptions for the U.S. market as the first market we're commercial in still stands at the previously communicated numbers.

Okay. Great. A bit on the potential in other geographical areas. And I'm fully aware that you are very much focused and should be focused on the U.S. market. But for the investment community, I think it's also important to know the full commercial potential for the test.

Absolutely. Thank you for that question, Peter. And as you know, commercially, our absolute laser sharp focus for the foreseeable future will be the U.S. That doesn't mean we neglect other markets. And as I communicated during the Q4 call, we are currently undergoing work to prioritize those markets where we see potential, and there are various markets where we see potential. Now we're weighing the market size and the prospects in those markets for our tests against return on investment when we later this year, communicate what we prioritize in those areas.

The next question comes from the line of [ Michael Rosman ].

2 questions really. Regarding the experience program for physicians, can you guide us on what that actually means in practice? And what do you expect to get out of it going forward? Also regarding the cash position, you have enough for the foreseeable future. But in the future, I guess, you will have to raise cash, perhaps given your plans. Would that include perhaps the U.S.?

Thank you, Michael, for your questions. The goals of the pioneer program are the following. First of all, we want to drive adoption of our tests in the U.S. We want to build a brand, and it starts with increasing familiarity of providers and doctors being comfortable ordering the IMMray PanCan-d test and interpreting the results. This will drive adoption for further clinical understanding of IMMray PanCan-d and also make doctors comfortable using it in the future. It's very much, as I said, about building a brand. And all of that together will enable us to broadly roll out our test in the U.S. during the course of attending reimbursement later this year and beyond. Then the KOL development is another area. The surveillance centers we're targeting with our tests are not only high volume surveillance centers with a lot of patients enrolled, but also surveillance centers where there are KOLs or key opinion leaders as we say, who are running those surveillance centers. And I think those key opinion leaders will be a critical part as we aggregate additional clinical evidence and build our case with reimbursement and payers throughout this year and next year. And on the cash position, Michael, on your second question, yes, we feel very well capitalized, as Karin said, to pursue both our near and midterm plans, including the U.S. We are continuing to be opportunistic as we look for financing options that might include equity financing and other things. But that will be decided at the right point in time and depending on market conditions.

[Operator Instructions] There are no more questions from the telephone at the moment. Mr. Bülow, back to you for the webcast questions.

Yes, we have received some questions through the web interface. Starting with Lars Hevreng, an equity analyst at Danske Bank. Please comment on the scale up of the commercial organization this year and next year.

Thank you, Lars, for submitting that question. And yes, as I said, scaling and equipping our U.S. organization with the right talent is a key focus for Immunovia. So there are certain functions which we continue to build, obviously, on the sales and marketing side. But also on the reimbursement side as we increase our focus to the U.S. and increase our scope also of our relationship networking with payers. So there's a lot of capital investment, which will go towards the U.S. over the next 2 years. And Jeff being on board now for 2 weeks will be a key part in designing that strategy going forward.

We continue with a question from Lars. What is your current view on the U.S. target population for the first indication?

The U.S. target population hasn't changed. Of course, things like the physician experience program, things like our work with patient efficacy groups, things like discussions on guidelines might lead to a renewed view or updated view in the future. But as of today, we have to say we substantiate what we've discussed and announced in the past around the market size for the initial familiar heritary group at $500 million in the U.S.

Ray continue, where can you capitalize on the PanSYM trial, particularly in the U.K., where a large portion of the trial has been done?

On the PanSYM trial, as I said, we are currently in advanced discussions with key opinion leaders. How we follow up on that concluded PanSYM-1 trial and how we exploit the symptomatic risk group, which we see as a substantial future market for the company, and we'll come back later this year on exact plans to tackle that risk groups on a clinical pathway.

Then regarding what portion of your initial target market can be covered by the [ fairly ] early experience program.

The pioneer experience program is less about market coverage. It is about adoption and brand awareness for our test. And that's, I think, the context in which you have to see it.

And final question from Lars, any cost savings related to the mentioned the priced areas?

Of course, as for the pancreatic cancer, some of our R&D programs have concluded. On the discovery side, there are some cost savings which will materialize. To what extent those will materialize in numbers we have to see. The one thing to note is we will not dedicate additional resources overall over the last year the capital outlay for the discoveries programs was marginal.

Okay. Thank you, Philipp. As there seems to be no questions left, we will now conclude the call. Thanks for joining us today, and welcome back next quarter.