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

Ladies and gentlemen, welcome to the Immunovia Q4 Interim Report 2022 Conference Call. I'm Sasha, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Karin Almqvist, CFO.

Good morning all, and most welcome to this conference call following our fourth quarter results. Present here is Philipp Mathieu, CEO; and myself, Karin Almqvist, and I am the CFO of the company. Before we start, there are, as usual, some practical aspects. This presentation will be followed by a Q&A session, and our operator will guide us through on how to pose the questions. After we have closed today's call, you will find the presentation and recording on our website. And with that, I would like to hand over to our CEO, Philipp, please.

Welcome, everybody, to today's Q4 conference call. I would like to thank you for your interest in Immunovia and in our mission. We are more committed than ever to establish ourselves as the leader in the early detection of pancreatic cancer. With our test, the world's first diagnostic test dedicated to the early detection of pancreatic cancer we have set out to significantly increase patient survival rates and save lives. During 2022, the first full year that IMMray PanCan-d, our test was commercially available in the U.S. We reached important milestones in this mission. I'm very proud of sharing with you today what the Immunovia team has achieved in 2022 and delivering on our previously communicated strategic priorities. As an agenda for today's Q4 call, I intend to cover the following topics. Firstly, I would like to recap where we are today, and what we have achieved in 2022. Of particular focus for me here are what we delivered versus what we had communicated as strategic priorities 1 year ago. I would also like to provide some detail on the significant advances we've made in building our U.S. business in our U.S. core market and on the substantial progress we made in obtaining reimbursement for our test. Secondly, I'm going to revisit the operational highlights during Q4, another quarter of tremendous progress. Karin will cover the Q4 financial highlights as well as details on the rights issue we announced earlier this week. Finally, I would like to look ahead and outline the strategic priorities and focus areas for us as a company in 2023. Today, we are the first company in the world to have launched a diagnostic test dedicated to the early detection of pancreatic cancer. This is a unique position we have. As a company, we want to leverage this position and establish ourselves as the undisputed leader in the early detection of pancreatic cancer. Today, more than ever, I feel that we have everything in place and are on the way to succeed in this. The unmet medical need for our test is significant. In the U.S. alone, 1.8 million individuals per year could benefit from our tests across all risk groups. Today, we adjusted at the beginning of penetrating this huge market opportunity for Immunovia. Offering broad patient access to our tests and reimbursement is a prerequisite for as many individuals as possible to benefit from it. Consequently, the commercial build-out in the U.S. is our core market and the successful execution of our U.S. reimbursement plan are hugely important. I'm looking forward to detail in this presentation, the key milestones we, as a new executive management team, have realized in 2022. The key for increasing the chances of survival in pancreatic cancer is early diagnosis. Only as diagnosed early enough in stages, 1 or 2 patients with the devastating diagnosis of pancreatic cancer has surgery as a treatment option. Only then, the 5-year survival rates are as high as 42% on average. No other treatment option can deliver that today. Today, we are in a very unfortunate situation that more than 80% of our patients diagnosed with pancreatic cancer have only a 3% 5-year survival rate because they are diagnosed too late. There are 2 main reasons for that. First of all, traditional standard of care diagnostic methods like MRI or a CT have significant challenges in diagnosed in pancreatic cancer early enough. Most of the time they fail. Secondly, overall, there has been limited innovation in both diagnostics and therapeutics especially compared to other cancers. Now this is the status quo visualized by the pie chart you see in the middle of this slide. And this is what we want to change. Moving these less than 20% of individuals with Stage I or II diagnosis to a significantly higher percentage is what we have as a mission. This is what keeps us awake at night, and this is what really improves over survival rates. Now we have developed our IMMray PanCan-d test to deliver exactly that. At Immunovia, we have taken the strategic decision to focus all our commercial efforts on the U.S. market, the largest and most lucrative diagnostic market in the world. Now what is the total addressable market for a test like ours for the early detection of pancreatic cancer. Our test is a surveillance test. The key differentiator for surveillance test is that you're testing a clearly defined group of individuals as opposed to the general population. Surveillance is done on individuals who have a proven increased risk of developing pancreatic cancer. For these individuals, the risk of developing pancreatic cancer is substantially higher than for the general population. Looking at the risk groups we are targeting that can be up to 32x higher, which is very significant and a source of tremendous anxiety, if you follow that risk group. Today, surveillance in these risk groups is largely done by imaging. As mentioned earlier, the total addressable market for our test is 1.8 million patients per year who could benefit from it. Today, we are only at commotion in the risk group of those individuals who have a family or genetic risk factor. With an estimate at around 600,000 patients or about 1/3 of the total addressable market we are only scratching the surface today. New onset diabetes remains the largest opportunity. In this risk group, we are conducting our PanDIA trial, targeting around 1.8 million patients in the U.S. per year as total addressable market. The other risk groups include pancreatitis and IPMN or cyst of the pancreas. For all those risk groups, we are either conducting or developing further clinical plans. Lastly, there is differential diagnosis, which is not included in the 1.8 million patients. We are still analyzing that, and this could provide additional upside. For us as a company, marketing and surveillance test into clearly identified risk groups allows for a very targeted commercialization approach, which is a key advantage. In summary, we see a vast unexplored market opportunity for Immunovia which will more than triple our initial market. What exactly is our novel test towards which we are targeting these risk groups and what is behind it? Our test is today the only blood-based test dedicated to the early detection of pancreatic cancer. There are other multi-cancer tests, but all of these are inferior in terms of performance. The test is based on a proteomics approach, which means we are looking at protein biomarkers. These biomarkers indicated that tumor formation, inflammation or immune responses. The test looks at a proprietary combination of those biomarkers and why an algorithm generates a decision value, which tells the physician of pancreatic cancer is most likely present or not. In our case, we use a biomarker signature of 9 biomarkers for which we hold extensive intellectual property and patents. Our test has a clear advantage, both of our standard of care and competing multi-cancer test, both in terms of performance and convenience for the patient. For the test, we produce a test result within 5 to 7 days, and the test can be taken either at the physician's office or even at home. And it is exclusively analyzed at our proprietary laboratory in Marlborough. Giving as many of those who could benefit from our test, the rapid access is how we want to increase overall survival rate for pancreatic cancer. Where are we today on this journey? And especially where are we compared to what we set out to do at the beginning of last year? When I came on board in January last year, I put out 5 clear strategic priorities. These were priorities for which we, as a company, have been executing on and against which we wanted to be benchmarked against. I'm very proud to look back at the year 2022 during which the Immunovia team has delivered on all those priorities. I will go in more detail and provide more color on the main ones on the following slides. But in short, we strengthened our U.S. team through key hires in terms of commercial leadership and expertise, and we are now fully set with a full-scale commercial platform to deliver a successful continued launch. And we made significant progress on the reimbursement side, having unique coding, CMS Medicare pricing and state licenses in place. Strategically, we sharpened our focus on pancreatic cancer and commercializing the IMMray PanCan-d test in the U.S. market. Keeping a laser focus on making efficient use of resources is what is key to be successful. Consequently, we de-prioritize development programs on all other non-pancreatic cancer indications and we fully focused all our commercial efforts on the U.S. On the clinical side, PanDIA for new-onset diabetes moved into the next phase to further develop and validate our tests in this large risk group. And we announced PanFAM-1 results. Naturally, additional clinical validation for our IMMray PanCan-d test across risk groups is an ongoing strategic priority for 2023 as well. In summary, 2022 has been a year of delivery from what we said we would do. I would like to spend a bit more time on detailing the progress we made in building our commercial presence in the U.S. Key for delivering a successful commercial launch is having the right commercial platform, the right expertise and the right team in place. 2022 was the year during which we made sure that this is the case. We made a series of key recruitments over the past year, which brought on board additional expertise. Firstly, we recruited a highly experienced commercial leader as the CEO of our U.S. subsidiary. Jeff added a wealth of expertise from growing diagnostic businesses in a broad range of commercial leadership roles in the U.S. market. We also added core expertise on the reimbursement side, with a new Head of Market Access, who is the key point of contact for all our ongoing dialogues with insurances and is driving that reimbursement plan. And we added a National Sales Director to realize the full potential of our sales team and drive our launch. Lastly, more recently in January, we announced the addition of a new Head of Clinical & Medical, which is a key hire with broad expertise in study design and execution as well as in working with a key opinion leader, all of which will help bolstering our clinical evidence package. We have been consistently building out our U.S. presence since 2017, but with these key additions, we have now a highly experienced U.S. commercial team in place. With our U.S. business today, I'm fully convinced that we will deliver the complete commercial potential of our test and generate rapid future growth. We have a detailed commercial plan, which we have previously talked about in which we are executing as we speak. This plan is based on the market insights and experience of our U.S. team, and this plan is pursued by us in phases. We pursue the plan in phases to ensure that we are highly targeted and get the go-to-market approach 100% right before moving to the next phase. This also ensures that we are capital efficient and allocate resources who are best used to achieve the maximum impact. Today, we are still in the launch phase of commercializing our tests. Only once we see that message, tactics and results are the right ones are we going to move to the growth phase. The growth phase is characterized by moving from a geographic focused approach, in our case, on 6 regions or 18 states to a national coverage approach. Timing-wise, we foresee that to be an event for the second half of this year. The move towards the expansion phase will happen only once we're moving into new onset diabetes risk group. For all risk groups, but in particular, for the new onset diabetes risk groups, we are opportunistic when it comes to commercialization partnerships. For new onset diabetes, which would be less targeted than the other more gastro-focused call points, we will likely pursue a partnership with somebody who has a presence in primary care. All in all, we, today, are pursuing a highly targeted and highly capital-efficient go-to-market approach. Positioning towards being an early commercial company not only changes the requirements for the commercial setup, but also the requirements for the R&D team. Bringing additional R&D expertise from other commercial diagnostics companies on board is needed to increase the R&D efficiency and productivity for the new phase. Our partnership with Proteomedix another expert in proteomics-based oncology diagnostics is aimed at delivering exactly that. With this partnership, we are leveraging complementary R&D capabilities of 2 companies to advance our R&D efforts. Both companies have a proven track record of successfully developing and launching novel tests in our space. With this alliance, we've increased the momentum of our R&D efforts, and we are further developing and validating our tests in the previously outlined risk groups. Key benefits of this collaboration are increased R&D productivity and efficiency, creating a more flexible R&D organization as it is needed for a commercial company and focus our internal resources on the commercial build-out and rollout of our tests in the U.S. This more flexible R&D setup also enables the realignment of internal resources and our R&D organization in Lund, which we announced during January of this year. We are focused on ensuring as many patients as possible can benefit from our test. Securing reimbursement is key to make this happen, and to make our test affordable on an at least annual basis for everybody who can benefit from it. We are actively pursuing reimbursement for our tests with both private commercial insurances which is our initial focus as well as public health care insurance schemes in the U.S. The U.S. reimbursement process is complex and requires regulatory steps, physician efficacy, price setting with insurances as well as detailed ongoing discussions with individual payers to obtain coverage. We have made significant progress during 2022, for which I would like to highlight the following: We obtained a PLA code. A PLA code is a unique code, which allows physicians and providers to report services such as the laboratory test to insurances. We also launched a physician experience program to drive adoption and familiarity with IMMray PanCan-d among physicians. Ultimately, we want those physicians to be our advocates for our test with insurances and we are highly satisfied by the feedback they're giving our tests and how they adopt it. Active since first of January 2023, we also obtained a CMS rate, which is the price Immunovia can expect once Medicare adopts coverage. The received $897 price, the CMS payment stabilization, this not only popularize our test, it also serves as a price reference point in future pricing discussions with other commercial peers. This is a very positive news for the commercial potential of our tests. We saw significant progress in 2022 and are relentlessly executing in our refined reimbursement plan. We are aiming at next milestones in 2023 to sign the first payer demonstration projects and recognizing initial commercial reimbursement. We are currently in advance reimbursement discussions with various health assurances on this. Q4 as the most recent quarter was one full of delivery and progress. I'm not going to touch again on all those operational highlights mentioned before in this presentation, but I want to mention a couple of additional ones. During Q4, we also implemented a leaner executive management team to ensure that the team remains focused on executing our strategic plan and on delivering. And at the beginning of 2023, after Q4, we announced the appointment of a new Head of Clinical and Medical Affairs as well as in January, also announced the realignment of our Swedish operator, which saw a reduction of our staff in Sweden by quarter 3rd. This is a process, which we concluded during this month. With this, I would like to hand over to Karin for the financial highlights and details on the rights issue, which we announced earlier this week.

Thank you. And as I said, being an early commercial company, revenues still have to pick up. And that's why our focus from a financial perspective is on the cost side and that we spend our money in a wise way. When comparing our cost side this year versus last year, we can see or 2022, I should say, versus 2021, we can see that we are on a steady level. We are that on a full year level, we are that also for the fourth quarter. Our cash burn continues to be around SEK 15 million to SEK 20 million per month, which is also what we have guided the market and we can see that we currently are trending towards the lower range of that. Cash end 2022 amounted to SEK 106 million. And that, in combination with the proceeds from the rights issue we announced earlier this week, we do have a solid foundation to execute on our strategy in 2023. So the rights issue that was announced Monday, this week, is of approximately SEK 200 million and guaranteed at 75%. With the proceeds from the rights issue, we will see that we will use approximately 50% of that to continuously build out our commercial presence and the rollout of IMMray PanCan-d on the U.S. market. The remainder will be relatively evenly split between R&D efforts, which means clinical studies and validation of additional risk groups and general running costs of the company. All in all, as said, the proceeds from this rights issue gives us a very good platform to be -- to enable us to execute on our strategy. On this slide, you can see some of the critical dates, but all details around the issue is available in the press release, which you can find on our web page. And by that, I hand over back to Philipp again.

Thank you, Karin. Earlier talked about the strategic priorities and our delivery on those during 2022. 2022 paved the way for a successful 2023. For 2023, we are going to focus on the following strategic priorities: We are going to further increase adoption of our test through a heightened awareness, and we are going to see the results of repeat orders following our successful physician experience programs. We're also going to deliver initial successes in obtaining reimbursement for our tests. On the clinical side, we are focused on broadening the clinical validation of our tests across all risk groups. In particular, we want to deliver on new onset diabetes and unlock this vast market opportunity for Immunovia. As we go along in executing our previously outlined commercial plan, we will also further strengthen and expand our commercial team. With that, we will make sure that we maximize patient access and maximize commercial opportunity for our tests. In summary, with the achievements of the past year, today, we are all set to capture the full potential of our novel tests and save lives from one of the deadliest cancers. With that, I would like to remind you of the upcoming events of the financial calendar and open the floor for questions.

[Operator Instructions] So far, there are no questions. [Operator Instructions] There are no questions from the telephone at this time.

Unless there are any further questions, we are happy to conclude this call. As always, both on the Investor Relations side of Karin as well as myself, we are happy to take any questions on a bilateral basis. And with that, thank you very much for your interest in Immunovia. Thank you very much for your interest in our journey. And we are looking forward to report on what we will achieve in 2023.

Ladies and gentlemen, the conference is now over. Thank you for participating in the conference. You may now disconnect your lines.