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

Ladies and gentlemen, welcome to the Immunovia Year-end Report 2023 Conference Call. I'm Andre, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's my pleasure to handover to Karin Almqvist, CFO. Please go ahead.

Thank you very much. And good morning and good afternoon to you all and welcome to this conference call following Immunovia's fourth quarter and year-end results. Presenting today is Jeff Borcherding our CEO, and myself and I'm the CFO of the company. Presentation will be, as usually, followed by a Q&A session. Our operator will guide on how to post questions and like we've done the last couple of times, there will also be a chat function where you can post your questions. After we have closed today's call, you will find the presentation and the recording on our website. And with that, I'd like to hand over to our CEO, Jeff. Please.

Good morning, everyone. Thank you for joining us on the call. As we close out 2023, we're excited to review our accomplishments from the year and the key changes that took place last year, especially in the second half of the year. We'll talk about how much has changed and at the same time we'll also talk about how our heritage in this space provides important assets that have fueled Immunovia in 2023 and will continue to do so in 2024. These assets are accelerating our pace, making us more productive and enabling us to develop and test our next-generation product. Our presentation today includes a discussion of our Q4 and 2023 results. And we'll, as usual, as Karin said, close with Q&A. And certainly given the number of changes and the questions that you may have, we look forward to providing answers to those. As we talk about our mission, it's important to note that through this transformation we have not changed our mission. And apologize, it looks like my screen is not sharing. So I will try to share that again. So, again, just to reiterate, we are very, very focused on our mission. And our mission is simple. We want to revolutionize diagnostics to save lives in pancreatic cancer by identifying that cancer earlier in the process when patients have a much better chance of survival. We continue to see a substantial unmet need for early detection, and we're energized by the opportunity to advance that early detection. We estimate that there are about 1.8 million people in the United States who are at high risk for pancreatic cancer, who over time could be good candidates for our next generation test. Initially, this includes people that are at risk due to family history and genetic mutations, and over time could include those people who have chronic pancreatitis, pancreatic cysts, or new onset diabetes, all of which put them at higher risk for pancreatic cancer. We see a tremendous opportunity to save the lives of individuals at high risk, and we see the opportunity to build a substantial business by meeting the needs of those high-risk individuals. We enter 2024 as a very different company than when we started the year. In July, we announced that we were significantly restructuring Immunovia to focus on our next generation test. And throughout the rest of 2023, we made a number of fundamental changes. Those changes have positioned us to develop a better test in less time. Let's talk a little bit about those changes. If we think about what triggered the changes, if you go back previously, in hindsight several things are clear. Immunovia had too many employees. That was our largest expense and we needed to become a smaller company with a lower cash burn. We weren't sufficiently agile, and had become too slow. We needed to accelerate the pace of our development. We were also too internally focused. Our default was to developed proprietary approaches rather than looking for best-in-class options externally. You can see on this slide the changes that we made to address those issues. One of the most fundamental changes was a change in leadership. I joined the company just over 2 years ago, but became the CEO in April of 2023. Also this past year, we elected a new Board chair for the first time in the history of the company. And we also added 3 new Board Members. Importantly, 2 of those Board Members are experts in U.S. healthcare. We see the U.S. as the key market for the company going forward. It was important to bring that expertise on. Melissa is the CFO in healthcare with a broad experience who brings tremendous financial acumen to the company. And Val Bogdan-Powers is an expert on product management as well as reimbursement and insurance, something that will be critically important for the success of the company going forward. As we discussed last quarter, the discontinuation of the IMMray PanCan-d test allowed us to transition away from that IMMray platform. We have moved to more modern platforms. We used Olink for discovery, and we are going to use the ELISA platform to run our next-generation test. We cut staffing and operating expenses, and we'll talk a little bit more about that. And we've really made a fundamental shift from being very internally focused to more of an external orientation. Historically, this was done -- the work was done at Immunovia almost exclusively by employees. We're now looking at external partners, whether those be researchers at universities, our partnership with Proteomedix, companies like Olink or others to bring in expertise and really marry that expertise with our experience in pancreatic cancer. As we shared on our last quarterly call, our goal was to reduce headcount to under a dozen employees by the end of 2023. And you can see that we did that closing the year with 11 employees compared to 64 at the end of 2022. Importantly, the reduction in number of employees as well as other cuts in our operating expenses allowed us to reduce our monthly cash burn by more than 50%, and that is going to be critical for us in terms of extending the cash runway of the company and allowing us to develop the next-generation test. With that, I'll hand it over to Karin for a little bit more information about our cash position and the burn rate that we have today.

Thank you. And as we closed the year with having approximately SEK 77 million cash at hand, so that's not taking us all the way into 2025. We are far better off, thanks to the drastic decline in OpEx. Cash burn in the fourth quarter was around the SEK 30 million mark, which is substantially lower compared to last year. And that's again thanks to the efforts in the second half of 2023, which are now showing a clear result. Looking ahead, we estimate that we will be just shy of SEK 10 million in cash burn per month. Though we should not expect that to be sort of a straight line going into 2024, we will certainly see some volatility between the quarters in the year. Our focus for next year and where we will spend our money is on developing the next-generation test. So OpEx will be heavy on the R&D side. With current plans, as we stated in the report, cash will take us just into Q4. But we will need additional funds to close the year and take us through 2025. And by that, back to you, Jeff.

Thanks, Karin. We've talked a lot about the changes that we've made, the transformation of Immunovia. And one of the things that I think is important is to recognize that we're not starting over. While it was very disappointing to make the decision to remove the IMMray PanCan-d test from the market and to focus on a development stage next-generation test, the reality is that we are pioneers in this space, and we have assets that are going to enable us to accelerate the development and the launch of that next-generation test. We'll talk today about the biobank of samples that we have to test our new product, relationships with leading clinical researchers and professors, as well as our highly productive R&D partnership with Proteomedix. The challenge of acquiring the samples needed to develop a new test and conduct studies often slows down diagnostics companies. Especially in an area like pancreatic cancer, where those cancers are rare, it's difficult to get serum samples from patients who have developed pancreatic cancer and especially difficult to get serum samples from patients who have stage I and II pancreatic cancer. Getting those early-stage samples is critical because as we develop an early detection test, we have to know that the test is effective and can be sensitive enough to detect cancer even at stage I and II. That's the stage of disease where we can make clinical interventions that can help that patient to survive and thrive long term. If you look at the history of research into biomarkers, what you'll see is that the problem is not usually the science. In fact, if you look in scientific literature, there are dozens and dozens of promising biomarkers that never made it any further than the pages of an academic journal. The problem is not the science, it's the lack of samples to test them on. Having the biobank that we have enables us to rapidly move through the R&D process and conduct clinical studies with the new test much more quickly than would otherwise be possible. If you look at this asset that we have, our biobank currently includes over 8,500 blood samples. Of those, about 10% are from patients with pancreatic cancer and really critically, nearly half of those pancreatic cancer samples, over 400, are the rare stage I into pancreatic ductal adenocarcinoma samples. One of the things that's important is not only having samples from patients with pancreatic cancer, but also having samples from what we call control patients that they can be compared to. These are people who are not totally healthy. They are others who are at risk, but have not yet developed pancreatic cancer. So those are people who have family history, people who have genetic mutations, have pancreatitis, diabetes or other conditions. Having those control samples is really critical for ensuring that the specificity of the test is what we need it to be, meaning that we don't create false positive results when we give a patient and their clinician the result. I think it's also important to note that while this biobank is very large, it's robust, it's also still growing. We have ongoing efforts to build the database to increase the number of samples that we have. Some of those efforts are specifically focused on acquiring nonwhite European samples. So we want to have sufficient numbers of samples from patients who are black, patients who are Asian, patients who have Hispanic ethnicity. It's going to be critical to show that our test works equally well in those patients. We know that that's a limitation of other tests that are being developed in this space. And we want to make sure that we can clearly demonstrate that we've delivered on the promise of a test that's really accurate for all patients, not just white Europeans that are often used to study these types of tests. One of the ways that we've built the biobank and one of the ways that we continue to fuel our R&D efforts is with the relationships that we have with top professors in the field, top academics at high-risk surveillance centers across Europe and across the United States. We have a formal scientific advisory board of 4 key opinion leaders in the space. These are some of the world's leading experts in early detection. And beyond that, we've got an informal advisory network of about 30 professors that we tap into. These people are eager to work with us on the next-generation test. They are just as committed as we are to seeing that test come to market, and they're really helping us quite a bit to get there. So they're providing us clear guidance on the target product profile for the next test, helping us to identify ways that we can simplify and accelerate our development efforts, talking with us about other studies that they have going on where we can actually participate at a much lower cost than if we had to do those studies internally. So overall, this is a tremendous set of relationships. We have built them over a number of years, again both in Europe and in the U.S. And those relationships are paying tremendous dividends as we develop our next-generation test. Finally, we've talked previously about our partnership with Proteomedix. Proteomedix, if you're not familiar with them, is a company based in Switzerland that has developed an early detection test in prostate cancer. They have deep expertise in protein-based tests and have been working with us on some of the technical aspects of our program. One of the things I'm excited to share since we talked last is that Proteomedix has been working with us on assay selection and refinement. If you recall, coming out of our discovery study, we had identified 15 proteins that were really promising as potential biomarkers. One of the challenges once you identify a protein like that is you have to actually have a test that can accurately measure that biomarker. We've been able to do that for 9 of the 15 so far, and we're continuing to work through that. But even accomplishing the 9 is tremendous. We certainly didn't expect that at the beginning of this program. One of the other things that we're working on with Proteomedix is really making sure that we develop these new assays to really run in an optimal way on the ELISA platform that we're going to use going forward. Recall that we've made the decision to move away from the IMMray platform. That should allow us to get tests completed faster and at a lower cost. You can see here we're expecting a 1-day turnaround time with the new test compared to 3 days for the prior IMMray PanCan-d test. We'll also have lower fixed costs and a lower cost per test using that ELISA platform. One of the things that's exciting for our partners at Proteomedix is that they have merged to create a new company called Onconetix. One of the things I'm very excited about is the fact that through that merger, Proteomedix and the team there remain very committed to our collaboration and have said that they will continue to be working on the program with us as planned. We talked last time about the large discovery study that we completed to identify those biomarkers that I was just mentioning. We used the state-of-the-art Olink platform, which for those of you in Sweden, you may be familiar with Olink. It is certainly one of the most successful biotech companies in Sweden, and it's recognized as a leader in protein analysis. We did what we believe is the largest study of proteins in pancreatic cancer. We looked at over 3,000 different proteins to identify proteins that might not have been identified previously by other researchers. And what we did then was looked at those biomarkers to say, can they distinguish pancreatic cancer from controls. We looked at that across a wide range of patient populations, those that are at risk due to familial factors, genetic factors, those that have chronic pancreatitis and those that have new onset diabetes. In the table on the left here, you can see those 15 biomarkers. For confidentiality reasons, we've blurred the names of those proteins. But what you can see highlighted in green are where individual biomarkers were able to effectively distinguish between cancer and controls across some of those different patient populations. So really robust results. We've got a number of biomarkers that are very promising, and we're excited to complete the development of the next-generation tests. Here, you see some of the results that we think we can deliver with that next-generation test. One of the things that we did is we took those 15 biomarkers and we looked at different combinations of them. Ultimately, we know that a test can't have as many as 15 biomarkers for a variety of reasons. We'll probably narrow down to a test that has 4 to 5 biomarkers in it. One of the things that we did was used artificial intelligence to look at optimizing combinations of different 4-protein combinations. In the chart on the left here, what you can see is a couple of those different 4 biomarker models. What we did was to compare them to CA19-9, which is a compound often used to detect pancreatic cancer. That's the line in black. We've got the line in blue, which is the prior IMMray test. And then 2 of the potential tests that you could put together with combinations of those 15 biomarkers that we talked about on the prior slide. What you can see in this chart is that further up and to the left suggest better accuracy, meaning better sensitivity, better specificity. We often refer to that as area under the curve. And you can see the area under the curve or the accuracy for CA19-9 and IMMray was somewhere around 87%, 88%, whereas the accuracy for the 2 sample tests that we were looking at here was more around 93% to 97%. Again, these are preliminary analyses. These are not final tests, but it does highlight the opportunity that we have to put together a final test of 4 to 5 biomarkers out of that list of 15 that are so promising. Here you can see the development process of the next-generation product, where we are and what comes next. We are, as I mentioned, at this stage where we're transferring the assays to a commercial testing platform. That's the ELISA platform. By early second quarter, we will [Technical Difficulty] algorithm will select those final 4 or 5 biomarkers, and we will lock the test. At the same time, we will conduct an initial validation study that will give us a preliminary estimate of the sensitivity and the specificity of our test, meaning how effectively can we detect pancreatic cancer and how certain can we be that when we have a positive result that it truly is pancreatic cancer. From there, in the second quarter of 2024, we will start working on analytical validity, making sure that the test really accurately measures those target proteins. We'll also do a larger clinical validity study that will assess the sensitivity and specificity of the next-generation product in a separate population to confirm that the test really does have the accuracy that we think that it does. From there, we'll go on to other clinical tests, and you can see some of those here. As you look at the bottom of the slide, one of the things, for example, that we will do is conduct a noninferiority study. Today, patients who are at high risk for pancreatic cancer go through imaging. They might have an MRI or an endoscopic ultrasound each year. One of the things that we want to show is that we can have a blood test that is a simple, noninvasive blood test that is as accurate as that imaging technology. We'll also look at other populations to show the clinical validity of our test as well as the clinical utility of the test. So clinical utility essentially means do you get better patient outcomes when you use the test. We're very excited. We have talked with one of our key opinion leaders, Diane Simeone, about testing the new product in a consortium of testing called PRECEDE. Diane is leading a group of dozens of pancreatic centers across the globe in conducting a test in early detection. That study gives us a low-cost way to be able to evaluate our test and do that much less expensively than if we had to sponsor a study completely on our own. And with that, I'll turn it back over to Karin to talk a little bit about the financial foundation for 2024.

Thank you. And as we look at what we have achieved from a financial perspective in 2023 and what is the foundation we have entering into 2024, it has been said earlier in this call, but it's perhaps important to repeat that cash burn, we've been able to reduce that substantially. It's down over 50%, and thereby we've been able to extend our cash runway. This is really one of the prerequisites for us to be able to develop the second-generation test. This is all driven by the reduction we've seen in OpEx that we gradually executed during the second half of 2023. We see clear results of that now in Q4, and we intend to maintain a low level of OpEx going into 2024. When the decision was taken to discontinue IMMray, the first-generation test, that was one of the reasons why we had to make a thorough review of our balance sheet. We took painfully, but still, we took one-off costs in the second quarter 2023 of SEK 141 million. This was relating to intangible assets, which is more or less, it was capitalized R&D. The work to sort of review the balance sheet has continued in Q3 and Q4 at much, much smaller scale. But as we exit 2023, we have a clean, I would say, lean but above all, a fair value balance sheet. Focus for us in 2024 will be to continue to hold a firm grip on our spendings, thereby having a tight cash management. And we will give our full effort to strategically secure our future and funding for Immunovia. Back to you, Jeff.

Thanks, Karin. So in closing, we're a very different company than we were in the past. We're leaner, we're more agile and we're more focused. We're better and we're more focused on leveraging outside experts and our partners. And we're blending that outside expertise with our internal experience and the assets that we have. Those assets come as a result of our heritage in the space, our experience in early detection of pancreatic cancer, whether it's the biobank of samples we have, the relationships with leading professors, all of those resources are being put to bear to rapidly develop our next-generation test. We have gotten in about a year to the point with this test that it took us many years to get to previously. And part of the reason for that is the way that we're operating differently, but part of it is those assays that we have that enable us to move much more quickly than you can the first time you go through the process. We are making rapid progress on the development of that next-generation test. I'm looking forward to sharing results as we begin the second quarter of 2024 from our model building study. And at the end of 2024, we expect to deliver results from that clinical validity study. That study will finish in the fourth quarter, and we will share results probably early in 2025 with that result. In the meantime, as Karin said, we will continue to operate very leanly. We are looking in conjunction with our Board at strategic options to acquire the resources that we need. We know that we will need funding for Q4 of this year and beyond, and we're looking at different options to meet that need, and we're confident that we can do so. At this point, I would like to open it up for questions and see what information we might be able to share. Thanks very much.

[Operator instructions] There are no questions from the phone.

We are refreshing the queue in the online chat. If anyone has a question they would like to ask there, certainly that's an option, or sharing a question via the telephone as well. One other opportunity for questions that I would throw out there. If you do have questions and would prefer to ask them offline, please do not hesitate to contact me by e-mail. My e-mail is [email protected]. You can find it on the Q4 report as well as the press release that was sent out. You can contact me there. Would be happy to connect and answer any questions that you have. It looks like we do not have any questions in the chat. And assuming we don't have any in the call queue as well. If that's the case, I think we'll go ahead and wrap up the call. Okay. Thanks very much for your time. I really appreciate it. Take care.

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