Isofol Medical AB (publ) (ISOFOL.ST) Earnings Call Transcript & Summary

Thank you so much, and welcome to our quarterly report presentation for the fourth quarter of 2022. And let's change slide. Just bear with me here. So what the final data we have confirms the top line results that basically the theme of this presentation. And go to the first slide. What highlights do we have? First of all, if you look on the operational and clinical highlights, the analysis of the AGENT study's final data unfortunately confirm the top line results, the criteria on the endpoints that were set up by the medical authorities. We did not even find predictive gene expressions associated with leucovorin for clinical response. So there, the gene expression hypothesis there was [indiscernible]. We have continued our efforts. We are terminating the AGENT study in line with applicable and regulatory requirements, of course. We have completed the final study report for submission to regulatory agencies, and that time you will be able to find our data on -- some of our data on clinicaltrials.gov and the European equivalent. We are Preparing a manuscript for a scientific publication that is ongoing. We have continued the cost cutting measures throughout the company to safeguard our financial position. The Board and management has continued to investigate and evaluate possible alternatives for the company's future. If you -- the result for the period amounted to minus SEK 225.3 million. The cash flow from operating activities was minus SEK 42.9 million. And our cash position at the end of the period was SEK 190.6 million. Let's go to the next slide. So if we look on our priorities following the top line results. First of all, you have a timeline where you can see the different events. So since our -- the top line priority for us since getting the top line results has been, first of all, to complete the analysis of the AGENT study data. We have also investigated all possible clinical and commercial viable path forward, bringing our politics to the market. That included, for example, could we go with our politics story? Could we do a reverse merger, et cetera? As data became available, it became increasingly clear that we need to do new clinical trials to bring our politics story to the market. We would have to go back to the drawing board and start from scratch again. So due to the results of the AGENT study, the company has evaluated the possibilities of conducting further story studies or carrying out a structural transaction. These significant measures we're taking as early as August to protect the company's remaining capital and optimizing our prospects going forward. Next slide. There we go. What we do see here is the AGENT study basically confirms the top line results. So if we look on what we've been -- wanted to show an increase in objective response rate. We wanted to see a prolongation of progression-free survival. Unfortunately, the final data did not show any evident regulatory thresholds for approval. There was a clear tendency to lower survival in the politic story arm in the study. And unfortunately, the trend was so significant, not statistically significant, but it really fulfill the FDA definition of detrimental survival, having an increased risk of early death that was 11% higher than in the leucovorin arm. If we looked on the subgroups, we could not find any subgroup that showed an advantage for our politics or in leucovorin. Our politics story was then not superior to leucovorin in the treatment, the regimens that we had studied in advanced study colorectal cancer regardless of genetic profile. If we look on the gene expression analysis, we could not identify any difference in -- for those patients that received less leucovorin if they had a high expression or a low expression or genes in relation to the clinical outcome. So keep in mind, the hypothesis was that patients with low gene expression would have a much worse clinical outcome than those who had a high expression. We did not see that. There was no [indiscernible]. So we had 2 external groups who reviewed the clinical data, and both external groups confirm the company's interpretation of the AGENT study data, that it was correct. One of the group forward for our politics story in combination with 5-FU in the area of oncology. The second group concluded that there might be a possible way forward, but did not specify how they would lead to that in regards of time, resources and capital requirements. If we go to the next slide, that is the clinical updates. So achieved since August 3. We have now all patients out of the AGENT study. So all patients are off the study. We are destructing the study medications of leucovorin, politics story or in oxalate in Avastin, et cetera. So all of those are being disrupted in accordance with regulatory requirements. All the 90 clinics who were involved in the AGENT study have now concluded their work. So we are closing down the sites, a few sites that we are still working with to close down. Compilation of all necessary documentation and archiving of study material is proceeding. So basically getting in all data from the sites, documenting them and then archiving them. Keep in mind, that's regulatory behavior for a very long time. We estimate that this process will be completed within the first quarter of 2023. The submission of the management of the scientific publication is in process, and we expect that this will take place spring or summer of 2023. We go to the next slide. So a little bit about the operational updates. We are again continues focusing on cost-cutting measures, and this is by implementing measures to preserve the company's financial position going forward. The organization has gradually been adapted to meet the basic operation needs at any given time. Employees and consultants have been laid off continuously and have left or will leave the company in accordance with the notice period. So we are seeing that basically, all employees will be out of the company by midyear. If you go, Gustaf Albert will continue. I'll go to the next slide. There we go.

Thank you. So an overview of the financial performance for Q4. The revenue still relates to the reimbursement for the AGENT study in Japan. And as you can see, it's phasing out, and that relates to that all the activities are being closed down even though we still get some reimbursement. Related to operating costs. As you can see, they have decreased by approximately SEK 40 million compared to last -- same quarter last year, and also SEK 46 million compared to last year full year. And the decrease of the cost mainly relates to that we have, of course, stopped all the pre-commercialization activities in Q3, when we received the top line results. But also the AGENT study costs has, of course, decreased related to less patients in the study and that we are closing down the study, although the costs in Q4 for compiling and analyzing the data was a little bit higher than planned. Personnel costs are slightly higher compared to previous periods, and it relates to salary increase, promotions, a mix of staff that has changed during the years and also severance costs for the CEO in line with the termination of all the personnel I've mentioned. All other costs have been kept and downsized to a minimum in order to save costs and save the resources and the financial position and safeguard that. And then over to the next slide related to financial position and cash flow. And the cash flow has, of course, decreased in line with the lower operating results and costs. At the same time, the payment of accruals related to study costs, for example, related to hospitals and other suppliers have increased, which means that the working capital, the short-term liabilities has been initiated to pay off, as you can see in the balance sheet, if you look into that. And related to that, the cash position is SEK 190.6 million at year-end. And as you see here, the working capital is SEK 157.7 million. That is after paying the short-term accruals, which is important to remember that we have to do that. So that's the position currently. Over to you again, Ulf, and I move to the next slide. Thank you.

Thank you. So let's look at the process to determine the future of Isofol. How do we make Isofol great again? Well, the current Board of Directors convened an AGM for February 13 and proposed then to distribute Isofol's remaining capital among all the shareholders and initiate a voluntary liquidation. Shorter thereafter, there came a request from shareholders representing more than 10% of shares to have another AGM that will be convened on February 28 to decide on election of a new Board of Directors. At the AGM on February 13, the Board's proposal did not reach the required voting majority. And therefore, it was not adopted. As a consequence of the outcome of the AGM, all members of the current Board made their positions available and also let know that they were not up for reelection. So what's going to happen going forward? Well, there is an additional AGM convened by shareholders for February [indiscernible] every Board of Directors, and they will then decide on the future of the company. So at this point in time, the current Board and the current management is awaiting the 28th. I will take the chance to end this to just thank you, everyone, and all the shareholders who have invested in our product mix or in development in Isofol. So thank you all for doing that. It has been a fantastic journey. I've been on the team here at Isofol, who's been dedicated even after August 3. They've been working hard. And unfortunately, in drug development, you never know what the outcome of the Phase III study. All indications are that this should be a drug that works. Many times, it's not the case, and we are one of those cases. So the new management and Board will come in and see what they can do. They need to go back to the drawing board, of course. And just personally, I wish them all the luck. And I thank you all for having listened today to our presentation of the Q4 results. Any questions? So I leave it to you.

[Operator Instructions]

Okay. I don't see any questions in the queue, and I'm not hearing any questions on the line. So just wait a few more minutes.

There are no more questions at this time. So I hand the conference back to CEO, Ulf Jungnelius, for any closing comments.

Okay. Thank you so much for listening into our results for 2022. And thank you again for being with us on this process of taking a drug from the lab to a completed Phase III study. Thank you so much, and have a good day.