Medivir AB (publ) (MVIR) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to Medivir AB Q4 Report 2019. [Operator Instructions] Today, I am pleased to present CEO, Uli Hacksell; and CFO, Magnus Christensen. Speakers, please begin.

Good afternoon, and welcome to our 2019 Q4 call. With me today are Magnus Christensen, our CFO; Linda Basse, our Chief Medical Officer; and Christina Herder, our COO. So let me take you to the first 2 slides very quickly. We have one slide with the forward-looking statements that you can take a look at later on. And let's move to Slide #3, which is the financial summary slide that will be presented by Magnus. Please, Magnus.

Thank you, Uli. And yes, please see Slide #3, where you can see the financial summary for quarter 4 and the financial year 2019. The turnover for quarter 4 amounts to around SEK 1 million, which is lower than last year, and it relates mainly to that where we see the milestone last year in quarter 4. In the total of 2019, the turnover is lower, which relates to both lower royalty income and as well as lower milestone payments. As you can see, the loss before tax has improved significantly in the quarter compared to last year in the amount of SEK 32 million minus compared to SEK 115 million minus last quarter in 2018, and of course, it relates to the restructuring of the company in the quarter 4 2018. In the total for 2019, the loss amounts to SEK 123 million compared to SEK 350 million. And the cost base is much lower now and relates to lower personnel expenses as well as other expenses. And the total fixed cost now is around 1/3 of 2018's year level. And that's in line with what we had communicated before. The cash position at the end of 2019 amounts to SEK 135 million, and the burn rate is much lower now compared to 2018. And the cash is sufficient to complete the ongoing clinical studies. And the market cap as of yesterday, 12th of February, was around SEK 350 million. And now I hand over to you, Uli, again.

Thank you so much. So let's move to Slide 4, which presents Medivir today. We are oncology-focused, and we are internally developing programs, emanating from a very powerful and proprietary nucleotide prodrug platform. We see this platform having the opportunity to provide us with multiple breakthrough oncology products, and we already have won very exciting program moving forward from this platform, and that is MIV-818 for liver cancer, which is currently in Phase I. We have other programs coming behind MIV-818 as well. We also have 3 clinical stage programs where we intend to find partnerships or out-licensing opportunities. Those are remetinostat, birinapant and MIV-711. So for these programs, we focus a lot on business development, trying to find a way to really maximize the value of these programs as well. We have an organization that is ideal for what we are trying to do. It's relatively small, and we're currently 13 people. But it's a very effective organization with a clear focus on clinical development on one hand, business development on the other hand. So let me take you through our nucleotide product concept on Slide 5. This is a tunable ID where you can actually take any kind of chemical tail, if you wish, and combine that with an appropriate nucleotide to achieve the kind of right uptake in the right cancer cell that you want to focus on. The product is taken up by all cells, but it's converted into a nucleotide that can be taken up into DNAs, in rapidly dividing cells and lead to DNAT which -- and eventually cell death, perfect for cancer therapy of different kinds. We have 3 programs listed here, MIV-818, as I mentioned earlier on for primary liver cancer. This is a Phase I asset with a long IP exclusivity that takes us into 2035. Then we have MIV-828 that's in clinical stage -- sorry, preclinical candidate, a drug candidate for AML and other blood cancer indications. That program has an even longer IP exclusivity, but we are currently not yet entering into a formal preclinical development with that program. And behind MIV-818 and MIV-828, we have multiple other opportunities for exciting oncology programs. Let's move to Slide 6, which gives you a little bit more understanding of the prodrug concepts illustrated by MIV-818. So MIV-818 is taken by mouth orally, and when it comes to the GI tract, it's absorbed by the blood and immediately transported to the liver, where it can enter into cancer cells, be transformed into first troxacitabine monophosphate and eventually by additional enzymatic reactions into troxacitabine triphosphate, which is the active component of MIV-818 and which is incorporated into DNA, causes double-strand breaks into the DNA and eventual cell death. Let's move to Slide 7. So MIV-818 is a prodrug which is really designed to act on primary liver cancer. It works really well with the fact that the prodrug is taken up by the GI tract and goes immediately to the liver. So it means that it's accumulated there. And what comes out of the liver is very little of active drug or of MIV-818. And of course, primary liver cancer is an indication with a tremendous unmet medical need. The 5-year survival is only 11%. It's an orphan indication in the western world. That is in the U.S. and in Europe. But in China, it's quite common, and there is a lot of cases in China with HCC. It's a cancer form which is genetically heterogeneous, which means that any kind of targeted molecular therapy will only address a small amount of the total HCC cases. And we think that with the nucleotide mechanism of action that we have with MIV-818, we can hit all liver cancers regardless of the genetic background. So we think that we have an indication with a major unmet medical need. We have the right kind of mechanism to treat those patients as well. Let's move to Slide 8, and all I'm going to say here is that we know from preclinical experiments that we have a liver targeting of MIV-818, which is quite powerful. We see that compared to giving, for example, a compound troxacitabine intravenously and comparing that with the same amount of MIV-818, we get 200-fold more accumulation of the active component in the liver after MIV-818 administration. So this is exactly what we want to achieve with MIV-818 liver targeting. On Slide 9, you can see that we have a nice dose-related increase in potency when MIV-818 is started in a mouse model of HCC or primary liver cancer. The more -- the higher dose we give of MIV-818, the more the tumor growth is recorded by the therapy. And we also see that we have a very nice potency in vitro in treatment, patient-derived primary liver cancer cells. Go to Slide 10. We demonstrate that when we combine MIV-818, on the slide -- on the graph on the left-hand side, you see that the combination of MIV-818 and the standard of care today, sorafenib, which is a multikinase inhibitor, we see a very nice synergistic effect. And we also see that MIV-818 in itself is much more potent than sorafenib, which is the standard of care today. This means that -- we believe that MIV-818 will have a very powerful anticancer effect in the liver as a stand-alone therapy, but we think that it will be even more powerful in combination with multikinase inhibitors like sorafenib. Now these are all preclinical data, animal data, but let's move to human data on Slide 11. So as you know, we have completed Phase Ia in the first 9 patients treated with MIV-818. These patients had advanced liver cancer. And we took biopsies from the liver of these patients, both biopsies from healthy liver tissue and biopsies from the tumor tissue in the liver. And you can see the pictures from those biopsies, which clearly demonstrate that it did not negatively impact the normal liver tissue but they had a pronounced effect on the tumor tissue. You can see in brown on this slide that we had cell death resulting from the action of MIV-818 in the liver cancer cells. So this demonstrates that we have a selective toxicity. MIV-818 acts powerfully on liver cancer cells, but it does not impact negatively the normal liver tissue. So this is exactly what we want to say and the very exciting impact, initial proof of concept of the -- mechanism of action of the activity of MIV-818. I should also mention that at these dose levels where we administered MIV-818 to the liver cancer patients, we saw very small amounts of circulating MIV-818, rather related compounds in the body. So this means that we will have small, low side effects after MIV-818 therapy. Slide 12 shows the MIV-818 study design. So we have already completed the Phase Ia, which was predominantly safety and tolerability study, but we already here saw the proof of concept for the MIV-818 action, which is very important. Based on that, we moved into Phase Ib, which is a 3+3 more classical dose escalation study. And where we started to dose, that was defined by the Phase Ia study. The objective here is to use the Phase Ib study to establish the Phase II study dose that we will use when we move forward with MIV-818. And Phase Ib is already ongoing. We have a number of sites already established, and we are screening for patients, full screen. We expect to have completed Phase Ib later on this year. We have also started to plan for a placebo-controlled add-on study to standard of care in Phase II, which we think is a very interesting study, which has the potential to get the -- up speed development path from the regulatory authorities, perhaps even such a fast speed so that we could use that -- such a Phase II study for regulatory approval. So that's something that we are working very hard on, and we will come back to you with the specifics of the Phase II study that we intend to run eventually and most likely later on this year. Now on Slide 13. We talk about where in HCC treatment that MIV-818 has the potential to be used. And we think because of the likely profile of MIV-818, which should be -- have a very attractive side effect profile and a powerful efficacy profile, we think that MIV-818 has the potential both to be used as a monotherapy and also as an add-on to standard of care in patients with advanced primary liver cancer. So we think it's a great opportunity. Now the second drug candidate coming out of our nucleotide prodrug pipeline is 828, which is directed towards various cancer, blood cancers, and we have particularly mentioned the AML. As I mentioned before, this is a compound that not yet has entered into clinical development. It's a clinical candidate which will enter into preclinical development before it can be given to patients. Now let's go to Slide 15, which speaks about the preclinical stage assets where we are looking for partners and for potentially licensing each of these assets to partners. We're talking about remetinostat, which is a topical HDAC inhibitor for cutaneous T-cell lymphoma; birinapant, which is a SMAC mimetic, which is currently undergoing a study in head and neck cancer; and MIV-711, which is a little bit different than the other compounds because it's a cathepsin K inhibitor for osteoarthritis, not an oncology product. So remetinostat is a topical gel that can be administered to people, to patients with a certain type of cutaneous T-cell lymphoma, which is a special type of cancer indication because it has a very long-lasting initial phase, which is relatively mild but at the same time affects the patient's quality of life in a very negative way, in the sense that they have severe itching and they have a lot of skin lesions, which are difficult to deal with. There are no good drug therapies for these patients today because the existing oncology drugs that are used for cutaneous T-cell lymphoma tend to have 2 severe side effects, for example, oral drugs, which are clearly not tolerated by the patients. But remetinostat has the particular profile that it is stable in the skin but not in the blood. So it means that it can act very powerfully in the skin, but when it comes out into the blood, it's broken down, and therefore, it has not the same kind of side effects as other drugs for this indication. And therefore, we think that it will be perfect for the mild phase of cutaneous T-cell lymphoma, which is the long-lasting phase that can act -- that can continue for years and years. With remetinostat, we have also 2 investigator-initiated studies, one in BCC and one in squamous cell carcinoma. Birinapant is our SMAC mimetic. Here, we have an ongoing study in head and neck cancer in patients who also receive radiation. Birinapant was earlier in a combination study with Merck's KEYTRUDA. We discontinued that in December last year because the study was considered to be futile, and we are not going to continue to do any more studies for colorectal cancer in such a combination. In fact, we are working very hard to try to find a partner for birinapant. We have not currently any type of ID to move forward with birinapant on our own. So we are searching a partner here. The same goes for our program, MIV-711, which is a very interesting cathepsin K inhibitor where we have powerful Phase II data that were presented in the fourth quarter in a high-status scientific journal. And that -- it really demonstrates the quality of our Phase II data, which demonstrated that when we give MIV-11 -- MIV-711 to patients with osteoarthritis, we decrease the effect of the arthritis on the bone and on the cartilage. So we reduce the disease progression with the therapy, something that opens up the potential to -- for MIV-711 to be the first disease-modifying osteoarthritis therapy ever. So we think this is very interesting. There are problems to move this forward. The major problem is of financial type, costs a lot of money to do a Phase III study with MIV-711. But on the other hand, if one is successful to move it all the way to the market, it will be an extremely large drug from a commercial perspective. So here, we are still working very hard on trying to get a partner who wants to take that decision to move into full speed with MIV-711. So finally, I want -- on Slide 19, I want to mention to you that we hit a number of important milestones last year with MIV-818. We completed the Phase Ia study and obtained early proof-of-concept, which we are very excited about. We have a new organization in place. Last year, in the third quarter, we were a large organization, which had a lot of scientists employed to do early research. We're not doing any early research in-house any longer, and we have a small, efficient and agile organization currently. In the fourth quarter, we started a head and neck cancer study with birinapant through an investigator-responsive study. And we did the futility analysis of the birinapant/KEYTRUDA combination in colorectal cancer, which unfortunately was a negative one so that -- we had to decide not to continue that study. We're looking forward to 2020 with a lot of excitement. Obviously, the focus will very much be on the future development of MIV-818 but we -- as I mentioned early on, we'll also continue to work very hard on business development. So with that, I thank you for your attention, and we are open to take any questions that you may have.

[Operator Instructions] Our first question is from Joe Pantginis from H.C. Wainwright.

Two questions if you don't mind. First, obviously, Uli and management, you guys have really put in some very good cost efficiencies into the company. So maybe first, how are you looking to manage your ongoing cost efficiencies as you're also looking to increase the burn from increasing clinical activities?

So Magnus, perhaps you can answer that?

Yes. I mentioned that the cost level is much lower. It's around 1/3 of 2018 level. And as we mentioned as well, the cash now is enough to complete ongoing studies, and it will blast into next year. So we think we are in a good position to complete our ongoing clinical studies.

Got it. No. That's helpful. And then, I guess, and this is difficult to answer because timing can never be predicted with regard to ongoing business development activities. But I guess, I don't know, for each one of your assets that you described or maybe even just remetinostat that you have already FDA visibility that could be helpful, very helpful to potential partners, how would you describe the level of, say, discussions that you've already reached? Or is there a wide spectrum of the types of discussions you have for BD?

Well, thank you for that question, Joe. We are very careful in giving you any kind of publicity around ongoing discussions with business development because we are afraid of giving a -- that people will be too optimistic about that or -- because you never know where discussions will end up before you have the signed agreement. So what I can say is that we have interest for all of these assets that I mentioned, birinapant, remetinostat and 711, and that we hope that we will be able to realize some kind of agreement around one or several of these assets over time. But we will never give a specific timing on when that can happen. That's our policy, and I think it's the right policy.

No. I understand, Uli. That's absolutely fair. I had to ask anyway.