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

Ladies and gentlemen, welcome to the Medivir AB Q1 report 2020. [Operator Instructions] Today, I'm pleased to present Uli Hacksell, CEO. Please begin.

Thank you so much, and welcome to our Medivir's Q1 2020 report. With me, I have our CFO and our Chief Medical Officer as well. So let me start by moving to Slide 3, and Magnus, perhaps you can talk about this.

Yes. Thank you, Uli. Yes, please see Slide 3, where you can see the financial summary for quarter 1 in 2020 compared to quarter 1 2019. The turnover amounts to around SEK 7 million, which is higher than last year and relates mainly to the business deal that we signed in the quarter as well as royalty income from Xerclear. And as you can see, the loss before tax has improved significantly in the quarter compared to last year and amount to minus SEK 23 million, compared to SEK 56 million last year and, of course, due to the high turnover as well as last year the organization costs were still on a high level, i.e., we have not -- which have not received the full effect of the restructuring done late 2018. End of quarter 1, we were 13 employees compared to 36 last year. The cash position at the end of quarter 1 is around SEK 116 million, and the cash is sufficient to complete the ongoing clinical study. And to finalize, the market cap as of 4th of May, yesterday, was around SEK 380 million. Thank you. And over to you, Uli, again.

Thank you. So let's move to Slide 4. So Medivir is oncology focused, and we see that we have a lot of opportunities for significant growth over time. We have 2 key asset classes. First, we have the proprietary nucleotide-prodrug platform, where -- that is led by MIV-818 or the program for liver cancer. We have multiple additional opportunities for other programs coming out of that platform as well. One such opportunity is MIV-828. We also have 3 clinical programs that are ready for partnering or out-licensing, remetinostat, birinapant and MIV-711. So we spend a lot of time and trying to find partners for these programs, and they represent another asset class, which is very important for Medivir. So let's go to Slide #5 that talks about the nucleotide-prodrug concept and the platform itself. So the idea here is that you combine a nucleotide with an appropriately-designed prodrug tail, and you do that through a particular chemical combination technology to create a phosphoramidate, and that way, you get prodrug that can be stable in the GI tract, stable in blood, but is easily taken up by cells, and which within the cell can be converted into active metabolite, which can cause cell death in cancer cells. We does -- show 3 types of nucleotide prodrugs on this slide, but what I want to emphasize is the right-hand column where you see that we have significant IP on all 3 drug classes shown on this side. That goes all the way to 2040 for MIV-838, for example. But let me illustrate the concept again of the prodrugs by taking a look at MIV-818 on Slide 6. So MIV-818 is an orally administered liver-targeted nucleotide. So it's taken by mouth and then it's absorbed into the blood stream from the GI tract, but immediately transported to the liver to be set up for fast transformation. What happens is that all the liver cells can take up MIV-818 and transform it into a triphosphate that is shown as the structure at the bottom on the right-hand side, called TRX-TP, so troxacitabine triphosphate. This is the active metabolite of MIV-818. And it's incorporated into the DNA of rapidly dividing cells, not by normal cells. And we see this in the experiments that we have conducted in patients that this metabolite is causing DNA breaks in cancer cells in the liver, but that it doesn't cause any damage to the normal liver cells. So we have a selective effect on liver cancer cells. Let me move to Slide #7. So this makes MIV-818 very interesting for primary liver cancer indications. And you may have noted that the European regulatory agency, EMA, recently gave a nod as -- for MIV-18 (sic) [ MIV-818 ] as an orphan drug for treatment of hepatocellular carcinoma. So this is the indication that we really want to move forward with as the first indication for MIV-818 because of the liver targeting, the mechanism of action, we think that it has the potential to really provide an efficacious drug with a large therapeutic window. And it should be, therefore, ideal as either stand-alone treatment or an add-on to standard of care. HCC is important to focus on because it's a very deadly disease. It's an orphan disease, but it's still very deadly and it has contributed significantly to cancer-related deaths globally. And what I'm talking about now is Europe and the U.S. In Asia, in contrast to U.S. and Europe, primary liver cancer and hepatocellular cancer are not orphan disease. So there you see so many, many more patients and there one will require a different kind of development path to receive an approval for a non-orphan drug. Let's move on to Slide 8, which I think tells you the story very nicely about the proof-of-concept that we obtained in the Phase I study with MIV-818. You can see pictures of the slices from the biopsies that we took from the patients. And on the left-hand side, you can see data from patient 2. So to the far left, you can see tumor tissue before dosing with MIV-818, and you don't see any kind of brownish spots, which are caused by the phospha 2A addition that we do to really show clearly which cells that are effected or not. And you see the normal liver cells after treatment with MIV-818 and there is no indication that we have any DNA breaks in those cells whatsoever. Big contrast of the tumor tissue, but you see a lot of DNA breaks in the areas where MIV-818 has had effect. So this clearly demonstrates very powerfully the selective effect of MIV-818 in the tumor in the liver. You can see on the far right-hand side, 2 biopsies from normal liver and from tumor tissue. And the same story here. In the normal liver, we see no DNA breaks; in the tumor tissue, we see significant amounts of DNA breaks. So this is really demonstrating that the concept that we used in the prodrug design on MIV-818 is working. And I should mention that, obviously, we also looked at the amounts of MIV-818 in the blood stream and of the metabolite. And what we saw is very low amounts of MIV-818 or the metabolite in the blood, just appears to be very selective liver-directed effect of MIV-818. So let's move to Slide #9. So you know that we completed the Phase Ia study with very promising results. And we moved into the Phase Ib monotherapy study in the first quarter of this year. Our plan is to complete that study, but also add another Phase Ib study where we add the MIV-818 on the top of standard of care. And in this study, we hope to demonstrate that we have a powerful effect of the add-on therapy so that we can move on after that into a Phase II study, which we hope should be good enough to really lead to approval for add-on therapy to standard of care of MIV-818. So that's the plan that we have for moving MIV-818 quickly and relatively inexpensively to the market. And then from there, we can continue to expand the usage of with MIV-818 into additional indications all the time. Let's go to Slide #10. I think that the key thing here is that MIV-818 represents something that really can deal with the unmet medical need in the therapy of hepatocellular cancer. This is a very severe cancer. And the current therapies which are provided as first line therapies do not provide much of extension of the life expectancy of the patients. We think that we can, by adding MIV-818 on the top of these current medications, should be able to provide a much better efficacy in the therapy of hepatocellular cancer, and that we also see an opportunity to provide MIV-818 as an add-on to other treatments for hepatocellular cancer and potentially also as a stand-alone therapy. So we're very excited about the potential for MIV-818 and try to move forward as quickly as possible with this drug. Let me also say a few words about the second nucleotide prodrug, MIV-828. So this molecule is still not in patients. We are currently thinking about trying to develop it for acute myeloid leukemia, but there are also other blood cancer indications that can be pursued for MIV-818. We think it has a lot of potential, but we are currently not pursuing the development project with this molecule. We need a little bit more cash to be able to do that effectively. Let's move to Slide #12. So here we have our asset portfolio for partnering, remetinostat, birinapant and MIV-711. And you can see that they all have IP exclusivity that takes us into 2034. So a significant amount of IP. What remains to be done for remetinostat in order to get approval is one pivotal Phase III study. For the birinapant, we have a larger program required to go to -- all the way to approval. And for MIV-711, we think, probably 2 carefully-designed Phase III studies are required for approval. Let me take them one and one a little bit more in detail. So remetinostat, the first indication is an orphan indication for cutaneous T cell lymphoma. We have very good Phase II data demonstrating that we have a nice efficacy and safety profile of remetinostat. We have concluded discussions with the FDA about the potential Phase III program and that can be done, we believe, with an investment of around $45 million. So it's not too expensive. It's only one study that's required. And we believe that remetinostat has all the requirements and attributes that are required for a successful drug for this indication that lacks well-tolerated treatment for the early stages of the cutaneous T cell lymphoma. In addition, we believe that life cycle program with remetinostat can be pursued both in basal cell carcinoma and in other related skin indications. So we are seeking for a partner here that can help us to take remetinostat all the way to the market. Birinapant appears to be -- have a lot of potential to solid tumor treatment. As I mentioned that we conducted a Phase II combination study with Merck's Keytruda, and we did a futility analysis of that study in 2019 that did not pan out, but to be likely to be successful. So we discontinued that because of futility. That does not mean that we don't have other opportunities with birinapant. And we currently have an investigator-sponsored study in head and neck cancer in combination with radiation. So there are multiple other combination opportunities with birinapant. What I should mention though is that we seek a partner who can help us to conduct those other potential combination studies. We do not intend to pursue that alone. Let me finally say a few words about MIV-711, which is our osteoarthritis drug. Can't have that in a large Phase II study demonstrated that it has the opportunity -- the potential, I should say, to be the first drug to really have a disease-modifying effect in combination with a pain-relieving effect. We did this -- a large Phase II study and we demonstrated very clearly the effects on both cartilage and bone, and we saw indications of pain benefits as well, but not significant effects. We believe that in order to demonstrate both the pain benefit and the disease-modifying effect, one needs to conduct a pretty large study. We are unable to do that on our own. We are looking for partners to help us with this. And we think that this is an enormous market opportunity, obviously. As you can see on Slide 15, there are about 240 million people with osteoarthritis and an enormous need. So we believe that together with a partner, we can really find a way forward to make this truly successful drug development program. So with that, I thank you for your attention. And we are open to answer any questions you may have.

[Operator Instructions] Our first question comes from the line of Niklas Elmhammer from Redeye.

Yes. I have a question regarding the clinical development and the impact from the pandemic, if I may. If you look at the clinical program, could you -- is it possible to give us an update on how the recruitment has gone so far? And secondly, are all clinics active right now? Or do you see some nonactive clinics? That's my first question.

Yes. Thank you. So it's -- yes, it's a very good question. Obviously, we, just like everybody else, are impacted by the coronavirus pandemic. We did recruit our first patient in the ongoing Phase Ib study with MIV-818 in the first quarter. And we don't provide interim analysis. But what we did write in our Q1 report is that we will -- we expect a slower recruitment in the near time frame in that study. And therefore, we said that we believe that we may not have completed that study until in the first quarter next year. So there will be slightly longer recruitment time than we expected initially. Obviously, the patients may be -- there are many reasons for that. Patients may be a little bit reluctant to go to the hospitals, being afraid of getting infected with the coronavirus, et cetera. And obviously, the hospitals have other priorities than they used to have. But the problem in giving a good guidance on potential delays is that we don't know when things will open up. So we will continue to keep you updated on any kind of consequences. Currently, the guidance I gave is the best estimate that we have at present.

Okay. And regarding the clinical development, you mentioned that you've done an add-on arm already in Phase Ib. When do you expect to be able to start that or does that, in some sense, run parallel to the monotherapy study?

It will be -- it may be run a little bit in parallel. So we will not have it -- we do not need to have completed the whole Phase Ib study, monotherapy in order to start the add-on study. But -- so there will be a little bit of staggering between the 2. And I don't want to give a specific guidance on when we can start that, but it will most likely be -- it will certainly be this year, hopefully, not too -- sorry, I should say, it will certainly be no later than early next year. That is the latest, I would say. We'll come back with any update.

And the next question comes from the line of Joe Pantginis from H.C. Wainwright.

So just curious to follow-up, very happy that you're being upfront with regard to your expectations for 818 due to COVID. So I'm just curious at this point, have you seen any site variability as to their views towards, say, decreased enrollment? Or is this just an anticipation?

It varies a little bit between sites. So different hospitals have different rules. But what we see in generally is that people are -- we don't see the same -- currently, the same recruitment rate as we had expected. So that's why we move the program a little bit forward in terms of completion. But -- so things will be a little bit slower, but we don't know for how long. This is something that everybody is struggling with. And we see things are going back to normal, even in Florida, even in Sweden. So -- but for how long and when the things will be really back to normal, it's hard to say.

No, of course. I appreciate that feedback. And then my next question, I usually ask this more generically about business development, but I'll be more specific on 711. So earlier in the quarter, as you've also discussed, you had a publication on the 711 data. So just curious how that publication might have sort of improved or increased the level of interactions you've had with potential partners?

I think the key with that publication was it clearly supported the quality -- the high-quality of the study itself. The editorial that accompanied the issue where the report was published very strongly talked about the quality of the study and the -- that this may be a study that in itself open up for new compounds to be developed for osteoarthritis. So I think it will be helpful. And I think a lot of people are thinking about this. And obviously, we are active in talking to partners as well. That's all I can say.

[Operator Instructions] And as there are no further questions, I'll hand it back to the speakers.

Okay. So thank you, everybody, for joining us for today's call, and we will continue to keep you informed no later than at the Q2 call later on this year. Thank you so much.

Thank you. Bye.

This does concludes our conference call. Thank you all for attending. You may now disconnect your lines.