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

Ladies and gentlemen, welcome to the Medivir AB Q3 Report 2020. [Operator Instructions] Today, I'm pleased to present Yilmaz Mahshid, CEO; and Magnus Christensen, CFO of Medivir. Please begin.

Thank you, operator. A warm welcome for everyone to our quarterly update. Slide 3, please. And as a reminder, you will find our presentation on our homepage, and I do recommend everyone to read the disclaimer on Slide 3. The agenda for today will be a brief overview of the company and then to be rounded off with our Q3 numbers presented by Magnus. Slide 4, please. As you all know, many of you who have observed Medivir, the company has been around since 1988 and started off as a virology-focused company. Today, the company is focused on oncology and clinical development, and the company is listed on NASDAQ here in Stockholm. Our proprietary asset, MIV-818, is a liver directed nucleotide prodrug, and we are currently in the Phase Ib clinical development. And we have received orphan representation both in the EU and the U.S. for this compound. We have in the last year or so downsized the company and built a clinical development focused company. And we are now, in total, 9 FTEs and have, to our belief, an efficient organization to execute on our clinical trials. We do also have several programs for partnering, and these are remetinostat, birinapant and MIV-711. Slide 5, please. This slide shows an overview of our focused clinical program and our programs for partnering. As mentioned, we are fully focused on developing 818 for liver cancer. Currently, the project is in Phase Ib clinical trials and in the part A of that trial, where we dose the patient in a 3 plus 3 cohort as a monotherapy. Subsequent to that trial, a part B of the Phase Ib will be initiated next year sometime in combination therapy. We do also have multiple programs partnering, remetinostat, a topical HDAC inhibitor; we have birinapant, a SMAC mimetic; and 711, a cathepsin K inhibitor. Slide 6, and then Slide 7, please. So our proprietary project, 818, is a liver-directed nucleotide. It is an oral prodrug. And once absorbed from the GI track, 818 is transported to the liver. And during the first half metabolism, the prodrug is taken up by liver cancer cells and converted into troxacitabine triphosphate. Troxacitabine triphosphate is incorporated into the DNA and causes double-strand DNA breaks and cell death. Slide 8, please. We have preclinical evidence of 818 liver targeting features. In the preclinical model, where we measured levels of troxacitabine in the liver versus troxacitabine in plasma, we could show that 818 displayed a 100-fold higher liver targeting capability in comparison to intravenous troxacitabine. Slide 9, please. To show the efficacy of 818, we have, amongst others, conducted preclinical xenograft models where we could show a dose-dependent inhibition of tumor growth. You see that on our left-hand sided graph, where rounded white circles are the placebo. We have then a low-dose and blue circles, which corresponds to high-dose 818. In a similar fashion, on the right-hand side, we see a comparison of 818 with the broadly used multikinase inhibitors, sorafenib and lenvatinib in HCC, hepatocellular carcinoma cell line, derived from patients that 818 is very efficacious in inhibiting these cancer cells. Slide 10 and then 11, please. When it comes to clinical data, we have conducted a dose escalation Phase I study in 9 patients, where we see signs of selective effect of 818 in tumor cell. This is depicted in the center picture and the picture on the right-hand side. As you can see, evidence of DNA damage, that is the brown coloring on the right-hand side picture, in tumor cells but not in the center cells, where we see the normal liver tissue cells. Slide 12, please. To depict the time line for our ongoing clinical trials, we are right now in the midst of the Phase Ib Part A, where we dose 818 as a monotherapy. This is an interpatient dose escalation, a cohort study, where we have 3 patients for each cohort. We expect data from this trial in the first quarter 2021. But bear in mind, we do also see a surge of the COVID-19 pandemic, as we speak. If this will have any impact on the time line for the Phase Ib monotherapy part, it is too early to know. Subsequent to that, we will initiate next year, a Phase Ib Part B, as we call it, that is an add-on of MIV-818 on top of standard of care or existing therapies. Slide 13 and then 14, please. As mentioned in the presentation, we have multiple programs for partnering. We have the remetinostat, a topical HDAC inhibitor where the company-sponsored trials were ran until Phase II. This compound is ready to go into Phase III if we find the right partner. It has also been conducted, a Phase II investigator-sponsored trial in basal cell carcinoma, where data -- top line data has previously been published. We do expect a full publication of this data in the near-term future. Birinapant is a SMAC mimetic. And as you are aware of, the company did run a Phase II trial in combination with KEYTRUDA. End of last year, we did announce that the trial was futile, and it has now been closed down completely. For this compound, we are looking if there are any opportunities for partnering as a combination trial in solid tumors. MIV-711, a cathepsin K inhibitor, for the indication osteoarthritis. This compound has also been through company-sponsored Phase II trials, and we are reviewing how to take this compound in a potential next Phase II or Phase III trial. But this has to be done with a partner. With that, I'll hand over to Magnus to run through our third quarter numbers.

Thank you, Yilmaz. Please go to Slide 15, and then 16 please. And here, you can see the financial summary for the quarter 3 and accumulated to quarter 1 to quarter 3. As you can see in the period, the turnover is SEK 1.1 million, which relates to royalty from Xerclear a bit lower than last year. However, if you look at the cumulative figures, you can see that it's higher and it's due to higher royalty as well as the preclinical assets that were made from business deals in quarter 1. And then you see in other operating income, you can see the effect of our renegotiated lease agreement for our office base in Stockholm. I could say the effect is more an accounting effect for this quarter, but more importantly, it means that our rent costs from January 2021 will be substantially lower than we have today. That's very positive cash effect for next year. If you look at other external expenses, it's much lower than last year, and it relates to general cost control as well as the only focus this year now, MIV-818 clinical study. And last year, we had 2 clinical studies ongoing. Personnel costs in line with last quarter, last year. But if you look at the cumulative figures, you can see it's well below last year. The net financial items is the revaluation of our liquid funds. As you can see, we had some -- in quarter 1, due to the pandemic, COVID-19, we had some setback there, but now it's turning around. So we have a positive figure accumulated there as well. And if you look at the cash flow for quarter 3, it amounts to SEK 17 million (sic) [ SEK 17 million minus ], which is a large improvement from last year of SEK 32 million (sic) [ SEK 32 million minus ] and accumulated, it's SEK 57 million minus compared to SEK 125 million (sic) [ SEK 125 million minus ]. So we can say the burn rate is much lower now than it used to be. End of the quarter, we were 9 FTE, end of September, and the cash position at the end of September were SEK 83 million. And the current cash is sufficient to complete the ongoing clinical activities. And we have summarized 2 takeaways from this slide is that, in general, good cost control, the cost much lower and a new office agreement, which will mean that our cash burn will be much lower next year. And I'll hand over to you, Yilmaz, again.

Thank you, Magnus. Slide 17, please. As a summary, as we mentioned during the presentation, we are focusing on our asset 818, a liver-directed nucleotide prodrug. This is a proprietary asset and currently in a Phase Ib clinical development as a monotherapy. We do expect data from this monotherapy part in Q1 next year. Subsequent to that, we will start a combination trial with one of the standard of care treatments within this segment. As a reminder, we do see a surge from the COVID-19 pandemic. This may, of course, impact our time lines regarding the Part A of the Phase Ib clinical trial. I think we have now the right size and efficient organization to conduct a focused execution on the 818 clinical development program. And we do also have other programs for partnering, as we mentioned, remetinostat, birinapant and 711. And with that, I'll hand over to you, operator to take on questions.

[Operator Instructions] Our first question comes from the line of Joe Pantginis from H.C. Wainwright.

Yilmaz, good luck with your new position. Wanted to ask, I guess, one more macro question and then a little more diving into the details. So first, obviously, a lot of efforts have been done to refocus the company and also including cost control. So that's great. So I guess from a macro standpoint, wanted to get a little bit of your vision for the company at this point since there is currently such a good amount of focus.

Yes. On a high level -- and Joe, thanks for the question. On a high level, I think we have started when it comes to 818 and our focus on clinical development. As you know, this was a virology company before and now focused on oncology. So we have started a strategic work when it comes to 818 to understand the position or potential position in the future, hepatocellular carcinoma market, but also potentially as a drug for cholangio -- intrahepatic cholangiocarcinoma. We hope to finalize that strategic work in Q1 next year. As you are aware, several oncology indications are very dynamic. So it's especially hepatocelluar carcinoma at the moment. So we need to understand where we find 818 position of it due to its specific mode of action and differentiated mode of action with current approved drugs, but also in comparison to drugs that we see in the clinical development programs out there.

Got it. And then a more -- I guess, more specific question is, it was very nice to hear that we'll be seeing a peer-reviewed publication regarding the remetinostat data. So that will help continue to boost the visibility for that asset. So with that said, I guess I would ask a question that I commonly ask here, is if you -- at this point, can you describe the tenor or the level of the conversations that are happening on the business development front because that would be a very exciting transaction for the company?

Absolutely. And thank you for the question again, Joe. I mean I have -- since I came into the company, it has just been 8 weeks. I have started to look into our programs for partnering, amongst others. As you can imagine, a lot of things ongoing, but for me to understand why these haven't been out licensed as of now. And I believe, I think what I see is that there might be some opportunities there. However, it's very premature for me to comment on the likelihood of achieving partnerships at this moment. I hope if you give me some more months, I might be able to comment that in a better way.

Of course, I always characterize that question as have to ask it. But best of luck in your new position and look forward to catching up soon.

And the next question comes from the line of Ulrik Trattner from Carnegie.

Actually, a follow-up on the business development side. As you mentioned, you have 3 products that you have the potential for entering partnerships. But -- so what would differ now from what the situation has been before? In my opinion, it rather seems like the IP of majority of these assets is running out of time. So thus, the value of these assets should deteriorate over time. And were there be any additional data that enables you to license these assets now that Yilmaz is relatively new to the company? So how would this differ from what we have heard before?

Thank you for the question, Ulrik. As I mentioned, I'm looking into these assets. As you mentioned, IP is also a ticking -- always a ticking clock. And as time passes, it's a headwind, as you alluded to. So I mean we have to see where and where the science will take us. I think we will have to take another look, a fresh look on these -- all of these 3 assets to see if there is something to be done here or not. But as I mentioned, it is premature for me to comment on the likelihood of achieving something at this moment. But I'll do my utmost to see if we can carve out or take out something and create value for Medivir shareholders.

Sure. But would you ever consider to just out-license these assets without any milestone payments related to them, just considering creating any type of value based on future royalty of sales?

I would say that everything is on the table right now. It all depends if we can create some value if we believe we can create some value for shareholders. If it comes to out-license these without any milestones, that will all depend on what type of partnership one could create. Is it a credible partner who can run these clinical trials or not? I mean, I think we need to add that into our equation if we see if that would create any value for the shareholders.

Okay. Great. 2 more questions. Obviously, it's very important to look at the selectivity of MIV-818, especially given the sort of profile of troxacitabine and given that there is a prodrug. What type of conclusions can you derive based on the data that you're planning to present in Q1 next year on the selectivity of the drug, if it is a dose escalation study?

Yes, it is a dose escalation study. And I think we'll have some more data on the selectivity. We will probably conduct some more biopsies to get more evidence on that. But really, to understand the efficacy of the drug, I think we'll see that in our Phase Ib Part B, where we do a combination trial with the compound, with any drug, so to say. And that drug that we're going to do combine with, we haven't really set up with that. That's why we have our strategic work here because what we believe going forward in the hepatocelluar carcinoma space, specifically, but also probably in the cholangiocarcinoma space, is that doublet therapies will dominate in the future. And it's a question about where we find 818, which suit -- which partner should we go with as a combination treatment, for example. But there is also some speculations out there that there might be also be triplet kind of therapies in the future when it comes to the hepatocellular carcinoma space. So it is a bit premature there as well since we haven't seen so much clinical data or evidence yet. But I think the best trial to answer your question, there will be after the second part of the Phase Ib when we start combining new baseline. I think looking at our preclinical data, looking at that we have done on top of the multikinase inhibitors, for example, we clearly see that 818 adds efficacy on top of those. But that's preclinical data. We need to show that in the clinics as well.