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

Thank you, operator, and warm welcome to our Q4 and full year 2020 webcast. On Slide 3, you will find our -- you will find our presentation on our home page. And on Slide 3, I do recommend everyone to read the disclaimer, which will be, as I said, on our home page as well, for those of you who are interested in the details. Slide 5, please. This is today's outline where we will briefly touch upon our main projects and then to be rounded off with our Q4 and full year numbers. Slide 6, please. Medivir has been around as a company since 1988 and started off as a virology-focused company back in the day. The company is listed on NASDAQ here in Stockholm. And our proprietary asset currently is MIV-818, which is a liver-directed nucleotide prodrug. We are currently in Phase Ib clinical development and aim to initiate a combination trial later this year. 818 has received Orphan Drug Designation both in EU and the U.S. We have made a couple of achievements in the last months. We managed to outlicense birinapant to IGM Biosciences where we continue to expect initiation of a Phase I trial later this year but have also outlicensed one of our preclinical project, USP7, to Ubiquigent, which we announced just a couple of weeks ago. In parallel, we have completed a successful financing of the company specifically to drive the next phase of our 818 molecule. In the rights issue, a new specialist health -- specialist investor, HealthInvest, became a new major shareholder. We do also have 2 programs for partnering. That is remetinostat and 711. Next slide, please. On Slide 7, you will find an overview of our clinical projects. We have a focused clinical program called MIV-818 targeting liver cancer and currently in a Phase Ib monotherapy clinical trial. We do have a partner asset, birinapant, which will enter Phase I clinical development in IGM's reins later this year. In parallel, there is an investigator-sponsored trial currently running at National Cancer Institute with the indication head and neck cancer. We do also have 2 clinical programs for partnering and outlicensing, remetinostat and 711, which we'll come back to later. Slide 9, please. Just a recap of the rights issue, one of our recent events here in the company. The preferential rights issue was completed successfully in February, and it was oversubscribed by more than 93%. With that, Medivir received around SEK 170 million before transaction costs. Subsequently, the Board of Directors decided to exercise the overallotment option of SEK 25 million to the specialty investor, HealthInvest, and supported -- and we do also have an EGM upcoming March 11, which is supported by the major shareholders to vote on a directed new share issue to Linc of approximately SEK 28 million. In total, Medivir will receive approximately SEK 223 million before transaction costs. And Medivir will then have an ownership base with 3 strong institutions and specialist investors: Linc, which aim for a 10% shareholding; Nordea and HealthInvest. Thank you all for supporting the rights issue. And warm welcome for HealthInvest as a new shareholder in the company and also warm welcome to all other shareholders which participated in the rights issue and made that a successful transaction earlier this month. Slide 11, please. In mid-January, we signed a licensing agreement with IGM Biosciences. To recap that, IGM is a clinical-stage biotechnology company focused on creating and developing engineered IgM antibodies. IGM received global development rights for birinapant, a clinical-phase SMAC mimetic that binds to and degrades IAPs, which then leads to cell death in tumor cells. Birinapant is initially intended to be combined with IGM's antibody known as 8444. This antibody targets DR5, Death Receptor 5. And it's being developed in different tumor indications. And what we see is a potential Phase I trial then later this year with birinapant in combination with 8444 in solid tumors. Next slide, please. Medivir will receive an upfront payment of USD 1 million upon signing of the agreement, which has already occurred. An additional $1.5 million will be received when birinapant is included by IGM in a clinical Phase I study. Should birinapant be successfully developed and approved, Medivir is entitled to receive development, regulatory and sales milestone payments up to a total of approximately USD 350 million. On top of that, Medivir is entitled to receive tiered royalties from the mid-single digits up to mid-teens on net sales. Currently, the tech transfer is ongoing with full speed. We should also mention that a prerequisite for this agreement was the announcement we made in December, the revenue share agreement with TetraLogic. Next slide, please, Slide 13. Just a reminder, this is a picture that was presented by IGM Biosciences at our Web conference in connection to the licensing deal. As we can see, IGM-8444 plus birinapant shows synergistic impact on inhibiting tumor volume growth in preclinical in vivo models. Slide 15, please. Jumping then to our own proprietary compound, which we are running clinical trials with. MIV-818 is a liver-directed nucleotide. It's an oral prodrug. Once absorbed from the GI tract, 818 is transported to the liver. The prodrug is taken up by liver cells and converted into troxacitabine triphosphate, which is the active metabolite of this molecule. Troxacitabine triphosphate is incorporated into DNA and causes double-strand, sorry, DNA breaks and cell death. Next slide, please. We did, in our Phase Ia trial, see selective effect of signals in liver cancer. There is a clear sign of cell death, measured as DNA damage, was observed in liver biopsies from tumor tissues in 818-treated patients. The tumor selective effect is an early proof-of-concept of the intended liver-directed effect in patients. As you can see, as depicted in the pictures, brown coloring is evidence of DNA damage, which is not seen then in normal liver cells and enhanced post-MIV-818 treatment. Next slide, please. So currently, we are reaching the end of the Phase Ib monotherapy, which we hope to announce when that is completed. In parallel, we have started to work on and preparing the initiation of a combination therapy in the second half of 2021. Next slide, please. Just to illustrate what we aim for in the hepatocellular carcinoma space, we all know liver cancer is the third most common cause of cancer-related death in the world, and HCC is the most common form of liver cancer. As we can see, in 2020, the HCC market was approximately $1 billion, and it will grow rapidly to approximately $3 billion. The growth comes from the combination therapies that will drive this. Previously, only monotherapy was -- monotherapy drugs was approved for the treatment of HCC. Next slide, please, Slide 20. And we do also have 2 clinical programs for partnering and outlicensing. Those are remetinostat and MIV-711. For remetinostat, we expect the publication of the final BCC data, which is now being prepared. As we all know, there was an updated data points on ClinicalTrials.gov in late January, where the overall response rate from the announcement that we made in previous years was changed from 64% to almost 70%, which is seen to be very positive. But for the final details, we will have to wait for the publication. With remetinostat, there was also an investigator-initiated Phase II trial in squamous cell carcinoma that was conducted by the same group at Stanford University. The study was unfortunately terminated due to the delays from COVID-19, which resulted in difficulties to recruit patients, in the end, resulting in drug shortage. We expect data from the 4-patient study in this trial to be published during this year. We look forward to seeing those results. MIV-711, we all know we have conducted a Phase II study showing positive effects in bone and cartilage in joints in osteoarthritis patients. This was a 6-month treatment where the primary end point was not reached. We are continuing to evaluating 711 projects. With that, I hand over to Magnus to go through our financial numbers.

Thank you, Yilmaz. Please see Slide 22 where you can see the financial summary through quarter 4 and for the financial year 2020. And all numbers are in million, clear. As you can see, the turnover for quarter 4 amounts to SEK 1.5 million, which is more or less in line with last year and relate to royalty income from Xerclear. And as you can see, accumulative for 2020, the turnover amounts to around SEK 40 million, which is higher than last year and relates to both higher royalty income as well as the business deal that we made in quarter 1 2020. During the year, we have been very cost conscious. For example, we have renegotiated the office agreement that we've shown in the quarter 3 report. As well in quarter 4, we have now exited the rent agreement in U.K., which means that the liability on the balance sheet is substantially lower from now and onwards. And as well, for example, we have renegotiated some CRO agreement during the year. And as a part of that, we have received return from previous clinical studies in this quarter, which is shown as other operating income. And the effect of cost conscious is resulting in lower other external expenses as well as lower cost of personnel as we are fewer FTE compared to last year. As you can see, the loss for the quarter 4 is around SEK 11 million and for the financial year is around SEK 43 million, which is substantially lower than last year 2019. And the cash flow from the operating activities for the financial year 2020 amounts to minus SEK 58 million compared to minus SEK 148 million for the financial year 2019. And the cash position at the end of 2020 is SEK 70 million. And with the proceeds from the rights issue that Yilmaz mentioned, the cash is more than enough to complete ongoing clinical activity. And according to our current plans, we will have cash well into the year 2023. And then I hand over to you, Yilmaz, again.

Thank you, Magnus. Slide 23, please. Just to sum up, we have a proprietary clinical asset, 818, a liver-directed nucleotide prodrug. Currently, we have started planning for a combination trial with the aim to be initiated in the second half 2020 (sic) [ 2021 ]. In recent months, we did also achieve several milestones of which highlighted here on this slide. We signed a business development deal, an exclusive global licensing agreement with IGM Biosciences. We did complete a successful rights issue and a directed rights issue to a new specialist health care investor, HealthInvest. And we do look forward to complete the directed issue to Linc, which is also a specialist health care investor here in the Nordics. And we do have 2 clinical programs for partnering and outlicensing, remetinostat and 711. We continue to work with those 2 assets. With that, next slide, and I would like to open up for Q&A.

[Operator Instructions] Our first question comes from Emanuela Branchetti from H.C. Wainwright.

This is Emanuela on for Joe Pantginis. So a couple of questions about MIV-818. I was wondering, can you remind us when we will see the dose escalation data? And also, can you give us maybe a little bit more color on the thought process around the selection of a combo asset for MIV-818?

Thank you for very -- 2 interesting questions. When it comes to the completion and reaching the maximum tolerable dose, I think we have guided end of this quarter, and we hope to achieve that. It all depends with the new COVID-19 surge, of course, and recruitment of the final patient into that trial. So we can -- we'll come back to that. And regarding the combination treatment, I think we have a delicate work to do in house because the positive thing with 818 is that it can be combined with all currently approved treatments for HCC. And those are a handful treatments, both antibodies, small molecules, tyrosine kinase inhibitors, et cetera. So that is the final work that's ongoing at the company right now. And we will also convene an external scientific advisory board in a couple of weeks where we would get their inputs on what the combined MIV-818 with where we see -- hopefully, where we believe we will see the best synergy in combination with another treatment and also to discuss different dimensions of patient population within the HCC space. And we have not landed that yet, but we will communicate when we have landed what kind of combination and design of treatments we will run in combination with 818. So we will come back to that.

Okay. That's helpful. And I guess my second question is about birinapant. What did you learn about -- like from your past birinapant experience? And what makes the new combination different from the past?

Yes. I think we try to illustrate that on the call that we had in connection to the licensing agreement with IGM Biosciences. I think what we have learned that is birinapant as a single agent, it hits the targets, the intrinsic apoptotic targets. But as a monitor piece, it doesn't really drive the apoptotic mechanism in tumor cells except for some indications or some instances in some patients. We have seen other companies working with SMAC mimetics where they have shown great success in combination therapies. So all in all, to sum up, our experience is that you need to push the cell with some kind of extrinsic pathway and in combination with birinapant, which is an intrinsic inhibitory -- apoptotic inhibitory pathway, you get basically a total synergy at least what we can see in preclinical models. So I think that combination made us and we are quite excited about the IGM Biosciences and the Death Receptor 5 antibody combination where they will push the extrinsic apoptopic pathway. At the same time, birinapant will then augment that signaling, so to say, by inhibiting breaks within the cell. So I think that's the scientific experience, and that's the evidence we see out there how one can use SMAC mimetics. And that's why we are so excited about the upcoming trials that IGM will run for birinapant.

Sure. And you didn't disclose any indications for the new combination. But would the Phase I be a basket study? Should we expect a basket study?

Thank you. Very good question. Why it hasn't been disclosed, what indication, the indication that we have disclosed is solid tumors, and that's disclosed by IGM. Why solid tumors? Because the combination, if it really works, it can go very broadly. And as you have alluded to in your questions, most probably what we have learned from IGM will be a type of solid tumor basket trial, patients entering that trial to guide the further development of the combination. In the end, when you look at the mechanism and the science behind it and the preclinical models, we believe it can go very broad among many and different type of solid tumors.

Congratulations on all the progress.

[Operator Instructions] Our next question comes from René Wouters from Kempen.