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

Ladies and gentlemen, welcome to the Medivir AB Q3 Report 2021. [Operator Instructions] Today, I am pleased to present Magnus Christensen, Interim CEO and CFO; and Fredrik Oberg, CSO. Please begin.

Thank you, operator, and welcome all to Medivir Q3 webcast. Please move to Slide #2, please. Today's presentation will be held by myself, Magnus Christensen, CFO, and Interim CEO of Medivir; and Fredrik Oberg, our Chief Scientific Officer. Next slide, please. I will not go through this but recommend you to read it as always at our homepage, where you can find the presentation as well. Please move to Slide #5. Today's agenda. I will start off with an overview of Medivir, then highlight some major events during Q3. Then, I will continue with the financial highlight for Q3 before handing over to Fredrik, who will present MIV-818 in more detail, and then I will conclude with expected upcoming milestone this year before we open up for a Q&A session. Next slide, please. Medivir was established well back in 1988. And today, we are focused on quality since a number of years ago. The company is listed in Stockholm, NASDAQ since 1996. End of Q3, we had SEK 226 million in our cash balance. And according to the current plan, the cash run rate is well into the year 2023, which is very positive. And we focus both personnel and financially on our wholly-owned asset MIV-818, which is a liver-directed new pro-drug product. We are currently in Phase 1b clinical development and Fredrik will present more detail later in the presentation. MIV-818 has received orphan drug designation, both in the U.S. and the EU by FDA and EMA. Next slide, please. Here's an overview of our clinical projects. As I said, we have a focused clinical program, MIV-818, targeting liver cancer and currently in Phase I with 9 patient lives, and we're looking forward to start the combination study later this year. We also have a partner asset, birinapant, which will end the Phase I clinical development by them later this year according to IGM. And birinapant is initially planned to be combined with IGM's 8444 in solid tumors. And when IGM will start their combination study, we'll receive another USD 1.5 million. And the potential total package is worth -- if Birinapant should be successfully developed and approved, Medivir's entitled to receive development, regulatory and sales milestone payments up to a total of approximately USD 350 million. And on top of that, Medivir is entitled to receive royalty levels from the mid-single digits up to mid-teens on that phase. And we do also have 2 clinical programs for partnering and outlicensing, remetinostat and MIV-711. Regarding remetinostat, we have shown good data in a Phase II study in cutaneous T-cell lymphoma as well in to investigator sponsorship studies and basal cell cancer and squamous cell cancer. And furthermore, in the OA space, we have MIV-711, where we have conducted a Phase II study that showed positive effects in both bone and cartilage in joint in OA patients after only 6 months of treatment with MIV-711. Please move to Slide #9. Here are some highlights that we accomplished during Q3 this year. In September, Malene Jensen joined Medivir as Vice President, Clinical Development, and we are very happy to have Malene on board, and she's part of the Medivir team. She will work with the clinical development and foremost for MIV-818. In August, the positive results from the Phase II study with Remetinostat against basal cell carcinoma were published in the scientific journal, clinical cancer research. And furthermore, we announced in August that we have renegotiated through a written agreement that Medivir acquired Remetinostat. And it's very positive now that our written agreement has been renegotiated so that compensation that we are obliged to pay in the potential future outlicensing of Remetinostat is based solely on the distribution of actual future revenues for Medivir. And we believe that this agreement in place, we have improved the condition for potential outlicensing or sale of Remetinostat. And end of August, Medivir received regulatory approval from the British U.K. Medicine and Healthcare Products Regulatory Agency for the upcoming Phase 1b/2a combination studies with MIV-818 against liver cancer. And it's very important so we can start a combination study according to plan. At ESMO Congress in September, the result from the completed dose escalation part of the Phase 1b monotherapy study represented a total 9 patients with various type of advanced cancer in the liver were included and evaluated, and Fredrik will present more about -- details about the data later on in the presentation. And very positive in October, we have announced that our new CEO Jens -- is Jens Lindberg. Jens Lindberg has extensive experience from the pharmaceutical industry and the field of oncology. He joins from Sedana Medical, where he has been Vice President, Commercial Operations and also Acting CEO. And before that, he has worked at AstraZeneca for many years in different leading roles. It has not yet been finalized, we're going to the start, but maximum 6 months from the announcement. Then, please move to Slide #11. Financial summary for the quarter 3. All numbers are in million SEK. Turnover for Q3 is almost SEK 1 million, which is slightly lower compared to last year and relates to lower royalty from the second year. Accumulated turnover amounts to almost SEK 12 million, which is not far from last year's turnover. Other external expenses are higher than last year and relate mainly to high costs for clinical studies and mainly preparations for the upcoming combination study. Personnel costs are lower and relate to few FTE compared to last year. The loss for Q3 is around minus SEK 12 million, which is lower than last year. And the low result mainly relates to the positive effect of the renegotiated leases prior year, which is shown as other operating income. The cash flow from the operating activities for Q3 is around minus SEK 20 million, and year-to-date, minus SEK 4 million to SEK 3 million compared to minus SEK 57 million last year. And the cash position at the end of Q3 is SEK 226 million, which is enough to complete ongoing clinical activities. And according to our current plans, we have our cash well into the year 2023. And please move to Slide #12. And with this, I will hand over to Fredrik Oberg that will present more details about MIV-818.

Thank you, Magnus. So our lead project, MIV-818, for treatment of liver cancer. Could I have the Slide #13, please? So hepatocellular carcinoma is a rapidly growing market, predicted to reach over USD 5 billion in 2029. And as you probably are aware, there's been recent advances in the treatment of HCCs. But despite this, there is still a large group of patients who will either not respond to this therapy or be intolerant to the current treatment. This means that hepatocellular carcinoma still constitutes a continued very high unmet medical need. The market growth in -- within HCC is mainly driven of new combination therapies, especially combinations with immuno-oncology therapies. So more patients are also receiving therapy when patients are living longer and treated earlier in the disease. But there's also an increase in liver cancer incidents and mortality. And still, the 5-year survival for advanced HCC is really very poor. So there's a big market here that needs new therapy. So if we move to Slide #14, in the third quarter, we reported the Phase I monotherapy data at ESMO. The bottom line is that these new results, we think, are very exciting to us. We think that this supports our continued development of MIV-818 in HCC. More specifically, the objectives were to analyze safety and tolerability in this patient population. And the patients that were recruited into this study were patients with HCC, but also with liver cancers derived from other primary sources, so liver metastasis from colorectal cancer, for instance. So a broad patient population heavily pretreated that has exhausted other approved treatment options. So in terms of safety, what we observed was that we saw a decrease in blood cell counts at higher doses, which was expected. That was the most common side effect. This result quickly when treatment stopped and they're easily monitored. So we think this is a very good safety profile to this patient population. In terms of efficacy, which we, of course, wanted to monitor as well, although they're, of course, not the primary objective, we observed as the graph to the right indicates that 4 patients out of 7 with primary liver cancer, and that is hepatocellular carcinoma and cholangiocarcinoma had stable disease as best overall response. And one of them actually stayed on treatment for 8 months. And on the right, you see the changes in these liver target lesions over time measured for the different diseases that were included in the study. And we also, as proof-of-concept, took liver biopsies and then analyzed. These liver biopsies demonstrated that both of these deliver the drug to the liver. We can measure a metabolite that cannot be found from any other source than MIV-818. So we know that we have delivered the drug to the liver. We also observed a selective effect of MIV-818 on the tumor cells. So induction of DNA damage in the tumor, but not in the surrounding normal liver tissue, which is great and really what we were hoping for. This confirmed the initial observations that were seen in the early Phase 1a dose escalation part. So with that, we feel very confident in moving on in our clinical development of MIV-818. So if we turn to Slide #15, a difference now that we're moving on in our clinical development program is that we're focusing in -- on hepatocellular carcinoma. So going forward, we see this as a good entry point. It doesn't, of course, exclude other cancers in the liver in the future. But now we're focusing on HCC. These primary liver cancers develop from liver cells themselves. There is a large number of patients across the world. As you probably know, this is a very common cancer in Asia whereas it's much more uncommon in the west. And therefore, we have sought and gotten Orphan drug designation for MIV-818 in HCC. The majority of these primary cancers in the liver are hepatocellular carcinoma. And in this treatment schedule that you see on the slide, highlighted with red, you see the patient population with advanced HCC. These are the patients that get systemic treatment. So these are the patients that we mostly talk about when they get immunotherapy, et cetera. And this is the patient space that we're entering with MIV-818. So if we move to Slide #16, in this space, in the advanced HCC space with systemic treatment, MIV-818 constitutes a unique new tool by its mechanism. So the current development pipeline in this space consists of a variation of different combination trials mainly. And they usually contain 2 main mechanism of actions, one, to stimulate the immune system, and marketed drugs here are the immune checkpoint inhibitors, mostly anti-PD-1 or anti-PD-L1. or tyrosine kinase inhibitors, TKIs. They do many different things, but one of the major things they do is block tumor supply to -- blood supply to the tumor, so they're anti-angiogenic. And combinations of these are the main 2 mechanisms that are both in -- both marketed and also in late-stage clinical development. So if we move to Slide #17. With MIV-818, we aim to be a new improved second-line treatment. This is how we view the entry into this market. The approval last year of TECENTRIQ plus Avastin, a combination of immune stimulation and blocking blood supply to the tumor, created a new second-line space. So they're actually -- strictly speaking, no approved second-line treatment after TECENTRIQ and Avastin. Now, of course, not all patients will get TECENTRIQ plus Avastin for different reasons. And a large portion of these patients will still be either primary resistant or have a response and then progress on their treatment. So this creates a new second-line opportunity. And with MIV-818, which has the mechanism of inhibiting DNA replication, we see that opens an opportunity to combine with the 2 main types of therapies in this space. So that's where we think we will enter. MIV-818 plus one of the anti-PD-1 antibodies, KEYTRUDA or MIV-818 with one of the TKIs, LENVIMA. So if we move to Slide #18. The upcoming Phase 1b/2a combination study in second-line HCC. Here, we're focusing on a patient population that has advanced inoperable HCC. They're either progressed or are intolerant of standard first-line therapy for HCC. So that could be, in most cases, perhaps TECENTRIQ plus Avastin, but other possibilities exist for patients that do not tolerate TECENTRIQ plus Avastin, for instance. And there should also be candidates for KEYTRUDA or LENVIMA. What we're looking at is the study that is divided into 2 phases, a Phase 1b part, which is a dose escalation. Based on the recommended Phase II dose for monotherapy, we're entering a bit lower here in this dose escalation to identify a combination recommended Phase II dose. This dose might be different for the different combinations. But these arms are -- streams are parallel. And after this dose escalation part, we aim to have a dose expansion part where we expand the number of patients at the correct dose to still obviously look at safety and tolerability, but also take a closer look at signs of efficacy. We're on track to initiate this combination study as planned. We will do the study in the U.K. We have regulatory approval in the U.K., we will add additional sites, but we're also working towards opening sites in Spain and South Korea. And this is important not only to recruit patients, but also from a strategic point of view. Having patients in South Korea, I think, will be an advantage for MIV-818 going forward. So if we move to Slide #19. The key advantages summarized in one slide that we see for MIV-818 going into HCC is that it's once oral daily dosing, it's one pill a day, it's convenient. More importantly, it's targeted to the liver. So this selectivity that we have seen in Phase 1a and b monotherapy, selective for tumor cells in the liver really is an advantage in terms of getting good effect in the liver and reducing systemic exposure and toxicities. There's also something that we haven't spoken that much about, but the fact that the prodrug design allows us to bypass several common resistance mechanism for nucleosides, normally found for nucleoside drugs such as deaminases, transporters, et cetera, which increases the efficacy of MIV-818 over the nucleoside type of drug. And also in the HCC space, we see that MIV-818 has a unique mechanism of action, which makes it attractive for different combinations as the resistance profile and the efficacy profile will differ from the other agents, the other therapies in this space. And as we've mentioned, we're entering with a combination of immunotherapy with MIV-818 and tyrosine kinase inhibitor in MIV-818. But obviously, the fact that we're unique opens up other possibilities in the future. So by that, I will hand over to Magnus.

Thank you, Fredrik, and please move to Slide #21. Here, we have highlighted expected milestones for the remaining part of this year. Firstly, we're looking forward to start a combination study with MIV-818 later this year, as Fredrik mentioned. And then secondly, IGM has announced in the future report of the plan to start a combination study with birinapant and IGM-8444 later this year as well. And when they start, we'll receive another milestone payment of USD 1.5 million. And we are really excited to follow the progress of these clinical studies. And with that, next slide, please. I will hand over to operator to open up for a Q&A session.

[Operator Instructions] We have the first question from Joe Pantginis from H.C. Wainwright.

So I have a 2-part question. The first one really looks to this upcoming combination 1b/2a. So first, it revolves around benchmarking about what benchmarks you have for success. And obviously, we can get those from the labels for both lenvatinib and KEYTRUDA in their respective HCC populations. So I'm curious, will you disclose at some point or discuss now to some degree, what you believe is the benchmark to beat? Like what do you want to see to be able to move from 1b to 2a?

Well, obviously, this is something that we have discussed quite a lot internally. I don't think we're ready to put the number on that publicly, yes. But as you say, we do know what the current treatments have achieved, although in a different -- slightly different setting as these were approved after sorafenib as first-line treatment. But it gives a good indication of where we need to be or what we need to be, of course, anyway. And then again, I think that what we're going to see here initially is objective response rate. And most likely, the overall survival, in the end, will be what really counts. So, yes, there will be several numbers to benchmark against eventually.

Sure. And my next related question is definitely forward-looking but I guess it's an open question prior to the study, during the study, and after the study that investors commonly ask as well as the medical community commonly asks. And that is how would you look to be able -- other than seeing improvements over the label, other ways you can discern the contribution of MIV-818 to potentially enhanced efficacy since it's not randomized.

So as you say, this study is open-label and it does not have a comparator arm. And I suspect that the data will be driving us in that respect with really good data, then the question is easier. With data that is good but not that good, we would probably need to include a comparator at some stage.

Got it. Thanks for the added color, and looking forward to the start of the combo study, guys.

We are, too.

Next question from [ Hans Engler ] from -- private investor.

Guys, in an article in Science, which I know you have seen, is claim that the immunotherapy -- to really having immunotherapy to really work, DNA cells must be damaged. In relation to this, what is your view on MIV-818 in relation to this with damaging the cells?

Okay. So yes, that was a very interesting article. It essentially said that the maximum stimulation of immunotherapy would require damage, but not dead cells as well as dead cells, which, in essence, meant that the maximum dose was not the optimal dose. I think this is very interesting. It's still model systems, but very similar results we actually saw from MIV-818 and we published that on our poster in a complex in vitro system with different cell types that actually we stimulate the immune response towards KEYTRUDA in the combination with MIV-818. So I think it's very interesting. I think that MIV-818 at a correct dose would do the same, namely achieve some level of cell killing, but still induce DNA damage in cells that live and perhaps are immune-stimulatory. So that's just a speculation.

Okay. And in the upcoming combo, you study advanced HCC. And in the intermediate HCC, TACE is a sort of chemo -- sort of chemoembolization is used. Do you see that it's possible for MIV-818 to replace TACE entirely in the future?

I mean that's a very ambitious goal, obviously, with TACE being very much an established method. But we do see future opportunities in patients that are intermediary or earlier in their disease. But I think that our current focus is the right focus to get the quickest way to approval, and that is to target the advanced stage patients because in the intermediate stage and in the patients who are -- have adjuvant therapy, for instance, to surgery, those are quite long and positive studies. And I think that our best play is to move into the advanced HCC space.

Okay. One further question. The protein degradation is being very hype at the moment with deals by Pfizer and Novartis recently. Your licensee of the USP7, Ubiquigent, it's hard to say. They last week announced that they had extended its discovery corporation with Bristol Myers Squibb. Does the new agreement includes your license product, USP7?

I mean that's a question for Ubiquigent. But of course, we're happy that we have licensed this project to a company that's very, very active and very competent within the DUBs field. So of course, these are very early molecules, but we're -- we hope they will be successful in the end. But this is a long-term goal still. So I couldn't really comment on their deal with their collaborations. But I'll give you -- we think it's a good partner, simply.

Yes. Just to follow up on that one then. With the -- it's been quite huge amount that Pfizer and Novartis are committing. And the BMS has quite an experience in the area. Do you believe that material revenue can come out of the revenue-sharing agreement Medivir has with Ubiquigent?

Absolutely. I mean, that's our hope and that's what was our intention when we did the deal.

Yes. Can you say anything about the timing of that?

No. I think, unfortunately, this is something that will be completely driven by data and the deals that Ubiquigent are -- can make, and it's really impossible for us to say anything about the time line.

Okay. But it sounds exciting, definitely.

Next question from Niklas Elmhammer from Carlsquare.

Okay. I was just wondering about business development following your new results and renegotiated the deal for -- deal terms for the mid-term that's going to start in summer. If you're seeing any renewed interest or intensified discussions with council partners?

Thank you for the question, Niklas. Of course, that's a very good question for me to guide on really. But of course, with the positive data from the studies that were announced in quarter 3 and with many new revenues, in revenue share agreement, of course, it attracts some interest. But it's very difficult to guide on when and if we could be accomplished a deal. But of course, we are working on it. That's what I can say.

Okay. Regarding the upcoming Phase 1b combination study. You mentioned starting doses there will be a bit lower. When do you think you will reach -- how soon do you think you will reach therapeutic dosing?

Again, very difficult to speculate. So we reached a dose of 40 milligrams per day for 5 days in the monotherapy study. We're entering the combination study with a 60% reduction. That means that 20 milligrams per day. And we have these 3 design cohorts of 3 patients at the time. And the -- we don't expect to go that much higher. But then again, we don't really know. So once we have gone through the dose escalation, I think we will be able to guide better the timing of the Phase II expansion phase and when we will get the data. So because it's the first dose-escalation part, it can be so elastic depending on what we see.

Next question from Richard Ramanius from Redeye.

I had 4 questions. Maybe I can continue with a follow-up from one of the previous questions. Do you have any kind of perfect or optimal partner for remetinostat? What kind of company would you think would be your best partner for that project?

That's a tricky question. Of course, we would like to see someone who is confident within derma-oncology and has the resources to really -- I mean, key for out-licensing is that we have a competent partner with the resources to actually do the studies. I mean that's why we're really happy with the deal we made with IGM Biosciences, very confident company and also backed with good money. So that type of situation, of course, is the ideal situation for remetinostat as well.

Okay. Then I have 2 questions concerning MIV-818, secondly, both of them at the same time. So first question, concerning the time line, how and when do you plan and prepare for an exit? And then the second question, have you had any discussions with or interest from Merck eyesight who's substances you're doing the combination study with KEYTRUDA in LENVIMA? I was thinking, for example, a supply agreement or something like that.

So if I take the last question first, the -- as you know, there's probably slightly under 2,000 studies going on with anti-PD-1s and a large part of those are KEYTRUDA studies. So it's a very, very big space, very many combinations of different kinds. And there's something to be said about having a collaboration agreement or a supply agreement. And that is, that does restrict you in what you can and cannot do going forward. Of course, you would save money but at the same time, you would tie yourself to that product. So having that finance by us gives us rather larger freedom to operate after we have the generated data. So that's one important aspect. We cannot say anything about if we're talking to them or not. I mean that would be confidential. But -- so we have considered different ways forward, and we think we have a really good way. We think we're confident, we have the finances to do, and that would give us the best opportunities after completion of this study. Then the time lines for an exit. Again, I would hand the question to Magnus. It's a very difficult question to answer.

Yes. Thank you. It's -- I think we had said it before, I think we can have different routes to the market. If you look at the western world, we hope and we see that maybe we can manage to do ourselves, the whole way to the market. Of course, it will be data-driven from the Phase 2a that we're going to perform soon. And from the Asian part of the world, what we see now that we think is the best for the project is to find a partner from the Asian part of the world. That's what we can say at the moment. But we will see and after we have progressed in the study, we might guide you a bit more on that later on. But at the moment, we're refocused on starting the clinical study.

And of course, it is -- I mean, it's no secret that companies in Asia do want to see data from Asian patients. And they do want to see a bit later date than just the first Phase I study data in general. And this is also our experience talking to different potential partners. And that's why I think -- we think that actually opening sites in South Korea is an important strategic move in order to open up that possibility and also increase the value of potential deals.

Yes. That makes sense, absolutely, especially what you saying, having an Asian partner. And my last question, financial, how do you see the cash flows changing in the next couple of quarters as you're start -- or as you continue or ramping up with the next part of the MIV-818 trial?

Yes. What I could say that some of the cash flow that we are -- now is preparing for the combination study and of course, for the substance, and so on. But what I can guide you, like I said before is that the cash run rate is well into the year 2023 according to the current plan. And we don't really split up into the quarters, but the money will last well into the year 2023.

[Operator Instructions] Looks like we don't have any more questions. Back to you for the conclusion.

Thank you, operator, and thank you, all, for participating in this webcast and some very great questions. And have a great day. Thank you. Bye.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect your line. Thank you.