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

Thank you, and welcome, everyone, to today's webcast on the back of yesterday's announcement of our planned rights issue moving forward. In today's call, we will walk through the rationale for why we are doing the rights issue and what we will be focusing on with regards to the use of proceeds. But most importantly, we also want to spend time on why we believe that this is the absolute right way to go with regards to generating long-term value for both Medivir as a company and primarily fostrox as a project. And therefore, we will also sort of focus our presentation today with and on fostrox as a project and how we will now take that forward. And presentation-wise, I will take the first part, and then Pia will take the second part. And as you heard, we will close with the Q&A session at the end. You will find the presentation on our website as well, including sort of this important disclaimer, which you can read sort of more thoroughly so when you access the presentation there. As I mentioned, we will focus on fostrox today, but just sort of a short start and a reminder that sort of Medivir as a company, we do have an oncology pipeline with our lead assets, fostrox, our in-house developed lead assets that we focus on, which is currently in Phase II and moving forward with speeds. We also do have a number of partnering programs that are out-licensed and where we have seen progress during the year, including sort of assets that are moving towards the clinic. So -- but we will focus today's presentation on fostrox as the rights issue will go towards accelerating the fostrox project on the back of the promising clinical data that we have presented over the past 2, 3 months. The key reasons underpinning the rights issue, why are we doing this? They are three. One, and perhaps the most important one is to keep maximum speed and momentum in the development program for fostrox. What we have shared over the past 2, 3 months is that patients in the ongoing fostrox LENVIMA study, they are staying longer on treatment, and data has continued to improve with increased maturity. As we have shared data updates, we have seen that time to progression has sort of grown longer. Overall response rate, disease control rate has improved with maturity of data. And so the improved clinical benefit supports a raised ambition. And for those of you who listen to our quarterly call a couple of weeks ago, we did announce that sort of the improved clinical benefit, together with the unmet medical need in second-line primary liver cancer sort of enables us to raise the ambition with regards to next phase. And we talked about designing Phase IIb with the intent of enabling accelerated approval as early as 2027. If we are to do that, that does require accelerating critical activities with regards to regulatory interactions, clinical preparations, and CMC, or manufacturing. So there are a number of things that we either need to accelerate or do them earlier than planned. But these are the key reasons why we are doing what we're doing from a rights issue perspective. And we will come back to sort of some of those elements regarding the rights issue sort of later on as well. But again, if we go into fostrox, it is a unique compound. It is the only liver targeted therapy in development for primary liver cancer and on the back of the improved clinical data that we have seen over the past 2 to 3 months, we are now seeing a clear opportunity for a pivotal next phase with accelerated approval intent 2027, into a patient population where there are no approved treatments today. So what we want to do is keep that momentum, keep that speed in order to be the first treatment in second-line live cancer that is approved, a market that is of significant value. For those of you sort of, again, as a brief reminder and a simple overview of that, this is the treatment algorithm in liver cancer and first-line treatment all the patients or I would say, 95 out 100 patients do get an immunotherapy combination. But we also know that 70% of those patients will not respond to treatment, and they will need a second line therapy. In that second-line population, there are no approved treatments. There's a big unmet medical need. And clearly, there is a very sizable commercial opportunity. Today, many of the patients get off-label LENVIMA if they can't find the clinical trial. And it's in this population where there are no approved treatments where physicians want to use LENVIMA where we see that a combination of fostrox plus LENVIMA, if approved, has a very significant commercial opportunity with low commercial risk. We have talked about sort of liver cancer being different than other cancers, and key element being that progression in liver cancer rarely or much more seldom happens outside of the liver, i.e., metastasis, et cetera. Most of the patients will have tumor growth within the liver, and it's the primary tumor in the liver that provides with significant challenges with regards to leading to death, et cetera. In other tumor types, it is much, much more often that the metastases outside of the primary tumor poses challenge. For example, many lung cancer patients will have brain metastasis, et cetera. And this is where then fostrox being a liver-targeted therapy is unique, and it's an opportunity for physicians to sort of target that primary tumor burden in the liver, specifically with the drug like fostrox. And how have we achieved this? fostrox is, as I said, it's a liver targeted, it's a smart chemotherapy. It is on the one hand side. On the right, it is a chemotherapy troxacitabine, which induces DNA damage and cell death. That we know, and chemotherapy is effective in killing tumor cells. But it also needs to get to the tumor cells with sort of appropriate exposure and also sort of minimize systemic benefits. And this is where we have used the historical sort of know-how and expertise in Medivir of how do we get drugs to deliver. And that you do in hepatitis C, among other things, by attaching a prodrug to the active substance. And that enables oral administration, but most importantly, what it does is that the combination of the prodrug and the active substance goes through the gastrointestinal tract without being absorbed and then it gets absorbed in the liver instead. And this way, we get a 100-fold liver exposure for the chemotherapy versus if you would give it intravenously, which you usually do with chemotherapy. So what it means is that you get much, much more sort of drug exposed in the liver, and then you minimize the exposure outside of the liver, minimizing side effects or systemic side effects. And when we do that, sort of not only do we get the drug to the liver to do the sort of induce DNA damage and cell death in the liver. What we can also see is that it kills tumor cells. If you look at the graph on the right, we can see that we induced the DNA damage in the tumor cells but we're not inducing the DNA damage in the normal cells. And that's, that's super important because what you don't want to do is, of course, kill normal cells. And this is enabled by the fact that tumor cells, they divide or proliferate faster than normal cells. And it's that difference in proliferation that enables fostrox to sort of selectively kill tumor cells sparing normal liver tissue, again, providing antitumor efficacy, minimizing side effects. And we can see that in the data that we've shared over the last 2, 3 months, we can see that the rationale, the scientific rationale behind the prodrug solution and selectively killing tumor cells, so that we are now seeing that translating into clinical benefit. And Pia will talk to what we have seen and are seeing in the study.

Thank you, Jens. And as Jens said, there are no approved treatment after progression on standard of care in first-line HCC. And you will see that fostrox is showing promising data when added to LENVIMA that is used off label actually in the second line as it is today. So the data on the next slide, not on this slide, next slide comes from what you see here, the fully recruited -- we can say on that slide -- the full recruited and ongoing Phase Ib/IIa study and where we have used fostrox plus LENVIMA in second line or in third line. The starting dose here, if you start to the left, you can see it's 20 milligrams, and it's oral, and it's given for 5 days in a 21-day cycle. But we didn't see an induced -- this was a dose escalation from the beginning, and we didn't see any dose-limiting toxicity, and we didn't reach what we call the maximum tolerated dose. But we still selected 30-milligram to ensure that we have this optimal dose where we could show benefit and it would be a good balance also not of course, any excessive toxicity on top of LENVIMA because we wanted to treat the patients as for as long time as possible. LENVIMA was given at the standard doses and the patients, as you can see to the right were treated until there was a recognized tumor progression. Now we can go to the next slide, please. So in this waterfall plot, it is showing the best percent change in tumor size for each individual patient. And if you see, I think you can see it, the dotted line on top of that is the threshold for tumor progress is orange. And the threshold for partial response is below in green. And as you can see on this slide, none of the patients had progress. And if you look at the green line specifically to the right, you can see that four out of the 18 patients had a partial response. And these results are highly encouraging. And with the study still ongoing, we hope for further improvements. It is, however, important to note that response rate and particularly in second-line HCC are usually very low. It is below 10%. And that's why disease control, which includes not only in response, but also stable disease, which means when you are between this dotted line, as you can see here, it is considered a successful outcome. And as mentioned, all patients here had tumor control in the target lesion, as you see in this waterfall plot and a clear majority of these patients more than 70% actually experienced a tumor reduction. We had additional three patients that were not part of this analysis, and you don't see them on this waterfall plot, and because they had not been followed for 12 weeks or more. But they have been followed for 6 weeks and all these patients have shown a stable disease on their first scale. We can go to the next slide. So the Phase Ib/IIa study data are highly encouraging. But a quick question that comes up, obviously, is how does this data compare with what could be expected if you use LENVIMA in second-line HCC. LENVIMA has not been studied much in second line, but now we have found published data on LENVIMA monotherapy after what is going to look at [ avastin ]. And this is a Japanese study. It is 10 sites and 12 patients had advanced HCC. This data set with all its limitations can contribute to the understanding of what is the added clinical benefit of fostrox to LENVIMA. And we try to show you that. We can go to the next slide. So when we do an indirect comparison between these studies, there is a consistently improved benefit with fostrox plus LENVIMA across the different endpoints, as you can see here on this slide. fostrox plus LENVIMA in green and LENVIMA monotherapy is in orange. And this is particularly the case when it comes to the duration of efficacy as seen by a higher disease control rate, what we talked about before, it's actually stability plus response. And that is at 12 weeks. And particularly at 18 to 20 weeks, if you look at the bottom table there, where the control rates dropped substantially over time in the LENVIMA monotherapy study, and it does not really do that when you add fostrox. Also, the overall response rate on the top table was high with fostrox plus LENVIMA, and we could see one patient that achieved complete response, and that was not seen in the LENVIMA monotherapy study. So we can move to next slide. There are other endpoints that are also important that you mainly see them in large Phase III study, and that is progression-free survival. It is an important endpoint. It includes all the patients, not only those who have responded but also those who haven't responded that has a chance to benefit from the treatment. So in the fostrox LENVIMA study that is ongoing, the PFS analysis has not yet been done, but we have time to progression which is a similar analysis and can be compared with PFS is the study, which we are, currently now shows no real difference between PFS and TTP, and that was the case in the Japanese study, while we are doing this comparison now. And as you can see here, both if you did an independent analysis or you did investigator analysis, there is a consistent improvement in PFS and TTP when fostrox is added to LENVIMA. And that is seen on the two graphs to the left. This pattern can also actually be shown when looking at how long do the patients stay on the treatment as a checkup. And in media, in the graph to the right, this was longer as well with fostrox plus LENVIMA and it supports the improved clinical benefit. So we are recognizing the pitfalls of doing this comparison, and we have limited data set. But the totality of these data is encouraging for fostrox plus LENVIMA. And also when you combine two drugs that have different antitumor mechanism, there is a strong rationale for synergistic activity with improved benefit. And we expected that, but one important factor is, is the combination really tolerable, because we don't want to reduce the efficacy of LENVIMA by having to do modify, for example, or discontinued. So we can go to the next slide. So we looked at that as well. Tolerability is, and Jens already alluded to that, and will you have a new combination, tolerability is important, right? But it's even more important when you look at HCC studies due to the vulnerable patient population. So the most important here was really that we didn't see any new additional unexpected safety events when we combine fostrox with LENVIMA. And in the fostrox plus LENVIMA study, only 10% of the patients had to discontinue due to fostrox related effects. And if you look at the table here, you can see that the incidence of higher grade adverse event more than three and discontinuation due to LENVIMA-related events were really similar between the two studies. So we -- what we can say here, it seems like the combination is able to provide improved clinical benefit without compromising safety and tolerability. We can go to the next slide. So with the high unmet need, we talked about that already, together with the processing clinical data for fostrox plus LENVIMA we really feel confident to raise our ambition when it comes to the clinical development, the future clinical development of fostrox as we really conclude at pivotal Phase IIb study with an accelerated approval intent in 2027 is really the appropriate next step. So this is how it looks like, and we hope -- yes, with the hope of replicating sort of the magnitude of the promising data as we already talked about from the Phase Ib/IIa. We are planning a randomized double-blinded pivotal Phase II study comparing fostrox plus LENVIMA, with LENVIMA alone, and we will use PFS as a primary endpoint because this is a really solid endpoint. So with an appropriate safety database, together with the fact that HCC is a serious, it's an orphan disease with high unmet need. We aim for this study to really support an accelerated approval. As we already said a couple of times already, but in 2027. And now I'll leave over to Jens.

And then the final note before we go into the -- towards the Q&A. Liver cancer is -- can sometimes be seen as is not the most common cancer type, but from a commercial viewpoint, it is a highly -- it's a growing disease. And from a commercial perspective, it is a sizable market. And if we focus only on the second-line treated patients, and that's what we see here on the left is the graph representing the annual value of the market. And on the right, you see some information how sort of underpinning that calculation. I think the key element here is that 2028, which on the back of accelerated approval will be the first year on the market. This market is worth almost sort of basically roughly USD 2.5 billion annually, and there are no -- sort of with the base case assumption from our end that there will be no approved treatments post first line, i.e., in this sort of second line population, i.e., fostrox LENVIMA sort of is the first novel combination in development with the opportunity to be the first approved treatment into a population that is -- has a market value of $2.5 billion. And it is when we then sort of -- as we have seen the data strengthen over the past few months when -- or a few months since that 3, 4 months, as we have shared data updates. And it becomes clearer and clearer that this is a population which other companies don't seem to be targeting. We are moving towards sort of being the first one, and it is a sizable market. That has led us to sort of the conclusion that we need to do everything we can to move with speed for the benefit of the patients, of course, but equally, for taking advantage of the commercial opportunity or value for fostrox and the combination with LENVIMA. So with this rights issue, this -- what we are doing with it or sort of the use of proceeds here is to, first and foremost, sort of continue to follow up sort of the patients in the ongoing study because the patients are staying on treatment longer than we expected. Clearly longer than we have seen previously in second line. So the longer patients stay, the more mature data we can sort of develop the more compelling that data set will be. So that's clearly important. Then accelerate preparations for the next phase, which we have now concluded after Q3 that we're moving to a pivotal study. That means some adjustments to our plans. And it means engaging with regulatory authorities regarding study design and open it up in IND and making sure that we engage with our clinical experts, et cetera, to adjust the plans. And then make sure that we clinically prepare for including more countries because if we do a Phase IIb with pivotal intent, we want to make sure that not only U.S. but also other relevant countries like Japan are included. Plus there are a number of sort of CMC/manufacturing activities that needs to be done to ensure that the study is that is ready for both pivotal sort of design, but also that we are ready for an accelerated approval and commercial launch. And I would say, not last but not least, an important element is also -- and we've communicated this before, that we see establishing partnership with the strongest possible partner in Asia is an important next step. And on the back of us seeing sort of strengthen data, we also want to make sure that we generate as compelling data as possible before we go into sort of in-depth partnering discussions with potential partners. So we don't want to go too early. And now that we've concluded, yes, we do see pivotal Phase II as the next step. That also clearly then opens the door more widely open for those partnering discussions and why we didn't want to push that prematurely as data strengthens. So that's what we plan to do. And the key priorities then in the short term moving forward is now that sort of we have mature data now that we see that it has improved and strengthened that is next step to be presented at a scientific congress in Q1 2024 using sort of the independent review, important. And then on the back of this sort of now more mature and improve data to really dive into the partner discussions to establish sort of [ innovation ] partnership and accelerate our regulatory KOL interactions to finalize study design while driving the critical sort of CMC activities needed to be ready for both studies start, and then the commercial launch for accelerated approval readiness. So that's in short the priorities moving forward. So to sum it up before we go into Q&A, sort of a similar message as we had in Q3, what we really would like for you to take away. And what we're trying to share is that with fostrox, with the data we're seeing, we truly believe that we have a unique liver-targeted therapy with potential for accelerated approval into a population where there are no approved treatments. So let's take advantage of that opportunity. Let's move with as much speed as we possibly can because we do truly believe that sort of fostrox plus LENVIMA improves efficacy versus LENVIMA alone and into a market that is sizable where we could be first. So those are some of the reasons why we are embarking on this rights issue. So with that, we'll stop there, and then we leave it open for Q&A.

[Operator Instructions] The next question comes from Richard Ramanius from Redeye.

My first question is a bit obvious, but I'll ask it anyway. Why did you choose to do the right issue now and not, let's say, in 2 months?

The -- I think it's all about sort of the speed and momentum. The development of medicines are take time and a number of activities do have a long -- relatively long lead time. So with regards to driving the regulatory interactions, but perhaps even more so some of the manufacturing or CMC activities, sort of those are elements that we really need to push now as early as possible to don't lose sort of -- every month is valuable here. And if we want to start that pivotal Phase IIb sort of before end of 2024 we really need to get going with some of those activities earlier than we had previously planned. So it's a -- it is really a matter of -- we don't want to lose any time at all with regards to moving to Phase IIb.

Okay. And I was thinking also to the other questions. First one, about your commitments of [ 68% ] and as you're aware, this is a tough market and what -- how far would that take you if that would be the outcome or what do you -- let's say, contingency plans if you get 68% subscription instead of 100%.

Thank you, Richard. I mean, of course, we are looking at different priorities in order to make sure the cash run it as long as possible. But I think it's a bit premature to say that what we will prioritize right now before we know the outcome of the rights issue. But of course, we have different priorities what we will do when we know the outcome for the rights issue, and we will look at that.

Okay. And the last question is, how do you think you'll finance the Phase II study. Would you have to finance part of that yourself? Or do you think you could find a partner to cover not just Asia, but the whole, the global sites?

I think that's one other. It's prematurely to answer it with any definity. But of course, what we have said all along is that we want to establish the best possible partnership in Asia. And that's one of the reasons why we didn't want to go too early. We wanted to make sure we have a mature robust data as possible to find the best partner. And it wouldn't be -- I mean, sort of finding, for example, one of the global Japanese set of players would be a really attractive partner, of course. And in that dose discussions, while we say that our main focus is an Asian partnership, we will, of course, be open to a broader partnership with the right partner. So I think that if there is an opportunity for that, that is beneficial for the company, for the shareholders, which it could well be, then we are, of course, open to that as well, and that scenario we will be exploring. And that -- maybe I'm a bit repetitive, but I think it's really important, we really want to emphasize that element that partner discussions is a matter of timing. And if you go too early, with too early data, then yes, it sounds good. The rationale is there, but the value of the asset and the project will be lower. And as we have seen, I mean, sort of the data -- I mean, it's an open-label study, we've seen the data improved, the efficacy improve over time. We wanted to make sure that let's not go too early. We don't think it's in the value of the shareholders, and we don't think we will attract the best possible partner if we go too early. Now with an accelerated approval sort of intent plan design, we -- I mean, we truly believe that sort of the opportunity for finding the best possible partner is there and possibly then also sort of unlocking that sort of broader opportunity beyond Asia as well.

Just a follow-up on that. I guess if you could find the best possible partner, they have deep pockets, perhaps you can negotiate a good upfront payment in that case?

Yes, yes. And sort of clearly sort of I go back to my point, again, the better the case is, the more compelling the data, and then also the further ahead our plans are and the more activities we have done, the stronger support and engagement we have from the international KOL opportunity in the scientific council it all adds to sort of negotiating the best possible agreement, including upfront. So it is a balance here. You always want to move with as much speed as you possibly can. On this particular one, and we do believe that of it wasn't in our best interest to move with the highest possible speed. We think that sort of where we landed with Q3, what we're seeing now is the ammunition we need in order to maximize the outcome of and the partnering discussions.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

It looks on the screen here, like Klas, maybe, maybe put himself in the question queue.

The next question comes from Klas Palin from Erik Penser Bank.

Just a follow-up on these partnering discussion. You intend to release some additional data in Q1 2024 for fostrox if I understood it correctly. Do you want to see that data before you really, really approaching partners?

The short answer is no. The slightly -- so those discussions, or those kind of outreach, et cetera, that is underway. I mean, as we have seen in data, we're just saying that we didn't do it too early. So -- so that's always important in that journey. But -- and the other slightly longer answer is that set of data that we presented in Q1, we have been focused on the independent review data sort of which is the primary endpoint. We will also be able to see some of that. We will see that data before we present it externally, and that data we can use in partnering discussions on and in NDA as well. So the data set will still benefit partners before we present at the congress. But I think it's important to have a sort of peer reviewed and presented before a partnering discussion is kind of finalized and agreed publicly. So it's -- things will happen before in terms of discussions and approach.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

And again, then I'll go back to -- so thank you, everyone, for calling in, and thank you for the questions, et cetera. What we want to leave you with is that -- we believe we have a great opportunity here with regards to moving with speed with fostrox plus LENVIMA into a population with great unmet medical need, no approved treatments with a significant commercial opportunity. But if we are to get there first, or as soon as possible, we want to make sure that we don't lose a day's momentum. We want to move with as much speed as we possibly can across the board with regards to clinical design preparations, regulatory interactions, CMC activities, et cetera. And that's why we are doing the rights issue here just to make sure we don't lose our feet in terms of realizing the longer-term value for the company and the asset. So with that, thank you, everyone, for dialing in.