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

Thank you, operator, and welcome, everyone, to Medivir's webcast covering the second quarter of 2026. And looking back, this was the quarter where a lot of things came together for us. The Phase Ib/IIa data for fostrox in combination with lenvatinib was published in Clinical Cancer Research, which is one of oncology's most cited journals. And we also took the important sort of exciting next step as the first patient was dosed in the randomized FLEX-HCC study in Korea. We secured funding to take MIV-711 into a second rare bone indication, Perthes disease, through an oversubscribed directed share issue of approximately SEK 140 million. Pia will take you through the clinical progress in both fostrox and MIV-711, and Patrik will cover the financial details. With 3 funded Phase II studies and a strengthened balance sheet, we are in the strongest position that we have been in many years. So let me start with the 3 things we would like you to take away from the quarter. First, for fostrox. In June, final safety efficacy data from the Phase Ib/IIa study of fostrox plus lenvatinib were published in Clinical Cancer Research, a peer-reviewed confirmation that our liver-targeted mechanism delivers tumor-selective efficacy without impairing liver function and a very important validation for when we speak with investigators, regulators and potential partners. And as I mentioned, in May, the first patient was dosed in FLEX-HCC, the randomized Phase II study. And we continue to see super strong engagement among the Korean investigators and recruitment is progressing very well to include all the patients within the 12 months. Second, for MIV-711, through the directed share issue, we are now taking MIV-711 into Perthes disease, which is the second rare bone indication where we already have Orphan Designation and Rare Pediatric Disease Designation from the FDA. And in parallel with that work, the study design for the proof-of-concept study in Osteogenesis Imperfecta has been finalized and preparations are progressing very well. And building 2 rare bone indications on the same established safety profile multiplies the value inside the single drug candidate. Third, our financial position. The directed share issue of approximately SEK 140 million was oversubscribed and brought in new institutional investors, and we ended the quarter with SEK 253-plus million in cash, and we now have funding in place for all 3 Phase II studies. Let me stop there. Just to sort of highlight our pipeline of first-in-class programs and the one thing that -- the one change that you see on this slide from previous quarter is the Perthes disease, where we are now then in the planning phase of the Phase II proof-of-concept study. We will not sort of speak too much about it today, but Vetbiolix, our partner in developing MIV-701. They continue to recruit sort of patients or dogs into their study with estimated readout in fourth quarter of their ongoing randomized study. So that's an important value driver for us as well in the coming period. So apart from myself, as I mentioned, our Chief Medical Officer, Pia Baumann, will go through the programs. Patrik, our CFO, will cover the financials; and Fredrik Oberg, our CSO, is here for our question-and-answer session as well. So with that, let me hand over to Pia, who will take you through the published Phase Ib/IIa data for fostrox and the start of the FLEX-HCC study.

Thanks so much, Jens. And let me just first start with a reminder of why fostrox is different. This is an oral prodrug that is activated in the liver, which means that we deliver the active substance, which is troxacitabine, where the tumor is and keep systemic exposure low. I know we have said this before, but this is really important. And this is confirmed also by the biopsies from our study, where we can see DNA damage in the tumor tissue and no DNA damage in the surrounding healthy liver tissue. That really translates into what we see clinically. In combination with lenvatinib, we see efficacy substantially beyond what has been reported in second-line HCC, including in the recently presented IMbrave 251 study with atezolizumab and bevacizumab refractory patients. And we see a combination with our drug that is really well tolerated. These final data from our study were published, as Jens mentioned, in Clinical Cancer Research in June this year. And our strategic point is really unchanged. There is still no approved treatment in second-line advanced liver cancer. That is a first-to-market opportunity in a market worth more than $2.5 billion annually. And I know that we are coming back a little bit in that in the summary from Jens. And this is why FLEX-HCC study that is ongoing in Korea is now our highest clinical priority for the moment. So next slide. A few words on the publication itself because it's an important milestone for this program. The full safety and efficacy data set from the Phase Ib/IIa study is now published in the peer-reviewed journal of Clinical Cancer Research and Professor Hong Jae Chon, which is also our primary investigator in the FLEX-HCC study is the first author. The clinical message I would emphasize is the one that you can see in this title, tumor control without deterioration of liver function. In many other tumor types, it is the metastatic disease. I'm sure you are aware of this. It's the metastatic disease that drives mortality. In HCC, patients most often die from liver decompensation, and it's frequently caused by local tumor progression. So the treatment goal is to control the tumor in the liver without compromising the liver function. And that is a balance most systemic therapies struggle with. What you see in the figures here are the liver function parameters during the full treatment time. And it is transaminase and something called the ALBI score where you measure liver function. And it is across, as I said, the treatment cycles. And all of these, they remain stable over time. In other words, we achieved tumor control without deterioration of liver function. And that is what keeps patients fit enough not only to continue the treatment, in this case, the study, but also to receive subsequent therapy. We go to the next slide. I would also like to comment on the IMbrave 251 study that was presented at ASCO this year because it's highly relevant for how we think about the second line. This study was large. It was over 550 patients asking whether it makes sense to continue immunotherapy after progression on an immunotherapy. And note -- if you press one more time, I already did that. And note how favorable the patient population was. The patient had to receive at least 4 cycles of atezolizumab plus bevacizumab as prior treatment. And on that prior treatment, they needed to have documented disease control, meaning stable disease, partial response or complete response on at least 2 tumor assessment. In other words, these patients who had done well on the first treatment, that's the patients who were included here. And even in that selected population, adding continued immunotherapy to a TKI, in this case, lenvatinib gave no benefit, neither in the overall survival nor in the progression-free survival and the response rate remained below 8%. For us, the conclusion is clear. Continuing immunotherapy is not the answer after immunotherapy failure. The second line remains open and what is needed is a new mechanism of action, and that is precisely where fostrox is positioned. We can go to next slide. Against that background, let me mention our own efficacy data in this context. It looks a little bit different than we have shown before, but it is also to show in the context of IMbrave 251. Here, more than 75% of the patients treated with fostrox plus lenvatinib experienced tumor shrinkage and the objective response rate was 24%. They had a time to progression. I know Jens already said that of 10.9 months and the median duration of response was more than 7 months. And we actually see that the longest response is still ongoing beyond 36 months. The part of this figure that might be interesting again in the context of IMbrave 251 is the color coding on this figure. The orange bars are the patients who were primary refractory on their prior therapy. In other words, those who never responded to first-line treatment. In this study, they also had tumor reduction. Patients benefited from fostrox largely independent on how they responded in the previous line, which is not what we usually see in this setting. And it speaks to a generally different mechanism that is needed in the post immunotherapy setting. This is the data set that gives us the confidence to run this randomized comparison, and that is the FLEX-HCC study. Go to the next slide. This is the study design for this study, and it's 80 patients with advanced second-line HCC, all with prior immunotherapy regimen before and they have a preserved liver function and good performance status. They are randomized 1:1 between fostrox plus lenvatinib or lenvatinib alone. The primary endpoint for this study is objective response rate assessed by a blinded independent central review. We also look -- they also look at the duration of response, progression-free survival, overall survival, safety, a secondary endpoint. And the tumor assessment is done by CT or MRI every 6 weeks. The study is run with the Korean Cancer Study Group across 12 hospitals. And as I said before, Professor Chon is the principal investigator. The first patient in this study was dosed in May, and the enrollment is really progressing well and very much in line with our plan to include all patients within 12 months. And we expect top line results from this study in the second half of 2027. There are 2 things that makes this design attractive. We generate robust comparative data through an established research consortium and the design allows for a rapid readout. So let me just move into MIV-711, our Cathepsin-K inhibitor. As Jens said, we are now developing this drug or this molecule into 2 rare bone indications. Both these diseases are driven by excessive bone resorption. And in both, there is no approved drug treatment today. I'll start with Perthes disease. So Perthes disease or it's also called Legg-Calve-Perthes disease. It affects around 1 in 1,500 children, most often boys, most often between 4 and 8 years of age, so relatively early. What happens is that for unknown reason, the blood supply to the femoral head is suddenly disrupted. What happens is that the bone dies and because the dead bone and the dead bone is then resorbed faster than new bone can be formed. The effect of that is that the femoral head collapses and deforms while the child continues to walk and put weight on the femoral head. Today, we have no disease-modifying medication to offer to these children. What is used is bracing and surgery, and it addresses only the acute symptoms, but they do not change underlying process and the majority are left with permanent damage to the hip. Most develop debilitating osteoarthritis as adults and around 20% will need total hip replacement later on, or actually earlier on because it happens earlier than it do in the normal population. So this is a disease where the mechanism is well understood, where the need is severe and where, as I said, there are no disease-modifying treatment. That is exactly the type of situation where MIV-711 can make a difference. So just to explain what happened and where MIV-711 comes in and how when to intervene in this disease. Perthes progresses through 4 stages caused by the blood supply loss to the femoral head. First, it is the necrosis, then fragmentation, then re-ossification and finally, the remodeling of the femoral head. And Cathepsin-K is the key protease driving this bone resorption. So by inhibiting Cathepsin-K, we aim to slow the resorption and preserve the shape of the femoral head before severe fragmentation has occurred. That points us to the stage to I to IIa that you can see on this slide. And it is consistent with the effect we have demonstrated in the disease-specific animal model that we have done. A good news is that these children present early. And why is that? It is because they have pain and they start limping, which brings them to the medical care quickly. And in the Swedish registry data, it shows that around 80% are diagnosed in Stage I or IIa. So the population we can treat at diagnosis is around 60% to 80% of all patients, and that is not a small subset. With that, I will hand back to Jens.

Thank you, Pia. So a few kind of strategic and commercial perspectives on this particular disease. The reason we're moving into this indication is that much of the groundwork is already in place. We've shown, as Pia alluded to, we've shown in the disease-specific animal model that MIV-711 counteracts the deformity of the femoral head, which is one of the supporting elements for being granted Rare Pediatric Disease Designation. And we are building on the same mechanism and the same established safety profile that we have documented in the around 250 subjects from Phase I, Phase II osteoarthritis. And we also have Orphan Drug Designation and Rare Pediatric Disease Designation in place granted by the FDA. So through the directed share issue, the Phase II proof of concept is now funded. The next step is, however, to develop the pediatric formulation and then to move into the randomized proof-of-concept study. And to make sure that we execute with speed because now the program is getting bigger, we have also sort of strengthened the organization and recruited a highly experienced clinical operations lead who will take responsibility for the operational leadership across the studies in Perthes disease and Osteogenesis Imperfecta. So importantly, it's not 2 separate projects. The pediatric formulation work that we do in Perthes will also -- and the dose selection work that we'll do will be highly beneficial also for the Osteogenesis Imperfecta program. So 1 plus 1 is more than 2 in that respect. If we then look at the commercial side of things for Perthes disease, the primary market is around 8,800 children a year in Europe and the U.S. And as Pia commented, we assess that around 80% of them would be suitable or accessible for treatment as an Orphan Drug in a pediatric population and also being a treatment where you treat not chronically, you treat for a year to 18 months, we see this setting supporting a premium pricing. And then on top of that, there's, of course, the opportunity for Rare Pediatric Disease and a priority review voucher, and those are currently valued at around $200 million if they are being sold. So taken together, we estimate annual peak sales of approximately USD 1 billion, 5 years after marketing approval in U.S. and Europe. And for a program where the designations are already granted and the study is funded, we think that is a very attractive risk reward. Stepping back and looking at MIV-711 as a whole, this is what makes the candidate special, we believe. It is a third-generation, highly selective Cathepsin-K inhibitor with a substantial clinical package behind it and proven radiographic benefit in Phase I, Phase II in osteoarthritis. So what has changed this quarter is now that we have 2 first-to-market opportunities from one single candidate and neither of which has any approved treatments today, OI with a market potential of over USD 2.5 billion and Perthes disease with approximately USD 1 million (sic) [ USD 1 billion ]. Orphan Drug in both indications, Rare Pediatric Disease Designation in Perthes. And we will, of course, sort of target Rare Pediatric Disease Designation for OI as well. And as I mentioned, I think that's an important element to comment. There are real synergies between the 2 programs with the development of pediatric formulation and dose selection across Perthes disease and Osteogenesis Imperfecta. So with that, I'll hand back to Pia for a bit further update on the -- how the OI program is progressing.

Thank you, Jens. And just before we go into that, just a little bit of a reminder of what is Osteogenesis Imperfecta. It's also called brittle bone disease. It is a rare hereditary genetic disease and around 1 in 15,000 birth have this disease. The mutation leads to defective or insufficient collagen production that actually leads to this problem with the bones as well. Children are born with it, of course, they're born with it. And the consequences is bone that fracture with minimal or no trauma. In the more severe forms of OI, nontraumatic fractures can be seen 5x or more in a year. But it's not only about the fractures. These patients, they live with bone and joint deformities that is often developed already in childhood. They have more common shorter stature and most of all, they have chronic pain. And they have significant limitations in their ability to take part in automatic daily life. There is no approved disease-modifying treatment in OI. And MIV-711, we are addressing the quality of the bone as well, not just the density by reducing resorption while allowing bone formation to continue. And that is the rationale we have tested with our external expert, and it is also the rationale behind the proof-of-concept study in adult OI that I will talk about next. We can go to next slide. This is the study design, and I'm pleased to say that the preparations are well underway. We will include approximately 20 adult patients with Osteogenesis Imperfecta who have had fractures within the previous 5 years. They are randomized 1:1 to 2 dose levels of MIV-711 and treated for 12 months. The endpoints are change in bone biomarkers, including bone mineral density, pharmacokinetics, safety tolerability, and we will also look at number of fractures occurring during the treatment period. On the operational side, the interest from investigators has been really substantial and 5 sites are already approved. Importantly also is that the eligible patients are largely known to these centers already, and they have them in their medical record, which is why we expect enrollment to be really fast. Preparation of clinical activities is progressing as planned and manufacturing of study drug is on schedule. I would also highlight the commitment that we see from patient organizations, both locally and regionally in Europe. They make us be not invisible, but visible. And it's a really good engagement that really matters for us, both for recruitment and for how we design the next development step. With that, I hand back to Jens.

Thank you, Pia. And I wanted to -- I mean, there's been such a lot of change over the last couple of quarters. We want to take a bit of time to go through a bit more detail on all 3 programs. So with that, let's turn to the financial position and a couple of comments on the -- how intellectual property work and the IP positions that we are building. The -- clearly, one of the biggest events in the second quarter was the directed share issue in June, and we raised approximately SEK 140 million or SEK 134 million net. The issue was oversubscribed and brought in 2 new institutional investors in Cicero Fonder and Storebrand alongside continued strong support from Carl Bennett AB, Hallberg Management, LINC and Nordea Smabolagsfond Norden. The effect on our position is substantial. We ended the quarter with SEK 253.5 million in cash compared with SEK 38.2 million a year earlier, and we assess that our existing cash is sufficient into 2030. Most importantly, though, we now have funding in place for the planned -- the 3 planned Phase II studies. And this assessment does not include any proceeds from potential partnering of either fostrox or MIV-711 nor from our existing agreements with Vetbiolix and Biossil. So is there one slide to remember from the call today? This is the one. We now have 3 Phase II studies fully funded. Each of them carries a clear value inflection point. FLEX-HCC is a randomized 80-patient study across 12 hospitals in Korea with the first patient sort of dosed in May, initial recruitment progressing really nicely and expected to be fully recruited in the 12-month period that we have planned for. In OI, the study design is finalized. First 5 sites have been selected and external interest is strong in a population of approximately sort of a large population of patients across the globe, again, without approved treatment. Perthes disease, the funding is in place. Pediatric formulation work has been initiated ahead of the proof-of-concept study and both ODD and Rare Pediatric Disease Designations are already granted. So 3 studies, 3 indications without approved treatments and the combined value potential well beyond what our current valuation reflects. One more piece to the value story and an important one. This, I guess, in sort of behind all the other great pieces of news in the second quarter, this one was a bit hidden, but wanted to sort of stay on this one because this was a big step for us, an important one. We received notice of allowance from the U.S. Patent and Trademark Office for the combination patent covering fostrox plus lenvatinib in hepatocellular carcinoma and cancer metastases to the liver. Once that patent is granted, together then with the other approvals we already have in EU, Japan, Australia and Canada, et cetera, we have protection in our key markets until at least 2041. And for a program that is now in a randomized Phase II, that length of exclusivity in the largest markets is, of course, significant commercial asset for us. And I think I've mentioned this before, I wanted to kind of stop here and highlight that sort of for a compound as fostrox, which is a liver-targeted compound, i.e., we will be focusing on liver cancer, having a sort of a combination patent like this and where we also sort of develop it in collaboration with lenvatinib, this is in addition to our normal composition of matter patent, this is a very strong patent because these are the areas we will focus on. It will be very difficult for any company, generic company to challenge this particular -- try to sort of circumvent this one after the composition of matter has lost its exclusivity. So this is a really, really strong element to strengthening the IP package we have for the compound. So with that, there are some other numbers as well, Patrik?

I will present the financial summary for Q2. And as you can see, all numbers are in SEK million. And the net turnover for Q2 was SEK 1.2 million, which was SEK 300,000 lower than Q2 last year. Other external expenses were SEK 17.9 million, which was SEK 13.4 million higher than Q1 this year, which is mainly due to the successful early recruitment in the FLEX-HCC study. The personnel costs were SEK 4.3 million, which was SEK 2.8 million lower than Q2 last year. The total operating costs were SEK 22.4 million, which is SEK 2.6 million lower than Q2 last year, which is mainly related to less employees and therefore, the personnel costs are lower. The operating loss was minus SEK 21.2 million, which is SEK 2 million better than Q2 last year. And as you can see, the cash flow from operating activities was minus SEK 18.3 million. And we needed to do the directed share issue in 2 tranches and SEK 130 million was received in June and SEK 10 million was received in July. And in total, it was SEK 140 million, as Jens has said before. Medivir has a strong cash position. The cash balance for end of Q2 was SEK 253.5 million, and the cash is assessed to be sufficient at least into 2030. Yes, that's the financial summary.

Thank you, Patrik. So bear with us one more slide, and then we move into the Q&A session. So just looking ahead at sort of some of our most important value drivers across our programs. And in our own programs, the priorities are, of course, sort of super clear, continued recruitment in FLEX-HCC towards full enrollment within 12 months. Clearly, we want to get sort of shorter than that, but we're confident with at least 12 months. Exciting having activated the sites and the startup of the proof-of-concept study -- or sorry, site activation and the startup of the proof-of-concept study in OI is the next step. And then also, of course, ensuring that we can develop a pediatric formulation as quickly as possible so we can also sort of start preparations for the proof-of-concept study in Perthes disease. In terms of concrete milestones, the nearest one comes from the work by our partner, Vetbiolix, as they expect top line results from the Phase II study with MIV-701 or VBX-1000 as they call it in periodontitis in dogs in the fourth quarter this year as they continue to progress the recruitment of their study in a very nice fashion. Positive outcome there could generate substantial revenues for us without any material development costs of our own. Beyond that, Rare Pediatric Disease Designation in OI, completion of the feasibility work and regulatory approval of the study design in OI, top line results from FLEX-HCC in 2027 and continued strengthening of our IP across territories are also, of course, key value drivers in the coming period. So with that said, we stop. We thank everyone for listening to the presentation, and we can open up for Q&A.

[Operator Instructions] The next question comes from Hans Engblom from EVM AB.

Regarding the IP situation, I consider that you in relation to fostrox mono have a patent in China that is valid until '35 or even further. In the fostrox-Lenvima combo, which was approved globally in some important markets, you did an excellent job to get the U.S. approval. But you haven't got any approval yet in China. You have a pending application. What is the status and the expectations regarding that application?

Hans, as you know, we never get any time lines from the patent offices. But we do -- the ball is in the Chinese Patent Office Court, and we do expect a result from them. But we can't really say when they will respond.

Can you say whether you have about the same issues that you had in the U.S. patent? It's about the same process or is it different?

They had similar issues, but I strongly believe that we have made a good argument also in China. But as I said, we don't have a time line for the response.

Okay. Just another question to you. The Journal of Lancet had recently a very interesting article regarding the future of HCC treatment. Have you any reflections on that since you didn't mention your presentation?

Can you repeat what article it was?

In The Lancet.