Moberg Pharma AB (publ) (MOB) Earnings Call Transcript & Summary

Hello, and welcome to the Moberg Pharma's conference call. [Operator Instructions] Just to remind you, the conference call is being recorded. Today, I'm pleased to present Anna Ljung. Please begin the meeting.

Hello. My name is Anna Ljung, and I'm the CEO of Moberg Pharma. I also have our VP of Finance, Mark Beveridge with me today. We're happy to present our interim report covering January to March 2020 that you can find on our web page. There you can also find a PowerPoint presentation and I will start from that presentation. On Page 4, on that presentation, we're a Swedish pharmaceutical company that base our products on drug delivery of known substances, which reduces time to market and development risks compared to traditional drug development. We have a clinical pipeline consisting of 2 large-stage drug candidates, MOB-015 and BUPI. Both drugs have demonstrated strong clinical results, which indicated that they have the potential to become market leaders in their respective niches. Out of these 2 projects, we spend our absolute majority of our efforts on MOB-015 against onychomycosis, where we have ongoing safety trials in more than 800 patients and expect results in the near future. We have strong commercial partners in place for all major territories, except the U.S., where we want to build our own presence and also have patent protection for both products until 2032. Moving on to events, during this period on Slide 6. The European trial is on schedule. To date, our operations have not been impacted by COVID-19 to any significant amount. All patients in the European MOB-015 study have completed their last visit despite the pandemic, and it is the only ongoing study that the company is conducting today. So far, we have not had any high sick absence numbers, and we also have contingency plans in place. In March, we entered a financing agreement of up to SEK 216 million. This financing can cover the company's capital requirements up to product registration following a positive outcome in the European Phase III study and can secure financing for an additional study if needed before registration. It also provides access to flexible financing at a reasonable cost under current market conditions. In December last year, we received top line data for the North America study for MOB-015. In short, the results were surprising and we therefore initiated an expert evaluation that confirmed the validity of the results. On Page 7, beginning to the North American study. It was conducted at 32 sites, including a total of 365 patients. And the key results from the study was the primary endpoint that was met, but at a lower complete cure rate than expected and also, mycological cure rate that was significantly higher and more rapid than expected, reaching 70% at Week 52. Slide 8 shows the relationship between mycological cure rates and complete cure rates for the current onychomycosis drugs. Looking at the graph, mycological cure rates in the 50% range have typically led to complete cure rates of about 15%, while cure rates in the 30% range resulted in complete cure rates of 6% to 8%. We can see that MOB-015 is off the chart, achieving mycological cure in 70% of the patients, in line with oral terbinafine, the same substance that we use topically, and the current gold standard for treatment of onychomycosis. With mycological cure of 70% and complete cure of 38% versus our lower complete cure of 4.5%. The study -- the outcome of the study is just surprising since the high mycological cure, normally over time, is followed by complete cure. On Slide 9, after analyzing the focus on the data, the company experts and key opinion leaders found that the vehicle enables delivery of high amounts of terbinafine to the nail. However, the hydrating properties of the vehicle also cause whitening discoloration in nails. This phenomenon is transient as the water content normalizes after end of treatment. But this whitening makes the assessment of clinical cure challenging since the physicians cannot distinguish between a nail that is discolored due to nail fungus or a nail that looks like this due to the high water content in the nail. A solution has been identified, shortening the treatment time. And this is based on the high mycological cure of 70%, the 40x higher terbinafine levels in nails than for oral terbinafine. 3-month treatment with oral terbinafine is a standard treatment, and we know that it is effective. The onset of the antifungal effect is more rapid for MOB-015 than for oral terbinafine, as we are applying terbinafine directly on the nail with MOB-015, delivering 37% mycological cure already after 6 -- 3 months versus 15% after 3 months with oral terbinafine. The experts concluded that once-daily treatment for not more than 3 months followed by maintenance treatment once-weekly should provide sufficiently high concentrations of terbinafine in the nail and enable normalization of the water content in the nail during the maintenance period. Also from a patient's perspective, a shorter treatment period is highly attractive. Moving on to Slide 10. I've included some quotes from key opinion leaders that all have decades of experience with terbinafine and the key ingredient in MOB-015. They're all supporting the concept that a shorter treatment regimen has the potential to achieve an attractive complete cure rate. Turning to the ongoing study. On Slide 11, we continue to progress EU study, and thanks in large part to the intensive work by our medical team and our CRO managed to get the last patient's last visit done just before the lockdown in Europe. The data collection part of this study is completed. And now the mycological testing grew -- growing fungal cultures and statistical analysis will follow. The time line remain unchanged and the top line data are expected at the end of June. Since the North American trial met its primary endpoint without safety concerns, and provided that the EU study also provides positive results, these studies can form a basis to register the product. The timing to optimize the dosing regimen will depend on the outcome of this EU trial. On Slide 12. In March, we entered a financing agreement with a Swiss investor, Nice & Green. This agreement gives Moberg access to up to SEK 216 million and can be seen as an insurance, enabling certainty of funds if we need one additional clinical trial before registration. The agreement provides us access to flexible financing at a reasonable cost in these uncertain times of COVID-19. The agreement does not prevent other financing solutions and does not include any fixed costs. We're all committed to draw the first SEK 6 million and can then decide if and when the remaining tranches will be drawn. With this financing agreement in place, we now have a clear path forward to exploit MOB-015's potential regardless of the outcome of the EU study. Moving on to the financial part of the report, on Slide 14. There were no milestones in this quarter and on the cost side, costs are in line compared to last year before the divestment of the commercial portfolio. As usual, in additions to the cost and the P&L, we also have investments this quarter of SEK 12 million in MOB-015 that are in the balance sheet. On Slide 15, we have a straightforward balance sheet with intangible assets as the only main item apart from cash. Out of these intangible assets, capitalized R&D investments consist of SEK 275 million for MOB-015 and SEK 15 -- and SEK 15 million for BUPI, and then we also have patent rights of SEK 7 million. On Page 16, the change in cash was minus SEK 13 million, giving us a cash position at the end of the period at SEK 52 million. To conclude this presentation, on Slide 18, we and our commercial partners look forward to receiving data from the EU trial soon, and we remain fully committed to creating a future market leader in onychomycosis. The exceptional ability to kill the fungi with an early onset and the prospects of a shorter treatment time are all very exciting. With the financing agreement in place, we now have a clear path forward to exploit MOB-015's potential. We also have commercial agreements in place for the major markets, corresponding to a total deal value of $120 million, while we keep the right path to ourselves for the U.S. market. I think I'll stop there, and are happy to open up for questions.

[Operator Instructions] Okay, there appear to be no audio questions at this time.

Okay. Then I just want to thank everyone for listening in. And if -- of course, if you have questions, please don't hesitate to either send an e-mail or call me after the call. Thank you, everyone, for listening in, and have a good day.