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

Hello, and welcome to the Moberg Pharma conference call. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I am pleased to present Anna Ljung. Please go ahead with your meeting.

Thank you, and hello, everyone. My name is Anna Ljung, and I'm the CEO of Moberg Pharma. And today, I also have our VP of Finance, Mark Beveridge with me here. I'm happy to present the year-end report, and this is for the prolonged annual year covering 6 quarters from July '19 to December '20. And that report, you can find on our web page. And there, you can also find a PowerPoint presentation, and that's the presentation that I will use throughout this telephone meeting. So if I start on Page 3 on that presentation. We are a Swedish pharmaceutical company that base our products on drug delivery of known substances, and this reduces time to market and development risk compared to traditional drug development. We have a lead program in MOB-015 against onychomycosis. And there, we see a global sales potential of $250 million to $500 million annually. And we recently completed 2 Phase III trials. In total, more than 800 patients. We met the primary endpoint and now have sufficient data to file for registration in the EU. And we're targeting filing during this year. Based on the average processing time, we expect approval early 2023, which would enable us to launch by the end of 2023. That's for Europe. For the U.S., we will discuss with the FDA, but we do think that one additional study is needed, and that will be a very similar study to the one that we have already completed in North America, but with shorter dosing regimens, enabling even stronger claims and higher complete cure rate going forward. We do have some major partnerships in place for MOB-015, including Bayer for Europe and Taisho for Japan. Also DongKoo, the market leader within dermatology in Korea and Cipher for Canada. And this is actually not the first time that we will take the nail fungus product to the market. We founded the company in 2006. And by 2010, we launched Kerasal Nail, that was our first-generation nail fungus product in the Nordics. And we have, in total, sold more than 15 million units of Kerasal Nail in more than 30 countries. And 2 years ago, we divested that franchise for a total of SEK 1.4 billion. Now we want to repeat the same journey once again, this time with MOB-015 that we feel has even greater potential. Turning to the events during the, I was going to say, fourth quarter, but formally, it's actually the sixth quarter of 2020, given the prolonged annual year. In October, we communicated the next steps for MOB-015 with a clear path forward, targeting to submit market authorization application in EU by the second half of 2021. And that also enables us to look forward and also look at the financing piece. So during the sixth quarter, we conducted a SEK 150 million rights issue. The issue was fully subscribed and no guarantees have been used. And this means that we now have financing in place, both for registration activities and for the clinical development for MOB-015. In parallel, we also decided to spin-off and list BUPI in the separate company, OncoZenge. And this is happening right now with the first day of trading actually now on Friday, February 12. Also for BUPI, we do have financing secured. And one additional event that happened was that we got a new important patent approval for BUPI. So turning to the next page, Page 5. Now we have a financing for MOB-015 in place. And the rights issue that took place in December means that we now have long-term financing secured for MOB-015, covering both the registration work and fees for Europe as well as one additional clinical study for the U.S. market. And as the rights issue was completed, we also terminated the convertible notes agreement that was entered earlier this year. And turning to Page 6. To facilitate financing and further development of BUPI and capture the value in the project, we did this decision to spin-off and list the asset as a separate company. Next step for BUPI is a Phase III study in Europe. And OncoZenge is now planning for such a study in 2022, and that results could be available in 2023. And by securing this financing, financing for that study and those operations have been secured. Both we have directed issue in December and a planned and fully guaranteed rights issue now in February, March, directly after the listing. And this increase, this capital increase, has also helped the company strengthen shareholder base with investors, such as John Fällström and Linc as well as our main shareholder, Östersjöstiftelsen. And the company also has a dedicated team in place, while using the know-how for Moberg as well as involving the original inventors behind BUPI. And what is currently happening is that OncoZenge is distributed Lex Asea to Moberg shareholders, meaning that there will be no tax event triggered by the distribution. For each 10 shares owned in Moberg, our shareholders will receive 1 share in OncoZenge. And as per the record date of February 5, these shares will actually be distributed today, February 9. And these shares will automatically be deposited in the same brokerage account where you have your holding in Moberg Pharma. And as I mentioned before, the plan is to list the company now on Friday, February 12. And I would also like to mention that we do have a Q&A page on our web page to answer any questions that may come up with regards to this. And, of course, OncoZenge has its own web page as well. Okay. Turning to Slide 7 and our clinical data. We have shown this graph before, but it's worth going back to. This shows the relationship between mycological cure rates and complete cure rates for current onychomycosis drugs as well as our 2 Phase III studies. We have world-leading mycology data, that is on any topicals and compared with oral terbinafine, we will address the complete cure rate via new dosing regimen as the shorter treatment time has the potential to increase complete cure rates. So this data from those 2 Phase III studies in North America and Europe, with a total of 800 patients, will be the basis for the registration application. We met the primary treatment target without serious adverse events in those studies. And 70% to 84% of patients were fungus free -- fungal free, which is higher than ever reported for an external treatment. And as previously reported, complete cure was lower than expected, but since a competing product was recently approved with a low complete cure rate and only 20% mycological cure rate in Europe, I think that also enhances our chances of succeeding in the registration. Turning to Page 8. We now have a clear path forward for MOB-015, where we target submission later this year, and with an average application handling time of 18 months, we think that we will get approval early 2023, and that will enable us to launch by the end of 2023 in Europe. As for the U.S., we intend to discuss next steps in advice meeting with the FDA after we have completed presubmission meetings with EU authorities, with the assumption that one additional may be needed for registration in the U.S. So therefore, we are targeting FDA approval in 2026. And turning to Page 9. That additional study that we may have to do for the U.S. market, that also enables us to use what we think is the ideal dosing, once daily treatment for not more than 3 months, followed by maintenance treatment once weekly. And this should provide sufficiently high concentration of terbinafine in the nail and enabling normalization of the water content in the nail during the maintenance treatment period. Also from a patient perspective, a shorter treatment period is highly attractive. So basically, what our competitive advantage would be that for every topical product, we will have superior efficacy with an efficacy that is on par with the oral treatments, but without the safety issues related to oral treatment. We also have that solid rapid visible improvement, where 75% of patients see improvement already up at week 12. So all in all, we think that this is a very compelling product profile with the potential to become the next market leader. Moving on to the financial part of the report. On Slide 10, you'll see our financials, and these figures are now without the BUPI project as that is reported as discontinued operations. I would say there are no surprises in the figures. Costs of operations are in line with previous periods. Investments in MOB-015 is capitalized. But as the studies are finalized, the MOB-015 investments for the quarter are very -- are limited at SEK 2 million. If you look at the cash row here, this cash position does not include the SEK 150 million that was raised in December as the rights issue was finalized in January. And this rights issue, of course, means that we now have the financing in place for both registration activities and further clinical development, and can now fully focus on our operation. On Slide 11, to conclude this presentation, we remain fully committed to creating the future market leader in onychomycosis. We have 2 Phase III studies that met the primary endpoint and can start as the basis for a EU registration, and have a clear path forward with time lines where we aim to file a registration this year and with a potential launch in 2023. And we also have commercial agreements in place for the major markets corresponding to a total deal value of $120 million, while we keep the rights to ourselves in the U.S. market, where we see the largest opportunity. Our goal is to repeat the journey that we did with Kerasal Nail, where we saw more than 15 million treatments, and that venture was divested for SEK 1.4 billion. Now we want to replicate the commercialization process with even greater potential product with MOB-015. I think I'll stop there and are happy to open up for questions.

[Operator Instructions] The first question comes from the line of Mats Hyttinge from Redeye.

I just have a short question here on the FDA path forward. I mean you're talking about as being, you are going to have discussions with them there that's towards the end of the year, I highly assume?

Yes. Right now, we need to focus on the registration in Europe. So once we have had those dialogues with European regulators, then we'll -- and file the registration in Europe, then we will have full focus on FDA.

Do you have any thoughts how long this new study would take? Is it the same path as usual? Or it is going to be shorter time?

Yes. So no matter how long you're actually treating the nails, you still have to have this 52-week follow-up because it's what FDA will require -- or has required, I would say, for every onychomycosis drug that has been approved, and that's basically driven by the same -- the time it takes for healthy nail to regrow. You need to wait for 1 year. And you also need pretty much the same size as the studies that we've already completed, so roughly around 400 patients. So that gives the same time line and also the same costs as we saw in the U.S. and the European studies that were recently completed. So therefore, it will take a few years. So that's why we're saying that we are targeting FDA approval in 2026. But of course, we can launch earlier in Europe, so that's 2023.