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

Hello and welcome to the Moberg Pharma Q2 report. [Operator Instructions]. And just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO, Anna Ljung. Please go ahead with your meeting.

Thank you and hello. My name is Anna Ljung, and I'm the CEO of Moberg Pharma, and I also have our VP of Finance, Mark Beveridge, with me here today. And we're happy to present the Q2 report that was published earlier this morning. And you can find the report on our website. And there, we also have a PowerPoint presentation, and that's the presentation that I will be using today in this telephone meeting. So let me start on Page 3 of that presentation. We're a Swedish pharmaceutical company that bases our products on drug delivery of known substances, which reduces time to market and development risk compared to traditional drug development. And our lead program is about MOB-015 against nail fungus, with a global sales potential of $250 million to $500 million annually. We're not preparing to file for registration, new, based on the outcome of the 2 Phase III trials on more than 800 patients who have met primary endpoint, and 76% of patients were fungal free, mycologically cured, much higher than we ever reported for topical treatment. We're targeting filing during this autumn. And based on average processing time of 1.5 years, we expect approval in early 2023, which would enable us to launch the product at end of 2023. We do have commercial partnerships in place with strong partners in all major territories, including Bayer for Europe and Taisho for Japan. In total, our partnerships include milestones of $120 million in addition to payments for product sales. We do have a tried and tested model, where we work with strong local partners that takes responsibility for and invest in marketing and sales, where we take responsibility for development and production and deliver finished products. And this model do not tie any capital with the exception of U.S., where we want to build our own presence targeting podiatrists. We learned a lot when we commercialized our first-generation nail fungus product Kerasal Nail, then we've built an OTC business with annual revenue of SEK 440 million, and our products were sold in more than 30,000 stores. That business we divested for SEK 1.4 billion back in 2019. And we now want to repeat that this year, with MOB-015, a product with much greater potential targeting becoming the future market leader in nail fungus. Turning to Page 4. Our main activities during this quarter has been centered around registration preparations. Most importantly, we have recently received final comments on the pediatric plan, right. EMA requested some supplemental data that were not provided and we expect the final decision in September, and this sets the time line for the registration that we will subsequently file later this year. During the summer, results from the North American Phase III study were published in JAAD, where the principal investigator in our Phase III, Professor Gupta from University of Toronto, concluded in the paper that MOB-015 was effective in the treatment of nail fungus and has a favorable benefit to risk ratio, as the lack of sustainable absorption of MOB-015 reduces the potential for systemic adverse events seen in oral terbinafine. We have started strengthening the management team with Agneta Larhed, who has broad experience with regulatory issues in drug development, including working for the Swedish MPA as well as companies as Orexo and Q-Med. We have further strengthened our Board with the addition of Nikolaj Sörensen. Turning to Page 5, the need for better nail fungus treatment. It's a very common disease, increasing with age. And despite that 1 out of 10 people suffers from nail fungus, there's currently no good treatment that's available. In the U.S. alone, there's more than 30 million patients. That's despite that almost 5 million scripts are sold annually. So there are a lot of untreated patients. The most effective treatment is oral terbinafine, which is associated with the risk of liver damage and interaction with other drugs. And a study shows that 72% of U.S. doctors avoid prescribing oral terbinafine due to the side effect profile. MOB-015 uses the exact same molecule terbinafine but applies it topically, and we have shown that we have 1,000x higher levels of terbinafine in the nail and 40x higher levels in the nail bed compared to oral treatment, with oftentimes less drug concentration in plasma. That's removing the risk for systemic side effects. Moving on to Slide 6 on the competitive landscape. This graph shows our positioning compared to other treatment alternatives. And normally, there is a clear relationship between mycological cure rate, that's killing the fungi, and complete cure rates. One we have cured the fungi, healthy nail will grow. In our data we have one leading mycological cure and we do have that, the complete cure rate with our new dosing regimen. A shorter treatment plan has the potential to increase complete cure rate for MOB-015. Based on 2 Phase III studies in North America and Europe, totaling 800 patients are the basis for this. We achieved primary treatment targets without serious adverse events in both studies, and 76% of patients were fungal free, which is higher than ever reported from external treatment among -- or even higher than oral terbinafine, current gold standard. Our [ one-off ] technology enables high delivery of terbinafine to the nail. Its hydrating properties also cause transient whitening in the nails, making the assessment of clinical cure challenging, and that contributed to the low complete cure rate. The knowledge from Phase III studies enable a shorter dosing regimen expected to increase complete cure. Once-daily treatments are not more than 3 months followed by maintenance treatment once-weekly should provide sufficiently high concentrations of terbinafine in the nail, but we currently have 4% higher terbinafine levels compared to 3 months of oral treatment and enable 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, instead of having daily treatment for a full year as required by most topical treatments. On Page 7, we have received final comments on our pediatric plan from EMA and see a good chance of coming to agreement with authorities and with a realistic pediatric plan with a clinical study, including a limited number of children in the age 6 to 17 years. We expect the final decision from the Pediatric Committee due in September. And after discussions with authorities, we believe that we can utilize a full registration [ in Europe ] and obtain 10 years of data exclusivity in first market approval in complement to our existing patent protection in all major markets up to 2023. And this really sets the time table for our plan to submit a registration application in Europe during the second half of this year. We expect approval within 18 months, and that indicates that MOB-015 could be launched in Europe by the end of 2023. For the U.S., we're planning for one additional study. It will be very similar to the North American study that we already completed, but with a shorter dosing regimen, enabling even stronger case and higher complete cure. And in addition to enabling U.S. approval, the additional study is expected to strengthen claims globally, substantially increasing market potential. Turning to Page 8. By focusing on the approval process in Europe, we expect to be able to launch the product very soon in Europe, and that corresponds to 1/4 of the global market potential for MOB-015. As we have secured strong commercial partners, both for EU, Japan and Canada, we're in a good position to make the most of the upcoming launch, while keep the rights to the U.S. as it is, by far, the largest market corresponding to half the global potential. We'll move on to the financial part of the report. On Slide 9, you will see our financials. And generally speaking, our expenses are in line with previous periods. We continue to invest in development which is capitalized. But given that we're in the registration phase, those investments are currently limited. Due to the spin-off in a separate company, OncoZenge, on the successful IPO of that company in February, we have positive earnings effect of SEK 24 million in total profit this year. Also, at the beginning of the year, we completed a SEK 150 million rights issue, and that means that we're currently well-funded with financing in place for both registration activities and further clinical development and is fully focused on our operations. And our current cash position is SEK 124 million. And turning to Page 10. In summary, we have an exciting journey ahead. The next milestone is the expected approval from EMA's Pediatric Committee in September, which can be followed by the EU submission later this autumn, as well as preparations for one additional U.S. study. And these milestones are very important and expected to create significant value as they enable launch in the EU by the end of 2023; and commercialization in the U.S., which is the largest and most important market; as well as strengthening things globally. I think these are key steps in our journey to make MOB-015 the future market leader in nail fungus. Thank you for listening in. I'm happy to open up for questions.

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

Anna and Mark, do you hear me?

Yes, hello.

It's very -- some very short questions. I know that -- I mean, you seem to be on the progress on most fronts and everything. But if you may sort of enhance what you think here, what are the most important things here going forward? I know it's a long process and the market is a little bit impatient about this. But what are you -- do you think you're still on track for what you said before, right, you reiterate your plan to the state?

Yes. We're still on track. And I think in near future, it's, really, the registration process in Europe working together with our partner, Bayer, making sure that we get the strongest possible registration filed, and to get a really good launch for the product in 2023. That, for me, is the main focus right now. But in parallel, we would love to start that additional study in the U.S. because that would open up the U.S. market for us. And since the U.S. market is the biggest market within onychomycosis, that's, too, is important. I think making sure that we have sufficient quality, the best possible quality in our registration file, and also continue to prepare for launch together with our partners. That is key.