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

Good morning or good afternoon all, and welcome to the Moberg Pharma conference call. My name is Adam, and I'll be your operator today. [Operator Instructions] I'll now hand the call to Anna Ljung to begin. So Anna, please go ahead when you're ready.

Thank you, and welcome, everyone, to this telephone conference following the press release yesterday evening. Please note that this call will be recorded and will be made available on our web page. With me today, I have our Chief Medical Officer, Anders Bröijersén; and our Chief Scientific Officer, Amir Tavakkol. Today, we will provide an important update on our ongoing efforts related to our product MOB-015. We understand that there is a significant interest in the progress of this program, and we aim to be as clear, transparent and forthcoming as possible. Our objective is to address not only top line results from our North American Phase III study, but also preliminary strategic implications that arise from the data. However, I want to emphasize that this is top line data that we have just received, and both we and our partners need time to thoroughly analyze and digest the information before making conclusions. I will begin with an overview of the study, key results and our reflections of what these results mean for our business strategy going forward. After that, we will open up the floor for questions. So turning to an overview of the study. The North American study was conducted at 33 study centers across the U.S. and Canada, including a total of 384 patients. 2/3 of the patients received MOB-015, while the remaining 1/3 received a vehicle. To maintain consistency, we deliberately kept key elements of the trial the same as in our previous studies. This included using the same investigators, CRO and mycology lab, while also providing comprehensive training to ensure good compliance. This study differs from previous studies with MOB-015 by reducing the dosage to 8 weeks of daily dosing followed by a weekly maintenance treatment for 40 weeks. The previous studies, which are the basis for drug approval in 13 EU countries, has a daily dosing throughout the entire treatment period. Our goal was to evaluate whether this dosing adjustment could deliver comparable or better efficacy while offering the advantage of less frequent dosing. A few words on the selected dose regimen. Our formulation and dosing regimen worked well in previous studies, and it is reflected in our European approvals. However, given the very high mycological cure rates seen in the previous studies, we also expected better clinical outcome. We believe the results of the previous studies were confounded because of whitening and overhydration of the nail plates by our effective formulation. This interfered with the investigator assessment of the nail and likely clinical cure process and nail appearance. Already at week 12 in the previous studies, 70% of patients showed tracks of whitening and overhydration. The current Phase III was, therefore, designed to reduce the frequency of application and dosing through 8 weeks of daily dosing, like a loading dose, to allow fungal killing followed by once-per-week dosing to avoid nail overhydration and whitening effects while, at the same time, maintaining fungal eradication. It is a combination of parameters that led to the exact dosing in the study, including analysis of patient photos by key opinion leaders from our previously completed Phase III trials with the first visit at week 12; photos from earlier time points such as 4 and 8 weeks from vehicle data and mycology data at different time points; and also the biopsies at 24 weeks, showing a concentration of terbinafine with daily treatment that is 40x higher in the nail bed to what is known levels with oral treatment. So in line with previous communication on September 13, the results now confirmed that the primary endpoint was not met. The primary endpoint, defined as the proportion of patients achieving a complete cure of their target toenail at 52 weeks, was achieved by 1.5% of patients receiving MOB-015. No patients in the vehicle group achieved complete cure. It is important to note that complete cure is a composite endpoint, requiring both a completely clear nail and mycological cure. For the key secondary endpoints, the results were as follows: for mycological cure, we achieved 25% of patients receiving MOB-015. Treatment success, as assessed by the investigator, was achieved in 11% of patients. Regarding nail whitening, while not a formal endpoint, we did see an improvement compared to earlier studies. Previously, about 70% of patients showed whitening at 12 weeks according to key opinion leaders' review of photos in those studies as well as looking at the number of nails scored as increased affected nail area by investigators at 12 weeks versus baseline. We have just received the data. So no formal review of all photos have taken place by external key opinion leaders. However, our internal experts have reviewed the data and also shared some of the pictures with key opinion leaders. As expected, whitening seems less frequent at 12 weeks compared to the previous studies, also indicated by assessed affected nail area by investigators where 49% of patients were scored as having a worsening, so increased nail -- affected nail area by investigators at 12 weeks versus baseline. Corresponding number for 8 weeks was 54%. Thus, comparing to previous study with about 70% at 12 weeks, this indicates that fewer patients develop whitening with the new dosing and that the whitening seen at week 8 is reduced by switching to weekly treatment. Turning to the mycology data. Mycological cure was 25% after 52 weeks and only achieving 16% at 12 weeks. This is way lower than the number seen in our previous studies, starting at 37% to 47% at 12 weeks and gradually increasing to 76%. The difference between the groups at 12 weeks is that instead of getting daily dosing for the full 12 weeks, patients in the new study got 8 weeks of daily dosing followed by 4 weeks of weekly dosing. The drop in mycological cure indicates that 8 weeks of daily treatment is insufficient to kill off the fungus. And while we see some improvement of mycological cure throughout treatment, levels remain low and show that although weekly treatment may be sufficient to prevent reinfection, we were unsuccessful in killing off the fungus to start off with. Whether another longer daily treatment period might have been helpful is impossible to tell. Unfortunately, the only way to know is to conduct lengthy and expensive clinical trials as patients need to be followed until healthy nail regrow. We still believe that there is a balance between delivering sufficient drug and avoiding the hydration whitening effect on the nail, where there is an interference between this whitening effect of the nail and the clinical cure assessment. We have managed to reduce whitening, but at the expense of not supplying sufficient amounts of drug. The patent application builds on the hypothesis that new lower dose would result in a higher complete cure rate. Unfortunately, the data from the study does not support this, so no data has to be generated for the patent application. We also have granted patent protection until 2032. Following these data, we and our partners will further analyze the results and determine the best way forward. Given that the study did not meet its primary endpoint, we do not have the data package required to file for regulatory approval in the U.S. as FDA typically requires 2 successful superiority studies. We have also investigated the possibilities of taking an OTC route in the U.S., provided that the data supports Rx approval. An OTC route for a topical onychomycosis product in the U.S. is possible, but takes time. We have no immediate plans to do another U.S. study with the original dosing or another dosing given the time line and costs involved. And our original strategy was to combine direct sales in the U.S. with strategic partnerships in other key territories. In light of the top line data, we are reassessing our plans for the U.S. and shifting our primary focus to Europe, where the regulatory approvals are already in place and where we see the greatest opportunity for growth. During this late autumn, Bayer has conducted an extensive review of its pipeline. And we have together decided not to continue the collaboration due to strategic reasons and the top line data received. So therefore, we have expressed a mutual intent to terminate the license agreement and whereby we regain the full rights in EU and retain milestone revenues already paid by Bayer. For Moberg Pharma, this represents both a challenge and an opportunity. We remain confident in the competitive profile of MOB-015, as seen in the successful launch in Sweden. By regaining control of MOB-015 in Europe, Moberg Pharma can secure a larger share of the value chain and play a more active role in commercialization. This includes brand ownership and better margins. Following the subset of data communicated in September, we have been working with multiple scenarios, including a shift in focus towards EU being the greatest opportunity. Moberg Pharma is now in discussions with potential partners in Europe to identify an optimal path forward. Our intention is to update you once our business plans have been detailed and negotiations have progressed. We see great opportunities in Terclara for the 13 approved countries in EU and with more to come. Terclara is already the market leader in Sweden and have grown in the market by 44%. Having a 76% mycological cure, daily dosing is outstanding for a topical onychomycosis drug, and the success in Sweden confirms that the marketing message and claims of the product resonates well with consumers. I'm looking forward to updating you on our plans and progress forward taking Terclara to market. In summary, the North American Phase III study for MOB-015 did not meet its primary endpoint, and its mycological cure rates were lower than those seen in previous studies. The reduced dosing regimen decreased nail whitening, but came at the cost of lower mycological cure. The strategic implications of these results are significant. The findings confirmed that sustained daily dosing over a longer period, as approved in EU, is essential for effective treatment. As a result, Moberg Pharma will shift its commercial focus away from the U.S. and towards Europe, where the original dosing regimen is already approved. Plans for direct sales in U.S. have been put on hold as FDA requires 2 successful studies for regulatory approval, and the current study failed to meet its primary endpoint. A key development arising from the data is our shared decision together with Bayer to stop the collaboration due to strategic considerations and top line results. As a result, we will regain full rights to MOB-015 in Europe while retaining milestone payments previously made by Bayer. This is also an opportunity to capture more of the value chain in Europe by taking a more active role in commercialization and brand ownership. Discussions have been initiated with potential partners in Europe to support this strategy. Our approved EU product, marketed as Terclara, provides a strong market opportunity. Terclara has already become the market leader in Sweden with the product achieving 76% mycological cure under the daily dosing regimen. We plan to use Terclara as a star brand in Europe with the potential to expand to more EU markets. The strategy may include acquisitions of complementary brands to create a broader product portfolio, similar to what was previously achieved in the U.S. market. And with that, I open up for questions.

[Operator Instructions] And our first question comes from [ Dakota Quince ].

So obviously, you weren't getting the label outcomes you were looking for with this trial. You were able to reduce the whitening. And this is kind of a question for at least Amir or Anders. Reading about terbinafine, well, ergosterol deficiency, it weakens the cell membranes. And consideration for past things Amir has said about excess hydration that was unrelated to that composition, I'm wondering if that whitening is cell death. And I know it's preliminary. And unfortunately, that would just be something that you're just getting punished for having a good topical that works well because it's causing all this excess cell death to occur continuously with continued application. And just in the spirit of market access and what we've seen -- the good work we've seen Allderma do with capturing all of that market, I'm just wondering if they could take -- if that would be sort of your ideal partner of choice for Europe. And I would be interested in hearing back if there's any validity to that possibility from the key opinion leaders like Amir. Yes.

So if I start with the question that I believe was directed towards me, whether Allderma would be our partner of choice, I would say that we have dialogues with several partners. And we aim to get back to you as soon as we have clarity on the road forward. But we definitely see a road forward where we control a larger chart of the value chain, but we won't do it all by ourselves. So we will definitely have a partner involved in the conversation going forward. And Amir, perhaps you want to address that other question?

Yes. I am Amir Tavakkol. I just hope I understood the question. I think you are correct in the fact that terbinafine obviously inhibits the enzyme squalene epoxidase and further downstream inhibiting production of ergosterol, which is a cholesterol required for membrane assembly. I think this is pretty specific to antifungals, in this case, terbinafine. I'm not really quite sure the vehicle would have such a kind of a potent biological activity to inhibit cholesterol production or lanosterol production. Is that what you're asking?

Well, it's just your MOB-015 gets a lot of terbinafine into the nail plate and the nail bed, way more than systemic oral therapy, and it does so very quickly, which is what's been observed in the past. So I'm just wondering if it's possible this excess hydration you've referred to in the past could be cell death. And if that's the case, well, I mean Moberg Pharma is just being punished for having a nail topical that works really quickly. I know it's like really preliminary and it's -- the data was just unblinded 12 hours ago. But I was just curious to hear your thoughts on that idea just because it's an oddity, for sure.

Right. No, I hear you. So yes, so I'm really doubtful that, that is the case. As you know very well, the life of viable fungus resides underneath the nail plate, in the nail bed. That's actually where the site of infection is, which often kind of goes unnoticed. So the discoloration or the whitening that we see is really very superficial, is limited to the nail plate. And given the formulation, which is, as you know, again, contains amount of urea, lactic acid and propylene glycol, these are really known moisturizers, known hydration kind of excipients and they're used widely in industry. So my belief is that it's really just a superficial effect. I don't really think that it would -- this is overdosing and killing the cells. These are keratin, they're dead on the surface, and I don't think it would really affect the viable fungus, which is way underneath the nail plate in these kind of spaces. But it is an interesting idea.

Yes. I was just thinking about the excess hydration you referred to in the past because you said it doesn't come from the composition, to my understanding. So I was curious about that. But okay, I appreciate you.

No, actually, it does come -- I'm sorry, maybe we misspoke, I doubt, but it really -- actually, the cause of hydration, overhydration is the excipients because we see the same, if you like, phenomena in both vehicle treated as well as MOB-015 treated. So that is explicitly because of the excipients. And as Anna just nicely alluded to, by lowering or lowering the frequency of dosing, we reduced the hydration whitening, but then that came at the expense of delivering less dose of the active drug. But they are very closely linked.

Got you. Okay. And congratulations to Allderma. Allderma, you knocked it out of the park with that launch, and you deserve everything that's coming because they earned their stripes for that launch. And I -- this is just me hoping, Anna, but you should give them more [ care ] if you can.

Thank you. We're really pleased with the collaboration with Allderma, of course.

The next question comes from [ Johan Holmström ].

My name is Johan calling from Sweden. I'm a private shareholder. You earlier announced that around this time of year, you will announce a new supplier of terbinafine. I wonder how is that proceeding? That is my first question. And then as a shareholder, I'm interested to know more about the business plan and the rollout in Europe. When do you expect to enter the first country? And what will the situation be in 12 months, 24 months and 36 months? If you can give us some kind of information about that.

Sure. So if we start with the terbinafine question, so as we announced in the quarterly report, we have answered the questions from the Swedish MPA regarding the application, and we are waiting for the agency's decision. So we have no new information, but we really do expect approval shortly. And of course, the terbinafine supply, that's also linked to the rollout plans because we need that terbinafine supply to be in place in order for us to roll out in more countries. And as I said, we think it's around the corner, but we're awaiting the approval by MPA. And I would say that the time line of the rollout is not really affected by this decision. Our goal remains that we will launch in the approved countries in 2026. So it's not really a change on plan when it comes to that. When it comes to the details around the launch in every country, well, now we have ongoing discussions with potential partners, and we need to get that in place and come back to you with an updated business plan.

Okay. May I ask you, when you talk about 2026, why are we talking about 12 to 24 months from now? Why does it need to take so long time to do the first launch in the first country outside Sweden?

Yes. So the reason for that is that we don't have approved drug substance to the extent that we need in order to launch in more countries. So we need that approval. And just assume that we will get that tomorrow, then that's excellent. But that approval, then you need to produce the drug. And more importantly, the pharmacy chains needs to put the drug on their shelves. And unfortunately, there are typically windows when they accept new drugs. So if we take our Swedish launch as an example, there are, basically, there are 3 windows in Sweden where you can enter a drug into the shelves, and it's February, it's March and it's October. And when we entered in February last year, then that decision was made by these chains in August and September the year before. So the time lines for the decisions for the chains, that's really on the critical -- that's really the critical time point here. And we want to enter at high season. And the reason for that is not so much that we want good sales to start off with, but we want to be part of the chains' campaigns. And they only have the campaigns while at high season. So they typically have a foot campaign following the high season. So that's super important in order for us to actually enter all the chains at the same time. We were successful in Sweden. So we now have coverage on every pharmacy chain in Sweden. And that's -- if we're going to spend money on advertising, of course, it's crucial that the pharmacies has the product on the shelf. So entering at peak season is critical, I would say, for us to do a really good launch so that we get acceptance by the chains, so they will take in the product ahead of the peak season and then we will do combined marketing with the chains over this peak season. So that explains the time line, I hope.

Okay. That's good information. May I ask another question?

Sure.

If we -- what I read also is that you have increased the market in Sweden with 40% since you launched the product, which is an amazing feature. May I ask you, what size is it on these 13 countries where you have approval of the market in euro, so to say? Can you give us an approximate number?

I would prefer not to because I think that they are really different markets. They, of course, have similarities, but I think that I'll rather come back to that when we have a thorough analysis of exactly how we will approach each market because even if we say that our goal is to take a larger market share ourselves, I don't expect that we can do that in every territory. So margins and so on will vary between countries. The structure of these countries are rather different. So in Italy, it's really down to covering the different pharmacies, and it's very, very local, requires a lot of foot on the ground, but it's a really interesting market, whereas you have the chain-based, the pharmacy chain-based markets in Northern Europe. So Europe is rather -- well, it's 13 different markets, and they all look slightly differently. And we think we will have different market share in these different markets. And we have different views on to what extent we can grow these markets, how mature they are. But we do think that this product has the capability to become the market leader in each of these 13 countries. So that's really our goal.

The next question comes from [ Dan Carroll ].

So a couple of questions. I'm very excited to hear that the European launch time line has not been affected. That's wonderful news. I was just wondering if you could talk to, given the change in situation with Bayer, whether you regard yourself as being fully funded to pursue that rollout as you think about it today and that you're sufficiently capitalized for that. The second thing I would like to explore a little bit is the conversation around the U.S. market. I think you said that there is no immediate plan to run another Phase III trial, but that there might be the possibility of going OTC. I'm wondering that would probably require a different concentration of terbinafine, and whether such a trial might be put in place or what the approval process might be or whether you're just thinking about putting such trials off for a few years until Europe is rolled out. So those would be my questions.

Okay. So if I start off with the U.S. question, so right now, we have investigated the possibilities of taking an OTC route, and we have also investigated the monograph route and concluded that monograph route is not possible. But the OTC route might be possible. And the challenge with OTC route is that today, there is no onychomycosis drug that is approved OTC in the U.S. today. So the drugs that you find in the shelf in the pharmacies, they're not really for onychomycosis. They're for athlete's foot and so on. And they're labeled in a way so you might think that it's for onychomycosis, but it's not. So for me, it was important to understand, is this doable or not? And we think it is doable. It takes quite some time. It's a 3- to 5-year exercise. And of course, there is a price tag associated with it as well. But I think that the key question in U.S., regardless if it's Rx or OTC, we need the FDA to approve our clinical data. And basically, what we hear is that you need to have 2 studies showing superiority. Today, we only have one study showing superiority. So if we are to proceed in the U.S., the conclusion is that we need to conduct one additional study. And given the time and costs associated with that, I think for the time being, we're focusing our efforts on Europe. And we'll get back to you with detailed plans, but I would rather spend the excess cash that we have in the company on making sure that Europe is a great success. I think it makes much more sense. So you also asked about the financial situation. And as could be seen in our quarterly report, we have slightly more than SEK 300 million in cash in the company. So we do have some excess cash that could be invested both, I would say, in a direct-to-market approach in Europe and also potentially to acquire additional brands that would be a good fit together with MOB-015 or Terclara. So we have no plans for raising additional funds as of now. We're well capitalized. And I'm looking forward for things to materialize so that we can talk about these potential partnerships, that partnership discussions that we have ongoing and present the full business case.

I appreciate that comment. It's exciting to hear that there's no -- certainly no likelihood in the near term of dilution and that you're fully funded for the European rollout, which remains on track. One last question. I didn't understand the comment from earlier in the call about whether or not it would be possible to rerun a U.S. trial, if you chose to do so, obviously, the timing is a different question, but just to rerun with the original label on a daily basis that you would -- if you could replicate the results of the first study, that would be sufficient for the FDA. Is that true?

Well, it's challenging to know on beforehand, if you do exactly the same study, will you end up with exactly the same results? That, you never know. But I'm just repeating myself, if we provide 2 studies showing superiority, then I think we have a very good material to present to the FDA. And then ultimately, it's the FDA's decision whether to approve a product or not on that data. But that is the data that we hear is needed for approval in the U.S.

Okay. But I'm just trying to understand the hypothetical. So if you were to rerun the same trial, probably it takes 18 months between recruiting and running the trial. And if you were to replicate the results of the first trial, there's no immediate reason to believe you wouldn't, that in theory would provide you with the sufficient data.

Yes. But it is a 4-year exercise and a significant cost, of course.

Very excited about the European rollout, and look forward to hearing more from you.

Thank you.

[Operator Instructions] We have a question from [ Guido Torbadi ] from [ Traders Partners ].