Oncopeptides AB (publ) (ONCO) Earnings Call Transcript & Summary

Hello, and welcome to Oncopeptides conference call. [Operator Instructions] Today, I am pleased to present CEO, Jakob Lindberg. Please go ahead with your meeting.

Good morning, everyone. This is Jakob Lindberg, CEO of Oncopeptides. This is a bit of an unusual webcast since the reason for this webcast is that a factual incorrect document has been circulated among our shareholders regarding how this drug works, that is no solution. There are things in biotech that are hard to measure. We all know that to gauge the correct risk level of a clinical trial or the peak sales assumption of a drug, that is a matter of debate. Then there are things that are factually correct or incorrect and that we need, as a company, to correct to make sure that you, as shareholders, sit on the correct information. And the document that has been floating around contains several factually incorrect statements and consequently, a factually incorrect conclusion. And that is what the aim today is to correct. We will take questions and answers in the end, and hopefully, we can just put this to rest on this call. Please go to Slide #3. And if you have animations on the web, please take it to the last animation. So this is our classical mode of action picture. On this picture, we actually discuss what happens inside the cell. This is not something that this external report from hedged fund actually addresses, and this is out of scope for this call. As you know, we get accumulated in cells that are high in aminopeptidase activity, and we have a very different molecular fingerprint than other alkylators inside the cell. The claim that has been made externally, though, is that melflufen in the blood is converted into melphalan and that melflufen never reaches the cell in the way that we described on this picture. And that is what we will talk about today and also correct that this is factually incorrect. So now, please go to Slide #3 -- 4, sorry. So first of all, we need to understand what the word blood means. Blood actually consists of 2 compartments, the blood plasma and then your blood cells. This is very fundamental. The blood cells are, of course, both your red, your white and your platelets, while the blood plasma is fluid filled with salts and proteins and carbohydrates and some lipids for that matter. When a drug is infused in a patient, and in the case of melflufen, it's a 30-minute infusion, all the melflufen ends up in the plasma [ uniquely ]. The first question you need to ask yourself is what happens in blood plasma with melflufen. And this, we can see on Slide #5, so please change slide. Now here, we have put melflufen in human plasma. And as you can see on the x-axis of the lower end of this chart, you see that the time is measured in hours. Actually, it takes more than 12 hours for melflufen to get completely degraded in human plasma. Here, we also see that very little melphalan is formed. There is some so-called de-esterified version. And please note, in this picture, that J1 was the old name for this drug in the lab. So J1 is melflufen. You will later see on the time stamps we're going to watch in patients that, given how long it takes for melflufen to actually be integrated in plasma, that this is a completely relevant process for how melflufen is managed in the body. It takes such a long time in hours for anything to happen with melflufen that the blood plasma compartment doesn't do anything with melflufen in a patient. From this time stamp also, we can conclude that there is no aminopeptidase activity in human plasma. The reason for this is that aminopeptidases act on the minute time scale. They are very rapid processes together with esterases, so the enzymes they can do something with this molecule. And given the scale here now, whereas, we know that what happens to melflufen in human plasma is the same as with any other alkylator. That is that it slowly reacts with water with a half-life here of 2.3 hours, and there is basically no contribution from enzymatic activity in human plasma. Now what happens though when we put melflufen into the patient and into the plasma? That we can see on the next slide, Slide #6. So this is, once again, a slightly complicated chart. You see on the x-axis, time and you can see here that the patient receives the infusion at time 0. And then since it's a 30-minute infusion, at time 0.5 hours, the infusion ends. On this chart, you can see that you can barely measure melflufen during infusion. It's a very, very low concentration. And this means that since we know from the previous picture, that nothing happens with melflufen in plasma in itself, but we can see in the patient that the melflufen disappears very rapidly from the plasma compartment. We can then conclude that the melflufen is taken up somewhere. And of course, it is taken up by cells, cells in the body, since we know that nothing happens in the plasma itself. We can also see that at the end of infusion, which is the last blue little dot just off the 0.5 hours, we can see that the concentration is barely measurable. And after that, we can't measure any melflufen anymore. It's gone. So it also means that once the infusion stops, melflufen is gone within basically seconds, maybe up to a minute or so, but then it is out of the system. The system, meaning the blood plasma. We can also see then the red curve. That is the metabolite, melphalan. You see how melphalan slowly rises during the infusion. And it actually also continues to rise after the infusion ends. As in when melflufen is not measurable, melphalan continues to rise. Since we know that melphalan only comes from melflufen, we now know that the melphalan that is rising here comes from somewhere else in the plasma compartment because there's no melflufen left there. And we will come back to that. Please note, which is not evident from the picture, point number three, that the melphalan concentration you can measure in the patient here is much lower, significantly lower, a little bit more than half of the concentration you would measure in a patient if you gave the same dose of melphalan to the patient. So you actually see a lower amount of melphalan in the blood plasma than after melphalan (sic) [ melflufen ] infusion. So that means that all the other melphalan that has been formed is somewhere else than in the blood plasma. And of course, it is in the cells. So to make sort of a little bit of a time stamp where we are now with the data on Slide #7, so next slide, please, we know that melflufen is rapidly infused intravenously to the plasma compartment and then it rapidly disappears. But we also know that in the human plasma, nothing really happens in itself to melflufen. So consequently, we know that melflufen is then very rapidly transported out to other compartments than the blood plasma, meaning cells. Furthermore, since we cannot measure melflufen quickly after the end of infusion but we can measure melphalan, we know that close to 100% of melflufen is cleaved by the intracellular aminopeptidases. And I say intracellular here because we know that there is no activity in the extracellular compartment as previously shown. Where melflufen, it takes more than 12 hours for melflufen to disappear. So the conclusion here is melflufen is rapidly taken up by cells after infusion and cleaved by intracellular aminopeptidases. The question here is, of course, where does melflufen end up? And to understand that, we need to talk about something very fundamental in analytical chemistry, and that is diffusion and the rules that govern diffusion. So next slide, please, Slide #8. As a bit of background, diffusion is actually the law that all concentrations become equal across the medium over time, and this is driven by the second law of thermodynamics. So it means that as an example, that if you put salt in 1/4 of a cup of water, if you wait long enough, the salt will be evenly distributed in your entire cup of water. There is 1 caveat for diffusion, and even a lot of pretty skilled physicians and bioscientists are not fully aware of this because this is more in the realm of physics, is that diffusion takes time if the distance that needs to be covered is actually in millimeters or centimeters. We're talking minutes to hours. And of course, in the body, processes are very rapid. So how does the body sort this out? Well, that is the main reason why evolution has given us capillary beds. In capillary beds, the distances between the cells from the blood, the blood plasma and the cells in your organs such as the liver, your brain, your viscera is measured in micrometers. Diffusion over micrometer range actually happens in the millisecond range as in the time that it takes the blood to pass the capillary bed, complete equivalence is reached for molecules. However, there is a problem, and that is that cell membranes as well as the wall of your blood vessels is covered in cell membranes. Those are lipids, and they act as barriers. [Technical Difficulty] So I apologize for that. Apparently, there was a problem with the sound. I hope it is good again. Otherwise, I expect financial hearings to take me off again, and we'll make another sound check. Apologies. So we're going to start over on Slide #8, which is the laws of diffusion. So diffusion means that concentrations become equal over a medium over time. And as stated, this is governed by the second law of thermodynamics. When the distances are measured in millimeters or centimeters, however, this process is rather slow, minutes to hours. And of course, in the body, processes are very rapid. Evolution, however, has given us the capillary beds to sort this out because in the capillary beds, those are -- that is the smallest blood vessels we have at the end when an artery becomes, at the other end of the capillary bed, a vein, distances are measured in micrometers. In the micrometer range, this process is measured in milliseconds. So whenever blood comes to the capillary bed, there is a complete equality of concentrations between the cells of your organs, your blood plasma and your blood cells. There is 1 caveat, however, and that is that cells and your blood vessels are covered in a barrier, which is formed by cell membranes. Those are lipids. Membranes are very effective at keeping water soluble molecules out, meaning that this complicates exactly how this exchange between the blood your blood cells and your organs occurs. However, when a substance is highly lipophilic, such as an anaesthetic compound, for example, cell membranes are nothing. They don't act as barriers at all. And that is why when you infuse a -- when you give a patient an induction dose of an anaesthetic seconds later, it's lights out for the patient. It doesn't take any time at all because you get perfect diffusion equilibrium over the capillary bed. Melflufen is equally lipophilic as an aesthetic compounds. In chemical terms, it is measured as logP or logD, and the logP value is 4. So what does that mean? It means that it likes fat 10,000x more than water. So melflufen acts exactly like an anesthetic compound and is immediately equalized across the capillary bed between the cells of the blood, the blood plasma and the various cells of your organs. This means that we now know, according to the laws of diffusion, and this is also measured in what is called autoradiography when you put isotopes on the molecule, radioactive isotopes and you track where it ends up, that this gets perfectly distributed to all cells of the body over the first passage in the capillary bed. So this means that there's no difference between one cell type and another. You get an equal amount of melflufen to a cancer cell, to a normal cell, to a cell of one of your organs. The only thing -- the only piece of the body where you get a slightly lower amount is if an organ has very poor capillary beds. There are basically 3 such normal tissues with poor capillary beds, and that is your hard bone, your tendons and your fat on the belly, for example, your abdominal fat. Otherwise, in terms of all other organs, there is a complete equality between how much melflufen they get. Now we can go back to the first picture, we shouldn't switch slides, by the way, and just realize that then comes the whole mode of action into play where cells that are high in aminopeptidase expression will cleave much more melflufen than the cell with low, et cetera, but that is something that we don't need to address for this presentation today. So by this, we then can form a complete picture of how this drug works, so please -- or as distributed. So please go to Slide #9. So now we know that melflufen enters the blood plasma through the infusion. So over 30 minutes, melflufen is added. But we also know that even though nothing happens in the plasma itself, as shown on one of the earlier graphs, we know that it rapidly disappears. This means that over the capillary bed, melflufen enters all cells equally in the body, and it enters as melflufen. Inside those cells, it gets cleaved by intracellular aminopeptidases and it releases melphalan. In some cells, this happens much more frequently and more as in a cancer cell. In other cells, it happens less. That is why this drug is so effective in the clinic. However, at this point, we now have no melphalan in the blood plasma, but we have plenty of melphalan inside all the cells of the body. Now the laws of diffusion work in the other direction since there's no melphalan in the blood but plenty of melphalan inside the cells, melphalan will slowly move out into the blood plasma, same laws of diffusion and the second law of thermodynamics that drove melflufen in there in the first place. However, since melphalan is water soluble, the cell membrane acts as a barrier, and this process is much, much slower. So while melflufen's entry into the cell is rapid and instantaneous, the leakage of melphalan back into the blood plasma is a slow process. And that is why we see melphalan slowly increase over time and even after the end of infusion. However, as previously noted, the peak concentration of melphalan in blood plasma is much lower than if you would have given melphalan in itself, meaning that we have loaded the tissue with much more alkylator than would otherwise have been the case if you had given the old drug. So in summary on Slide #10, we know that melflufen after intravenous infusion is rapidly disappearing. We know that melflufen is not cleaved in the plasma at all, which -- so we know that due to its lipophilicity, it is just like an anesthetic compound. It is evenly and very rapidly distributed to all cells of the body over the capillary bed, just according to the laws of diffusion. Inside the cells, the intracellular aminopeptidases cleave melflufen to release melphalan. And as a final step, since there is no melphalan formed in the plasma, the laws of diffusion will now push melphalan back out into the blood plasma, but it's a much slower process than by the speed which -- with which melflufen entered the cell in the first place. So we just really wanted to set this record straight. And we believe, in summary, that they probably didn't know that there is no activity of human plasma on melflufen, and they were probably not fully aware of how lipophilic, that is how fat-soluble this molecule is, meaning that it acts exactly like an anesthetic compound over the capillary bed with very rapid distribution to all parts of the body. We will now open up for questions and answers, if there are any. Thank you very much.

[Operator Instructions] And there seems to be no question at this point, so I will hand over back to the speaker for any final comments.

So thank you very much. I understand this is a very technical topic, which actually makes it hard to do a webcast to the market as well. The intention today was just to set the record straight in terms of facts. There are things where there are judgment calls to be made, but this is not one of those items. We're happy to engage over mail if there are any additional questions, and you know the contact details to our Investor Relations department, and to straighten out any remaining question marks. In terms of data, I just want to highlight when you look at this presentation later that is that on Slide #5 in this deck that there is no activity of human plasma on this molecule. And it is actually a very complicated slide, that is Slide #8, the laws of diffusion and how lipophilic this compound is. Because if you understand those 2 slides, you understand how erroneous and factually incorrect the report that has been circulating is regarding this compound. Thank you very much, and thank you for today.