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

Ladies and gentlemen, welcome to the Oncopeptides Audiocast Teleconference 2022. [Operator Instructions] Today, I'm pleased to present the CEO, Jakob Lindberg; CMO, Klaas Bakker; and CFO, Annika Muskantor. Please begin with you presentation.

Thank you. Warm welcome. This is Jakob Lindberg, CEO of Oncopeptides, and we are here today to present the first quarter of 2022. I think we can go straight to Slide #2, just the regular disclaimer that we are making forward-looking statements, et cetera, today. And if you would like details around this, please read this carefully, and it is available on our website. Slide #3. As already mentioned, with me here today and then Dr. Klaas Bakker, our Chief Medical Officer; and Annika Muskantor, our Chief Financial Officer. Before we go into the substance, I would just like to highlight that the last quarter has been absolutely dominated by regulatory interactions. And I know that this, to some extent, is frustrating for you as the market because there's only so much we can say when these are ongoing. Today, you will note that we are sharing some more details regarding the European application process, but we can still not share much more about the FDA process. We are still on a time line to be able to disclose all information regarding the EMA process during quarter 2 as stated in the quarterly review, but we will not be able to share all that information today. Please go to Slide #3. So the highlights from the first quarter is, as stated, that we are under review with the European Medicines Agency regarding melflufen approval in Europe. I think it is important to note, and we're going to come back to this, that the current application, even though the indication, et cetera, is centered based on the HORIZON data set, both the HORIZON and the OCEAN data sets are part of this application. We also announced on January 21 that we rescinded the voluntary withdrawal of PEPAXTO in the U.S. We also published the data from our Phase III OCEAN study in Lancent Hematology on January 13. And once again, this complete OCEAN data set has been shared with regulatory authorities, both the FDA and the EMA. Next slide, please, Slide #5. So when it comes to the European Medicines Agency application, the process is on track and in accordance to the time lines that we have previously disclosed. That is, we expect the CHMP opinion in the second quarter with the European Commission decision in the third quarter of 2022. We have provided one piece of additional information today, and that is that EMA has asked, and this is very important that they have asked for this, so this is not a dispute resolution mechanism between us and EMA. We have a very good process that we feel comfortable with, with them, but they will hold the Scientific Advisory Group meeting regarding specific scientific topics in the near term. It's also important to note that the EMA application, which originally was based on the pivotal Phase II study at HORIZON, now also includes OCEAN as a potential confirmatory study as part of the package. Meaning that this could result in a full market authorization in Europe if they think the HORIZON data is good enough and if they deem OCEAN to be a confirmatory study. I will now leave the word to Dr. Klaas Bakker to talk about the FDA on Slide #6.

Thank you, Jakob, and good morning, everyone. As Jakob mentioned, we have still voluntarily withdrawn PEPAXTO in the United States, so that hasn't changed. So formally, we are an approved drug on the U.S. market. We have done that because of further analysis of the exceptional, the heterogeneous overall survival data in OCEAN, but also in other trials. And this data has also been shared with EMA. And although we do not market PEPAXTO at this time in the U.S., we have a dialogue with the FDA ongoing, still to reach a mutual understanding on the OCEAN data. With FDA, we are not in a position today to speculate on the timetable and outcome. What we are doing, though, is providing U.S. patients access and continued access to melflufen via the so-called IND process. And important to mention is that it is not only ongoing patients that we will also be willing to consider new patient requests for PEPAXTO in the United States. Next slide, please.

Sorry, this is Jakob. I just want to add, so the first statement was that we have still rescinded our voluntary withdrawal of PEPAXTO in the U.S.

Yes. Sorry if that was not clear. Yes, so it's still rescinded, and we're still having an ongoing conversation with the FDA. Thank you, Jakob. Then the Phase III OCEAN data, and I would actually encourage every one to read the paper because it gives very important insights also in the discussions we're currently having with regulatory authorities. Important to note is that the authors of the OCEAN data and the BI really think that in patients with len refractory multiple myeloma, melflufen could play an important role. And that based on the heterogeneous subgroup data, this should be carefully tailored on the basis of the patient's previous medical history. And that this most notably, the transplant has also been shared in the Lancet Hematology paper. With that, I would like to hand it to Annika to the financials.

Thank you, Klaas. Happy to talk about the financials.

Slide #8.

Thank you. So you can see quite a decrease. The swift and decisive measures that we initiated last year have lowered costs significantly. We are tracking as expected, and operating losses for the first quarter decreased to SEK 98.9 million from SEK 347.3 million. The largest decrease is, as can be expected, in marketing and sales since the same period last year involved an expansion in the U.S. as well as in Europe, while almost all such activity has ceased during the quarter that just ended. The costs that do remain are tied to the tail of the severance payments as such as well as the minimal expenditure relating to the ongoing EMA application. G&A has also decreased, but inevitably not at the same rate as marketing and sales, which all makes sense, actually, given that certain administrative resources are always at the tail end of downsizing to handle legal and organizational issues. Thereby, severance pays affect the past quarter as well as run a bit into Q2, totally in line with previous communications. Further, some costs classified as G&A are required for running a company and a listed company as well as the ongoing EMA application process. R&D has decreased, but proportionately less, which also makes sense given that we continuously build on our early stage pipeline. In addition, the slower decrease in R&D costs compared to other areas is totally in line with previously communicated information relating to the closing of studies, which are anticipated to affect the first half of the year, i.e., through Q1 and Q2. Further, the number of coworkers decreased to 76 by the end of Q1, and you can expect that number to decrease further as notice periods come to end. All in all, of course, tying into cash flow from operating activities that have decreased from SEK 386.7 million to SEK 166 million. And with that, I actually hand back to Jakob for Q&A.

Thank you. So Jakob is back here. And before we start Q&A, I just want to highlight that we have probably conveyed that we feel fairly good about where we are in the regulatory processes. But at the same time, I want to just make clear that decisions have not been made yet and there is still risk in our regulatory processes. Thank you. Now for Q&A.

[Operator Instructions] First question from Erik Hultgard from Carnegie.

Sorry. Yes, Erik Hultgard here from Carnegie. I have 2, if I may. First one, on the Scientific Advisory Group meeting that was announced, if you could give some color on the reason why you have decided to call for this type of advisory group meeting. And also how you plan to communicate around the outcome and any potential material ahead of this meeting since it's not a public meeting. And then finally, financial question for Annika, how long when -- how long do you expect the current cash to take you with current accounting?

Thank you. This is Jakob. I can start with the Scientific Advisory Group meeting. So there are 2 reasons to have a Scientific Advisory Group meeting. To make it simplistic, either it is called upon by the company because you use it as a dispute resolution mechanism, or it is called upon by EMA because there is some very important scientific matter to discuss that is of principal nature. This is the latter. And at this time, we cannot share the exact content of this meeting even though we know the topics of it and it makes perfect scientific sense to discuss these topics in our view. And I don't think it is hard for the market to more or less understand what this is about because it connects to how to interpret the OCEAN trial, of course, based on all the discussions that have been and some very principal matters in the interpretation of that head-to-head comparison between melflufen and pomalidomide. As when it comes to the disclosure of that information, we are now disclosing that the meeting will happen. The only part that should really disclose information about this meeting is EMA itself. And normally, in the case of some sort of CHMP opinion in the end, if it's positive, meeting minutes, et cetera, will be disclosed as part of such decision. We will not disclose information straight after that meeting about the outcome of the meeting. But we will need the EMA decision to have happened prior to disclosing any such information. I think it's important to note that these so-called SAG meetings are very common as part of the EMA processes, and roughly 1 in 5 applications have them. And it's not sort of seen as either negative or positive in terms of generally probability of success. It's just a normal part of the procedure. With that, and you can ask follow-up questions if something was unclear, Erik. But otherwise, I bring in Annika for the financial topic.

My favorite topic, cash. I'll try to be as clear as I can. We have, of course, a number of scenarios. And now given the outcomes that we can foresee at this point, we estimate that we have funds required for the coming 12 months. Now that said, should any of the material underlying assumptions not materialize, I can think of -- this seems like if we have -- if we can't complete the agreement with the EIB as expected or if we can't draw on a line of credit because of regulatory delays or approvals, then we might, of course, need to revise that statement. But the 2 most difficult cash drivers to predict are really the final cost for closing studies and process delays, both really out of our hands and beyond our control. So that gives a little bit more color to your question, I hope.

Yes. And then just a follow-up for, Jakob, I guess, on the Scientific Advisory Group meeting. So will there be a very specific sort of voting process where members of the panel will vote whether this should be approved or not? Is it that type of meeting? And typically, this meeting, how long before the actual opinion is announced that this type of meeting take place?

So the first question is that the Scientific Advisory Group opines on scientific matters and not on regulatory matters, and approval is a regulatory matter. So they will answer very specific questions that is asked by EMA through the CHMP regarding specific scientific matters. And they answer those questions, and that will be done. Then the regulatory implications of those answers is up to the rapporteur and CHMP to ultimately make a decision on. When it comes to -- I don't think there's any normal. It's just part of the normal process. And it's not a -- ultimately, it's -- as long as it occurs prior to the CHMP meeting or decisions should be made, it is done ahead of that meeting, which is, of course, it doesn't happen after the CHMP meeting. It happens before. But there's no normal there, except that it normally happens late in the process because you don't do a SAG when a lot of other outstanding questions are there, which you don't need a SAG for it. So SAG is sort of for the residual key questions where you think that we need additional scientific input on how to interpret or how to create a view of such a scientific topic. I don't know if -- I hope that made it clear to you, Erik.

Next question from Suzanne van Voorthuizen from Kempen.

I was just wondering, just to confirm regarding the run rate guidance of the coming 12 months. So into, let's say, H1 next year, does that include additional funds from, for example, the EIB loan or other sources? Or is this run rate guidance purely based on the current cash position and the current, yes, burn that the company is foreseeing with a downsized organization?

That's a very good question. Thank you for asking that. Let me try to be more clear on that. Now as we announced in the previous when we had a loan agreement with the EIB, that is, of course, tied to certain market and sales goals. So that would be in the scenario where we can start selling. And since those milestones are tied to specific goals, then a delay could, of course, affect them. So yes, in the positive scenario in order for us to leverage and grow as quickly as we would like to and we anticipate the market to need, that is included.

All right. And just one other follow-up on the scope of the Scientific Advisory Group meeting. This is in relation to -- or it is part of the review process of melflufen? Do I understand that correctly? Or is there a broader scope included in this type of meeting?

I mean it is regarding the melflufen application, and it is about the interpretation of the OCEAN data set primarily.

Got it. Got it. All right. And maybe just one final question, a sort of strategic update. Is that now -- let's say, on the company plans going forward, is that now expected in Q2 after the EMA CHMP clarity is there?

Correct. I mean to make a little bit of an analogy, right, right now, we have -- we are Schrodinger's cat. And we're listening very closely to the box to see if the cat is alive or not, and we feel good about it. But ultimately, we have to disclose our plans once we know. Yes. Thank you. Susan?

Thank you. For the moment, we have no more questions. [Operator Instructions] I think we have no more questions by phone.

Thank you. Just a final few words. I hope that we, during Q2, as expected, can share much more information with the markets. And I'm looking forward to that because it has been pretty horrible to have all these webcasts where we cannot fully disclose everything that is going on. And I'm looking forward to be able to share so much more with all of you. With that, thank you for listening in today, and I hope you continue to support us. Thank you. Cheers.

Thank you. Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.