Pila Pharma AB (publ) (PILA) Earnings Call Transcript & Summary

Good afternoon, and welcome to this H2 2024 presentation and Q&A with Pila Pharma. With us today, we have the CEO, Gustav Hanghoj Gram. First, there will be a presentation, and afterwards, a Q&A, where the CEO will answer questions submitted by you. There have already been pre-submitted questions on Stokk.io, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to Gustav from Pila Pharma to start the presentation. So, Gustav, your line is now open.

Thank you so much, Anders. It's a pleasure to be back here with Stokk to present our half year report and our year-end report for 2024, a very eventful year for us in Pila Pharma, where we have taken great strides in our quest to develop our novel TRPV1 antagonist for treatment of obesity and related disorders such as diabetes, cardiovascular disease, et cetera. So I will briefly go through a few highlights from the report, and afterwards, give a quick introduction to Pila Pharma to those who do not know us yet. And hopefully, we can leave quite a lot of time for all of your questions in the aftermath. So we released a report this morning for the second half of 2024. I think that most investors will be happy to see that there are no negative surprises, of course, which is always great. We had a total operating result for last year, which was in line with what we had expected. We ended the year with roughly SEK 6.4 million in cash across both the main mother company that is here in Sweden as well as our Danish subsidiary. And we have had a relatively consistent cash burn with what we had forecasted. So all in all, it has been a year of a little higher expenses for us as a company compared to 2023. However, this is, of course, mainly related to the increased activities that we have initiated in anticipation of starting a Phase IIa trial in obesity, where we will look to understand what dose levels can be handled. And we have also conducted a small preclinical trial in a cardiovascular disease called aorta aneurysm, where we were interested to know whether our lead candidate, which is called XEN-D0501, would have a positive effect on, let's say, reducing the progression of aorta dilatation. So aorta dilatation, meaning that aortas expand to the point where they burst. So ideally, you are looking to see if you can prevent this condition from happening. And the initial preliminary results that we have received are very promising. So this is, of course, very confirming for us that we have a molecule and a compound that is very potent and could potentially also have great cardiovascular effects. But this is something that we are looking to try it a little bit more in depth once we have confirmed the data a bit more in depth. A little bit on the key figures and the cash position here. Of course, we're looking into Q1 here where we have -- we still have some activities ongoing. I think what is important for investors to understand is the process of the obesity trial, where we last communicated in the autumn that we are in dialogue or looking to be in dialogue with the U.K. authorities for a scientific advice. This also means that our cash burn for the obesity trial has actually not been as heavy as we had anticipated given that there is a slight delay to this. That's what that I can tell you for now. However, I think it's worth mentioning that these discussions are still ongoing, and we look forward to updating you all very soon on the actual process and progress to this project. So a little introduction to what we do in Pila Pharma. We are working with what is called a TRPV1 antagonist. And I think one of the main ideas or main constraints that we have when dealing with metabolic diseases is this element of inflammation that is found throughout the body. It's particularly prevalent in obesity and in other of these cardiometabolic diseases such as diabetes. So constantly, we hear both doctors and also other companies wishing to explore how can we cope and how can we deal with inflammation, as it is basically, or to some extent, tied to many of these conditions. Well, we work with the TRPV1 antagonist. And TRPV1 is located on sensory afferent nerves throughout the whole body. So this is a target that's very untraditional for metabolic diseases such as obesity and type 2 diabetes. However, the theory is that if you can block the receptor, you can also block or at least to some degree limit this inflammatory condition that many patients and people living with obesity are experiencing. And thus, you can actually improve body and organ function. And to -- and hopefully, we also have the opportunity in the near-term future to show that it may actually also have a concrete effect on regulating body weight. That would, of course, be in the interest of many investors at this webinar. So TRPV1 is basically what is called “capsaicin receptor or “chili receptor as our founder, Dorte Gram, likes to call it. And it is a receptor that is commonly known to regulate inflammation and pain. So in theory, any disease that contains inflammation as a component could be very interesting to explore. Now as a small company, we, of course, have to be very diligent with the amount of money that we throw at different projects. So for now, our main project is still to explore obesity as a potential therapeutic area that we can use this receptor for. We were founded in 2014 by Ms. Dorte Gram. She's an ex-scientist from Novo Nordisk in Denmark, where she's been in their obesity unit and has been involved in many of their projects relating to GLP-1 as well as to the long-acting insulins. So she has vast experience and knowledge of how to get molecules to the stage where they can become actual products. We have a lead molecule internally here in Pila Pharma called XEN-D0501, I mentioned it before. It's a second-generation TLPV1 antagonist with a very stable formulation that allows it to be stored and produced very effectively. This is a molecule that we have taken over from a different company some years back, which means that it has already been in 8 clinical trials in the past. So it has already been exposed to 300 humans. And this particular molecule has a particularly promising safety profile for the drug class, which gives us a lot of courage in the sense of seeing if we can progress it further given that many drugs fail in Phase II and Phase III because of side effects, like -- yes, our pipeline is centered around diabetes and obesity. You will see that we also have a program for pain. I don't want to speak so much about this today, as I don't have any news. And then, of course, the abdominal aorta aneurysm, which we have moved one further to the right, which is great. And hopefully, we can continue with the development plan for this track as well. And TLPV1 in obesity, I mean, of course, from diabetes in the form of obesity, you have a whole range of extra side effects or at least you have a different -- how can I say, you develop a lot of extra syndromes as a result of your diabetes or as a result of your obesity. So by treating the underlying effect, which obesity is, you can realistically expect to get a lot of beneficial effects on many other parameters. And this is what we see in ongoing longer-term trials with other products that are currently in development as well as on the market. And I think what's interesting for us is that there's starting to become a common recognition that obesity-derived inflammation is really the driver behind many of these diseases that are so much up in the air and what is being spoken about. So this is, of course, hugely interesting for us, as we have a molecule that is at least in principle anti-inflammatory, so it will treat inflammation directly. We have some data to suggest that a TRPV1 antagonist can reduce body weight. This is a little graph that is based upon the research by Dr. Gram, where she had used a molecule that is extremely similar in chemical properties as ours, where she induced it in rats, and she saw an almost 40% reduction in body weight gain. Now this may sound a little weird, but body weight gain in this rat model actually translated to body weight loss in a human model. So it gives us some encouragement as to the potential properties of using a TRPV1 once you can get the dose levels up. And this is, of course -- as I mentioned before, this is the next step for us. We want to explore higher doses. So we believe that TRPV1 could have an effect in many different, how can we say, components for weight loss. One thing is that we have some data that suggests that TRPV1 could inhibit nervus vagus activity. Now nervus vagus activity is very important for signaling from the gut to the brain if you're hungry or not. So in theory, it could lead to you feeling less hungry. We also expect that if you decrease inflammation throughout the body, all of your organs will also start to function better, and thus, your immune system would start to become better, and it would overall lead to body normalization, which again would benefit your immune system, it would benefit your metabolic system and so on. Furthermore, we also expect that our molecule XEN-D0501 could affect energy expenditure. And of course, this is very important and very interesting right now because in the industry, you really crack the code with heavy weight loss based on, let's say, reducing appetite. Now the issue is that many patients also experience losing a lot of muscle mass. So the industry is heavily focused on finding new pathways that can allow for leaner weight loss. And this is, of course, something that we hope to explore whether we could also have a part to play. The obesity landscape is, of course, extremely evolving all the time. There's quite a few of these players that are listed in this graph from 2023 that have already been acquired. And so we're looking into a future where there's going to be a huge amount of competition. However, what is essentially a very evolving market, it's also starting to fragment quite a lot now. There's a lot of focus on developing the next oral treatments for obesity as well. These are heavily centered around GLP-1s and to some extent GLP-1s combined with other different types of targets. And we see that there's a rise in small molecule development as well compared to peptides. This makes quite a good sense since peptides in oral formulations tend to be quite inefficient and expensive. What you would maybe recognize here is that a TRPV1 is not listed on the mechanism of action circle. And this is because as we have not yet filed a trial for obesity, it is not getting picked up by these research websites. So hopefully, in the future, we will be included in this. And to our knowledge, we are the only ones working with TRPV1 for obesity and diabetes. So hopefully, that gives us some sort of first-mover advantage that we can leverage. And, of course, this is a highly selective slide that I've chosen to include today, but it's just to give you as investors a little bit of an idea of how our molecule or how our drug could potentially look when we come to delivery method as well as side effects. And we have seen that there's been dramatic rise in discussions on discontinuation rates and side effects of the current marketed products. And this is, of course, something that we are looking to see, if we could potentially offer something to a pharma partner that is substantially different while still delivering weight loss. Obesity is still on the rise globally. And of course, as obesity is on the rise, so are all the other diseases. So cardiovascular disease, diabetes, cancer, everything is on the rise. And this is presumably not getting any better anytime soon. This is at least not the expectation from neither WHO, International Diabetes Federation, et cetera. So this is a megatrend that is coming to stay. So what are we intending to do? The next trial for us is going to be a Phase IIa in obesity/diabetes. The plan is to include 30 to 40 patients and dose escalation to assess what the maximum tolerable dose is. And we are hoping that we can include quite a lot of extra measurements like DEXA scans, heart scans, et cetera, in order to understand the mechanistic trends that occur in the body when you are exposed to a drug like ours. Of course, if you are able to attain data that suggests that you have a very lean weight loss profile that also gives you quite an advantage when you talk to pharmaceutical partners, which is something that we are very focused on as well because -- the further you get, the more expensive it becomes as well. So it is the outspoken strategy for us in Pila Pharma that we want to explore the opportunity of achieving a partnership in the not-so-distant future in order to progress the molecule as far as possible, of course, but also to pay back to the very patient shareholders we have. I took an old slide that we have, and this is just to give you an example. This is an old term sheet example that we received from 2023 regarding only diabetes. So obesity is not even included in this one. But here, we're looking at a deal value of potentially up to EUR 700 million. So if we get this right, of course, we expect interest to be increased. There's still a bit of work to do in the sense of educating other pharmaceutical companies as well on our thinking and our strategic and scientific rationale. But we're very confident that if we can produce results, then they will be interesting. We have a world-class scientific advisory Board. If I have to put it in my own words, we have Jens Juul Holst, who is the inventor of GLP-1 and one of the most famous obesity/diabetes researchers in the world. And as well, we have a range of very, very competent people throughout -- team with myself, Hampus, and of course, our founder, Dorte, who's also the Chairman and working with me as the Chief Science Officer and really running the show when it comes. So with that, I think we've gone through all the slides, and we're ready for some questions, Anders.

[Operator Instructions] We have the first question from the audience here. The first question is, I would like to know where you are with assessing the efficacy of XEN-D0501 for erythromelalgia. That's...

Erythromelalgia, yes, don't worry. It's taken me some years to figure out how to spell that, too. So the current plan is that we have received quite a lot of interest from people who live with the disease. And we have also experienced that some doctors and professors have reached out in order to gain more knowledge of where we are. However, our priority within the company has always been obesity and the diabetes project, and it still is. So for now, I mean, the -- it is not something that we have allocated funding for. So for now, we can consider it to be paused. However, we have this orphan drug designation in the U.S., and that's not going anywhere. So for us, establishing contact and establishing partnerships with, let's say, universities who may be able to or want to do it together with us, so a joint venture program in that sense. So for now, it's not active, and it's not -- and I don't really have much more to comment on it right now. But we do see that there, down the line, would be a huge potential in developing this drug for pain treatments as well. It could be massive. And just a few weeks ago, the first non-opioid treatment in 20 years was approved in the U.S. So the market and investor segments are certainly getting more appetite for pain.

And the next question from the audience is around the finances. How do you judge your increased burn rate compared to 2023? And how much of the cash from your directed issue has been deployed yet?

I think -- that's a good question, I think it's important to note that we have increased our activities quite substantially in '24 compared to '23. '23 was a pretty slim year for us in terms of wrapping up some existing projects. And, of course, the financing climate was not ideal at that time in Stockholm either. So I think for us, for me, at least, it signals that we have increased our activities again, which is great. And I think we've got some pretty good results so far. When it comes to the funding that we received in the summer, again, it has drawn a little bit out, but we have so far only allocated about SEK 4 million to this preparational work, which is -- and, of course, that's a little bit, but it's also better than, let's say, if we had put in all SEK 10 million already, then I think there would be some...

What are your partnership plans? Are you already talking to companies?

Yes. We -- I mean, we -- for the last many years, we've been in some dialogue with a range of different pharmaceutical companies. I think what's interesting is that the market has just evolved dramatically in the last 3 years since these GLP-1s became really mainstream when they came to the U.S. So we had 3 to 5 different companies that were doing diabetes drugs. And nowadays -- I mean, I don't even have the number of amount of companies that are trying to develop or are developing obesity drugs. It seems as if that many of the bigger pharma companies that don't have a track or have a history in the metabolic disease space are looking to enter it now because they can see that there's a huge amount of opportunities. But everyone is trying to find a different angle and trying to find a new way in and coming in with something different, it could be oral; it could be a different mechanism than GLP-1. So I think for us, it gives us a good chance if we are successful in the next couple of trials, and we're actively looking out and talking to investors. We are going to Milan for a big conference in a couple of weeks, where we will be in touch with many of these big pharmaceutical companies and update them on our thoughts and our study design for the next trial as well as the results that we achieved in the preclinical trial here before New Year. So this is how it is. And of course, it's always a limbo, and their strategies can change from one quarter to the other. So it's about keeping them updated all the time and making sure you keep a good dialogue, and that's what we are...

Maybe that brings us to the next question. You've previously been focused and have results on diabetes. What is the plan for obesity? How does your proposed product differ from the obesity products on the market?

Okay. That's -- okay, it's 2 very different side of questions. I think -- at least when it comes to our products, I think the main things that come to mind for me is, of course, the delivery, it's oral, which is something that is attractive if you want to address large volumes in the market. We hear that there are substantial production issues around obesity medications, some substantial availability issues as well, like patients can get on a drug, but in a couple of months, they might not be able to get it at their local pharmacy. And so, of course, if you really want to address the volume of patients in the market, you need to develop oral solutions. So that's one. And I think -- for us as well, I think we have quite an attractive safety profile on the molecule. We don't have any gastrointestinal side effects like nausea or diarrhea or vomiting. And I think that's also something that can be a contributing factor to having companies think of us as an interesting company or at least... Sorry, what was the other question?

The other question was you've previously been focused and have results on diabetes. What is the plan for obesity?

Yes. Well, the plan is to expand our thinking and our horizons. And I think what I said before when it was about the amount of companies coming into obesity, that's also kind of -- it's symbolizing as well that diabetes drugs in the future will likely need to have some sort of a weight loss component to them. So if we didn't do it now, we would have -- we could potentially develop a drug that works good for diabetes, but wouldn't have a place in the market if it doesn't have weight loss capabilities. So from our point of view, it's a logical step towards success, and it also fits the original theory that Dr. Gram has developed back in the day when she filed the patent, which is for treatment of obesity and obesity-related diseases and disorders. So for us, it's full circle. And we're just excited to see where we can push it and excited to see that the market has really come around and it's very interesting and exciting.

What about the plans for your aorta aneurysm project?

So we've only received preliminary data for now. So that's currently being validated, and we are looking to discuss with the researcher at Uppsala University who we conducted this project together with to see if we could develop -- of course, it gives us quite a good indication of -- no current treatments. So that's a very good thing to have in your -- in the data set. But that being said, we're still a bit away in the sense of being able to communicate what the next step is and what the value is, et cetera. So for now, for us, it just gives us a very good idea of the fact that the molecule seems to have very good cardiovascular protective benefits as well. In a previous type 2 diabetes trial, we've also seen a very big reduction in the biomarker for the risk of heart failure. So it seems like there may be a link between some of these, but it's not been described yet in a scientific publication.

Then, Mills has a question here. He says, please elaborate on how the ongoing test is progressing.

Yes. I think I commented a bit on that in the introduction. So the unfortunate thing I can report is that things are drawing a little bit out with the authorities in the U.K. and that's where we are at right now. We're very hopeful that once the report comes up, and we can start a trial, and we can execute it pretty fast. Of course, patients have to be treated for more -- for 3 months. It may take a while. And depending on where you start, if you start right before the summer due north, they can recruit over the summer holidays. There's a lot of different variables. And of course, myself and Dorte are looking at can we include more sites in order to speed up the trial itself. And we met some very interesting people at this ObesityWeek Conference that we attended in the U.S. in November, and we will have a meeting with them next week to see if they could potentially -- and at least guide us as to help obesity.

Then we have a question from [indiscernible]. He is addressing, "My main worry is the body temperature raising properties of the drug candidate. Is there any new insights into this issue"?

No new insights since -- I think I know who the [indiscernible]. For now, there's no new insights as to hyperthermia data. And, of course, this is the main thing that we're looking to explore in the next trial, where we assess -- you want to find the best balance between hyperthermia or side effects in general as well as hopefully finding some level of efficacy on body weight. So for us, that's, of course, a key thing that we will be looking into that with no additional data that I don't think he has already seen.

And then he has another question. On another note, what would be the mode of action for the abdominal aorta aneurysm protecting property?

That's a very good question. I don't actually have an answer to that as we sit here today. Again, this abdominal aorta aneurysm data is very preliminary and it's on a very small amount of mice. So it's something that we're looking to explore and understand much better in the coming year, whilst we have our main focus on the obesity trial.

Then we have some questions from Henning. Is there an estimated completion date for Phase III?

It's a very different time. We need to get past Phase II first. And I think I've said in the past as well, I believe that if we are successful in Phase II, then it's very likely that we will benefit or find sufficient interest so that we don't do Phase III ourselves. I think that's definitely a goal and ambition of us. It's -- I mean, if you're looking at Phase III trials and how much they cost, it's simply not -- it's not something we would be able to lift ourselves as a small company.

And then I think you have already answered his second question around partners. But the third question, when will new funding be needed again?

That's a classic question you get around your half year reports, right? Of course, this is not something I can comment directly on, but I think most investors know -- that know us they know that we are very diligent with the way that we spend money. And of course, our Board of Directors and myself are very focused on finding viable financing now as well as in the future. And we had a good Board meeting yesterday that really we had a lot of positive discussions, and there's a lot of opportunities for fundraising nowadays, especially if you are in the obesity segment. So it's not something I can comment on directly here and now. But this is something that if you follow Pila, you will get some sort of a notification once and if we do intend to take in more money.

How is the macro situation with the U.S. and EU affecting you and your share price at the moment?

I'm not sure I can comment that much on the share price. But I mean, of course, we sense that there is a level of uncertainty and nervousness among both private and institutional investors that at the end of last year, there was some outflow from European stocks to the U.S. market perhaps and maybe there's been some inflow coming back now in Q1. It's a bit difficult for me to say. But I think we're just trying to stay focused on getting results. And I think if we do get results in obesity, then I think there will be investor interest from both from Europe and from the U.S. Again, it was a good year for the share performance compared to where it started. And, of course, we're looking to build upon that. And the best way to build upon it is to get data in the clinic. So that's what we intend to do.

Is your investor base becoming more international?

To some degree, yes, I would say. I do believe we are getting across a bit more into an international audience. It's something we worked very hard for. And I work with some people that assist me with getting into more international media, and sometimes, they send me articles in Polish or in German. And of course, that's interesting to see. I'm not sure how much it actually generates when it comes to actual investor commitment. But, of course, our investor base is heavily centered around Scandinavia, like around Denmark and Sweden, in particular. And then we have a handful of North American and British investors. So -- but of course, we're looking to internationalize our investor base. And with good results and solidifying the company, I'm sure it will be an interesting opportunity for many given that we are in this, what I personally would consider, as an attractive price.

And then we are at the final question here, and I think you have already addressed some of it, but maybe you have something to add. But the question is, does any other companies use TRPV1 for these diseases?

Not to our knowledge. There have been companies working with TRPV1 for metabolic conditions such as obesity and diabetes. So that, of course, gives us -- it gives us a hint, maybe no one else believes in this, and we could be wrong. But maybe we're the ones who found the needle in the haystack, and they will all come running once we produce results to showcase a good effect on body weight reduction. Let's see, time will tell. But to our knowledge, no one else is working with this. And I think that's a nice position to be in even if it sometimes gives you a bit of a challenge to educate and explain to others.

And that was all the questions for now. So before we end the webcast, I will just hand over the word for you if you have any final remarks to end with here today.

No, I think that's about -- it's largely -- it's going to be now -- I mean, of course, our next report is in August. It will be a while before we can communicate anything publicly again. But I think that the takeaways from us is that we continue to progress. We keep a straight focus on obesity [indiscernible] here in Q1 and Q2. And we're looking to start partnership discussions already now. I think it's a good thing to get on the radar for other companies already early on so they can track the progress. And -- I mean, we are still working on finalizing our -- I wouldn't call it roadshow, but our plans for Q1 and Q2. There will be a couple of events in Denmark and in Sweden. And of course, all of this will be listed on our website. So if you feel like it would be great to come and meet us in person, then we will continuously put up events where we come around, and we can talk then. And, of course, everyone who's got interest or questions regarding Piva Pharma or regarding the investment case or regarding the technology, more than welcome to send us an e-mail. All the information is on our website, and we're happy to answer on a going basis. And now we have a lot more time since we don't have to write half year reports.

Perfect. Thank you for the presentation and for the answers today, and thank you, everyone, for listening in.

Thank you so much.