Saniona AB (publ) (SANION) Earnings Call Transcript & Summary

Hello and welcome to Red Eye. Today, I have Saniona and CEO, Thomas Feldthus, with me. Welcome, Thomas.

Thank you.

Nice to have you here.

Could you just start a bit to explain the company's key goals for 2024?

Right. So I think we came out quite positive at the beginning of this year. We had two new compounds coming in, selected around Christmas and New Year. And then we also got some money in, in February. So the goal right now is to make a new partnership. It's a key goal for us. And then also, we will support Medix as best as we can to get approval of tesofensine in Mexico, which will secure royalty income. And then I hope that these efforts will make us able to get rid of the Formue Nord loan. And also then we have money now to start implementing the epilepsy strategy.

And to start off a bit, can you explain kind of your partnering strategy? What are the current activities?

Yes. So last year, I had the [ objection ] to go out and say, "Well, we want to make two deals this year." I'm not going to promise this time. I learned my lesson. Bad things can happen. And last year, I actually expected to make two deals over the summer at this time. We made one with AstronauTx. It's an option agreement where we own everything, they pay for everything and we own it, until they exercise the option, where we will get a decent amount of money. Totally, we get $170 million in milestones plus royalties on sales. And as said, we wanted to do two, but bad things can happen, and even in late stages negotiations. And I've talked that before, but not as many times as this time because we have actually tried it several times last year and over the last 12 months. And in some cases, the potential partner, in a very late stage, had a negative event with one of their pipeline programs, so they lost maybe a Phase II, Phase III program. And then they have refocused their BD activities. They either stop them or they may pause them or they focus on a different area. Whatever they decide, it's -- this then end up with a stop around discussion, a pause on discussion with Saniona. In other cases where company had -- two companies had -- very concerned of a generic issue in relation to where the program was. And normally when you're that far, it doesn't happen. I mean, it's okay in the beginning, but it doesn't happen in late stage because you put that behind you. And this is just bad luck. But I think that we are on good track. We have a lot of good leads to pursue, and we have meetings with partners every week, opening data rooms every month for a program or another program. And so I'm confident that we will succeed no matter whether whatever kind of black swan in or not.

And is this relating to mostly all drug candidates, or one in particular? Or...

I think that there is a particular interest of about 3 or 4 programs right now. And this is also what we are focusing on.

Good. And if we move on a bit to tesofensine, can you just elaborate a bit on kind of the recent progress in the application in Mexico?

Yes. So Medix got a favorable opinion in February last year from the Advisory Board to COFEPRIS, which is the regulatory agency in Mexico. And then they filed an application in May last year. And they were very bullish and thought that we could potentially get it very soon. But it's the last argument, so it's an application. So tesofensine has been tested in 26 different clinical studies in a total of about 1,600 patients in different geographies and by different companies. And all this information has been put into a document and file to the agency and it's about 20,000 pages. So it takes some time to digest. And the regulatory agency have been deep into the documents and the applications. And they have of course questions and may need some additional information. There might be some things which doesn't really fit each other, a past number or whatever. And then we get this question, then we need to respond to them. And Medix have been in regular sort of contact with them, and we have been more and more involved in this process during the last 5, 6 months since -- in this year. And I think, I've seen what they have responded and the file to the agency, and the questions. And I think they provide good answers and that they have -- we have, together with Medix, provided the information needed. So we're getting closer. Obviously, they may come up with new questions which we need to address. But I think we are getting closer, and I'm cautiously optimistic about registration this year.

Interesting. And if we look at the competitive landscape for these types of drugs, could you -- how do you think that Medix will position tesofensine compared to, for example, liraglutide and semaglutide and so on?

Yes. So the obesity market has evolved very dramatically over the last couple of years. So it's particularly after the introduction of Wegovy from Novo. And now if 5 years ago, it was maybe a $1 billion market world, right now, it's more than [ 10-double ]. And so there's a huge trends. But in Mexico, there's two markets, it's a cash market. People have to pay it for themselves. And then you have a product like Wegovy, which is sold of several thousand crowns a month. And I think that also in Scandinavia, most people have difficulties funding that in the budget every month. So this is -- this particular market, and Mexico is not the same GDP as Scandinavia. So the [ majority ] of people will not be able to pay for that. So Novo has taken a nice market share by dollars, but not by, you could say, volume. And Medix's products portfolio is addressing, you could say, the general market. And I also think that tesofensine will address that. So it's actually two different markets in Mexico. And in some way, Novo is actually increasing the market because it comes a lot of attention around it. And then the person go down and say, "I want this Wegovy." And then they, "It will cost you 3,000, 4,000 Danish crowns or Swedish crowns a month." And then they're able to ask to have something cheaper. And here, tesofensine is interesting because it comes at a tablet, it's not an injectable. And it's also providing significant weight loss, 10% over 6 months, which is in the same ballpark as the GLP-1 analogs. So it's a very interesting option.

Very interesting. And beyond Mexico, you mentioned this potentially in other South American markets, for example. Can you maybe elaborate a bit on that also?

Yes. So there's Brazil, is probably 5x bigger than Mexico in market and by value, maybe even more. Then we have Colombia, Peru. And Chile is probably the most interesting market in South America. Chile could also be interesting, but the economy is so bad and it's so difficult to make business there right now. But these are probably the key areas. And there are players there who cover all of them. And we have started reaching out on some of those companies, have a conversation with them. There are some of the bigger companies in Brazil, for instance. And there is an interest. But I would like to take that discussion when we have the approval with these companies.

But a lot of market potential beyond Mexico, for sure.

So we have these in South America. And then there will be South Korea, where we have been a couple of times a couple of years back and have some connections. And then other Asian countries. And then there is Europe and Western U.S. And since the market has changed quite a lot, maybe we have to revisit some of our assumptions around that. And this is also something we need to look into.

Yes. Very interesting potential in tesofensine for sure. But if we move on to your strategy to become an epilepsy company also. Can you maybe just elaborate a bit on the recent progress in the company, for example, relative to SAN711?

Yes. I would say that, I mean, if you look at the epilepsy strategy, we announced it in autumn last year. But it's more than words. So we have created an epilepsy pipeline in a quite short time. Back in end of 2022, we select SAN2219 for convulsive seizures. And then in 2023, we have worked on building a database, a package around SAN711 for absence seizures. And then we have put full speed on our internal research on the Kv7 program, which led to the selection of SAN2355, a Kv7 activator, which is positioned for focal onset seizures. So we have, within the last 15 months, created -- 16 months, we have great pipeline in this field which is based on validated targets and -- but -- which address significant medical need in this area. And with validated target, I mean that there exist products on the market today which address these targets, or have existed in the past, which have been successfully used. But these products are typically coming with significant use restriction because of side effects. And what we do is to make selective small molecules addressing specific ion channels to maximize their efficacy and reduce the side effect so we get rid of those use restrictions. And this is where we come in with these drugs and where we have some very quite new in this field. And we like this area because there's hard end points. Do they have seizures or not? You can measure it also by EEG. And we have a very predictive animal models telling with epilepsy indication we should go for. And we have biomarkers, target engagement and functional biomarkers. And all this increase, you can see, the likelihood of success here. And then we have been working in this field for, particularly on GABA compounds and Kv7 activator, for more than 20 years. So -- and these are the two most interesting areas in epilepsy right now. So we have what it takes to be successful here.

And maybe a final question. In terms of your epilepsy pipeline, what kind of the key catalysts from our shareholders' perspective that we should keep out looking?

What we do now here this autumn. So we are filing a CTA to start a phase -- a biomarker clinical study. And in this study, we will have -- we are also going up a bit in doses because what you don't want to do is a proof-of-concept study which fails just because you get too-low dose. And we have not reached the maximum tolerable dose in the last Phase I study. So we want to push it further. And then we have some interesting readouts. Functional activity of SAN711, which we can get a biomarker on. And we want to see whether we can repeat that also in humans. And then we have some food and drug interaction studies which can help us on the PK side. And this is what we're doing here in the autumn. We will have top line data from that, I think, around Christmas. And then we are ready to thing to go in and make a solid proof-of-concept study in children. We have previously talked about it adults. But now we were hoping to go straight into children, which is the right place to be.

Which is the population that will be addressed...

This will be the end population, the end. And we will then do some -- what you do is you have to do a human iTox study in baby mice. And you would also have -- we also do some modeling because the difference between adults and children not only in size and weight, but also in the cell composition and the enzyme composition, so how the products are metabolized. And you need to model out all of this before you find the right dosing to do children.

Okay. And what about the other candidates?

Yes. So we are focused on SAN2355 for focal onset seizures, the Kv7 activator program. And we have put that into preclinical development and it has gone very well. And I think that we will have a [ tox bet ] during autumn and this could potentially enable us to start Phase I studies next year. And I believe that this is the best way that we right now can create value for shareholders now, to obtain proof-of-concept in childhood, absence seizures for SAN711, and get SAN2355 through preclinical development into Phase I. And particularly, obviously, proof-of-concept will always create a lot of value. But I also think that having the Kv7 activator program in Phase I will create a lot of value, given that financial analysts in the U.S. has put a price tag of $1 billion on Biohaven's Phase I program. And in this way, we will have 2 extremely interesting assets and create a potential exit opportunity for the shareholders if that is the preferred road at that time.

That is a very interesting potential. Thank you very much, Thomas, for being here today.

Thank you.