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

Okay. Hello and welcome to this live queue with Saniona. And the first off, there will be a presentation from the management team. And after that, we will try to ask as many questions as possible from you investors, and we have received quite a lot of questions. So we will make some time for that. So please, Saniona, do your presentation first.

DO you want me to start?

Yes.

Okay. Thank you. So good morning, everyone, and thank you for joining our Q2 update. The quarter was marked by continued execution across our proprietary partner programs. More recently, we decided to focus our internal development resources on SAN2668 and SAN2465 as our 2 lead proprietary programs. Today, we will focus on that session, our process towards the clinic, upcoming catalysts and our financial position. So with me today, I have our CMO, Pierandrea Muglia; and our CSO, Karin Nielsen, as well as our CFO, Johnny Stilou. Pierandrea and Karin will take you through the clinical strategy, and new data for our prioritized pipeline, and Johnny will cover the financials. So before we begin, please note that today's presentation contains forward-looking statements based on current expectations and subject to risk and uncertainties. I will start with the Q2 highlights, our recent strategic [indiscernible]. Pierandrea and Karin d will then cover our development plans and new SAN2668 data, followed by Johnny on the financials, before we open for questions. So let me briefly remind you of our long-term ambition. We aim to build a balanced CNS pipeline with programs across early, mid- and late-stage clinical development, similar to companies like Karuna and Seville before acquired in 2024. We believe we have 3 strong pillars supporting that ambition. First, a validated drug discovery platform that has delivered 5 clinical candidates in the last 5 years. Second, a proven partnership model that provides some validation with [indiscernible] nondilutive funding and substantial downstream value. And third, our priority pipeline were SAN2668 and SAN2465 are now approaching clinical development. Q2 was another quarter of execution, followed by a sharpening of our strategic focus. We continue the R&D and CTA-enabling work for SAN2668 and SAN2465. SAN2465 is expected to enter Phase I around year-end. While SAN2668. We expect CTA submission around year-end and first dosing in the first quarter of 2027. The prioritization of these 2 programs also extend our expected runway into 2029 and give us greater capacity to invest in our clinical development and early proof-of-concept studies. Our partner portfolio continued to progress as the Nordics Tx exercised its option to ATX0926 after quarter end, providing us with share value at $5 million, and significant future milestones and royalty potential. Jazz is preparing the first Phase I study of SAN2355 while Acadia now expects its ACP-711 Phase II studies to start in 2027. We also continued active business development and investor engagement, including around 25 partnering meetings at BIO in San Diego and with institutional investors in the U.S. and Europe over this summer. As our programs have mature, we have gained greater clarity on both their development opportunities and the resources required to take them through clinical proof of concept. We, therefore, recently decided to concentrate our internal development waste holders on SAN2668 and SAN2465. This focus is expected to extend our financial runway into 2029 and gives us flexibility to invest further in the programs where we see the greatest value. In particular, we may allocate capital to generate early proof of concept with SAN2668 in DEE patients in 2028. And following the plan of proof of mechanism study in photosensitive epilepsy in 2027. SAN2668 combines a strong premium profile with a compelling rare disease development plan and the potential for Saniona to retain the program through late-stage development and potential consultation. SAN2465 gives us a differentiated opportunity in major depressive disorders. The significant unmet need and substantial commercial potential. We believe these 2 programs provide the strongest opportunities for value creation as we enter the more resource intensive clinical states. As part of this discussion, we will pause at 2219. The program has demonstrated an extractive preclinical profile and would be retained for potential future development or partnering opportunities. There is a significant unmet medical need in pediatric epilepsy and DEEs, and we have seen substantial strategic interest in this area. The transaction on this slide remains from commercial stage projects from GW and Zogenix to long with a Phase III asset. And most recently, Act, which was acquired by Jazz for up to $1.6 billion with a lead epilepsy program in Phase Ib/IIa. The Ag transaction is particularly interesting from our perspective. If our development proceeds as planned, SAN2668 could reach a comparable stage of clinical development in 2028 when we aim to generate early proof of concept in DEE patients. SAN2668 also has the potential to address multiple DEEs rather than a [indiscernible] indication providing an opportunity for broader development over time. These transactions are not directly comparable, but they illustrate the significant strategic value that can be credited by differentiating therapies in this field. We see similar strong strategic interest in major depressive disorders and treatment-resistant depression. SAN2465 offers a differentiated approach with the potential for rapid antidepressant efficacy in all treatment without the in-clinic administration and monitoring required by some new rapid active therapies. So our 2 prioritized programs provide complementary opportunities, a focused rare disease strategy with SAN2668 and a large [indiscernible] opportunity with SAN2465. And with that, I will hand you over to Pierandrea.

Thank you, Thomas. I'm going to give you a highlight of our clinical programs. and how we are planning to translate the properties of our compound in humans and in patients. Both programs have Phase I studies that we can reach biomarker for target engagement in [indiscernible] pharmacology, and they are being in to start toward the end of this year or early next year. So starting with 2668 in the next slide. So since candidate Select, we are building the preclinical package and in demonstrating evidence in a number of animal models. And Karin will show you that. And in essence, what we are learning is that our compound has strong and broad effect on seizures, multiple type of seizures, but also on non-seizure endpoints. This gives us the confidence to broaden our value proposition and the potential impact of our compound. And as a consequence, we have refined our clinical development plan that we presented at the webinar. So I will suggest you for more details to look at our webinar. But now in essence, I'm going to walk you through the key points of this -- our plan and value proposition. If you go to the next slide, this is like I borrowed this slide from our opinion leader that was presented at the webinar. That shows that the DEEs are complex multifactorial disorders. It's not only about seizures that give a great burden, but there's a number of non-seizure endpoints. Some of this may be indirectly improved with the improvement of seizure or reduction of [indiscernible], other like can be additionally improve with the pharmacology of our compound. And this is based on our evidence on non-seizure endpoint and specifically behavior, and Karin is going to show you those data. So on that, we have refine our value proposition that you see in the next slide, where we see a clear, strong potential effect on seizures and multiprocedure types. We see the potential of reducing the impaired EEG and electrical abnormalities debt paired development in these kids. And in addition to that, as I said, the non-seizure endpoint, specifically behaviors that are really impacting the disease and families like aggressivity and irritability. So with that and reduce tolerability profile given by the selective [indiscernible], we think to have a unique differentiating potential for these compounds. So now without further ado, I'll give the word to Karin, so she will explain in details the data that we recently acquired. Karin?

Thank you, Pierandrea. And hi, everyone. So as Pierandrea alluded to, [indiscernible] activities is quite common across the DEEs and it's believed to contribute not only to seizures, but also to negatively impact cognition and behavior, by disrupting the normal information processes in the brain. At our webinar in June, I show [indiscernible] one monogenetic DEE, namely the [indiscernible] model. Since then, we have produced data into additional genetically defined DEEs, namely the SGX BP1 and the [indiscernible]. And as you see in the figure here, besides the strong suppression of byways in Sincan that you saw early on in our webinar, 2668 also strongly suppresses [indiscernible] activity in the 2 other genetically defined DEEs. So what I find particularly encouraging by these data is the consistency you see across the different genetically defined DEEs because this supports the potential for 2668 to have activity across multiple DEEs rather than just being limited to one specific genetic disorder. Next slide, please. [indiscernible] are much more than see [indiscernible] important to investigate whether 2668 can affect non-seizure symptoms. And here, on this figure, we demonstrate the 2688 improves multiple non-seizure endpoints, including cognitive impairment and aggression like behavior in the [indiscernible] model and also improved social functioning in the [indiscernible] model. Of course, this is preclinical findings, and we should be cautious about that translation to patients. But I think they are particularly interesting, given the significant non-seizure burden that is experienced by children with DEEs. Next slide. Now aggressive symptoms have been reported by the cap give us to be among the most troublesome behavioral symptoms. So to further support the beneficial effects of 2668 on aggression related behaviors, we have replicated the separates findings in an established [indiscernible] model, namely the resident and true model of aggression. And as you really can see in the figure, 2668 reduced aggressive behavior, both by delaying the first attack, but also in reducing attack duration. And importantly, this was not just caused by some kind of unspecific effects because the locomotive activity was not affected. So it suggests that the effect was not simply caused by sedative effect or the unspecific effects. So together, these data clearly strengthen our confidence in the potential broader clinical profile of 2668. And with that, I'll hand it back to Pierandrea to take you through how we plan to evaluate the compound clinically.

Thank you, Karin. As I said, we are finalizing the package that will allow us to submit for first in human studies toward the end of this year. On this slide, you should focus on the lower part where we see the key deliverable of our clinical plan. And it's -- we are fortunate to have a number of validated biomarkers therefore, test differentiated pharmacology that we are developing. In addition to be fortunate to have a [indiscernible] that will allow us to measure target occupancy at different level. So the [indiscernible] program is rich biomarker will allow us to deliver Phase I data in conjunction with this clear evidence of differentiated pharmacology and that will be around the end of '27, beginning of '28. In parallel to the Phase I, we have designed a study to test the effect of our compound in an established and translational model that is widely used in epilepsy that is the photosensitivity model, where susceptible patients are exposed to flickering light and we will test, evaluate the effect of compounding suppress this platform activity. That will eventually will be information will be used to select a dose and design and finalize the study that will test the fact efficacy in the relevant population, the broad DEE in a basket study composed for a number of orphan disease. And so that would be the delivery of the proof-of-concept data that you see later on in the plan. So that's kind of, in essence, our 2668 early clinical plan that will generate evidence at different time points with a specific deliverables. So without further ado, on 2668 8, I will just now transition to the next slide and give you a few highlights on the other program, the 2465. Our alpha 5 GABAA a selective compound that is in development for depression. So there is no question that depression constitute one of the major part overall and specifically for CNS disorders. And the major the majority of the burden is given by patients that do not respond to first-line therapy like SSRIs. And the demonstration of the burden and also what -- how you can alleviate the burden with the pharmacology is demonstrated by esketamine, approved to treat most refractory patients. And as you can see here, in terms of revenues, it's generating a lot of value for the company. that develop it, but a lot of value for it is very severe patient. And this is in spite of complexity that is related to the administration of this compound in clinic under [indiscernible]. Our proposition of our compound is to target this type of patient, but being devoid of this in credit administration because we don't expect any similarity on the pharmacology of some aspects there given by esketamine administration. So in essence, our program will -- is expected to give a faster onset of action with potential on cognition. And we're making good progress here as well to submit for an IND approval tower in this fall. And if you go on the next slide, I wanted to provide you just key highlights on the program. The good progress include the testing of the compound in nonhuman primates where we have demonstrated again with a specific [indiscernible] penetration and different exposure of our target occupancy. This will inform our dosing strategy for Phase I and eventually for our Phase II. And so if you go in a second -- on the next slide, you can see the value proposition, again, summarized on 2465. We expect the rapid onset of action and the comparable to cetomy,and we expect [indiscernible] the data on the pharmacology, a cognitive benefit for these patients, where cognition -- cognitive impairment is quite common and is also negative [indiscernible] factor for improvement of the overall symptomatology. Together with that, as I said, it's easy to use at home administration without any complexity in clinic and as ketamine. So with that, we expect to address the key unmet need in major depression, and we have delineated the clinical plan again, in Phase I, you can see next slide, the time line of the deliverable. Phase I reach with a biomarker for target engagement and proof of pharmacology and that will allow us to enable a Phase II study in the relevant population with the standard design and a lot of learning from the past experience in this area that we have already discussed with the key opinion leaders that they are behind our program. And with that, I concluded the clinical part and I hand over to Johnny, I guess.

Yes. Thank you, Pierandrea. And next slide. So our net result for the second quarter was a loss of SEK 58 million, which continued to be in line with our expectations. The increase in cost is driven by the progression of our 2 internal assets, SAN2668 and SAN2465 as we progress them towards initiation of clinical Phase I trials around year-end. Personnel costs increased due to head count growth with 44 employees in June this year versus 29 a year earlier. This buildup again reflects preparations for the clinical execution. The buildup in our organization needed to initiate the clinical trials is complete for now, and we do not plan to continue the growth in head count near term. Next slide. Here, you find an overview of our operating expenses for the past 8 quarters. Operating expenses or OpEx was realized at SEK 65 million in the quarter. This is an increase of SEK 4 million compared to the previous quarter. As mentioned, the increase in cost quarter-over-quarter is both expected and planned as we progress our 2 internal programs toward the initiation of the clinical trials around year-end. Next slide. At the end of June, we held SEK 486 million in cash equal to approximately USD 50 million. We expect to receive an additional USD 17.5 million equal to approximately SEK 165 million in near-term milestone payments when Acadia started their Phase II trial and Jazz start their Phase I trial. We also maintained the option of making a sale and leaseback of our headquarter, which we acquired for SEK 70 million last year. Including the near-term milestones, our current funding can sustain our planned operations into 2029. This means that current cash can fund clinical Phase I programs for both SAN2668 and SAN2465 through to data readout and early proof-of-concept in DEEs for SAN2668 in 2028. Next slide. Over the next 24 months, we see multiple inflection points, including clinical initiation, Phase I and biomarker readouts, proof of mechanism and early efficacy data of our lead asset, partner milestones and potential licensing opportunities. Next slide. As mentioned, our collaborations continue to progress, latest with AstronauTx who exercise their option and paid us USD 5 million in milestone, which we received in shares, and several partners may move into next development phase over the coming year. Acadia's Phase II start for ACP-711 in essential tremor will provide a USD 10 million milestone payment,; and Jazz's Phase I start for SAN2355 in epilepsy will provide USD 7.5 million in milestone payment. In addition, we have a potential research milestone from Boehringer Ingelheim when they reach candidate selection. Regarding Medix and Tesofensine, regulatory dialogue is ongoing and Medix is increasing their actions and push towards [indiscernible] please. While potential approval could generate royalties, our core value driver remains our CNS pipeline. Overall, collaborations provide nondilutive capital and strategic flexibility. With that, I will give the word back to Thomas for final remarks.

So thank you, Johnny. So let me just summarize before we open for questions. We are entering an important new phase for Saniona. We have sharpened our focus around 2668 and 2465, the two proprietary programs, we believe offer the strongest opportunity for value creation. Both our approach in the link and our prices give us the financial flexibility to take these programs further include the potential to generate early proof-of-concept with SAN2688 in DEE patients in 2028. At the same time, our partner programs continue to advance and provide opportunities for both near-term milestones as a significant long-term value. The strong financial position and a focused proprietary pipeline, multiple potential value inflection points ahead, we believe Saniona is well positioned for the next phase of development. And with that, we are happy to take questions. Thank you.

So the first question was -- and this is an investor question and we got quite a few variations of this. But if you can elaborate a bit more about prioritizing 2666 and 2465 over 2219? And yes, if you can discuss that and whether it has anything to do with the 2219 molecule in a cell or if it's just a capital allocation or yes, develop a bit more.

So this is clearly a decision data based on focus and not something about 2219. So SAN2668 has had the top priority since we selected it in August last year, followed by SAN2465 and 2219. What is new is that we have narrowed our focus for development on 2668 and 2465. We have been in a similar situation before. In 2024, we focused all our internal development resources on SAN711 and SAN2365, partly because we saw a significant industry interest. Within 18 months, those programs were licensed to Acadia and Jazz. And today, we see significant interest in SAN2668and SAN2465. Within epilepsy, SAN2219 stands somewhat in shadow of SAN2668 because efficacy is critically important, particularly in severe epilepsies, and SAN2668 has exceptional strong preclinical efficacy profile. The difference this time is that we want to take SAN2668 further ourselves and capture more of the potential value. Our financial position gives us now the opportunity to generate early proof-of-concept in DEE patients. and recent transactions clearly illustrate the value that can be created at that stage of development.

And you mentioned the focus here. And is it also about extending the cash runway? Or is it also because partly -- because of internal constraints in terms of capacity and so on? Or is it, yes, why do you need to focus, I guess, is the question.

This is about extending runway to a meaningful inflection point and to be able to create proof-of-concept studies for SAN2668. This is part of it. But it's also because we think that we can create more value in these 2 assets at this point in time based on our current financial situation.

Makes sense. And another investor question here was about do you still plan to pursue a partnering strategy for 2219 you still have meetings regarding it and so on? Or how should we should be -- is it passed or...

So we retain SAN2219 for further -- potential further development and partnering. If our resources and priorities change, we could certainly pick it up again. But it is primarily partnering at this point in time.

And another question that I think you mostly answered here, but which internally developed asset is currently closest to a partnering transaction, and it sounded like it's the [indiscernible].

I didn't -- sorry, I didn't understand that question.

So basically, which of your assets is most likely to land a deal soon?

So as mentioned, we see on our these 3 assets, we see stronger interest in SAN2668 and SAN2465. Within epilepsy, SAN2668 tends to attract more attention because it's a very strong efficacy profile and the opportunity in [indiscernible] pediatric lapses. So it is in the shadow as I mentioned before, of that asset. And where we ultimately speak with partners about 2219, the conversation go quickly into that direction.

Got it. And you have previously referred to near to midterm when it comes to future licensing deals. Can you say anything more precise than that? Has it changed in any way? And maybe you can tell us a bit about your plans for the autumn in terms of partnering [indiscernible] and so on.

So we are speaking -- we are entering into -- we have had 25 meetings for instance, at Bio in [indiscernible] with early summer. And we are speaking with companies across our pipeline, including 903 to [indiscernible] and and also the free asset, we are developing internally. I cannot go into details about specific conversations about that at this time.

It's an active schedule, I presume, for the autumn with in terms of meetings.

What was that sorry?

No, yes. It seems like it will be an eventful autumn in terms of meetings going to partnering meetings and on what you...

After the 2 deals we did Jazz and Acadia, we have also seen a lot of inbound coming to us more to speak about our pipeline and see what we have. So we see great interest in general in the company and across our pipeline.

So there was one question about the finances. And I think you mentioned this a bit, John, about the burn rate has increased and if it was expected, but you told us basically it was -- it was expected. So the next question was a bit about your cash position. And why is the return on cash relatively low. Beyond the FX, what actions are taking to to get a better yield from the cash position?

So yes. So as I correctly mentioned, I stated that our increase in cost over the past quarters is, as I mentioned, both expected and planned and it is as we transition towards our clinical execution. Our funds, we do not take a speculative approach. We have funds to progress our programs and to execute our planned operation. So our funds, we place those in a short to medium long cash deposits and/or in other short-term assets without any risk bonds, short-term bonds. So we are risk averse in that context. Similar, you didn't ask the question -- similar on currency exposure, we hedge our currency exposures through operational hedges as we forecast what currencies are needed from a euro-U.S. dollar, Swedish Danish kroner perspective and hence, we hedged that way.

And you mentioned that your risk averse when it comes to the cash position. And of course, I mean, I assume that it's because you expect to use the cash in the coming year?

Exactly. Yes. Yes, exactly. So that is exactly why we have a risk adverse approach and have the funds in a short to medium-term cash deposits as we will be utilizing the funds similar to having short to midterm bonds similar where the interest rates may be highest at any given time.

Got it. And another question was about, again, you have a large cash position and many investors regarded that you have a low enterprise value. Has the Board evaluated a minor share buyback program or other capital allocation strategies? And of course, you're not the board, but maybe what the case of the view in the company.

Yes. So the funds we have is to progress our pipeline to create value. As Thomas mentioned, as we go through the clinical stages and get readouts, you saw the slides about the transaction that has taken place. So that is our focus. Being biotech, this is clearly costly to progress the programs. Hence, we do not have any plans to do any share buybacks.

Makes sense. And another question was about, are you where you want to be in terms of ramping up the organization? Or do you expect future hires?

Again, as I mentioned in the presentation, we -- at the end of the quarter, end of June, we were 44 employees. As of today, as we speak right now, we are 47. That is basically the organization that we need. For now, we have the clinical organization in place to execute into the Phase I trials as planned. So as mentioned, we do not have any near-term plans to increase our organization significantly. So therefore, the cost item, personnel cost, I do not foresee the continued increase in that cost line in the coming quarters.

Got it. And another question was about the fact that AstronauTx exercised their option in your collaboration there that frees up any resources internally, both cash and personnel?

Go ahead, Karin.

Please go ahead, Pierandrea.

Now just saying that cash-wise, as we stated, the $5 million, they are paid in shares. So there is no cash impact directly from that milestone payment. On the draw on our resources, the AstronauTx will be using a limited amount of our resources. So these resources will be allocated to internal research allocations.

Sounds good. And maybe if you can just say shortly, I mean, you got an investment in Nationotics, maybe you can explain where that is a good thing for Saniona? What do you get out of the investment, I guess, what programs do they have at least my interpretation was that you -- I mean you get exposure to some other programs that you obviously don't have internally.

For our internal resources on that piece, I think that over the last year, we have not spent a lot of resource on this program because candidate has been quite advanced for a while. So we don't see much difference in our internal business allocation. From a financial perspective, then, of course, shares is not cash, but we see significant downstream milestone payments coming into the company when they approach the clinics. They have, as we mentioned in the original press release, informed that the [indiscernible] development will start shortly, and coming to that, it typically takes around 18 months if things are moving smoothly before to be Phase I ready. But again, this is AstronauTx, which is controlling this time line, and they will progress, and we will comment, I don't know or make a release about it when the time is appropriate.

Yes, I was thinking more like I mean, indirectly, investors in Saniona get a share of AstronauTx as well. So what do they get exposure to beyond your collaboration? And because it was a valuation that was from a previous round, right? So maybe also the valuation could be attractive in AstronauTx.