SoftOx Solutions AS (6FV.F) Earnings Call Transcript & Summary

Welcome, everybody. Welcome to the presentation of SoftOx Solution, a new SoftOx solution helping the world fighting infections. Next slide, please. Today's presenters will be Elin and Thomas and myself. Elin, can you please introduce yourself?

Sure. Thank you, Geir. So my name is Elin Jørgensen. I'm a doctor of veterinary medicine and I am part of the preclinical team at SoftOx and I'm lead on SoftOx's engagement in the European Defense Fund development project.

Yes. Thomas?

Yes. My name is Thomas Bjarnsholt, I'm Chief Scientific Officer at SoftOx and also Professor in Copenhagen at Copenhagen University and Copenhagen University Hospital.

And then myself, Chairman in SoftOx. I'm -- I've got a master in finance and a state-authorized public accountant. I have extensive experience from business development and previously worked with risk management in PwC and KLP Asset Management. Next slide, please. Thank you. The new SoftOx, restructuring after refinancing of the company. We have now got into a situation where we have managed or handled our debt and we are -- have -- we are going to reorganize the company into 2 separate units. One for SoftOx Defense solution and one for SoftOx Skin and Wound Care. The SoftOx Defense Solution, sorry, SoftOx Inhalation Solution. SoftOx Inhalation Solution will be the listed company and SoftOx Skin and Wound Care will be nonlisted. The reason for this is because we see that there are different investors that are interested in an inhalation solution and in skin and wound care. And investors that we have been in touch with on the inhalation solution, have been interested in the listed unit. While those who are interested in skin and wound care are interested in a non-listed company. SoftOx, everything will happen through [indiscernible] where we will have a daughter company, which will be SoftOx Skin and Wound Care which will be given as dividend to all the shareholders in SoftOx Solution at the time of general assembly. SoftOx Inhalation Solution will focus on ventilator-associated pneumonia, which Thomas will tell you more about. We will change the Board with new management, a new Board and we will seek separate funding for the company. At the same time, Elin's project, which is the medical COUNTER measurement, will continue as it is today and is fully funded by European Defense Fund and all the work will go on at University of Copenhagen or at our other partners. SoftOx Skin and Wound Care will focus on wound care and will focus on taking SoftOx Biofilm Eradicator up to Phase II/III. At the moment, there are no planned changes in the Board and -- but we will seek separate funding for the company. And it's very important to emphasize, all current shareholder retain their values and the ownership in SoftOx Skin and Wound Care, if they want. Next slide, please. So what is new? Investment highlights. SoftOx Inhalation Solution, today, we will focus on this company since that is the one that is going to be continued to be listed at the stock exchange. We have got rid of all the debt. That's a major step done. We have established a slim organization, which is ready for taking the project forward and we have a well-defined clinical program answering on ventilator-associated pneumonia which is a huge cost for the hospitals and got high mortality rate. We have managed through the partnership with University of Copenhagen. We have managed to lower the costs of Phase II dramatically. And we have a fully funded Phase I study on SIS-02 through our military project. Those 2 projects will have nice synergies. And after only 2 years, we expect to reach out for partners or axe it, sell the whole technology to 1 large player. Next slide, please. Thomas. Yes.

All right. Yes. And thank you, Geir, for the introduction. And I will tell you about our current focus, the ventilator-associated pneumonia Phase II project. Next slide, please. So ventilator-associated pneumonia is a infection or a disease which happens when intensive care patients are intubated due to problem of breathing and unconsciousness. But the tube, which is inserted into trachea of the patient has a risk of getting infected with bacteria, causing also a spread into the lungs and you have a very, very severe condition, which is very, very difficult to treat with antibiotics. The doctors today at the intensive care units, they use the available antibiotics. But due to resistance of bacteria, tolerant bacteria, the buildup of biofilm, these fortresses of bacteria, which are incurable with antibiotics, the treatment often fails. So it's such a great or such a risk of developing ventilator-associated pneumonia that in a intensive care unit, if you intubated, 10% to 30% of the patients will get this condition. And since the treatment is so limited, up to 50% risk of actually dying from this infection. So there's a huge unmet need for a new treatment strategy. And on top of that, on top of the suffering of the patients is also a tremendous cost of more than USD 4 billion per year in the EU and in the U.S. Next slide, please. So why choose ventilator-associated pneumonia? We've been talking about different strategies throughout the years in SoftOx. But especially ventilator-associated pneumonia is a unique opportunity to have a very conserved cohort of patients. They are all hospitalized. They're in a bit to -- we do not need to go out and recruit patients. So it's not an outpatient study. We have the patients and we have several of these patients in Copenhagen, in the capital region of Denmark. It's interesting cohort also because, as I said before, they are so difficult to treat but also because they are localized and we have this Intercept organization in the capital region of Denmark. The cost of this study is also quite low compared to some other studies. On top of this, we -- on top of that, it's a well-defined group of patients. We also know that the solution will be delivered first of all, into the tube but also into the lungs where the bacteria are. We know that from our animal studies and also from our first-in-man study and the doctors and nurses at the intensive care units are extremely experienced using inhalation medicine and also devices for nebulization. So everything taken together, it's a quite safe setup we are looking at. Next slide, please. So for the SIS that's offered in inhalation solution, going into this project on ventilator-associated pneumonia. We have ticked all the boxes up until that we can start a Phase II, starting in 2 months. So we have the technology in place. We know how it works. We have performed all necessary preclinical toxicology. We've been in healthy volunteers. We know it's safe to inhale. And we also know from our in vitro and in vivo studies that we can kill and eradicate the relevant microorganisms, which cause this severe infections in patients. So now what we need is real proof of concept, which we hope to show in this Phase II study. Next slide, please. So just to summarize the SoftOx technology. It's based on hypochlorous acid. Hypochlorous acid is a very strong, reacting agent. It will react with anything organic. It's produced by our white blood cells exactly to counteract the intruding of bacteria and virus. So our white blood cells -- our immune defense use hypochlorous acid on itself. So it has a very, very broad spectrum of antimicrobial activity. It will inactivate any and I'll come back to that, any virus we've tested, any bacteria we've tested so far [indiscernible]. We know that it's safe to inhale and there's no systemic side effects because it only reacts in -- when it's applied and then it's gone, so it doesn't have any systemic effects. And as I'll show it in one of the next slides, we have stabilized the formulation. So yes, in this slide, the beauty or the most important thing of the SoftOx solution apart from reactive hypochlorous acid molecules is that it's stabilized. There is a lot of -- not drugs but a lot of solutions on the market, especially for wound treatment and topical treatment and these are based on hypochlorous acid. But to get high enough concentration for the hypochlorous acid to actually work in a clinical situation, the competitors have to have very, very high concentrations. But since hypochlorous acid reacts to everything, it's also extremely unstable. So the competitors, they have to fill the bottles with high concentration hypochlorous acid and you have a fast degradation. So you lose the active ingredients but also you get production of degradation products. So this window of opportunity, the competitors cannot stay in this window of opportunity for very long. So the SoftOx solution and this is also what has been patented and what is really the core technology, is that we use acetic acid to stabilize the hypochlorous acid molecule. So we can produce within a 10% range, the concentrations we need and we can keep that concentration in the bottle until it's used. And based on our in vitro and in vivo experiments, we know which concentrations we need here in this context for airway purposes but also on the other segments that Geir was talking about for the wound care and so on. But we can produce these and concentrate in these solutions, so they are not harmful for the humans. So it's not dangerous for humans to use it but it's danger for the bacteria and virus because they will be eradicated and there will be killed. Next slide, please. And this slide is just to inform you, I'm not going to go into depth about it. You can read it later, it will be online but to inform you that we have performed every single step of what is required to obtain a permission for Phase II study. We have performed all the preclinical toxicology and also the Phase I study, both in the preclinical, both in vitro and in vivo. So it's not like we are missing something. We are ready to submit a CTA to the Danish medical agency as soon as we have the funding in place. Next slide, please. We have been in humans, we have been in health volunteers. And this is actually me lying on the bed before the clinical trial was initiated because, I think Elin and I, we discussed, we cannot have healthy volunteers to come in and experience the solution if it was too unpleasant. So I tried it and I'm sitting here today, talking freely, so it was non-harmful. But also our cohort, they experienced up to 4x per day 5 ml for a period of 5 days and we saw no adverse -- serious adverse events. It was greatly tolerable by the health volunteers. And it was also easy to use and there was no discomfort in inhaling the solution. Next slide, please. We've tested it against a variety of bacteria and viruses and especially for the ventilator-associated pneumonia project, you should focus on the bactericidal effect. We are able to eradicate all the bacteria, which normally cause ventilator-associated pneumonia. And on top of that, we also can kill fungi and virus so we -- and as Elin will talk about later, it has this very, very broad pan antimicrobial effect. So yes, it can be used in many, many other respiratory infections. Next slide, please. And also as I said in the beginning, one of the big problems with ventilator-associated pneumonia is this tube the patients have inserted into their airways because here the bacteria can attach to the surface and form these biofilms, as you see here in the red picture. These biofilms cannot be eradicated by our white blood cells, by our own immune defense and also the antibiotics used. Biofilms are notorious, resistant and tolerant towards antibiotics. So no matter what antibiotic doctors provide, biofilms, it doesn't work. But we have shown that since the hypochlorous acid molecule just reacts with any organic material, we can eradicate bacteria even if they are in biofilms. And that's a major advancement in especially the ventilator-associated pneumonia treatment. Next slide, please. We also have shown proof of concept in a real biological setting. So we used mice. One thing is to show in a shaking culture, you can kill bacteria or you can do some in vitro experiments. But to show that we can actually have an animal inhaled distribution and we can, in this case, reduce the influenza A virus from the airways of the mice is really a great proof of concept and assuring that our solution will work in a clinical setting. In these experiments, we infected the mice with the influenza A mouse strain. And you can see in these, in this graph that we were able to, over a 3-day period to actually lower the virus titer, the number of virus compared to the placebo. Next slide, please. We also performed another study when we looked at what about spreading of virus. So we infected 1 mouse, here in black and put that together with 4 of these white mice, uninfected mice. Then when we were looking at -- can the virus be -- can the virus contaminate or infect the uninfected mice. And we, of course, used a placebo treatment. So this was saline salt water. And in the group of mice just receiving the salt water, the placebo, actually, 7 out of 8 mice got infected by this 1 or this infected mouse. But if the group of mice were treated with the SoftOx Inhalation Solution, suddenly, we could prevent 6 out of 8 mice from getting infected. So that really shows the great potential of this solution combined with all in vitro studies and that is safe to inhale. Next slide, please. So developmental plan for this ventilator-associated pneumonia study is that together with Intercept, this platform, which has been formed in the capital region of Denmark, we are most likely able to start the experiments or the trial, beginning of 2025. The period after that, we'll use that as a preparation. It's not like it will take a year to prepare for this. We have almost everything collected and documented to prepare for the clinical trial application. But I think we do not have a time slot until start of next year. So we'll use this period of time to submit the application and get ready to start the clinical study. It's an adaptive trial setup. So if we have good results in the Phase II, we do not have to wait until all the data in and everything has been collected, we can move straight into a Phase III but that, time will show how that goes. But we -- the thing actually is, we have relatively high probability of success because we are well prepared. We have everything -- everything has been done correctly according to standards. We have this very well defined group of patients. We know it's safe to inhale. We know it reaches the areas of the lungs where the bacteria are infecting these patients. We know it can eradicate all these organisms. And we know it works in a real biological system. And the Intercept concept platform are extremely experienced working with these patients. Next slide, please.

Thank you, Thomas. Thank you. So market adoption. The underlying driver here will, of course, be the high risk of the people on the ventilator, actually get them up and get sick and with a high mortality that is a strong driver for [ user ] solution to treat them that works better than today's solutions. At the same time, we also have other drivers because VAP is a hospital-acquired infection. That means that the hospital have to pay the cost themself. And for the hospitals in the U.S. and Europe, that is adding up to more than USD 4 billion. And since we -- they are creating this situation themselves, they have to pay for it. And therefore, we don't have to go and fix the reimbursement before we can actually start to sell it. It means that the pathway to market for us regarding payment is very short. We can go straight to the hospital when we get the approved product and say this will help you to reduce your costs and save your patients. It's also very easy to implement, as Thomas have described for you carefully, well -- with a well-qualified health care personnel and standard equipment in place so we can just start use this straight away. Therefore, the pathway to market for this product is short, a small sales force, since it's only hospitals with the intensive care units that needs to be sold to. And we can therefore -- and there's big drivers for using it. So we expect to be able to build market share quite fast. So short and well-defined pathway to market. Next slide, please. So the financial potential in this is huge. With these drivers and with 130,000 patients in Europe and U.S., getting it every year and with the total cost of USD 4 billion, the potential for cost saving and for then, of course, income for SoftOx is significant. Next slide, please. Elin, please.

As Thomas said, our solution is very antimicrobial and against all types of bacteria and viruses, et cetera. And therefore, we're also one of the main players in this COUNTERACT program. It's a fully funded program by the European Defense Fund, where we develop countermeasures against CBRN threats. In our case, the B is the important thing because we are targeting biological weapons like bacteria and viruses. Our pillar of this huge research project is around NOK 90 million. So we have quite a large part of this. We have very close collaboration with University of Copenhagen and CR Competence in Lund, a long-term friend and collaborator of SoftOx. And we are also collaborating with a lot of different other institutions around in Europe. The highlights of this project is that we are actually optimizing our SoftOx Inhalation Solution to a 2.0 formulation. This is undergoing within this project and we have seek scientific advice by the health and medical authorities in regards to swapping from our so-called old to the new solution. And we are also testing our solutions against a very broad area of pathogens. So not just the ones Thomas showed you but also extremely pathogen or dangerous bacteria, for instance, like [indiscernible]. As you might know, this is a common biological threat that is sent by snail mail to different institutions or companies or persons in this world. So -- and we also see a good efficacy of our product against such a nasty bacteria as that. In this program, we will do a Phase Ib study starting next year and we'll do that to increase actually the possibility of the dosing, so actually increase dosing for future development of the product. Further, we also have a GMP production setup. So this is -- GMP is the way you have to manufacture medical drugs. And of course, that needs to be in a very controlled way and it's expensive to set up such a system and that's actually also included in this EDF project. And I have to be fair to say that there is also a part financing of the Norwegian Ministry of Defense. And even though that -- this is paid from other sources, all the commercial rights belongs to us at SoftOx. Next slide, please. So we see a big potential for a medical countermeasure, again, because we can defeat any type of biological weapon even though we don't even know the name of it potentially or beforehand. We know in the NATO countries and our partner countries who have around 1 million soldiers that can stand on their feet within a few months. So for them, it would be relevant to do military stockpiling. We also see a possibility of a civilian spin-off because in NATO and partner countries, we also have about 1 billion civilians, all of us. And if a terror attack occurs or if the next pandemic with a potentially unknown virus occurs, it might also be relevant to actually stockpile for the civilian population. So we are, of course, in the beginning of this development and we foresee it will be successful. And if so, the product is actually expected to be able to be directly sold to military forces and the governments around Europe, NATO and partners. Next step -- next slide, please. So this is just the overview. You have seen together with Thomas, the first part, yes, that's the VAP, so the ventilator-associated pneumonia path. And the lower part here, you see the EDF, the European Defense Fund project, where we are optimizing the product and setting up the GMP production. So there's a lot of synergies here. For instance, in the EDF project, we will, again increase the dosages and optimize the dosing, which will be helpful also in the future studies later down the VAP trial, so to speak. And also this important setup of the GMP production, that's also something that will occur under and be fully funded by the EDF program. And that will also benefit the VAP project. So there are a lot of great synergies between these 2 projects. And then I think it's back to you, Geir.

Thank you and next slide, please. Thank you, Elin. So key takeaway from all this. We are debt-free. We have defined a very well -- defined an interesting clinical development program, targeting a very interesting indication VAP, which has high mortality rate, for -- few alternatives to treatment and a large cost for the society in total and for the hospital, especially. We have through our partnership with the University of Copenhagen, we have managed to reduce the Phase II costs dramatically. So we have the modest development cost. At the same time, as we see that we have also very favorable possibilities of success. We have short time to market. We have talked about that Phase III for the VAP to be ready already in 2026. And the Phase II could be ready in 2025, 1 year and 1.5 years from now. So the time line for being a medical drug development is very short. We have the military project, which will be finished with the Phase I study in the beginning of 2026 or maybe late in 2026, depending on how you define it, which will also then be ready for partnerships. And we have the strong synergies between these 2 programs. So we managed to lower the cost and increase the output for both of them. By doing all this, I think we have managed to make the maximum -- we have managed to maximize the potential for the shareholders value. During the next 2 years, we think that we shall be able to increase the value creation in SoftOx, so it shall be a nice investment hopefully for the shareholders. So that's all from us now. Do we have any questions, please feel...

We haven't received any questions. For the viewers, if you have any questions, please use the Q&A section on the left side on SoftOx Solutions' profile on Investorweb to send in any questions. Let me check here if we have received any questions. Yes. Actually, I got some questions there.

Yes. Thank you.

Kenneth, it's from Kenneth, it's in Norwegian. I hope it's okay.

Yes, no problem.

[Foreign Language].

[Foreign Language].

It's another question. It's also in Norwegian. I hope it's okay if I read it in Norwegian. [Foreign Language].

[Foreign Language].

Yes. Guys, if you have any more question, please ask in the Q&A section. If not, we can wait 1 minute and if we get more questions. No. I think it's okay. Do you have some last words before we end this session?

[Foreign Language].

[Foreign Language].