Vicore Pharma Holding AB (publ) (6Y4.F) Earnings Call Transcript & Summary

Hi, everyone. My name is Cailin McGurk. I'm a member of the banking team at Morgan Stanley. I'm very happy here to host fireside with Ahmed Mousa, CEO of Vicore Pharma. Just before we get started, a couple of important disclosures. Please see Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. With that, I think, Ahmed, maybe we get started. If you could just give a brief overview of who you are, who Vicore is, and where you are, and then we can dive into some of the specifics around the pipeline.

Wonderful. Thank you for having us, Cailin. It's great to be here. Vicore Pharma is a publicly listed company on the Stockholm Exchange in Sweden, so historically European biotechnology company. And the company has been working on understanding the Renin-Angiotensin System and the angiotensin II pathway, which we believe can be quite potent intervention for a number of fibrotic and inflammatory diseases. And we've zeroed in around targeting a receptor called the angiotensin II type 2 receptor, which we think can be quite a potent, not just antifibrotic, but rather a mechanism that drives tissue repair and fibrosis resolution. And the particular fibrotic disease that we've been focusing on is idiopathic pulmonary fibrosis, which is a disease with quite a high unmet need and also a very significant commercial opportunity. And currently, we've taken our lead compound through Phase I and Phase IIa data, which has been quite exciting. And now we have an ongoing Phase IIb, which is quite large and quite extensive to really demonstrate the potency of this mechanism broadly and, of course, the potential of this specific molecule in idiopathic pulmonary fibrosis.

Perfect. So maybe we'll just start a little bit on the mechanism because, I guess, angiotensin is traditionally thought of as a cardiovascular target. What is distinct? And I guess what is the relevance for fibrotic disease and IPF, in particular?

Yes, absolutely. So when a lot of folks think about the angiotensin II pathway, the angiotensin II is peptide that actually activates 2 receptors, the AT1 receptor and the AT2 receptor. And essentially, these 2 receptors do the opposite thing from each other in a very simplistic way. The AT1 receptor drives fibrotic, inflammatory and hypertensive pathways. And that's a great natural response to infection, injury insults. So you could think about it as the body's rescue system. And actually, it has its own built-in response mechanism, which is this AT2 receptor, which drives an antifibrotic effect and anti-inflammatory effect and a vasodilatory effect to really respond to the things that the AT1 system brings. What's been interesting is we've had incredible success as an industry in drugging the AT1 side of the angiotensin II pathway, and that's by blocking AT1 activation. So ACE inhibitors and ARBs or angiotensin receptor blockers are basically blockers of the AT1 system. And you're right, Cailin, a lot of people have seen the success of those and think about those as really good antihypertensive drugs for the vasculature. I think what we also forget is in addition to these drugs being super well tolerated, they're also used in a number of other diseases that have other inflammatory or fibrotic components. For example, these ARBs and ACE inhibitors are quite popular and part of the standard of care in chronic kidney disease, for example, which certainly has a lot of fibrotic implications as well as other diseases. And then what's been interesting is, and we think highly underexplored then is if blocking the side of the equation that drives the fibrosis and inflammation and hypertension is interesting, what about actually activating that endogenous tissue repair and fibrosis resolution system? And we think the potency there can be quite attractive and we think like kind of modulation of the AT1 side, it can actually be quite safe and well tolerated. So we're really excited about the broad potential applicability here, and that's what we're trying to achieve with our lead candidate. Now, let's take this then into the context of the lung specifically, right? Like what exactly is activating this endogenous or built-in tissue repair fibrosis resolution system doing? And what it's doing is it actually is agonizing this receptor is actually driving a functionalization and a proliferation of stem cells in the lung called Alveoli or epithelial type 2 cells. And if you think about IPS and fibrosis generally, it's injury that causes this runaway wound healing or scar formation. And so in the lung, the injuries focal point is the epithelial layer. And so we actually have these type 2 epithelial cells that become injured, they drive fibrosis as a result of that injury. And essentially, what this mechanism does in the lung is it protects and drives a proliferation again of these stem cells. And by doing that, you're able to both regenerate like the parts of the lungs that have become injured, which we think is quite unique but also you're then able to cut off that kind of fibrosis driving signal at the very source we believe. And so we think that's a very interesting way to go after the disease. And what's also, of course, known about the AT2 receptor, as you said, Cailin, if nothing else that has a vascular effect. And I think we've seen recently with United Therapeutics exciting data in IPF that actually having a drug that also impacts on the vascular access can be quite useful in this disease state.

That's a -- thank you, Ahmed. I think that's a perfect segue into the next topic. So I guess in terms of data, we've seen some failures earlier this year, but more recently with BI and United that you referenced some positive Phase IIIs. So how do you see the current set of treatment challenges in IPF. Where do you think the role is going to be for Vicore going forward, not least of all, given that we have seen some successful Phase III readouts in the area?

Yes, absolutely. So I think, first, just to look at where the market -- where the landscape sits today. There are 2 approved drugs for IPF, pirfenidone and nintedanib. These drugs are tough to tolerate, so quite poor tolerability, they cause GI side effects, diarrhea, some nausea as well as photosensitivity. And they also, at the same time, unfortunately, only slow the decline of lung function in this pulmonary fibrosis state. And just to put that into context, unfortunately, the survival after diagnosis with IPF is only around 3 to 4 years and that's even in view of kind of the available standard of care. So you're talking about a disease that's worse than many cancers on average. And unfortunately, these 2 drugs that are available are so tough to take that only 25% of people in the United States who are diagnosed with IPF even initiate therapy and then actually the average time on drug because it's poorly tolerated and because it has limited efficacy is only 10 months. And even in view of all of those things, it's currently a $4 billion market as of last year and it's expected to continue to grow. And certainly, it could be multiples of that if you're able to actually have a drug that is easier for physicians to prescribe patients to take and it's easier for patients to stay on for a longer period of time. So certainly, we're talking about a massive gap that sits since today. Now it's also been great to see some recent Phase III successes because there have been a lot of drugs that haven't worked in this space. You can imagine for this type of unmet need and commercial opportunity, there have been a lot of attempt. Now, we believe that one of the reasons why a lot of these attempts have been unsuccessful is because mechanistically, these kind of approaches have been more in the downstream blockade of fibrotic buildup. And we think that potentially has the ability to be a little bit less efficacious than thinking about the kind of problem in a broader way, epithelial repair, as I was mentioning and also thinking about the vascular component. BI's nerandomilast readout, while a nice extra tool in the toolkit is not expected to significantly change the treatment landscape. And we just saw last week, United Therapeutics with a positive readout. We'll have to see what the full details look like, but it does look like, at least from an efficacy bar, this is going to be the new threshold, and that's really great to see for patients. But we're talking about a market and a clinical landscape that requires more therapies well beyond what inhaled Treprostinil will be able to offer, which will be great for patients. So we're excited to contribute to that. And certainly, when you talk to clinicians and you look at the regulatory perspective, they would like to see combination therapy in this space. And so even when you have a great therapy come out or something that adds to the landscape, looking at combining with them is certainly something that Vicore does. So Vicore sees itself certainly as a therapy that can be a frontline treatment. And we think that's the right place for our therapy. And we also see that we can combine with the available standard of care at the time, that's how we're running our current Phase IIb and certainly how we would think about it in the future as well.

So I guess, $4 billion, but plenty of opportunity given, as you said, only 25% of patients are treated and short duration of treatment. So there's lots of upside. One is more effective and, I guess, tolerable treatments are available. Just coming back to the mechanism, and then I want to dive into the Phase IIa data a little bit. I think you'd alluded to the importance of addressing the vasculature. I guess relative to treatments that are available, the Phase IIIs that you've seen for PDE4B from BI and United Therapeutics, what do you think of similar or what would give you confidence, I think, in buloxibutid, I hope I pronounced that correctly, leading into the Phase IIb in terms of some of the data we've just seen.

Yes, absolutely. So I think that as I mentioned, kind of when you think about the disease that is pulmonary fibrosis, at the distal end of the lung, you have millions of air sacs or alveoli, they become injured because of exposure to environmental factors plus genetic susceptibility, and that injury then leads to apoptosis and dysfunction of these epithelial cells, they then start releasing that kind of fibrosis signal. And then you actually have that scarring buildup around the air sacs. And what that does is it prevents oxygen from diffusing from the air sacs into the pulmonary vasculature. But also that state of hypoxia or that limited kind of availability also then leads to pulmonary dysfunction. So the vasculature tends to thicken and then tends to narrow, and that means it's tougher for the oxygen to then get through the air sac through that, they call it an interstitial space and then into the bloodstream. And so a lot of the mechanisms that have been advanced historically for IPF have really focused on that middle part between the air sac and the pulmonary vasculature. And that's not an invalid way in our view to go after this disease, but we do think it's not complete. And so we really are excited about the fact that on the epithelial side, we can actually repair the epithelium because in order for oxygen to go through your air sac, it needs to go through specific epithelial cells. And so if those have died off because of the injury that causes the pulmonary fibrosis, it doesn't really matter what's after that, right? You need gas exchange cells, type 1 epithelial cells in order to be able to have the oxygen diffuse. And that's really step 1. And so we're really excited that our mechanism uniquely has an ability to drive that. And we've shown that in a number of preclinical experiments. What's also then important is that your pulmonary vasculature has to be available to receive the oxygen as it diffuses, and so we think that's not a thing to be ignored. And certainly, in IPF, depending on the population, up to 40% can also have diagnosed pulmonary hypertension. And even before there's actual pulmonary hypertension, we do believe that there's been vascular dysfunction which can interfere with the ability to oxygenate blood. And so we're excited about addressing kind of all 3 pieces of the puzzle. You saw in nerandomilast, which kind of is probably focused more on the interstitial space have some effect, but a little bit more of an incremental effect. And then Tyvaso, which has a vascular effect, maybe goes a little bit beyond that with a higher kind of effect size initially shown, and we believe we can then go even beyond this because we also bring in the epithelial repair component.

Perfect. Let's talk about the Phase IIa data. You had pretty impressive improvement in FVC. What -- how would you characterize the data? What are some of the sort of standouts for you? And I guess, what based on that Phase IIa dataset gives you confidence in the Phase IIb that you're running now?

Yes, absolutely. So in IPF, the way that regulators and clinicians look at understanding whether or not there's an effective drug is they measure lung function by forced vital capacity, and essentially, that measures the lung capacity. And unfortunately, in IPF, as we mentioned, there's this kind of 3- to 4-year survival. And that's associated with a decrease in your lung function in milliliters, so it's measured in volume over time. And you could think about, for example, about 180 to 200-milliliter decline over an approximately 1-year period on average. It's also variable depending on the different datasets that you look at. And so what historically we've seen is the ability to slow that decline in lung function. So they still have a decrease in milliliters of lung function, but maybe less than 180 to 200 milliliters. What we saw in our Phase IIa study of IPF patients, and this was a monotherapy study. So we just treated with our drug, buloxibutid, is over a 9-month period an improvement in lung function by 200 milliliters. So basically giving IPF patients approximately an extra year of lung function, which is really a dataset that's never been observed before in this space. So it certainly made me quite excited to join the company about 2 years ago, and it certainly makes me excited about what we might be able to achieve in our larger and ongoing Phase IIb study, where we're also now combining with the available standard of care.

And that was a single-arm study. You also looked at a synthetic control arm. Can you sort of talk about that? I think you've alluded to the 200 milliliters improvement as opposed to stabilization being a significant finding, but anything sort of incremental around looking at that relative to synthetic control?

Yes, absolutely. So yes, as you mentioned, the Phase IIa study was a single-arm open-label study. And so I think what becomes then important is saying, okay, can we better contextualize what's happening here? And if we were to actually pull IPF patients who have the same traits and characteristics as the ones that we enrolled in our Phase IIa study, how would they perform, right? And for example, our Phase IIa study, as you might expect from an early clinical study, had slightly earlier stage patients in terms of their status relative to what you might see on average in a Phase III study. And so for us, that was an interesting exercise, and we actually leveraged a dataset of 100 -- sorry, 10,000 IPF patients. And then we pulled from that basically groupings of IPF patients who best matched the inclusion criteria of our study and actually the actual baseline characteristics of the patients who are enrolled in our Phase IIa study. And we saw that, that group of patients had a decline in lung function over 9 months of 114 milliliters. So maybe a little bit less than you'd expect in our Phase III study, but still a meaningful decline in lung function. And so then it was very nice to have that type of a dataset to really contextualize then the observed improvement in lung function that we saw, which is quite different. And really, that's consistent with what you'd expect in IPF patients, unfortunately, while it's a pretty heterogeneous disease. So sometimes patients can be stable for a while before they decline, sometimes they decline rapidly. But unfortunately, the ultimate kind of fate of these IPF patients currently is a decline in lung function. And so for example, only a single-digit percentage of patients out to 9 months would have a stable lung function without any sort of treatment or intervention or some sort of marginally improved lung function from what they've measured at baseline. So it really confirms that this is a real effect, and it's able to provide additional confidence in it.

Switching gears onto the Phase IIb ASPIRE study. This is very different. It's a global study. It's big, 52 weeks. Can you talk a little bit about the design and sort of anything. I guess just once we've talked about that. I mean, it looks in terms of design and size, almost like a Quasi Phase III. What -- how are you thinking about it? And what more you'll need in order to speak to regulators?

Yes, absolutely. And that's exactly how we thought about it, Cailin. So we thought, look, look, we really want to confirm the signal that we saw in the Phase IIa setting, and we want to provide the greatest possible confidence around it as quickly as possible relative to this high unmet need. We're also very cognizant of the fact that a number of drugs have worked in Phase II and have not worked in Phase III. And so we're certainly very interested also in just having a Phase IIb that essentially was like a Phase III, so our inclusion criteria are quite broad and similar to what we would do in Phase III or what other companies would do in Phase III. And our Phase IIb endpoint is the regulatory or the Phase III endpoint, which is the change in lung function is measured by FVC over a 52-week period. And so certainly, how we think about it is that it should provide a great deal of conviction in what we're able to achieve moving forward in a Phase III setting. And of course, depending on the discussion with FD,A you might have to run 1 or 2 Phase III studies, and we've seen different examples of this over time. And we believe that with the Phase IIb data package that we will build as we execute this study. We should with, hopefully, a positive Phase IIb readout, be able to move towards approval with a single Phase III study.

Perfect. And maybe just a quick update, recruitment time lines. What do you -- what is the latest and what can you say?

Yes. So this is the most advanced IPF study that's currently enrolling. So there -- as we discussed, BI had a Phase III readout recently and United Therapeutics just last week, BMS has the third ongoing Phase III, but they've completed enrollment. So we're very pleased to have great engagement with approximately 100 clinical sites across 14 countries that are enrolling our Phase IIb study. And we've seen some great progress on the enrollment side. And so we've now guided that we should complete enrollment in the first half of 2026 for a readout in the first half of 2027.

Maybe just switching tack. You have a partnership with Nippon Shinyaku in Japan. How does that work? And how are you thinking about that partnership in the context of the broader plan for buloxibutid going forward?

Yes, absolutely. So we saw the opportunity to accelerate Japanese development of our therapy as a very interesting one. And while we're interested in really seeing what the Phase IIb data looks like before we seriously entertain U.S. or European partnership, we thought that could be a nice way to also drive greater acceleration of the overall development program, bring in a little bit of capital and that's been quite useful from that perspective. So Nippon Shinyaku are also really experts in the pulmonary space. They actually discovered and developed one of the key pulmonary hypertension drug, Uptravi, and actually licensed the ex-Japanese rights out, but they are the developers and the commercializers of that therapy in Japan. And so they really have the clinician and the pulmonologist relationships in Japan, the sales force in Japan. And the structure of this deal allows us to take advantage of both Nippon Shinyaku skill set for Japanese development, but also with the financial contribution for the global nonclinical development costs. So for example, we're now doing our Phase III and commercial and manufacturing work, and we're doing that in financial partnership with Nippon Shinyaku. In addition to that, of course, Nippon Shinyaku will contribute to then the global development as we move into the later stages with Japanese patients as well.

And I think you touched upon it, but with respect to the plan for rest of world, Europe, U.S., other markets in terms of own commercialization for the partnerships, is that TBD once...

Exactly. I think it's TBD with readout. I think what's genuinely interesting and intriguing for us at Vicore in the context of IPF is this is a disease area from a commercial perspective where small biotech can commercialize. So with a limited sales force in the U.S. and in other territories that is quite tractable. And so we think that's an intriguing opportunity. But of course, we also want to do what's best for the drug and what's best for the company. And so certainly, we'll look at that as we move forward and see our Phase IIb data.

So you mentioned you made the decision 2 years ago to join a Swedish biotech, which remains a sort of solely Swedish-listed company. Just tell us a little bit about that. I mean how are you thinking about presumably moving this forward as the U.S. will be a key market. Any sort of thinking more broadly about coming to the U.S. at some point?

Yes, absolutely. So I think that, generally speaking, as European companies evolve and move into later stages, the opportunity to access the U.S. capital markets becomes quite interesting. Certainly, as I just mentioned, we have an ambition at least to look at being an independent company that would run a Phase III and think about what it would mean to become a commercial company. So I think that being in the United States is certainly helpful from that perspective. And I'm U.S.-based, I'm based in Boston. And so certainly, for me personally, I think that's also an interesting opportunity for us at Vicore as well.

And maybe on a related topic, just in terms of cash, where you are now, sort of how far that gets you, as you mentioned, there will be data following the recruitment and hopefully, a successful Phase IIb ASPIRE Study. How are you thinking about that? And sort of where are you today?

Yes, absolutely. So I think at the end of last quarter and last month, we reported $100 million cash on hand, which is sufficient for us to complete the Phase IIb readout with additional cash runway. So we're in a great position to have the finances we need to get this really impactful readout with even some runway thereafter.

Perfect. Actually, I think we've covered most things. Anything else in terms of the audience. Anything else you'd highlight? I think we've talked about the landscape, the opportunity, time lines. I mean, any sort of take-home messages for the audience in terms of what we should look out for over the next, call it, 12 to 18 months?

Yes. I mean, certainly for us, right, like it's -- we're in a pretty focused execution mode like these studies are challenging to run 100 clinical sites, 14 countries, and we do try to be capital efficient. So we're a 35, 40-person team over the duration of this Phase IIb to execute that study. So that's certainly something that we'll try to continue. But I also think that as we look at the broader landscape, as we talked about earlier in the discussion, it's been really interesting to see how mechanisms that go beyond traditional antifibrotic can do more. And that's certainly why I joined Vicore. I actually worked on this mechanism when I was in my molecular biology days at the lab and I'm certainly a believer in it. And I think it's really exciting to see not then just Vicore's efforts, but also the academic community as well as other biopharmaceutical companies start to really move beyond traditional kind of antifibrotic fibroblast kind of antagonism approaches. And I think that can be quite exciting for IPF patients and for the landscape more broadly as well.

And I guess what you're alluding to is if everything bears out in terms of your understanding of the target, the pathway and the biology, I mean, this is potentially or ideally sort of disease modifying in a more meaningful way relative to what has come before or at least what's on the market?

Exactly. That's the signal we saw in the Phase IIa. And certainly, that's the hope and promise over time is that we can achieve therapies that are truly disease-modifying in the space.

Excellent. So look, thank you, Ahmed, for attending. I think it's going to be fair to say, a very exciting sort of next 12 to 24 months, the setup into, I think, the Phase II ASPIRE data looks good. Lots of interesting points. And again, thank you to you and the team for attending. Much appreciated.

Thank you.