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

Good morning, everyone. My name is Mary Lou, and I'm one of the associates on the healthcare investment banking team at JPMorgan. It's my pleasure to introduce our next presentation from Vicore Pharma. I'm joined by the company's CEO, Ahmed Mousa, who will give a presentation on the business, followed by a Q&A session. Thank you very much for being here. And with that, I will turn it over to you.

Thank you, Mary, and good morning, everyone. I'm Ahmed Mousa, as Mary mentioned, CEO of Vicore Pharma, and I'm really excited to tell you a little bit more about our company today. Refer to the forward -- typical forward-looking statement disclaimers. Vicore Pharma is a Swedish listed company currently with a USD 380 million market cap and about $140 million cash position as of the end of the third quarter. We're fortunate to be backed by a number of leading specialists in the United States as well as Europe, presence in Stockholm and Copenhagen with an increasing presence in the United States, where I'm based as well. The company is highly focused on driving new type of biology in the angiotensin-2 pathway. And within that pathway, we've zeroed in for our lead program on agonizing or activating a molecule called the angio -- a receptor called the angiotensin 2 type 2 receptor to go after a really tough disease that I'll tell you more about called idiopathic pulmonary fibrosis. That is really the lion's share of our effort. However, we also continue to work at the preclinical stage on a number of molecules within this biology space as well, and we look forward to sharing more on that in the future. Now why go after pulmonary fibrosis and in particular, idiopathic pulmonary fibrosis to start. This is a very difficult disease. It is a rare disease. It's an orphan indication. It is larger, though, with 150 patients -- 150,000 patients in the United States and about 3 million globally. The currently available standard of care therapies offer only unfortunately modest slowing of disease progression. This is a disease that has a 3- to 4-year mortality post diagnosis on average, unfortunately. And the standard of care therapies, in addition to not significantly changing that picture, also have significant GI side effects that limit the tolerability profile as well as the uptake. Now in addition to that, when you look at the profile of the patients then, consistent with this kind of more limited treatment landscape, only about 1/4 of patients in the United States choose to initiate treatment of the therapy. And then at that point, the discontinuation rate is relatively rapid due to the limited efficacy as well as a significant number of tolerability issues. So actually, time on therapy is the average of about only 10 months. So in view of this pretty limited landscape, even though everything that I just said is true, it still is a significant commercial opportunity already, and it's expected to continue to grow. So that subset of patients, who stay on the therapy only a short period of time have driven in 2024 over $4 billion in sales with the standard of care therapies that are available, and this is expected to grow to over $10 billion by 2030 into 2033. Now the market continues to grow due to new approvals, better understanding of how to diagnose and treat the disease. But then, of course, there's a huge open space for therapies that could be better tolerated and therapies that could be more efficacious and hopefully, therapies ultimately that allow individuals to have a good quality of life and to extend survival outcomes. And certainly, that's our objective at Vicore Pharma. In view of that, the thing that makes us also very excited about our program, which is currently in Phase IIb development for IPF is when you think about the emerging treatment landscape, unfortunately, these therapies, while they continue to build and will hopefully be able to offer patients more solutions are not expected to significantly transform the treatment paradigm. So we're still talking about therapies that to date, have only shown the ability to incrementally slow the decline of lung function and therapies that continue to have significant tolerability issues, some of these therapies have the same challenges as the standard of care with significant GI side effects. Others drive other effects like cough or other issues that make it difficult for them to take. Buloxibutid on the left-hand side has a nice profile, both in the sense that it has a very unique mechanism of action relative to the approaches that the emerging and standard of care therapies have taken, and I'll talk a little bit more about that. In addition to that, it's a convenient drug. It's an oral twice daily. The tolerability profile in development to date has looked very good compared to those other therapies, and I'll talk a little bit more about that as well. And then in our Phase IIa studies, we've shown unprecedented impact on lung function. We've actually shown the ability to improve lung function in IPF patients, and that makes us very excited to continue to advance the development as well. Now the reason why we're quite excited about the approach that we're taking is that in many cases, when pulmonary fibrosis is addressed there is an injury to the lung in this disease, followed by a significant fibrotic driver scarring buildup. Many of the therapies go after the disease by blocking the fibrotic cascade. And while that's not an invalid way to go after this disease, we believe it's incomplete and we go for a very different approach by trying to actually address the injury that is the cause of the fibrotic drive. And so, the receptor that we're working on is actually expressed in progenitor or stem cells, and it's intended to drive alveolar repair and resolve fibrosis as well as promote vascular function rather than just blocking the build of new fibrotic material. We, as I mentioned, have seen a really nice initial clinical signal that I'll talk more about and are currently undertaking a large Phase IIb study, which has the regulatory endpoint and positions the drug as a first-line therapy that can be taken in combination with standard of care or for patients, who have chosen not to or discontinued the use of standard of care. Now I mentioned this mechanism being quite different from other approaches and I'd like to talk a little bit more about that here. So what we're doing with our drug candidate, buloxibutid is agonizing or activating a receptor called the angiotensin 2 type 2 receptor. It's shown here on the right hand in orange. The AT2 receptor is the body's fibrosis resolution and tissue repair system. So it drives a set of antifibrotic vasodilatory and anti-inflammatory effects. And the objective of Buloxibutid is essentially to supercharge this mechanism of action against the disease state. This mechanism actually exists in the body as the opposing force to a very familiar mechanism of action. So the AT1 receptor is the body's rescue system, and it drives hypertension, fibrosis and inflammation in response to infection, injury and insult. And actually, we've been very successful as a health care industry in driving great therapies by blocking the AT1 receptor. That's actually what arbs and ACE inhibitors are intended to do and many individuals in the United States take these therapies, not just for hypertension control, but for a range of other fibrotic and inflammatory diseases. And just as that blocking that left-hand side has been fruitful, we believe that activating the right-hand side that opposing force can be full not just in pulmonary fibrosis, but in a number of diseases beyond that in the future. And that's the intention behind our early-stage pipeline. Now maybe putting this then in the context of pulmonary fibrosis and asking the question, okay, where exactly is this receptor that you're activating expressed in the lung. And so what you see here is an air sac in the lung. There are millions of these at the distal end of the lung. And the objective here is for you to breathe in oxygen, it goes into your air sac crosses outside of it and then ultimately gets into the blood to oxygenate. The type 2 epithelial cells that carry our receptor, these stem cells play 2 very important roles in the air sacs function. First and foremost, they differentiate or specialize into the type 1 epithelial cells, which are gas exchange cells. So essentially, it creates that layer that allows oxygen to cross ultimately into the bloodstream. The second thing that these type 2 epithelial cells, these stem cells do is they produce surfactant protein, which breaks up the natural surface tension of water. And that's really important because you'll see that these air sacs have a round inflated shape they're only able to maintain that shape because of the surfactant proteins that break up the surface tension. And in the absence of them, these alveoli would collapse due to that phenomena or that surface tension associated with water. Now this is a schematic of what's happening then in IPF. And you can think about this as a cross section of a small part of the lung. On the left-hand side, you'll see what's happening in IPF. And on the right-hand side, you'll see what we believe our mechanism is doing about that. And you'll have in the middle in air sac, again, there are millions of these at the distal end of the lung. You want the oxygen to move through the air sac and then down into what's called the interstitial space and then eventually into the pulmonary vasculature in order to oxygenate blood. IPF, like other pulmonary fibrosis is a disease where the epithelial layer of the alveolus, the lining of the air sac becomes injured. And that injury causes death and dysfunction of the type 1 and the type 2 epithelial cells. So essentially, the gas extreme cells start to die off in dysfunction such that the oxygen can no longer diffuse through that layer. In addition to that, the injury also affects the stem cells, the type 2 epithelial cells, so they can no longer replenish the type 1 gas exchange cells. Beyond that, you have a phenomenon that occurs in IPF that's called pre-fibrotic alveolar collapse. So even before fibrosis builds up in the lung, the injury that drives this disease causes a loss in lung function because the alveolar collapse these air sacs collapse, and that's because these type 2 epithelial cells no longer produce that surfactant protein. The really tough thing about this disease is actually that these stem cells, these type 2 epithelial cells are also then when they become injured and dysfunctional, the main secretors of the profibrotic drive, so they release a cytokine that's widely recognized to be the cause of the buildup of fibrosis called TGF-beta-1 and that causes the cells that make ultimately collagen or fibrosis buildup accumulate in the interstitial space in the space around these alveoli and then they ultimately accumulate, activate, and then deposit collagen around these air sacs. And that acts as a physical barrier to oxygen diffusion into the pulmonary vascular. So essentially, it's blocking the ability of oxygen to get into your blood vessels. And then beyond that, you have in the vascular compartment, so you have these blood vessels in the interstitial space. And as the fibrosis builds up, it causes a pressure on them. And this is why actually 40% of IPF patients also have pulmonary hypertension, and that's due to the squeezing and the pressure that's placed on these blood vessels. In addition to that, it's not only a matter of kind of like squeezing on these blood vessels, but it also causes injury that actually caused them to provide additional profibrotic drive, i.e., they release injury signals, and that actually causes more fibrosis to build up in the same exact space. And so it's a pretty tough disease, I would say, that involves both the air sacs and the interstitial space as well as the pulmonary vasculature as part of the kind of disease pathology. And it's 1 of the reasons why, unfortunately, it has a tough mortality and prognosis from diagnosis. Now what we believe our mechanism does about this is, first and foremost, by agonizing these type 2 receptors on these type 2 epithelial cells, we replenish that population. So we caused them to refunctionalize and we cause them to proliferate. And that phenomena then allows you to replenish the type 1 gas exchange cells. So you have that differentiation back and you restore the body's gas exchange capability. In addition to that, by reactivating the type 2 epithelial compartment, you're able to produce that surfactant protein and you can address that pre-fibrotic alveolar collapse. But what's very nice about this mechanism is that by refunctionalizing the type 2 epithelial cells you naturally attenuate the pathological pro fibrosis signal, i.e., that injury signal is no longer being released from the epithelial compartment, and that means you don't have that profibrotic drive and that deposition of collagen, what's really nice about this mechanism as well is it addresses existing collagen too. So it's not just that it stops new fibrosis, but it also upregulates the buildup of collagenase matrix metalloproteinases, which are enzymes that can essentially break up existing collagen. And by doing that, you can resolve fibrosis. And then finally, if we know anything about the angiotensin 2 pathway, we know that it's vasoactive and this AT2 receptor is designed to be the opposing force to the hypertension driving AT1. And so it causes a local vasodilation and a reversal of vascular remodeling. And this is important because not only then does it address -- make it easier for oxygenation of blood, it also decreases fibrotic buildup because it causes the pro fibrosis signal from the endothelial compartment to resolve itself. And so this is a summary of what we do. It's quite comprehensive. And I would say it sits distinct from other mechanisms of action, which are more oriented to blocking the fibroblast activation migration and collagen deposition. That's not an invalid way to go after IPF, but we believe it's incomplete because it doesn't address what happens in the epithelial layer in the air sacs nor does it address what's happening in the pulmonary vasculature. And that's kind of summarized here, where we look at the different compartments, where this mechanism plays a role. So it's tissue repair and regeneration, anti-inflammation and antifibrotic effect as well as an effect on the vascular compartment. Now we've shown that this drug works quite well in a number of preclinical studies, but I'll focus today on our clinical data to date, which is in a 36 week or approximately 9-month clinical study in treatment-naive IPF patients. This was an open-label study and it tested our drug 100 milligrams twice daily. Again, this is an oral small molecule and looked at safety and tolerability as well as change in lung function as measured by forced vital capacity, which is the regulatory endpoint in IPF, it's the FDA approval endpoint over that 36-week period. The patients that we enrolled in this open-label single-arm study are shown at left, it's called AIR and you'll see here on the right-hand side, a comparison to what's called the INPULSIS study. This is the Phase III studies that led to the approval of 1 of the available standard of care therapies Nintedanib and you'll see that age, gender and other features are similar to what was enrolled previously. In particular, I'd point out the metric of percent predicted FVC at baseline or inclusion, which is about 75% so these are patients with impaired lung capacity, and that compares well with the 79% baseline percent predicted FVC observed in the INPULSIS studies. I will also note that the study did enroll a little bit more of an Asian patient population, and I can talk a little bit more about that as well. In the safety and tolerability side, in the right-hand column here, we're showing the treatment-emergent adverse events over the 9-month study. And what you'll see on the right-hand side, on the left, there's a comparison again to INPULSIS safety and tolerability. There's good GI tolerability, so we don't have that toxicity signal or that tolerability signal that's associated with a number of the standard of care therapies, including Nintedanib. There's a low rate of exacerbation and cough worsening, which is very nice to see, and there were no treatment-related serious adverse events observed in this clinical study. I will note that 1 side effect that's been observed in this drug in this study, in particular, is mild to moderate hair loss or hair thinning, and that was observed in 19% of the patients. This phenomena was reversible, i.e., patients all patients after they discontinued treatment had regrowth of hair. This is something that we believe is an acceptable part of the profile in view of the mortality rate of IPF and it is also a disease that tends to be of older men, approximately 70% to 80% of the population versus women as well. This is also something that we're working on in the ongoing Phase IIb study in that in the Phase IIa, we tested 100-milligram twice daily. This is a dose-dependent side effect, and we are testing a 50-milligram dose in addition to the 100-milligram dose in Phase IIb to see if we can mitigate or eliminate this side effect from the profile moving forward. Now this is the exciting part of the picture, and it's what we saw on the efficacy side in the Phase IIa study. So here, we saw out to 16 weeks of stabilization in lung function as measured by FVC followed by an improvement in lung function out to 36 weeks by ultimately over 200 milliliters. This is quite an amazing effect in the sense that the standard of care therapies, as I mentioned, would only be expected to slow the decline of lung function, i.e., you would end up still below the 0 line and in comparison to what you'd expect in an untreated population is shown in the dotted line that's moving down towards 200-milliliter decline in FVC over that 36-week period. What's also nice about this effect is that we have improvement in lung function in most of the patients at 36 weeks. So 65% of the patients had improvement in lung function at the 36-week period. And what this tells you is that in a disease state like IPF, there's a lot of heterogeneity, and there have been prior clinical studies in IPF that have been driven by outliers. This is not an outlier driven effect. Most patients had improvement in lung function, and that also compares favorably to what you'd expect to see in a standard of care setting as well as natural history population, where you'd only expect a single-digit percentage of individuals to have stable or some improved FVC value out of that time period. Now 1 thing we did to better understand our data set because, as I mentioned, it was a single-arm open-label study is generate a synthetic control arm. And to do this, we accessed a database of over 10,000 IPF patients. We narrowed that pool to those who would meet the inclusion criteria of our Phase IIa study. And then we created 30,000 randomly sampled placebo arm groups and then we matched on all of the actual characteristics of our enrolled patient population in terms of the lung function criteria, age, gender and other characteristics and essentially pulled out the 408 placebo arms that best matched the actual patients, who are enrolled in our Phase IIa study. That sampling of placebo arms is shown here on the right. So you'll see here, there is variability and heterogeneity associated with IPF. Ultimately, what you have is a decline in lung function and the mean decline in lung function across these 408 synthetic placebo arms is 115-milliliter decline in lung function over 36 weeks. And we also, on the left-hand side, use this 115-milliliter decline in lung function to provide an imputed signal on our data set, showing an improvement in lung function by 23 milliliters. And ultimately, what this reflects is even when placed in the context of a synthetic control arm. And even where we do quite a conservative imputation, so the imputation analysis here essentially assumed that all patients, who discontinued the study had a placebo-like decline in lung function. We maintained in this Phase IIa study, a really nice signal of clinical efficacy and beyond that, disease-modifying effect. What we're doing moving forward is a large 52-week IPF study. It's a global study that's enrolling 360 patients. It has the regulatory endpoint, which is a 52-week impact on FVC. It has a broad inclusion criteria that's materially similar to the Phase III studies in the pulmonary fibrosis space, and we're testing, as I mentioned, 100-milligram twice daily dose, same as in the Phase IIa, half dose of 50 milligrams twice daily. And of course, a placebo arm in this large study as well. We're allowing patients who are not on standard of care or who are patients who are in Nintedanib or nerandomilast standard of care to be included in the study. This study is expected to complete enrollment in the first half of this year. And then after the 52-week enrollment dosing period, we would then expect to have a readout in the middle of 2027. The study is powered to detect a lung function difference from the placebo arm to the treatment arm of 96 milliliters. And essentially, this is a powering that would allow us to demonstrate the best effect ever seen in an IPF therapy, comparison here is made to some of the approved and emerging therapies BIs nerandomilast, it showed last year approximately 70-milliliter difference in lung function between placebo and treatment arm. So this is still a decline in lung function, but a slowing decline lung function. Treprostinil has shown in their T2 study last year, a 96-milliliter difference in lung function between the treatment arm and the placebo arm. And essentially, we're aiming for that level of flexi or better with an overall well-tolerated profile. Thanks for the time, and I'm happy to take any questions.

Thanks very much for the presentation. We'll open the floor to questions. Maybe I can start with the first question. On the Phase II trial that you just ran through, how does the synthetic control arm you presented last year, provide additional confidence in your Phase IIa results. Yes, absolutely.

Thanks for the question, Mary. So the Phase IIa AIR study, because it was open label, I think it was very useful to then leverage a very large database of actual IPF patients, who had not only similar inclusion criteria but actually quite matched baseline characteristics. And then so seeing that, again, IPF is a heterogeneous disease that broad heterogeneity, but seeing again a confirmation that patients with these characteristics at baseline would be expected to have a significant decline in lung function, and that is, of course, contrasted with what we observed in the treatment arm of our study and that improvement of lung function over an extended 36-week study.

That makes sense. And what was the primary objective in adding patients to the ongoing Phase IIb trial and how has enrollment been progressing?

Yes. So in the Phase IIb trial that we're currently running, I mentioned that it's a 360-patient study, it was originally designed as a 270-patient study, which provided 80% power to detect a 126-milliliter difference in lung function between the placebo arm and the treatment arm, but what we observed between the time that we had designed the study and our decision to make the study larger is a number of IPF therapies that were in development, unfortunately, did not succeed in their readouts or were discontinued. And we saw the relatively unfortunately, limited efficacy of some of these standard of emerging therapies, such as nerandomilast and Tyvaso. And so the increased powering of the study, which is the product of increasing the size of the study, essentially enables us to have statistical power to detect a difference at the level of effect that would be the best IPF therapy that we observed to date.

On that, go ahead.

I'm Dr. Chang from New Jersey. So congratulation actually from a mechanism of action is great and actually an ascending the disease, it was very smart for the Phase II actually to use the external control arm because it's difficult to enroll those type of patient at that phase. But -- so I do have 2 questions. The first 1 is using external arm control is a good strategy, but it's challenging. So my question is that could you share a little bit how could you find the data that could match perfectly the inclusion criteria that you just mentioned because it's real work, right? So it's very difficult. So please sure about that. And then second is, of course, you are going to do the Phase III now. And very quickly, very soon, you are going to plan to launch the product, what would be your pricing or, for example, a formulation event, I'm curious about the formulation because it's oral BID similar to BI and other companies. So are you planning to change the formulation because it's respiratory. So I'm curious, if doing a formulation that is a kind of pump will that increase the effect of the product? I'm just curious.

No, the Yes. Both great questions. So on the synthetic control arm analysis, we worked with a company in the United Kingdom called Qurate. And actually, they've gotten access to a database of over 10,000 IPF patients. A lot of those patients actually come from the NHS, which has been able to organize a really robust data set around IPF patients. And so that is what allows us then to really have a nice look at patients who are diagnosed with IPF. You actually have the high-resolution CT scans for these patients as well. You have their characteristics. And then you have their FVC trajectory over an extended period of time. Also, you'll remember that our study in the Phase IIa was a monotherapy study, i.e., there was no background or standard of care therapy that was added. And there's a significant population, as I mentioned, that choose not to take the standard of care therapy. So this database also has a nice proportion that were not on standard of care therapy. So we're not taking anything. And so that really allowed us to nicely leverage a data set that could give some context to the Phase IIa study. I will say that right, whenever -- especially in IPF, you're working with smaller-sized data sets, and of course, then you're running a synthetic control arm. I think what I would take away from the Phase IIa study is a true signal of clinical activity and a signal of disease-modifying potential without actually saying that we've identified exactly the Delta FVC or the exact effect size that we hope to achieve. And I think that this is something that we'll have to see in the ongoing Phase IIb study, but that's also why the ongoing Phase IIb study is powered quite conservatively relative to the effect size that we saw in the Phase IIa. The second question that you had was really on the kind of right the dosing. And what I would generally say is we've spent a lot of time with clinicians and patients as well as patient groups. And I think the feedback in general has been that an oral drug, a pill that you can take twice a day is very convenient. And this actually based on a number of pieces of feedback overall has been perceived to be more convenient than an inhaled therapy. And based on the effect that we've seen to date, we think that we're achieving really nice concentrations of the drug based on the modeling in the lung. And so we haven't really seen a strong reason to consider an inhaled approach. Of course, I think that if you have a drug that's tough to tolerate oral, then turning it into an inhaled makes a ton of sense. So then it's mostly in the lung and it doesn't go out into the periphery or if you have a drug where the efficacy is limited unless you take it inhaled, that would make a lot of sense. I would say, of course, we'll always be open mind to then look at data, but the oral approach appears to be working quite nicely so far.

My next question will be the... Yes, we'll prioritize question from the audience?

Just a short question because we do see there is a lot of other candidates that perform well. I mean positive as we see change in Phase II, but the Phase III is not so fascinating. And we are just wondering how would you differentiate -- of your molecule with these recent drugs to cure?

Yes. That you're absolutely right. There have been a relatively large number of IPF studies, where the Phase 2 shows a really nice effect, sometimes even an improvement in lung function. And then when development has continued to Phase IIb or Phase III, that effect is no longer observed I would say the key issue around those studies is that they are 12-week studies that ultimately don't translate into an effect. And part of what's happening here is inflammation is part of the disease of IPF, but it's not ultimately what drives the mortality in our view, right? It's the buildup of fibrosis over the longer term that causes the decline of lung function and unfortunately, why people succumb to the disease. Now many of the mechanisms of action that are pursued in IPF have a very strong anti-inflammatory effect. And so over a short period of time, over a 12-week study, reducing swelling may be able to improve the lung capacity. But if over the longer term, the fibrosis continues to build and you don't address that profibrotic drive. Unfortunately, the longer-term result will be different than that shorter-term effect. And we believe that's why many of the studies did not translate well from Phase II to Phase III. I am not aware of any other Phase IIa study like Vicore's where it was conducted over 9 months. So this is very close to the 12-month Phase III endpoint, and I think that it significantly derisks the drug relative to those prior development courses.

The IPF landscape has evolved with the recent approval and new data coming from the competitors. What's your overall perspective on the current landscape? And how is your mechanism of action differentiated from other late-stage products?

Yes. So as I mentioned, because IPF is such a tough disease, 3- to 4-year mortality, I think it's actually quite nice that new therapies are available. Nerandomilast, which was approved late last year, while it doesn't have an effect size that appears to be highly differentiated from the current standard of care, does appear to have better tolerability than the current standard of care. The feedback we've heard from clinicians is that it has GI side effects, but they're gentler, and that's consistent with the Phase III data set that BI disclosed. And so I think that's a nice offering for patients, and it's great to see that there's more available but we have not yet seen a transformation of the landscape in terms of an effect size that does anything beyond incrementally slow the decline of lung function nor have we seen a drug with a fully clean tolerability profile as well. So I think as I mentioned at the outset, there's really a lot of space still to have a therapy that can be more impactful on both sides of the coin. And the other point that I would make is this is an area where it's unlikely to be a 1 winner take the whole market. IPF is quite heterogeneous disease and both clinicians and regulators are of the mindset that combination therapy makes a lot of sense in this space. So I think that we're going to -- as hopefully, we have more successes in IPF think about dual therapies as we're running in our Phase IIb IPF study as well as maybe even further combination from there.

Thanks very much. If there's no further questions, we'll conclude the presentation. Thank you so much again for the presentation. Thanks, everyone, for joining.

Thank you, Mary. Thank you, everyone.