Vivesto AB (VIVE.ST) Earnings Call Transcript & Summary

Good morning, everyone. So I'm delighted to go through the strategic update as a follow-up of our press release this morning. This is Slide 1. If you could turn the page to Slide 2, the forward-looking statement that I will, obviously, not describe. Slide 3. So just as a reminder, so what is Oasmia? So we are an innovation-focused specialty pharma company. We do have a proven track record from a regulatory/commercial perspective, and I will go through that in a minute. The company has been founded in '99. Headquarter is in Uppsala. We've been listed at the NASDAQ Stock Exchange in 2010. Market cap is around SEK 3.5 billion. And today, we've been just listed into the micro-cap index of the stock exchange. What is our [ USP ]? So we have XR17, which is our unique technology platform, and I will go through that in a minute as well. We've been able to register and launch Apealea in -- approved in Europe and a number of CIS countries in ovarian cancer. We are in discussion with the FDA for a U.S. approval. And very importantly, we've been able to secure a global commercial deal with a U.S.-based company called Elevar worth about USD 700 million without counting the royalties. Another feature of Oasmia is that we have an R&D and GMP-certified production facility in our headquarters in Uppsala. And as many of you know now, I've been onboard since March of this year. So if you could turn on Slide 4. So Slide 4 shows you the management team as well as the upcoming Chairman of the company; Anders Härfstrand, who has a lot of experience in pharma and biotech as a senior executive in Pfizer, Pharmacia, Pharmacia & Upjohn as well. And I'm also very pleased to announce that Birgit Stattin Norinder has been -- will be appointed to -- at our EGM tomorrow as a Board member. She has an extensive experience from also international companies and biotech companies with a special focus on regulatory. And she's a Board member at Hansa Biopharma AB, AddLife AB and Jettesta AB. From the management standpoint, I'm pleased to let you know that Elin Trampe has been promoted to the position of Chief Technical Officer, with a lot of experience, past experience in production, mainly at GE global operation. And Reinhard Koenig has been appointed Acting Chief Medical Officer. He was previously our GM for the U.S., for our U.S. operations. He's a medical doctor, PhD as well and has a lot of experience in this industry. So this is where we stand from the management and Board standpoint. On Slide 5. Yes. So this strategic review was launched relatively short after my start in mid-March, once we have secured the deal with Elevar. And the overarching goal is aiming at unlocking the potential of this company. So as you know, so we did this global partnership with Elevar that really is a transformative event for the company, enabling us to rethink, refocus on our priorities. And as I said -- as I will say a little bit later, the overarching goal of the company is now to build a long-term cash flow profitable specialty pharma company based in Sweden, obviously, through in-house R&D, but also through M&A and in-licensing. On Slide 7, yes, I would like to remind a little bit what is our XR17. So XR17, this is our vitamin A-based technology platform that rely on a proprietary nanoparticle formulation that is designed to facilitate the administration of IV-delivered pharma ingredients, is called API, without the addition of toxic solvents. So XR17 is based on a mixture of derivatives of vitamin A, basically. And what does that do? Well, that does increase very significantly the solubility of those API, so you have on the left-hand side on the slide, you have the API, which is usually water insoluble. And this is a great issue in the pharma world, the solubility of the drugs. And together with the XR17, which is a nanoparticle, a molecule, we can basically constitute, we can add micelle by encapsulation of the API, that is becoming water soluble. And this is this technology that is quite unique. Other technologies are on the marketplace, but we have this ability with XR17 to lead to a water solubility that is quite unique in the industry. And that the impact is the lowering of the side effect profile in the patients. On Slide 7, fundamentally, our XR17 platform has 3 legs, 3 legs of use, basically. The first one will be on [ piece ] oncology, and today with Apealea in ovarian cancer, as I said earlier, but there are also some other indications we can pursue with paclitaxel, basically, in lung or breast. And we will initiate some discussion with our partner in order to secure a clinical development path for Apealea. But at the same time, we have also docetaxel that we can use through the platform, especially in prostate cancer. That also will benefit of this unique delivery technology. But at the same time, there are also other therapeutic areas that can be benefiting of the platform such as anesthesiology. For instance, propofol is one example, a good example that needs to be water soluble. And we have certainly initiated discussions with a number of partners in that area as well. And the third leg of the XR17 platform is the animal health business. So we do have, as a kind of a mirror of our human pipeline, we have an animal health pipeline. And we are also evaluating this pipeline in order to strategize it. Okay. So let's move on Slide 8. So Slide 8 shows you the -- our portfolio, our pipeline, basically. So you see the ovarian cancer indication approved with Apealea, paclitaxel, and Paclical in the U.S., approved in Europe, under a review process in the U.S., and approved in a number of other countries in Russia and CIS. What I would like to emphasize on this slide, Docecal, docetaxel, that we are planning to develop in prostate cancer. Hopefully, in a couple of weeks and months from now, we'll be able to report on that. And we have also what we call XR19, which is a combination of 2 APIs into a micelle. So that will be the next step for XR17 platform. That will be an upgrade if we are able to encapsulate 2 APIs in 1 micelle because we know that in cancer, most of the cancer treatment are using 2 drugs. And if we could do that, that would certainly significantly help the patients from a side effect standpoint. On Slide 9, this is a summary of our deal with Elevar. So that was transformative for our company. HLB is a South Korean-based company with a market cap of around USD 3 billion. So let me just remind you the terms of the deal. We received in April $20 million as an upfront payment. The milestones are based on regulatory approval and sales achievement, geography achievement as well, up to $678 million. And on top of this, we have a double-digit royalties agreement with Elevar based on sales. The important piece also is that we retain the full right of XR17 in other APIs. So therefore, we keep all the rights of our core engine at Oasmia. And I think that's important. So fundamentally, we can conclude all the deals with other APIs in other territory with other molecules and other companies. Right. So let's move on to Slide 10, which is the purpose of this call today. So this strategic review, as I said earlier, was really triggered by the completion of the Elevar deal. And we reviewed all aspect of our business, from a structure standpoint, from an HR standpoint. And the outcome consists of a cost control program in order to free up more resources to invest in future growth. And let me tell you a little bit more detail on what that consists. So we will be focusing more on R&D and clinical GMP manufacturing, as opposed to commercial manufacturing. So that means that we will be scaling back on manufacturing operations with our external supplier and that includes also some shutting down of our commercial facility in Uppsala. From a key growth standpoint, so that will result of a cost saving of more than SEK 100 million per year. And the translation will be also a significant reduction, 50% of our burn rate, below SEK 10 million per month. On Slide 11, I would like to really emphasize that this new strategy of the company, which is to embark on a path aiming at delivering long-term profitable growth. So we really would like to build a platform based in Sweden that is cash flow positive as a specialty pharma leader. So how are we going to do that? Well, by continuing exploring other opportunities with our XR17 platform in oncology, but not only, in other therapeutic area as well, by upgrading this technology, as we call XR19; by developing strongly our pipeline, namely Docecal in prostate cancer; and by continuing to leverage our GMP manufacturing facility, mainly for R&D and clinical trial production. And obviously, we would need to expand our pipeline through acquisitions and licensing deal, and I mentioned here, late-stage assets that will be certainly the goal of the company. So all in all, we believe that at Oasmia, we are very well placed for embarking on this path. So this is Slide 11. And at this stage, I would elicit to questions from the audience.

[Operator Instructions] And our first question comes from the line of Franc Gregori from Trinity Delta.

When you talk about the restructuring and the cost savings, are there any significant costs that you have to incur before you start doing the cost savings? To achieve a 50% reduction, I presume that there must be some upfront cost to achieve that.

Michael, would you like to take this one?

Yes. We have just embarked on this process. We do know that there will be some cost, but it's way too early to say how much and when. We do not think that they will be very significant on the other hand.

Our next question comes from [ Ingemar Krierson ], a private investor.

I just read some about the -- how you're working with the strategic handling the XR17 with both in-licensing products. And when you talk about in-licensing and using other APIs in combination with XR17, does this mean that you are encountering obstacles on the way when you are discussing the XR17 with other potential biotech companies out there?

No, absolutely not. I mean you know that we generate new formulations attempted coming out of the XR17 platform. So the fundamental question for us is to choose the right ones in order to make them water soluble and then basically patent them, embark on a development path and then find a partner. I would say that the sky is the limit, to be honest. But we -- so we have a number of options on that side. And we are currently in discussion, as I said, outside oncology with a number of partners in order to produce for them an API that is water soluble and then we can patent it. So no, the sky is the limit.

I have another question. You mentioned before from the company that there have been some effects on the rollout of Apealea. How is the COVID-19 affecting this rollout? Is it still -- is it a stop? Or is it a half speed? Or what is happening regarding the cohort when you have it regarding the COVID-19?

Yes. The COVID-19 has certainly been a significant impact on our activities for the launch of Apealea in the Nordics. We do experience a significant slowdown. It is still the case. It will continue for a while. And we are shifting our strategy towards more digital marketing. We are using a number of tools like that. But we are still very much dependent on this external situation.

I have one more final question. You mentioned some about Docecal. The study that was presented last spring, when you look at it from outside, we see that, well, almost nothing has happened when it comes to Docecal. But can you -- can you evolve some of the thoughts, ideas, what is going to happen in the short-term when it comes to Docecal?

Yes. So first, I started mid-March of this year. So please allow me to have a bit of time to review the pipeline and what we could do with it. But clearly, this is on top of my priority. And we are reviewing the clinical path now as we speak. And hopefully, I will be able to report at the next quarterly meeting, some progress with regard to Docecal.

Okay. And one final question about -- yes, I have one more. The animal health side. Have you -- can you say anything about that?

Yes. Again, we certainly will not be complacent with this as well. And the goal is to do something with the animal health business, either divest it or partner it. But be sure that I will not rest on this one.

Our next question comes from the line of Joseph Hedden from Rx Securities.

So on Apealea in the U.S., you mentioned discussions with the FDA. What is your understanding of what the next steps need to be? Is the trial that you've already conducted to satisfy European approval, is that going to be satisfactory, in your view?

Yes. So you know that we have handed over to Elevar that part of Apealea. And we are in discussion with the FDA. I'm not in a position to tell anything more at this stage for reasons that you know very well.

And as there appear to be no further audio questions, I'll return the conference to you -- sorry, we do have a follow-up question from Franc Gregori from Trinity Delta.

François, I realize it's early days. You've only been there a matter of weeks. But can you give me some direction on where you see the business going? At the moment, the opportunities that you will have, as you say, the sky really is the limit. It's a broad acting technology. If you are going to develop, are you going to develop within oncology? Or are you prepared to go elsewhere if the opportunity is right? And that then leads on to the second part of the question, which if you're looking for in-licensing and acquisitions, whether that be products or companies, is there a specific therapeutic area that you have in mind for the longer term?

Thank you for your questions first. Well, certainly, with regard to oncology, we -- that was the initial focus of the company, but we would like to broaden that beyond oncology. And the XR17 applications is far beyond oncology. So yes, we are looking at other therapeutic areas and other companies and with different pipelines if we want to achieve that goal of becoming, one day, a cash positive profitable company, basically. So that's also the reason why I felt it was relatively important to be lean and mean at this stage. And when we have some cash in the company, and then we can carefully look at the right options that we have in front of us. Consolidation will happen in Sweden and in the Nordic country. That's certainly the name of the game, as you know, and we think that we are very well placed to embark on that path. But certainly, as you know, if we want to become a cash flow positive specialty pharma leader, we will need to broaden our scope of activity beyond oncology, and this is the intent as well.

And as there appear to be no further questions, I'll turn the conference to you for any closing remarks.

Thank you. So I hope that I was crystal clear today this morning with regard to the future of Oasmia. This is one of the many steps to come. And I will be certainly happy to come back with more news on the progress on our pipeline, on our strategy with regard to acquisitions. But I have to say that in Sweden, at least, we are relatively well placed in order to achieve that objective. And stay tuned. Thank you very much for your time.