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

Thank you, and good afternoon, everyone. I'm very pleased to hear that we have over 100 participants on this webcast. So really thank you for that. So this morning, we announced the acquisition of Global development and commercialization rights for Cantrixil, a clinical stage ovarian cancer program, building, therefore, critical mass in our oncology pipeline. Over the course of the next hour or so, I'm looking forward to sharing with you the strategic rationale for this move and our excitement about it as we believe it marks an important milestone in Oasmia transformation. And as usual, we will be hosting a Q&A session at the end of this presentation. Slide 2, that I will not ask you to read. Slide 3. So today, I am joined by Dr. Reinhard Koenig, who is our acting Chief Scientific Officer, who has been working for quite some time for Oasmia. And since this is the first time that you hear Reinhard, I would kindly ask him to present himself in a few words. Reinhard, the floor is yours.

Yes. Thank you very much, Francois. Hi, everybody. So I'm Reinhard Koenig, and I'm a medical doctor [ at ] training and a pharma and life sciences professional. I have about more than 25 years of experience in the United States and Europe in the field. All of my career, I have been developing products from early stages to approval international in several indications. And I've held positions with companies in the U.S. and Europe in various capacities, mainly in product development, regulatory and general management. Back to you, Francois.

Thank you, Reinhard. So let's move to the Slide #4. So today, as I said earlier, we took really a bold step forward by announcing the acquisition of the global rights of Cantrixil, our drug candidate from Kazia Therapeutics Limited, an Australian biotechnology company. This licensing has been very carefully considered. And really, it builds on our proven development and regulatory expertise in ovarian cancer. As you all know that we have been able to register successfully Apealea in Europe. Furthermore, we plan to evaluate the potential of Cantrixil for synergy with Apealea and with our technology platform, XR-17, down the road XR-18, which is also, in some other words, a double shot at once. We are really particularly excited by this licensing agreement as it is a part of a wider strategy to transform Oasmia into a sustainable specialty pharma company. This is the first of several envisioned product, compound acquisitions, aiming at beefing up our pipeline. This is really the first step of our, what I would call, our string of pearls strategy. And having said that, I will pass the floor now on Reinhard on Slide 5, please.

Okay. So in the next few slides, I will be discussing some of the scientific background of Cantrixil and will paint a picture of its properties. On Slide 5, let's talk about Cantrixil at broader overview. Cantrixil is the first-in-class, third-generation benzopyran, targeting CD-44+ cancers, initially ovarian cancer. And as you know, already, Oasmia already has considerable experience in ovarian cancer through the development of our lead program Apealea. Cantrixil has shown promising results in preclinical developments. And those are activity against ovarian cancer stem cells as a key driver of chemotherapy resistance. It's been shown that Cantrixil monotherapy inhibits tumor growth in a model of aggressive ovarian cancer. And it has been shown that Cantrixil and standard chemotherapy combined effectively against chemo resistant cancers in vitro and in animal experiments. Most recently, top line results were published from a clinical study, a Phase I clinical study. And -- so the highlights of the study were intraperitoneal (IP) application. The study objectives, by and large, were achieved, so the maximum tolerated dose was determined. And a partial response and a complete response were observed. Generally, the compound was well-tolerated. But since this was only a top line disclosure, we are waiting for a peer-reviewed publication that will discuss the entirety of the results. Next slide, please. Let's talk a little bit about the market case for ovarian cancer. As we all know, it's a major medical unmet need with a high rate of recurrence. And from a business perspective, this is a market that is growing globally, about 295,000 women are diagnosed or were diagnosed with ovarian cancer in 2018, which makes it the eighth most common cancer in women. Many of those women, probably more than 70%, have a relapse within 3 years from diagnosis. In the market size, according to the measures that we looked at are considerable about $6.7 billion. Now how does Cantrixil work? In order to discuss that, I want to give you a little bit of background on ovarian cancer. Broad strokes, of course, no scientific minutiae. But overall, the cancer stem cells play a key role in tumor recurrence and resistance. Cancer stem cells are able to self-renew, differentiate and initiate and maintain tumor growth. Very often cancer stem cells are drug resistant, leading to tumor recurrence and metastasis. And in the indication, the standard of care is still platinum- and taxane-based therapies with, a significant occurrence of drug resistance after first use. So that makes it a very difficult disease to treat, among others. So Cantrixil has shown potent anticancer activity. Sorry, let's go to Slide #8, please. Slide #8 talks about the preclinical results that Cantrixil has achieved so far. Cantrixil has shown anticancer activity in some of those experiments. And it has been shown that Cantrixil destroys cancer stem cells that under monotherapy, it inhibits tumor growth and aggressive ovarian cancer model, that there is an effect on the basis of Cantrixil with a combination of cisplatin in vitro and in vivo. And there has been an anticancer activity demonstrated across a panel of ovarian cancer cell lines across different histotypes. The IND-enabling profile was favorable for the compound. Next slide. How does Cantrixil work? It may be, and this is still an emerging area of inquiry, that Cantrixil exhibits a multifactorial mechanism of action in combating those cancer cells. One of them is the mitodic arrest that directly inhibits tubulin polymerization. Another effect is the activation of pro-death apoptosis pathways and other effects are the inhibition of pro-survival pathways. Those targets will need to be fully validated going forward. Next slide. In this slide, I am going to briefly discuss the Phase I safety and PK results. I don't want this to be too technical. So I just want to state that the maximum tolerated dose in this clinical study was established as 5 milligrams per kilogram. And that adverse events were assessed, of course, in this study, and there was an incidence of abdominal pain, fatigue, vomiting and nausea. All of those data, please keep in mind are very early. They are from a Phase I study and cannot be extrapolated at this point. Overall, the pharmacokinetic profile is predictable and there is no accumulation of the compound. Next page, next slide. So in the Phase I study that I referred to earlier, it was also reported as a top line report late last year. Cantrixil showed positive efficacy and safety signals. Again, very early signals, not final results. It was shown that the -- that out of 16 patients that were evaluable for efficacy, one patient showed a complete response and 2 patients showed a partial response. Generally, the compound was well tolerated with the mentioned GI toxicities, abdominal pain, vomiting, nausea. So this is an overview over the data of Cantrixil, both clinical and preclinical. With that said, I'm passing on back to you, Francois.

Thank you, Reinhard. Thank you for this explanation. So let's move to Slide 12 now. With the addition of Cantrixil to our product portfolio, we are building our critical mass in our oncology pipeline. You all know that Apealea has been approved in Europe in -- for adult patients for relapsed platinum-sensitive epithelial ovarian cancer, but also primary peritoneal cancer and fallopian tube cancer. You also know that a commercialization deal has been now announced with Inceptua from Elevar and commercialization will start this year. You also know that we -- Elevar is making significant progress with regard to the registration in the U.S. Now we are about to enter the clinics with docetaxel micellar in metastatic prostrate cancer. And obviously, we continue to work hard on adding new candidates to this pipeline through in-licensing, initially focused on oncology. And the transaction today is certainly the first of a planned series, our string of pearls acquisitions and licensing in (sic) [ in-licensing ] deals. So let's move on to Slide 13. So I'm very happy to report that we have secured favorable agreement terms for this transaction, with an upfront consideration of USD 4 million. Development and milestones, up to USD 42 million for ovarian and we have not disclosed the royalties. They are sales based, as you would expect, in line with the standards in the biotech industry. The next steps that you're going to see over the next few weeks and months. Well, first of all, I find out at Unit II, there will be a peer-reviewed publication of the full Phase I results, not only the top line but the full Phase I, and then we are planning to initiate the Phase II next year. And why? Because we, first of all, need to secure an international drug supply this year for the -- for Cantrixil. We will be building up an advisory board. We have already started to talk to most of the leaders in the intraperitoneal fields also in the U.S. and we, obviously, we need to talk to the regulatory agencies in Europe, but also in the U.S. in order to disclose and validate our clinical plan, which is an essential part of our strategy. So let's move to Slide #14. So to sum up, we're really excited about Cantrixil. It's an exciting opportunity with the potential platform synergies, first-line tubulin-binding small molecule and with a potent cytotoxicity against CD-44+ ovarian cancer, but not only ovarian cancer, potentially bladder and colorectal cancer as well. This drug has the potential to improve the outcome in relapsed ovarian cancer. Reinhard showed the safety profile in IPUs as well as a favorable PK profile as well. That drug has got an orphan drug designation with the U.S. FDA that is always a plus. From a pipeline standpoint, we are in a safe position with the composition of matter patent protection up to 2035. And again, there is other opportunities with this compound in other indications than bladder. So -- and as I said earlier, there will be even an evaluation of the potential synergy with Apealea. Let's see what we can -- and I mean, I meant here IV formulation. And also with our technology platform XR-17/-18. So on the Slide 15. So I'd like to say that, clearly, this transaction demonstrates our ability to deliver -- this is the first step of a string of pearls acquisition and licensing deals. We have a strong cash position of SEK 287 million, that was disclosed by year-end. Many of you have been made familiar with our 4-pillar strategy for growth. And with this transaction, we've made progress against 2 of those 4 pillars, the Pillar 2 in red and the Pillar 4 as well. And thank you for listening to this presentation. I hope you share with us our excitement regarding to this compound, and I would like to open up to Q&A at this coming time. Back to you, operator.

[Operator Instructions] Our first question comes from the line of John Priestner at Edison Investment Research.

So I have a couple of questions, so I'll probably ask them one at a time. So my first question really is, so why was Cantrixil the best fit for Oasmia? And are there any current limitations that you believe the XR-17 platform is best suited to address?

Okay. I mean, first of all, we have, we believe, a decent level of expertise in ovarian cancer. So that's one point. And the other thing is that, of course, for a company of our size, Kazia was happy to give us this compound because it will be a very important product for Oasmia. So that's the rationale. Now in terms of limitations, I'm not sure that I really understood your question, sorry. If you could repeat it, please?

Yes. So just wondering if there are any kind of current limitations that you believe the XR-17 platform is best suited to address in terms of using them in combination together?

Not really. And well, first of all, of course, the development program of Cantrixil will be in IP, intraperitoneal, and at the same time, we will be testing, evaluating in vitro through the IV formulation, what we could do with our platform. But I don't -- I mean, we need to work on this.

Okay. That's great. So we can -- with the Phase II set aside in 2022, we can assume that will be for the unmodified Cantrixil. So I was just wondering if you could provide any details on really the clinical protocol in terms of maybe number of patients or whether there'll be a combination arm in the Phase II trial set to start?

Okay. Reinhard, would you like to address this one, please?

Yes. Thank you for the question. It's too early to make any kind of comments or commitments on design and locations. We'll evaluate that in the next few months, and then we'll get back to the market on this.

Okay. That's great. And just a final question, if I may. So this is obviously a very exciting announcement. I mean how many assets do you think will allow Oasmia to reach this critical mass? And when do you expect these additional announcements to come?

Right. That's a good question. A challenging one. Well, in principle, that we are not a one-trick pony, so this is the first comment I would say. And what we've done today demonstrate that even more. Now to your question on how many assets we need to have in order to have a decent portfolio. Well, I would refer to ultimately companies like Genmab, so you have the answer. So we will need to acquire a couple of more -- broaden our scope of activities, broaden the scope of the oncology candidates and mechanism of action. So in order to be -- to have this critical mass that is needed to survive in the biotech world.

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

Congrats on this deal. Certainly makes a lot of sense with your expertise in very [ intense ] complementarity with the Apealea. Just 2 questions on the Phase I study. I appreciate that there's not a lot more you can say about the data that's not been reported. But in terms of this publication, could you confirm whether the full 14 patients are going to be evaluable for efficacy in that publication.

Reinhard, please.

That's a very good question. The overall data set will be submitted for the manuscript, of course. I can't make a firm commitment, whether or not 14 or 16 will be evaluable. But obviously, we'll do our best.

Okay. And then staying on the Phase I study. We saw the progression increase in viable after the dose escalation and it suggested encouraging in comparison to historic chemotherapy rate for that particular last-line patient group. Can you say whether or not you had the chance to see the PFS data before you signed this deal? Appreciate it's not public, but did you see the PFS.

I'd rather not comment on that. So the answer is no. I'm referring you to the published data on this study. There is an abstract that is available on the web, and there is other information, previous press releases. But at this point, we don't want to discuss those specifics.

Okay. Sure. And just on the Phase II, you announced that you expect that in 2022. So that implies a fair time period until we get to the start of the study. What means -- is there anything that needs to be done? Any additional work you envisage before you get to that trial? Is that why there's a little bit of a delay?

In general, there is technology transfer from our partner that takes time. And in addition to that, we want to initiate an authority consultation process and want to get prepared for manufacturing-related issues. So that's going to take a little bit of time that we will need in order to initiate a clinical study.

Okay. That makes sense. And given the mechanism of action, conceptually, it seems to me that this drug is best suited as a first-line therapy or at least in an early line of therapy. So I mean, does that fit -- is that in line with your views? Is the Phase II first-line trial? Or not -- at least not in such a refractory population as this, where presumably, there's already so much resistance that the drug doesn't have as good a chance to work as it would maybe in first-line?

Right. This is a good observation. This is obviously a very difficult indication with many limitations from our study design enrollment perspective. So what we are going to do is we will consult with our key opinion leaders, and we will find the best population and protocol to run a Phase II study. So we're not there yet, but that's an ongoing process.

Okay. Great. And then I realize I've taken a few questions here. But just on the financial side of the deal, and I appreciate you're not going to disclose very specific details about milestones and royalties here. I just wanted to get an idea between development and commercial milestones and whether there is a milestone tied to the Phase II start?

Yes. Well, as you would expect, we haven't been disclosing any details of the agreement, that is industry standards from a royalty standpoint, and I cannot say more about the milestones.

We currently have one further question in the queue. [Operator Instructions] Our next question comes from the line of Klas Palin of Erik Penser Bank.

I just wonder if you could elaborate a little bit about possible cost that will be added to Oasmia in 2021 for Cantrixil. Also perhaps -- I mean I guess you will not disclose that much about the milestone package. But maybe you can say if there will also be a milestone payment when starting the Phase IIb -- the Phase II trial.

Okay. So we are -- we disclosed that by year-end, close to SEK 300 million in cash, and you know that we have reduced our bond [ rate ] significantly. So we have plenty of financial muscles to execute on our plan with Cantrixil and I cannot comment any further. With regard to the milestones/royalties, unfortunately, I cannot disclose anything on that. And which is not probably surprising to you, Klas, sorry for that.

No. Okay. And also, I mean, there's a lot of preclinical work done with this compound. I just wonder if the previous owners have perhaps been looking into combination with PARP inhibitors.

Reinhard, please?

Yes. I can't comment on what previous owners did, but this is certainly an area where we would be interested in getting input from our KOLs and see what the possibilities are. So the answer is yes, it's interesting and we'll evaluate it.

And then my last question is about -- I mean, you also mentioned that you want to evaluate an IV solution with your platform. Is that regulated in the deal that you have now signed with Kazia?

We're not at -- no, this is not. This is, let's say, an added benefit for us for the compound for Oasmia, for our investors and to evaluate further any individual work with regard to the added formulation. And potentially, whatever we could improve it with our technology platform. But this is totally independent from the deal with Kazia.

[Operator Instructions] Next on the line is [ Tonna Ilson ] a private investor.

Could you just clarify that this is, in fact, XR-17 a new API that you have referred prior?

Yes, we will be -- we have initiated some work with the technology platform in an upgrade manner, okay? So we -- I don't want to be necessarily specific. We will be using our technology platform and potentially the upgraded one in order to perform the necessary individual work with [ Avax in ]. So I think this is the answer to your...

I understand, but you have previously said that you will announce a new API and XR-17, and I just wanted to clarify that this is, in fact, that combination.

Well, this does serve that purpose as well. Whether this is a new API, I cannot comment on that. We are still working on another API as well as we speak.

Okay. Thank you for that. From what I understand, this is not chemo, and it is not intravenous. And it seems, from what I could read, there wasn't any toxic issues. So what would be -- what could be the advantages of combining it with XR-17? Because it's not the typical advantages that you would have from Apealea or other chemo combination.

I think there are 2 things. First of all, the Phase I has been performed intraperitoneal, okay? And the Phase II program will be intraperitoneal. Now this is, at the same time, we will be evaluating whether the -- an IV formulation could be exploitable and whether -- at the same time, whether we could and potentially improve it with our technology platform. So this is 2 different things.

Okay. And you also mentioned that you will be looking into combination therapy and not just a monotherapy. So if you would combine it successfully with Apealea, and it would be addressing first-line rather than relapse when that is all finished and done, how would that effect synchronized with your current deal with Elevar, considering it would include Apealea and Cantrixil?

Reinhard, would like to address this one?

Yes. So great questions, but the last question specifically is, obviously speculative and looking far out. So we are driven by research, and we will take the next steps, and we will find out if there is any synergy with our therapeutic regimens and then we'll explore them. We haven't really thought about potential business related transactions or interactions based on the Apealea situation. It is more a scientific possibility that needs to be validated. So at this point, we can't really comment on that in more specific fashions.

I understand that. I just figured it would be a game changer for Apealea, if we also moved Apealea into first-line and not just relapse. So I just figured it would have something to do with Elevar there as well.

And that's a great thought.

Yes. Okay. And my last question is considering the report you had recently, you disclosed that there is SEK 30 million worth of inventory and finished cost of goods. What are those SEK 30 million worth of inventory?

Well, I cannot comment specifically on that. This is part of our relationship with Elevar, and we are addressing that as well.

And we've got one further question in the queue at this time. That's from the line of Joseph Hedden at Rx Securities.

My followup, it was just on preclinical data in terms of -- now that you've licensed this product, how quickly do you think you could do some preclinical work testing the synergy, the potential synergy with Apealea? Would it be possible to see preclinical data from such studies in -- over the next year?

That is a great question, and it's one of our priorities. So we are assessing the timing and we'll then plan appropriate preclinical work and get back to the market on this.

[Operator Instructions] There seems to be no further questions at this time. So I'll hand back to our speakers for the closing comments.

Thank you very much for listening to this presentation and asking those questions. I hope you are sharing with us in our excitement with regard to this transaction, the first step in our string of pearls strategy. And we will continue to work hard behind the scene to evaluate other opportunities such as today's news. And we -- not all of them will get to the market. We'll get to the finish line, let's say. So -- but I appreciate your patience, your commitment to Oasmia. And I'm sure that we will have another opportunity to speak pretty soon. Thank you very much, to you all.