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

Welcome to the Vivesto audio call with teleconference Q1 2022. [Operator Instructions] May I present today, CEO, Francois Martelet. Please begin your meeting.

Thank you, and good morning, everyone. This morning, we released our Q1 2022 results, which we will be going through this presentation. And as usual, we'll run through the highlights and the financials and then take any questions at the end of this presentation. So I'm now on Slide 1, which is a forward-looking statements that you should be aware. Slide 2, I have with me Fredrik Järrsten, our CFO. And let's move to Slide 3. So the first quarter of 2022 has seen us delivering sustained operational progress. And specific highlights include a successful rights issue, raising SEK 151 million to drive the development of our current business and programs. We also -- and I know that Fredrik will continue -- will go through that, we continue to reduce our operating expenses. We have announced a manufacturing agreement with Lonza for clinical trial material for the Cantrixil Phase II study, and, at the same time, an upgrade of the Uppsala research and development facility to support and succeed development, especially for the IV formulation. I am also pleased to report that the Phase Ib docetaxel micellar study recruitment is so far on track. And even more importantly, the Apealea launches in Europe are expected to happen during 2022. More about this a bit later. And Elevar is also reviewing an optimal development strategy for the U.S. market. We've made progress with the development of our drug delivery technology, XR-18. A novel candidate has been identified. Research agreement has been signed off with Visikol, which is a U.S. CRO. We have appointed Daniel Tesfa as our Chief Medical Officer; and Kai Wilkinson as our Chief Technical Officer. There will be a new Chairman and Board members that have been also proposed post period end. And finally, we continue to focus on our string of pearls strategy in order to expand our oncology portfolio. On Slide 4, so in a very difficult financial market conditions, we've been able to successfully raise SEK 151 million through a rights issue, therefore, strengthening significantly our financial position to drive the development and value of our existing pipeline. And this is absolutely a key step towards building a Nordic oncology powerhouse focused on how to treat a late-stage cancer. And let me take here the opportunity to thank our shareholders, our current shareholders, our new shareholders for their support, which is greatly appreciated. Slide 5, please. So as you know, and this is a reminder, so Cantrixil is the first of our string of pearls in licensed from Kazia last year. As a reminder, this is a tubulin-binding small molecule with potent cytotoxicity against CD44 ovarian cancer stem cell and ovarian somatic cancer cell, which are both resistant to standard chemotherapies, which is why it has an orphan drug designation status in the U.S. And I have to emphasize the capability of the drug, the potentiality of the drug against stem cell. Positive Phase I data was presented at the AACR conference in 2021 and published later on in the journals of cancer. We are now working and planning the Phase II for the U.S. and also in Europe as well. I'd also remind the incidence of ovarian cancer continues to grow. In 2020, there were about 314,000 new cases of ovarian cancer worldwide. The global ovarian cancer market is, therefore, expected to grow, I'd say, compound annual growth rate of close to 20% from now on until 2025. Slide 6. So as I said, we have ambitious plan for Cantrixil over the next year as we prepare to go into the Phase II in advanced ovarian cancer. And that includes -- we continue the interactions with our experts, scientific advisory boards, which are made up of key opinion leaders in Europe, Australia and in the U.S. in order to guide us on the design of the Phase II. We have also plans to hold talks with regulators to discuss endpoints and appropriate data for submission. These early interactions with the regulators are absolutely key and should help and will help to derisk the program. Cantrixil at the same time is a complex drug to make, which is, of course, on the positive side, a high barrier for entry. During the quarter, we signed off a contract manufacturing agreement with Lonza for a large-scale production of main drug, intermediate material for the Phase II clinical study, and, as I said earlier as well, we expanded our research and development lab capabilities in Uppsala, especially for Cantrixil. Cantrixil is very exciting. We believe there is -- this is a pipeline in a product. And it has really a great potential in other CD44+ cancer as well. Slide 7. Another promising in-house project is docetaxel micellar, which targets advanced prostate cancer. This is an IV formulation of the widely used cancer drug docetaxel, also known under the brand name of Taxotere. And by using our XR-17 delivery technology, we, therefore, aim at eliminating the need for solubility enhancers, potentially, therefore, improving the side effect profile and eliminating the need for additional drugs for many patients, such as corticoids. Our Swiss partner, SAKK, is running the Phase Ib study in 3 major hospitals in Switzerland with the aim of recruiting 18 chemotherapy-naive patients. SAKK has a target of completing this trial by the end of 2022. We're also working on expanding the IP around docetaxel micellar, and we are evaluating a formulation using our improved drug delivery platform, XR-18. During the quarter, we have announced that the first patient had fully completed the study. Furthermore, the first 2 of 3 dosing groups in the trial had been successfully recruited and the first patient for those group 3 is in a screening phase. And obviously, we look forward to updating you as the trial progresses. Slide 8. As I mentioned to you earlier, we are also excited about the potential of our drug solubilization platform. With regard to XR-18, our scientists in Uppsala have identified and synthetized a promising novel drug candidates for using the platform, and this is already being tested in combination with a widely used oncology compound. Now we, unfortunately, cannot disclose more information about it at that stage for obvious competitive and commercial reasons. During the quarter, we were pleased to announce a significant expansion of our IP portfolio linked to XR-17. Building on these advances post period end, we announced a signing of a research agreement with Visikol Inc. to evaluate the cellular effects of new and existing anticancer drug formulations developed using the Vivesto XR-17 and XR-18 technologies. As a result of this research, we will be able to assess anticancer compounds formulated with our XR-17 drug delivery platform as well as line extensions formulated with our XR-18 technology. Slide 9. I know that you are all expecting the launch of Apealea in Europe, now it's coming. And Inceptua is planning to launch Apealea first in 2 key markets in Europe, which are the largest markets, U.K. and Germany. The Apealea U.K. launch is perfectly on track and packs are now -- will be available before end of June of this year. And Inceptua has secured a lease price with the Department of Health and Social Care of the U.K. The German launch is slightly delayed versus original plans and is now expected to happen at the early time frame of H2 2022, still on track fundamentally. Inceptua is also evaluating launches in other European markets. And therefore, we believe that we will receive our first European royalties this year. In the U.S., Elevar is reviewing an optimal development strategy for Apealea, and also for competitive reasons, I cannot disclose the precise chemical design. Slide 10. You will certainly have seen that our Nomination Committee has proposed some changes to streamline the Board to 4 members without any deputies. In addition, the Nomination Committee proposed the reelection of board members, Hege Hellström and Peter Zonabend, and the new election of Pål Ryfors and Roger Tell as board members. Peter Zonabend, representing Vivesto's main shareholder, is proposed as a new Chairman. Anders Härfstrand, Andrea Buscaglia and Birgit Stattin Norinder have declined reelection to the Board. These proposed changes will be voted at our AGM later today. During the quarter, we also announced that Dr. Daniel Tesfa will be joining us as our Chief Medical Officer in July at the latest, and Kai Wilkinson has been promoted to the management team as the Chief Technology Officer. Slide 11, and I'm turning to Fredrik to comment these slides.

Thank you, Francois. So turning to our finances, a few key numbers on Page 11, give a snapshot of our performance in Q1. So we have continued our cost savings efforts, and we show operating costs totaling SEK 21 million. That is a significant reduction since Q1 2021, when we had SEK 34.5 million in operating costs. It's also a reduction since Q4 when we had SEK 31 million in costs. So we're very pleased with that continued development. We reported an operating loss of SEK 26.3 million. Now that is also an improvement since Q1 2021, when we had a loss of SEK 41 million. We had operating cash flow of negative SEK 22 million. So that's equivalent to a burn rate of approximately SEK 7.3 million per month, which is also well below our previous target of SEK 10 million per month. We had cash and cash equivalents at the end of the quarter of SEK 74 million. That does not include the net proceeds from the rights issue, which we received after the end of the quarter. If we include that of SEK 135 million, cash position would be SEK 208 million. So just on -- further on the rights issue. So that was, as you know, completed in Q1. We raised gross SEK 151 million before issue expenses of SEK 16 million. With that, we strengthened equity with SEK 135 million. We then have a very solid financial position with an equity/asset ratio of 94%, and we can also conclude that we have no debt on the balance sheet. So a very solid financial position going forward. Thank you, Francois. I think that's it from my side.

Thank you, Fredrik. So Slide 12. On this slide, you can see that we continue focusing on building our proven capabilities to make us a more attractive partner for innovative assets. Our core capabilities include product, clinical development, business development and regulatory affairs. So therefore, we do have all the functions of a small pharmaceutical company. Ultimately, we are aiming at building our pipeline with new late-stage oncology assets using different mode of actions in order to spread the risk. And once we have -- once this development process will be completed, we always will have the option to commercialize our product through global collaboration or, in some cases, to undertake direct commercialization ourselves for certain niche products in Europe. Slide 13. So this is an important slide. So looking ahead, we have multiple catalysts to drive near and midterm value. Apealea initial launches in Europe, which is happening now as we speak in the U.K. and very quickly afterwards in Germany. Further partnering with Elevar, obviously, there will be the Chinese partner is --in sight. Potential initial revenue from royalties as well. This is absolutely key, and we will, therefore, belong to the limited club of biotech companies having royalties coming from an approved product. Docetaxel micellar, the Phase Ib completion of the enrollment and the initiation of another trial with XR-18 constitute certainly another set of milestones to achieve. Cantrixil intraperitoneal injection, preparation of the Phase IIa as we speak, and we'll be also working on preclinical and proof-of-concept work on a new formulation, the IV formulation, which also constitutes a number of different catalysts compared to Apealea and docetaxel micellar. And of course, above all, we are planning to expand our technology platform through our internal in-house development, XR-18, in particular. Right. So in summary, and this is Slide 14, we have now completed fully the turnaround of the company. The last step was to change the name of the company, which has been done. And with the recent fund raising, Vivesto is well capitalized to fund existing operations over the course of the next 18 to 24 months, which is also something very significant if we look at the market, at the biotech market in Sweden. We do have capabilities in place to build a diversified pipeline of program by executing our string of pearls strategy through in-licensing and M&A. Ultimately, we are aiming at building and developing a diverse pipeline, creating multiple shots on goal in order to decrease the level of risk linked to clinical development in oncology. We've built a strong platform to attract innovative partners. And also, obviously, we do hope to be able to attract new specialists, institutional investors to help us to grow this business. So this is my last slide. So at this point in time, I will pass the floor to the moderator for questions.

[Operator Instructions] The first question comes from Joseph Hedden, Rx Securities.

First one on Cantrixil. You've established part of the manufacturing process with this deal with Lonza can you just remind us how many steps are left to secure the full manufacturing chain? And are you looking at agreements with different companies? Or could this also be done with Lonza? And what do you think the timeline of completion of that is? Secondly, on the PA, you mentioned Inceptua has secured a U.S. -- U.K. lease price. Could you tell us on those, please?

Right. So on the -- your first question about the Cantrixil manufacturing process. So Cantrixil, yes, is indeed a difficult product to manufacture, which is actually quite great because, of course, it is a significant buy to -- for any other compounds in a similar class to entry. Having said that, as I said, we have signed off a great agreement with Lonza for drug substance. We will be also involving 2 other manufacturers in order to complete the drug substance process. And then we are in a stage of working for drug products. We hope to simplify as much as we can, the manufacturing chain. That is obviously our objective. And we will certainly update you at the next quarterly conference about those -- this progress. But we were actually very pleased to have been able to sign off this agreement with Lonza, which is a very solid, well-known manufacturer. So on Apealea, well, this is run through Inceptua, as you know. And so we are actually pleased that, obviously, launches are now happening. The U.K. will be first and it's imminent, okay? With regard to Germany, there were kind of an administrative issue that did produce a very slight delay, but not really significant overall. And Inceptua, we will obviously announce that through a press release when the first packs will be indeed launched. With regard to other markets in Europe, so this is the next step for Inceptua, so they are evaluating a number of other key European markets in which Apealea can be and will be launched. And we will be updating you as soon as possible.

Okay. And just anything on the U.K. price?

Well, I'm not -- I don't have any authority to disclose that at this point in time. For obvious competitive reasons, given the Taxol being generic in the U.K.

Your next question comes from [ Per Anderson ], private investor.

I was wondering regarding the timeline that you presented now. On your web page, you have a similar timeline presented from the Anglo Nordic Life Science Conference, the presentation there. And in that, you presented a more precise timeline for the U.S. phase FDA trial initiation. Then you stated late 2023 in that presentation. Has that changed?

Well, we are in constant discussion with our partner Elevar in the U.S. And recently, I don't know if you're aware, but there is a significant change in management at Elevar. And I actually even discussed last night, the matter with the CEO of Elevar. And really, they absolutely are reluctant to disclose any precise information on the U.S. strategy for competitive reasons. It's not that we are hiding anything, it's that this is a very competitive field in ovarian cancer. That's the reason. And there is obviously some frustration also on your side, I understand that. But it is as it is. It is an extremely competitive situation.

But the information in that presentation late 2023, where did that information come from then?

Yes. Yes, absolutely. Yes. Yes.

That was the indication you have at that time that it could be at the end of next year the trial would be initiated?

Again, we will release any information which relates to the start of the study from Elevar. So this is in the hands of Elevar.

So the information...

And I cannot comment any further.

That information, you shouldn't -- that was not reliable, that it stated late 2023. That was incorrect.

It's -- no, no. But the planning process is still ongoing. And therefore, we give you information when we get it. And then afterwards, planning may change, but there is an absolute commitment of Elevar to pursue a U.S. registration strategy with Apealea, which is the most important thing.

But could it be delayed indefinitely by Elevar again and again? Could we be sitting here in June next year and you're just giving the same statement that you're giving now?

I cannot comment on that one. You know that every year, we -- there is a conference call together with the Elevar CEO. That hasn't happened this year because of the change of the management. But that will be the topic of a conversation that will be held with Elevar at the right time. So -- but I cannot comment any further. I'm sorry for that.

Regarding Cantrixil, if you look at the same slide with the timeframe, should we interpret that planning of the Cantrixil Phase 2 will be initiated late 2023, almost at the beginning of 2024?

For Cantrixil, as I said earlier, we are in a process to finalize the drug substance manufacturing process. And then at the same time, we are working on a drug product process. Now as of today, the timeline that you referred to is correct. But obviously, it all depends on the way we will be able to manage the drug product process through another manufacturer or the same one that we are using for drug substance. So this is where we are. What is important? It's not necessarily if there is a delay of 1 or 3 months, it is important to secure a proper, very professional manufacturing chain for Cantrixil. This is the key issue.

Yes. And at the present time, you predict the end of 2023?

At the present time, I am telling you that we continue to secure the drug substance manufacturing chain together with a drug product, and we will come back to you with a more precise time frame when I will know it.

Okay. My next question is regarding the collaboration with Karolinska Institute. Last year, you stated that result of that collaboration regarding the potential of the platform would be communicated before the end of last year. What has happened with that?

We have decided to continue working with Karolinska. At the same time, we have signed up an agreement with Visikol, which is a U.S. CRO, in order to look for the cellular mechanism of the platform. And then based on those results, we will continue to work with Karolinska, and we will report the progress at that time. So -- but there is nothing wrong with the work with Karolinska. I mean this is a 2-step process actually.

Do you have a timeframe you could give on that when there will be a communicated update?

During the next year, that we will communicate that. Yes, we will communicate the report on both the work from Visikol and KI as well.

Okay. Your list regarding potential value drivers, you have removed divestment of AdvaVet. Does that mean that the divestment is highly unlikely to ever take place?

No. The -- we continue to pursue the best strategy with regard to animal health portfolio. We have actually -- we continue to work with U.S. experts in this area. U.S. people who have a lot of expertise in the vet business. And we'll update you at the right time.

Okay. And my final question, can you comment at all for the reasons for the Board members leaving?

Well, no. I mean this is a decision made by shareholders. So I cannot comment on this one. What I can tell you is that management will be looking forward to working with the new Board.

The next question comes from [ Frederic Harbin ], private.

I would like to ask, do you have any expectations of a milestone within -- coming from the Elevar agreement within 2022?

Yes. I mean, certainly, there are milestones that are in the making for Apealea. Whether I would make a formal commitment on the timeframe, no, because it's not in my hands. It's actually in the hands of Elevar and the authorities as well. But this is -- I mean, I can tell you that we will update you as soon as we have that to happen. But yes, I mean, don't even think that Elevar doesn't work on that, there is some work ongoing on that.

All right. So I interpret you as there could be a milestone within 2022, but nothing is for sure. Is that what you're saying?

You see milestones are -- in this licensing agreement, depends on geography approval essentially and on indication approval, okay? So unfortunately, indication or geography approval does not depend on me, it depends on regulatory bodies. But when we work on that through Elevar.

I see. And the next question, do you expect to get any sales estimate from Inceptua for the [indiscernible].

Yes, you know that Inceptua is privately held pharmaceutical company, and they don't provide any guidance on that. And there won't be any public guidance on Apealea sales at all.

There are no further questions. I hand back to you speakers.

Thank you. Well, let me conclude this quarterly call that if I look at the Swedish biotech market, we are in a fortunate situation. And why, because we have money in the bank in order to pursue our operations. So this is really a significant point that I would like to emphasize. And two, we are launching Apealea. And the first royalties will be expected by year-end on the U.K. and German launches, which is something that is also very significant if I compare to any other biotech company in Sweden. So with these 2 strong points, I would like to thank you for attending this call, for your confidence in us delivering milestones and royalties throughout our partners. Thank you.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.