Xbrane Biopharma AB (publ) (XBRANE) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Xbrane Biopharma Q1 2022 Report Conference Call. [Operator Instructions] Please be advised that this conference is being recorded today, the 5th of May, 2022. [Operator Instructions] And I would now like to hand the conference over to your speaker today, Martin Åmark. Please go ahead.

Thank you very much. Welcome, everybody, to this call when we're going to present the Q1 report of Xbrane Biopharma. Stop to apologize a little bit for my voice today. Maybe it sounds like I had a heavy night yesterday, but that's not the case. It's a pollen allergic reaction, so apologies for that. But we'll try to do the best out of this call anyway. So can I just start here with a reminder on our portfolio of biosimilar candidates we're working on. We have Xlucane, our Lucentis biosimilar candidate, which is currently in registration phase. We submitted the file to EMA in September last year and to FDA in March this year. And we're currently going through the regulatory processes to try to get towards an approval in Europe during the latter part of this year, and then in the U.S., most likely Q1 next year. We have Xcimzane, our Cimzia biosimilar candidate, which we partner up with Biogen earlier this year. We were happy with that arrangement and having Biogen as partner. And then we currently go through take transfer in preparation really for scale up together with drug substance contract manufacturer, AGC. And then we have our oncology portfolio, which is more early stage. So more early preclinical development of biosimilar candidates to Opdivo, Keytruda and Darzalex, respectively. So this portfolio together addresses roughly about EUR 2 billion of reference product sales if we look at 2021. So this is a slide that we presented earlier this year when we went through the Q4 report, and it's kind of the focus for this year on our different programs quickly, as I walk these through and talk a little bit about what we have achieved during the first quarter and what we intend to do during the remainder of the year. We start with Xlucane. Then, as I said, the BLA or the marketing authorization application to the FDA was submitted in March. We're currently waiting for acceptance of the agency of the application, and we will communicate when and if that happens, most likely during the course of this month during May. And then the formal process starts. We'll also be able to communicate them the date when the agency is targeting to make a decision with regards to the application. That's most likely going to be in March next year. Then with regard to Europe, we are going through the regulatory process as we speak. We received questions as per the process of day 120. So that was January. These questions were responded to, to EMA in April. And we are expecting, according to the process questions on day 180, which is done in June. And if all goes well, we were able to answer these questions, I think that we're looking forward towards an opinion by CHMP, the commitment in September, followed by, if that is positive, of course, an approval by the commission towards November. That's, roughly speaking, the time line. And we are then, of course, working very closely with our contract manufacturers and preparing for producing large volume for Xlucane that is really going to start late summer, post patent expiry of the main patent of the originator in Europe. But it's a lot to prepare to. We work on goal, of course, to make sure that the supply chain is fully prepared. And then there are preparations ongoing, of course, by STADA and Bausch + Lomb for launch, dependent on approval, of course. So I think overall, Xlucane is moving along according to plan. We're very excited, of course, to go through this very important year for this product and looking forward towards finally being able to see the product on the market. And Xcimzane, as I said, we're happy with having been able to conclude the deal with Biogen. And now, it's really about -- we kind of set the production process at pilot scale, but we're working with tech transfer to agency and preparing for scale-up really for the process. And then, of course, more intense preparation for clinical trials are going to be done during the year for, hopefully, being able to initiate trials during next year. But as you recall, under the terms of the deal with Biogen, initiating and conducting the clinical process is really Biogen's responsibility. And then on the oncology programs, Xdivane, our Opdivo biosimilar candidate, we have concluded cell line development. And we are developing the process at pilot scale, which we do here internally in our lab here in Solna. And that's going to be concluded during this year, after which we can start the process as we go through now with Xcimzane, take transfer and scale up at selected contract manufacturers. There's also work to be done during the year, of course, to select a suitable contract manufacturer for this product candidate. And our Keytruda and Darzalex biosimilar candidates we introduced late last year, they're really in early-stage cell line development stage currently. And we're going to initiate process development during the course of this year, but we will not be in it. So I guess that's a brief update on what we're trying to accomplish across our portfolio during the year and what we've done so far. We continue to grow from the staff perspective or team perspective. We now have 64 team members. And we're happy to see that, still, it's rather easy for us to attract talent to the company. So we see a lot of talent becoming available in the market due to reductions at other companies. And also, we see that there's a great interest in actually coming to Xbrane to work due to an increasingly good reputation in the market, which we are happy about, of course. And with regards to upcoming Capital Markets events, we're going to participate at ABG Life Science Summit in May, and then Pareto Capital Markets Day in September. And then we intend to hold our own Capital Markets Day in Q4 this year. I mean, as you remember, we held a Capital Markets Day in May last year, but we want to wait, hopefully, approval of Xlucane, to be able to hold this Capital Markets Day. And then being able to focus more on the launch efforts of Xlucane. So we want to hold back that Capital Markets Day in Q4 and focusing on that. So we'll get back on more details around that internal event. So with that said, I hand over to Anette.

Thank you very much, Martin. And this is Anette Lindqvist speaking, the -- I'm the CFO of Xbrane. I will take you through a couple of short update on the financials before we move to the Q&A session. So first of all, the total company expenses, we actually saw a decrease of approximately 20% during the first quarter in 2022. This is true and not true because for those of you who have been with us for a while, you would remember that in June or from July last year, we capitalized our development costs for Xlucane on the balance sheet. So this is obviously the net of cost. And what -- so that explains kind of the overall decrease. I should also point out that the G&A cost stays on a nice and fairly low level in comparison with the previous quarters. So if you -- we then look at the next slide, which is a like-for-like and year-on-year comparison, we see that the total operating costs have actually increased with 38%, which is obviously very natural as we move into the next stage with Xlucane, the efforts with Xcimzane, the activities there are increasing. And also, we do some exploratory work for the new oncology portfolio. So what could you see here that what's on the balance sheet in terms of Xlucane is the red bar. So in Q1, we capitalized close to SEK 13 million. And last, some cash update. We leave the quarter with a strong cash position of around about SEK 300 million. Of course, that has been supported by the -- the first upfront payment from Biogen that was received in March. So we leave the quarter with a strong position. And also the shareholder equity is close to SEK 400 million. So with that, I think that concludes the financial section. So we move to Q&A, so over to you, Martin.

Okay. I'm looking at the questions coming in here from the audience. But actually, this seems to have been crystal clear because there are no questions, as far as I can tell. We should wait a couple of seconds. So in case anyone has a question, please enter into the chat. Okay. Now there's one question. Can you please comment on the cash runway? Okay. So it's a good question. I think we came out of the quarter with SEK 300 million in cash position. And that will take us at least to approval of Xlucane. That's really what we're targeting as the next milestone. So that's probably what we can say. And then looking beyond that, it's going to be very much driven on the oncology portfolio and what we managed to do there from an out licensing perspective before we're going to scale up with the CMO of the first product candidate being the Opdivo biosimilar. So that's probably what you can say on that question now. Now there are a couple of other additional questions. So next question. What are the sales of Xlucane in Europe? And can you please remind me of the economics of the deals you have around this biosimilar. Okay. Okay. So let's see here. The sales of Lucentis, the originator, is about EUR 3.2 billion globally. And if you add EYLEA to that, you're getting close to EUR 11.7 billion for total addressable market towards sale. The terms we have with regards to the deals with STADA and Bausch + Lomb are the following. With STADA, we are going to share profits generated from sales 50-50. So that is really after subtracting production costs and sales and marketing costs at dollars and from net sales. After that, we share the profit generated 50-50. With Bausch + Lomb, it is profit share split agreed upon. So Bausch + Lomb is going to share a certain percentage of the gross profits with STADA. And the exact percentage, we haven't gone out with yet, but that's the mechanism. What we expect, and this I guess is based on the overall forecast of expectations from our partners, is that we shall be able to generate EUR 100 million of profit sharing to Xbrane third year post launch. So that's our -- and that is based on, roughly speaking, that on average, that Xlucane captures a 25% volume share across the main territories, Europe and the U.S., at the price decline, which -- or price discount versus originator current pricing that could then go up to 50% at year 3. So that's kind of the fundamental assumptions getting to those EUR 100 million. Okay, next question. The Board proposed authorization potential share issues. How do you view the current cash position with only Xlucane launching in H2, second half of this year. As I said, the current cash we have will take us to market approval of Xlucane. Post that, it's really going to be dependent on what we do and how. That is to say, alone or with a partner around the oncology portfolio.

And if I just may chip in, there's also a third moving target. And that's also the achievement of the milestones for Xcimzane in the Biogen agreement as well. So depending how that work is going and the achievement of those milestones will also be the third component, which is then obviously then also a moving target.

Yes, along with the expected milestones of Xlucane with the Bausch + Lomb arrangement on FDA approval and launch in the U.S., which are then expected to come during 2023. Okay, next question. Can you shed some more light on BLA submission since the end of March? Has there been any contact with the FDA? Okay. And so the file was submitted end of March. We had just 1 or 2 complementary questions from the agency so far. So we're really waiting now for the agency to accept the submitted file and start the process. And that could take anything 30 to 60 days from submission, so we will expect that to happen during the month of May. Your next question. Do you plan to start selling Xlucane in Europe right after marketing authorization has been granted? So that is -- in some countries, that is possible. In others, you have to wait on approval for pricing and reimbursement. So I think for different countries, it could be immediately up until 6 months post marketing authorization. Could you tell about additional questions from EMA, do you see answers will be accepted not causing delays in the approval process? Well, this one is a little bit harder to comment on. We received close to 150 questions from the agency. So I think we provided, to our assessment, good answers to all of them. But I cannot really comment more than that, I think, on this question. Next one, how does it look for new partners for Xlucane in Japan, China and Latin America? Yes. That's a good question. We are working on this together with STADA. As you probably recall, STADA Re has the commercialization rights globally ex China. So STADA has responsibility to fill up the gaps, so to say, in relation to what they can do with their infrastructure. And they're actively working to try to find partners in at least Latin America and select countries across Asia. So we hope really that we'll -- we're going to be able to update on this during the course of the year. Are you planning to seek any change in the designation for Xlucane in the U.S.? And so the answer to this is no. To our assessment, this was not really possible as per the guidance of interchangeability designation by the FDA because what is required is really switching study, looking at comparative pharmacokinetics, which is something you cannot really do with a drug injected into the eye and with a very low systemic exposure and high variability in the pharmacokinetic pattern. So it was not really possible to do as per the guidance. And it's not done by any of the expected to be competing biosimilars either. And I don't believe it would matter so much in this setting either since it's not a product going primarily via the retail channel, where the concept of the change would be most important. Next question. Can you elaborate on your view of the future business development of oncology biosimilars, please? Okay. Well, we are initiating dialogues with potential commercialization partners already now. We haven't put out a target. So the ambition is clearly to try to do a deal with a suitable commercialization partner before we go into clinic. I mean that's our business model and what we're going to try to achieve. But we haven't put a target to the external market when we plan to see that happen. But we are already now, even though we are in an early stage of development, as you've seen, we're starting to engage in dialogues with potentially suitable commercialization partners. Good. Okay. So I think that was the last question. So I'm glad that they finally came a couple of questions, good questions. Thanks, a lot for that. And we're always available. Should you have any follow-up questions, you can reach us via e-mail or on phone. But with that, I think we can conclude this call. And thank you all for participating and listening.

That does conclude our conference for today. Thank you for participating. You may all disconnect.