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

Good day, and thank you for standing by. Welcome to the Xbrane Biopharma Q3 2022 Report Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Martin Åmark, CEO. Please go ahead.

Yes. Thank you very much, and hello, everybody. We're going to present the Q3 report of 2022. And we can go onto the next slide. So first, let me have a look at our development portfolio, and I'll talk a bit about the progress we've been made on the respective programs during the quarter. First, of course, we have our presented biosimilar candidates Ximluci and similar to -- it's called Xlucane previously, the development name, but the brand name in Europe is going to be Ximluci. So we now call the product candidate Ximluci. And I'll get back to Ximluci particularly on the coming 2 slides, but we'll comment on the other programs. So we have then Ximluci biosimilar candidate, which we now develop together with Biogen. Here, we are going through a process of scale up of the production process, together with Biogen but also together with our contract manufacturer, AGC Biologics. next milestone is really going to be during the course of next year to successfully perform first scale-up batches, something which we will then get back to when we are achieving. And after that, it's going to be about taking programs further into clinic. On our oncology portfolio biosimilar candidates to Keytruda and Darzalex, we are advancing from a development perspective. We are getting towards finalization of establishing the production process like pilot scale on our deal by similar candidates, Xtrudane. And we are in the course of selecting an adequate contract manufacture for the drug substance. we want to do still during the course of this year to be able to initiate the process of tech transfer and scale up for this program. For our biosimilar candidate Keytruda and Darzalex, we are going to fund out the pilot scale process during the course of next year and then proceed towards scale up. And as we talked about in the recent Capital Markets Days, we have an ambition to fiber to a commercialization partner for these 3 programs during the course of next year. So we are in the process as well. We have a couple of discussions ongoing with the interested partners, so its very exciting, of course -- yes And then getting back to Ximluci, 3 years the rough time line. As most of you are aware we got the positive opinion from CHMP in September, which will lead to an approval in Europe but in November this year. And then the product can be launched across Europe starting in the first quarter of next year. We're going through the process now of producing launch material together with the contract manufacturers to be able to support our commercialization for the startup in the launch. And the approval is expected to be around the Biogen only. So as some of you know, the originator I have 2 presentations of Biogen and pre-filled syringe what we are going for with regards to the biosimilar is a Biogen,and that's also what we're now producing commercial volumes, of course. We have developed a pretty good change, which we intend to take to market later.So it's something which should we plan to seek approval for at a later stage or after getting the formal approval of the Biogen. So that's something which we are going today to come back on during next year. Then with regards to the U.S. and the regulatory process there, we have had a meeting with the FDA. We cannot confirm or I know that we shall resubmit the BLA during this year.so during this quarter, essentially. And we're working -- We are now to compete everything we have to do for resubmission. And then we should count on 12-month regulatory process with regards to the FDA and then therefore, expect to have an approval in place towards fourth quarter of 2023 and then after that, enabling a launch of the product by Bausch + Lomb. But now really looking ahead for the launch in Europe, very exciting, of course. And Europe alone is a very significant market when it comes to the VEGF inhibitors for retinal disorders the EUR 4 billion market, just going through a very interesting to see how quick the uptick is going to be of Lucentis biosimilars, generally speaking.specifically how the sales develops on industry. And for those of you who were able listen in on the Capital Markets Day, we have Bryan Kim, the Head of Specialty Business at STADA, presenting a little bit generally about the setup wording start of the biosimilar business and what they've done in the past. There are 5 biosimilars on the market already. And what they now are doing to prepare for a successful launch of Ximluci. So if you haven't listened to that yet, I think that's very interesting to hear. But there are preparations ongoing, of course, we're going to a stage in terms of preparing all the training materials we used with physicians and the patients and a ramp-up of sales force that is going to be deployed and for the specific products. So a lot of preparation is ongoing and we believe that product is getting itself ready for a successful launch of the product in the first quarter of next year. And just to reflect back on the Capital Markets Day that we held apart from Bryan speaking about Ximluci and upcoming launch. We also had David Vikström, our CTO presenting our technology platform more in depth. I think that was very interesting. And we're making good progress there. 10 approved patents, 15 pending and 5 of the approved patents is also in the mammalian protein expression field, which is being applied for our oncology biosimilar candidates. So that's very interesting. And also, we reiterated our previously stated ambition to get to cash flow positive state by the end of next year or beginning of '24, something we still believe is feasible, and it is our clear ambition and in that also our ambition to our patent to oncology portfolio through the course of next year and to get some core financing for continued development of this program. So if you haven't listened Capital Markets Day yet, I think that's the well time spent. Okay. Then in the near [transition] we are going to participate in at least 2 Capital Markets events on the one hand, Jefferies in London in November and then DNB at their conference in Oslo in December. So we hope to be able to meet many of you on some of these occasions. I think that we are going to be able to participate in a few other conferences as well, but this will have to come back. And on the team front, we're growing as an organization. We're now 74 professionals. We're growing with maintained strong culture, I would say, and strong satisfaction or high satisfaction amongst the workforce and low turnover and high scores on most others Great Place to Work survey, which we're now doing dearly. So I think we see continued easy time actually to attract competent people to our organization, which, of course, is key given the activity we're conducting. Yes. So I think that's, that when it comes to an operational update. And I will hand over to Anette on the financial side.

So thank you, Martin. And before diving into the financials, I would like to express my apology. We understand that we have a technical issue, and you are not likely to see the slides. So just after this, we will do a Q&A on the phone lines, just switch to that. And also, we will post the presentation on our website immediately after this. And you can listen into the recorded version. So sincere apologies for that, and we're not really sure what's happened. But rest assured that you will be able to see the slides. So looking into some of the financials, our total capital expenses increased with 28% in the quarter, and is mainly caused by the production preparation as Martin mentioned for Ximluci. Also the R&D costs of the remaining for Ximluci related to regulatory work and also the expanding portfolio in which both the 11801 as well as the oncology portfolio is now accelerated. As many of you would remember, it's only Ximluci R&D cost, the remaining costs that are capitalized on the balance sheet -- the -- whilst the other costs related to the portfolio is expensed on the profit and loss. Looking at them the adding kind of the capitalized R&D cost looking like-for-like, you can see that actually we are now coming to close or hold on the R&D expenses, only SEK 3.8 million were put on the balance sheet in this quarter versus SEK 27 million last year. So the total value for Ximluci on the balance sheet as of September 30 was SEK 89 million or close to SEK 90 million. And also noteworthy is despite the fact that we are growing the organization, our G&A costs are still relatively low in percentage and also lower than last year. But last year, we had some one-offs caused by the move to our new premises. And last, but important, we leave the quarter with SEK 165 million in cash position. And as communicated last week, we managed to do a capital raise of SEK 170 million before transaction costs, this despite the very harsh market conditions. And we are very humbled by the trust of the confidence placed in Xbrane by our investors. But all the impact and effects of this rate will that obviously won't be visible on balance sheet nor on the equity side until the next interim report, which is due in February. With that, I think, if we can look at the operator to help us with some Q&A, please.

[Operator Instructions] There are no questions at this time. [Operator Instructions] And it comes from the line of Benjamin Billiard from Pergam.

I had a quick question, actually. So how do you ensure that the production is going to be flawless, basically, do you ensure you have the capacity? What's the risk about quality defects? How much control do you have over production partner? Yes, I mean, can you give more details around that part of the business, please?

Sure. So we work with contract manufacturers for all the steps in the production, and we select the best possible contract manufacturer for the specific product we're working with. And we prefer to go with contract manufacturers that have commercial products already on the market and on GMP certified by the main regulatory bodies. And then when it comes to the specific product approaching market, as is the case for Ximluci, of course, then by that time, the production processes are validated. It's part of the regulatory process, and we would have produced at least more than 10 commercial scale batches also as part of regulatory requirements. So by then, you kind of have come to a stage where you can produce reliably. And also we enter into supply agreements long in advance of producing commercial material where we essentially knock in production slots with our contract manufacturers to make sure that we have the required capacity to fill the demand of our commercialization partners.

[Operator Instructions] There are no more questions at this time. Please continue.

And we have 3 questions that came in over email. So let's read them up and try to answer the first one. pre-filled syringe at a later stage and the visibility on how fast that could be developed and go to market, is that still in 2023? Or will it be 2024? We'll have to get back on that from a development perspective. we have it developed, so to say, but there's a regulatory process that needs to be gone through. So we will have to get back during the course of next year with exact timing of a potential launch of the previous range. Next question for the Cimzia biosimilar candidate, can you go over how the current partnership is set that would buy and go over the economics of the deal, specifically, can you give a ballpark indication of the royalties that you will receive? Yes. So this was the event into February this year with Biogen. It was an upfront payment of USD 8 million. There will be a milestone payment of another USD 80 million during the course of continued development and then royalties on sales, we did not disclose the exact figure, but rather refer to -- yes, what is common practice for preclinical deals. And the split of responsibilities which is rather important. And this deal is that Xbrane is responsible for development to the end of the preclinical face essentially successful scale up of the production process. And after that, Biogen takes over the development responsibility, including the clinical development. So as we also talked about some debt at the Capital Markets Day, we feel that this is a very advantageous deal for Xbrane because essentially when we get the first milestone, we believe we can reach breakeven on that program since we're not going to have significant investments from that point onwards. So I think it's a very good deal from that perspective for Xbrane. If you look at it at the return on investment perspective, it's really good. Okay. Next question. Can you also go over what stage the Cimzia biosimilar candidate is currently? And what will be the next news flow items on this specific project? And to go through, as I said, the scale-up process together with our contract manufacturer, AGC and we expect to successfully run the first scale-up batches during the course of next year, and that will also be the point in time when we communicated that as a milestone. That's relating to be the next communicated milestone on this specific program. So there were 3 questions that came in over e-mail. Someone having difficulties to call in or to ask a question, we had a phone line. Any other questions on the phone?