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

Good day, and thank you for standing by, and welcome to Xbrane Biopharma presentation of year-end report 2022. [Operator Instructions] I would now like to turn the conference over to CEO, Martin Åmark. Please go ahead, sir.

Thank you very much, and welcome all of you listening to our call where we're going to present the Q4 report of 2022 for Xbrane. So first, is going to provide a brief update on our different biosimilar candidates in our portfolio, progress we've made during 2022 and what's ahead of us during the course of 2023. We start with our Lucentis biosimilar, I think we made a great progress during 2022. Of course, most importantly, we got an approval from EMA for the product so that it now can be launched by our partner [ STADA across Europe ] which is going to take place this quarter, and I'm going to come back to that in the later page. And we work a lot on the BLA for a regulatory submission to FDA for approval in the U.S. As all of you are probably aware, we had to withdraw the BLA during the course of 2022, and we'll be working since to complete it based on feedback from the FDA, and we are now telling to resubmit the delay during the course of this quarter. So I would say that this work is going according to plan, and resubmission will happen this quarter. We have also started to work together with STADA and trying to take the product to other territories beyond Europe and North America. And one such territories Middle East and Northern Africa, where STADA has their own sales and marketing infrastructure and the process of seeking regulatory approval in this region has started. STADA submitted the file to the authorities in South Arabia during this quarter a couple of weeks ago. And we are planning to submit the file in remaining key countries in Middle East and Northern Africa and during the course of the first 6 months of this year. So we hope that we, together with STADA [ to launch ] the product in this region at the beginning of 2024, it's going to be very exciting, of course. We're looking beyond that as well, together with STADA in Southeast Asia where STADA was [ active ] in sales and marketing infrastructure and we are also looking at other territories where we together need to find the third-party distributors [indiscernible] in Latin America and China and Japan. That's very exciting, of course. But I'll come back and talk to you a bit more about the imminent launch of Ximluci in Europe. Moving on to our Lucentis biosimilar candidate, we are now working together with our partner, [ Biogen ] and our production partner AGC to scale up the production process and to produce clinical material to target for this year and also, of course, Biogen is preparing for -- initiate any clinical trials on the biosimilar candidate. So I hope that during the course of this year, we'll be able to get back on a successful scale-up and production of clinical material, unless we then are able to get with [ Biogen ] and take the next step into -- into clinic. Then when it comes to our oncology portfolio, first, our biosimilar candidate [indiscernible] here during 2022, we made great progress. We now finalized the process development here in-house, as I explained what we call pilot scale, and we are now in the process of selecting a production partner, and this has been a big job for us here in 2022 to source and find [ Xtrudane ] production partner, now we're close to finalizing that. And then, of course, the next step is as what we're doing with our Lucentis biosimilar candidate to do take transfer to the selected [ contract manufacture ] and scale up the process and reduce clinical material. I think -- that is a process of approximately 2 years. So I think in the beginning of 2025, we're going to be in a position to take of -- [ finalizing ] the candidate into -- into clinic. That is -- I think the proper timing in order to be able to get approval by the time of U.S. patent expiry, which is December 2028. That's really what we're targeting from a timing perspective. Of course, also very interesting work that we have ahead of us during this year is to design the clinical trial for this biosimilar candidate and engaged in discussions with the regulatory authorities around that design. So that's another interesting work for this year and this quarter. When it comes to our biosimilar candidates to Keytruda and Darzalex and we are finalizing the cell line development and are going into process development in-house here at Xbrane and we are going to finalize process development for one of these products through the course of this year and then be in a position to take a similar step into contract manufacturer, take [indiscernible] like what we now are doing [indiscernible] going to happen at the beginning of '24. I think we're making a good progress on oncology portfolio. And of course, also, as we've said before, this is the time where we [ open ] would like to find a commercialization partner. So we're also in that process. And discussing this -- the portfolio with the [indiscernible] and able to finalize something, as we said before, also during the course of this year which is, of course, are important for us to be able to get some [ co-funding ] in the form of license for this continued development. That's a brief update on where we are standing on the different programs. So we go to the next slide. But most important right here, right now, of course, the imminent launch of Ximluci in Europe and the U.K. So this is very exciting, of course, for the whole team here, [indiscernible] there was a development that started in 2015, really. So many people have been deeply involved in this development during the last 7 years or so as you can imagine the excitement when this finally can come to market and be beneficial for patients. And this is a big market opportunity, EUR 4 billion market, roughly speaking in Europe, if you think about it as retinal anti-VEGF. So that includes the same [indiscernible] the centers and EMEA in roughly [ 4 billion ], but that's leaning the way we view the addressable market for this product. It's more that in growing with an 8% [indiscernible] for the last couple of years. And we believe it's going to continue to grow and actually grow quickly than historically, at least from a volume perspective going forward due to the low orders of biosimilar to [ Lucentis ]. And we have worked very closely with STADA during 2022 to prepare for the launch. Of course, one part of that has to do with producing the launch material, which coming to an end. Now and also for STADA to prepare their organization for the launch. And I think that we're very confident that STADA will do a great job in commercializing this product and that they're not -- in prepared for a good launch. They have vast experience from launching and commercializing biosimilars in Europe with a handful of products on the market for quite some time actually. So they have an established organization, of course, and long experience from these sources. They're very confident that they are going to do a great job [indiscernible]. And we reported that the -- this is a product, which of course bring great value to patients and to the society and demonstrated the product which is equivalent to Lucentis with regards to efficacy and safety [indiscernible] administration and so on and so forth. And Lucentis is a product which the community has great experience with under the vast amount of experience and clinical data on usage of Lucentis, which brings comfort to the product amongst the [indiscernible]. However, of course, Ximluci is going to be much superior option to Lucentis and Eylea in this sector is going to be a much more cost-efficient alternative which is really main point here, of course. And we've seen what that can do in [indiscernible] for biosimilars and other classes of drugs. We've seen treatment based [indiscernible] increased by 100% or double essentially the years after launch of [indiscernible] biosimilar and [ massive savings ] being realized for the payers, which is -- savings that can be redirected to more [ novel ] and hopefully more efficient treatment. So I think this [ purpose ] will both increase accessibility in Europe, now in Chile for this kind of treatment and realize you having a big value to patients as well as the society. And as far as really leveraging their long heritage and experience reputation of high quality supplier of biosimilars and other pharmaceuticals across Europe, I think that brings comfort for the stakeholders in the market. And also that we have for the European supply chain I think also helps which this company is the quality of our products. So we're excited and looking very much forward to the launch, which is now going to take place in a couple of weeks only. And we are, of course, going to update further on that in a call for our Q1 report. And also we are going to speak in a couple of Capital Markets Day arranged by Redeye onto the 24th of February, [indiscernible] in March, and a couple of other events and also in those new centers, we also seek care more and more about how the [indiscernible] is progressing. So I think we can interact with all of you as shareholders in the company in these occasions. We're also growing from an employee perspective. Coming out of Q4, we were about 80 employees in the company. And we're doing that with main [ base ], strong culture and of course the spirit in the company. We are certified Great Place to Work with a very high score so-called trust in the [ corporate ] measuring. That I think a great accomplishment by the team here today to maintain that line of growth as we are. And I think we have an easy time still to find and recruit talent. I think the company has a good reputation in Sweden. And I think we benefited also historically from [ couple of reductions ] in the industry leading to talent coming available in the country. That's good to see as well. So with that said, I'm going to leave over to Anette to provide an update on financials.

Thank you very much, Martin, and good morning, everyone. Gonna take the first slide on the -- yes. For those of you who've been with us for a couple of times now, you would remember that we have by -- on the expense side, a bit of an awkward -- if you could say an awkward [ view ] that we capitalize some of the R&D expenses as of July in 2021. And that means that it's hard to tell from a cost perspective, really how much is spent. So if we look at what expense on the P&L, we have a number of things. First of all, Ximluci, a much less part of the total spend is now put on the balance sheet because Ximluci is really moving into the commercial phase and then the costs don't really justify to be capitalized any longer. The second, prepare, so commercial activities for the launch have accelerated, the natural -- because of the [indiscernible] launch in a couple of weeks. We also see intensified activities across the remaining portfolio for [indiscernible] 1008, the biosimilar candidate to [indiscernible], where we are in deal with Biogen, and we are accelerating that work to be able to provide the preclinical material and then the rest of the oncology portfolio as well. Looking at G&A only that have increased by SEK 5 million, and that is really continuing to build the company as Martin said. The next slide, if we compare like for like on the cost side, the red bar in the bottom being what is capitalized, you really see how much that is put on the balance sheet for Ximluci. That said, the costs still have increased with roughly around SEK 35 million or 44%. So the total value on the balance sheet as of now for Ximluci is SEK 102 million, which is obviously needless to say, far from its market value. The next slide, please. From a cash perspective, we leave the quarter with SEK 194 million in cash. That is obviously including the capital raise of [ Xbrane ] that we did in November. So that actually generated SEK 170 million before transaction costs and obviously, this is a result of significant prepayments that we've done to our CMOs to be able to provide raw materials both for the stock build -- raw materials for the oncology portfolio for Cimzia, it will be [indiscernible] 1008 and also for [ soft ] build for [ Ximluci ]. And looking forward, we communicated in the report that we have also be aimed to outside -- look for a commercial partner or development partner for -- for the oncology portfolio during 2023. And by that, I'll leave back to Martin.

Yes, I think that brings to the end of the formal presentation, so we can open up for Q&A. So anyone who wants to ask a question over the phone can do that now.

[Operator Instructions] And the question is from Mattias Häggblom from Handelsbanken.

Thank you so much. Mattias Häggblom from Handelsbanken. I have a few, please. So I'm curious to hear if we would isolate cash flow from Ximluci only, how long-erm launch in Europe to breakeven from a cash flow point of view? Would you expect that to be -- I guess it's earlier than for the group as the group carries G&A cost R&D expenses for the other projects? That's the first one. I am going to add another one.

Yes, as we said previously, we target to reach breakeven for the company, first quarter 2024, and that still holds true. If you were to isolate the Ximluci breakeven would occur earlier as you say, the G&A expenses exactly when that will occur, we cannot expect to comment on.

That's fair. And then you state again the target of reaching cash flow positive in '24. So help me think of the path from the base in 2022 of an outflow of close to SEK 200 million to the positive. Should we think about a more kind of linear improvement? Or is this going to be very back-end loaded as you reach the inflection point and turn cash flow positive?

I think it's not going to be completely linear. I think it's going to be more of an uptick during the second half of this year because naturally, there are still economies in particularly, I would say, in the sales and marketing part of the Ximluci P&L, so to say. So when we gain more volume as per plan during the course of second half of this year, I think that's when you kind of -- we see a pickup and will quickly pick up in terms of getting towards cash flow positive. That's one piece. The other piece is, as we also wrote in the quarterly report that we need to be successful in finding commercial partner for the oncology portfolio during the course of this year in order to get the cash flow positive stage during first quarter of next year and as we spoke about, we're getting into for the biosimilar candidate process of scale up construction of clinical material, which is a rather less capital intense process. And following the timelines, which all go into that process for the other 2 biosimilar candidates in low-quality portfolio from beginning of next year. So naturally, that whole portfolio will -- if we are continuing the development [ or consume ] quite a lot of cash. So we need to how commercialization work in place towards the end of this year, we care for that [ growth ] and in order for us to reach that goal of getting cash flow positive first quarter of next year.

That's clear. And the final one I had, any updated thoughts on timelines to first in man for BIIB801?

Yes. I think we're looking towards third half of '24.

The next question from Dan Akschuti from Pareto Securities.

One question would be regarding supply chains and commercial supplies. Can you confirm that this is all going well and in place and not -- but there is no risk from that side for any delay of the launch in Europe?

Yes, I can confirm that that's going well, and there is no risk with regards to delay due to material supply.

Okay. Thank you very much. That is clear enough. And another question is, as we heard this week that Biogen with its new CEO seems to have some talked about strategic reorientation that would also potentially include the biosimilars portfolio that they have. Do you have any mitigation strategies in case Biogen would decide to divest its biosimilars portfolio and as of now, I would assume that you don't see anything in terms of your interactions with Biogen?

I mean we have, of course, talked to Biogen about this after their announcement earlier this week. They remain committed to this program, we're working on together with them and to their biosimilar business generally speaking, but they don't view it as core and looking for another [indiscernible]. We have the trust in that part of the value in that business is development portfolio, including our Cimzia biosimilar candidate and bidders or buyers for that business also will use it in that manner, and I do want to continue to invest into continued development together with us on that program. So that's kind of the signals we're getting and what we're planning for. And of course, we have no more clarity on timing of this than the public market, let's say. So we'll have to wait and see how that goes. And I think it's only when eventually this business gets to new homes, so to say, we can reevaluate if we're facing any other kind of risk in relation to that and how we invest [indiscernible].

Okay. One more question would be -- Yes, related to the prefilled syringe. It's -- I know I ask this often, but I think that would be a key differentiator, obviously, and everyone is trying to somehow work on it. So I just understood from the presentation that there have been more expenses related to the development of the prefilled syringe. Could you give us maybe any kind of timeline when that could appear?

Yes, exactly. So I agree with you. I'll just take a step back for everybody. We're now launching Ximluci as a vial and the originator, Lucentis, has 2 presentations, one vial and one prefilled syringe. We've been working on the prefilled syringe for quite some time, and that development is coming towards an end. And we are considering when we could submit that initially in Europe. And then when we think about the [indiscernible], it will be the vial only and the prefilled syringe will come as a variation to that application. So I think that one could reasonably expect that this will be early as second half of '24 with regards to a potential launch of the prefilled syringe across Europe and the U.S.

Okay. That's very helpful. And my last question on the oncology portfolio. Is it past the cell line development stage?

Yes, exactly. There are few biosimilar candidates, we finalized the process development at pilot scale here, and we're now getting into the stage of tech transfer scale up together with the CMO, and we are at the end of that selection process. So we're going to come with an announcement as soon as an agreement is signed with selected contract manufacturers like what we did with -- Cimzia biosimilar candidate when we signed an agreement with AGC on that one. On the 2 others on the Keytruda and the Darzalex biosimilar candidate, we're finalizing the cell line development, and we're now going into process development here at our in-house lab. And the first of these 2 products, we expect that we're going to have finalized the pilot scale process development for the end of this year.

Okay. Then we could probably expect the partnership sometime in '24 than, I guess, for that?

Well, our aim is -- and our partner has always been tried to do a portfolio [indiscernible] biosimilar portfolio and as a package I would say. And -- we have an ambition to do that during the course of this year. So that's really the ambition for all of these 2.

The next question from [ Joseph Hedden ] from [ Rx Securities ].

Joe Hedden from [ Rx Securities ] here. Just wondering if I could ask your thoughts on the competitive environment for Ximluci with a couple of biosimilars already approved in Europe and -- and your thoughts on the dynamics and are there any others behind it? And then perhaps your some kind of thinking on your internal estimates of what proportion of the anti-VEGF market in Europe you think you can capture in the long-term?

Yes. This picture hasn't changed so much actually during the years when we've talked about this, there are 2 other biosimilars too, Lucentis approved in Europe. It's the program with German developer Formycon and the commercialization partner [indiscernible] and then something [indiscernible] with a partner variant. And so there are going to be 3 biosimilars to Lucentis in Europe and that has been our expectation, so to say, for quite some time. And we are targeting, and we do believe that we together with the [ partnership ] be able to capture, let's call it, our fair share of that market to sort of the generator biosimilar market to Lucentis. We think about it strictly as the Lucentis thing. And we've shown that graph many times in our presentation how the penetration of the volume share of the biosimilar versus the reference products have evolved over time at the launch of the biosimilars. And after 3 years or so, I think in all of the situations, there's a market share of above or penetration of about 60% volume-wise. So that's our expectation is that over the course of 3 years, that the biosimilar [ Lucentis ] will really take 70% to 75%, we believe of the Lucentis sales and that then we together with STADA will capture a part of that generating biosimilar market, of course, as you of course, no price discount to the originator. So our expectations haven't really changed that much now when we are at the launch in comparison to how we've described we think this will pan out in the last couple of years.

There are no further questions from the phone. I will hand back for questions from the webcast.

Good. Then we will proceed with the questions that came in here over the chat. First one, you mentioned launch volume for Ximluci have been manufactured. That is include also release process. Can you comment on this? Yes, it's due to also release process. So this is even though remaining risk in the introduction of launch volume. How -- next question, how competitive does the situation in Europe look like? Will it be the first biosimilar in market? Well, of course, we can tell -- I describe this now, the other biosimilars that are approved in Europe, the Lucentis. And -- and I think that one of them has been launched in select countries and the other one is being launched approximately at the same time as what is expected from Ximluci. The next question, could you further clarify using the same timeline, even is in time? And is there any problems or delays occur with the completion, be more like H1 or H2 -- '23 as a [ contemporary ] cost -- R&D costs for the full year '23? Okay. [indiscernible] struggling with timeline. There are previous question that first half of '24, I think the expect the clinical trials to commence on this biosimilar candidate due the course of this year is about cleaning up and producing clinical material. And yes, this program will consume more R&D costs during the course of this year, as we've said, before when we reached the first milestone and have completed our obligations versus [ Biogen ] with regards to the development. This program will go into cash flow positive stage, but it's not going to happen or [indiscernible] at the end of this year than the beginning of '24. That the way it looks like. So it will consume more cost and cash during the course of this year. Okay. Next question. Congratulations for completing Xbrane pilot scale process, but this completion mean that also analytical similarity of [indiscernible]. We now evaluated for Xbrane process and pilot scale. And to comment a bit about the volume of competition situation. There seem to be not many publicly announced development programs. So -- Yes, I mean, when we conclude -- when we conclude the production process at pilot scale, we also ensure that we have sufficiently high degree of analytical similarity to the originator or to process into the scale-up. So yes. Next question. The competitive situation, I think it's too early to talk about really. I agree. There are not that many publicly announced development programs. But I would be very cautious to read too much out of that because there can be companies developing biosimilars to [indiscernible] without necessarily being too public about it. So I think really we should await until beginning of '25 or so when biosimilar candidates to placebo most likely are going to go to in then the situation will be much clearer. The next question. Since you are moving in the process upscaling of Xbrane, can you confirm that you have to ship [indiscernible]? Yes. [indiscernible] question. Well [indiscernible] have achieved an analytical similarity. If so, can you talk about how big your yield increase has been? No, this we're not going to talk about and review for competitive reasons. So next question. Have you received all the necessary documentation from your suppliers in order to resubmit to FDA? Yes, answer to that question is, yes, we are finalizing everything, and we stick to the plan to resubmit to FDA during this quarter. Next question. How is it that we haven't applied [indiscernible] in the U.S. yet? Okay. For that question [indiscernible] in fact, we submitted the BLA originally in March last year, but had to withdraw it due to some information deficiencies identified by the FDA. We announced that in May last year, and we have seen in the dialogue with FDA works to complete the file in accordance to general [ advice ] we have received from the FDA. So we're now in the process of being able to resubmit the BLA. Next question. Are you expecting any milestone payments under 2023 regarding existing or [ BIB801 ]? So our expectation is now that first or next milestone is going to come due in part of next year for this program. Any updates regarding Primm Pharma? Not really as of now. We're continuing the process of trying to divest this business, we have a [ new vial ] reduced the cost to almost zero in our Italian subsidiary. And so it's actually cash flow positive from that situation. But we're still working on trying to divest it no other immediate update on it right now. Next question. Given your current capacity in R&D, when do you estimate that you will add the next development project? [ Do we ] said that we have an ambition to start one new program annually, and we stick to that ambition. However, we started actually 2 new programs in the end of 2021. So I think only towards the end of this year, we are going to be able to bring in new programs in our portfolio. Good. Okay. I think that, that concludes also the questions which we received over the chat here. We're always available for further questions, should you have any. You can reach out to us over a phone or e-mail. And as I said previously, I hope that we get the opportunity to meet and interact one or several of these capital markets events we're going to participate in the near-term future. But with that, I think we can thank you all for participating and conclude today's call.

That conclude the conference for today. Thank you for participating.