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

Good afternoon, everybody and good morning to any potential listeners from the U.S., and welcome to this webcast by reason of the press release we published on Friday. My name is Anette Lindqvist. I'm the CFO of Xbrane Biopharma. And it's my pleasure to introduce today's presenters. Par S. Hyare from Valorum Biologics and Martin Amark from Xbrane Biopharma. We will have a few slides to share with you today. And following those, we will open up for questions. [Operator Instructions]. So with this, without any further ado, Martin, over to you.

Thank you, Anette. So hello, everybody and we are holding this webcast with the reason of the news we released on Friday morning with -- entered partnership with Valorum Biologics for commercialization of our Lucentis biosimilar candidate which is going to go under the brand name Lucamzi in the U.S. And just a little bit of a recap for those of you who are not so familiar with us. We are a biosimilar developer located in Stockholm, Sweden. We're solely dedicated to development of biosimilars. You can see on the screen now our portfolio. The first biosimilar we developed was indeed this product we're going to talk more about today. But we also have biosimilar candidates, 2, [ Keytruda ] and Darzalex under development. So all in all, a portfolio, which addresses EUR 26 billion of originator sales. And just a few words about our Lucentis biosimilar, then Lucamzi brand name, U.S., Ximluci brand name in Europe. We have a partnership with STADA around this product, a co-development agreement, which was entered into 2018. And through that partnership, the product is launched by STADA in Europe and we are in the process of getting FDA approval and hoping for subsequent launch in the U.S. And that's where we are now together with STADA and enter into this license agreement with Valorum Biologics. So just a few words about the partnership with Valorum. So essentially, we have, together with STADA granted to Valorum, the exclusive commercial rights for U.S. for Lucamzi. And the agreement entails a license deal of up to USD 45 million. Now as is usual in this kind of arrangements, it's split up into an upfront payment and then regulatory and sales-led milestones. And then after that, we have an agreed royalty rate on net sales. And we have agreed amongst the parties not to disclose further financial details around this agreement but we feel that it's a good agreement for all parties with regards to the split of the economics and the future -- around future commercialization of the product in the U.S. What I think is important to remember here, is that Xbrane is doing this together with STADA under the co-development agreement we have with STADA. And hence, all payments coming from Valorum is shared 50-50 between STADA and Xbrane according to that agreement. Then separately, apart from the strict license agreement, Xbrane and Valorum has entered into a supply agreement, under which Xbrane essentially is responsible for supplying finished goods of the product to Valorum and we're doing that for supply price, which is essentially production cost plus a double-digit markup. Yes, that's the essence of the agreement that we now have signed and we're now very happy to [Audio Gap] just before startup but now also with Valorum Biologics to take Lucentis to the U.S. market and see it being launched and hope for that it realizes the commercial prospects, we believe it has. And then for you all to learn more now about who is Valorum Biologics and how Valorum Biologics view the product itself and the market opportunity, I want to hand over to Par, CEO of Valorum Biologics to go through a few slides here.

Great. Thank you, Martin. And I want to thank Xbrane and STADA for the partnership and for inviting me to join today. Valorum Biologics was really founded on the principle to provide value to markets that are currently underserved. Despite 45 biosimilars approved in the U.S., there remains a significant opportunity within the marketplace. What I'll be reviewing today is our team, our focus, the U.S. landscape and specifically how we view the anti-VEGF market within ophthalmology. Our team, very privileged to have a seasoned group of professionals joining us on this venture. As you can see, very large pharma experience, quite a bit of experience launching multibillion-dollar brands in the marketplace as well as developing them from preclinical all the way to global Phase III, then eventual approval. As you can see, J&J, Merck, Genentech, Roche across the slide deck. We also have recent biosimilar experience, particularly with our regulatory team and our manufacturing team, namely with Coherus, recent approvals and also manufacturing commercial supply as well. Coupled with our extensive management team and our broad pharma experience, we are very pleased to have what we believe is a very unique combination of large pharma experience added to us with large distribution experience. As you can see, we have past presidents from AmerisourceBergen, McKesson and Cardinal Health. Mark Santos, Mike Cunningham, Joe DePinto, have literally built some of the largest distribution and specialty networks here within the U.S. If you're familiar with U.S. commercialization, over 97% of all drugs sold within the U.S. fall somewhere within those big 3 umbrellas, either it's through the specialty wholesaler or through specialty pharmacies. So we have the unique convergence of big pharma and distribution to guide our strategies and to basically optimize our pipeline as we look at new assets to bring in. Coupled with the big pharma and distribution expertise, we have Wall Street executives that have helped cofound the company, Tim Opler, who is a partner and co-founder in Valorum but also as a partner and co-founder in Torreya Partners, an investment bank in New York, which was then sold to Stifel Financial. Tim is a serial entrepreneur and has started dozens of companies himself, raised over $1 billion in the public markets. Dave Barrett himself is also a Wall Street executive that has raised multibillion dollars over his career and started a number of companies with a number of successful exits. And both are guiding our financial efforts with fundraising, et cetera. Our focus is clear. With our first few assets, namely Lucamzi in the U.S. We are focused on regulatory approval to get to commercial. We are going to -- from our first few commercial assets build significant P&L, which will offer us the opportunity to add additional programs and become a market leader. And as I mentioned, within the U.S., there remains a major significant unmet need across existing markets that have biosimilars approved. And most importantly, across markets that have not seen biosimilar entry yet. The next slide is a nice schema from a recent report presented by IQVIA. In the U.S., you have $260 billion worth of biologic market opportunity. Currently, the top -- bold in the middle, square shows you the opportunity that is currently facing biosimilar competition, about $40 billion or so. At the time of this publication that represented 12 molecules. Currently, we have 14 molecules that have biosimilar competition. And of the most mature markets in the U.S. that sit in the oncology space, currently just a handful of commercial parties are commercializing within that market segment, where we see significant opportunity for multiple entrants given time of entry. But most importantly, the middle bar here that represents almost $200 billion worth of future biosimilar competition, approximately half of that market is being addressed by current developers today, where we see Valorum, literally sitting in the middle of that, is we have the opportunity to take advantage of markets that are commercially ready today, build our P&L. But aspirationally, we really look forward to providing value and developing and partnering with global partners to bring biosimilars into the U.S. where markets are currently not being served. I've had the privilege of speaking to many KOLs that treat patients within some of these segments. These biologics have transformed the way these patients are treated today. But in many cases, it's been decades since they've seen any price relief and we look forward to providing that value in the future through our organization and through our partnerships that we will create globally. In addition to the market opportunity, the U.S. dynamics are changing quite significantly. Since our first biosimilar approvals, the FDA has moved significantly and advanced its learnings of biosimilars from a regulatory approval perspective. But also as of recently as just 1 month ago, had leveled the playing field and the FDA had called on Congress to eliminate the interchangeable designation that was originally provided. And now what this does is basically provide interchangeability to all biosimilars that are approved. Once approved in the U.S., all can be interchangeable given their safety efficacy and more importantly, their bioequivalence to the reference product. In addition to the regulatory tailwinds, we are also seeing legislative updates that provide more incentives to biosimilar usage, despite your political preference, all parties want health care cost to be reduced within the IRA. The incentive has been increased for biosimilars. So for qualifying biosimilars, they can be reimbursed at a higher rate than the reference product. Once that has been achieved, that can maintain for a 5-year period. So the similar perspective here. One, the U.S. market is large and a significant opportunity remains within the commercial markets today but most importantly, for tomorrow. The regulatory and legislative changes are supporting new entrants and provide a fruitful opportunity to bring biosimilars into the U.S. Our pipeline led by the partnership with Xbrane and STADA has a tremendous opportunity to provide value in the near term. We do see Valorum as a multi-asset program with significant opportunities to launch multiple assets over a 10-year business model. Our second asset is grounding Phase III as we speak and poises ourself for a nice multi-asset launch over the years to come. We have several other programs that we were talking to global parties with that are at various stages of development and various stages of diligence and look forward to adding to the slide here in the near future. So specifically within the anti-VEGF market opportunity in the U.S., we have seen a number of launches as of late. Ranibizumab biosimilars have made their first entrant within the ophthalmology space. Vabysmo from Roche is definitely making some strong inroads with a bispecific approach. And high-dose Eylea from Regeneron has also been recently launched within the year. Despite all of the entrants, you can clearly see a tremendous opportunity for growth year-over-year. Global data projects this market, given the aging population and other dynamics to significantly grow, surpassing $20 billion in sales by 2030. We've also noted some of our competitors on the Eylea biosimilar front have faced some patent challenges, which may provide opportunities for another ranibizumab biosimilar to provide value not only in the Lucentis space but potentially moving into other market opportunities as well across that anti-VEGF market opportunity in the U.S. So market is big and is growing and a percent of this market today will be a very big value as the market increases over time. Specifically, within the ranibizumab biosimilar opportunity, we do see a really nice case example from Coherus. They recently launched their ranibizumab biosimilar. And as you could see, really started to ramp up sales, particularly in the last few quarters. The big jump here from Q1 2023 to Q2 2023 was the addition of the reimbursement Q code that provides U.S. providers certainty of reimbursement, efficiency of submitting that reimbursement claim. Prior to that, they were dealing with a miscellaneous code that is cumbersome and offers some delay in reimbursement. So once that reimbursement code was established, they were able to maximize the value of the biosimilar and the commercial opportunity. And we see that it has created a significant opportunity in the quarters following the reimbursement code. We see this as a very good signal and a path forward for another entrant. We are clearly not the only folks that like a ranibizumab biosimilar, as you can see earlier in the year, Sandoz who recently spun off from Novartis had purchased that asset from Coherus as Coherus was shifting focus into its core businesses and moving specifically into oncology for $170 million upfront. It's interesting to note that, that $170 million acquisition was for less than 50% of the gross profits as Coherus had licensed that program in. They were paying royalties north of 50%. So a ranibizumab biosimilar has shown to be effective, shown to penetrate that anti-VEGF space within the ophthalmology market and clearly has shown a lot of value that is attracting attention. And we feel this path forward and these examples give us strong confidence for commercial uptake for Lucamzi in the U.S. And clearly, the market opportunity will support a third entrant. So with that, Martin, I think I've got one more slide with a summary. Yes. Great. So to summarize the brief overview that we provided, experienced and dedicated team to focus on launch in the U.S. Clearly, given the market opportunity within the U.S. it can support an additional ranibizumab biosimilar. Together all 3, Xbrane, STADA and Valorum, we believe create an optimal partnership to secure FDA approval and the eventual launch of Lucamzi in the U.S. And look forward to taking questions.

Okay. So thank you, Par. Thank you very much. This then was the presentation that we aim to share with you today and we open up for questions. [Operator Instructions] So -- but first of all, we'll open up the telephone line. So please, operator.

[Operator Instructions] The next question comes from [ Philip Enarson from Red Eye ].

So my first question is probably then for you, Par, if that's okay. It would be interesting to hear Valorum's take on Lucamzi being sort of a late entry compared to other ranibizumabs on the U.S. market? And what are the indications of that from your point of view?

Yes. [indiscernible], thank you very much for the question. I think the opportunity really -- you kind of point to the historical trends, right? So 1 key dynamic is that Lucamzi is going to be launching into a reimbursement environment that has shown success in the U.S., particularly in the oncology market opportunity. So this is a product that's reimbursed under Medicare Part B, it's under the medical benefit and its incident to physician. If you look at the sales trends of other biosimilars that have launched within similar dynamics, second to third to fourth entrants by year 2 or 3 have garnered north of double-digit market share points. And given their success, we feel -- and given the similar dynamics of reimbursement, we feel that a third entrant has significant opportunities and not to mention that the anti-VEGF market continues to grow. So as we gain a certain percentage of market share, I think the overall pie just gets bigger. So we think the opportunity is pretty attractive.

Okay. That's clear. I have a few more, if that's okay. So it would be interesting to hear from you some context to Valorum Biologics' sort of financials and underlying funding.

Yes. Another great question. So we are a newly founded organization. We have significant resources to get through the task at hand. We have also engaged Ladenburg in New York, reputable bank to secure a $150 million revenue interest financing facility to support the launch of Lucamzi and additional assets we look to bring in and then launch as well. So we see ourselves very well funded, very well resourced with a lot more to come to support the U.S. entry.

Great. And also in the press release, you stated that -- this is maybe more to Martin but anyway, you state that Valorum is the ideal partner to commercialize ranibizumab in the U.S. Could you elaborate a little bit on why you think that is?

Well, as we have presented today, Valorum has a very experienced team with the right network in order to be successful, we believe, in commercializing this product. And then we are ourselves an entrepreneurial organization. This launch is crucial for us. And I like the fact that it's equally crucial for Valorum and I'm sure that it's going to have the absolute highest priority and focus of the team of Valorum to make this a success.

Perfect. And also while we're on the topic, it would be interesting to hear if there has been any developments on the front with the FDA and the CRL since we spoke last time.

Yes. No, this is a topic which we are going to get back to in due course as we get more information.

[Operator Instructions] There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Thank you, operator. Then the first question, or this is really around Valorum. Par, it's [indiscernible]. So when was Valorum founded?

Valorum was founded in an interesting time, right, as COVID was initiating and the global dynamics were changing. So Valorum was founded early 2022 with Tim Opler and I. And as stated, we really saw the opportunity with the unmet need and as we were exploring that opportunity, it was such an unmet need, we had to go find people to develop these biosimilars that aren't currently being developed. So we quickly shifted focus to identifying commercial-ready assets, which are not easy to find, which we been fortunate enough to find a few here recently and move the task forward but a newly minted team, for sure.

So, thank you. The next one is and I think you touched upon this already. Probably came from Don. So how is Valorum sales organization organized and how many people do you have in that organization? And also related to this, does Valorum today have enough capital to market all of this in the U.S.?

Yes. No, great question. So we have a dozen or so staffed employees with probably an equal number of consultants to help us with the task at hand. We will scale up as we get near to launch, as we prepare U.S. entry at different stages, for obviously, efficient manages -- management of resources. We are well resourced today. And as I mentioned, we're very fortunate to have Ladenburg setting up $150 million revenue interest financing for us, which will more than support the launch of Lucamzi but most importantly, bring in other programs with multiple assets in the near future.

Yes. There are a lot of questions coming in, again, related to the FDA timing, how you're going to work together, the 3 parties. So maybe, Martin, if you want to kick off on that and then so we could preempt that conversation then.

Yes. As I said, we're not going to be able to comment further on timing of resubmission of the BLA. But we're very pleased now to have the partnership with Valorum and that we now can work together Xbrane, Valorum and STADA together with, of course, our manufacturing partners to bring the BLA to resubmission as soon as possible but we need to get back on the specific timing.

Par, do you want to add anything?

Yes, yes, definitely. So I completely echo Martin's perspective. And as we've been engaged for quite some time now, we're very impressed with Martin and team and clearly with STADA as well. We feel that Valorum will be additive in this process. We have direct lines to the FDA through our internal team and/or through consultants. We've recently been through biosimilar approvals, particularly with our regulatory and our manufacturing teams. So we are actively assisting where we can and providing additional value where we can as well. So I think together, we make a stronger team for sure.

Related to this, can you say anything about your confidence in that approval process?

Yes, definitely and so as we mentioned, we've been working with the team quite extensively in our diligence, in our review, clearly, of the BLA application and the CRL subsequently after. And the key things that we see is probability of success. It has significantly been derisked during the BLA review. As Martin noted on his Webex, post the receiving of the CRL, it's important to note that the FDA did not ask for any additional data as it relates to biosimilarity or bioequivalence, all that data was provided and validated. The other key point is that there is no additional clinical PK/PD or efficacy data required after a 582 Phase III patient trial that met all of its endpoints and the remaining issues we feel are addressable, not major or critical in nature. So we feel we have a very derisked program with a near-term commercial opportunity.

Excellent. Thank you. So moving on to Lucentis and the fact that it's showing a decline in sales, how do you view that? Will that impact your prospects with Lucamzi?