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

Welcome to Xbrane Biopharma Q3 Report 2026. [Operator Instructions] Now I will hand the conference over to CEO, Martin Amark; and CFO, Jane Benyamin. Please go ahead.

Hello. My name is Martin, CEO of Xbrane. I have with me our CFO, Jane, and we will present the Q3 report 2026 for the company. I will, as usual, go through a brief operational update related to the quarter, and Jane will thereafter go through the financial highlights. First, a snapshot of our development portfolio. First, our biosimilar to Lucentis, which is under the brand name, Ximluci, on the market in Europe and select countries in Middle East, and now recently got approved by U.S. FDA under the brand name Lucamzi. We have a partnership with STADA for the European market and the partnership with Valorum for future commercialization in the U.S. Second product, Xdivane, biosimilar candidate to Opdivo, partnered with Intas Accord, and we recently announced that the pivotal clinical pharmacokinetic trial was fully recruited. So we're looking forward towards clinical readout Q2 next year, followed by a submission of a BLA to U.S. FDA. And then Xdarzane, our Darzalex biosimilar candidate, which is more early stage development partner up with JOINN Biologics, which is conducting process development currently. And in parallel to that, Xbrane is seeking commercialization partners for that product. But we'll go through this a little bit more in depth one by one, and starting then with Lucamzi U.S. So we're very happy, of course, with the recent FDA approval, and we're now going through preparations with our partner for launch during the course of next year. And here's a snapshot of the market. And I think the right way to look at this is VEGF inhibitors for retinal disorders. That's a market of about EUR 9 billion, with about 10 million units being administrated annually across the U.S. So a very sizable market. There are about 16 products in that market as far, as we can tell, 6 branded products or originated products and 10 biosimilars both on Eylea and on Lucentis. So I think for us, this poses a big opportunity, of course. It's a very sizable market, and even if we were to capture just 1% of that market, it could reach sales up to USD 100 million. So very sizable market. And we are now, together with our partners, forming the commercial strategy for the product. So it's a little bit too early to say how this will pan out, but we can know that given the dynamics in the U.S. market, new entrants are actually favored in the segment of products, which goes on the Medicare Part B due to the structure with reimbursement on the back of the list price before you have an average sales price established, which is essentially the list price minus the discounts which are given. So I think these dynamics typically favor new entrants because you're able to structure it so that it becomes economically beneficial for, in this case, the [ eye ] clinics. So we're quite optimistic that this will go well, and we'll make the most of this opportunity together with our partners. And as I said, what lies ahead of us before a launch is, above all, of course, production of material. We're going through that given the remainder of this year essentially. Then preparations with our partner, Valorum, of course, which relates to applying for a so-called [ Q ] code, which is required essentially for reimbursement of an administration of the product. I think this is crucial to have in place before launch. That takes 6 months to get in place. It's just an administrative process. So there is no risk or anything attached to that, but it's an application which needs to be gone through. So therefore, we should have that by mid next year, after which, we believe a launch can take place. But as said, this is really something we do now in collaboration with our partners, STADA and Valorum. And then a few words about Europe, as I said, Ximluci, which is the brand name in Europe, has been on the market since 2023 across the 4 countries in Europe and the Middle East, started commercializing, quite simple structure. We are -- we have co-developed a product together with STADA, and we're sharing the profit contribution, 50-50. And here is a historical graph with the profit share essentially that has gone to Xbrane over the quarters since launch in Europe, and we have accumulated profit share of about SEK 145 million throughout this time period. And you can see on this graph that it varies quite a bit from quarter-to-quarter. And it is -- it mostly has to do with the way this is accounted for, where actually the profit sharing is recognized as revenue upon shipment of the goods to startup, and the shipment goes in cycles. So that's why it's a little bit of a variation quarter-by-quarter. But I think if we look at this where we stand now, it's generating about SEK 50 million a year in profit share for [indiscernible]. And with that said, 6% volume market share, then looking at only the ranibizumab market, so that's a share of the total VEGF inhibitor market. And we are, as we have talked about before, going through several cost reduction measures. We believe that, that is crucial to bring down the production cost given an increasing competition. And this will bear fruit second half of next year, essentially. And we believe then that this could unlock further growth opportunities across Europe and Middle East. We also have a remaining inventory position of SEK 149 million, essentially mainly drug substance gradually being converted to drug product and sold to STADA mainly. And we believe that, that will be converted during the remainder of this year and next year essentially to cash. So that was an overview of where we stand with regards to Lucamzi or Ximluci, and shifting gear over to Xdivane, our biosimilar candidate to Opdivo. So this is then targeting the whole PD-1 inhibitor market. So essentially, Opdivo and Keytruda, and that's about EUR 40 billion in annual net sales. So a massive market opportunity. And to be noted, Opdivo goes off patent first. So that's December '28 in the U.S., and Keytruda patent lapses some 6 months after. But we do believe there's an opportunity for biosimilars being there day 1 post Opdivo patent expiration to also capture market share from Keytruda. So massive market opportunity. And we believe we are well positioned from a time line perspective in this race towards patent expiration. From a competitive perspective, we know Amgen already submitted their BLA to the FDA. But I do believe that we are second in that group of expected biosimilars having fully recruited [ RPFL ] clinical trial. And that -- then we have 3 other biosimilar candidates under development and in clinic. So eventually, we do expect to see 5 or so biosimilars to Opdivo on the market. But it's really about being there in the first wave or preferably [indiscernible] patent expiration, which we really do believe that we're going to be able to be. And the partnership with Intas Accord in relation to this product, we believe we have a very strong partner for commercialization. Accord, which is a sales subsidiary of Intas, has a very high market share in Europe when it comes to [indiscernible] injectables, and is also establishing themselves in the U.S., with an acquisition done of [indiscernible] biosimilar a while ago, and also has work products on their way to market. So we believe we have a strong commercialization partner and that the court will do a fabulous job in commercializing this product. And again, from a time line perspective, we are now going through, on the one hand, all the CMC-related activities which are remaining. So that is drug substance per product process validation and characterization, which is going according to plan. Again, the pivotal clinical trial was fully recruited, 314 patients in melanoma, and we're going to have an interim readout in Q2 next year. And then we are planning for submission of a BLA to the FDA mid next year, really to prepare for having an approval and be in a position to launch by ahead of expiration end of '28. So I think this is going very much according to plan currently, and we're very excited about the prospects of this program. And moving forward, I think a natural question to have and the question we often get is why should we believe that this biosimilar candidate is going to be approved on the first attempt by the FDA, given the delays we've had with Lucamzi, and that's a fair comment. But I think it's important to look at this in a little bit more detailed manner. What held us back with Lucamzi was really related to GMP issues at the contract manufacturers. It was related to unresolved observations from inspections by the FDA. We had 2 CRLs due to that, as you might recall, but FDA in the first BLA was sent in, did not have any comments in relation to the clinical development nor the whole analytical comparability package, which are 2 other important aspects of the BLA. So we've learned from this when it comes to Xdivane, and we work with one of the top 10 contract manufacturers globally, with 2 sites involved having had successful FDA inspection since 2010 and supplying commercial products to the U.S. since. So we do believe that we have reduced the risk in relation to potential issues with the FDA related to inspections at manufacturing sites. And I do believe there is a high probability that we're going to get approved the first time when we submit the BLA to FDA. So we're quite excited about this program, and it could be very valuable to Xbrane. We've shown this slide before. We have better valuation, which is an independent pharmaceutical product valuation company located in Switzerland to do a valuation of Xdivane essentially. And you can see on the right-hand side of this slide, all the assumptions that they took in this valuation, but essentially as looking at the expected market or the expected sales of the originated product by time of launch, looking at the trajectory of other oncology biosimilars in the U.S. when it comes to volume market share as well as price decline and applying those curves or trends, if you will, to this situation, in combination with the expected competitive situation essentially, and then applying the relevant cost structure and profit sharing mechanism, if you will. All that together, their estimate was that this could generate about EUR 100 million in profit sharing at its peak to Xbrane, which, of course, would be fabulous and a very sizable opportunity for us. So we're very excited about this program and what it could do for patients, of course, but also for Xbrane as a company. Then moving on to Xdarzane, this is more early stage, as I mentioned, but we're quite excited about this program as well. It's addressing a very sizable originated product now at about USD 14 billion actually. And we are navigating this through without having to invest further into the program from Xbrane's perspective. So essentially, the arrangement here is that JOINN Biologics, which is a prominent biologics CMO with sites in both the U.S. and China, they're going through process development of this biosimilar candidate and the target to get towards comparative analytical demonstration mid next year, after which we can take this program further to watch scale up production of clinical material and in going to clinic and so on. In parallel, Xbrane is seeking a commercialization partner like the partnerships we've done with start-up as well as Intas in the past. We're seeking a similar structure with a partner that is interested to commercialize this biosimilar candidate once approved. So early stage, but quite interesting opportunity still. So to summarize, key takeaways from this quarter. Ximluci launched across 24 countries in Europe and MENA, generating about SEK 50 million per year in profit sharing for us now. And we are going through cost reduction measures, which will bear fruit second half of next year, and we hope unlock further growth opportunities. Lucamzi, FDA approval, and now going through preparations for launch during the course of next year together with our partners. And then for Xdivane, the pivotal pharmacokinetic trial was fully recruited in October, and we are moving in a timely fashion towards day 1 launch in the U.S. late '28. And then early development with Xdarzane, and we are working through establishing deal with commercialization partner. So it sort of key takeaways from an operational perspective of the quarter. And I therefore hand over to Jane to go through the financial highlights.

Yes. And as we can see during the third quarter, we have resumed shipments to STADA, giving us a revenue of total SEK 54.8 million, where SEK 54.6 million are referred to shipments to STADA. COGS amounted to SEK 45.8 million, giving us a gross margin of 16%. We expect continued shipments to STADA during the course of the coming quarters. And as Martin mentioned, we are still working on cost reducing measures to reduce cost of goods and give us a more competitive cost of goods and production costs in 2027 and onwards. The administrative expenses amounted to SEK 5.4 million, and the R&D expenses to SEK 13.4 million, where SEK 2.7 million referred to amortization of intangible assets. SEK 15.7 million have been capitalized as intangible assets during the third quarter of 2026. Here, you can see the cash flow breakdown for the third quarter. So SEK 6 million was received from profit sharing from STADA for the second quarter. Production of finished goods of Ximluci amounted to SEK 3 million, which will give us and has given us revenue during the third quarter and also in the upcoming quarters. Fixed costs amount to SEK 17 million and are referred to salaries, social security, IT, storage, et cetera. Ximluci sales gave us SEK 39 million and came from accounts receivables for the second quarter and also sales during the third quarter. Development costs amounted to SEK 5 million in cash flow, and Xdivane to SEK 3 million referring to CMC-related development costs. So the cash balance closed at SEK 37.4 million, which all in all, gave us an operating cash flow for the quarter amounting to SEK 4.1 million.

Excellent. So we thereby close the formal presentation and open up for potential questions coming from listeners calling in.

[Operator Instructions] The next question comes from Fredrik Thor from RedEye.

Congratulations on the approval. So my first question was about volume growth for Ximluci. I don't if you show that, but if you can start a bit and also the market share that are [indiscernible] of it.

Yes, the volume market share for Ximluci across Europe was 6% as of July. The volume growth in the quarter, Jane?

Well, we haven't seen really a volume growth. The total market has been declining a little bit due to increased competition coming from other treatments. So unfortunately, as a total, the ranibizumab market has been declining, and the growth for Ximluci has more or less stayed the same.

Got it. And in the presentation, you also mentioned that the time to launch the -- in the U.S. to take quite a bit until 2027. Can you just [indiscernible] a bit what is the -- in place before launch?