Xbrane Biopharma AB

STO:XBRANE

Earnings Call Transcript

[Operator]

Good day, and thank you for standing by. Welcome to the Xbrane Biopharma Q2 2022 Report. [Operator Instructions]

I would now like to hand over to your speaker, Mr. Martin Amark, CEO. Please go ahead.

[Martin Åmark, executive]

Thank you. So welcome everybody to this presentation of our Q2 report. And I'm joined today by Anette, our CFO. And I will start to provide an update on the activities from an operational perspective for second quarter this year and then Anette will go into financial highlights.

Shift slides here. So, we can look through our development portfolio and our first product here, Xlucane, which is the development mainly about Lucentis, biosimilar candidate and we are in registration phase in Europe and we expect approval for the product later this year and subsequent launch, beginning my next year by our partner, STADA. We will go through more details on the timelines in the following 2 slides here.

I'll also talk more about the process for the BLE to FDA. Then we have our Cimzia biosimilar candidate, which we now have development name, BIIB801. And this is the development name by our commercialization patient partner, Biogen, which we now have adopted as well. Here we are working together with Biogen, but also together with our production partner AGC to scale up the production process and essentially produce clinical material and make preparations for being able to initiate clinical trials with biosimilar candidates that hopefully can be initiated during the course of 2023.

Then we have our oncology biosimilar candidate, Opdivo, which we are activating our optimal biosimilar candidate. We are working very intensively here internally to set the production process. I think we're making good progress. I think we reported that last year as a result of this work that we now have 5 granted patents that has come out of this development work, which we believe will give us a competitive position with regards to production costs. So as you probably remember, what we intend to do is to get to a high [indiscernible] activity possibly leading to and as low as possible production cost. And we have quite a strong platform being developed in mammalian cells now also current, particularly from this development program.

And roughly speaking, to get some indication of timing on this one, this program is one and a half years at our Cimzia biosimilar candidate. So, we're also trying to find a suitable production partner, as you remember, for our Cimzia biosimilar candidate in September last year, we signed the agreement with AGC Biologics. So, we're now looking into who could partner us with from a production perspective on our Xdivane program. And hopefully, we can conclude something towards the end of the year or beginning of next year. And then move into scale out. And then also we are conducting dialogues with potential commercialization partners.

We haven't provided a firm timeline for when we are going to conclude such a deal. But we are conducting dialogues with interested parties and hope that we're able to come back on that end as well. So, I think this program is what we had last week, and then biosimilar candidates to get Darzalex respectively. Here, we are working with cell-line developments, more early phase developments potentially. But we're leveraging the same platform technology that came out of our Xdivane program, which again, we believes give us competitive production cost position. So that's kind of the highlights on the portfolio.

I think we can move to next slide and go a little bit more into depth on the Xlucane program. So here is an updated timeline. If we start with Europe and the regulatory process versus EMA, we submitted the marketing authorization application in September last year and STADA submitted a marketing authorization application in September last year. And we have responded to the questions, which according to the process comes at day 120. In the process, they came in January. We submitted the responses to those questions in April. We received the remaining questions back from EMA in June. And we're now working to respond to these questions.

Our plan is to submit our responses mid-August. And hopefully, that should lead to a positive opinion from CHMP, the Scientific Committee for Medicinal Products. In September, led or followed by an actual approval by the EU Commission in November. That's kind of the regulatory plan. And we are also working a lot to prepare for a launch of the product in Europe by our commercialization partner, STADA, of course, we are awaiting the expiry of the last patent by the originators surrounding this product. I mean, we're very cautious and [ have a support ], of course, not to infringe any third-party IP. So, we're waiting. This last patent will expire now end of July before initiating commercial manufacturing of the product and reduce the launch volume. And if all goes well, then we go to -- look forward to watch the launch of the product in Europe first quarter of next year.

So very exciting, of course. And I'll talk more about the prospects in Europe on next slide. But I want to spend some time on FDA in the US, as well here. And as you all probably know, based on the latest communications, we submitted the BLA for Xlucane to FDA in March this year. And FDA has a 60-day period, where they review the file for completeness as such, after which they take a decision to actually file the application and initiate the review process.

Now, what happened in the case of Xlucane was that if they came back to us and after the filing review concluded that additional information was required in the BLA, or the application for them to be able to file the application and initiate the actual review. That led to us withdrawing the application now in May, and we have now received the general advice letter from the FDA with comments and recommendations with regards to the BLA, which we now need to take into consideration for resubmission of the BLA.

Now, this general advice letter contains a number of items. And they're mainly related to actually the supply chain and mainly related to additional information required by the FDA to make a full assessment, which we now are working on together with our contract manufacturers and suppliers to -- together and to put into the BLA for resubmission. We're also going to engage with the FDA in meetings prior to resubmitting the BLA to make sure that we understand fully their views and their requirements for a submission. Yes. So, we are sure that the resubmission will be successful and that it will go through the filing review and that will be filed and an actual review can be initiated.

So there of course is not of course, but we're working intimately with the agency to ensure a successful resubmission of the BLA and we will assess from a timing perspective that we shall resubmit the BLA during the course of 2022. If we cannot at this point in time provide a more specific timing, then that -- it's dependent on the time it will take for us to gather this additional requested information, but also the outcomes from a continuous dialogue with agency. But we'll get back with the communication once we have more clarity and once we are going to be able to resubmit the BLA. So that's I think is what we can say now with regards to US.

But we can shift to next slide and talk a little bit more about Europe. We're very excited, of course, about now being so close actually today with the launch of Xlucane in Europe. And we all in the company have worked long time together with STADA, our partner, on this product. And we're very excited now to being so close to actually see the fruition of all the hard work we've been going through. And we truly believe that we're going to be able to bring something valuable to the market.

And we're looking at an addressable market in Europe of around EUR5 billion, if we think about the retinal VEGF alpha inhibitor market. So that contains Lucentis -- mainly Lucentis and Eylea are the main approved products in the space. It's a big market in Europe we are addressing. And we know that there is a great need of more cost efficient and more affordable alternatives in order to be able to alleviate the [ burdens ] on the healthcare budgets, but also to make this treatment more accessible in parts even of Europe, where accessibility is an issue.

And so we truly believe that we're going to be able to bring something valuable here to the market. And we're excited about that. We still believe that Xlucane will be one out of the 3 biosimilars to Lucentis coming to market during the course of next year. We believe that STADA is a very strong partner for us here and that they will do an excellent job in commercializing this product and really optimizing the potential value in this product in Europe. And they're working, as you can imagine, very intensively in preparation for a launch as we speak. And they are very involved in that, of course. So very, very exciting times.

And as most of you probably recall, as per the co-development agreement we have with STADA, we are entitled to 50% of the profits generated from the product. I think it's interesting to see how launches of biosimilars have gone previously in Europe, and we can see that on the graph on this slide on the right-hand side, where we've seen a more rapid uptake in the biosimilars from kind of a volume market share perspective in the more recent launches. And we could see biosimilars [indiscernible], taking beyond 35% volume market share at month 12, which I think is extraordinary. So one could apply that to the situation of the centers.

And of course, pricing is an unknown here, and we don't know exactly where prices would land. But if one would calculate on the 50% price discount purchase to originator and 35% volume share towards the end of '23, that's still approximately EUR350 million market for biosimilars that could have been generated at that point in time on an annual level, of course. So it's a substantial market that could be generated rather quickly for the biosimilars coming in on Lucentis. So, we see great prospects for Xlucane in Europe, and we're very much looking forward to see how this all pans out during the course of the next year.

Good. And so we can probably move on to next slide. We're also growing as an organization. We're now 70 employees. I think still -- we've had a rather easy time to recruit and attract professionals in this field to the company. And I think we have a good reputation in Sweden, particularly. We're certified as a Great Place to Work since last year. We actually redid this year and even increased our scoring surveys. I think we have been able to -- in an environment, we've been growing a lot. We've been able to maintain a satisfied workforce and a good culture in the company, which I think is actually is crucial to be able to do it, to be able to grow this company continuously. So, we're very happy with that.

And I think we can move on to next slide. And we're also then planning to have -- as we did last year in May, we had the Capital Markets Day, which we arranged ourselves, where we were able to go a little bit more in depth with regards to our business compared to what we can do, participating at arranged Capital Markets Day by financial advisors. And we want to do this again this year, and we want to arrange such a day towards the end of August. And we're going to get back to all of you with the timing for this Capital Markets Day, but that we're planning for. And then we hope that we're going to be able to go into more depth around the business.

Then we are also going to participate in Pareto's Annual Healthcare Conference in September. We're most likely going to be able to participate in more Capital Market Days raised by financial advisors during the course of this year, but they still need to be scheduled. So, I hope that we can interact with all of you in a more in-depth manner in these upcoming events.

And so that's probably all for me at this point in time. And I will leave over to Anette here.

[Anette Lindqvist, executive]

So, thank you very much, Martin. And I will start to have a look at some of the financials. This will be quite brief, as usual.

And we'll start with some operating expense. They amounted to roundabout SEK 59 million in the quarter, which is then totally in line with last year, even though the split between R&D and G&A is somewhat changed, meaning the G&A costs has showed a slight decline and the R&D costs have increased somewhat. What's really interesting to see is if you look at the split of the spend in R&D, we also announced the -- an increased spend in reference to both the BIIB801, which is the biosimilar to CIMZIA, but also expanding oncology portfolio. So that's really, really pleased to see that.

For those of you who have been here for a while, you will remember that last year, we started to capitalize the R&D development cost for Xlucane that's highlighted in red in this chart. So comparing like-for-like, we have a 10% increase for -- between the 2 years. This is the fourth quarter we now capitalized the development spend for Xlucane, as you can see, it's only SEK 5.7 million in the last quarter. And this is exactly as expected. Xlucane is now moving into a phase and the development costs are not as significant as the preparations for supply chain. And those costs are not entitled to be capitalized.

So hence, we have a total now of SEK 86 million on the balance sheet, leaving the second quarter. And really the quarter also with SEK 250 million in the second quarter. For those of you that remember, we did the share issue in June last year. However, that cash didn't actually hit the books until Q3. So hence, why we have -- and we -- still we leave the quarter with quite a strong cash position. I think that was it.

So Martin, any Q&A?

[Martin Åmark, executive]

Yes. So let us -- please submit any questions you might have in the chart here. And we have a couple of questions already. We'll address them now. And you can add questions here. We'll try to address them as good as we can.

Okay. So let's start. Can you comment more on the 180 days question? Do you feel comfortable with the number and quality of the questions and were you able to reduce the number of questions after 120 days.

Yes, we feel comfortable. Of course, we were able to reduce the number of questions from the [indiscernible] quite significantly, so when we feel comfortable that we're going to be able to respond in a satisfactory manner on the remaining questions about mid-August, as I mentioned on planned timing for submitting the responses.

Next question. Solid acceleration with new projects could be seen. How much faster do you think you're able to develop Xdarzane and Xtrudane compared to Xdivane?

And I think as per now, the programs are following more or less a rather standardized timeline, which we now have asked for our development process. And based on the learnings, we've been accumulated, particularly in the Xtrudane program. So. I think the timelines will be, roughly speaking, the same for each program. So yes, they are differently geared in time, so to say. And I think that Xdarzane and Xtrudane and Darzalex and Keytruda biosimilar candidates are probably a year, year and a half after the Xdarzane program.

Okay. The next question. Can you please comment on launch dates of the other 2 Xlucane biosimilars in Europe? Is your partner a major competitive advantage versus your biosimilar competitors? Do they have partners too? When are you expecting you would start production of Xlucane for Europe?

Okay. So quite a few questions here in one. So let me take those. Launch dates of the other 2 Lucentis biosimilars in Europe, we don't know. We cannot comment on that.

Next one, is your partner a major competitive advantage versus your biosimilar competitors? I mean, again, as you probably are aware, the other 2 Lucentis biosimilars expected to come -- what we launched in Europe are, on the one hand, the products developed by Samsung Bioepis partnered by [ Biogen ] and the other one developed by the former codeveloper former [indiscernible] commercialized by Teva in Europe. And I think that STADA has great capacity to commercialize biosimilars across Europe. They have great experience, and they have launched and are commercializing quite a few biosimilars already. They've been doing it successfully. I also do believe that we have a very strong position from the cost perspective in Xlucane.

When are you expecting you will start production of Xlucane for Europe?

Well, we are initiating that from a commercial perspective end of this month when the last patent expires in next -- when last patent is expiring. So, we need to wait before initiating commercial manufacturing, but essentially it's starting next week.

Next question. BYOOVIZ launch in the US at a 40% discount compared to Lucentis, discount higher than expected. Could you leave a comment?

Well, I think we've always -- since quite a few years back, actually, been calculating on a 50% price discount versus the originator, both in Europe and the U.S. So yes, maybe this was higher than expected compared to what we've seen in the past, but it is not higher compared to what we've been expecting at this point in time. So yes, again, we've always been thinking about a level of 50% to discount versus the originator.

Next question. Okay. Let's see here. Regarding the FDA advice that you mentioned the items were mainly through the supply chain. Just to clarify, are there any items that the FDA requested that has to do with the outcomes of Phase III trial or analysis of the clinical data either being safety or previously available there.

First question, answer to that one is no.

Next question. And was there overlap between the EMA questions and the information that the FDA requested that led to -- they refuse to follow the withdrawal.

Yes, certain items on the general advice letter we received from FDA were indeed same questions we received from EMA throughout the procedure. I think actually this difference between how EMA operates, where I think that the EMA had a high degree of acceptance for getting additional information through the procedure in the question round than FDA. So quite a few of those items in the general advice letter, we've already worked on as responses to questions to EMA.

Next question. Could you please specify what in your view would be the timeframe in which decision for EU approval for Xlucane would be for the latest?

So, our plan here as communicated in the report is that we hope that we can get a positive opinion from the committed CHMP in September, followed by an approval by the commission in November this year. So, this is the current idea of the plan.

Has the regulatory submissions being experienced sole responsibility? Or are your partners also involved within this process of the BLA and MAA filing. Our partners are involved to a very high degree, the MAA to -- the EMA was submitted actually by STADA and we've been working very intimately with STADA in preparing that file, of course. I mean, needless to say, we have a co-development agreement with STADA since a long time back and we've been working very intimately with the development of the product. With regards to the BLA, Xbrane is actually the one submitting the application to the FDA, but we'll be working very intimately both with STADA and also Bausch + Lomb for that application and also with regulatory advisors in the US.

Next question. With the current cash position, what is your runway?

So as Anette mentioned, we came out of the second quarter with the SEK 250 million in cash. And what we can say that at least, it shall take us to EU approval of Xlucane. Then we have quite a high degree of flexibility in our burn, so to say, particularly considering what we do in the more early stage portfolio, so the oncology portfolio, particularly how fast we accelerate that.

And also, we have [indiscernible] of when we will be able to do a commercialization deal with Xdivane. So that makes it a little bit hard to actually put down the foot specifically on what is the cash runway into 2023. But at least, to approval of Xlucane, we have a cash runway. Then we are having discussions with potential financial partners as always. And I think other financing opportunities are being opened up now as a consequence of us actually getting closer to an approval of our first product in Europe and also getting closer to a potential launch of the product.

So non-dilutive financing on the debt side or some companies are doing selling off some royalty rights to system products, things like this. Such opportunities are being opened up, given where we are now from a development perspective and we are also exploring such non-dilutive financing options.

Okay. Next question. Xlucane in the US, are you 100% certain that you do not need to do further tests?

Yes, the items which we received from in general advice letter from the FDA does not conduct -- does not include that we need to do further tests, so to say, if one is considering here additional clinical trials or such things. No. It might be so that we need to submit now the data from the first commercial batch that we're producing, which again are starting next week already now. I don't think that, that is a big issue from a timing perspective. But that needs to be clarified with the agency if that is needed. But again, I don't see that, that will be an issue from a timing perspective.

Next question. Is the injected volume in Xlucane the same as Lucentis?

Answer is yes.

Will it be the same for all 3 biosimilars you are expecting in the market? The answer is yes.

Next question. With regards to the prefilled syringe submission to EMA, is this still likely to be approved and launched together with the vial is the question?

Answer is no. We have submitted the vial presentation to EMA, and we are developing a prefilled syringe. But that was not included in the initial application to EMA.

Are there issues that could cause delays for the prefilled syringe?

So the idea for the prefilled range is that we'll seek an approval from EMA on the prefilled syringe post getting approval for the vial. And of course, things could emerge in that process, which could cause delays that cannot be out true, but I think we have a solid plan for that. And I think it's something that we are going to be able to update on during the course of next year as we're getting closer.

Are you aware of any other competitors that has managed to submit the prefilled syringe? Or are you still the only one at that stage with the prefilled syringe?

So, I don't think we can comment so much on the competitors. We can just note, which is public information. But the approvals that were granted to the competitors were under vial. So it seems to us that they were not submitting prefilled syringes either. But with regards to any potential plans on prefilled syringe of the competitors, we wouldn't comment.

Next question. Consideration for how much market share for Xlucane as a [ sample ] given that you're not the first to launch?

Well, I think actually in Europe that we're going to be able to launch approximately at a similar time point as expected competitors. And I see no reason why biosimilars to Lucentis wouldn't follow the same penetration curve or volume market share uptick as we've seen in previous biosimilar launches. And I see no reason why Xlucane wouldn't capture its fair share of that market to be generated. That has been our ingrown assumption into this all the time. So, I think that assumption still holds true.

Comments on strategy is to protect market share from incumbents from incumbent [indiscernible] formulation and so on. Well, nothing really to comment there. More than what I comment on the vial and the prefilled syringe question, prefilled syringe.

Next question. Are you having to generate any further clinical data to meet additional requirements from the FDA?

Answer is no.

You mentioned you're planning additional meetings with the FDA ahead of submission. Have you the date for this first meeting yet?

Answer is no. But we are intending and this has also been the way we've understood the FDA and the communication we've had with them that we're going to be able to engage in a series of informal meetings with the FDA to make sure we understand the items on the general advice letter as clear as possible. So, our hope is that we're going to be able to have such informal meetings with rather short notice during the coming months.

Next question, partnership on oncology portfolio. Can you comment on how advanced the discussions are and whether you think you will partner on the portfolio or [indiscernible] 21st?

Well, we're having the early stage develop -- early stage discussions, I would probably say, with potentially interested commercialization partners. Our ambition here would be to find the suitable commercialization partner for this whole oncology portfolio. I think that will be very beneficial. I think it will be easier to have one partner to work for that full portfolio. And I think it's also particularly biosimilar candidates, Opdivo, Keytruda, let's say, closely interlinked. I think that will be the best way to go, and that's our ambition.

Next question. Do you expect with your partner to generate profit from Xlucane during the first year of Xlucane in Europe?

Yes, definitely. Profits should be generated from the first sales potentially as compared to our expectations. So yes.

Next question. You've always claimed that Xbrane technology is cheaper compared to other biosimilar companies. But given the substantial margin for all biosimilars, is that competitive advantage really that's important?

Good question. Well, actually, when it comes to biosimilar Lucentis, I don't believe that, that advantage will be needed is maybe the right word. Because again, if discount versus originator is 50%, we're still talking about an average net sales price of, let's say, EUR350 a unit at a similar level as production cost is a very small fraction. So a benefit on the production cost side is not that important if pricing is as expected.

But if you look at our Cimzia biosimilar candidates, I think the picture was different. And I think the reason for us actually being the only biosimilar developer working on Cimzia biosimilar candidate is due to our platform technology and our ability to reach what we deem to be a commercially viable yield on production cost. I mean we started that program and said that we need to be able to have a production cost, which gives us at least an 80% gross margin with a 50% price discount versus originator and then we can calculate backwards. What that means in terms of yields or productivity or essentially grams per liter fermentation median we get in the production process. And we put that as a threshold in the development and eventually we are able to reach that, but that was fully thanks to our platform technology.

And I do believe that other developers would have thought about this in a similar fashion and a reason for some of them dropping biosimilar candidates [indiscernible] particularly due to not being able to reach that yield. So their situation where actually, I do believe that our platform technology not only provides a competitive advantage, but actually enabled us to develop a biosimilar candidate on a product where others couldn't.

Next question. Can you provide some guidance on your expected cash burn for this year?

So this question we've already addressed.

Is it still the strategy to out-license the whole oncology portfolio at once?

We already addressed it.

Next question. Can you comment on the cost profile for STADA, the joint venture on Xlucane? When will it break even at which levels of sales?

So, I think the development costs we've been taking over the development of the product. So, there's still some expenses from a development perspective that needs to be taken during the remainder of this year. But then it really comes to comes down to the profit generated from the sales. So, I think that breakeven should be reached during the course of 2023.

Okay. And next question. Are there any updates on the status of Xoncane?

Okay. I think we also mentioned that in the Q2 report. So Xoncane is a biosimilar candidate to Oncaspar. This is a program where we no longer are conducting active development with, so to say, post the development. We believe we need to -- we want to find someone who potentially would want to take this program forward. We believe there are greater opportunities for us to spend our time on, frankly speaking. I think, particularly on the oncology portfolio, we've been talking about, which addresses the market thinking about peak sales expectations of EUR45 billion compared to current sales of Oncaspar, some EUR200 million. So, I think it's just a different ballpark of opportunity. And that has been our reasoning that we better focus and spend our time on the most attractive opportunities out there, and then we needed to [ deprioritize ] on Xlucane programs who is currently put on hold, so to say.

Okay. Good. I think that, that concludes the questions that we can see at least on the chat here. And it was quite a long list of questions. So, we thank you all for that, and I hope that we were able to provide satisfactory responses to the questions. If that was not the case and some of you would want further clarification, please get back to us over e-mail or phone and we will talk to you and clarify further. And otherwise, I wish you continued rest of the day, and we can conclude the call. And as I said before, we're also looking forward to be able to go more into depth on the business and discuss further with all of you in upcoming Capital Markets Day towards the end of August. So, thank you all.

[Operator]

This concludes today's conference call. Thank you for participating.