BioArctic AB

STO:BIOA B

Earnings Call Transcript 2019-Q1

[Operator]

Hello, and welcome to the BioArctic Q1 2019 Report. [Operator Instructions] Just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. Please go ahead with your meeting.

[Gunilla Osswald, Chief Executive Officer]

Thank you so much, and I'm happy to be here today and present the interim report from January to March 2019, and I will share the presentation with our CFO, Jan Mattsson. Next slide, please. So BioArctic, here we are on the dot com -- NASDAQ.com exchange, and that -- this is our disclaimer. Next slide, please. So today, I will start with a summary of our great projects -- progress in the projects for 2018 and for the beginning of this year. And I think we have had a great projects in all 3 disease areas as well as with our technology platform in the blood-brain bio market. I will start with Alzheimer's disease, where BAN2401 with our -- is our most advanced program. Last summer, we presented positive result in the Phase IIb study in 856 patients with early Alzheimer's disease. And Eisai, our partner there, is really committed, and they have already initiated a single Phase III confirmatory study in early Alzheimer's disease. And we are also progressing our discovery stage programs, and they are progressing well and according to plan. In Parkinson's disease, we had great news at the end of last year when AbbVie licensed the portfolio of alpha-synuclein antibodies, and we received the milestone of USD 50 million. We had also great news in February when we had the approval from FDA of the IND produced by BioArctic, which is the application to get started in clinical trial. And our collaborator here, AbbVie, are really committed, and they have already started Phase I, which is well underway now. Now we're, indeed, focusing on the discovery stage projects, and they are progressing well and according to plan. And our third disease area, which is complete spinal cord injury. Here, we also have had really important news this year when we did the safety evaluation of the first part in this study that supported progression into the next phase. And we have started Phase II, and the first patients have been administered SC0806. And the technology platform and facilitating transportation of antibodies across the blood-brain barrier, here, we have got a grant from Swedish Vinnova of SEK 10 million together with Uppsala university, and this happened in April. So a really, really good start of this year as a continuation from the really successful last year. Next slide, please. So if we have any new listeners today, I thought a short introduction as well as to the company. So BioArctic is a unique Swedish biopharma company, and it was all based and founded of the scientific breakthrough by our founder, Professor Lars Lannfelt. He first discovered a Swedish and then the Arctic mutation in Alzheimer's disease, and we are focusing on developing disease-modifying treatments for Alzheimer's disease and Parkinson's disease, and no such treatment exists on the market today. We have 2 really important successful strategic collaborations with Eisai in Alzheimer's disease and AbbVie in Parkinson's disease. We have a great agreement with them with a total value of up to SEK 1 billion plus royalties if we come all the way to the market. Our most advanced program is BAN2401 in Alzheimer's disease, where we now are in Phase III, and I'll come back to this in this presentation. BioArctic is also a bit unique in that we have had positive financial results year-by-year during the last 6 years, and we have more than SEK 1 billion in the bank. We have a great organization and really, really good collaborations with universities, and we had a broad project portfolio consisting of fully-funded programs with our 2 strategic partners as well as innovative early programs with substantial marketing and outlicensing potential, which I will show on the next slide. So in the next slide now, Slide 5, we see that we have a broad portfolio, and it's well balanced. In Alzheimer's disease, we have 5 different programs. BAN2401, which is the most advanced now in Phase III with our partner Eisai. But we are still own other indications, and we are exploring other indications like, for example, Down syndrome with dementia and potentially traumatic brain injury. We have also outlicensed a backup compound for Alzheimer's disease, a backup to BAN2401, and Eisai is progressing that. So we don't have any costs by ourselves in Alzheimer's disease for BAN2401 or for the backup. Then we have 3 innovative early programs, all 3 different from each other, all 3 different from BAN2401. But all of them are disease-modifying treatment antibodies, and here, we are in discovery phase. And now with our solid financial situation, we can drive them all further and increase the value before partnering discussion. In Parkinson's disease, we have ABBV-0805, which now is taken over and driven by AbbVie, and they are covering the cost for the clinical program. We focus now on PD1601 and PD1602, which is in discovery phase. When you work on disease-modifying treatments, it's really important to be able to identify patients at an early stage and to follow disease progression and see the effects of a therapeutic intervention. Therefore, we work on imaging tool based on our biomarkers together with Uppsala University and biochemical biomarkers based on antibodies together with Gothenburg University. In our collaboration with Uppsala University, we have a really, really innovative and great, encouraging results in the blood-brain barrier technology platform. And this is really, really competitive. And we are at an early stage, but this has a huge potential for the future. And the last area is spinal cord injury. And here, we have a combination of a medical device and a growth factor. And here we are now in Phase II. Next slide, please. I'll say a couple of words about our 2 important strategic partners. In Alzheimer's disease, we have been collaborating with Eisai since 2005, and Eisai are really committed to dementia. They discovered the most sterling symptomatic treatment for Alzheimer's disease, which is Aricept or donepezil. And they are fully committed and have more than 10 different programs for dementia under development, and we can see that they're highly committed to BAN2401. We have, so far, received EUR 47 million from our collaboration, and we are now waiting for the next milestone, which will be linked when the first patient in the confirmatory Phase III trial will get the dose, then we will have a milestone. But as you can see, we have a majority of milestones still to expect if everything progress according to plan. And if we come all the way to the market, we will also have opportunity to high single-digit royalties, and considering the huge amount of patients, this could be a substantial amount of income to BioArctic. If we then look at Parkinson's disease, our collaboration with AbbVie since 2016. And AbbVie has the world's most-selling medicine, HUMIRA, which has 10 different indications. And AbbVie is also very committed to Parkinson's disease, where they have Duopa on the market for severe Parkinson's disease. And we work with them on disease-modifying treatment based on alpha-synuclein antibodies. We have, so far, received USD 130 million out of the total aggregated value of the deal with them up to USD 755 million plus royalties that will apply if we come all the way to the market. And considering the approach that AbbVie has taken on HUMIRA with multi-indications, we could also expect that, that could happen with our antibodies in Parkinson's disease and other indications. So even here, we can hope for substantial royalties in the future. Next slide, please. So now returning to Alzheimer's disease and especially then BAN2401. Next slide, please. So Alzheimer's disease is a very, very common disease, which affects a lot of people around the world, around 300 million (sic) [ 30 million ] people suffer, and it's also relatives who are very much involved in this disease and a huge impact on society. There is a huge unmet medical need, especially for disease-modifying treatments since there are only symptomatic treatments on the market today. And also, we are focusing on earlier and earlier stages of the disease, which will also further increase the market opportunity. And so this area has suffered from several drawbacks lately. With regard to the antibodies, they have been stopped due to lack of efficacy. And the small molecules, the base inhibitors, has been stopped due to side effects. And I will explain on the next slide why we think the BAN2401 is different. It's a unique antibody with the strongest clinical result, and we are now in Phase III. Next slide, please. So BAN2401 is a unique antibody with a targeted binding profile. It's especially defined to target the misfolded toxic aggregated forms of Abeta. They are called protofibril, and they are the bad guys, the toxic form. And BAN2401 is defined to selectively bind to those toxic [ species ] and eliminate them and not bind to the monomers and not so much to the fibrils. So BAN2401 has a unique binding profile as compared to competitors. We also are differentiated if you look at our clinical results in the huge Phase IIb studies with 856 early Alzheimer's patients that were presented last year. There we saw consistent effects of clinical endpoints, 3 different clinical scales. We had a dramatic effect on amyloid clearance and really importantly also effects on 4 different neurodegenerative biomarkers, both total tau, phospho-tau, neurogranin and neurofilament light, all of them are downstream of Abeta. So even though, it's an amyloid target, we also effect tau and other neurodegenerative biomarkers. In the study, most patients were randomized to the 2 top doses. Due to that, we had an early effect, and the top dose was selected as the best dose. And also in this that we saw that most patients got the 2 top doses. That means also that in the study, we had an effect. And important for disease-modifying treatments, the effects increased over time. So we have a unique clinical fingerprint of BAN2401 with rapid onset of clinical effect, with consistent effect on neurodegenerative biomarkers, and we also had a low frequency of the side effect ARIA-E, which is like the brain edema that you may see on a MRI scan, and normally -- or mainly at 90% without any symptoms. For BAN2401, we had not more than 10% in any of the doses in the Phase IIb trial, and no titration is required. And this is in contrast with competitors. If you look at, for example, aducanumab and gantenerumab, they had at least 6 to 9 months titration required. Eisai are really committed to BAN2401. They have already initiated 1 single Phase III study called Clarity AD, and this is now designed to confirm the positive results in Phase IIb. In this study, 1,566 subjects with early Alzheimer's disease and confirmed amyloid pathology will be included. The primary and secondary endpoints will include clinical outcomes, safety as well as imaging and other biomarkers. And the top dose from Phase IIb, BAN2401 10 milligrams per kg, will be compared to placebo and also will be administered twice a month. So it's really exciting now to follow this study. The next slide, please. So this is a just a curiosity slide, but I thought it was really interesting. When we are at AD/PD, this is a big Alzheimer's congress in March in Lisbon, there was this huge session with 1,500 people, key opinion leaders, researchers and physicians. And they had an interactive question, and then they got the question, which antibody that they think is most likely to succeed and become an approved therapy for early Alzheimer's disease, and the majority voted for BAN2401. And I think it's interesting to note that gantenerumab, who is ahead of us in Phase III, had much left to hope for. So next slide, please. What's happening with BAN2401 now then? Eisai has initiated a confirmatory Phase III trial, and we are now waiting eagerly for that if very thorough screening process will lead to administration of the first dose, and then we will receive our milestone. And Eisai is really committed and have also announced that they expect results from this trial as early as 2022. And this is really, really fast when you consider an 18-month treatment and a huge number of patients to be recruited, so I think that really shows how committed they are. We also have the open label extension study of BAN2401 now well underway, and here, the top dose, 10 milligrams per kilogram every second week will be administered to all the patients who are coming back. No matter if they had placebo or if they had other doses before, everyone is getting the top dose of BAN2401. And this study will also give us really important information in the future as we look forward to that. Eisai has also announced that they are exploring the potential for a clinical study at even earlier stages of Alzheimer's disease, and this is called preclinical stages of Alzheimer's disease. So we're expecting further news on that in the future. Next slide, please. So now we turn into Parkinson's disease, and next slide, again. And Parkinson's disease is the second most common neurodegenerative disease, and again, there is a huge unmet medical need for disease-modifying treatment since there are no such on the market yet. And this is what we are focusing on together with AbbVie. Next slide, please. So again, here we have a strong scientific rationale about our target is built on. And BAN0805 or it should say ABBV-0805 now, has a unique binding potential with a potential disease-modifying antibody. And we have really strong preclinical results, where we see that our antibody reduced those toxic, misfolded, aggregated form of alpha-synuclein but also called protofibrils in this active -- in this indication, but it's for alpha-synuclein now. And we also have really strong results in transgenic mice, showing that they got motor symptoms much later and increased lifetime considerably. So in this study, they increased life span with a doubling after treatment with our antibody. Next slide, please. And here, we have a short update on 0805 and follow-up antibodies. And I mean, we were really, really thrilled when we got the approval from FDA based on the IND that BioArctic personnel had written, and I think they've got a huge markup for us about our quality delivered here from BioArctic. And our very committed partner, AbbVie, quickly started Phase I already in March, and it's now well underway. And AbbVie is responsible for the clinical development now of 0805, and we're really focused now on the follow-up antibodies in collaboration with AbbVie. It's really exciting times as well in the Parkinson's area. Next slide, please. Now we're turning to the third disease area, the complete spinal cord injury. Next slide, please. And now we're turning to younger people, and this is mainly young men, could also be seen as, of course, that it's traumatic injury. It's based on accidents, for example, sports injuries or multi-vehicle accidents or falls. And falls could, of course, be any ages. And these patients, they have no treatment whatsoever available for them. And we have orphan drug designation for our treatment concept to SC0806 both in the U.S. and Europe. Next slide, please. So this is a unique regenerative treatment for complete spinal cord injury. And it consists of a medical device, which is biodegradable, together with a growth factor FGF1. Here we have really encouraging preclinical results showing that the nerves do regenerate after our treatment. We also see that we can restore electrophysiological function as well as start to gain some motor functions again. So really encouraging results, which made us go into clinical stage. Next slide, please. So now we are in Phase II, and we have now also included the first patient outside of Sweden, so the first patient now came from Estonia. And we had then that happening after safety evaluation of all the patients in the first panel, which supported progression into the next panel. And the first patient was administered SC0806 in February. So now we are in Phase II, and we are preparing for an interim analysis for both safety and efficacy. That is expected to happen within like a year's time or so. Next slide, please. I also would like today to say a couple of words about our technology platform. And as I said, we work on diagnostic tools. But today, I will allude to the technology platform, where we work on facilitating the transportation of antibodies across the blood-brain barrier. And here, we are working on multi-specific antibodies together with Uppsala University, and here is where we got the grant from Swedish Vinnova of SEK 10 million together with Uppsala. Next slide, please. So now we come to the financial summary, and I will hand over to our CFO, Jan Mattsson.

[Jan Mattsson, VP of Finance & CFO]

Thank you, Gunilla. Some words on the financials for the first quarter of 2019. The net revenues increased to SEK 63.4 million coming from SEK 52.3 million in the corresponding quarter of last year. This increase was mainly related to the AbbVie research collaboration regarding the Parkinson's project. Some words on the costs. Around some 85% of our costs are related to R&D. Our project expenses increased slightly to SEK 29.9 million from SEK 26.1 million, whereas other operating expenses were SEK 22.4 million compared to SEK 18.5 million for the corresponding quarter of last year, and this increase is mainly related to BioArctic being a larger organization today compared to a year ago. Operating profit decreased from -- decreased to SEK 17.3 million from SEK 18.9 million. Looking at the costs for the full year of 2019 from the period January to December, we estimate that the costs will be in the range of SEK 190 million to SEK 250 million. Next, please. Cash related and net profit for the first quarter, our cash balance amounted to being more than SEK 1 billion at the end of the quarter, SEK 1.255 million (sic) [ SEK 1.255 billion ]. Operating cash flow amounted to plus SEK 333 million compared to minus SEK 42 million for the corresponding quarter of last year, and the reason for the -- for this is that we received the USD 50 million payment from AbbVie in February. And net profit for the period decreased from SEK 15.4 million to SEK 13.6 million for the period. And to sum up, BioArctic showed another quarter with positive net results and a strong cash balance. Back to Gunilla.

[Gunilla Osswald, Chief Executive Officer]

So I will then conclude, and we'll take the next slide, so we are now on Slide 26. So the upcoming news flow we have in Alzheimer's disease is BAN2401, where we are eagerly waiting for that -- the first patient who will receive the first dose, and we will get our milestone payment, and then you will see a press release. And I think that will happen at least before the end of June, so please stay tuned. It will happen. And then we also are expecting to hear a decision from Eisai with regard to earlier stages on Alzheimer's disease. In Parkinson's disease, everything is progressing well, and we are starting the Phase I study. And in complete spinal cord injury, the study is progressing well, and we are preparing for the interim analysis of safety and efficacy in a year's time. And then last there, I think you will hear also more information coming from us about our ongoing expansion and continued development of this really, really encouraging and important, innovative technology for facilitating the transportation of antibodies across the blood-brain barrier. So really, really exciting times. We had a great year last year. We have started really, really strong this year, and we have many exciting things ahead of us. So by that, I thank you so much and open up questions on the next slide, please.

[Operator]

[Operator Instructions] We have a question from Mick Cooper from Trinity Delta.

[Michael Thomas Dudley Cooper, Research Analyst]

I've got one question, and I know that you don't want to -- it's too early to disclose the targets of the early programs in Alzheimer's. But given the doubts in some circles about amyloid beta, I wonder if you could tell us if any of the -- those programs were either upstream or independent of amyloid beta.

[Gunilla Osswald, Chief Executive Officer]

Thank you so much. And nice try again.

[Michael Thomas Dudley Cooper, Research Analyst]

No. I'm not asking for the -- for you to tell me what it is. Just wondering if there were...

[Gunilla Osswald, Chief Executive Officer]

Yes. No. I think -- a couple of comments. First of all, I think it's really important not to say that amyloid is the same thing. I think it's really, really important to understand that there are many different targets and opportunities within the amyloid arena. So I really want to emphasize that, first of all. And then I will say that we have different targets, and I'm tempted to tell you, but I will not do that today either.

[Operator]

[Operator Instructions] There are no further questions at this time. Please go ahead, speakers.

[Gunilla Osswald, Chief Executive Officer]

So then I would like to conclude, and thank you so much for your attention. Thank you so much for today. Bye.

[Operator]

Ladies and gentlemen, this conference has been concluded.