BioArctic AB

STO:BIOA B

Earnings Call Transcript 2021-Q1

[Operator]

Welcome to the BioArctic Q1 Report 2021. Today, I am pleased to present CEO, Gunilla Osswald and CFO, Jan Mattsson. [Operator Instructions] Speakers, please begin.

[Gunilla Osswald, Chief Executive Officer]

So welcome to BioArctic's First Quarter Report 2021. I'm Gunilla Osswald, and I'm the CEO of BioArctic. I will share the presentation here today with our CFO, Jan Mattsson. This year has started really well for BioArctic. Our most advanced program, lecanemab, BAN2401, in Alzheimer's disease, has further been strengthened by new data and other data in the Alzheimer's field. Our partner, Eisai, has completed enrollment of patients into the pivotal Clarity AD study. And our Phase IIb results have been published. Our project portfolio has progressed well and expanded during the first quarter of this year, and I will describe more about this in the presentation here today. Next slide, please. BioArctic is listed on Nasdaq Stockholm Mid-Cap, and this is our disclaimer. Next slide, please. BioArctic is a unique Swedish biopharma company with the aim of improving lives for patients with disorders in the central nervous system. When I say that I think it's a unique company, I base that on 4 different areas combined. The first one is that we focus on R&D of innovative treatments for central nervous system disorders, where there is a high unmet medical need like Alzheimer's disease and Parkinson's disease. These diseases affect large patient groups and are relative with a large cost for the society. Today, there are only symptomatic treatments available, and we work with disease-modifying treatments meant to affect the underlying disease and slowing down the disease progression. The second aspect is that we have a great organization with very experienced and engaged coworkers and important fruitful collaborations with universities and with our 2 strategic partners, Eisai in Alzheimer's disease and AbbVie in Parkinson's disease. The third aspect is that we have an attractive and well-balanced project portfolio. We have projects spanning all the way from early discovery to late Phase III. We have partner projects that generate revenues by milestone and where our strategic partners carry all the costs for clinical trials. And we have also early -- fully owned projects with substantial marketing and out-licensing potential. The fourth aspect is that BioArctic is well financed with a strong cash position with approximately SEK 1 billion on the bank. And we have valuable collaboration agreements with Eisai and AbbVie at the value of up to SEK 8.9 billion plus royalties, if we come all the way to the market. So in summary, BioArctic is a dynamic and very exciting company with a huge potential which I'm happy to lead. Next slide, please. Some highlights so far this year, and I will start with our most advanced program, lecanemab, for Alzheimer's disease. And I will start with the press release that we had yesterday. Then we announced that the Phase IIb trial with lecanemab has been published in Alzheimer's research and therapy. And we also announced that our partner, Eisai, has expanded the confirmatory Phase III study called Clarity AD with approximately 200 patients with early Alzheimer's disease. So now the study has completed enrollment and, in total, 1,795 early AD patients are part of this trial. And they will now be treated for 18 months, and then we expect the readout in September 2022, so next year. And this study is, of course, aiming to confirm the promising results that we saw in the big Phase IIb trial. The next aspect is what happened at different Alzheimer's congresses earlier this year. And that was a huge Congress AD/PD in March, where BioArctic presented data. And there, we showed that we had significantly elevated levels of soluble AD protofibrils, the harmful forms of amyloid beta. And those were seen in Down syndrome patients in a similar way to Alzheimer patients and this in contrast to normal controlled person. The binding of lecanemab to these harmful forms of amyloid beta, the protofibrils and to plaques was for the first time demonstrated in Down’s syndrome patients. So these data together suggest that lecanemab could help preserve brain function in adults with Down syndrome with dementia. So I think that is an important step forward for this indication. Eisai also presented results -- updated results from the Phase IIb open-label extension study at the Congress. There, they have shown that the effects of lecanemab on amyloid reduction that persist for up to 2 years following lecanemab discontinuation. So if you look at the little graph there to the right. So those patients, who were part of the core study of the Phase IIb, there, we see that lecanemab dramatically decrease amyloid in the brain. So they are normalizing the levels in the brain of amyloid. When they are without treatment, until the open-label extension study started, there, we see that the low levels remained for those patients, who had got the treatment of lecanemab. For those patients, who had placebo in the core study and no treatment, they continue on a high level. And when they have been started the open-label extension study, for those patients who previously had placebo, they had now a dramatic decline of amyloid in the brain. So a clearance that is dramatic, normalizing the levels of amyloid in the brain. And for those, who already have had the clearance of amyloid from the brain, there was only a small further decline. Importantly, also was that lecanemab when it was dosed 10 milligram per kg biweekly, was shown to reduce amyloid levels in the brain to normal levels in more than 80% of patients, who participated in the core and in the open-label extension study. And this as early as 12 months into treatment. Other really important findings and presentations at the Alzheimer-Parkinson Congress was that we now can note that 3 different anti-amyloid antibodies have shown clinical effects and reduction of amyloid in the brain of Alzheimer's disease patients. So I think that all supports the amyloid -- anti-amyloid hypothesis and further strengthens lecanemab. And when we compare lecanemab with other late-stage competitors, we can note that lecanemab is very competitive. Next slide, please. And other highlights during the first quarter were that we had important learnings at the Alzheimer-Parkinson Congress in Parkinson's disease in that field, and that supports now, AbbVie, our partner, when they are defining the Phase II program. So right now, we are discussing with AbbVie about the design of Phase II and preparing for the Phase II program. And other highlights was that we had a European patent granted for new antibodies targeting truncated forms of amyloid beta. And our patent portfolio has expanded further during the beginning of this year. So now it includes more than 230 granted patents and 60 pending patents -- the patent applications, and this is within 13 patent families. Our project portfolio has also expanded, and I'm really excited about this that we have now 2 new Alzheimer's disease projects that are coupled to our Brain Transporter technology. So that technology platform has evolved in a great way, and it's now linked to 2 of our Alzheimer projects. And for myself, personally, I also had a highlight when I had the opportunity to present BioArctic and our important research in Alzheimer's disease to the Swedish Royal Family. And I was really impressed by their high level of engagement in this area. So in summary, BioArctic has got a great start of this year. Next slide, please. BioArctic has an attractive and well-balanced portfolio, and it's all focused on central nervous system disorders. And we have divided it in 5 different areas. Alzheimer's disease is the largest area. And when I say it's balanced, I mean it's from -- on 3 different ways that we have several projects in different areas and that we have also projects spanning from early discovery all the way to late Phase III. And the third is that we have a combination of fully financed partnered projects and innovative fully owned projects with great potential. And our strategic partners finance the expensive clinical programs in Alzheimer's disease and Parkinson's disease, whereas BioArctic financed less expensive preclinical phases, where we can increase the value of the project before going into partnering discussions. And we can also notice that for this quarter, we have expanded the project portfolio with 2 new early discovery projects together then with our Brain Transporter technology. And you see them as AD-BT2802 and AD-BT2803. Next slide, please. BioArctic has 2 long-standing successful partnerships together with Eisai in Alzheimer's disease all the way back since 2005. And Eisai is a great partner, and they are very committed to dementia and to lecanemab. We have so far received EUR 65 million out of the total aggregated value of the agreement of up to EUR 222 million. There is still a lot to receive if the program continues to progress well. And if we come all the way to the market, we can also expect royalties of substantial value. I think that they could be like blockbuster revenues for BioArctic. And that means that we could see revenues of more than USD 1 billion per year. And I think this is quite impressive, if you consider that we are not having any cost for the clinical program. And furthermore, we also have the right to other indications, and we also have the right to commercialize lecanemab in the Nordic region for Alzheimer's disease. So I really think that BioArctic has a great business model. And that model is also applied in Parkinson's disease where our partner is AbbVie, and we have a very successful collaboration with them as well. In this collaboration, we have so far received USD 130 million out of the total aggregated value of USD 755 million. And if we come all the way to the market, we could also expect substantial royalties here. And as we have already mentioned that they are planning to start with Parkinson's disease for ABBV-0805, but they are also looking into other potential indications for ABBV-0805. Such indications like multiple systemic atrophy and Lewy body dementia. So this collaboration could also lead to substantial revenues for BioArctic if it all continues to progress well. So I'm really happy and proud of these 2 collaborations. Next slide, please. We'll talk a little bit more about lecanemab, where our partner, Eisai, are strongly committed. And they have a broad program, and there are now 3 different clinical studies underway. We'll start with Clarity AD, the Phase III confirmatory study in early Alzheimer's patients. The study is progressing well, and patient enrollment was completed earlier this year, as I said. And we now have 1,795 early Alzheimer's patients, who will be part of the primary endpoint readout with 18-month data, which Eisai expects to be available in September 2022. The second study in the same patient population, which is mild Alzheimer disease and NCI. Those 2 together are called early Alzheimer's disease. And the second study there is then the open-label extension study linked to the Phase IIb study, which is ongoing with about 180 patients. And this is where we get data continuously since this is an open study, which is being presented at congresses, and we just had this presentation at AD/PD and other congresses earlier this year, as I just mentioned. Then the second Phase III program is in even earlier stages, very early stages. And that now we talk about individuals, who are not yet having any symptoms. So this stage is called preclinical Alzheimer's disease. But these individuals, they have increased levels of amyloid in the brain, and they are then part of this Phase III program called AHEAD 3-45. And this is a study which where the Alzheimer's Clinical Trial consortium has selected lecanemab together with Eisai to be part of being explored as more of a prevention program at this very early stages to -- and the aim here is to see that we can reduce amyloid levels in the brain and normalize them and then also evaluate therapeutic effect of lecanemab on the progression of this disease. So we are very impressed by how our partner, Eisai, are driving lecanemab in a broad approach to support and help Alzheimer's patients. And we are really looking forward to following the progress here. So the next slide, please. So what about our early-stage portfolio? Well, our early-stage portfolio continues to progress well and according to plan, despite the COVID-19 pandemic situation. And I think the ways that we have adjusted and, of course, we work a bit differently. But so far, we have managed to progress our early-stage portfolio without any noticeable disturbances. I think it's important to have several different possibilities to target Alzheimer's disease since it's a huge disease affecting many, many patients around the world. We say that about 30 million patients around the world are affected by Alzheimer's disease, and it's really increasing and increasing since it is linked to age, and the population around the world is getting older and older. So therefore, we are working on different targets. And I think in the future, we will also most likely see a combination of different targets in order to give the patients the best outcome of the treatment. So we have 6 fully owned disease-modifying antibodies now in our Alzheimer's portfolio, and we also have out-licensed backup compound to BAN2401 in collaboration with Eisai which also is in early stage. So this quarter, as I said, we have expanded the early-stage portfolio with 2 new Alzheimer's projects linked to our Brain Transporter technology. Our preclinical programs in Parkinson's disease and in other CNS disorders is also progressing well. And we are also, as I said, progressing the Down syndrome with dementia patient segment with new data, as I just reported. And I'm really excited about how well the Brain Transporter technology platform is progressing. And also, as I said before, we are working on this diagnostics. And this is another area where important things are happening in the field around us, where blood markers are looking to be more and more promising. And that will be an important complement to the disease-modifying treatment in order to identify the patients at an early stage. So also great progress for the early-stage portfolio during the beginning of this year. Next slide, please. So by that, we are now coming to the financial summary, and I will hand over to our CFO, Jan Mattsson.

[Jan Mattsson, VP of Finance, Secretary of the Board & CFO]

Thank you, Gunilla. And for those of you that don't know BioArtic so well yet, I'd like to point out that we currently don't have any steady revenues, but we have a business model that is focused on partnership agreements, which means that our financials are very much linked to milestones and that income is related to research projects with our partners. With that, let's start looking at our numbers. And my comments here relate to the quarter's number. Net revenues were SEK 7 million for the quarter compared to SEK 36 million in the same period last year. The decrease in the quarter compared to last year relates to lower revenue from the Parkinson's disease program, which is according to plan, together with the fact that during last year in the same quarter, we had a one-off of SEK 23 million that was recorded, attributable to a remeasurement of total costs on the Parkinson program. Looking at OpEx. Total costs are in line with last year from SEK 36 million to SEK 38 million, of which project expenses in total increased to SEK 11 million from SEK 10 million in the first quarter, and this was mainly related to and explained by our increase in our own projects and our expanded portfolio. Moving to operating results. It was down to minus SEK 29 million in the quarter compared to plus SEK 4 million in Q1 of last year. And just as for net revenues, this relates to the Parkinson's disease program. As you look at our costs in the coming year, we forecast to have costs of -- in the range of SEK 180 million to SEK 220 million. Next slide, please. Looking at cash and net result. The cash balance continues to be in good health and amounted to just below SEK 1 billion at the end of the quarter. Now cash flow from operating activities was minus SEK 38 million compared to minus SEK 36 million in Q1 of last year. Net result for the period was minus SEK 29 million compared to plus SEK 4 million same quarter last year. And in summary, we continue to be in good financial shape. And with that, I hand back again to Gunilla.

[Gunilla Osswald, Chief Executive Officer]

Thank you, Jan. So by that, we are now coming to upcoming news and closing remarks. And now we are on Slide 14. So upcoming news flow. Eisai are progressing the broad clinical program for lecanemab in Alzheimer's disease in a great way. And we expect more data to be presented at coming international congresses. The next one to look out for is the AAIC Congress in July, which will be partly virtual. And everyone in the Alzheimer field is also, of course, very excited to follow the FDA decision on aducanumab, where the review period is until the 7th of June. In Parkinson's disease, we look forward to the continued Phase I study being completed by AbbVie and with AbbVie's preparation of the Phase II programs, where we got a lot of important learnings from the competitors at the AD/PD Congress. And the diagnostics area, where we have seen great progress in the Alzheimer field, where we will follow this closely, and I want to point out, especially the blood biomarkers like phospho-tau 217, which looks really promising. And this could be a very important contribution to the disease-modifying treatment for Alzheimer's disease. And our brain barrier technology platform, we will also continue to develop that and see what we can do further sharing of results of that. So we can conclude that we have had a very good start of 2021 and that we have exciting times ahead. Slide 9 -- 15, please. And I just want to close by saying that BioArctic is built on great clients. We have great projects. We have great partners. And it's all being done by our great people working for BioArctic. And everything we do is with patients in mind, and our aim is to help patients with brain disorders. And I think that we are on our way to help Alzheimer's patients within not too long. Next slide, please. And by that, I thank you for your attention, and we are happy to take questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Joseph Hedden from Rx Securities.

[Joseph Hedden, Healthcare Analyst]

This morning's release , you announced the first time programs where you're coupling antibodies with more Brain Transporter technology. I was just wondering if you could give any more color on those programs, for instance, targets of the antibodies and time line to preclinical data or clinical data? And then the second question I had, it looks like the preclinical data on the Down syndrome, there's proof of mechanism there, it's quite promising. What steps do you see that you still need to complete to get to a Phase I trial where might that be?

[Gunilla Osswald, Chief Executive Officer]

Excellent question. Thank you, Joseph. I wish I could reveal more information for you on the Brain Transporter. But I think what we can say now is that our Brain Transporter technology platform has progressed so well, and we are working on a broad potential for the platform as such. And then we have selected 2 Alzheimer's programs that will be the frontrunners with this technology. And I'm not in the position right now that I can reveal the target and the time lines. But I can say that we are very encouraged and pleased to see that it's now being applied into some of our projects. That's the first step. So I think it's really exciting. And then your second question on Down syndrome, where I also agree with you, it's exciting that we have been able to show the proof of mechanism, at least in the laboratory stage. And we have had a presentation at AD/PD. We also have had one publication so far come out just recently now in April. And there are some more steps that we can take before we would go into, and I would say we could go directly into Phase II here since we have so much learnings already about lecanemab. But important for this patient population is to have a subcutaneous formulation. And that is one of the things that we are working on. That's why it still will take a bit of time before the clinical trials will start. But then I think we can start with Phase II. So I hope that was answer to your question.

[Joseph Hedden, Healthcare Analyst]

Yes. If I could just possibly ask a follow-up on the blood-brain barrier technology. Is that technology something that you're open to license? It's just I know that certain other companies in neurodegenerative space have their own technologies, and it's becoming quite a hot field. So are you getting any interest from potential partners coming to you to use that technology? Or is that something that you would be open to?

[Gunilla Osswald, Chief Executive Officer]

Absolutely. Great question. And I mean, as you have heard me say before, I'm really excited about this technology. And I think that we have something, which is really in the front run in this area, where we are competing with some big players as well. And what we are thinking about is, of course, several nonexclusive licenses here. And I think the first step is to start with a couple of our own, but then definitely, we're open to discussions that we are all the time, if any, big pharma want to have collaborations with us and so forth. So that door is always open. But our approach is that we would like to start now with our 2 internal programs.

[Operator]

Our next question comes from the line of Gergana Almquist from Redeye.

[Gergana Almquist, Equity Analyst]

My first question is about the article that was published yesterday. How did the study results from the IIb study inform the Clarity AD? And I mean exactly the endpoint, the design and the measurement. Why would they -- why were they selected exactly in that way in the new Clarity AD study? And what was learned from the IIb study? That's my first question.

[Gunilla Osswald, Chief Executive Officer]

Excellent question. Thank you so much, Gergana. So of course, I'm very pleased to note that we now have got the Phase IIb results published in Alzheimer's research and therapy. And the Phase IIb trial was a specific study in order to, first of all, see that we have an effect confirm -- to see that we have an effect and a good tolerability profile and, importantly, select the right dose for Phase III. So there are some really important learnings from that study that is being applied in Phase III, especially with regard to the dosing and patient population is the same as in Phase IIb, and that I think is very important. Then when there are interactions with regulatory authorities, they prefer CDR sum of boxes as the primary end point. And CDR sum of boxes was one of the clinical outcomes in the Phase IIb trial. But now in the Phase III trial, which is aimed to confirm the encouraging results of the Phase IIb. There, the primary endpoint is CDR sum of boxes, and secondary endpoints are the other clinical scales like ADAS-Cog, the cognition scale and outcome. And then it's also important to see that and to confirm that lecanemab is clearing amyloid from the brain and normalizing the amyloid levels in the brain and also confirms the good tolerability profile with a low level of the side effect that we have seen so far. So I think that -- and then the difference is, of course, with regard to the design of the trials. The Phase III program is a very traditional study with 2 arms, placebo versus 1 dose of lecanemab. So -- and -- but I'm very pleased that the article is out, so everyone can see. And it's the same information as we have been providing all the time, which I also think is very reassuring. It's now peer-reviewed article, which is in great consistency with the communications that has been going on since the results came up.

[Gergana Almquist, Equity Analyst]

And my second question is actually comes from our retail investors for what it makes. And yes, how do you think is the aducanumab and lecanemab both get approval, how would then the market split or the -- because they both are promoted by the same companies, how would this look like in terms of sales and marketing? And they are probably to follow ups to your point hypothetically?

[Gunilla Osswald, Chief Executive Officer]

Yes. You were breaking up a little bit, but I think I understood your question. What is both aducanumab and lecanemab comes out on the market?

[Gergana Almquist, Equity Analyst]

Yes. How would it look like in terms of the sales and the marketing? That was the question.

[Gunilla Osswald, Chief Executive Officer]

So I think that, first of all, this is a huge patient population. It's an enormous number of patients around the world, who suffer from Alzheimer's disease. So there is room for many different treatments. And I think if we look at what we have shown with lecanemab is that we have a very consistent results in our Phase IIb trial on clinical outcomes. We have also seen that we have an early effect at 6 months, which will increase more and more over time and a dramatic effect in clearing plaques rapidly. Where we differ also in contrast to this earlier effect and so forth is on the side effect profile, where we have shown that we have a very low frequency of the area, and a very, very low frequency of any patient having any symptom. So lecanemab is the only treatment, which can be given with the top dose directly without any titration by giving the dosage slowly titrated upwards like others. So I think that lecanemab is very well positioned no matter what other compounds that will be coming into the market. So I think definitely, there is room for different. And if you compare just aducanumab with lecanemab, lecanemab is the only one that really targets those toxic forms of amyloid, the protofibril and clear those, whereas aducanumab has a slightly different profile and targets more the fibrils. So -- but I definitely think there is room for fibrils.

[Operator]

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

[Gunilla Osswald, Chief Executive Officer]

Okay then. I thank you so much for your attention and for the great questions. And I wish you all a great day and stay safe.

[Operator]

This now concludes our presentation. Thank you all for attending. You may now disconnect.