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BioArctic AB
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Welcome to BioArctic's Q1 Report 2022. Afterwards, there will be a question-and-answer session. Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. Please begin your meeting.
Good morning, and welcome to BioArctic's presentation from the first quarter. I'm sorry about the technical issues. I'm Gunilla Osswald, I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Jan Mattsson.
I will give an update on lecanemab and some recent highlights in Alzheimer's disease. The Alzheimer's disease field is progressing really well with both lecanemab and some other treatments and with diagnostic tools, such as blood-based biomarkers. I think that it looks very promising for lecanemab. And this year will be very exciting for us with the lecanemab Phase III readout in Alzheimer's disease during the autumn and potentially an accelerated approval in the U.S. And I will talk more about that here today. And of course, I will also mention the recent information from AbbVie on our alpha-synuclein collaboration.
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, and the aim is to improve lives for patients with brain disorders. I think that we are unique based on 4 different areas together. The first one is that we focus on research and development of innovative treatment for brain disorders where there's a high unmet medical need, like Alzheimer's disease and Parkinson's disease. These diseases affect large patient groups and their relatives with large cost for the society. But it's a high medical need for disease-modifying treatment affecting 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 our strategic partner, Eisai, in Alzheimer's disease. We have an attractive and well-balanced project portfolio, that's the third aspect, with projects spanning from early discovery all the way to Phase III and now also in the regulatory process. We have partnered projects that generate revenues by milestones and where our strategic partners carry the cost for clinical trial. And we have earlier fully owned projects with substantial marketing and out-licensing potential.
The fourth aspect is that we are well-financed. We have a strong cash position of about SEK 800 million on the bank. And we have valuable collaboration agreements with big pharma like Eisai. I think BioArctic is a dynamic and very exciting company with a huge potential, which I'm happy to lead.
Next slide, please. BioArctic has a rich and well-balanced portfolio, and we focus, as I said, on brain disorders. We have fully financed projects like lecanemab in Alzheimer's disease and early innovative projects with great potential for the future. As you can see, Alzheimer's disease is our largest area. Lecanemab is our most advanced program. And here, the regulatory process in the U.S. is ongoing by our partner, Eisai, and they also have 2 large Phase III programs ongoing in parallel.
Even if the first step with the first disease-modifying treatment is successful, there is still a large medical need for more treatment options and for combination of therapy in Alzheimer's disease. That's why it's so important that we continue to work on further alternative approaches to disease modification of Alzheimer's disease.
This quarter, we have stopped one of our Alzheimer's project, AD1502, since the data does not support further progression. So we now have 5 early disease-modifying programs in Alzheimer's disease, including 2 of them where we have combined the antibodies with our Brain Transporter technology.
In Parkinson's disease, our partner, AbbVie, recently took a strategic decision to terminate the collaboration on our alpha-synuclein portfolio. And now we are working with AbbVie together to smooth and efficient transition of the projects back to BioArctic.
Other neurodegenerative indications, our portfolio here has expanded, and we have now also one more project for ALS with TDP-43, that is called ND-BT4813 (sic) [ ND-BT3814 ]. And this is a project which is combining TDP-43 antibodies with our Brain Transporter technology. The blood-brain barrier technology platform is really exciting. It's progressing well, and we have now combined it with several of our internal projects. And we will continue to apply it to more internal projects. And in the future, it could be applied to other companies' antibodies or proteins on nonexclusive license basis. I think that lecanemab is very important for BioArctic, but I also want to point out that BioArctic is more than the lecanemab.
Next slide, please. We have a long-standing and successful partnership with Eisai. They had been a great partner in Alzheimer's disease all the way back since 2005. We have 2 license deals and several research collaborations still ongoing. We have valuable agreements with them with a substantial amount still to receive if it continues to progress well. And in total, we can expect milestones up to EUR 151 million.
And if we come all the way to the market, we can expect royalties of high single digit, which could be substantial value for BioArctic, if you consider how huge this patient population is. And we also have retained rights to other indications and possibilities to market in the Nordics, which we are really looking forward to.
We have a collaboration with AbbVie since 2016, and that collaboration is now under termination. And that is regarding our whole alpha-synuclein project portfolio that we are now getting back. We have so far received USD 130 million. And due to their strategic business decision, they will end this collaboration now. And according to the license agreement, we will take back the projects and evaluate the best way forward. And discussions regarding the project transfer is ongoing.
I think we have a great business model. BioArctic brings forward new innovative projects with high quality. And then we partner with other large pharma companies to de-risk clinical development and optimize the commercialization opportunity.
Next slide, please. So an update about what has happened the first quarter of this year. With regard to lecanemab, Eisai, our partner, they have initiated the submission of application data of lecanemab. And the prior assessment consultation system in Japan, and this is with the aim of a faster regulatory approval in Japan. There was also several presentations on lecanemab at the AD/PD congress in Barcelona in March. And all the data presented continue to confirm the previous positive results and to further strengthen and differentiate lecanemab towards competitors.
We were also pleased to note that the first patient has been enrolled in the DIAN-TU NexGen study in dominantly inherited Alzheimer's disease subjects, where lecanemab is included as a backbone anti-amyloid therapy to be evaluated in combination with tau therapies. The project portfolio has been updated and one new ALS project has been added, as I said, and 1 Alzheimer's project has been stopped. We are continuing to build our Nordic commercial organization. And the 4 new recruits have now started, and they have vast industry experience.
Next slide, please. So I wanted to share some of the data being presented at the AD/PD conference in Barcelona in March, which showcases the great achievements being done within the field. And there is excitement towards the key results that are coming later this year. I think the atmosphere was very positive with optimism in the field, both with regard to treatments like lecanemab and with diagnostics, including blood biomarkers.
There were several presentations held on lecanemab. Professor Lars Lannfelt presented the unique binding profile of lecanemab in comparison with competitors. And Eisai presented many different presentations. For example, one which I show data on here on the slide, which shows new blood biomarker data from the large Phase IIb study with lecanemab.
And what you can see to the left is robust effect on the blood biomarker plasma Aß42/40 ratio by lecanemab treatment that compared to placebo. And it also correlates very well with the profound brain amyloid PET clearing results.
To the right, you can see the robust effect on the blood biomarker phospho-tau 181 by lecanemab versus placebo. I think it's clear that lecanemab targets amyloid and still, it shows a clear effect on downstream tau-related processes as well. So I think this further strengthens the case for lecanemab.
Next slide, please. Then some comments on events after the quarter. We have shared the disappointing news last week that AbbVie has taken the strategic business decision to end the collaboration with BioArctic's alpha-synuclein portfolio. And we will now, in accordance with the license agreement, take the projects back, and we're working on a smooth transfer. And we will then also evaluate the best way forward for these projects.
And yesterday, we had a press release on lecanemab, and that is a recently published article regarding disease modeling, which suggests that lecanemab could delay the progression of Alzheimer's disease dementia by several years. And I will show you more data on the next slide, please.
And this was then described in publication this week in Neurology and Therapy. And it's a disease modeling done by Eisai, which is utilizing data from the lecanemab Phase IIb study and from the large ADNI study in the U.S. with regard to standard of care treatment of Alzheimer's disease patients.
The modeling was performed to show -- to study long-term effect on lecanemab together with standard of care and compare that with standard of care only. Lecanemab treatment was estimated and showed that it slowed the rate of disease progression, which resulted in an extended duration in the earlier stages of Alzheimer's disease, like mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease dementia. And it shortened the duration in the later stages, like moderate and severe Alzheimer's dementia.
In the model, in the meantime, advancing to mild or to moderate or to severe Alzheimer's disease was longer for patients in the lecanemab-treated group than for the patients in the standard of care group only. And the prolongation was by 2.5, 3.1, 2.3 years, respectively.
The model also predicted a lower lifetime probability of admission to institutional care with lecanemab treatment. I think that analysis such as these are important to understand the potential clinical value and long-term effects for patients and families and society, which could be offered by lecanemab treatment beyond what can be seen in clinical trials. The outcome of Clarity AD Phase III study will, of course, be essential to further refine this model, and we are looking forward to the top-line results later this year.
Next slide, please. This slide shows the broad late-stage clinical program for lecanemab. And Eisai, our partner, is strongly committed, and they are driving this broad clinical program underway in a great way. The most important part is Clarity AD, the Phase III confirmatory study in early Alzheimer's disease patients, where the patient enrollment was completed in March last year, and they should be treated for 18 months. The study includes 1,795 early Alzheimer's patients. And on top of these, there is 100-plus Chinese patients, which is included to support a future regulatory application also in China.
The study is progressing really well, and we have a low discontinuation rate in the study. And many of the patients are going into the open-label extension study. So the 18-month data will be available at the end of September this year, but I think we have super exciting times ahead.
Eisai has also just communicated that they plan to evaluate a new dosing routine with reduced frequency of administration, utilizing blood biomarkers with dosing up to every third month in the open-label extension study. And they will also evaluate the subcutaneous injection formulation in the open-label extension study, which I think will be a great complement to the intravenous infusion.
The Phase IIb open-label extension study in early Alzheimer's disease is also progressing well with new data coming along continuously. And all the data that has been reported at congresses so far have further strengthened the data and confirmed the positive Phase IIb results with profound amyloid clearance from the brain and continued low frequency of the side effects area ARIA-E.
And then we have the other Phase III program in presymptomatic Alzheimer's disease called AHEAD 3-45, which is Eisai is driving together with Alzheimer's Clinical Trial Consortium, and that is progressing in many different countries around the world as well.
And then we have the DIAN-TU NexGen study for individuals with dominantly inherited Alzheimer's disease. The study started now in January this year. And lecanemab is here, the anti-amyloid treatment therapy that every patient will have, and half of the patients will then be combined with a tau treatment and half of the patients will have placebo as well. So I think that is also an exciting study to follow. So I'm really looking forward to the progression of this impressive broad program that Eisai is driving in Alzheimer's disease.
Next slide, please. Lecanemab has the potential to lead the paradigm shift in the treatment of Alzheimer's disease patients. We have a higher likelihood of success, which is based on the positive and consistent response in the Phase IIb study. And on that, all the data which is coming from the Phase IIb open-label extension study continues to strengthen and confirm the Phase IIb results. The pivotal Phase III study is well designed and designed to confirm the positive Phase IIb results.
I'd want to point out that, of course, all drug development is connected with some risk. But I believe that lecanemab has a high likelihood of success. We have the opportunity of being first with a full approval in the U.S. and the first disease-modifying treatment to be approved in -- for Alzheimer's disease in Europe and in Japan.
The rolling BLA submission to the FDA in the U.S. is under the accelerated approval pathway. This is ongoing by Eisai. And 2 of the 3 parts in the rolling submission have been submitted, including the preclinical part and the clinical part, together with a proposed label.
The third and final part is CNV, which is expected to be submitted this quarter. And BioArctic, we can then expect a milestone after the regulatory submission. And there is a potential for an accelerated approval in the U.S. already this year. A full BLA submission, which is the most important part, of course, is planned to be submitted to the FDA pending positive results in the Clarity AD study, together with a regulatory submission in Europe and in Japan. And all of these are expected to be submitted by the first quarter of next year.
There is a potential for a full approval in the U.S. already next year and in Europe and Japan next year or potentially the year after. I think it's really encouraging to see that lecanemab seems to be the best anti-amyloid antibody with a great opportunity to differentiate versus other late-stage competitors. We have shown that we have a rapid and profound clearance of amyloid from the brain by lecanemab. We see an early onset of clinical effect in slowing of cognitive decline. We see that we have a better tolerability profile with a low frequency of ARIA-E versus competitors, even without titration. And lecanemab is the only one of the late-stage anti-amyloid antibodies that gives the full therapeutic phase from day 1.
Further development programs are also ongoing. I think it's very important with the subcutaneous injections and alternatives. And this will then make self-injections possible and more convenient administrations at home. Blood biomarkers are also making great progress in parallel with the therapeutics. And Eisai will utilize the blood by biomarkers to explore less frequent dosing as maintenance dosing after that brain amyloid has been cleared. And the blood biomarkers are also being used in order -- in screening to identify the right patients. Other clinical studies in other Alzheimer's populations will also be interesting to follow.
So in summary, I think it looks great for lecanemab. Of course, nothing is ready until it's ready, but I think that we have a very exciting year ahead of us.
Next slide, please. And by that, I will hand over to our CFO, Jan Mattsson. Next slide, please.
Thank you, Gunilla. My comments relate to the quarter's number, and I inform you that we are now on Slide 14.
13.
13, sorry. For those of you that don't know our company so well yet, at present, our revenues consist of milestone payments and compensation from collaboration agreements, meaning that we don't have any steady revenue since we don't have any product on the market yet.
Net revenues amounted to SEK 4 million in the quarter compared to SEK 7 million in Q1 of last year. Total costs in the quarter were SEK 10 million higher than in last year. And costs will continue to increase as we continue to build a commercial organization and to further progressing our expanded portfolio. Operating loss was SEK 44 million in the quarter compared to SEK 29 million same quarter of last year. And our expenses for the full year 2022 are expected to be in the range of SEK 220 million to SEK 260 million compared to SEK 166 million in '21. And the reason, again, for the increase is the buildup of the commercial organization prior to the potential launch of lecanemab and costs for the expanded in-house project portfolio.
Next slide, please. Cash balance amounted to SEK 801 million at the end of the quarter, and operating cash flow amounted to minus SEK 40 million, which is slightly more compared to Q1 '21. Net result for the quarter was minus SEK 44 million compared to minus SEK 29 million in Q1 of the previous year. And in summary, BioArctic continues to have a strong financial position.
With that, back to Gunilla on next slide, please.
Thank you, Jan, and I will finish with upcoming news and some closing remarks.
Next slide, please. So I will talk about upcoming news flow and start with Alzheimer's disease. Eisai colleagues are working very intensely right now on the final part of the rolling submission for an accelerated approval in the U.S., which is expected to be completed in the second quarter of this year. Then of course, as I said before, the Clarity AD top-line data is expected in late September this year. And data with lecanemab will continuously be presented at international congresses. And the next one we are looking forward to is AAIC in July, which will be a hybrid meeting again, partially virtual and partially on site in San Diego. And here, lecanemab will be included in several presentations.
In Parkinson's disease, data will be presented at International Congress. And the next one is [ Neuro 4G ] in the middle of May. We will now take the projects back and evaluate the best way forward, and we will communicate more when we have more information to provide.
Our Brain Transporter technology platform is progressing really well. And we are expanding our portfolio with the Brain Transporter couple projects. And we will communicate more regarding all of our projects when we have more relevant information to share.
Next slide, please. So I'll just close by saying that BioArctic is built on great science. We have great projects. We have great partners and great people working for BioArctic. And everything we do is with patients in mind. Our aim is to help patients with brain disorders, and I really think that we are on our way to help Alzheimer's patients right now. We have a very exciting year ahead.
Next slide, please. And by that, I say thank you so much for your attention. We are happy to take some questions.
[Operator Instructions] Our first question comes from Joseph Hedden.
Just firstly, one on the financials. At the end of the AbbVie collaboration, how will you be recognizing the remaining deferred revenue? And can you confirm how much that is? I think it's about SEK 51 million, something like that.
And then secondly, on lecanemab, what is your interpretation of CMS' recent final decision regarding Medicare reimbursement in the U.S.? Do you think that the coverage, the development that they've confirmed is broad enough to reach most eligible patients? Or is it the hope that Clarity AD and perhaps similar results from other antibodies are going to widen that reimbursement even further?
I'll start with the finance question. When the license agreement is finally concluded, we will close the AbbVie project in our books. And this is expected to happen in the coming months. And we have not yet considered any financial effects on this.
Okay. And then I'll take the other question, which is about the CMS decision. And I think it's fair to say that -- which I've said all the time, that it's great if we get an accelerated approval, but that would be with limited reimbursement most likely in the U.S. So don't expect too much of an uptake.
I think still it's very important because we can start to prepare sites and so forth. But the most important thing is the Clarity AD results at the late September and then to provide an application for a full approval. And what CMS has said is that after a full approval, if we have convincing clinical data, then we could expect a broader access to patients with a broader reimbursement.
And our next question comes from Patrik Ling from DNB Markets.
Unfortunately, I cannot hear anything.
Are you on mute, Patrik, maybe?
Was there any more question? Are we having more technical issues?
Operator, can you please help?
Hello, operator? Are you there?
I can hear you, but there is no one else, by the way.
Is that Gergana?
Yes.
Gergana, maybe we can -- if you have any question, maybe we can take your question. Meanwhile, we are waiting for the operators.
Okay. So I just was -- I was just curious whether you have some time lines to move more projects into the preclinical stage and further on.
Thank you so much. So you see that we have a broad portfolio in the research phase, and it's progressing really well. I mean like always, we have so many ideas that we had to stop one project due to that the data didn't support further progression. On the other hand, we now added a new project and increased our focus also in ALS. I cannot say exactly when next project will be transferring to the next stage. But I can say that the portfolio is progressing really well.
Okay. And about the SEK 100 million -- or between the SEK 80 million and SEK 100 million higher costs, why -- which, exactly, projects in the portfolio are taking up this cost? Or where do you invest mostly?
So I think it's fair to say that the majority of the increase in the spend is linked to the buildup on the commercialization, organization and activities that we're doing to prepare for commercialization of lecanemab. I mean, what we have to think about here is that we are talking about a completely new kind of treatment for a kind of new patient population with earlier stages of Alzheimer's disease, so a larger patient population and also with kind of infrastructure that should be able to take care with patients. So there's a lot of work that needs to be done in the commercial part, which we are working actively on. So that is one part.
The other thing is when the whole portfolio, which now is expanded, is progressing further, that will be more cost in the coming years. And as soon as we can say which projects that is being transferred into the preclinical stage, where it's a little bit more costly, we will provide that information when we have taken those decisions.
Great. And when it comes to commercialization in the Nordic, just out of then, your reasoning, why do you choose to market it yourself to build up this organization yourself?
Sorry, I don't really understand your question.
Was it why we choose to commercialize ourselves in the Nordics?
Instead of with a partner, yes.
So we think -- I mean, it's really important to have very experienced people doing this, and we have been able to recruit extremely experienced people into our commercial organization. And I think that we are working very closely with Eisai to sort out all the details about how we will collaborate with them in commercialization of lecanemab in the most efficient and successful way.
In the Nordics?
But I think that's in comparison with -- I mean, we are getting high single-digit royalties on a global level. There is an opportunity for BioArctic to build the organization into a more full-fledged biopharma company and to get more revenues by also doing the opportunity that we have to commercialize in the Nordic region. So I think it's both a strategic and a financial benefit for BioArctic to go into this path together with Eisai.
Our next questions come from Chien-Hsun Lee, Pareto Securities.
So could you comment a bit on what kind of progress that AbbVie has completed in ABBV-0805? And if you transfer the project back, from what standpoint will you start sort of develop the project?
So thank you. So AbbVie has been driving the project forward in Phase I. So BioArctic, we delivered the whole IND package. What AbbVie has done since is do the Phase I data, which has been presented, which looks really encouraging with a long elimination half-life, a good PK profile and a good safety tolerability profile. So we are now discussing how we're doing a smooth transition of the project, including what AbbVie has done to increase the value in the portfolio.
And then we will look into different approaches and see how we can try to find a new partner in an efficient way to drive the program further. We are strongly -- we strongly believe in this program still. We think that we have the most selective compound in 0805 with more than 100,000-fold selectivity versus the monomers, the physiological form of alpha-synuclein, and we are then targeting those harmful forms called protofibrils and oligomers of alpha-synuclein. So we think -- and we have very strong preclinical data that we have generated and a good Phase I data.
So we think we have a great asset that we are now getting back in a smooth, efficient way together with AbbVie, and then we will find a new partner. So that's our approach.
And our next question comes from Patrik Ling, DNB Markets.
First a question regarding the open-label extension trial for Clarity AD. Do you have a sense for how large proportion of patients that actually complete Clarity AD that moves into the open-label expansion?
So great question. Thank you, Patrik. What Eisai has revealed is that 13.9%, when they last reported this, of discontinuation, which is lower. Normally, for a Phase III trial, you estimate 20%, that's normal. So we have much lower than that. So 13.9% was that. And then almost all of those patients then come into the open-label extension study. There is a high -- people highly want to continue because in the open-label extension studies, then every patient gets lecanemab, even those who had placebo in the core study and also had lecanemab in the core study. Everyone then gets lecanemab. So there is a very high proportion of the patients going in there. So the last thing that was reported was that more than 620 patients was already in that part. It's progressing really well.
Is it fair to assume that for a patient that's been on placebo or even the patient that's been on treatment that you do a sort of a baseline PET scan and stuff like that?
Yes.
More or less likely you did in the other open-label extension?
Yes. And I think what we have heard from Eisai, which was presented at AD/PD, it's also that the patients who will come into the open-label extension study will be followed with several different measurements. Because here, they will also be both looking at the subcutaneous formulation and comparing those who have had [ IV ] before with lecanemab versus those who will be having the subcutaneous administration of lecanemab who previously had placebo. So I think that would be very important data. And also, they will look at this with the increased frequency or increased -- less frequent, increased time in between dosing in both open-label extension study. So there will be a lot of measurements, of course, including PET and also fluid biomarkers and the blood biomarkers. Very important.
Okay. Great. And could I also ask, when it comes to the increased estimate of operating expenses here for '22, does that in any way reflect that you might have to assume some additional costs after you get ABBV-0805 back? Or would that come on top of the SEK 220 million to SEK 260 million?
Well, that is not included in that calculation at all. And that'll -- well, we're now starting an -- in certain discussions with AbbVie, so we don't know where that will end up.
But I think it's fair to say that, I mean, we have -- it's very clear in the agreement that we have the right to get it back, and we are discussing now how to get it back in the most efficient and smooth way. I don't think there will be any major implications this year, but we will come back with more details as soon as we have that.
Okay. Great. But it's fair to assume that just the fact that you get it back would probably imply some additional costs just to keep the project fresh and alive and available for additional out-licensing?
What I can say is we are eagerly waiting to be able to work on these assets again. And we think we have some great assets here that we really would like to drive forward in the most efficient way. And of course, we will also think about potential new partners as well. So we will come back with more information when we -- this happened last week, so please stay tuned. We will come back with more information as soon as we have that.
Okay. Great. Then the last question, if you can give a little bit more granularity or clarity on the buildup of your commercial organization in the Nordics. How -- like how large organization do you think you would need? And then how many sales reps and so on? And if you could share anything more on your thoughts here for marketing lecanemab?
Yes. So right now, we have 6 very, very experienced people in our commercial organization. It's amazing how we have been able to attract really experienced coworkers here. And this is what we will have until we have the Clarity AD results. Then the next part, so we will do a stepwise recruitment strategy here. So after that, we will recruit some more people, and we are just now in discussions with Eisai about exactly how we're going to work together with them with regard to commercialization of lecanemab in the Nordics.
So we will come back with more information on exactly how large the organization will be. But we are very committed to make sure that we have a successful launch and that we can have a broad access of lecanemab in the Nordic region. So this is a top priority for us, and we are very, very excited and committed to be doing this in the best possible way.
Who will be responsible for pricing in the Nordic region, given that the European countries are pretty much interrelated on pricing?
Yes. So I think it's clear that, I mean, it's Eisai who has overall global responsibility for the research and development and commercialization of lecanemab. So of course, Eisai is responsible for the regulatory part and for the global pricing strategy. But we will be heavily involved in the Nordic part.
There are no further questions at this time. I hand over to the speakers for any closing remarks.
So I just want to say thank you so much for all the great questions and for your attention here today. And I think that we are looking forward to a very exciting year, and I'm really looking forward to the results at the end of September and continued development of BioArctic.
Thank you very much. Have a great day.