BioArctic AB

STO:BIOA B

Earnings Call Transcript 2023-Q2

[Operator]

Welcome to the BioArctic Q2 Presentation for 2023. [Operator Instructions]Now, I will hand the conference over to the CEO, Gunilla Osswald; and CFO, Anders Martin-Lof. Please go ahead.

[Gunilla Osswald, executive]

Good morning, and welcome to BioArctic's presentation for the second quarter of 2023. I am Gunilla Osswald, and I'm the CEO of BioArctic, and I will share today's presentation with our CFO, Anders Martin-Lof.I think it's very exciting times for BioArctic with LEQEMBI now granted full approval by the FDA last week and with CMS announcing a broader reimbursement. It's a beginning of a new era and BioArctic is behind this true breakthrough in the treatment of Alzheimer's disease. We can now help a large number of patients and their families, and I think that is extremely gratifying. And of course, I will talk more about LEQEMBI here today.Next slide, please. BioArctic is listed at Nasdaq Stockholm Large Cap since January this year, and this is our disclaimer.Next slide, please. LEQEMBI is the trade name for lecanemab and that was approved last week in the U.S. and that means that LEQEMBI is the world's first fully approved disease-modifying treatment for Alzheimer's disease. On the 9th of June, the FDA Advisory Committee had a meeting where they, at the end, voted unanimously confirming the clinical benefit of LEQEMBI. The Advisory Committee reviewed the efficacy data, the biomarker data, and the quality-of-life data, as well as having a thorough review on the safety data. The efficacy data are consistent across scales and across items in the Phase III Clarity AD study. It showed a reduction of the progression of the disease and slowing of cognitive, as well as functional decline by 26% to 37%. The safety data was discussed in detail, in particular with regard to the side effect area, which is a class-related side effect. Dr. Sharon Cohen, she presented health-related quality-of-life data from both family and patient perspective with 38% to 56% less impairment after 18 months' treatment of lecanemab. This underlines the ability of lecanemab to help patients to function independently for a longer time and that could mean, for example, that patients are being able to dress, take care of family finances, feed themselves and participate in hobbies and activities of interest. The clinically meaningful effect of LEQEMBI was emphasized in this early and broad patient population that was included in the Phase III trial.On the 6th of July, FDA granted Eisai a traditional approval for LEQEMBI for the treatment of Alzheimer's disease. This means that the approval -- previous approval, which was an accelerated approval, which was based on biomarker data from the Phase IIb trial was now converted into a full approval based on the confirmatory Phase III Clarity AD study verifying the clinical efficacy of LEQEMBI. If we compare the label from the accelerated approval to the full approval label, the main difference is the inclusion of a boxed warning for monoclonal antibodies against aggregated forms of amyloid beta, including LEQEMBI. The warning specifically relates to the side effect area and the increased risk for homozygous of ApoE4 allele to create a foundation for patient and physician to have a good dialogue regarding risk benefit. It's quite common that new kind of treatments receive boxed warnings, and if we think about those that received an approval last year for first-in-class treatments by the FDA, more than 40% of them had a boxed warning. And I think this is very good and I think it supports a responsible and informed introduction of LEQEMBI into the U.S. market.Teresa Buracchio, who is the Acting Director of the Office of Neuroscience in the FDAs CDER, she said in the press release last week, today's action is the first verification that a drug is targeting the underlying disease process of Alzheimer's disease have shown clinical benefit in this devastating disease. This confirmatory study verified that it is a safe and effective treatment for patients with Alzheimer's disease. On the same day, CMS announced that, based on the full FDA approval, Medicare will now provide a broad insurance coverage of LEQEMBI, and that is for all patients that are eligible according to the FDA-approved label. Provided that, a real-world evidence is collected in an available easy-to-use patient registry. And the items to be registered are those that normally would be entered into medical records. So I think the burden of data entry is expected to be small. And I think it's extremely gratifying that LEQEMBI, which is originating from BioArctic with Professor Lars Lannfelt as the inventor, now can be helping many patients and their loved ones.Next slide, please. So lecanemab has the potential to become the first disease-modifying treatment for Alzheimer's disease and to receive a full approval on a global level in all 3 major continents. It has already happened in the U.S. with the FDA providing Eisai a full approval of LEQEMBI last week. Reimbursement is, of course, also important, and the Veterans Health Administration decided earlier this year to provide coverage for veterans with Alzheimer's disease. And now, Medicare, which is the major insurance part in the U.S. is also covering LEQEMBI on a #1 level. Eisai is also exploring less frequent maintenance dosing and evaluating a subcutaneous administration by an auto injector, and they plan to file first quarter of next year in the U.S. LEQEMBI is now also in regulatory review process for a full approval in many other parts of the world. And the next one to think about is Japan while lecanemab has undergone a pre-review process of data during last year, and Eisai submitted a full application in the beginning of this year to the Japanese authorities. And the application has then also been granted priority review and Eisai is expecting a response in September this year. In Europe, Eisai submitted the MAA 9th of January and that was based on both Phase IIb and Phase III data. And the application was accepted 26th of January and it's now following the standard review process, and the response is expected in first quarter next year. In China, Eisai has initiated the application process in December last year. And the priority review designation was provided in February, and we are awaiting response in China by the first quarter of next year. Regulatory process is also ongoing in other parts of the world. For example, in Canada, Great Britain and South Korea. I want to compliment our partner Eisai for their dedication and hard work with the clinical studies and the regulatory processes in such a timely way. I think this is very important since every day matters for the patients.Next slide, please. And if we just reflect a little bit on the population of patients with early Alzheimer's disease, it is enormous. Eisai has guided and estimated that the global prevalence for future early Alzheimer's disease could include about 240 million people by 2032, of which then about 75 million of those people are in Americas, EMEA and Japan. But, of course, all the patients will not be treated by disease-modifying therapies. The patients first, of course, need to come to health care and they need to be diagnosed with mild cognitive impairment or mild Alzheimer's disease with confirmed amyloid beta pathology in order to be eligible for a disease-modifying treatment. And even if only a proportion of all patients with early Alzheimer's disease will be treated, it's still a huge opportunity, and more and more patients could potentially be treated if we work on some other challenges. Eisai has estimated that approximately 3 million patients will be treated with disease-modifying therapies by 2032, which is a lot of patients. There are several opportunities that could create -- could increase access and some of them are listed to the right. We could, for example, work on increasing patient awareness, especially on the mild cognitive impairment part, which is not diagnosed so well yet. But now when there is a treatment, it's more focused on that as well. Also, earlier signs of the disease and working on less stigma for Alzheimer's disease patients. Education of primary care on both diagnosis and biomarkers and treatment options, so they can refer the patients to specialists. Access to specialist care is, of course, also important to try to facilitate and it's an important role for the memory clinics to make sure that the right patients get the right treatment. Parts that are linked to that is, of course, confirming pathology with CSF or amyloid PET following treatment with MRI and ensuring access to infusions and so forth.Improved diagnostics is an important part and it's really reassuring to see how well the blood-based biomarkers are progressing in parallel with the treatment options. And the subcutaneous formulation is another important opportunity to increase access and makes the administration more convenient by getting the treatment and also make it possible to get the treatment easier and at home. And we are working with our partners on all these aspects for the benefit of the patients. Of course, we would like, as many patients as possible, that could benefit from lecanemab to be able to get access to the treatment.Eisai has forecasted that 10,000 patients will be treated by LEQEMBI at the end of first quarter of next year. If we think about what that means with regard to the U.S. Alzheimer's population of approximately 6.7 million, that's about 0.15% of the Alzheimer's population in the U.S. So I think that we can conclude that there is substantial room for growth and that LEQEMBI can be a treatment of major importance.Next slide, please. We are very happy about our longstanding and successful partnership with Eisai all the way back since 2005. And we have 2 license deals and several research collaborations with Eisai. So far, we have received EUR35 million in regulatory milestones from Eisai this year, and we have another EUR101 million still remaining in milestones if lecanemab continues to progress well. And that is mainly linked to regulatory approvals and to sales and marketing milestones. The next potential milestone would be related to regulatory approvals in Japan and in Europe. BioArctic is also entitled to royalties of high single-digit percentage for the first 10 years following launch and mid-single-digit percentage for the following 5 years on a country-by-country basis. I think this is of substantial value for BioArctic, and it could be a blockbuster potential of lecanemab, which means that we could see revenues of more than USD1 billion per year without having any cost for clinical -- the clinical program in Alzheimer's disease and very limited cost for commercialization. BioArctic has also retained rights to other indications and to market in the Nordics, and we are now preparing for that and very much looking forward to doing that together with Eisai.Next slide, please. Lecanemab is, of course, a key project for BioArctic, but I would like to emphasize that BioArctic is more than lecanemab. Alzheimer's disease is our largest area and for lecanemab we have one more additional large Phase III trial, which is ongoing in even earlier phases of Alzheimer's disease, so even before the symptoms appear. And even if it's the first step with the disease-modifying treatments, which will be successful, but it's still a large medical need for more treatment options and for a combination of therapies. So, therefore, it's important that BioArctic and many others continue research in this area. And we have 4 early disease-modifying programs, including 2 of those that are combined with our Brain Transporter technology. We have also 2 of the 4 projects that are targeting truncated forms, such as pyroglu Abeta and that -- one of them is combined with our Brain Transporter technology.Based on BioArctic's positive Phase III results, I think that the probability of success has increased in our other programs with similar approach when we are targeting the toxic soluble aggregated forms of proteins that we call oligomers or protofibrils. In Alzheimer's disease, the proteins is amyloid beta; and in Parkinson's disease, the protein is alpha-synuclein; and in ALS, the protein is TDP-43. I also want to mention that I think that our ALS program targeting TDP-43 is progressing very well and quickly. And that is, thanks to our technology platform and our vast experience from Alzheimer's disease and Parkinson's disease project.We are also working on another rare disease, Gaucher disease, with an enzyme replacement therapy with the aim of also being able to target the CNS symptoms of Gaucher disease. And this is an unmet medical need today, and this is a rare disease indication.And then, finally, our Brain Transporter technology, which I think is a very exciting part is progressing really well, and it's now in preclinical development phase and the Brain Transporter technology has now been included in projects in all our disease areas. And in the future, if it continues to progress well, our Brain Transporter technology could also be applied to other companies' antibodies or proteins on a non-exclusive license basis. As I said, I think lecanemab is, of course, very important for BioArctic, but I want you to remember that BioArctic is more than lecanemab, and our portfolio is progressing really well.Next slide, please. And by that, we come to the financial summary, and I will hand over to our CFO, Anders Martin-Lof. Next slide, please.

[Anders Martin-Lof, executive]

Thank you, Gunilla. If you start looking at the left-hand side, on the revenues graph, you see that our net revenues for the quarter were SEK3 million, but for the first half of the year, our revenues were SEK397 million, and that is explained by the 3 milestones that we received in the first quarter, totaling EUR35 million. And, as Gunilla pointed out, we are entitled to 1 further milestone that could occur later this year if we do see approval in Japan, that is forecasted for September by Eisai. Over time, our revenues will become less lumpy as we now are receiving royalties after the launch of LEQEMBI. However, it will take some time before those revenues actually will become larger than the milestone payments. And just as an example, Gunilla mentioned that Eisai are forecasting to have 10,000 patients on LEQEMBI at the end of the first quarter of 2024. And if you would have 10,000 patients on average during the full quarter, that would generate in the ballpark of SEK50 million for that quarter. You should not see that as a forecast for the first 2 quarters of next year, but that gives a hunch for when do we expect to see significant royalties that are at par with the milestone payments.If we then turn to the midsection, you see that the operating expenses increased from SEK50 million to SEK104 million in the second quarter and they also doubled for the full six-month period going from SEK98 million to SEK200 million. This is mostly driven by an increase in personnel cost that increased from SEK23 million to SEK72 million in the second quarter. However, that is primarily driven by non-recurring costs for stock options and related social security contributions and also by repurchase that was made from Gunilla. So, if you take away that, the increase of SEK48 million in personnel costs during the quarter -- of the SEK48 million, roughly SEK8 million were driven by increasing staff. The rest were these non-recurring costs. However, over the longer-term, our costs will continue to increase due to the buildup of our commercial organization and certainly, when we progress our project portfolio further. But they will not increase in the second half of the year. We still reiterate that our full year guidance of SEK330 million to SEK380 million of operating expenses. So you see that the costs are expected to decrease during the second half of the year compared with the first half. If we then look at the right-hand side, you see that operating loss was SEK101 million for the second quarter, but we made a profit of SEK200 million for the first half of the year. And if you then combine that with our full year guidance, you understand that that we should have a possibility to be profitable for 2023 even without an expected approval in Japan.If we then turn to Slide 10. Starting with the mid-graph, you see our cash flow that was a negative SEK64 million in the second quarter. But all in all, for the full 6-month period, it was a positive SEK235 million and that's roughly SEK35 million better than the operating profit and that is mostly due to the fact that the costs that are recorded in operating profits are, to some extent, non-cash costs, especially the stock option costs. If we then look at the left-hand side, you see that we started the year with SEK805 million in cash and we are currently at SEK1,042 million and we'll see where we end up towards the end of the year. If we get an approval in Japan, I believe that we will be above the SEK1 billion at the end of the year. And on the right-hand side, you see the net result. We made a loss of SEK102 million for the second quarter and a profit for -- of SEK192 million for the combined period January to June. And the decrease from the operating profit is mainly explained by a tax recorded of SEK20 million in the first quarter of this year.That concludes the financial section, and I hand back to Gunilla.

[Gunilla Osswald, executive]

Thank you so much, Anders. And now, we come to the upcoming news flow and closing remarks next slide, on Slide 12, please. So more data on lecanemab will be presented at coming Alzheimer's disease congresses and the next one is next week in Amsterdam, and there will be several presentations of lecanemab. And you saw more details of that in the press release that was issued this morning. And then the next congress after that is CTAD in Boston in October, where there also will be several presentations on lecanemab. The regulatory process continues and Eisai expects response from the regulatory authorities in Japan in September, and in Europe and China responses during the first quarter of 2024. We will, of course, provide more information on other parts of the world when that is relevant. So I think that we can conclude that we had a fantastic first half of this year and that we have a very exciting time ahead of us.Next slide, please. I would like to conclude by saying that BioArctic's aim is through world-leading innovative research to create drugs that improve the lives of patients with neurodegenerative diseases. And we can conclude that LEQEMBI, which is originating from BioArctic, is now the world's first and only fully approved disease-modifying treatment for Alzheimer's disease. And it's leading the paradigm shift in the treatment of Alzheimer's disease. I think that BioArctic is an innovative and dynamic and very exciting company with a huge potential.So, by that, I say thank you for your attention, and we're happy to take some questions.

[Anders Martin-Lof, executive]

Operator, are there any questions?

[Operator]

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

[Fredrik Thor, analyst]

My question was a bit -- you mentioned this a bit maybe, but do you have an update on how royalty revenues will be recognized? Will it be the same quarter as the sale, or will it be with a delay?

[Anders Martin-Lof, executive]

So, I should answer that. Yes, we will record the royalties based on the actual sales of each quarter going forward. And Eisai will report the sales and then we will issue our reports after Eisai. So you would see the sales figures for LEQEMBI first in Eisai reports and then you can see -- you can basically deduct our royalties from that.

[Fredrik Thor, analyst]

Perfect. And my next question was a bit about how LEQEMBI is purchased. You mentioned a bit here that basically the 10,000 patients you mentioned -- yes, that you would be recognized, the purchase would be on a monthly or a quarterly basis. What I was just wondering if you can elaborate a bit on how kind of the pharmacists or yes, how they are purchasing LEQEMBI? Is it in bulk or continuously throughout the treatment?

[Anders Martin-Lof, executive]

Well, they probably buy some stock but not much. So they're basically buying continuously. So for your modeling, I would just assume that they're buying continuously.

[Fredrik Thor, analyst]

And maybe a final question was a bit on BAN0805. Is there any progress on partnering discussions, for example? Is it reasonable to see any progress this year?

[Gunilla Osswald, executive]

So I think with regard to our Parkinson's program, we are preparing for Phase II. We're doing a lot of work and we are reviewing to see which is the best way forward if that is to drive it ourselves into Phase II or if it is with a partner. So we will come back with more information later this year if we have more information there.

[Operator]

The next question comes from Patrik Ling from DNB.

[Patrik Ling, analyst]

Just a few questions for me, please. First, I mean, we saw some changes in Eisai when it comes to the Head of Alzheimer's disease, maybe you can have some -- give us some clarity what that is? Does that have any implication on -- for the further development of LEQEMBI? Or do you have any more color on why that happened now 1 week after the approval?

[Gunilla Osswald, executive]

So, I think, first of all, I would like to say that we have a great collaboration with Eisai, and with many different people at Eisai. And Ivan Cheung was the Head of Alzheimer's disease, and -- in the U.S. He was just announced that he will retire, and he is replaced by the son of the CEO, and this is a family-owned company. I think by putting in the son, it shows how important they think this is with the Alzheimer's disease. So, of course, I personally will miss Ivan, but there are many other very important people in Eisai doing a tremendous piece of work. So I'm very confident that Eisai will drive this program forward in the best possible way. So I'm not -- I'm sad, but I'm not worried, if I put it like that.

[Patrik Ling, analyst]

Okay, great. Could I also ask, when it comes to the other potential indications for lecanemab, the ones that Eisai did not have any rights to. Maybe you can update us a little bit what is happening there on your side first? And whether you're having any discussions with Eisai if they are interested naturally taking the full rights to LEQEMBI in one way or the other?

[Gunilla Osswald, executive]

Excellent question. Thank you, Patrik. So, just as you said, BioArctic still owns other indications and we have been looking into several different indications. And what we have communicated so far is, for example, Down syndrome with dementia, now we are looking into a couple of other indications that might be even more interesting and important. And we are doing some ex-vivo work to see that lecanemab is the right treatment for that. And then, of course, we will be discussing this with Eisai. But I think the first very important part was to see that Alzheimer's disease, which is a huge indication, that's not disturbed in any way. So that was the first step. But, of course, we are working on the other indications, and we'll start to discuss that, of course, with Eisai first. But, otherwise, there are other opportunities with other partners in the future potentially. So, we have to be patient and see, but now we are really happy about the Alzheimer's disease to start with.

[Patrik Ling, analyst]

Great. Then my last question, when it comes to your own sales and marketing in the Nordic regions, I mean, you always say that you will sell and market the product in collaboration with Eisai. So maybe you can give us some clarity on exactly how that collaboration will work in the Nordic? What you will be responsible for? What Eisai will be responsible for, et cetera?

[Gunilla Osswald, executive]

So we have a great collaboration with Eisai, both in Japan and in the U.S., and now we're also building a great collaboration with our European organization where -- and, of course, we will benefit a lot from all the great work on the global level that commercialization aspect for lecanemab and LEQEMBI is being done.Then if we can more -- so a lot of interactions on global level, a lot of interaction on European level, and now we are working also very close with the Nordic organization, and discussions are ongoing exactly on who will be doing what and how. And I will -- we will come back to that when we can. And what I can say is that, I mean, we are building our organization stepwise. We have started with the strategic positions. And the more field-based key account managers and so forth, they will be later on closer to a hopeful registration. But -- so, now, it's really, I mean, building on the strategic positions. And we have built positions for the Swedish market, we have also a couple of people now in Denmark, we have a couple of people in Finland, and we have just recruited our first person in Norway, and we have then also built BioArctic as a subsidiary -- subsidiaries, if that's the right word, in the Nordic countries. So, we're taking this stepwise in order. But there is a lot to do in order to help health care and society to be ready for -- because this is a new kind of treatment, a disease-modifying treatment, that does not exist yet on the market. And it's for a new kind of population. We go earlier than normal ordinary diagnosis today. So we also go into the mild cognitive impairment, which is a new kind of the diagnosis and then it also requires some infrastructure. So there is a lot of work to prepare that we have started to work together with Eisai and work with the society in order to make a really successful launch in Europe, which is our aim, of course.

[Patrik Ling, analyst]

Great. Then just a follow-up. Could you say anything about how the financials in the Nordic region will work?

[Gunilla Osswald, executive]

The only thing I can say that it's not royalty-based. I mean, it's based on the -- we will be doing the commercialization together. The exact details, we have to come back to later.

[Operator]

The next question comes from Viktor Sundberg from Nordea.

[Viktor Sundberg, analyst]

I have 3, if I may. So, I had one on the Brain Transporter technology. I noted here in the quarter that Biogen exercised its option to develop and commercialize Denali's Antibody Transport Vehicle Program based on the previous collaboration that was formed in 2020. And based on the fact that your technology, as far as I can see, is also based on latching onto the transferring receptor. I wondered if you could perhaps map your program on top of Denali's progress if you think that you're also on the same development stage as the Denali program or what is left before we can see a similar collaboration perhaps with you and Eisai or other players that are developing amyloid beta antibodies? Or if you need to show some more proof-of-concept data before that could be materialized? I'm just trying to understand where in the timeline you are with your Brain Transporter technology?And then another question I had was also on the timeline for CMS covering more than 1 PET scan in conjunction with amyloid beta antibodies. Still to me, at least, this remains a bit unclear. I don't know if you have got any more indication when a more generous reimbursement policy for PET scans could be implemented.And a final question I had was also if you plan to provide financial guidance on net revenues, perhaps, next year as you probably record more substantial royalty income going forward as you mentioned today here?

[Gunilla Osswald, executive]

Thank you so much for great questions, Viktor. I'll start with the first 2 and then hand over to Anders for the third. So, the first one was with regard to Brain Transporter. And in that area, it's a very, very hot area, of course, to get antibodies and proteins coming better into the brain and there are 2 companies who are in the lead here when you think about transferring receptor facilitation, and that is Denali, as you mentioned, it is also Roche. And we have recruited people both from Roche in Basel and from Denali in San Francisco. And they are working on -- they and many others, we are investing in this area, and we think that we have something which is really competitive versus those who are in the league right now. And -- but, of course, Denali and Roche are ahead. But we think that we -- in the same way as in the amyloid beta field, we have something which is coming a bit later, but that we think is hopefully better. And we -- the timeline here is that, we are in preclinical phase, and we have now combined it with programs in all our different disease areas.I think it's fair to say that it's our Alzheimer programs who are the most advanced among those. And we will come back with more information when we have that as possibilities. But, of course, I mean, this has huge opportunities to be combined with many different programs, and I'm very excited about the future here. But, sorry, I can't give you any more exact details here.And with CMS and the PET scan reimbursement, I wish I knew more. But what I can say is, I know that there is a lot of pressure on CMS and request that they should start to reimburse the amyloid PET scans on a broader base since they are one of the important ways to diagnose the patients and show that they have an amyloid pathology. There are other ways, for example, with CSF sampling and so forth. But, so far, we can just hope that they soon will do the reimbursement on a broader way there as well.And then for the financial guidance, I hand over to Anders.

[Anders Martin-Lof, executive]

Right. No. So, of course, it will be very hard for us to guide on the revenues for the royalties without proper guidance from Eisai. And we don't know when they will start guiding on LEQEMBI revenues. So, for us, right now, we can't really tell when we will be able to guide on our royalty revenues.

[Operator]

The next question comes from Erik Hultgard from Carnegie.

[Erik Hultgård, analyst]

Congratulations to the full approval and the broader coverage from CMS. I have 1 question more to add, and it's related to the market access in Europe. So what do you expect in the Nordics in terms of reimbursement pricing or reimbursement? And also in the top 5 markets, what timeline should we think about as we approach the European approval?

[Gunilla Osswald, executive]

Excellent question, Erik. Thank you so much. So I think that, as you know, market access in Europe is really country by country and it's very different among different countries. So without any specifics to lecanemab, what normally happens is that, countries like Germany and Austria are very early on with regard to the launch, whereas other countries take a different long time. And even though we hope the Nordics should be as quickly as possible, it will be a bit later, of course, than Germany. So I think we will just have to take it step by step, and it's really important to have the dialogues with regard to the reimbursement parts. So I think it will be stepwise different country by country in Europe as normal. So, we'll see -- we'll come back with more information when we have it.

[Erik Hultgård, analyst]

So, is it fair to assume like the standard 6, 12 months in sort of the major markets, except...

[Gunilla Osswald, executive]

Yes. I don't think we have any information about that. We should be anything else than standard times. So we'll see. And then I think what no one knows is U.K. and Great Britain with our new process and how that will work with regard to regulatory. But then we know [ Nice ] takes time. If you think that the U.K. is also 1 of your 5 big countries. So...

[Erik Hultgård, analyst]

And then maybe I can sneak in one on for Anders as well on this marketing infrastructure in the Nordics and how you think about phasing costs? So when do you anticipate to sort of add sales reps and the bulk of cost? Is it post the European approval, post-reimbursement, or at what time point?

[Anders Martin-Lof, executive]

If I'm to guess today, we would like to add our key account managers ahead of the launch, but not by much. So we will know better during next year when we start to see what's happening on the reimbursement side about when we can actually launch the product. So right now it's hard to tell. I don't think that we will add more sales reps in the first half of next year. So at some time point after that, but hard to tell exactly when.

[Gunilla Osswald, executive]

Definitely post approval for the key account managers. But...

[Anders Martin-Lof, executive]

Definitely yes.

[Gunilla Osswald, executive]

But then more strategic positions before that.

[Operator]

[Operator Instructions]

[Oskar Bosson, executive]

There doesn't seem to be any more questions in queue by telephone, Gunilla and Anders, but we have a few questions online that are posted. Maybe I can just sneak one of those in, because then I saw Joseph is coming on. So, there are 2 questions regarding the subcutaneous development by Eisai. Wondering a bit about what kind of level of data is required for such a submission. Gunilla, is there anything you can comment on?

[Gunilla Osswald, executive]

Yes. I think that's a great question and, of course, patients -- for patients, we really would like also to be able to provide the subcutaneous administration and Eisai is also working on this together with an auto injector to make it very convenient for the patients. And what has been done is a couple of Phase I studies to show the bioavailability level. And now, it's being evaluated in the open-label extension part of the Clarity AD study. And in that extension, Eisai has also informed that there are both patients that has been coming from the Clarity AD study, who has been on IV infusion previously with lecanemab and those who also have been on placebo, so they are kind of newcomers. But there is also some de novo patients in that part, which will be included in the evaluation of the subcutaneous formulation. So that is expected to be what is needed for a subcu filing for the U.S., which Eisai have guided that that is expected to happen in the first quarter of next year.So that was the answer to the subcu.

[Oskar Bosson, executive]

I'm not sure if we're going to go to the question queue now with Joseph Hedden, maybe operator?

[Operator]

The next question comes from Joseph Hedden from Rx Securities.

[Joseph Hedden, analyst]

Congratulations on the full approval. I just wanted to ask a few, and perhaps the first one around the online portal that Eisai has been talking about for the Medicare coverage with evidence development. Eisai have said that it's a relatively easy-to-use portal and that it's relatively standard patient information takes 5 minutes. So I just wondered whether you've seen it and what your thoughts are on that.

[Gunilla Osswald, executive]

Thank you so much, Joseph. So, of course, everyone is eager to understand more details about this online portal that Medicare is providing. It's free to use. And it said that it should be easy-to-use and with the same kind of information that you normally assemble any way. And that it should take between 5 and 10 minutes to do the recording. I, as the curious person, tried to log in, but I was not allowed in since I'm not a physician in the U.S. So I don't know the details really more than what I just said.

[Joseph Hedden, analyst]

Okay. And then perhaps on -- Eisai has got a target of 10,000 U.S. patients it seems by the end of their financial year, so March '24. I was curious as to how did that fit with your -- after they announced that, how did that fit with your internal forecast? What's that relative to your thinking?

[Anders Martin-Lof, executive]

So, well, it's really hard for us to make internal forecast without thinking about Eisai's forecast. So, we are very much in line with Eisai's forecast. And I think it's important to note that 10,000 patients, as Gunilla pointed out, that some 0.15% of the Alzheimer's population, there is plenty of room to grow from there. There are question marks, how fast will it be to introduce this new product since you do need the infrastructure for PET and MR and infusion centers, we think that will be sorted out. Longer-term, the market will be huge. But for the first 6 months or so, it's really hard to estimate how quick the uptake would be. So it seems Eisai has made a fair assumption and it's hard for us to make any better assumptions because they are the ones who are on the ground and have estimated this. They have mentioned that they have educated already 1,200 physicians that are ready to prescribe the drugs, that they have educated 700 infusion centers, so that would probably mean that they can start prescribing right away. But on the other hand, getting all these infusions going and performing all these MRIs and PET scans is probably going to take some time. So, we'll see what happens, but our expectations are in line with Eisai's expectations basically.

[Joseph Hedden, analyst]

Okay. That makes sense. And then perhaps just 1 on subcutaneous lecanemab and the AAIC presentation. I noticed that one of those presentations is on some subcutaneous data. Can you -- could you tell us if that's from the previous Phase I study? Or is this the first data emerging from the Phase III open-label extension?

[Gunilla Osswald, executive]

So the managed expectations, I think, it's fair to say we should expect mainly simulations and what this could mean with regard to efficacy and safety and so forth. So I think that true data from the Phase III trials, open-label extension part is expected later. So it's more from the first studies, the Phase I studies, and then some modeling that should be expected.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Oskar Bosson, executive]

I note there is another question though online, which I think we should also mention and that's a question -- if I've understood this correctly, Gunilla, there is a -- talking about the expiration date of patents and patent life, but also the time it takes to develop a new drug. And maybe you can say something then about future plans for BioArctic when it comes to developing new drugs? How long will that take? And when we will have other BioArctic drugs on the market to sort of take the next step as a company?

[Gunilla Osswald, executive]

Yes. No, of course, I mean, it's important to realize that the development of LEQEMBI has taken some time. But the most important was that it's successful. And, of course, for the first projects, it takes a bit of time. We still have a good time for -- until patent expiry with the extension, which is up to 2032. I think it's also important to note that various -- the regulatory data extension time that you also can think about and the market exclusivity time, which is 12 years in the U.S. and 10 years in Europe. So that's one part of the questions I understand it.And the second part of the question is, in the future, what would we expect from different kind of treatments? And I think it really depends on the kind of treatment. For some treatments, I can think of ways of doing it faster. For other treatments, I could think about being combination therapies and so forth. So it really needs to be taken project by project. But, of course, with regard to our projects, we will ensure that we do the most efficient and timely drug development programs as possible for those programs. So, it has to be taken project by project.

[Oskar Bosson, executive]

We have another question that just popped up here, too. Let me just read it. There are important differences between subcutaneous and IV administration, it may affect the distribution in the body and so forth, also in [ CSF ]. Is there any indication that the subcutaneous will be better?

[Gunilla Osswald, executive]

I think that's an excellent question. And if we think about what has been presented previously and we'll look forward to more presentations next week, but what has been presented previously is that, the hypothesis is that, it is the average concentration, which really steers the efficacy. But it is the Cmax, the maximum concentration, that potentially is more linked to the side effect. And if that holds true in the clinical setting, that would mean that we would expect a similar efficacy, but a lower frequency of side effects with regard to area, for example, from the subcu treatment. So I think it will be very, very interesting when we have the data and we'll see if those hypothesis hold true in the clinical setting. So, there are indications definitely on that, it could be better, and definitely is more convenient and it will be more of a fixed dose to everyone instead of the -- for IV infusion, it is depending on the body weight. So, the -- but, also -- and also with the auto injector, I think, that makes it very much more convenient for the patients or caregiver to provide this.And what is being studied now is once a week dosing that is easily done, for example, at home. So, we have to stay tuned until we have the data, but definitely the hypothesis says that it could be better with regard to safety.

[Oskar Bosson, executive]

Just another question that came in. Can you comment something on the AHEAD 3-45 study?

[Gunilla Osswald, executive]

Yes. The AHEAD 3-45 study is another very exciting Phase III program, which is ongoing around the world. It started in the U.S., but it's also in other parts of the world and we are also hoping that it will come to Sweden. So -- and it's not fully recruited. It is being recruited more and more. And this is, as you know, more of a prophylactic study where you will start to get the treatments before you have any symptoms. What you do in the screening phase is, you find out that you have increased levels of amyloid in the brain. And then depending on how much increased levels you have of amyloid in the brain, you get either the randomized -- or coming into the A3 part of the study with a slightly lower dose, or if you have more amyloid in the brain, you come into the A45 study and then you get a slightly higher dose. And this is a 4-year treatment period. And it will be based on -- for the A45, a clinical outcome called the PACC5 and then biomarkers. And so, we will come back with more information of this study also when we have more information to give, but that's definitely a very exciting study to follow as well.

[Oskar Bosson, executive]

Thank you, Gunilla. I can see no further questions in the question queue. Do you want to end with a few summarizing comments?

[Gunilla Osswald, executive]

Yes. No, thank you so much for many great questions and comments. And I think that, as I said, we have had a fantastic start of this year where we are now -- are really changing the treatment for Alzheimer's disease based on lecanemab, LEQEMBI, which is originating from BioArctic. And I think it's also transforming BioArctic to new kind of company, where we will be looking forward to a more stable income and with regard to royalties. And I really look forward to when the royalties are higher than the milestone. So you have to follow us and stay tuned. And thank you so much for today. And I wish you all a great summer.