BioArctic AB

STO:BIOA B

Earnings Call Analysis

BioArctic's Leqembi Experiences Strong Sales and Expanded Approvals

BioArctic reported significant growth in Leqembi sales, particularly in the U.S. and Japan, with a strong launch in China. Leqembi is now approved in eight markets, representing over 80% of the expected global demand. The company anticipates a fivefold revenue increase, projecting sales to reach $2 billion by 2026. Net revenue for the quarter was SEK 50 million, with royalties projected to average SEK 120 million quarterly over the next year. Despite a negative EU decision, BioArctic is optimistic about a favorable reexamination and expects to be profitable next year. The company is advancing its portfolio, including a Phase IIa study for exidavnemab in Parkinson's disease.

Growing Sales of Leqembi

BioArctic is experiencing a significant upswing in sales of its Alzheimer's drug, Leqembi. Sales are ramping up in the U.S., with a remarkable increase of 120% over the last quarter, bringing total global sales to approximately $40 million. The U.S. market is contributing heavily to this growth, alongside positive early sales data from Japan and a successful launch in China. Specifically, monthly sales in the U.S. surged from $6 million in April to $13 million in June, indicating strong patient acceptance and increasing market penetration.

Regulatory Progress and Market Approvals

Leqembi is now approved in eight regions, including key markets such as the U.S., Japan, and China. Regulatory processes continue to advance, with submission plans for a subcutaneous auto-injector and further approvals sought globally. Notably, a setback occurred in July when the CHMP issued a negative opinion regarding EU market authorization, but BioArctic's partner, Eisai, is actively pursuing a reexamination, expected to culminate in a decision by November this year.

Revenue Growth Guidance

Eisai has forecasted that Leqembi’s revenue could skyrocket from approximately $30 million in 2023 to $360 million in 2024, which translates to a more than tenfold increase. This projection reflects confidence in the drug’s future performance, with expectations that royalties for BioArctic will see a significant uptick from SEK 43 million to around SEK 360 million over the next three quarters.

Financial Health and Profitability Expectations

BioArctic reported a net operating loss of SEK 76 million, consistent with prior quarters, mainly due to increased R&D expenditures aimed at accelerating its drug development portfolio. The cash position remains strong at approximately SEK 890 million, which is over six times its quarterly burn rate. With Leqembi sales on a solid trajectory, the company anticipates reaching profitability by next year, irrespective of the ongoing EU approval process.

Investment in Research and Development

R&D expenses rose to SEK 84 million from SEK 41 million a year ago, as the company focuses on enhancing its product pipeline, including the upcoming Phase IIa study for exidavnemab, aimed at treating Parkinson's disease. This data-driven approach underscores BioArctic's commitment to expanding its therapeutic offerings for neurodegenerative diseases.

Strategic Market Movements

The increasing number of institutions prescribing Leqembi rose by 40% in the latest quarter, reflecting a rapidly growing market infrastructure. In addition to expanding U.S. sales, BioArctic is targeting the private healthcare market in China using innovative online platforms for patient diagnoses, which presents substantial future growth opportunities.

Future Outlook

BioArctic is preparing for important upcoming events, including the Phase IIa study in Parkinson's disease and the forthcoming CTAD congress in Madrid where Leqembi will be a focal point. As regulatory approvals and product launches continue, the company expects momentum to build, potentially leading to even greater market penetration and revenue growth.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to BioArctic Q2 Report 2024. [Operator Instructions] Now I will hand the conference over to 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. It's very exciting times for BioArctic, and I have three key messages for today. The first one is that Leqembi sales are increasing. It's starting to take off in the U.S., it's going over expectations in Japan, and it's also started really well in China.

The second one is that lecanemab regulatory processes continues, and we are now approved in 8 different geographies, which represents more than 80% of the expected market for Leqembi. The third one is that the rest of our project portfolio progressed really well, and we are preparing for exidavnemab Phase IIa study in Parkinson's disease.

Next slide, please. I'm Gunilla Osswald, the CEO of BioArctic, and I will share today's presentation with our CFO, Anders Martin-Lof. We also have our CMO, Tomas Odergren here for the Q&A after the presentation.

Next slide, please. This is our disclaimer, BioArctic is listed at Nasdaq Stockholm Large Cap.

Next slide, please. A lot of things have happened during and after the second quarter. And I will start with lecanemab, where we are in a lot of regulatory activities, our partner Eisai had two regulatory submissions to the FDA in the U.S.A. We have -- they have submitted a supplementary BLA for intravenous maintenance dosing with less frequent dosing, which means once a month dosing. Eisai has also received fast track designation for the subcutaneous administration. And then they have initiated a rolling submission for a new BLA for the subcutaneous auto-injector for maintenance dosing.

We have got several regulatory approvals in South Korea, Hong Kong, Israel, United Arab Emirates and last week also in Great Britain. We had a drawback in July when CHMP adopted a negative opinion on the market authorization for lecanemab in the EU. Our partner, Eisai, has requested a reexamination of the opinion. Leqembi, as I said, also been launched in China, and it has been initiated at the end of June in a really good way. We have long-term data, which has been requested for some time, and that was presented now 3-year data with lecanemab, at the Alzheimer Congress AIC. And this showed continued increasing benefit for the patients with maintained safety profile. If we then look at exidavnemab, two Phase I studies were published with the results in Journal of Clinical Pharmacology.

And data show that exidavnemab was generally well tolerated and had an excellent PK profile with an elimination half-life of about 30 days, and this supports monthly dosing. And I think this is great news in the preparation for the Phase IIa study that is starting later this year. If we look at other projects in our portfolio, it's also progressing well, and we have the first agreement signed for our brain transporter technology during the quarter where Eisai and BioArctic entered into a research evaluation agreement regarding the drug candidate ban 2802.

Next slide, please. Lecanemab is the first disease modifying Alzheimer's disease treatment, which is now approved in 8 different markets around the world and it's on its way of being establishing new standard of care for the patients. And this slide shows the situation of lecanemab globally. If we look at the U.S. first, I have mentioned the two submissions with less frequent IV dosing where the PDUFA date is set by the FDA to the 25th of January next year. For the subcutaneous auto-injector maintenance dosing, the rolling submission has been initiated in this plan to be completed later this year.

Launch is ongoing in the U.S., Japan and now also in China, and we will talk more about that later in the presentation. And as I said, we have several approvals in the rest of the world. South Korea, Israel, Hong Kong, United Emirates and recently Great Britain. The Great Britain authorization was great, and I was really happy to see that, especially since the European [ Stage ] A&P gave a negative opinion in July. And Eisai has, as we said, requested re-examination and outcome is expected later this year.

So next slide, please. Our partner, Eisai showed this slide at the quarterly report as a regulatory update for the EU. We start with CHMP standpoint with a negative opinion after considering the balance of benefit and risk. A size standpoint, are three parts. The first one is that the protocol and the statistical analysis method for the Phase III program was determined in advance and it was in consultations with regulatory authorities, including the EU regulatory authorities.

The second part is with regard to the benefits and in the Phase III study, [ CARTA ], lecanemab met the primary endpoint as well as all key secondary endpoints with high statistical significance. Furthermore, long-term data up 2, 3 years have showed maintained benefit over 3 years. The third aspect is the risk and the side effect of concerned is called ARIA. And at the Alzheimer Congress AIC where long-term data was presented, it was concluded that the risk for ARIA is highest in the first 6 months and very low thereafter. And most cases are asymptomatic. And I think this was reassuring to hear the presentation of the side effect profile and real-world evidence. It was also concluded that it can be well managed in accordance with the guidelines.

The CHMP opinion was surprising to us and I think, very disappointing. And Eisai has been very clear about requesting a reexamination and to work closely with the authorities to get an approval and to also make lecanemab accessible for European patients who could benefit from the treatment. And of course, we hope for a positive CHMP opinion later this year. followed by an approval in Europe early next year. We draw strength from the firm support that has been shown for lecanemab, from both researchers key opinion leaders and patient organizations from across Europe. Many of them are now taking a stance and ensuring that their voices are being heard.

Next slide, please. Positive news came last week when Great Britain authorizes the Leqembi. I want to point out that there was a slight difference in their approval from what has been seen in other countries. They focused on lowering the risk of area, which is the main side effect of contract. The indicated population, therefore, excluded what is called ApoE4 for homozygous, which means that you have two leads of ApoE4. And this is a specific genetic variant which means that you have a higher risk of getting Alzheimer's disease earlier and also higher risk of getting the side effect area.

The homozygous are about 10% to 15% of the Alzheimer's population. So the indication that was authorized includes early Alzheimer's patients that are ApoE4 for homozygous, which means they have one ApoE4 lead or non-carriers, they have no ApoE4 lead. And this is the vast majority of Alzheimer's patients. If we look at the indicated population in the Phase III trial Clarity AD, Lecanemab showed slowing of clinical decline over 18 months compared with placebo by 33% on CDR sum of boxes, as you can see on the graph to the right. And it was 39% on the activity of daily living scale. It was also seen a lower frequency of ARIA-E of about 9% and symptomatic ARIA-E of about 2% in this population.

In Grace Britain, a consultation process involving AI and other stakeholders will now take place before Leqembi can become available for use in the national health care system. The reimbursement authority called NICE, their draft recommendation was that cost effectiveness did not support routine use. The authority has requested additional information before its final decision. Eisai has stated that they will work collaboratively with the NICE to make Leqembi available to eligible patients living with early Alzheimer's disease as soon as possible.

Next slide, please. I want to share some key highlights from AAIC, which is one of the largest Alzheimer's conference, which was held in Philadelphia in July this year. Long-term clinical data has been requested for lecanemab. And now Eisai presented 3 years data, which showed increased patient benefit with maintained safety profile. If you look at the graph to the left, we can see clear and meaningful long-term effect over 36 months now when all patients have got lecanemab either from the start between 3 years or after they had their 18-month placebo treatment in the CORE study and then they have been treated for 18 months with lecanemab. There are two things I want to point out to this graph.

The first one is that the benefit increase over time, we can see that the benefit was 0.45 after 18 months, and it doubled to 0.95 after 3 years. The second thing I want to point out is that patients get more benefit if they start treatment early. So if you look at the top green curve, you see that they have more benefits. But you also see that the middle curve, which starts black, which is placebo, and then after 18 months, it's green, which means that they have got lecanemab. Then you see that they also get benefit from the treatment.

In comparison with the purple curve, which is controlled from the ADNI group, which is matched to the study. If you look at the graph to the right, I think we see very encouraging data, but also was presented at AAIC. And this is from a small sub-study in patients with no or very low power in the brain. And this means that they are early in the disease. We can see that 60% of these patients had improvement after 18 months. which means that they were better than when they started the treatment. And more than 50% of the patients were still doing better after 3 years.

I think we should be a little bit careful since this is only 40 patients, but I think it's encouraging and further emphasize the importance of starting treatment early. I also want to say that safety matters, and it was reassured to see that no new safety findings were reported and the very low frequency of area was reported after the first 6 months. And now with thousands of patients have been treated. I think this is reassuring. Key opinion leaders from both the U.S. and Japan, they concluded that the side effect is manageable and that their real-world evidence data showed lower frequency than has been reported in clinical trials.

It was also emphasized that continuation of treatment is important even after the plaques have been removed from the brain. And that was demonstrated by data on biomarkers will start to deteriorate if treatment stops, whereas continued benefit was shown for when treatment was continued.

Next slide, please. There has been a lot of discussion about if the effect by lecanemab and these kind of treatments are clinically meaningful. And I just want to explain a bit about the scale that is being used in this kind of clinical trials. It's called CDR [ sum ] of boxes. And that is measuring cognition and function with three items each. The cognitive items are memory, orientation and judgment or problem solving. The functional items are community affairs, home and hobbies and personal care. Sometimes I hear that difference on an 18-point scale is not clinically important.

And to me, that is just completely wrong. I think that for a patient 0.5 could mean a difference from having a slight impairment to being unable to function independently on one of the items on this scale. And no one can convince me that that's not meaningful for a patient with this devastating and deadly disease. What we hear that patients want is longer time to enjoy life with a loved ones, especially in the less severe stages. And lecanemab has showed an average saving of about 5.3 months already after an 18-month treatment, and this is longer if treatment continues.

So I think the effect is clearly meaningful benefit for the patients. Next slide, please. Lecanemab development continues, both with the IV maintenance dose, which is less frequent than once a month. but also subcutaneous with an auto-injector to make it more convenient for patients and to be able to make its easy administration at home. I think it is also great to see how the blood-based biomarkers for diagnosis will simplify the patient journey and help identify patients in a much easier way in contrast to pest and CSF, which sometimes can be challenging.

And this development with the blood-based biomarkers goes even faster and better than I had expected. Professor Oskar Bosson from Sweden. He presented data at AIC on blood-based biomarkers with 90% accuracy in diagnosing Alzheimer's disease. This is remarkable. It's better than both primary care physicians and even specialists. And I think this is important for the opportunity to diagnose patients earlier and on a broader scale. This is already being used, for example, in China, and it's being piloted in Sweden and in many other countries at the moment. Treatment earlier has, as I said, shown more benefit, which is encouraging for the Phase III study called AHEAD 3-45, and this is ongoing in subjects without symptoms but with elevated amyloid deposits in the brain. And this study already used blood-based biomarkers to identify the right patients. and the recruitment for this Phase III trial expects to be completed this year.

Next slide, please. So I've been talking a lot about lecanemab and Leqembi. But I want to say that BioArctic is, of course, more than that as well. We have a broad project portfolio for treatment of neurodegenerative diseases. And our programs progress well, and we are very pleased with the first agreement in place for our brain transporter technology, the BAN2802 collaboration with Eisai to evaluate this asset. I also want to point out that BAN2803, which is another Alzheimer's program with the brain transporter technology. That looks great, and we plan to show data from this program later this year.

Our Parkinson's disease program, Exidavnemab is actively preparing for starting Phase 2 next quarter. Next slide, please. We think that our alpha-synuclein portfolio has many opportunities in several neuronal synucleinopathies, such as Parkinson's disease, Parkinson's disease dementia, Lewy body dementia and prodromal stages as well as the orphan indication multiple system atrophy. I think it's reassuring that biomarkers are available to identify the right patients with pathological Alpha-synuclein and we will also use this in our Phase IIa study.

Next slide, please. The Phase III study with exidavnemab is called EXIST and it will be performed on patients with mild to moderate Parkinson's disease. The design is a randomized sub-line placebo-controlled trial with a low dose and a high dose compared to placebo. The primary endpoint will be safety and tolerability. And the secondary key endpoints will be pharmacokinetics and immunogenicity. Several biomarkers will be explored, both biochemical biomarkers as well as digital and cognition markets, which are relevant for patients and will be also an important preparation for the next proof-of-concept studies. So it's a lot of activities happening at BioArctic at the moment in order to start the study later this year.

Next slide, please. So by that, I will hand over to Anders Martin-Lof for the financial summary.

[Anders Martin-Lof, executive]

Thank you very much, Gunilla. Starting with the royalties. We are very happy to see that Leqembi royalties are continuing to grow actually at the next financial pace. The global sales were JPY 6.3 billion. That is roughly $40 million. That's roughly 120% higher than the quarter before. And if you then look at our royalties, they increased to SEK 42.6 million. That's a doubling from the court [indiscernible] or if we look on annual figures, it's a 70-fold increase year-over-year. That's 7,000% if we're talking percent. So we really see really, really high growth numbers. That's mainly driven by the U.S. market, and we're really happy to see that the U.S. expansion started picking up stead during this quarter.

As you may recall, the first 2 quarters after the launch in the second half of last year, it was fairly slow for the U.S. clinics. It was -- they were struggling a little bit to get the infrastructure together and start treating patients that started to happen towards the end of the year. And in the first quarter, they were starting to treat patients more on a pilot scale. What we saw now in the second quarter is that they are really scaling up.

Now they are starting to treat a lot of patients, and that is then further supported by a larger commercial infrastructure by Asian [ Biogen ] had an increase of roughly 30% and now have 450 positions in place, and that helps to increase the number of sites that are starting to treat. So it was very reassuring to see that the number of hospitals have started ordering lecanemab increased by 40% in the second quarter over the first quarter. All in all, this means that we saw a big increase in sales during the quarter.

So the April sales were JPY [ 0.9 ] billion growing to SEK 2.1 billion in June. That means we went from SEK 6 million per month in April to $13 million per month in June. So in total, $30 million. So now I would say that we're now on a really good trajectory in the U.S. It took a little bit longer than it was initially expected when the product was launched, but now things start to look really, really good in the U.S. We also saw a very strong start in Japan with roughly $10 million in sales already in the second quarter after the launch.

Here, we did not see the little slow-ish implementation that we saw in the first 2 quarters in the U.S. already now, 500 facilities have started prescribing out of the 650 that have implemented the pathway at the end of the first quarter. And then you should bear in mind that of the 800 doctors that have started prescribing only 70 have started prescribing to large numbers of patients. And that will, of course, increase in the coming quarters. So we know that growth will continue to be very, very strong in Japan.

The launch in China was also mentioned by Gunilla. That's also a really interesting market. That happened a little bit ahead of time. And here, Eisai is adopting really interesting model with using an online platform and blood-based biomarkers. So potentially, this could be a model for how to handle this in the future in the Rest of the World. And China really has a large potential. Initially, Eisai is targeting the private market, but that is relatively large in China.

And in the long term, Eisai is expecting China to be an even larger market in Japan and in the order of China. So it will be interesting to see how this takes off in the coming quarters. If we then turn to the next slide, this high growth is expected to continue by Eisai. They issued a forecast at the end of their fiscal year, where they expected they can be to grow from roughly $30 million in 2023 to $360 million in 2024. So that's more than a tenfold increase.

And in their last quarterly earnings call, they said that they were doing according to plan or even better than planned in certain markets. So we still expect to see these numbers. To us, this was correspondent to royalties of roughly SEK 400 million from the second quarter of '24 to the first quarter of '25, and those are really big numbers for us. But you should still remember this is still only the beginning is expecting a fivefold increase from 2024 to 2026. So if that comes through, then Leqembi would be selling for roughly $2 billion in 2026.

So of course, it's hard to tell exactly what will happen. But Gunilla has mentioned that there are a lot of developments that will underpin this. You will see a much easier administration with subcutaneous working out in the coming years. And I also believe that we'll see the blot-based biomarker diagnosis being implemented in that time period. So we firmly believe that this market is set to grow immensely over the next few years. If we then turn to our finances, looking first at the net revenues on the left-hand side, they have been very, very lumpy in the past due to the milestone payments that have occurred from time to time.

For this quarter, we had SEK 50 million of net revenue, SEK 50 million. There were no milestone payments in this quarter. And I think it is unlikely that we'll see any milestone payments during this year. The one is that could happen is if we get approval in the EU. But if you get CHMP opinion in the May time frame, it will take probably a month or two for the European Commission to give their full approval. So it's unlikely that we will see that milestone this year even if Leqembi's approved in Europe.

But over time then, the two new revenue streams will shift the revenue mix over time. We will not see something in the future. You saw a royalty now of SEK 43 million in the second quarter and co-promotion revenues of SEK 3 million if we get approval in Europe, the core promotion revenues will continue to increase over time. And we have already talked about the royalties, they will increase over time.

And this will be fast. If the Eisai forecast for 2024 is correct. We are to expect roughly SEK 360 million in royalties over the coming 3 quarters, i.e., roughly an average of SEK 120 million royalties per quarter, probably less than in the next quarter, but higher than that in the first quarter of 2025. So I think you will see a big shift of these curves in the coming 3 quarters. If you then look at the operating expenses on the mid graph, you see that they grew to SEK 121 million, up from SEK 104 million in the second quarter.

The majority of this is made up of R&D expenses. They grew to SEK 84 million, up from SEK 41 million a year ago, so a big increase there. And this is what we really want to do. We are focusing a lot of resources into our portfolio and are trying to accelerate our programs that Gunilla mentioned as much as possible. We also saw an increase in marketing and sales costs going to SEK 16 million from SEK 10 million a year ago. And this cost increase that goes on quarter-over-quarter will continue during the remainder of the year. Mainly in the R&D department, where we are progressing our product portfolio successfully, starting our Phase II clinical trial, and we are preparing other programs for INDs as well.

We will also see some increased activity in the commercial organization. But here, we are really careful. We are not expanding our organization until we have a final CHMP opinion. And we have previously stated that we expected the total cost for 2024 to increase by roughly 30% to 50% compared to 2023. That's still correct. We will probably be somewhere towards the middle of that range in 2024. And on the right-hand side, you see that our operating loss was SEK 76 million for the quarter, roughly in line with previous quarters.

If we turn to the next slide and look on the left-hand graph, you see that the net result of SEK 68 million, the loss of SEK 68 million, i.e., slightly better than the operating SEK 76 million. That's mainly driven by strong financial NAP. The cash flow that you see in the middle graph is then, however, slightly worse than the operating loss, it's SEK 80 million lower at SEK 94 million compared to the SEK 76 million in operating loss and that's mainly driven by our growing accounts receivable due to the royalties that we received from Eisai are paid 120 days after the end of the quarter.

So you will continue to see this lag between cash flow and revenues as long as the royalties keep growing significantly. Then on the left-hand side, you see our cash balance. We had roughly SEK 890 million in cash and short-term investments at the end of the second quarter. It's still a very, very solid position that is roughly or over, I would say, 6x our quarterly costs.

So we're very well funded. However, this is towards the end of the year. We have previously said that we expect to have cash between SEK 800 million and SEK 900 million. That will then probably not be the case since we would probably not have the payment of the EU milestones.

So I would -- I think we will be roughly in the range of SEK 600 million to SEK 700 million instead. However, this is really not dramatic. We still think there is a very good chance that Leqembi will be approved in Europe and that we will receive that milestone. And even more importantly, we expect to be profitable from next year since we see that the Licai sales are really on a good trajectory. We still stand by that guidance, I would say. So all in all, we're doing really, really well. We're really happy to see that Leqembi is now on a really good trajectory.

And with that, I leave the floor back to Gunilla for some closing remarks.

[Gunilla Osswald, executive]

Thank you so much, Anders. And then some closing remarks and upcoming news flow. So next slide, please. So if we look into the fourth quarter of this year, we plan to start the Phase IIa study in Parkinson's disease with exidavnemab and we're looking forward to also present some data on our brain transporter program. That's something I'm really looking forward to as well.

Eisai plans to complete the rolling submission of lecanemab with a subcutaneous auto-injector to the FDA. And the next important Alzheimer Congress, is called CTAD, which will be in Madrid at the end of October when lecanemab will be presented by, for example, Professor Lars Lannfelt will also get the lifetime achievement award. We look forward to the reexamination in Europe and hope for a positive opinion from CHMP during the fourth quarter of this year. We also hope for more potential approvals of lecanemab, that could also come later this year and next year. So I think there is a lot of exciting times ahead for BioArctic.

Next slide, please. To summarize today's presentation, Leqembi is approved in 8 geographies and now launched in the U.S., Japan and China. And if you think about this, it's very large patient populations with early Alzheimer's disease that can now benefit from the treatment. And even a small part of those populations will be huge. And I think it's very gratifying that we can help many patients. The launch is starting to take off as we had under say, and it will be exciting to see more and more patients being able to get access to Leqembi treatment.

We're hoping for more approvals and Eisai continues with more regulatory applications and further development of lecanemab. Our product line is progressing really well, and the first brain transporter agreement has been signed, and we are looking forward to the Phase IIa start of exidavnemab. Our finances remain solid. And we have almost SEK 0.9 billion on the bank. I think it's great so we can focus on driving the projects forward towards patients. Next slide, please. So by that, we say thank you for your attention, and we're happy to take some questions.

[Oskar Bosson, executive]

And before we take questions, I have two remarks I want to make on the presentation. One is that when Gunilla mentioned the indicated population for Great Britain, she obviously meant heterocycles and noncarriers and nothing else. And when Anders mentioned when a potential CHMP positive opinion could come, he obviously meant November time frame and not May time frame. Thank you. Now we can take questions.

[Operator]

[Operator Instructions] The next question comes from Viktor Sundberg from Nordea.

[Viktor Sundberg, analyst]

So one on the pipeline project. So the [indiscernible] paper out in German neurology a week ago or so looking at post mortem brain tissue for patients with down syndrome and they found that, I guess, we really know that, but the rebuild -- amyloid angiopathy is more present in these patients, and that's lecanemab, bound to blood vessels in a degree that concerned the researchers in that paper.

Does these findings in any way, impact your priority of the pipeline project in down syndrome from your part? And secondly, in the European regulatory approval process, I know it was driven by AI, but I was wondering if you perhaps heard that they discussed [indiscernible] or [indiscernible] exclusion previously and if based on those discussions, that it would be likely that the CHMP would be more likely to reconsider its negative opinion on lecanemab, if this group was excluded as it was in the U.K. approval?

[Gunilla Osswald, executive]

Thank you so much, Viktor. I'll start with the second one. And of course, it's Eisai partner who is driving the regulatory authority discussions. And I think they need now to take its place. So we will not comment anything about what has been discussed and not discussed and so forth. We just now have to await and see how the process goes. And I think that there are many different approaches you can take in this way.

And I really hope it will be a final positive opinion in the re-examination. And then going back to your first question on Down syndrome, we have Tomas in the room, and he has also been presenting BioArctic data on down syndrome, where we have shown that lecanemab also combined and seem to be a good possibility for these patients. We are aware that they have a higher risk of CAA in this patient population.

And I think also we know that it's important with subcutaneous treatment for these patients. So I don't know, Tomas, if you want to comment?

[Tomas Odergren, executive]

No, I think that's absolutely right, that we think it is a vulnerable patient population, and we really want when lecanemab is introduced to such a population that is given in way at the right dose and with the right modality and subcutaneous is all likely with a better way to proceed.

[Operator]

The next question comes from [ Sushila-Honandez ] from Van Lanschot Kempen.

[Unknown Analyst]

This is Shiela for Louisa. In your brain transporter technology, could you elaborate on what we can expect from the set plans in Q4 this year? And anything you can already share on onco how it compares to Roche's Brainshuttle, how long will it take to get approved?

[Gunilla Osswald, executive]

Thank you so much for the question. So as you know, I'm really excited about our brain transporter technology that we now have applied to several of our internal programs. It has some similarities as we can see with Roche Brainshuttle. It also has some important differences that we will be able to talk more about in the next quarterly report, where we also hope to show some preclinical data.

We have data and they look really promising and exciting, and we are getting data now every day. So I think the next quarterly report will be a good time point and it will, of course, be preclinical data that we will be able to show. And we are preparing then with IND-enabling activities for example, for BAN2803 in order to bring it towards a clinical setting.

[Operator]

The next question comes from Rajan Sharma from Goldman Sachs.

[Rajan Sharma, analyst]

Just on the CHMP reexamination, and I realize this is kind of managed by your partner, Eisai, but could you confirm if there are any new data which can be included in the reexamination versus what was included at the original filing? And then maybe just one for Anders. In terms of profitability. You've obviously reiterated guidance for profitability next year.

Just to confirm, is this irrespective of the European approval? And then just on BAN2803, could you just remind us of the differentiation there relative to and how you think about both of these assets potentially coexisting. And then what should we expect in terms of data before the end of the year?

[Gunilla Osswald, executive]

Okay. The first question was CHMP reexamination. And then it depends on the questions and the discussion that Eisai will have with CHMP. So I think that will be a good opportunity to -- for the CHMP to do a full review of all the data. Then your second question was with regard to profitability on this? .

[Rajan Sharma, analyst]

Yes. Yes, I believe we would be profitable given the forecast for Leqembi sales that we have seen, if that comes through, we should be profitable regardless of what happens in the European Union.

[Gunilla Osswald, executive]

And then your third question was 2802 and 2803. And then BAN2802 is in collaboration with Eisai, and that's an undisclosed target for Alzheimer's disease. So I can't talk about that one. What we can say is 2803 is an antibody towards pyroglutamate A beta with the brain transporter technology. So that's a possibility then to see that mechanism of action has already shown good efficacy in Alzheimer's patients. And then by adding brain transporter with the transferrin receptor, which also has been shown to have a very strong effect in clearing [ Plexus ].

We think that this kind of treatment has a really good chance of being able to help patients going further. So the data that we hope to show that we will show plan to show in the next quarter will be more about how the brain transporter functions and preclinical data. So stay tuned looking forward to next quarter.

[Operator]

The next question comes from Erik Hultgård from Carnegie.

[Erik Hultgård, analyst]

I have a couple, if I may, first, for Anders. Were the costs for the Nordic commercial organization in the second quarter and half the CHMP opinion changed your investment plan in any way for the Nordic infrastructure. And then two questions maybe questions, maybe for Gunilla or Tomas, on the CHMP reexamination, just a follow up on the previous question whether you could confirm that the AAP data, [ 3-year ] data and real-world safety data, whether that could be submitted in the explanation, the way I understand the processes that new data can be submitted in the recognition process. And then finally, on any potential impact that you're seeing on the Leqembi U.S. following the Lilly approval in July, if you hear anything from partners?

[Gunilla Osswald, executive]

Could you repeat the last question? I missed the last one?

[Erik Hultgård, analyst]

Yes. The last one was the Lilly approval in. July in the U.S. whether you're hearing anything on the potential impact on Leqembi from your partners?

[Gunilla Osswald, executive]

Okay. So I think if we start from the bottom?.

[Anders Martin-Lof, executive]

Yes. Let's start with the exciting stuff. Maybe I should start -- yes. No, I'll just jump in with the marketing and sales costs that were million in the second quarter. And you were asking if the CHMP decision has changed our plans, yes, a little bit. If things have been going according to plan, we would now have recruited more sales force actually. So we're holding back a little bit.

However, the structure that we have is a really good strategic -- we have all the strategic positions in place, and they are working really, really hard to prepare the market for the introduction of Leqembi regardless of the CHMP discussion.

We just have to assume that it's going to happen. We think that's the logical outcome. So we have to prepare for that. Of course, that may be in vein in worst case, but we keep on working. But so slightly lower cost going forward in the next quarter. So -- but hopefully, we will then just accelerate a little bit later. So that's what we're planning for. I hope that answers the question.

[Gunilla Osswald, executive]

So Tomas, do you want to comment on the CHMP reexamination?

[Tomas Odergren, executive]

Yes. Well, I think we should tell our appreciation of Eisai. I mean, they have been very conscientious providing a lot of data to the CHMP review in our opinion, as CHMP already has access to a very good insight in terms of the long-term effects of Leqembi. So we are confident that, that is already accessible to.

[Gunilla Osswald, executive]

And then your last question about Lilly's approval in July and the impact. I think, as I've said before, we welcome more alternative treatments on the market that will help to build the infrastructure. And I think that's a possibility to grow the market larger and larger. And it's so much that is needed when you come with a new kind of treatment. I mean before there was mainly symptomatic treatments on the market and then to build the infrastructure for disease-modifying treatments, it really helps with more alternative treatments. So, so far, I think that everything looks really, really good for lecanemab, which also stands very well on our own merits.

[Operator]

The next question comes from Joseph Hedden from Rx Securities. .

[Joseph Hedden, analyst]

You mentioned that the China launch of Leqembi is using blood-based biomarkers. So could you just confirm if you know what product is actually being used at diagnostic products? And what's the -- what are the barriers to using blood based by markers in the major markets like the U.S. where are you seeing more use there? And then secondly, on exidavnemab, it was good to see the publication there. Could you confirm whether you're going with the subcutaneous or an IV dose in the Phase II trial?

[Gunilla Osswald, executive]

So we start with your last one with exidavnemab, where we start with, as you saw in the publication, we had both IV and subcutaneous and in this Phase III study, it will be -- but of course, we have an interest in subcutaneous formulation for the future as well. And then with regard to the blood-based biomarkers, I don't know, do you want to take that question, Tomas?

[Tomas Odergren, executive]

Well, I don't have any details on what exactly is being applied in China. I think from my understanding, in terms of application in major markets, we can expect that there will be several options provided from several companies, and it's more the case whether you have sort of the -- put it, the volume in place, so you really have the reliability at the given analytical facility that you are selling your samples too. I think that is the hole that you need to [ come ] as Gunilla mentioned, I mean, we do have scientific evidence that this will work very well. It's now up to sort of the health care system to implement it in a reliable fashion.

[Gunilla Osswald, executive]

So what we heard at the AIC is that the next step now, I mean, it is being piloted in different parts of the world. Sweden, for example, and others. And they are writing a use guidance, and that will be important to have that agreed before it can be used on a wider scale. But I think it looks really promising. And we also, as I said, we are using it in ahead 3, 4, 5, the Phase III trial, which is ongoing for presymptomatic subjects.

So I think we will see the blood-based biomarkers being used more and more. And I think that's a great step forward for the diagnosis of Alzheimer's patients.

[Operator]

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

[Oskar Bosson, executive]

Thank you. So we have a few questions written I'll try to hand them out to the appropriate person.

First out, I think there are a couple from RedEye, from Frederic, let's start with those. I think there's one was about CHMP reexamination process. And I think Tomas and Gunilla already answered that regarding using new data, et cetera. But maybe we can talk about the other two, so can you say anything about the [indiscernible] from the first process, not the reexamination process, but the one that had the first [indiscernible] in Gunilla, can you say anything about that? And then secondly, regarding Eisai's sales projections for their fiscal year 2024, could you confirm whether these could be affected by the EU process and maybe that's something for Anders to talk about.

[Gunilla Osswald, executive]

So if I start then with the CHMP reporters in the first round, I mean, I get this question a lot, and this is something we are trained that we normally don't reveal. But since the Swedish CSMP person has been out in media and made it publicly available that it was France and Denmark, I think that's public information. Otherwise, I would not have revealed that because that's how I'm trained.

[Oskar Bosson, executive]

So that answers that question. Anders, can we say anything about the EU?

[Anders Martin-Lof, executive]

You share of the 2024 forecast for Eisai. Yes. So what they have communicated that out of the $360 million that they were forecasting for '24, $280 million was supposed to come from the U.S. and [ $ ]65 million from Japan. So that's $345 million -- so $15 million out of the [ SEK ] 360 million are expected to come from other markets, mostly China, I would say, so it has a very minor impact on the 2024 forecast. There are really low numbers that were expected. And yes, that could have a very slight impact but very, very minor.

[Oskar Bosson, executive]

Yes. And Fredrik, I think we can add to that, that obviously, that has to do with the process in Europe largely, right? Because when you get an approval in Europe, that could have happened at the [ early ] list if the time frame would have held in September. And then you have just not so many months left of the fiscal year. And then in Europe after an approval, that's when you start discussing price with authorities around different countries. Germany, and I think Austrian can start selling right away, but the rest of the market needs price discussions before they are implemented.

So that also means that the sales from Europe really weren't expected to start coming in until the next financial year, we believe.

And we had another question then on -- also relating to the EU. I think I understood wanted to say anything about what the forecast there or what the numbers that we have seen externally by Eisai, how much could the total potential of EU over time, how much could that add up to according to the best of our knowledge right now.

[Anders Martin-Lof, executive]

Right. Yes. So the impact of EU is -- has been described by Eisai, both for 2026 and for 2032. So basically, they have been saying that in 2026, they expect roughly 6% of Leqembi revenue come from EMEA. That's the EU plus U.K. plus the Middle East. So I would say, well, it's going to be then -- it was less than 6% for 2026, and that share was going to grow until 2032, where it was supposed to be 14% for EMEA so less than 14% in 2032. So a very minor difference if we do not see approval in the European Union in 2026, more sizable for 2032, but we still expect to have more than 85% left of the market in 2032 even if the EMEA would not change their opinioN.

[Oskar Bosson, executive]

Thank you. Then we've got a question on the U.S. market, Gunilla. And as a statement here, private insurer seemed reluctant to finance can be subscriptions and U.S. neurologists seem to be somewhat divided in their view on Leqembi. Can you make any comment on that? I think we saw something else when we were at AIC this summer, I don't think the last statement holds, but Gunilla, please give us your comments.

[Gunilla Osswald, executive]

No, I think, I mean, what we have seen is, I mean, CMS, they make reimbursement through, for example, Medicare. And there are many different insurers who have taken different stance. The veterans were the first one who went out with supporting the treatment of Leqembi. So I think -- but it's different in shorter that make their own judgments. And what we heard from the U.S. neurologist, I mean there are always some who negative.

That's always when it comes new treatment and some who are positive. What we really heard when we were there at Eisai in Philadelphia this summer, was the presentations by, for example, one professor from Columbia University in the U.S., who had been treated exactly according to the label, and he presented data from 122 patients and there was a Japanese professor who also had quite a lot of experience with real-world evidence data. And they concluded that it was less side effects with regard to area than they was seen in the [indiscernible] study, similar or less in their experience. and no new other important adverse events.

So I think that also after that, those presentations, I heard physicians come up to the microphone and saying I've been a bit reluctant, but now I'm convinced and I will go home and help my patients. So I think that it's kind of -- when new treatment comes the physicians need to really understand the benefit and the risks. And it's really important, it's being handled in the best way, so the patients get the most benefit out of the treatment. So I think that the more we hear that the physicians use lecanemab, then they also have the experience and learn how to use it in the best way for the patients. So I think we have a really positive approach ahead of us with more patients.

[Oskar Bosson, executive]

And I can just add, when it comes to the insurance of the coverage in the U.S. as Gunilla mentioned, the veterans help association and also CMS. I think I remember numbers that the total reimbursement coverage in the U.S. is above 90%, if you look at the total. So I think with access to more than 90% of the market, I think we're in a good place there.

[Gunilla Osswald, executive]

Thank you, Oskar. Good. There was a question about 2802, and I've said that I cannot say so much about 2802. What I can say is what is a main difference from lecanemab, and donanemab on the market is, of course, that this one has a brain transporter. So -- and the same with our brain transporter in spite it utilizes [indiscernible] receptor to make an active transport of the antibody into the brain.

And what we see then is that we get a fast, broad and deep distribution which I think could lead to potentially even better effect less area because it goes into the brain in another way, most likely. And we can give lower doses. So I think that's a very, very interesting next generation. Now I'm so happy we have lecanemab, that can help patients. in many different parts of the world. And then I think it's great that we are working on next-generation treatments that hopefully can help patients in the future.

[Oskar Bosson, executive]

That was the last written question. I don't see any other questions in the queue either in the phone queue, so I think that concludes today's call. Thank you for everybody who have listened in and see you again in a quarter.