Moberg Pharma AB (publ)

STO:MOB

Earnings Call Transcript 2020-Q2

[Operator]

Hello, and welcome to the Moberg Pharma conference call. [Operator Instructions] Just to remind you, this call is being recorded. Today, I'm pleased to present Anna Ljung. Please begin your meeting.

[Anna Ljung, Chief Executive Officer]

Thank you. Hello, everyone. My name is Anna Ljung, and I'm the CEO of Moberg Pharma. I also have our VP of Finance, Mark Beveridge with me here today. And I'm happy to present our interim report covering this last quarter, April to June. And you can find the report on our web page. And there, you can also find a PowerPoint presentation that I will use in this telephone meeting. So I will start on Page 4 in that presentation, with a brief summary. So we're a Swedish pharmaceutical company that base our products on drug delivery of known substances, which reduces time to market and development risk compared to traditional drug development. We have a clinical pipeline consisting of 2 late-stage drug candidates, MOB-015 and BUPI, both of which have demonstrated strong clinical results, which indicate that they have the potential to become market leaders. Out of these 2 projects, we spend the majority of our efforts on MOB-015 against onychomycosis, where we recently published the results from the Phase III trials in more than 800 patients, and these results will, of course, be my main focus on this presentation today. We have strong commercial partners in place for all major territories, except the U.S., where we want to build our own presence. And we also have strong patent protection until 2032 for both products. Turning to Page 6, on the events during this period. The main event is the top line data for EU that we announced in June, where we met the primary endpoint, showing noninferiority versus ciclopirox. These data are consistent with the data from the North American study, with low complete cure rates but very strong mycological cure rates. To date, our operations have not been significantly impacted by COVID-19. We currently have no ongoing clinical trials. And so far, we have not had any high sick absence numbers, and we also have contingency plans in place. Earlier this year, we entered a financing agreement up to SEK 216 million with a Swiss investor, Nice & Green. This financing can cover the cost of an additional U.S. study. And to date, we have used SEK 9 million out of this facility. We have further strengthened our management team with the recruitment of Cindy Wong, who used to be Head of Global Clinical Development at Metz Pharmaceuticals, and she also has a background as a CMO at Q-Med and have had senior positions with regulatory authorities in both Sweden and Australia. Finally, an expert evaluation has confirmed the validity of the clinical results also in the EU trial, and I'll continue on Page 7 with the EU results in more detail. So the European Phase III study for MOB-015, it included a total of 452 patients, where 2/3 received MOB-015 and 1/3 received ciclopirox, the most widely used topical drug for onychomycosis. The primary endpoint was met showing that MOB-015 is noninferior to ciclopirox in achieving complete cure rate, however, has a higher mycological cure rate. Looking at the absolute number, the absolute number are low as the complete cure was only seen in a few patients. Mycological cure, however, was significantly higher and more rapid than expected, reaching 84% at week 52. And actually already at week 12, 46% of the patients were fungus free. And there were no safety issues identified in the study. Slide 8 shows the relationship between mycological cure rates and complete cure rates for current onychomycosis drugs. Just as the North American data point, the data point for the EU trial is also off the chart. For all of our competitors, it is a clear relationship between mycological cure rates and complete cure rates. The higher mycological cure rate that is achieved, the higher the complete cure rate. And already after the North American trial results, we had external experts reviewing all of the photos, and once we received the EU data, these experts also reviewed those photos and that data. The conclusions presented earlier this year remain, and we see the same pattern in EU that was seen in the North American trial. If anything, it's even more pronounced in the EU data set. So to summarize. The key opinion leaders had found that the vehicle enables delivery of high amounts of terbinafine through the nail. However, the hydrating properties of the vehicle also caused whitening discoloration in nails. This phenomenon can be seen in a majority of the nails, but it is transient as the water content normalizes after end of treatment. This whitening makes the assessment of clinical cure challenging since the physicians cannot distinguish between a nail that is discolored due to nail fungus or a nail that looks whitish due to the high water content in the nail. All the experts that we engaged agree that the high antifungal effect is extremely attractive and that a product with this high mycological cure rate should, over time, also be able to achieve a high rate of complete cure. On Slide 9, based on all available data, we have identified a solution. A shorter treatment time has the potential to increase complete cure rates. And this is based on the high mycological cure rate of 70% to 84%. This is on par or even higher than overall terbinafine. 40x higher levels of terbinafine in the nail bed has been seen than for oral terbinafine, and we know that 3 months treatment with oral terbinafine is a standard treatment, and that is effective. The onset of the antifungal effect is even more rapid from MOB-015 than for oral terbinafine, as we're applying terbinafine directly on the nail with MOB-015 delivering actually 46% mycological cure for this EU trial already after 3 months versus 15% for oral terbinafine, and the reduction of the hydrating effect after the initial treatment phase and then reducing the impact of the clinical cure assessment at week 52. So the experts' conclusion is that the ideal dosing is once daily treatment for not more than 3 months, followed by maintenance treatment once weekly. This should provide sufficiently high concentrations of terbinafine in the nail and enable normalization of the water content in the nail during the maintenance treatment. And also from a patient perspective, a shorter treatment period is, of course, highly attractive. On Slide 10, normally, when you conduct a clinical study, you get either strong, weak or somewhere in between data. In this case, it's an unusual situation as the results for the 2 main parameters, complete cure and mycological cure, are fundamentally different, with world-leading mycological cure rates, but rather low complete cure rates. As we met the primary endpoint showing that MOB-015 is noninferior versus ciclopirox in the EU study in addition to the North American trial showing superiority versus the vehicle, these 2 studies can be used for registration in the EU. In the U.S., FDA normally requires 2 studies showing superiority, and therefore, one more study is likely needed for the U.S. As we have partnered our assets, we are not alone in taking these decisions, but, of course, need to involve our partners. As these are large companies, and also an interaction with the regulatory authorities typically takes time, we expect this to take a few months, but we'll come back with more information as soon as possible. Moving on to the financial part of this report. On Slide 12, there were no milestones this quarter. And on the cost side, costs are streamlined compared to last year. We're now a team of 12 employees, so there is limited cost apart from clinical studies. Our burn rate for operations is roughly SEK 8 million a quarter. But then, of course, we have external costs for clinical studies on top of that. And as we're finalizing the Phase III studies, they are rather large at the end of the study. But in this quarter, we invested SEK 10 million in the balance sheet in MOB-015 to complete the study. On Slide 18 (sic) [ Slide 14 ], to conclude this presentation, we remain fully committed to creating the future market leader in onychomycosis. We now have 2 Phase III studies for MOB-015 that have met the primary end point and can serve as a basis for EU registration. Our outcome, the low complete cure and world-leading antifungal effect is unusual. As we have partnered our assets, we're not alone in taking the decision going forward. We will discuss with our partners and regulatory authorities before deciding on the next step. With a financing agreement in place, this agreement can cover the cost of an additional U.S. study. And we do have commercial agreements in place for the major markets, corresponding to a total deal value of $120 million, while we keep the rights by ourselves to the U.S. market, where we see the largest opportunity. Now I'll stop there, and I'm happy to open up for questions.

[Operator]

[Operator Instructions] And our first question comes from the line of Klas Pyk of Nordea.

[Klas Pyk, Research Analyst]

My first one is, so can you give any indication of what your partners are telling you? Given the puzzling Phase III results, do you see any risk of a partner not moving forward with the product until a new study has been completed? And my second question is, if you could provide any indication of the time line ahead, even though you will come back with more information in a few months' time? For example, approximately when do you expect to file for product registration in Europe? And when you're planning for the initial study?

[Anna Ljung, Chief Executive Officer]

Thank you, Klas. So of course, there is a lot of data for us and our partners to go through, and that is something that is ongoing right now. And as I indicated before, we believe that, that will take a couple of months, especially as we think that we might have to involve regulatory authorities as well. So I think it will take a couple of months. Let's come back when we have that information. Of course, all of our partners have seen this initial data that we have received, and they are as thrilled as we are about the high mycological cure rate. But as I already said, it takes some time to find the right way forward here, and that will happen over the next few months, but we have no reason to believe that any of our partners would like to leave the agreement. They're as thrilled as we are about the mycological cure rates.

[Operator]

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

[Gergana Almquist, Equity Analyst]

I have a question about the financing. Do you think, Anna, that the SEK 216 million you can draw upon will be sufficient or -- and go along?

[Anna Ljung, Chief Executive Officer]

Well, the financing, I think that has to follow when the overall strategy is set. Since we now have a period where we will discuss next steps with partners and regulatory authorities, then the natural time point to choose a financing strategy is after that. We do have this financing agreement in place with Nice & Green that enables us to draw up to SEK 216 million should we choose to do so. And that would be sufficient for one additional North American study if we end up wanting to do that. But we have to decide on the strategy first, and then we come back with the information on the financing strategy after that.

[Gergana Almquist, Equity Analyst]

And my next question is, do you have the study design of the new study already in place? What's the status there?

[Anna Ljung, Chief Executive Officer]

That is something that...

[Gergana Almquist, Equity Analyst]

Have you decided that design?

[Anna Ljung, Chief Executive Officer]

Sorry, could you repeat that last statement?

[Gergana Almquist, Equity Analyst]

Have you decided on the final design of the new study?

[Anna Ljung, Chief Executive Officer]

No. That is something that we will decide in collaboration with our partners. So first of all, we have to decide that we will start the study and then when to start the study and then the final design.

[Operator]

[Operator Instructions] Okay, there seems to be no further questions coming through, so I'll hand back to Anna for the closing comments.

[Anna Ljung, Chief Executive Officer]

Thank you. Then I just want to thank everyone for participating today. And of course, if you have any additional questions, don't hesitate to e-mail either me or Mark. Thank you, everyone, and have a good day.