BioArctic AB (publ) (BIOAB) Earnings Call Transcript

Hello, and welcome to the BioArctic Q4 reports 2020. [Operator Instructions] Just to remind you this conference call is being recorded. Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. Please go ahead. [Foreign Language]

Thank you, and welcome to BioArctic's full year report for 2020. I'm Gunilla Osswald, and I'm the CEO of BioArctic. I will share this presentation today with our CFO, Jan Mattsson. 2020 was a very good year for BioArctic in spite the tough situation around us with the COVID-19 pandemic. Our great project portfolio progressed well, thanks to our great personnel and our great partners. Eisai has, during 2020, broadened the scope for lecanemab, BAN2401 and has now 2 Phase III programs ongoing. Yesterday, we also announced that the number of patients in Clarity AD, the pivotal Phase III study, has been increased to ensure a robust data set. We have also reported that continues to strengthen the support phenomena during the last year. Next slide, please. BioArctic -- next slide, please. BioArctic is a unique Swedish biopharma company, and our aim is to improve lives for patients with central nervous system disorders. When I say unique Swedish biopharma company, I mean that on 4 different aspects. The first one is that we are focusing on areas where there is a high unmet medical need. And that's areas like Alzheimer's disease and Parkinson's disease, where today, only have symptomatic treatments for the patient. And we focus on disease-modifying treatments meant to affect the underlying disease. These groups of patients are huge, and that is a large commercial opportunity. The second aspect is that we have a great organization with very experienced and engaged coworkers. And important fruitful collaborations with both universities and with our strategic partners, Eisai in Alzheimer's disease; and AbbVie in Parkinson disease. The third aspect is that we have an attractive and well-balanced project portfolio. We have projects spanning all the way from early discovery all the way to Phase III. We have partnered projects that generate revenues by milestones where our strategic partners carry the cost of the clinical trial, and we have earlier fully owned projects with substantial marketing and out-licensing potential. The fourth aspect is that we are well financed. We have a strong cash position of approximately SEK 1 on the bank or more than USD 120 million. We have valuable collaboration agreements with big pharma like Eisai and AbbVie at a value of up to SEK 8.7 billion, about USD 1 billion, plus royalties if we come all the way to the market. So BioArctic, it's a dynamic and very exciting company with a huge potential that I'm pleased to lead. Next slide, please. So I'll start with some highlights of the last year. We had significant progress in the projects. If we start with lecanemab, Eisai has presented new data from the ongoing Phase IIb open-label extension study at several Alzheimer's congresses last year. The latest one was at CTAD Congress in November, and this further strengthens the support for lecanemab, and I'll come back to that. The second aspect for lecanemab is the ongoing Clarity AD study for early AD patients where the Phase III pivotal program progressed well during the year. And I have to say that I'm really impressed with how Eisai has worked with mitigating the potential impact of COVID-19 on the study last year and continue to do so and put the safety of the patients first and also doing a lot of efforts to secure high data quality. The third aspect for lecanemab last year was that an additional Phase III program was started, and that is called AHEAD 3–45 started in September in collaboration with Alzheimer's Clinical Trial Consortium. And this Phase III program, here, lecanemab is given to very early stages of Alzheimer's disease. In Parkinson's disease, AbbVie canceled the second part of the Phase I program, the multiple ascending dose study with ABBV-0805. The Phase I program is still ongoing with single doses. And we are instead working on a detailed plan for Phase II, and we think that was very good news that they are planning for Phase II. If we look at our internal programs, they have also continued to progress well in spite of the COVID pandemic situation. And we have added 2 innovative projects to the portfolio, and they are progressing really well, now well underway. At the end of last year, we also won the Allbright award for companies who are listed at Nasdaq Stockholm. They are being reviewed for how they work with gender equality and leadership. And we were pleased to see that we won this award this year or for last year. Next slide, please. If you then focus on what happened during the fourth quarter of last year. Then BAN2401 got its INN name. So we now should say lecanemab and we'll try to use that. And sometimes I might slip and say BAN2401 again, but we mean lecanemab. At the CTAD congress, there were 3 different presentations. The first one was on Clarity AD, where baseline characteristics of the patients were reviewed and compared with Phase II. And importantly, they were consistent and it's also representative of an early AD population. So that was really good news. The second one was 2 presentations on the open-label extension study. And they showed that first, there was a rapid decrease of clearing amyloid from the brain, where there was shown already after 3 months of treatment with lecanemab in the patients who earlier got placebo in the core study. And then a further continued decrease was seen at 6 months and further after 12 months. The second aspect that was reported was that if we focus on the side effect and especially the ARIA-E, which is like a brain edema, which mainly is seen on MRI scan, they still report a very low frequency of this side effect, which is consistent with previously reported in the core study. And this is one of the areas which differentiates lecanemab from other late-stage competitors who have more ARIA-E in spite of that they have to titrate and give the dose slowly increasing upwards. Lecanemab does not need to titrate. You can give the top dose directly and still have less ARIA-E as shown in the Phase IIb open-label extension study and in the Phase IIb core study. The next presentation also at the CTAD Congress was AHEAD 3–45. This study -- ACTC presented the study design and also some baseline data on the first patients who were screened. After this period, I think last year was a really good year, and this year has also started in a very good way. It started with that. We got a European patent granted for antibodies targeting truncated forms of amyloid beta. And yesterday, we had a press release that Eisai has expanded the Clarity AD study by approximately 200 patients. And this is in order to ensure a robust data set and mitigating that some of the patients missed some doses during the first wave of COVID-19 pandemic situation last year. The recruitment has gone really, really well and the recruitment, including additional patients have now been closed. And we expect randomization to be concluded during February. And Eisai, I'm really impressed with how they are driving this program. They still expect the 18-month readout in September of 2022. Next slide, please. BioArctic has an attractive and well-balanced project portfolio, we have organized it in 5 focus areas: Alzheimer's disease, Parkinson's disease, other CNS disorders, our blood-brain barrier technology and diagnostics. I think it's balanced in 3 different ways. We have several projects spanning from -- several projects in different areas. We have projects spanning from discovery all the way to Phase III and we have a combination of fully financed partnered projects, an innovative fully owned early programs. And our strategic partners finance the expense of clinical program, and we finance the less expensive preclinical phases where we can increase the value before partnering. During last year, we can note for lecanemab in a new patient population. We can also see the 2 new discovery projects that was added to the portfolio late the year before, and they have now started really well. So I think with that, we have a really attractive project portfolio. Next slide, please. A couple of words about our long-standing and extensive successful partner. We have had several research collaborations and 2 license deals. So far, we have received EUR 65 million, and the total aggregated value of this is up to EUR 222 million. So there's still a lot left if the programs continue to book as well. And if we come all the way to the market, BioArctic we get royalties of substantial value. Could be like blockbuster revenues, which means that more than USD 1 billion per year without any cost for the clinical program. And we also have the right to other indications outside of Alzheimer's disease, and we have also rights to commercialize lecanemab in the Nordic region. I think that BioArctic has a great business model, which is shown in this case. It's also shown in the case for Parkinson, where we have a successful collaboration with AbbVie since 2016. So far, we have received USD 130 million out of the total aggregated value of the agreement of up to USD 755 million, plus royalties, if we come all the way to the market. And if you think about this patient population, which also is huge, and especially if you also add other indications like multiple systemic atrophy and Lewy body dementia so this could also mean substantial revenues for BioArctic if it continues to progress well. So it's 2 great collaborations that we are really, really happy about. Next slide, please. This slide shows the broad lecanemab clinical program that Eisai is driving. So we start in the middle with the Clarity AD Phase III confirmatory study, which is in early AD patients, which means patients with mild cognitive impairment and mild Alzheimer's disease. And this study is expected to read out, as I said, in September 2022, according to Eisai. And the new target of patients now is 1,766 early AD patients. It's also in the same patient population, the open-label extension study to the phase -- linked to the Phase IIb study, which is ongoing in 180 patients. And here, we will see data that this is an open study. Data will be coming along continuously and being reported at congresses. And the next one to look out for is AD/PD. The new Phase III program, AHEAD 3–45, is then focusing on very early stages of Alzheimer's disease. And this is comprising of 2 sub studies, 2 sister trials, A3 and A45. And it's driven together with Alzheimer's clinical trial consortium, and a total of approximately 1,400 subjects are expected to be included. And this is then for preclinical, asymptomatic subjects who have intermediate or elevated amyloid levels in the brain. The A3 program, there the studies have intermediate levels of amyloid in the brain. And here, the intention is to delay the brain amyloid accumulation by lecanemab. And in the A45 study, they have elevated levels of amyloid. And here, the intention is to reduce the risk of cognitive decline. I'm really looking forward to the progress of this impressive broad program that Eisai is driving in Alzheimer's disease. Next slide, please. So our early-stage portfolio has also continued to develop in a very good way in spite of the COVID-19 pandemic situation. Of course, we work a bit differently. But so far, we have managed to progress our early portfolio without any noticeable disturbances. The largest area we have is Alzheimer's disease, what we have 4 fully owned disease-modifying antibody project. Each of those projects have different mechanisms from the others. And as I said a year ago, I think within the coming year, I will reveal some more information about those programs. We have been very secret about them. And what we have told is that AD1801 is a project which is linked to ApoE, which is the most common risk factor for Alzheimer's disease. We have also just recently now disclosed that AD1503, that project is linked to -- and have antibodies towards the truncated forms of Abeta. These truncated forms are prone to aggregate and form toxic aggregated forms of amyloid beta. And our antibody is intended to bind to those aggregated form and eliminate that. We have also then the early Parkinson program together with AbbVie and our new neuro-generation program, as I said, has got a very good start. We are also preparing for Down syndrome in different ways. For example, there is a need for a subcutaneous administration. So we have to wait a bit further until that is time, but we have the poster presentation at CTAD about Down syndrome, for example. Our efforts in the blood-brain barrier technology platform is progressing really, really well. I'm really excited about this part. And that's something for us to continue to talk more about at a later stage. Then diagnostics, which is really important also when you look at early stages of Alzheimer's disease and also to be able to both identify the patients and to follow disease progression. And here, the whole field are also doing some very interesting breakthroughs that we will also follow at the next Alzheimer Congress. So by that, next slide, please, and I will hand over to our CFO, Jan Mattsson, for the financial summary.

Thank you, Gunilla. For those of you that don't know us that well, I'd like to point out that we currently don't have any steady revenues, but have a business model focused on partnership agreements, which means that our financials are very much linked to milestones and that incomes related to research project with our partners. And with that said, let's start looking at our net revenues and operating results. And my comments relates to the quarter's number, not the full year numbers. Net revenues were SEK 8 million for the quarter compared to SEK 26 million same period last year. And the change is primarily related to lower activity in the Parkinson's disease program and is the quality plan. Moving at OpEx. Costs -- total costs are down SEK 8 million from SEK 42 million to -- from SEK 40 million to SEK 32 million, and this is mainly due to lower project expenses compared to last year, although expenses in our own projects increased during the same period due to higher activity. Moving to operating loss. It was down to minus SEK 13 million in the quarter compared to SEK 21 million in Q4 of last year. And just as for net revenues, this relates to lower activity in the Parkinson's disease program. Our cost forecast for the coming 12 years -- 12 months, sorry, is in the range of SEK 180 million to SEK 220 million. Next slide, please. Looking at cash and net results. The cash balance continues to be in good health and amounted to SEK 1 billion at the end of the quarter. Our cash flow from operating activities was minus SEK 25 million compared to minus SEK 54 million in Q4 of last year. And the net result for the period was minus SEK 13 million compared to minus SEK 17 million same quarter last year. And in summary, we continue to be in good financial shape. And with that, I hand back to you, Gunilla.

Next slide, please, and then I will conclude today's presentation with some upcoming news and some closing remarks. Next slide, please. And now we are on Slide 14. So the upcoming news that we are looking forward to now is, of course, to see that lecanemab is progressing well. We're looking forward to the next Alzheimer Congress AD/PD in March. It's again a virtual congress, and there are presentations on lecanemab, and also BioArctic has a poster on Down syndrome. And I think that the whole Alzheimer arena is, of course, evolving a lot. And of course, everyone is excited to follow the FDA decision on aducanumab, which now has extended the review period until the 7th of June. And the whole progress also with regard to diagnostics is also something that we look forward to follow at the AD/PD congress. In Parkinson's disease, we look forward to the continued Phase I study that AbbVie is driving and the preparation for the Phase II program. So that will still take some time. Yes. Diagnostic area has great progress in the AD field, and I'm really eager to follow blood biomarkers like phospho-tau 217. And I think this can really help the Alzheimer's speed is that continues to look as well as we have seen previously. So we are concluding that we have had a very good year 2020, and we have very exciting times ahead. Next slide, please. So that concludes today's presentation and say that BioArctic is built on great science, we have great projects. It's driven by great people. And everything we do is with patients in mind. We really want to help them to get better lives. Next slide, please. So by that, I thank you for your attention, and we're happy to take some questions.

[Operator Instructions] Our first question comes from Joseph Hedden from Rx Securities.

I have a few. Starting on your alpha-synuclein MAB program. And you mentioned the single ascending dose study is ongoing. Has -- have they given you any indication of the recruitment status of that and when we might expect to see results. And then in terms of the plans for Phase II, have you had any interactions with that there at all on the design or the ongoing conversations on design and when we might see an announcement on that.

Thank you so much, Joseph. Great questions. So with regard to ABBV-0805, which is driven by AbbVie, the single ascending dose study is ongoing, and it's looking really, really well. It's what I can say. I can't disclose details, but I can say that it's going really well. And that they are preparing for Phase II and that will still take some time because, I mean, it's a lot of things to prepare when you go into a Phase II program. So I think I just want to manage your expectations and say it will not -- don't expect it before summer. So yes and of course, we are engaged with AbbVie. That was your other question. Of course, we are. I mean, the way we work, it's they who are driving it, but we are working with joint committee -- joint development committees and so forth. And so of course, we are.

Okay. Great. And then just staying on that program and we saw yesterday, Biogen sneaked into their results on your full year 2020 results. Their progress has failed in Phase II and I just wondered if you could remind us about how 0805 is differentiated from Biogen solanezumab.

Yes, there was some news yesterday, and we really look forward to seeing more data. So the first one of the alpha-synuclien antibodies that had some Phase II data is Roche/Prothena, and we're really looking forward to seeing more data on that program at AD/PD. They seem to have had some effect on the movement part of UPDRS. So I'm really looking forward to seeing -- learning more from their study. I'm also eager to understand more about the Biogen Phase II study. I think it's important to understand that each antibody is different, each is unique. They are all targeting alpha-synuclien in different ways. And what we believe is that we have the most select antibody with selectively targeting the protofibrils, oligomers of alpha-synuclien. And this is really important not to have too much binding to monomers because then it can be sequestrated in the periphery. So we are eager to learn more about the other competitors and their Phase II programs. And to understand what learnings we can draw from that. The same approach has been in Alzheimer's disease for many, many years, where we have learned a lot in the different clinical trials. And eventually, we now have seen, for example, lecanemab, who has had really encouraging results in Phase II.

Just curious, is there some kind of evidence in Parkinson's disease as in Alzheimer's disease that the oligomers and protofibrils are the most neurotoxic and therefore, potentially the best to target with an antibody? Or is it more a case in Parkinson's that you do get sequestering of the antibodies by monomers in the blood?

No, no. I think -- I mean our belief is strongly that it is the protofibrils, so it's the most toxic part. And that's why our focus has been to have very selective antibodies targeting the toxic protofibrils in the brain. So we have a very similar thinking on that aspect between 0805 and lecanemab. That is the toxic protofibrils that we are targeting. And here we differ a bit from some of the competitors.