ExpreS2ion Biotech Holding AB (publ) (EXPRS2) Earnings Call Transcript

Welcome to today's presentation where we have the pleasure to present ExpreS2ion Biotechnologies. To help us through today's presentation and talk a little bit about results and answer questions in the end, we are joined by CEO, Bent Frandsen; and CFO, Keith A, Keith Alexander. Today's topic, of course, your Q2 report out fresh from the press, but I guess also the bigger broader picture, what has been a, I think, a very busy news flow over the summer by you and in the early spring. As always, ask questions down in the box down below. We already got a lot in, see if it's already answered. I will also say we have a firm deadline at 11:00, unfortunately, but you are very welcome to send in the questions if you don't get to the IR webmail by you. And I know, Ben, I have seen your program. You also have a lot of presentations in other places. So maybe the questions can be asked there. But for now, I'll hand the call over to you, Bent.

Thank you very much, Michael. My name is Bent Frandsen. I'm the CEO of ExpreS2ion Biotechnologies, and I'm joined here by Keith Alexander, our CFO. And we'll be going through ExpreS2ion, where we are today on the back of the Q2 report that we just released today. And we have some exciting information here coming up. We'll be going through our strategy and pipeline, subsequently the financial results and allowing some time for Q&A, as Michael also alluded to. And first, going through strategy and pipeline. I think the important keyword here is momentum. We have been following up on announcement we've been making earlier, making progress, especially on our breast cancer vaccine assets in clinical stage 1, and this we're going to talk through. Just in the beginning here, let's just all be clear on ExpreS2ion strategy. It's laser focused. We have first and foremost, the advancement of our proprietary pipeline. That's, of course, delivered by the progress on ES2B-C001, [indiscernible] profile [indiscernible] immunotherapy. Second is to amplify our impact through collaborations across malaria, influenza and Nipah, where we, in essence, actually borrow scale and expertise from collaboration partners in non-diluting funding setups. Thirdly, we are keeping on the innovation, and we are approving new concepts, and we have been filing novel patent applications. And finally, we aim to monetize on the platform that we have also with respect to our contract services where we leverage on our platform for clients. So these 4 pillars are together ensuring that we not only innovate but also create value and stay financially healthy. And our strategic focus, we've been able to deliver in the second quarter. We have moved from plans to execution, you can say. In Q1, we announced plans, for example, the letter of intent with WuXi vaccines and not least the trial protocol amendment for the breast cancer vaccine asset. And in the second quarter, we have executed on these. Our HER2 vaccine, the ES2B-C001 vaccine trial dosed its first patients and got regulatory clearance to expand and our partnerships have paid up on top of this. AdaptVac, our joint venture secured a major funding for [indiscernible] virus vaccine and also joined a new malaria vaccine consortium. So in that sense, we've been achieving some major goals even in the second quarter. Let's dive into ES2B-C001. It's being developed for HER2-expressing breast cancer patients who have exhausted standard treatments. It's a rare hope for those patients. The Phase I is a dose escalation trial where we start with 50 micrograms and progress up to 450 micrograms all doses with adjuvant. The Data Safety Monitoring board decides whether the study can progress to a higher dose. Patients will receive intramuscular injection every third week and in total, 5 injections. The primary endpoints are safety, secondary endpoints are immune responses and signs of clinical efficacy. And the dose escalation will be carried out in a 3+3 design with advanced metastatic breast cancer patients where cancers express HER2. The time of this is approximately 48 weeks from the first patient first dose. Subsequently, additional patients will be dosed to confirm the recommended Phase II dose in the following 6 months. So thereafter, we will have evaluated up to 27 patients in the 18 months, which we expect the trial to take. So we are essentially testing if we can safely turn a patient's immune system into a precision weapon against HER tumor. It's an exciting new approach for HER2 cancer. Momentum in this, we are recruiting. The quarter marked the turning point for ES2B-C001 clinical trial for that. In late June, we received the regulatory green light earlier than expected, allowing us to combine our HER2-targeted vaccine with state-of-the-art antibody drug conjugate therapies. Why is this important? Because it means patients receiving cutting-edge drugs like ENHERTU can join our trial. In other words, we've opened the door to patients who previously might not have been eligible, aligning our study with what's actually happening in oncology clinics right now. We are growing our presence in this trial. We didn't stop at the regulatory approval. We proactively expanded our trial's footprint on the ground. In Vienna, we made agreements with 5 major oncologist clinics to establish a reference network. And to ensure that we can serve the growing interest, we also brought 2 additional trial sites on board as part of the amendment, one in Lienz and another in [ Grass. ] So this means a patient doesn't have to travel far or wait long to participate. The trial is more visible and accessible than ever and most importantly, now on track. If you look at the development path going onward, this is an assessment of our high-level development plan. Needless to say, ExpreS2ion would like to proceed beyond the clinical Phase I trial and to also document clinical proof of concept in a Phase II trial. The design of this is very dependent on the outcome of the Phase I trial. So positive results in a randomized Phase II trial would be a very significant value trigger. This will also be the time we would expect to out-license the program. A proof-of-concept Phase II trial would start in the beginning of 2027 and run for approximately 24 months. What would it take to bring this vaccine to patients faster? As previously mentioned, it may be possible to receive conditional approval to start marketing the vaccine even if the Phase II has shown clear progression-free survival over standard of care. the target for gastric cancer. So we will also be evaluating a parallel Phase II track to broaden the impact if Phase I shows safety. HER2 is just as common in gastric cancer as in breast cancer, even though most people only associate HER2 with breast cancer. We will explore partnering opportunities prior to Phase III. So this time line may be executed by us or a partner. In the malaria projects, I should say, this is important. malaria remains through University of Oxford, our Express platform is central to several vaccine candidates targeting malaria life cycle. This table shows how active this area is multiple trials on multiple continents are going on. The key is any success here validates our Express technology and could lead to a licensing deal, for example, in the discussions we have at the moment with Serum Institute of India. VAC099, which is for PFS 45 has been added as a new clinical trial in the portfolio and now actively recruiting in Burkina Faso. Several other trials have been updated the time lines since the last quarterly report. Importantly, 3 additional trials, VAC089, BIO-003 and VAC093 now have estimated completion dates specified for the first time. That's in Q1, Q2 and Q3 2026, respectively. And with respect to IS5, a key component in the blood stage malaria vaccine, this is a very important target. A fun fact is here that the IS5 vaccine that we contributed with so far is among the first to show strain transcending efficacy in a Phase Ib trial complement or even improve upon the new WHO recommended malaria vaccines. Across other programs, across Nipah virus vaccine, across influenza vaccine project, our platform's versatility is on display, all from enabling next-generation nasal influenza vaccine to contributing to first-ever Nipah virus vaccine. These are long-term shots on goal, mostly funded by others, but each success would reinforce that our Express platform can tackle diverse pathogens. Summing up, this is our pipeline as we depicted today. We are a platform-based vaccine company. At the top, you can see our 100% owned breast cancer vaccine in Phase I and on track and progressing as we speak. This is the most important program right now. The rest of our pipeline leverages partnerships and grants. For instance, our malaria vaccines that you can see here are funded by non-dilutive funding and carried out by Oxford University. So no cost to ExpreS2ion on that account. The same goes for Nipah and Influenza. And the takeaway is that ExpreS2ion is really not a one product company. It's a platform with multiple shots on goals and derisked by partner funding in many cases. And again, let me just stress, if you look at the bottom, the COVID-19 project, which was discontinued by the licensee Bavarian Nordic in clinical Phase III after having met its primary endpoint due to the commercial plans for Bavarian Nordic and the assessment of this. We remain very proud that it basically documents a clinical Phase III validation of our platform. We have a lot of upcoming catalysts. We have on the breast cancer vaccine, ES2B-C001. Of course, we'll be announcing when safety and tolerability can be announced as well as with efficacy data and on the Oxford malaria trials, as you saw from the table, many clinical milestones coming up, all based on our platform. And the selection of the Nipah virus vaccine candidate is also an important part of the upcoming data. On strategy and platform, we still have the Serum Institute of India licensing agreement discussion is ongoing. We are also extending our filing and grants on IP. And furthermore, on [indiscernible] platform validation, we are progressing through the influenza project, [ MucoVax ] envivo as well as the Nipah virus vaccine project in the [indiscernible] portfolio. That said, I'll carry over to Keith to go through the financial results.

Thanks, Bent. As CFO of ExpreS2ion, I'll shift the focus now from strategy and development to our financial performance, walking you through the Q2 and half year 2025 results. Our total income in the first half of 2025 was SEK 6.4 million, up 61% from the first half of 2024. This kind of growth for a company at our stage with limited proactive marketing shows how active our collaborations and grants have been in fueling our R&D. In the second quarter alone, income was SEK 3.4 million, a 42% year-on-year increase. In the middle chart, you can see net sales, which is revenue from projects, licenses and our web shop, continuing to rise that began in Q4 2024, up 49% from Q2 '24, thanks to growing CRO project revenue. On the right, other operating income, which is grant funding, also kept growing, driven primarily by progress in our MucoVax and VICI projects. Moving to the cost side. We completed certain high-cost activities, including preclinical studies and CMC manufacturing for ES2B-C001. So external R&D spend is [indiscernible] this will, of course tick up as we add patients [indiscernible] but only modestly since the dose escalation [indiscernible] at a time. This means that these costs are spread out over time. In fact, external R&D costs were 80% [indiscernible] than in the year ago quarter. These R&D costs can be large and variable, driven primarily by pipeline activity. [indiscernible] total around SEK 15 million [indiscernible] down 35% year-on-year. On the right-hand side of the slide, we break out the 2 largest components. The top chart shows external R&D costs and the bottom chart shows personnel costs. For the personnel figure, we exclude share-based compensation to highlight the underlying cash personnel cost. This underlying personnel expense peaked in Q1 '23 and was about 5% lower than a year ago in Q2. Foreign exchange had an impact here. The Swedish crown strengthened 5% against the Danish crown, making our DKK denominated wages more expensive in SEK terms. We do keep an eye on FX impacts, but that is largely out of our control. Our net result for the first half of 2025 was a loss of SEK 21.5 million. This is in line with our expectations and reflects continued R&D investment in ES2B-C001. It is higher than the prior year period's loss of SEK 10.3 million, but that comparison is distorted by a 1-year AdaptVac dividend last year. In Q2 2024, we recorded a SEK 22.5 million onetime gain from AdaptVac related to a Bavarian Nordic milestone payment, which gave us a temporary net profit that quarter. Excluding that one-off, last year's underlying Q2 net loss was around SEK 20 million, meaning our Q2 2025 net loss of SEK 10 million is actually a significant improvement on a like-for-like basis. This slide shows how our cash balance has developed in 2025. We started the year with SEK 82 million. Since then, we've used about SEK 31 million for operations with roughly 2/3 of that spent in Q1, mainly due to annual payments for [indiscernible] ES2B-C001 and some onetime Phase I setup costs at our CRO. In Q2, CMC costs dropped significantly and clinical trial expenses became the primary R&D cost. We had minimal cash flows from financing or investing activities this half and foreign exchange movements cost us around SEK 1.5 million year-to-date. All told, the company ended Q2 with SEK 49 million in cash, a decrease of SEK 33 million since December. Based on our budget, SEK 49 million covers our operations through the end of Q1 2026, excluding any financing or partnership inflows. This chart illustrates how we repeatedly strengthen our balance sheet through non-dilutive funding, including grants and a dividend from AdaptVac and equity raises with corresponding warrant exercises. As of Q2 2025, we closed the quarter with SEK 49 million in cash, giving us runway through the end of Q1 2026 based on our current budget. Like many biotech companies at this stage, we expect to strengthen our balance sheet ahead of major milestones. Importantly, we've done this successfully in the past through a combination of non-dilutive funding equity raises and equity raises, and we intend to continue pursuing the most value-creating options. Turning now to the TO11 warrants. These warrants were issued alongside the TO10 warrants in last year's rights issue. Every 40 TO11 warrants gives the holder the right to subscribe for 1 new share. The subscription price will be set at 70% of the volume-weighted average price during the pricing period from September 1 to 12, with a floor of SEK 4.44 and a cap of SEK 70. The subscription period runs from September 18 through October 2, and shares will be delivered shortly afterwards. Importantly, the TO11 warrants are listed and freely tradable, so they're open to all investors. Structurally, these warrants have a built-in 30% discount in the pricing mechanism, which could offer a particularly attractive entry point for investors depending on where the share price trades during that period. Further details, including the application form and full terms on our investor website. To support the TO11 warrant process and ensure every investor has a chance to engage, we've lined up a broad set of upcoming investor presentations. We'll be present in both Denmark and Sweden, where most of our investors are, and we're also trying some new forms such as pro hearings. These events in person or virtual are great opportunities to hear more about our progress, ask questions and get clarity on the warrants and our broader strategy. We encourage you to join us at whichever session fits your schedule best. With that, I'll pass it back to Michael to start the Q&A. Thank you.

Thank you. There are some questions. I think you covered the TO11 program. There are some questions, will you catch to get some news flow out? I guess you don't want to comment on that point. Is there -- it's a very short time frame, but there's a question around whether you -- whether there will be any news flow before the period.

We've just laid out the momentum that we have in the second quarter, and we are continuing progression on the breast cancer vaccine trial as well as moving on the discussions with Institute of India on the licensing agreement. And there's a lot of progression on the malaria trials. And all this said, of course, we'll make the announcement to our shareholders as soon as there's an important value trigger to announce.

And then there are always questions about whether you will keep -- or why the management if they believe in the company, don't buy more shares and keep...

Maybe mostly directed to me. I'll just say that I've been participating in any -- every rights issue I've been in this company, and I've been participating on the warrant programs that have been associated with the rights issue to the fullest extent. So I still intend to have that planned.

If I could just chime in, I would just say one thing. I frankly think it's a little bit of a rich question because if you look historically, we all have participated in all of our equity fundraisings, and we have been solid supporters of the company since we've been here. So...

Perfect. When are the results from the breast cancer treatment expected to be published?

Well, publication, as we've alluded to, that is in 2026. So we expect interim data in the middle of 2026 and full data by the end of 2026. But as mentioned, the trial design is following 9 patients in the dose escalation phase followed by 18 patients in the dose expansion phase, and we'll be monitoring on safety and monitoring on immunogenicity. And if we believe there's relevant data to announce, we'll do that.

Then I think when is the next data on the malaria expected? I think that was pretty well covered on the slide you showed there actually with all the results completed. Then can you do more to highlight the value you have in AdaptVac? You had a decent news flow out there, some big brands also progressing on maybe boosting the effect of mRNA vaccines in general. So I guess that's building up some value in your ownership in AdaptVac. Is there something you can do to highlight it more?

Well, we are using AdaptVac VLP technology in our breast cancer vaccine assets. And of course, AdaptVac is just as much as ExpreS2ion, proud of having the platform validated in Bavarian Nordics COVID-19 Phase III program in the COVID-19 space. That said, AdaptVac has been very good in making some important announcements this year on grants have obtained one within -- from CEPI in the EU to cover virus vaccines and another one very recently from Japanese Foundation malaria Research program. So Adapt is really their own rights on gaining and expression, of course, still have to maintain and work together with Adapt on opportunities that emerge.

I guess you face a lot of investors already any loss of interest in the vaccine more negative viewers view on vaccines. I guess it's not actually the cancer vaccines and the bigger vaccines. But do you feel any hesitance by investors when you mentioned you as a vaccine company?

That's a very good question. And it's interesting that vaccine due to this new administration in the U.S. I think what we have heard from the Minister of Health or RFK Jr. is in a way, if you look at it, good for ExpreS2ion because what we do is working with protein-based vaccines. And we have our platform, which shows great advantages when development of sub protein-based vaccines. What RFK is negative around is actually RNA mRNA vaccines and we have stopped 22 programs from being progressed with governmental non-dilutive funding. So that's, of course, serious for those mRNA programs. But that doesn't really affect ExpreS2ion, on the contrary, I would say.

I'd like to just add that I think it's a lot of the devils in the details on these because you're seeing broad comments in the press that are headline news. But if you read the underlying comments, it's pretty specific what they're targeting. So I encourage investors to look at that in more detail. And just to provide one little anecdote, we do see funding opportunities in the vaccine space and immunotherapy more broadly that could be potentially relevant from the U.S. So it's not like it's been knocked out completely. It's very targeted.