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

Welcome to today's event where we have the pleasure to present ExpreS2ion Biotechnology. To help us through today's presentation, we are joined by CEO, Bent Frandsen; and CFO, Keith Alexander. The topic, of course, your Q3 report this morning, but I think more broad, a very large news flow coming in the quarter and a lot of -- other than the financials. As always, ask questions in the box down below. I'm speaking fast. We have a firm deadline at 11:30. We will try and catch as many questions as possible. But you will have joined a lot of events, presentations here in the coming days, so I think people will have a good possibility to ask later on. But for now, I hand the call over to you, Bent.

Thank you very much, Michael. Good morning, everybody, and welcome to is ExpreS2ion's third quarter webcast. I'm Bent Frandsen, CEO of ExpreS2ion Biotechnologies. And with me today is our CFO, Keith Alexander. We'll take you through our progress this quarter, how we are advancing our HER2 breast cancer immunotherapy, expanding on global vaccine partnerships and keeping track on our financial position. We'll start with strategy and pipeline updates, focusing on clinical progress, collaborations and upcoming catalysts. And then Keith will walk you through the financials before we open for questions. This quarter has been about driving momentum across both pillars of our business, first, our proprietary HER2 cancer vaccine; and second, our global vaccine collaborations. Together, these create a unique balance between high-impact innovation and revenue-generating partnerships. Our strategy continues to be driven by these four key pillars. From top left, we are advancing our proprietary pipeline led by our HER2 breast cancer vaccine, ES2B-C001. We're intensifying global vaccine collaborations, including projects with Oxford, Copenhagen, the INDIGO consortium and the VICI-Disease Nipah virus partnership. We are innovating, strengthening our platform, expanding IP and exploring next-generation immunotherapies and, finally, growing our CRO business and platform licensing business, which provides recurring revenue and visibility. These pillars create a robust and diversified model, combining near-term income with long-term upside from our clinical assets. Q3 was a strong execution quarter. In our ES2B-C001 Phase I trial, the first patient has completed dosing. And in the quarter, we received approval to expand the protocol, adding the opportunity to combine with standard of care treatment such as antibody-drug conjugates, ADCs, as well as new clinical sites. Early data already show how vaccine-induced HER2-specific immune response occurs in the first treated patient. It's an indication of the ability to break tolerance. On the partnership front, we executed a definitive license agreement with the Serum Institute of India yesterday for 2 malaria vaccines, RH5.1 and R78C. Oxford now has 10 active malaria vaccine trials, 6 in Phase I, 4 in Phase II, all supported by our technology. In the VICI-Disease Nipah virus consortium, a lead antigen has been selected in AdaptVac, in which we hold 34% secured at EUR 4.6 million in new grant funding. We also strengthened our finances through warrant proceeds, and we are broadening our investor visibility at multiple Nordic life science events. Let's take a closer look at our Phase I trial in ES2B-C001. The study is regulatory approved to include up to 27 patients with advanced HER2-positive or HER2 low breast cancer who have already received standard of care treatments. It's taking place at the Medical University of Vienna and, since our protocol amendment approval, also at clinical sites in Linz and Graz. Each patient receives 5 intramuscular vaccine doses at escalating levels to establish safety and immune response. Some patients will also receive an ADC to assess safety of combination therapy. Our primary goal is to confirm safety. The secondary is to measure anti-HER2 antibody formation and potential tumor response. So far, the first patient has completed all 5 doses and 4 additional patients are in follow-up or ongoing treatment. The Data Safety Monitoring Board review is going to take place, we expect before the end of this year, and pending approval from this board, we will increase to the next dose level of 150 micrograms. Assuming positive outcomes from the Phase I trial, we are preparing for a Phase II trial to begin in 2027. We have the potential for an accelerated design. Our long-term goal is to move from breast cancer into gastric cancer, where HER2 is also a validated target. From there, we have the potential to advance toward conditional approval and eventual registration. This potential road map allow us to progress diligently toward a pivotal partnership or licensing opportunity as we build clinical proof of concept. Our malaria collaboration with the University of Oxford continues to deliver at scale. As I mentioned, there are now 10 active or completed clinical trials spanning Phases I through Phase IIb. And 2 new Serum Institute of India licensed vaccines, RH5.1 and R78C, are fully recruited in early-stage studies and several Phase II readouts are expected through 2027 and 2026. These programs exemplify how our ExpreS2 platform enables rapid, reliable protein production, supporting one of the world's most advanced malaria vaccine pipelines. And importantly, most of these programs are fully funded by grants or partners, reinforcing our nondilutive business model. Beyond breast cancer and malaria, progress continues across several major collaborations. In the VICI-Disease Nipah virus consortium, we've selected a lead antigen and are preparing for GMP manufacturing, fully funded through Phase I. At the University of Copenhagen, our MucoVax influenza program reached important preclinical milestones, including progressing on a potential GMP-compliant Xylose cell line and successful proof of concept on tools to create a GMP-compliant HighMan cell line. And in the EU-funded INDIGO program, which targets a next-generation influenza vaccine, we're nearing completion and discussing next steps to translate this work into follow-on development. Together, these programs broaden our reach, validate our technology and diversify funding sources. So this slide shows how our ExpreS2 platform underpins every program that we are involved in, both proprietary and partnered. At the top is ES2B-C001, our fully owned HER2 cancer vaccine. Below that, you see our partnered malaria programs, 2 of those licensed to Serum Institute of India. And you see the influenza projects, INDIGO influenza and VICI-Disease, all partnered through grants or partnerships. And even though Bavarian Nordic discontinued the COVID-19 program for commercial reasons and successfully validated our platform in more than 4,000 studied subjects through Phase III, we maintained having it on this chart. Finally, here's a summary of our upcoming catalysts. On the clinical side, we expect initial Phase Ia safety and tolerability data by mid-2026, followed by Phase Ib immunogenicity data before the year-end. We also anticipate several malaria vaccine readouts from Oxford and Serum Institute of India trials over the next 12 to 18 months. On the strategic front, we are filing new IP extensions to protect our technology and continuing grant-funded validation work within MucoVax, INDIGO and the VICI-Disease consortiums. These milestones provide continuous visibility, strong news flow and clear long-term value drivers for ExpreS2ion. With that, I'll hand over to Keith, who will take you through our financial performance for the third quarter and year-to-date.

Thank you, Bent. In this section, I'll walk through the results for the first 9 months and the third quarter of 2025. Overall, the story for Q3 is one of increased income supported by grants, disciplined cost control and a strengthened cash position. Let's go through the key figures and charts together, starting with our income for the period. On this slide, you can see that our total income for Q3 was SEK 2.3 million, which is a 36% increase year-on-year. For the first 9 months, total income reached SEK 8.7 million, up 54% from the same period in 2024. For a company at our stage, achieving this kind of growth with minimal marketing underlines how active our collaborations and grant funding have been in fueling R&D. In other words, our partnerships and nondilutive grants are contributing to revenue and supporting our research. Drilling down into year-to-date income components. Net sales, which includes revenue from our CRO services, license fees and reagent products, were SEK 3.2 million, about 33% higher than the same period last year. Other operating income, which is primarily grants, was up 69%. This growth was driven by progress in our supported projects, for example, the MucoVax and VICI grant programs. They both contributed substantially. The takeaway here is that both the CRO business and grants boosted our revenue base. Grants are an important nondilutive funding source to advance our pipeline while reducing costs to our shareholders, underscoring the strategy to leverage external funding for R&D. Moving to the cost side. We have maintained strong expense discipline in the quarter. Having completed several high-cost R&D activities last year, our external R&D spend in Q3 was much lower than a year ago, in fact, about 42%. You will notice an uptake in external R&D costs compared to the previous quarter as we advance the Phase I trial, adding a few more patients. Phase I trial protocol limits how many patients can be treated at once which, in turn, naturally caps how fast trial expenses can grow. In short, R&D costs can be variable quarter-to-quarter depending on pipeline activity, but we strictly control them and only spend on critical development work. Overall, total operating costs in Q3 were about SEK 12 million, which is 19% lower than the prior year quarter. The two largest expense components are broken out on the right-hand side. The top chart shows the external R&D costs discussed a moment ago. And here, you can see the sharp year-on-year decline. The bottom chart shows personnel costs, which were held roughly steady. Personnel expenses in Q3 were about 3% lower than the same quarter last year. This small reduction in staff cost reflects a stable headcount and careful management of salaries and hiring. Turning to the bottom line. Our net result for Q3 was a loss of SEK 8.4 million. This outcome was in line with our expectations as we continue to invest in our lead program and other pipeline projects. Importantly, the Q3 net loss improved by about 19% compared to last year quarter. The reduced loss reflects the higher income and lower costs we just discussed. On a year-to-date basis, our net loss totaled approximately SEK 30 million, which is 44% higher than the reported net loss for the first 9 months of 2024. However, it's crucial to put that figure in context. Last year's 9 months result benefited from a significant one-off gain in Q2 2024, in which we received a SEK 22.5 million onetime dividend from our associate company, AdaptVac, related to the Bavarian Nordic milestone payment. That nonrecurring gain actually gave ExpreS2ion a temporary net profit in Q2 of last year, greatly reducing the cumulative loss in 2024. If we exclude that one-off item, the underlying net loss for January through September of 2024 was around SEK 43 million. Against that normalized baseline, our year-to-date loss of SEK 30 million in 2025 represents a significant improvement. We remain focused on prudently managing our spending while progressing our R&D. This slide illustrates our cash position has evolved quarter-by-quarter in 2025. Focusing on the most recent quarter, we started Q3 with about SEK 49 million and ended with SEK 37 million. So net cash reduced by approximately SEK 12 million over the 3 months. The primary use of cash was our operational spend. In Q3, we used approximately SEK 11 million in cash for operations. Roughly half of that went into R&D for our project expenses, funding the ongoing ES2B-C001 Phase I trial as well as supporting our malaria Nipah and influenza vaccine programs and other early-stage research and platform development. The other half of our operational cash flow covered our personnel and overhead costs to keep the company running. We had minimal cash flows from financing or investing activities in the quarter. We did, however, experience some negative foreign exchange fluctuations of SEK 1.3 million due to currency changes. Taking all these factors together, the cash burn in Q3 was in line with our projections and we continue to manage our expenditures carefully. Ending the quarter with SEK 37 million in cash puts us in a position to continue executing our strategy in the near term. Here, we provide a broader perspective on our cash balance over the last 7 quarters along with key financing events. Most recently, after Q3 2025, we received gross proceeds of SEK 11 million from our TO 11 warrant exercises this October. Each of these steps have helped strengthen our balance sheet. As of the third quarter, we had SEK 37 million in cash, which when we include the October warrant exercise, gives us a pro forma cash balance of approximately SEK 49 million. Based on our current operating plan and budget and assuming no new funding or inflows beyond what's already secured, this cash gives us runway into second quarter of 2026, carrying us towards our Phase I readouts targeted in mid and late 2026. Moving on, we want to update you on some shareholder engagement initiatives. In Q3 and into early Q4, we conducted a review of our investor relations and capital market service providers and decided to consolidate our partnerships for greater impact. The goal is to ensure we are reaching our investors effectively with high-quality research coverage and events while also being cost-efficient. As a result of this review, we are bringing on RedEye, a well-known Nordic investment and analysis firm, in several capacities, RedEye will become a provider of sponsored research covered on ExpreS2ion and will also host investor events for us. Moreover, RedEye will take over as our certified adviser in February of next year. We're excited to partner with RedEye given their strong life science focus and reach among Nordic investors. We want to thank our outgoing partners for their support and quality service over the years. To conclude the financial section, I'd like to highlight some upcoming opportunities to meet with ExpreS2ion's management. Later today, Bent is presenting at the BioStock Life Science Summit in Lund. Next week, Bent and I will host an investor seminar in Copenhagen organized by host, Anderson Capital. And on December 3, Bent will present at the RedEye Life Science Day in Stockholm, which will also be accessible virtually. These events, whether in person or online, are great opportunities for investors to hear more about our progress, ask questions and engage with us directly. We encourage all investors or all interested stakeholders and shareholders to join us at any of these sessions that fit your schedule. With that, I'll conclude the financial update and hand it back to Michael to begin the Q&A session.

Perfect. The first question was actually how many patients are enrolled in your ES2B-C001 study. I think 5 was on the slide. So I guess that is the correct answer. Is that correct, Bent?

That is correct. Five have been dosed and ongoing at the moment.

Perfect. Regarding malaria, congratulations to the agreement. What is the time horizon for Phase III and beyond? And why haven't the third vaccine that is in Phase II included in the agreement?

Well, if you look at our pipeline, we show 4 different malaria projects and not all of them are blood stage malaria projects. So Serum Institute of India takes a particular interest in the blood stage malaria vaccines that University of Oxford are developing. That's 2 of the 3 blood stage malaria vaccines. I cannot answer on the third one. So that's Serum Institute of India's folio interest. And the agreement we have entered into has the scope of those two, RH5.1 and R78C. But I just want to like to add that we are, of course, very thrilled by having an agreement in place now with Serum Institute of India. It's the world's largest vaccine manufacturer and it's great to be engaged with them in this way. And for us, in ExpreS2ion, just think about the world's largest vaccine manufacturer who is going to work with our proprietary S2 cell system, that's great. It's going to broaden the knowledge of working with S2 cells and its advantages in making vaccines. And we're thrilled about this.

And then to maybe round up the malaria, what is the sales potential? I know it's not a very well-known market. So do we have any figures? Or is it too early to kind of indicate what sales could be in the malaria market?

It's very difficult to predict. And for sure, the majority of malaria cases take place in Africa and low and middle-income countries. Up to 600,000 die of malaria infections. And of course, Serum Institute of India, they have a mission of providing affordable vaccines. So it's up to them actually to decide the proper pricing. So it's difficult to say anything about sales potential.

Perfect. And there's a question. I read that AdaptVac has funding for another project. You usually write a press release when that happens. Can you tell me more?

Well, if it's referring to a grant award that AdaptVac, they received to actually sponsor another malaria development project, I believe we have made an announcement on that. In fact, that's the EUR 4.6 million funding from a Japanese fund. That has been announced. So I'm not quite sure what this question is about.

And then when do you expect to receive the upfront and milestone payments from the recent licensing agreement with SII?

Well, on upfront payment, in the near term since we have now signed the agreement. And milestone payments, which are dependent on progress on the clinical moving into the later stage clinical phases, well, they should come here within the next 1 to 2 to 3 years as they roll along. We already alluded to that 2 Oxford-driven clinical trials, where some of them, including these 2 projects, RH5.1 and R78C, progressing along in the next 12 to 18 months. So that should be good. But I cannot be more detailed than that.