Oncopeptides AB (publ) (ONCO) Earnings Call Transcript

Welcome to Oncopeptides' Q2 Earnings Call for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Sofia Heigis; and CFO, Henrik Bergentoft. Please go ahead.

Hi, everyone, and welcome to the presentation of Oncopeptides report for the second quarter of 2025. This is our standard disclaimer. I'm Sofia Heigis, CEO of Oncopeptides, and I'm joined by our CFO, Henrik Bergentoft, who will give a financial update in just a few minutes. Let's start with the highlights from the quarter. Q2 was an eventful quarter, and we took strong steps forward in Europe. We reached net sales of SEK 19.2 million. That's up 45% compared to Q1 and 135% versus last year. It's worth to point out that this is our third quarter in a row with more than 30% growth. Germany continues to perform well. Spain and Italy has been moving faster than expected on regional access and the positive clinical experience generated has already now been translated into real-world publications that is supporting our launches. Momentum has carried into the summer, too. Sales in July were 3x higher than July last year. As August is a vacation period in most of Europe, we believe a strong July to be especially important. Another big milestone from outside of the quarter, Pepaxti is now included in the EHA EMN guidelines. This is an external validation of Pepaxti's position in the treatment landscape and the recognition from leading experts that support us to build awareness and adoption. The amount of real-world data following the increased use of Pepaxti in Europe is increasing, and we are pleased to have announced that studies from Spain and Italy will be presented at the IMS Congress in September, showing Pepaxti's effectiveness and tolerability in the everyday practice. Outside of Europe, we continue to progress in Japan, and we have received nonbinding offers from 2 partners and are in advanced discussion with one. I will come back to Japan in more detail soon. To make sure we can keep building on this momentum, we've announced a rights issue of up to SEK 150 million. That will give us financial flexibility we need as we continue towards cash flow positivity in 2026. I will now hand over to Henrik to speak more about this and give a general financial update.

Thank you so much, Sofia. As the company has communicated since the release of our year-end report in February, we have been exploring various alternatives to financially support our plan to cash flow positivity towards the end of 2026. After a thorough analysis of our options, the company today announced a rights issue of SEK 150 million authorized by the AGM in 2025 and decided to be guaranteed up to SEK 130 million. The funds raised will be strategically used to ensure the ongoing commercial operations for Pepaxti in Europe, executing the core company target aimed at achieving positive cash flow by the end of 2026, requiring an average quarter-over-quarter sales growth of approximately 30% to 40%. Additionally, the proceeds will help advance the company's preclinical project portfolio and enhance business development opportunities. The commitment from the main owner Healthcap, along with certain members of the management and the Board of Directors, underscores confidence in the company's fundamentals. Notably, the company has demonstrated robust growth with 3 consecutive quarters exceeding 30% sales growth. And we are also actively negotiating a license agreement in Japan, all of which reinforce the long-term positive outlook. This financial summary highlights the key performance metrics over the recent periods, showing a strong upward trend in net sales with a 45% growth compared to Q1 2025 and a 135% increase from Q2 2024. This marks the third consecutive quarter with a quarter-over-quarter sales growth of plus 30%. Despite this growth, operating expenses have remained stable compared to the previous quarter and are significantly lower than last year, reflecting the improved cost efficiency. Overall, the quarterly results demonstrates that the company is successfully scaling revenue while managing expenses carefully, positioning itself for profitability towards the end of 2026. In examining our operating expenses, we see the results of focused cost management. Sales and marketing costs have only slightly increased, reflecting our focus on efficiency as we now see complete commercial organizations in Spain, Germany and Italy. General and administrative costs have seen a temporary increase in the quarter, mainly related to efforts in evaluating the most optimal financing for the company as we saw the results of today. Research and development expenses has been deliberately been decreased. Still, we continue to advance our preclinical portfolio. The measurable drop in costs from last year indicates our commitment to maintaining a lean operation while still investing in future growth. This slide focuses on the company's liquidity status, highlighting a cash balance of SEK 70 million at the end of the second quarter. The cash position aligns with the company's expectations and communication that reaching cash flow positive requires additional financing in line with what we have communicated today with the announcement of rights issue of SEK 150 million. To strengthen the liquidity, a short-term credit line of SEK 20 million has been utilized during the quarter, providing flexibility and time to secure the optimal financial solution for the company. Importantly, after today's launch rights issue, the company anticipates maintaining a sufficient liquidity position until it reaches positive cash flow by the end of 2026. This outlook is based on the company maintaining an average quarter-over-quarter growth rate of approximately 30% to 40%. And this marks the end of the financial presentation. And now I hand over back to you again, Sofia.

Thank you, Henrik. Let's now take a look at the commercial side. We have a strong momentum in all our key markets, Germany, Spain and Italy. Drivers are clear: positive clinical experience and peer-to-peer recommendations, increased awareness among prescribers and now guideline inclusion that further supports positioning. Following the inclusion in the EHA EMN guidelines, we have added the strongest possible validation of how Pepaxti should be used from top multiple myeloma experts across Europe, which is an important direction for prescribers in all of our key markets. We do expect such a strong and clear guideline for Pepaxti to continuously support our growth momentum. We continue to build Oncopeptides from Pepaxti sales in Europe with a market potential of SEK 1.5 billion annually. On top of that, we are working to add revenue from other geographies where our partner in South Korea continues with the regulatory prereview process. Our WODA partners continue to work for named patient sales, and our main focus is to conclude a deal for Japan. Finally, we have a promising pipeline consisting of 2 different platforms with global opportunities and potential for multiple disease areas and indications. Japan is a very attractive opportunity as approximately the size of Germany, swift pricing, confirmed path to regulatory approval and support from top multiple myeloma experts. In February, we announced that the company is involved in partnership negotiations for Japan. These negotiations with well-established sizable Japanese pharma companies for the licensing of Pepaxti for the Japanese market continues, and we are still advancing discussions with one highly reputable partner and have in total 2 nonbinding offers currently. We are in due diligence process at late stage and the nonbinding offer is in line with market practice, which includes upfront and milestone payments and double-digit royalties. With the partner assuming all costs related to regulatory activities and commercialization in Japan. I wish to point out that the partnership negotiations are nonbinding at this time, and there is no assurance that a binding agreement will be entered into or the timing thereof. As for the timing, I repeat what I've said before, deals of this type commonly takes time to conclude, in general, up to around 9 months. We are aiming to close the deal as soon as possible. We will, however, take the necessary time to conclude a win-win deal, which in turn will secure a solid partnership that will be able to realize the value Pepaxti can bring to all important stakeholders, obviously, including patients and shareholders. We will, of course, keep the market posted as to close the Japanese deal would be a landmark event for Oncopeptide. Our major efforts in Europe is currently put on our key markets, which stands for 50% of the potential and includes Germany, Austria, Spain and Italy. These markets together can take us to profitability at the end of 2026 with a growth of 30% to 40% per quarter. As for the rest of Europe, we continue to work with market access and are in dialogue with several partners to be able to realize the full potential of Europe over time. In Europe, we have treated more than 400 patients since EMA approval in 2022. We have, in general, generated a positive experience that is triggering real-world data publications from physicians and in turn, support peer-to-peer recommendations, which is one way for us to drive our launches. As already mentioned, the updated EHA and EMN guidelines is in our wanted position with [1B] recommendation, which further strengthens endorsement and awareness, which is needed to keep our growth momentum. If we look at the overall map for Europe, the greatest visible change in Q2 versus Q1 is how fast we have moved in Italy. We do see a good momentum across, and I will now give you more details into the different key markets. Germany remains our largest market and continues to grow steadily. Market research performed in July 2025, including 70 of our target prescribers demonstrate that unprompted awareness and willingness to prescribe are both increasing significantly compared to the last research we did in September 2024. Furthermore, the research confirms that HCPs with Pepaxti experience gained confidence and perceive the drug even more positively than HCPs without experience. This may sound given, but certainly isn't as many drugs within multiple myeloma comes with a great promise on efficacy, more difficult to treat side effects than HCPs than patients have anticipated. And this means that in general, Pepaxti standing out as a drug that is commonly is a positive surprise, and it's great to see how that is now being confirmed by both real-world evidence and market research. In addition to a positive perception among regular prescribers, German investigators and KOLs have started to submit study proposals to us as they wish to generate evidence with Pepaxti. This demonstrates curiosity and belief in Pepaxti and is promising not only for the launch of Pepaxti, but for the future of the full PDC platform. What do we then need to do to keep the growth momentum in Germany? Well, we need to continuously build on the positive experience with real-world publications and peer-to-peer exchange. We need to continue to broaden our prescriber base, and we need to ensure that our positioning in fourth and fifth line are solidified. Let me explain what I mean with that. Drugs that are being launched in a late stage commonly enter into last resort positions if the physician have no experience from before. This means that they try the new therapy when they have no other options left. And this happens with every launch in this setting to a different extent and has partly been the case in Germany for Pepaxti, which is one of the reasons together with the scatteredness of the market behind the slowness that we have seen in the past. Our field work has been and is still focused on ensuring the right position for Pepaxti as the patients in fourth to fifth line are less rare and respond even better than in later lines. Getting out of last resort and into the fourth line segment will support growth. This is data from our latest market research showing willingness to prescribe in fourth and fifth line. Fourth line is our ultimate position and the research concludes that overall, we do see significant progress from 47% to 82% of the 70 HCPs taking part to say that they may or will prescribe Pepaxti the coming 6 months. In the segment of office-based physicians, we have moved from 42% to 79% for willingness to prescribe in the fourth line and in the group of hospital-based physicians from 52% to 87%. These results are truly encouraging for our sales growth in Germany in the second half of 2025. Looking at our prescriber base, we continue to grow with 10% in Q2 versus Q1. Having said that, majority of sales previous quarters comes from repeat customers, and we still do have a great potential to capture by broadening our customer base. If we look at sales for Germany quarter-over-quarter, we are starting to see a really good geographical spread, but there are still a lot of potential across. Berlin, for example, is an area that has been really difficult to unlock. And usually, that's the case in many launches due to this region being quite conservative in treatment options. But we do now see progress and step by step, we are adding more accounts this quarter. As mentioned, we do see a very encouraging progress in Italy with faster regional access than anticipated due to broad positive clinical experience ahead of launch. We now have 80% of regional access unlocked at hospital level with only 2 high potential regions left. Experience already ahead of launch has resulted in an RVD publication from Italy already now with a poster presentation accepted by the IMS Congress. IMS stands for the International Myeloma Society, which is a professional organization dedicated to advancing research, education and clinical care in the field of multiple myeloma worldwide. And their annual meeting that is exclusively focused on multiple myeloma attracts all the top experts and many dedicated multiple myeloma physicians. Meaning it is, at least in my view, the best and most focused multiple myeloma meeting during the year and the acceptance of the real-world data to IMS is both important and impactful. Moving to Spain. We have managed to gain higher level of access than anticipated, now having 97% regional access secured. It's a clear success for our team to reach this coverage within this time frame and to ensure we can capitalize on that reach. We have signed a strategic partnership with SD Pharma to complement our efforts and broaden physician reach to be able to capitalize on this fortunate access situation. The positive clinical experience in Spain is confirmed by that we also there do have a real-world data publication submitted and accepted by the IMS Congress. Our pipeline efforts are still focused in preclinic for both the PDC platform and the SPiKE platform. We have 3 assets that we are moving step-by-step towards investigational new drug status. OPD5, which is a sister molecule to Pepaxti, for which we do see a global opportunity, not just within multiple myeloma, but also in other indications addressing high unmet needs, such as, for example, glioblastoma. For our immunotherapy platform focused on NK cell engagement, the SPiKE platform, we are currently focused on exploring the potential in autoimmune disease. Oncopeptides is demonstrating a strong growth momentum with 3 consecutive quarters of double-digit sales growth and a clear path to profitability by the end of 2026. Pepaxti is fully approved and reimbursed in key European markets, representing a market potential of about SEK 1.5 billion annually, with a projection to reach peak year sales in all of our key markets by 2028 and with patent protection until 2037. Beyond Europe, we are progressing with the partnership discussions in Japan and have already secured global agreements in other regions. Finally, our pipeline, including next-generation peptide drug conjugates and our SPiKE NK cell engagement platform offers significant long-term value in oncology and beyond. And with that, I would like to conclude the presentation and open up for questions.

[Operator Instructions]

I have some questions. Let's start with the rights issue. Previously, you said a Japan deal would take it to cash flow positivity. Is that taking longer than you expected? Or do you think the upfront will be smaller or a combination?

Thank you. Thank you for the question. So as we have communicated, we are negotiating a Japanese deal, and it was one of the options for us to finance the company to conclude that deal. As I said today, we are continuing the discussions. We are still optimistic about this deal. And for us, it's important to allow the time it takes to conclude the most beneficial deal for all different parties. And that is why we now have decided to finance the company through a rights issue to ensure we have the flexibility and also stability to be able to conclude an optimal deal.

Yes, sure. Makes sense. Concerning the amount you're going to raise, how much of that do you think is actually going to be invested into operations of Pepaxti? And how much will be over for other preclinical programs or other activities?

Thank you, Richard, for that question. And as we clearly stated in the press release that this is the amount that we are raising to take our commercial operations back in Europe to cash flow positive in 2026, not factoring in the Japan license deal. So I mean, the answer to your question is if we are successful in concluding Japan license agreement, we will have more funds to invest in our preclinical portfolio.

All right. And you had relatively stable cost level quarter-to-quarter. Do you think it will continue relatively stable up until you become cash flow positive?

Thank you, Richard, for that question also. Yes, what we have been communicating is that the cost base that we are currently running at includes our commercial organization for our key markets, Japan -- sorry, Spain, Italy and Germany being in place. So we will -- we do not require additional increase of OpEx other than you could normally expect with inflation rates and such going up. So the run rate for 2025 will more or less continue into 2026 until we are cash flow positive, yes.

And another question about your presentation. Sofia mentioned increased willingness to prescribe the fourth and fifth line in Germany. But what is the most common line of prescription today? I guess it would be the last line or something -- what does that mean?

Yes. So the most common line is -- so let me be clear on the facts before I give you my -- our insights. So factually, we don't know the lines of all the patients all the time. But the insights we have, which is on majority of our patients is that they are today commonly prescribed in a fifth line with physicians that have some experience and in fourth line with physicians that have more experience than maybe one patient. First-time prescribers are commonly prescribed in fifth line plus, meaning that can be from fifth line to whatever line. And that is due to how the dynamic works in a specialty launch in late stage. So that's something that we have foreseen, and that's what we have been working hard on this, and we are really happy to see positive progress now that more and more prescribers are really also as first-time prescribers actually starting in earlier lines. So this is a promise for the future.

And just one last question. Do you think a growth of above 30% quarter-on-quarter is realistic in the near term I suppose you can see ahead?

So while I don't want to comment on any kind of sales trajectory going forward, I mean, if you look at our past sales, you can see that the quarterly sales can vary between the different quarters and every quarter comes with some specifics, right? Having said that, we have 3 consecutive quarters now with strong growth, and this is the trajectory that we are looking at to continue up until the end of 2026 to become profitable.

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

Thank you. And there's a few written questions. We'll start from the top. First question, you mentioned a heavy increase in sales in July, 200%. Can we assume that July stand-alone is close to the full Q2? How much did you sell for in July 2025?

So thank you, Martin, for posting your question. So let's stay with what we -- the information that we have released, and that is sales on a quarterly basis. The reason for not, in general, releasing specific sales figures for a month is because that doesn't make sense with the treatment like Pepaxti. As you may know, Pepaxti is administered every fourth week. It can be delayed a bit based on the status of the patient. And this means that the monthly sales is not really representable. You have to look at the quarter to be able to see a trend. So that's why we only kind of release quarterly sales in general. The reason why we now commented on July is because we are announcing a rights issue today, and we wanted to be as transparent as possible and share as much information as possible that we have as of today. And if we then focus on your question, so what was sales for July 2025, we have not reported sales for July, but sales for the full quarter, if we look at Europe, was SEK 7.5 million.

Next question. What is the average cost for a patient using Pepaxti in the current markets?