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Edited Transcript of BIOAb.ST earnings conference call or presentation 24-Oct-19 7:30am GMT

Q3 2019 BioArctic AB Earnings Call

Oct 26, 2019 (Thomson StreetEvents) -- Edited Transcript of BioArctic AB earnings conference call or presentation Thursday, October 24, 2019 at 7:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Gunilla Osswald

BioArctic AB (publ) - CEO

* Jan Mattsson

BioArctic AB (publ) - VP of Finance & CFO

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Conference Call Participants

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* Joseph Hedden

Rx Securities Limited, Research Division - Healthcare Analyst

* Michael Thomas Dudley Cooper

Trinity Delta Research Limited - Research Analyst

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Presentation

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Operator [1]

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Hello, and welcome to the BioArctic Q3 Report 2019. (Operator Instructions)

Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. So please go ahead with your meeting.

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Gunilla Osswald, BioArctic AB (publ) - CEO [2]

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Welcome to BioArtic's interim report from January to September. I'm Gunilla Osswald and I'm the CEO of BioArtic, and I'm happy to do the presentation here today and share it with our CFO, Jan Mattsson.

Next slide, please. This is our disclaimer. And BioArtic is listed on NASDAQ.com midcap.

Next slide, please. For those of you who are new to BioArtic, I will start with a short introduction to the company. And BioArtic is a unique Swedish biopharma company. By that, I put it into 4 different areas. I start with that we are working on areas where there is a high unmet medical need in CNS. Today, there are only symptomatic treatments for Alzheimer's disease and Parkinson's disease and we focus on disease-modifying treatments, and these are areas where there is a growing population and an increasing need for new treatments.

And the next area is that we have a world-class research and development driven organization, with very experienced scientists and drug developers. And we have great collaboration with universities and with our strategic partners.

The third area is we have an attractive and well-balanced project portfolio with projects from discovery all the way to Phase III. And we have a good combination of fully funded programs through our 2 strategic partners, Eisai in Alzheimer's disease and AbbVie in Parkinson's disease, and innovate early programs that we're driving ourselves with a great outlicensing and marketing potential for the future.

We have a well-financed company and we have more than SEK 1 billion on the bank. We have positive financial results all years since I came onboard 6 years ago. And we have valuable collaboration agreements with our 2 strategic partners, totaling up to SEK 9.3 billion, plus royalties if we come all the way to the market. So BioArtic is a dynamic unique Swedish biopharma company.

Next slide, please. At BioArtic, we focus on research and development on innovative treatments for CNS disorders and we work on 4 different areas. I'm pleased to say that we have had significant progress in all 4 areas this year. Last year was a fantastic year, with a positive Phase IIb results of BAN2401 in early Alzheimer's disease and with AbbVie taking the full license to our Parkinson's disease portfolio.

This year has also continued with strong progress for all 4 areas. Let's start with Alzheimer's disease. But before we start with our programs, I just want to comment on the news on Tuesday when Biogen and Eisai presented new data recording their antibody adalimumab. The new information with more data showed the clinical benefits associated with reducing amyloid in the brain in patients with early Alzheimer's disease, and we are encouraged by this positive development for Alzheimer patients.

It's also interesting to note that when we think of BAN2401, where we had the positive results of the Phase IIb study last year, we had clear effect on 3 clinical scales. We saw a dramatic change of decrease of amyloid from the brain supported by neurodegenerative biomarkers and a good tolerability for the Alzheimer patients.

Eisai has now the Phase III Clarity AD/Study ongoing and it started in May and then we received a milestone of EUR 15 million. Eisai are very committed to BAN2401 and the open label extension study are now well underway. The Alzheimer Clinical Trials Consortium and Eisai are preparing for a secondary prevention study, the A45 Study, to be started next year. And we also had a good time in July at the Alzheimer Congress, when new data were presented for BAN2401, which I will come back to in today's presentation.

Our discovery programs are progressing well, according to plan in Alzheimer's disease. And in Parkinson's disease, we've also had great continued progress this year. The IND that was produced by BioArtic for ABBV-0805 was approved by FDA in February. And our partner, AbbVie, started Phase I in March and the study is going well. BioArtic, we're focusing on the early programs in collaboration with AbbVie.

Our third area is complete spinal cord injury and there we had a safety evaluation early this year supporting continuation into Phase II, and Phase II was started during spring time. And our fourth area, which is diagnostic tools to support our Alzheimer and Parkinson's programs and technology platform to facilitate antibodies passage over the blood-brain barrier. There we have also had significant progress and we were pleased to get a grant from Swedish Vinnova of SEK 10 million together with Uppsala University.

And here we have now initiated this collaboration from the 1st of July, so here we are ongoing now. And we have also been able to recruit renowned -- internationally renowned scientists in this area. So in all 4 areas, we have had significant progress so far this year.

Next slide, please. This slide shows our attractive and well-balanced project portfolio. And when I say well-balanced, I mean that from 3 different aspects. First, that we are working on 4 different areas. We have 5 programs in Alzheimer's disease, 3 programs in Parkinson's disease, spinal cord injury and the diagnostic tools with the -- also the BBB technology platform. Our projects span from discovery all the way to Phase III. That was the second.

And the third is that our strategic partners finance the expensive Alzheimer and Parkinson clinical programs, whereas, BioArtic, we finance the less expensive pre-clinical phases and we increase the value in those programs before partnering. And meanwhile our partners are funding the clinical programs, we also get milestone revenues.

Next slide, please. We have 2 long-standing successful partnerships with Eisai in Alzheimer's disease all the way back in 2005. Eisai has developed donepezil or Aricept, which is the most selling medicine for Alzheimer's disease patients, a symptomatic treatment. Eisai is very committed to dementia. We have so far received EUR 62 million of the total aggregated value up to EUR 218 million of the agreements that we have with Eisai. So there is still a substantial part to receive if we continue to progress well.

If we come all the way to the market, we also have royalties of high single digit that we can receive. And if you think about how large the Alzheimer's disease population is and the opportunity with BAN2401, this could mean a blockbuster revenue to BioArtic without any cost. So I think that's a pretty good business model that we have. We also have the right of selling in the Nordic region if we come all the way to the market.

If we then look at the Parkinson's area, where we have a great collaboration with AbbVie since 2016. And AbbVie, they have Humira, the world's most selling medicine on the market and they have Duopa for severe Parkinson's disease on the market. Here the total aggregate value of the agreement is up to USD 755 million. We have so far received USD 130 million, including the USD 50 million that we got when they took the full license of the whole alpha-synuclein antibody portfolio.

And here we also have the right to good royalties if we come all the way to the market. Interestingly, we heard that AbbVie presented in July their thoughts about ABBV-0805, but they plan to start with Parkinson's disease, but they also have thoughts about further indications like MSA and DLB. So I think that we have here 2 great different partnerships that are very important for BioArctic and for the success of our programs.

Next slide, please. In Alzheimer's disease, BAN2401 is a potential disease-modifying antibody, and this is where we had the positive Phase IIb results last year and now we are well on the way in the Phase III study.

BAN2401 has the unique binding profile. It was specially designed and generated to selectively bind and eliminate the toxic forms of misfolded Abeta, and those are called protofibrils or oligomers. So we have a unique clinical fingerprint that was shown in the Phase IIb study in 856 early Alzheimer patients, where we saw a consistent effect on clinical outcomes 3 different scales as well as a dramatic clearance of amyloid from the brain through PET imaging and effects on 4 different neurodegenerative biomarkers.

This together with a good safety profile is a unique clinical fingerprint. And the good safety profile also means that we do not need to have any titration. We can give the top dose for the best effect already from the beginning due to the good safety profile.

So now, Eisai are driving 3 different programs: the confirmatory Clarity AD/Phase III Study, which they have announced that we expect primary endpoint results in 2022. And they also have the Phase IIb open label extension study well underway now with most patients recruited. And they are preparing, as I said, for the A45 Study together with Alzheimer's Clinical Trials Consortium, planning to start next year.

Next slide, please. On this slide, we see some of the results that Professor Lars Lannfelt presented in July at the Alzheimer Congress. At AAIC, Professor Lars Lannfelt also received a lifetime achievement award for his important scientific contributions in the Alzheimer field, including BAN2401. So we were very pleased to see the external recognition by Alzheimer's Association, which is a great honor, and we are very happy and proud of Professor Lars Lannfelt and his work.

As the Congress, Professor Lars Lannfelt presented the data describing the binding profile of BAN2401. As I said, BAN2401 was specially designed and generated to bind the toxic soluble aggregated form of Abeta called protofibril. And this was what Professor Lars Lannfelt saw on the patients with the Arctic mutation. They had increased levels of those toxic species. And they also exist at all Alzheimer patients. And we are now seeing that BAN2401 can decrease amyloid from the brain. But that's then more on the plaque, but we also then assume that the protofibrils also are decreased in a similar way.

So we have shown that BAN2401 is highly selective for protofibril binding. We have more than 1,000-fold selectivity versus monomers, which is very important, and we also have about 10-fold selectivity versus fibril.

If we compare BAN2401 binding profile with aducanumab, we see that it's distinctive, different. So BAN2401 prefers binding to protofibrils and oligomers, those toxic species of Abeta, versus aducanumab, who prefers binding to the fibrils. Furthermore, BAN2401 is up to 100-fold stronger in its binding to those toxic species if we compare it with aducanumab.

And these data were then presented at the Congress. And next slide talks about the next Alzheimer Congress, which is CTAD in San Diego in December, where more data will be presented. We will learn more from other antibodies and the other programs in Alzheimer's disease. And regarding BAN2401, Professor Lars Lannfelt will present additional data on BAN2401 binding profile. And Eisai will present some information from the open label extension study. And the title of that presentation is Persistence of BAN2401-Mediated Amyloid Reductions Post-Treatment. So we are really looking forward to this Congress in December.

Next slide, please. Now we turn to Parkinson's disease and ABBV-0805. This is the potential disease-modifying antibody for Parkinson's disease, where we have shown strong pre-clinical result and we are now in Phase I, and it is AbbVie who are driving this program forward.

Here we have a similar unique binding profile in a similar approach as we have for BAN2401, but now we talk about target -- selectively targeting protofibrils and oligomers for -- alpha-synuclein is the protein here. We are now, as I said, in Phase I, which is progressing well. And we at BioArctic, we focus on delivering back-up and follow-on antibodies in close collaboration with AbbVie. So great progress even here during the year.

Next slide, please. Now we come to our third area, the complete spinal cord injury program, SC0806, which is a combination of the biodegradable device and a growth factor FGF1. This is a potential regenerative treatment for these patients, complete spinal cord injury patients, who have no treatment available at all. And here we are in Phase II.

In this program, we are collaborating closely with neurosurgeons at Karolinska Hospital in Stockholm, and they have rehabilitation clinics in different countries. And we are supported by Horizon 2020 grant that are covering majority costs for this clinical trials. We are now looking forward to an interim analysis within the coming 6 months, and now we will for the first time look at both efficacy as well as safety.

Next slide, please. So now we come to our fourth area, which is to support our disease-modifying treatment for Alzheimer and Parkinson. We work on diagnostic tools to identify patients at an early stage of the disease and to follow disease progression. We work on imaging biomarkers as well as biochemical biomarkers, all based on our antibodies.

Our work with the blood-brain barrier technology platform we are expanding, and this is very important in order to see that we in the future can have antibodies that come better across the blood-brain barrier. And here we have done -- as I said, now started our research collaboration program with Uppsala University, where we got the grant from Swedish Vinnova, and we have successful recruited a scientist from Roche and from Genentech, [Denali] and from Uppsala University. This is an area we are expanding and building further.

Next slide, please. So by that, we now come to the finance summary and I hand over to our CFO, Jan Mattsson.

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Jan Mattsson, BioArctic AB (publ) - VP of Finance & CFO [3]

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Thank you, Gunilla. And before providing comments on the financials for the third quarter, I would like to remind you that BioArctic's business model means that our revenues consist of milestone payments, which are one-time in nature, and payments associated with research collaboration agreements, which are recognized over time. BioArctic has basically no expenses associated with milestone payments but does have expenses associated with research collaboration payments.

In the Parkinson's project, we received in 2016 an initial payment of USD 80 million for the delivery of the research agreement. This initial payment is recognized over time as BioArctic meets its performance obligation.

As the Parkinson project has been progressing well and now is in clinical phase, this means that the BioArctic activity under the research agreement is lower than that of last year and that our revenues from this agreement are also lower than last year. So this is the reason why net revenues decreased in the quarter to SEK 20.6 million from SEK 94 million in the previous quarter of last year, and this is also the reason why we see -- why we had high net revenues in Q4 '18 and Q2 '19, where we received milestone payments from AbbVie and Eisai respectively.

Project expenses decreased to SEK 13.5 million due to lower external expenses in the Parkinson projects versus previous year and other operating expenses increased to SEK 5.5 million and relates to exchange rate losses.

Operating result decreased to minus SEK 10 million coming from SEK 33 million in the previous quarter of last year. And operating expenses are expected to be in the range of SEK 109 million to SEK 110 million for the fiscal year 2019, which is in the lower range of what has been communicated previously.

Next slide, please. Cash balance amounted to a little less than SEK 1.2 billion at the end of the quarter and operating cash flow in the quarter amounted to minus SEK 49 million coming from SEK 31.5 million (sic) [minus SEK 31.5 million] in the corresponding quarter of 2018.

Result for the period decreased to minus SEK 8.3 million from plus SEK 25.9 million, and the decrease of net result is attributable to low revenues from the research collaboration in Parkinson project.

And to sum up, BioArctic continues to have a strong financial position.

Next slide, please.

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Gunilla Osswald, BioArctic AB (publ) - CEO [4]

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Thank you so much, Jan. And then we come towards the summary. So next slide, please. We are now on Slide 17, and I will summarize today's presentation with upcoming news flow.

We start with Alzheimer's disease, where we are looking forward to the Alzheimer Congress CTAD in December where we will hear about more data on BAN2401 and learnings from other Alzheimer programs. We will also look forward to future communication of data from the Phase IIb open label extension study and we also look forward to the start of the A45 Study next year. 2022, that's when we expect to see the results from the Clarity AD study, the Phase III confirmatory trials.

And Parkinson's disease is progressing well and we will have to wait for the completion of the Phase I or the start of Phase II for ABBV-0805. And our complete spinal cord injury program, there we have the interim analysis ahead of us with efficacy and safety within the coming 6 months. And finally, the diagnostic tool and technology platform, we are expanding this area. So there is a lot of exciting news to expect from BioArctic in the future.

Next slide, please. So by that, I would say thank you so much for your attention. And we open up and are happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Joseph Hedden from Rx Securities.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [2]

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I've got a few on BAN2401, so maybe I'll go one at a time. Do you have any update on recruitment in the Clarity AD trial and do you think it could be possibly going at a quicker rate going forward due to the positive development with aducanumab in that…

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Gunilla Osswald, BioArctic AB (publ) - CEO [3]

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Joseph, great questions. First of all, the study is progressing well. And I cannot comment on the recruitment pace and that's something for Eisai. And then with regard to the quicker rate of inclusion, I think that we will have a good recruitment rate for BAN2401 based on the positive results we had on the Phase IIb study with effect on all 3 clinical endpoints and the dramatic decrease of amyloid from the brain and also further supported by all 4 neurodegenerative biomarkers and with this good safety tolerability profile, which means that we can give the top dose directly.

So I think that I see very positively on the expected recruitment phase for the patients. I think that we can -- well, I would really like to see good progress in this study, which I expect.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [4]

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Okay. And then just moving on to the presentations at CTAD. It's talking about amyloid status in the title present -- in the presentation title. But do you expect that we could see some of the clinical -- newer clinical efficacy data coming out? And if not at CTAD, then when might we be? This is -- we're kind of 6 months down the line or so from the start of the open label extension and maybe we should see some data soon? Is it -- do you think that could happen?

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Gunilla Osswald, BioArctic AB (publ) - CEO [5]

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Yes. So a great question again, Joseph. First of all, of course, Easai is responsible for the whole BAN2401 program in Alzheimer's disease. And we are really pleased to see what they have in the title, which they talk about the baseline data from the open label extension study.

And some of those patients have now been without treatment for some period. So I think that will be very important learning just by looking at the baseline data to compare that with the previous Phase IIb results. So I really look for them to -- and then I think that I don't think you should have too much expectations on seeing data from -- kind of during the open label extension study. I think the expectations should be the baseline data, which I think is important enough because I think that's really important learnings there.

And then future, I think that I'm really looking forward to every large Alzheimer Congress in the future, and we will see what data will be presented when. But I think -- I mean, there is -- when you have an open study ongoing, I expect us to be able to follow this study. So I think I really look forward to the CTAD in December. And then I look forward to AD/PD, which every year is in March-April time.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [6]

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Okay. Sorry, just to confirm what that kind of baseline data is. So you have patients that have discontinued after finishing the Phase IIb trial and then have reenrolled some months later into the open label extension. So you're looking at the kind of bounce in amyloid that might have happened in those few months in between?

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Gunilla Osswald, BioArctic AB (publ) - CEO [7]

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Yes. So if you think about -- all patients will come back in this open label extension study -- no matter if they had placebo or low dose or mid dose or high dose, all patients will now come back and get the top dose. So that means that you will have learnings from patients who have been without treatment for different amounts -- period of time and you also will learn information with baseline data from patients at different doses and from placebo. So I think it's a very rich possibility to see -- to get more knowledge.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [8]

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And did the recruitment into that happened in a structured way so you have kind of set proportions of who crossed over from placebo and who crossed over from the top dose and the other doses? Or was it just all-comers and you kind of have what you have?

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Gunilla Osswald, BioArctic AB (publ) - CEO [9]

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What I'm very happy about is that Eisai are treating all patients equal, so everyone are welcome back no matter which dose they had. So then it depends on how far they have progressed in the disease. Unfortunately for those who have progressed too far, that might not have been possible for them to come back. So I think around 200 of those patients are expected -- or at least it's less than that, but something like that. So I think it's a rich data set that we will learn more and more from.

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Joseph Hedden, Rx Securities Limited, Research Division - Healthcare Analyst [10]

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Okay. And last one. Biogen on the call, on their Q3, where they talked about aducanumab data specifically highlighted BAN2401 as well. So I just wanted to see if you had any comments on what you think Biogen and Eisai are thinking about the positioning of those 2 drugs commercially now that we might assume that aducanumab is already on the market when BAN2401 reports data.

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Gunilla Osswald, BioArctic AB (publ) - CEO [11]

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So I think that I was just happy to hear how Biogen also commented positively on BAN2401. And then I think I cannot comment on both. But I think that they are in a great position. The 2 companies are having 2 really good looking compounds for this patient population where there's such a huge unmet medical need.

And I think also if you think about the data that Professor Lars Lannfelt presented in Los Angeles, he showed that they are distinctive from each other. So I'm sure that if both come to the market, they will have different benefits and some patients -- it will be better for one and maybe some will be better for the other. And I think the BAN2401 has shown really good efficacy and a good safety tolerability profile, so I feel very positively for the future for BAN2401.

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Operator [12]

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(Operator Instructions) And our next question is from Mick Cooper from Trinity Delta.

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Michael Thomas Dudley Cooper, Trinity Delta Research Limited - Research Analyst [13]

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A quick question from me. Give an update on the trial with BAN2401 or the progress from BAN2401 in Down syndrome?

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Gunilla Osswald, BioArctic AB (publ) - CEO [14]

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Mick, great to hear you. So we are progressing well in our pre-clinical evaluation and preparation for -- in this area. But we are still in pre-clinical here.

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Michael Thomas Dudley Cooper, Trinity Delta Research Limited - Research Analyst [15]

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And one other question. With the progress you're making with the blood-brain barrier technology -- and I don't know what you can say, but I'm going to test you anyway -- have you tried using this with some of your AD treatments in pre-clinical settings?

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Gunilla Osswald, BioArctic AB (publ) - CEO [16]

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So we have this -- so far it is in pre-clinical stage. And on the slide I showed you, on Slide 12, you see how we have used it together with our imaging tracers in the animal studies. And on the top graph there, you can see that it really has helped the antibody to come into the brain to light up and bind to the protofibril. And this is quite unique because this is the first time that anyone has been able to show an antibody being an imaging agent showing protofibrils in the brain.

So this is quite remarkable what I showed on that slide. And we have also added it to antibodies and in those preliminary studies we have shown already that we can have at least a 10th lower dose. We haven't tried any other different doses, but we know that the lower dose was as good as the top dose with the difference of 10. And this is published, so we are -- together with our colleagues at Uppsala University. And we are progressing further and you will have to wait and see for more good news.

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Operator [17]

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And as there are no further questions, I will hand the word back to the speakers for any final comments.

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Gunilla Osswald, BioArctic AB (publ) - CEO [18]

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Okay. So thank you so much for all the attention and for great questions and have a great day. Thank you.

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Operator [19]

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This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.