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Edited Transcript of BIOAb.ST earnings conference call or presentation 6-Feb-20 8:30am GMT

Full Year 2019 BioArctic AB Earnings Call

Feb 10, 2020 (Thomson StreetEvents) -- Edited Transcript of BioArctic AB earnings conference call or presentation Thursday, February 6, 2020 at 8:30:00am 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

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Presentation

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Operator [1]

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Hello, and welcome to the BioArctic Q4 Report 2019. (Operator Instructions)

Just to remind you, the conference call is being recorded. Today, I'm pleased to present CEO, Gunilla Osswald; and CFO, Jan Mattsson. Please go ahead with your meeting.

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

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Thank you, and welcome to the full year report of 2019 for BioArctic. I'm Gunilla Osswald, and I'm the CEO of BioArctic, and I will share the presentation today here with our CFO, Jan Mattsson.

I'm happy to be here today and present another successful year for BioArctic with a strengthened cash position and an enhanced project portfolio, which has expanded and progressed well during the year.

Next slide, please. BioArctic is listed on nasdaq.com midcap, and this is our disclaimer.

Next slide, please. For those of you who are new to BioArctic, I'll give a short introduction to the company. BioArctic is a unique Swedish biopharma company with the aim to improve lives for patients with CNS disorders. I think that we are unique on 4 different aspects. The first one is that we focus on areas where there is a huge unmet medical need with disease-modifying treatment for diseases like Alzheimer's disease and Parkinson's disease, where there is a huge need for disease-modifying treatments, since there are only symptomatic treatments available on the market today. So this has a huge 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 our strategic partners, in Alzheimer's disease, Eisai, the global Japanese company; and in Parkinson's disease, AbbVie. The third aspect is that we have an attractive and well-balanced project portfolio with projects spanning from early discovery all the way to Phase III. We have partner projects that generate revenues with milestones. And where our strategic partners carry the costs for the clinical trial and we have earlier fully owned projects with a substantial marketing and out-licensing potential.

The fourth aspect is that we are well financed. We have a strong cash position with more than SEK 1 billion on the bank. And we are quite unusual also in the aspect that we are, again, have positive financial results, like we have had for the last 7 years. And we have valuable collaboration agreements with Big Pharma, with a value of up to SEK 9.6 billion plus royalties of substantial magnitude, if we come all the way to the market.

BioArctic is a dynamic and very exciting company, I think, with a huge potential.

Next slide, please. BioArctic has had yet another strong year with a great progress, resulting in an enhanced project portfolio. And I will take you through the top lines now and come back further on to more details in the presentation.

We have 2 important projects that have enhanced to the next clinical phase. Start with BAN2401 in early Alzheimer's disease, which started Phase III with a study called Clarity AD by our partner, Eisai. And then BioArctic received a milestone of EUR 15 million. We are happy to see that Eisai are very committed to BAN2401, and they have now 3 clinical trials in planning around the way. And I'll come back to that.

So several exciting things happened during the last quarter, which I'm happy to talk more about later on today.

We have also expanded our early portfolio in Alzheimer's disease with innovative -- another innovative program. So now we have 4 fully owned disease-modifying programs in our pipeline.

In Parkinson's disease, ABBV-0805 took an important step by our partner, AbbVie, who started Phase I. And we at BioArctic are focusing on delivering the earlier projects in collaboration with AbbVie.

The spinal cord injury program was stopped as a consequence of the interim analysis, where the results did not show any convincing results. So after that, now our portfolio is completely focusing on neurodegenerative disorders.

And our early project portfolio has also recently been expanded with a new project, which I think is very exciting with a difference -- which can be used for different neurodegenerative diseases.

We have also had a successful year in our blood-brain barrier technology platform. And I'll come back to that, and our diagnostic tools and biomarkers have also progressed well. So we have had a really strong year this year.

Next slide, please. BioArctic has an attractive and well-balanced project portfolio, which has expanded over the year.

And we have now, as you see, reorganized the pipeline side a bit. So it's organized in 5 focus areas. Alzheimer's disease, Parkinson's disease, other CNS disorders, the blood-brain barrier technology platform and diagnostic tools and biomarkers.

I think that the portfolio is balanced in 3 different ways. We have several projects in different areas, all from discovery all the way from Phase III.

We are also focusing on different areas, all in CNS.

And we have a combination of fully financed partner projects and innovative fully owned programs with great potential.

And in our business model, all the expensive, large clinical trials are financed by our partners. And we get milestones as revenues when they take the next step, like we just had this year for BAN2401 when it started Phase III.

So I think this year, I think the 2 most important progressions are, of course, BAN2401 coming into Phase III and ABBV-0805 coming into clinical Phase Ib, the latter one by AbbVie and the former one by Eisai.

Next slide, please. So a couple of words about those 2 long-standing successful strategic partnerships. In Eisai, we have had a collaboration all the way back since 2005. And they -- in the collaborations we have, we have now received EUR 62 million, including the EUR 15 million that we got when they started the Phase III program for BAN2401. We also -- at the end of last year, we concluded a new research collaboration with Eisai focusing on understanding further details in the mechanism of action of BAN2401, and then we have now a total agreed value of our collaboration deal of up to EUR 221 million.

So it's still a lot that is possible to receive if it continues to progress well as well as royalties, if we come all the way to the market. And also, I'm happy to see how Eisai are driving BAN2401 forward and also broadening in the clinical program, also starting now a Phase III program in prevention trial. That can, of course, also in the future, if everything goes well, even increase the large royalty possibilities even further.

In Parkinson's disease, we have received USD 130 million, including the USD 50 million that we got linked to that AbbVie [dutiful] license of our Parkinson's portfolio at the end of 2018. The total aggregated value is up to USD 755 million. So also here, we have still a lot to receive, if it continues to go well, and also royalties if we can move it into the market. And here, Parkinson's disease is the first indication, but as AbbVie has announced, they are also thinking about other indications, such as multiple systemic atrophy and Lewy body dementia.

Next slide, please. Now focus a bit on BAN2401, which is the potential disease-modifying antibody for Alzheimer's disease, where we have those positive Phase IIb results in 2018 and where Eisai progressed into Phase III last year. BAN2401 has a unique binding profile, and it is especially designed to selectively bind and eliminate the toxic forms of Abeta called protofibrils or oligomers. It has also a unique clinical fingerprint, and I say that based on the strong Phase IIb results in the large study with 856 early Alzheimer's disease patients. It showed consistent effects on preclinical scale. It showed dramatic reduction on amyloid from the brain, and they also showed effect on 4 different neurodegenerative biomarkers. And it has a good safety profile, which led to that no titration was needed, so we could give the top dose directly to the patients, both in the Phase IIb trial and it's the same thing in the Clarity AD study, which is ongoing now. And also, we saw an effect at an early stage, and that was also something which is quite unique for a disease-modifying treatment.

As I said, Eisai are very committed to this program, and they now have 3 clinical studies with BAN2401 underway. And I would describe that on next slide. So next slide, please.

So Eisai have announced that they are expanding the program, and they have now 3 important parts in the clinical stage. First, the very important Clarity AD trial, the Phase III confirmatory trial in early Alzheimer's disease patients. It started in May last year, and the study is progressing well. And according to Eisai, they expect patient enrollment to be completed this year. The 18-month results are expected mid-2022.

The open-label extension trial is the second trial which is ongoing in early Alzheimer's disease patients. And here, Eisai presented baseline data at the Alzheimer's conference CTAD in San Diego in December. The data they presented showed that the treatment benefit after treatment had been stopped, those benefits were maintained, both with regard to dramatic amyloid reductions in the brain that remained at low level after the treatment had been stopped for about 2 years. And they also saw that the differences in benefit on clinical outcomes were maintained after stopping treatment. So the 2 highest dose groups compared to placebo.

And then we're happy to see how Eisai, together with Alzheimer's Clinical Trials Consortium, has selected BAN2401 to be part of a prevention program that they now call AHEAD 3-45. And that is comprising of 2 groups, A3 and A45. And this is in planning stage and expected to start this year. The A45 that is for subjects with preclinical AD with little or no cognitive impairment and who have elevated levels of amyloid in the brain. A3 is for early preclinical AD subjects, who are cognitively normal, but which have -- they have intermediate amyloid levels in the brain. In these programs or these trials, they will measure biomarkers on amyloid, tau as well as neurodegeneration. In the A45 study, they will also look at clinical outcomes, and that will be assessed by a scale, which is called PACC5, and that is a sensitive scale for these very early stages of Alzheimer's disease. So I think it's very, very exciting times for -- to follow BAN2401 progress.

Next slide, please. BAN2401 has a unique binding profile. And it was especially designed and generated to bind selectively and eliminate those toxic species of amyloid beta called oligomers and protofibrils. And at the Alzheimer's congress CTAD in December, the -- Professor Lars Lannfelt presented the binding profile. And I think it was really nice to be at that Congress because it was a more positive atmosphere and an increased hope and excitement for the whole field and for the patients, Alzheimer's patients, and a lot of focus on the anti-amyloid antibody. Professor Lars Lannfelt, he also presented the highly selectivity for BAN2401 with more than thousand-fold selectivity versus the monomers and about tenfold selectivity versus fibrils. And this is where BAN2401 differentiates from other anti-amyloid antibody.

During the last quarter last year, BioArctic and Eisai went into a new research collaboration which is aimed to further study the details of BAN2401's unique binding profile. And we look forward to being able to present more of these results at coming future -- coming Alzheimer's congresses in the future. And the next one is the AD/PD congress in April in Vienna, where Professor Lars Lannfelt will have an oral presentation. So we look forward to that.

Next slide, please. Now we turn to Parkinson's disease and ABBV-0805, which is a potential disease-modifying antibody with a -- where we have strong preclinical results.

And here we are now in Phase I, which is driven by AbbVie. In a similar way to BAN2401, ABBV-0805 has also a similar unique binding profile, where we also differentiate from other alpha-synuclein antibody.

So it's also especially designed and generated to be highly selective for the protofibril oligomers, those misfolded toxic forms of alpha-synuclein. With a very encouraging preclinical data and the mechanism of action based on solid scientific grounds, that paves the way for taking the compound into clinical stage where it is now. And AbbVie is driving that part and BioArctic is focusing on follow-up antibodies in collaboration with AbbVie.

Next slide, please. There has been great progress in the collaboration with AbbVie on the alpha-synuclein portfolio. As I said, AbbVie licensed the whole portfolio of alpha-synuclein antibodies at the end of 2018, and we received the revenue of USD 50 million early last year. We got the approval from FDA with the IND that BioArctic had produced in February, and AbbVie started Phase I in healthy volunteers in March. And they are now preparing to initiate the next stage of this study with Parkinson's patients with the aim to evaluate safety and tolerability. And as I said, BioArctic, we will continue to progress the early preclinical program -- projects in this great collaboration.

Next slide, please. In November, we announced the results of the interim analysis from the clinical study with SC0806, for patients with complete spinal cord injury. Although it's disheartening that the SC0806 treatment did not have similar good effects that we had in the preclinical stage, the results did not show any convincing effect on either primary nor secondary endpoint, but importantly, the study has contributed to increased knowledge for the patients with spinal cord injuries. And we will now close the study in a responsible manner. And we will make sure that we make data available to the larger community for the benefit of the patients.

So BioArctic, we will now focus on our core operations, which is research and development of drugs for Alzheimer's disease and Parkinson's disease and other neurodegenerative disorders in the central nervous system.

Next slide, please. So our early-stage portfolio, that really continues to progress well. And Alzheimer's disease is, of course, our largest area, and now we have expanded that with a new disease-modifying project, so we have 4 fully owned programs that we are driving forward. Each of them have different mechanism of actions from the others. In Parkinson's disease, our early programs have progressed further. And it's also really exciting also that we have a new innovative program in -- with broad possibilities for neurodegeneration. And also, our blood-brain barrier technology, where you have heard me being very excited before, I'm still very excited, and last year, we got the Vinnova grant together with Uppsala University researchers. And I think that shows a good external validation of the high-quality work that we are doing together. I'm also very pleased to have been able to recruit internationally renowned scientists that already makes a positive impact in this important area. The diagnostic tools and biomarkers have also progressed in a good way during last year.

So I think BioArctic has an exciting portfolio with a great potential to help patients with a huge medical need in the future. So by that, next slide, and I turn 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. Some financial comments to Q4 and full year 2019 will follow. Net revenues were SEK 26.4 million for the quarter compared to SEK 515.3 million for last year. The full year revenues were SEK 281.8 million compared to SEK 714 million for 2018. And this change is primarily due to the onetime AbbVie milestone of USD 50 million at the end of 2018, which was linked to the license agreement.

Project expenses decreased to SEK 21 million from SEK 48 million due to lower external expenses in the Parkinson's project versus prior year. Parkinson's project has progressed into clinical phase resulting in lower expenses for BioArctic from the research collaboration with AbbVie and also consequently lower associated revenues versus prior year.

The personnel expenses decreased to SEK 15.3 million coming from SEK 23.6 million, since Q4 2018 included a variable remuneration based on the milestone payment from AbbVie.

Full year 2019 total operating expenses of SEK 184 million were just under the low end of guidance for 2019 due to delivery of the Parkinson's project being more efficient than expected.

Operating loss was SEK 21.1 million compared to a profit of SEK 430.3 million for last year. The decrease is attributable to the onetime AbbVie milestone.

And we are now issuing guidance for total operating expenses for 2020, and these are expected to be in the range of SEK 180 million to SEK 230 million for the financial year January-December 2020.

Next slide, please. Cash balance amounted to SEK 1.1 billion at the end of the quarter.

Operating cash flow amounted to minus SEK 54.2 million for -- during Q4 compared to 89 -- minus SEK 89.3 million for 2018.

Net result for the period was minus SEK 17 million during Q4 compared to a profit of SEK 335 million in last year.

And net results for the full year amounted to SEK 88.5 million or compared to SEK 381.6 million for 2018.

And to sum up, BioArctic showed a positive net result for the seventh year in a row and continued to have a strong financial position.

Next slide, please.

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

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So then I will talk about the closing remarks on upcoming news. So next slide, please. When I conclude the year, I can see that we have had another successful year behind us, with a strengthened cash position and an enhanced project portfolio. And we have a really exciting year ahead of us, where with regard to BAN2401, we will see more data being presented at international congresses. The next one is AD/PD in April. We also look forward to more information regarding the progress of BAN2401, with regard to, for example, the prevention study in very early stages of Alzheimer's disease and of course, to follow the progress of the important Clarity AD Phase III program.

In Parkinson's disease, we look forward to AbbVie starting the next part of Phase I with Parkinson's patients.

And it will be very exciting to progress our innovative and broad early project portfolio, which have great possibilities to bring medicines of the future to help patients with CNS disorders.

So by that, the next slide, please. And I say thank you so much for your attention, and we're happy to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes 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 have a few, so maybe I'll go one at a time. On the Parkinson's disease program, the next stage of the study is starting in Parkinson's disease patients. I just wondered whether there's any more information you can provide around the design of that. And do we expect to see results from the healthy volunteers and safety data at some point next year?

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

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Thank you so much, Joseph, for a great question. So with regard to ABBV-0805, part of the Phase I trial in Parkinson's disease patients, that is available on ClinicalTrials.gov. And there you can see the full design, which consists of 3 or 4 different panels with increasing multiple ascending dose groups with ABBV-0805 and placebo. And then since it's AbbVie who are driving this program, Big Pharma normally are very sparse, if you say that, with giving out information when it's progressing. So I think that we'll just think like no news are good news. So I think the next thing we'll be able to see is when ClinicalTrials.gov shows that this part with Parkinson's disease patients have been open for recruitment.

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

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Okay. That's helpful. And then on the early-stage Alzheimer's trials in the preclinical population. I just wonder what your thoughts were on the importance of binding profiles, and in particular, the profile of BAN2401. I ask because I know that the results from DIAN-TU are coming soon. Solanezumab is looking at monomers. I wondered whether you thought the binding profile was particularly important even in the earlier stages of the disease.

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

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Thank you so much, another great question. And I think that at BioArctic, we strongly believe in that it's important to selectively bind and eliminate those toxic forms of amyloid beta that we call the oligomers or protofibrils. And I think -- still think that it's really good to have the antibody targeting those with a good selectivity versus the monomers.

So here, we differentiate clearly from solanezumab, who is a strong binder to monomers. So at BioArctic, we strongly believe that we should have a selective antibody targeting the toxic species, and I think that goes for early stages and other stages of Alzheimer's disease.

And if you look at the Phase IIb results for BAN2401, you can see that we have very strong results with BAN2401. Perhaps, this selective binding profile, if you contrast that to what has been shown for solanezumab, they have seen some small effect, but not a strong result, I would say, as BAN2401 has shown also with effect on taking down amyloid from the brain and with neurodegenerative biomarkers. That's what really, I think, puts BAN2401 in such a strong position that we have effect on those variety of different endpoints. But of course, it will be exciting to see the DIAN-TU result. I'm skeptical, but we'll see. I hope it will be fine. I wouldn't be too worried. That's what I want to say. I wouldn't be too worried if it's -- because it's a very small and very complex study.

So I think look at what Eisai and ACTC are doing with the prevention trial, which will be much, much larger and longer. So I think that I would focus on looking at the AHEAD 3-45 study. That's what I think will be important to follow.

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

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Okay. And then just perhaps one last one, some housekeeping on the financial side. Can you confirm how much income from the AbbVie Research collaboration is left at this point? And how much longer on the schedule is left to realize that income?

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Jan Mattsson, BioArctic AB (publ) - VP of Finance & CFO [7]

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We have another -- a little more than SEK 100 million to recognize and that's over time, over the next 4 or 5 years.

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Operator [8]

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(Operator Instructions) Okay. There appear to be no further questions. I return the conference to you.

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

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Okay. Very good day. Thank you so much for the attention, and have a good day.