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Edited Transcript of MVIR B.ST earnings conference call or presentation 27-Nov-19 1:00pm GMT

Q3 2019 Medivir AB Earnings Call

Huddinge Nov 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Medivir AB earnings conference call or presentation Wednesday, November 27, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Linda Basse

Medivir AB (publ) - Chief Medical Officer

* Magnus Christensen

Medivir AB (publ) - CFO

* Uli Hacksell

Medivir AB (publ) - CEO, President & Director

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Conference Call Participants

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* Ingrid Gafanhão

Kempen & Co. N.V., Research Division - Research Analyst

* Klas Palin

Redeye AB, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Medivir AB Q3 Report 2019. (Operator Instructions)

Today, I'm pleased to present Mr. Uli Hacksell, CEO; Mr. Magnus Christensen, CFO; Ms. Linda Basse, Chief Medical Officer; and Mrs. Christina Herder, COO.

Speakers, please begin.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [2]

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Thank you so much, and good afternoon. I would like to start this by asking you to read Slide #2, which really reflects the problem with forward-looking statements, so please read that carefully.

Let's move to Slide 3, which is related to the financial summary. Please, Magnus.

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Magnus Christensen, Medivir AB (publ) - CFO [3]

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Thank you, Uli. And yes, please see Slide 3, where you can see the financial summary for quarter 3 and accumulated quarter 1 to quarter 3. As you can see, the turnover for quarter 3 amounts around SEK 2 million, which is lower than last year and relates mainly to lower royalty income from Xerclear. The loss before tax has improved significantly in quarter 3 compared to last year and amounts to minus SEK 23 million compared to SEK 71 million last year, and relates, of course, to the restructuring of the company last year, where the cost base is much lower now and relates to lower personnel cost and other expenses.

At the moment, we have 14 full-time equivalents today working compared to 73 last year. And the total cost now is around 1/3 over last year level, in line what we had communicated before. Accumulated quarter 1 to quarter 3, we have a loss of SEK 91 million compared to SEK 236 million last year, and the main improvements are made in quarter 2 and quarter 3.

As you can see, the cash position in quarter 3 is around SEK 159 million, and the pace has continued to slow down and will continue to do this year compared to last year. The market cap is around SEK 527 million, and the cash is sufficient to complete the ongoing clinical activities that we have and cash into the year 2021.

And then I hand over to Uli.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [4]

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Thank you, Magnus. Let me start out by saying that Medivir has changed over the past year. We are an oncology-focused development company today with lots of upside potential. Our assets can be divided into 2 different pieces. You have the proprietary nucleotide-prodrug platform, which includes MIV-818 and MIV-828. This is the type of platform that provides lots of exciting opportunities for new types of oncology products with very attractive profiles, good side effect profiles, combined with high efficacy. So I think this is very exciting, and our thinking around those programs is that we want to bring them forward as far as possible on ourselves because we think that's the best way of bringing a lot of value into these programs.

Then we have the separate group of assets consisting of remetinostat, birinapant and MIV-711. Those are advanced programs, but for one reason or another, we don't take on some of these programs into Phase III on our own. So with these programs, we are focusing on finding partners that can help us to develop them through Phase III and through eventual market approval.

As you heard from Magnus, the company is small today. We have 14 people, but we have a very strong organization, an experienced leadership team and an organization that's working effectively on clinical development and on business development. That's our focus, and we believe that we can continue to be very successful with this group of people.

So let me move to Slide 5, where we explain a little bit about the concept around nucleotide prodrugs. What we're doing here is systemically that we are taking a nucleotide and combining it with a chemical tail to create a prodrug that has the ability to be taken up where we want it to be taken up, be effective where we want it to be effective, can be a certain type of cells or a certain type of tissue. We have sort of shown this to protect the right kind of efficiency tolerability profile. These assets are led by MIV-818, which is currently in Phase I for hepatocellular cancer. We also have MIV-828 for AML. And we have a number of other opportunities that are symbolized by MIV-838, where we speak about blood cancer, but we haven't yet come so far in research that we have designated particularly in patients within the blood cancer sphere. The exclusivity, IP exclusivity for these compounds are good to (inaudible).

Let's move to Slide 6, where we try to describe what MIV-818 really is. This is an oral prodrug. It's a compound that's taken by mouth, and it's a prodrug where the nucleotide part is the clinically effective troxacitabine. The compound that's previously had been given intravenously showed effects in certain blood cancers but not the tolerability that's allowing that to be developed all the way to the market.

Now we are giving MIV-818, the prodrug of troxacitabine. Orally. And by doing that, we achieve a liver-selective effect. So when MIV-818 is taken up from this GI tract, gets transported to the liver and then accumulated in the liver, be taken up by liver cancer cells, and when it's taken up, it's metabolized through the active components and might kill the cancer. I think this is very exciting and provides a great opportunity for a well tolerated and highly effective treatment of liver cancer.

Let's move to Slide 7. There are a few treatment options for hepatocellular carcinoma, and those that are available provides very little benefit. So there's a great unmet medical need here. We believe that because of the liver targeting and the mechanism of action, MIV-818 may provide a great opportunity, safe, effective and probably ideal as either stand-alone therapy or an add-on to standard of care, just in the case.

Now let me just say a few words about HCC. This is, as I said, a very severe indication. In fact, the 5-year survival is as low as 11%. It's a leading cause of cancer-related deaths globally. In the Western world, it's still an orphan indication, although the number of liver cancer patients is increasing in the Western world. But it's very high in Asia and in particularly in China. So we think that there is an opportunity to develop 818. That's an orphan drug in the Western world, but that's a different type of drug in Asia.

We have a lot of preclinical data that supports the use of MIV-818 as a successful drug, as a stand-alone or as an add-on therapy in HCC, but importantly, we also have human breakdown, and so let's move to Slide 8. Let me show some patient data from biopsies of patients with severe liver cancer. You can see on the left-hand side data from patient 2, to the far left, there's an analysis of the noncancerous liver sample, and next to that, you'll see what happens in the tumor tissue. This is with a particular stain that indicates that in brown that have cancer cells that have been affected negatively by the treatment with MIV-818.

So the fact that you see brown on the tumor tissues and not in the normal liver means that MIV-818 doesn't hurt the healthy liver, some of these are the tumor tissue, which has a selective cancer effect for MIV-818. What we also note, which is what is not shown on this slide, is that we have very low levels of MIV-818 or troxacitabine outside of the liver. So this means that we also have this liver selective effect. You'll see the same thing to the right from data from patient 4. Normal liver, again, you don't see an impact of the MIV-818 treatment, and the tumor tissues, you'll see significant impact.

So we think this is -- it really provides a proof-of-concept for the fact and for the IP behind MIV-818, the combination of a liver (inaudible) that is selected for cancer cells in the liver and not have negative impact on other cells in the liver or elsewhere.

Let's move to Slide #9. We have recently reported that we have completed the first part with Phase I study, which included 9 patients that were started with intra-patient dose escalation. And we did use that to establish an ideal starting dose for the second Phase I phase, which we call Phase Ib. So the start dose for Ib has been determined. It's 40 milligrams a day for 5 weeks. And this will be a classical 3+3 dose escalation study. We expect to include up to 24 patients. We still didn't determine exactly how many patients that will be included, that depends on when we find the optimal dose. We think that based on what we have learned in Phase Ia, that we can move pretty quickly to start determining what should be the ideal dose to use in Phase II, and we will learn that from the Phase Ib study. We obviously will collect safety, tolerability data, as we did in the first Phase I study, and we hope that we also will see additional indications of efficacy.

When it comes to Phase II, so are we currently planning for a placebo-controlled add-on study to standard of care? We think that's the kind of Phase II study that we want to conduct. We believe that by doing this really carefully and hopefully achieving a very good outcome, we can really find a way to maximize the value of MIV-818 very quickly. We believe that such a study may be sufficient for approval, and we believe that it's the smartest and cost-effective way to bring MIV-818 to the market in a minimal time frame and with minimal costs. So it's a very exciting program for us.

Let's move to Slide #10. This is our second nucleotide prodrug, MIV-828, which we denominated as a clinical candidate in the fourth quarter last year. So this is a prodrug that is considered for AML blood cancer indication, which is very severe and very difficult to treat, and whereas it means that MIV-828 has a great opportunity for an improved therapy from what is available today. We'll come back with the -- talk much more about MIV-828 when we are moving into formal development.

I mentioned that we have some advanced clinical-stage assets that we considered for partnering, so we are not going to move these programs into Phase III from the data that are available. So those consist of remetinostat, which is primarily considered for a skin cancer indication called cutaneous T-cell lymphoma, where we have outstanding Phase II data, and we also have an ongoing basal cell cancer study, which is in Phase II.

We have birinapant, which is currently -- we started in combination with Merck's Keytruda for MSS colorectal cancer and where we just started a head and neck cancer study, which is done in patients who receive radiation. So this is also a combination study, that's a different kind of combination study. And finally, we have MIV-711 for osteoarthritis.

So if you take a look at Slide 12, the treatment, remetinostat. This is formulated as a gel for topical administration, I think that's very important. You can see on the right hand of the slide that this particular formulation is very special in the cells that is stable in the skin, but is broken down very quickly in the blood. So this means that we will have minimum side effects related to systemic exposure of the drug, which you also see here. We have had the EOP2 discussions with the FDA based on our Phase II study, which came out very, very clear, we know exactly how the Phase III study should be designed. It will be placebo-controlled. And by the way, I should mention that if it is placebo-controlled, it will be sufficient to do one Phase III study to get approval to in the U.S.

We will, however, need a co-primary endpoint to define the effects of the treatment on skin lesions. So this means that one needs very good significance in the study to get approval, and one needs a fair amount of patients to ensure that the significance is there. We also know that pruritus can be used as a key secondary endpoint. That's important, but of course, we know from our Phase II study that we have a very positive effect on this severe itching, which is one of the things that really affect the quality of life for patients in the early stage of this disease. We believe that the topical use of remetinostat has the potential to improve the treatment to take care of early stage patients with Cutaneous T-cell Lymphoma. The current medications are not particularly suitable for these patients because they have too many side effects.

I also mention that we reported on an interim analysis on an ongoing basal cell cancer study in the spring this year. And those data indicated that it's moving forward very well. So we hope that we will be able to see the results, the total results of this some time next year.

Let's move to birinapant on Slide #13. So this is a so-called SMAC inhibitor. It has 2 types of effects: it enables tumor cell death; and at the same time, it augments the immune system. We believe that this combination is really very exciting, and we think that birinapant has the potential to improve cancer therapy, particularly in combination with other treatments since it makes the cancer cells more vulnerable to other therapies as well. We have -- we did a Phase I study, where we had 1 patient with MSS Colorectal cancer, a type of cancer that not really -- where Keytruda does not really have an effect. In these patients with still up to 2 years, we have good treatment result. The patient is a partial responder and, as I said, has been on drug for 2 years.

The ongoing Phase II combination study is done only on patients with MSS Colorectal cancer. We have a futility analysis, which will be done this quarter, so we'll come back and talk about that shortly. And this is, of course, a very important part for us. Again, as I just mentioned that we just started a Phase I study in head and neck cancer in combination with radiation, so the first patients has been recruited and dosed in that study.

So let's move to Slide 14, which deals with MIV-711. That's our osteoarthritis trial. It's a cathepsin K inhibitor, where we, in Phase II, have demonstrated that can decrease patients for 6 months. We have a very good outcome in the same study. We reduced the destruction of the bone and of the cartilage. So we think that has a disease-modifying effect on MIV-711. It's an indication where there is no disease-modifying treatment available. It affects enormous amount of people, and that's an increasing number because of the aging population. But doing a Phase III study in this indication is very expensive, costs probably at least $100 million. So we cannot do this alone. Therefore, we are seeking for a partner who can help us to take this interesting molecule all the way to the market.

Let's move to Slide 15. We have, in the past years, reached a number of milestones, and we have 2 remaining for this year. First, the futility analysis, again, later on this quarter, and then with MIV-818, we plan to then start Phase Ib later on this quarter as well.

Let's move to Slide 16. We believe that 2020 will be a very exciting year for Medivir. We have a number of drug development activities that are very exciting. With MIV-818, we are moving this forward aggressively. And what we really hope to be able to do here is to establish the fastest and least costly path to registration in the Western world as an orphan indication and orphan drug. And we believe that the program and the activities that we will conduct around MIV-818 will allow us to have that plan specifically defined next year, so that we can move into Phase II in 2021.

MIV-828, we hope to start with Phase I preparation by doing a preclinical development next year. As with birinapant, obviously, assuming a good outcome of the futility analysis, we expect to complete the Phase II combination study with Keytruda next year. And in remetinostat, we expect to complete the BCC test.

So lots of things going on, on the development side. And at the same time, we continue to focus on business development activities related to the -- for the assets that we cannot for one reason or another develop on our own all the way to the market.

With that, I thank you for your attention, and let me know if you have any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We have one first question from Ms. Ingrid Gafanhão from Kempen.

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Ingrid Gafanhão, Kempen & Co. N.V., Research Division - Research Analyst [2]

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So I have 2 questions on birinapant. Regarding the futility analysis planned for Q4, do you plan to communicate only on a pass or fail futility analysis? Or are you also planning to give us some color and to share some data on the program?

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [3]

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When we report on the futility analysis, we'll certainly provide information about the outcome of the patients that we have looked, and certainly, it will not be a super detailed presentation, but we will talk about the number of patients who did not respond, the number of patients who responded or are partial responders, stable disease, et cetera. So that -- we will provide that kind of information. We will also state about the patient tolerability of the treatment.

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Ingrid Gafanhão, Kempen & Co. N.V., Research Division - Research Analyst [4]

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Okay. Understood. And my second question on the birinapant is, if I -- just to clarify, so I understood it well, after you conclude the Phase II in combination with Keytruda in colorectal, do you plan to bring the program any further by yourself? Or it's also a program that you'll be willing to take forward only under a partnership?

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [5]

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I think it's a very good question, Ingrid. The way we looked at it now is that we think that when it comes to combination therapy, we need to have a partner with the other molecule in that segment to combine it within all this to really bring it forward successfully. And we expect that partner to really conduct and pay for the further developments, and what I mean by that is for the development starting with Phase III and all. So that is our thinking with birinapant. We think that's the optimal way of proceeding.

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Operator [6]

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We have another question from Mr. Klas Palin from Redeye.

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Klas Palin, Redeye AB, Research Division - Equity Analyst [7]

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I have questions about MIV-818 primarily. If you have any comments to share about the possible side effects that you saw in the last 3 patients in the Phase Ia part or they were rather in line with what you saw in the first 6 patients? And also, if you may comment on how high doses that you have been studying MIV-818 in these patients? Yes, kick-start with that.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [8]

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Yes. Thank you, Klas. I think Linda can help you to answer that first, what kind of side effects that we see and then the -- what the highest dose that did have.

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Linda Basse, Medivir AB (publ) - Chief Medical Officer [9]

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Yes. When it comes to the side effects, as we reported out of the 6 patients, we have started to see some bone marrow suppression and we have also seen this for patient number 7 and 8. We are still evaluating data for patient number 9 since this is a very early stage of data from that patient. So this is where we are. Nothing has changed from the safety perspective, but we have concern what we show in patient number 5 and 6, as we reported earlier. And when it comes to the dose, that is just at the start of Phase 1b, then we have 200 milligrams per week, which means we need to treat the patient with 4 milligrams, 4 days a week.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [10]

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So what's the highest?

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Linda Basse, Medivir AB (publ) - Chief Medical Officer [11]

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Oh, yes. The highest dose, yes, that was 60 milligram, 5 days per week that was recommended for 2 patients.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [12]

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And perhaps, Klas, we basically should mention that those bone marrow effect that we have seen are not worrisome. They are sort of what we expect to see, and it's reversible, and we won't add anything more...

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Linda Basse, Medivir AB (publ) - Chief Medical Officer [13]

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No, exactly. And they have not gotten worse as long as we have increased the dose for patient number 6. It was more or less the same duration we see from CTX-II from those events for the last 3 patients. And again, there we do not have the safety data for evaluating in detail for the last patient.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [14]

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But it's very slow start, that's very important.

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Klas Palin, Redeye AB, Research Division - Equity Analyst [15]

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No. And I don't know if that's correct, but troxacitabine, was the max tolerated dose slightly above 20 milligram? Or am I wrong here?

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Linda Basse, Medivir AB (publ) - Chief Medical Officer [16]

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I might say on top of my head, I cannot recall this exact amount. But I recall that the bone marrow studies were stopped due to a very narrow (inaudible) there.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [17]

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And I think what you need to remember there, Klas, is that troxacitabine was given intravenously and then MIV-818 orally. It has very little troxacitabine that comes out of the liver. So in fact, when we have looked at this preclinically in models of liver cancer, and so we have given the same amount of troxacitabine in IV and MIV-818 given orally. And then we have dosed at the amount of the active component, the troxacitabine triphosphate in the liver comparing the 2, and also there's 200-fold difference of amount. It's a -- I mean, it's a completely different kind of exposure when you're giving MIV-818 compared to troxacitabine.

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Klas Palin, Redeye AB, Research Division - Equity Analyst [18]

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Yes. Good. And my last question, just as a confirmation. Will you -- the patients that will be recruited in the Phase Ib part, will that be patients that has progressed on second-line therapy?

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Linda Basse, Medivir AB (publ) - Chief Medical Officer [19]

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Yes. That is correct. That will be patients progressed on second-line therapy, yes.

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Operator [20]

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We have no other questions. (Operator Instructions) It seems that we have no other questions, sir.

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Uli Hacksell, Medivir AB (publ) - CEO, President & Director [21]

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All right. So I want to thank you for your attention, and we are excited about the future of our programs and about being able to come back and present the data from the fourth quarter when we meet the next time. Thank you.

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Operator [22]

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Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.