PCI Biotech Holding ASA

Good morning, and welcome to PCI Biotech's second half-year 2023 presentation. My name is Ronny Skugudal, and I am CEO and CFO in the company. With me today is Morten Lur, responsible for business development and project manager for the bioprocess project. Please take a look at our important notice and disclaimer. It will be possible to send in questions via the webcast console, so we will try to answer those questions at the end of the presentation. So I encourage you who have an intention to send in questions to start early with that, so that we are sure to have them in hand when we get that far. The agenda today contains a more comprehensive presentation of our bioprocess project, including why and how our technology has a place in the production of viral vectors, as well as the status for 2023 and the outlook for 2024. The first part of the presentation will be about bioprocess. Good morning and welcome to PCI Biotech's second half year 2023 presentation. My name is Ronny Skugudal and I am CEO and CFO in the company. With me today is Morten Lur, responsible for business development and project manager for the bioprocess project. Please pay attention to our important notice and disclaimer. It will be possible to send in questions via the webcast console, so we will try to answer those questions at the end of the presentation. So I encourage you who have an intention to send in questions to start early with that, so that we are sure to have them in hand when we get that far. The agenda today contains a more comprehensive presentation of our bioprocess project, including why and how our technology has a place in the production of viral vectors, as well as the status for 2023 and the outlook for 2024. And the first part of the presentation will be taken by Morten about bioprocess. So, here you go, Morten.

Good morning. Gentherapies are biological drugs with potential life-saving potential. In recent years, gentherapy has had major breakthroughs in the treatment of both blood cancer and hereditary diseases. Gentherapy is divided into two categories. In vivo gentherapy and ex vivo gentherapy. The latter is also known as cell therapy. This presentation will focus on in vivo gene therapy, which has shown good results in treating serious degenerative diseases. With in vivo gene therapy, a virus is used, a so-called viral vector, to deliver a genetic medicine directly to the patient, as shown to the left in this figure. Genetic medicine can be a healthy or functional gene that recreates a certain function in the body, such as motor skills or vision. Examples of such gene therapies are Zolgensma and Lyxdurna. The downside of the medal for these groundbreaking medicines is that they have a very high price tag and are so complicated to make that they are almost impossible to produce for large patient populations. Improving production is therefore necessary to make gene therapy available to new and larger patient groups. Why are viral vectors so complicated to produce? Roughly speaking, there are three reasons. 1. Viral vectors are combined products. 2. Viral vectors must be made of living cells. 3. It is a limited supply of one technology for the production of viral vectors. The production of viral vectors is divided into an upstream and downstream process, which both consist of several steps. This is a process for the production of an adeno-associated virus, also called AAV. In the upstream process, cells are used in culture to produce virus vectors. These cells are called production cells. As the virus vector is made, it hops up into the production cells, shown in pink particles in the figure. To be able to separate the virus vectors from the production cells, the cells must be opened up in a process called cellolysis. Cellolysis opens up the cells so that the virus vectors are freed, as shown in the figure to the right. The problem is that cellolysis makes many irregularities be freed from the production cells, in addition to the viral vector. The impurities pose a danger to the patient, and cause the cleansing process to become ineffective. 70% loss of virus vectors is common in the network process, and impurities from the production cells are an important cause. PCI Biotech is developing a new cellulite technology to extract virus vectors from production cells with fewer impurities. The technology is called photochemical lyses, short for PCL. Photochemical lyses are used to treat production cells with photosensitizers, and then to light them. Because of the short treatment, the photosensitizer will be bound specifically to the outer membrane of the cell, the so-called plasma membrane. When the photosensitizer is activated by light, the plasma membrane will be permeabilized without destroying the entire cell. The advantage of photochemical light compared to today's industrial standard is that it is a targeted way to extract virus vectors. As mentioned earlier, the industrial standard causes a lot of irregularities in the production cells. This is due to the fact that they are unselective and liberate a lot of other things from the production cells, such as DNA and protein. This creates problems in downstream cleaning, including the use of expensive enzymes to remove irregularities, as well as the loss of sustainable virus vectors. Photochemical lysis is selective, which means that you can extract virus vectors with fewer impurities. We have received feedback from experts on the production of virus vectors, that fewer impurities can make the downstream process more effective and actually lead to increased exchange in the end product. This means more patient doses per batch, It is very expensive material, so this has a high value. How far are we on the way to develop photochemical light technology? We have established an upstream process for the production of the virus vector type AAV. which is one of the hottest virus vectors within in vivo gene therapy. We have worked with production cells that grow on solid surfaces in small volumes, and shown that photochemical lyses can separate several types of AV from several cell types with fewer irregularities than industrial standards. Note that these results are from the upstream process, and that we have not yet tested the downstream process. To do this, we must work on a larger scale than we do today. We have sought a broad international patent, where we have received legal feedback from patent authorities. Through cooperation initiated in Q4 with a large factor within the bioprocess, we have shown that photochemical lyses also work in 20-40 times larger volumes with cells that grow in suspension. Production cells in suspension are more relevant for large-scale and commercial production. The purpose of the file testing initiated in Q4 was to test photochemical lyses in a third party with expertise in viral vectors to get feedback on how the technology worked in their hands and user-friendliness. The feedback was used to understand whether the technology is worth developing further, and what is needed to make it commercially attractive. In the test, photochemical lysis was performed in our partner's laboratory with 20 milliliters of cells in suspension that produced AAV. We usually work with a half to one milliliter of deterrent cells, so this was a 20 to 40 times upscale and a transition to suspension cells. Tests from this upstream process were analyzed for virus vector yield and impurities from the production cells. The results showed that photochemical lyses got the corresponding yield as the industry standard, with significantly reduced impurities from the production cells. The downstream process and analysis were not carried out, as it required a larger scale. But the feedback from the partner was that with such results, one has a good starting point for improving the downstream cleaning of the viral vector. At the same time, they express their desire to see results from a larger scale in bioreactors, and emphasize that we must develop a dedicated light shield for the use of photochemical light in commercial production. Our own experimental model has been an upstream process in plates with adherent cells of about 1 milliliter. Together with a partner, we have shown that photochemical light works in 20-40 times larger volumes with suspended cells in bottles. In 2024, we will scale photochemical light further up to mini-bioactors, which can generate enough virus vectors to test whether photochemical light affects the downstream process. Then we can get answers to whether photochemical lysis actually results in increased net yield in the end product, in comparison with the industry standard. This also makes it possible to check whether the virus vector has the desired functionality after photochemical lysis and full cleansing, so-called potency testing. Our ultimate goal is to develop photochemical lysis for commercial production of gene therapy. It takes place on a much larger scale than we do today. It is often said that commercial production takes place in 200 to 500 liters. And to get there is dependent on partnership. External feedback suggests that good data from mini-bio-reactors and downstream cleaning can enable cooperation towards further escalation and commercial production of viral vectors and the development of a specially adapted light shield. We are aiming for late-phase file testing or beta testing in 2025, where the goal is to test photochemical lyses in small bioreactors with one or more partners. The market for the production of viral vectors is growing rapidly, driven by several hundred clinical studies that use viral vectors. In the table to the right, you can see a list of some FDA-recognized gene therapies that are based on AAV. The price list for a treatment is, as you can see, very high. The production costs make up a part of these list prices. We wish with photochemical analysis to make potentially life-saving gene therapies more accessible through more effective production. We will then be able to get a share of the production costs for the gene therapies. The largest segments within the viral vector market are adeno-associated viruses, adenoviruses and lentiviruses. Photochemical lysis is primarily directed towards the production of viral vectors without the lipid cap, which includes adeno-associated viruses and adenoviruses. Then I give the word back to Ronny. Thank you.

Some words on the company side. We now have an estimated financial running track into 2025. This is due to the fact that we at the end of the year had 21 million Norwegian kroner on the bank. Denne finansielle løpebanen gir oss et mulighetsrom for å demonstrere teknologiens kommersielle potential. Det som Morten nevnte tidligere, at vi har mulighet for å oppskalere til en såkalt mini-bench-top bioreaktor, der resultatene er mer representativ for en kommersiell setting. We will continue to explore financial and strategic opportunities to secure the financial roadmap for the next 12 months. Focus areas for 2024. We will further develop photochemical lyses for production for gene therapy. We are a small organization, and we must focus. Therefore, the focus will be on the bioprocess in the future, so that further development within dermatology will be through collaboration. Today, we are working with intratumoral immunotherapy through a PhD student's work. This work will continue and is supported by up to 50% of the research group. So now a word about the numbers. It is not reasonable to compare the numbers against 2022, based on the restructuring we went through that year. We have, as I said, 41 million kroner on the bank by the end of the year. Nettoendring gjennom året er begrensat til 15 millioner kroner. Dette er forventet å øke i 2024 på bakgrunn av den positive utviklingen innenfor bioprosesset og de planene som Morten nå gikk gjennom. Views in the future. If we first look at the pipeline at the bottom of the slide here, then the application within the bioprocess for the viral vectors is moved from a feasibility stage into a prototype phase. Achievements in 2023. We have further developed our IP position within all our programs. We have sent a patent application for intratumoral immunotherapy and of course the patent application for bioprocess. We have also been given a European patent for mRNA, intended for use in dermatology. This is an international search, so we are waiting for answers from other areas, Asia and the USA, on this patent. Further, we have generated early phase data for bioprocess, which has generated industry interest, and this resulted in the initiation of a test collaboration with an international partner, now in Q4. And we have today, if we look at the goals for 2024, we have also reported that we have already received feedback from this test partner, with positive feedback that Morten went through. And we consider this to be a green light internally to further develop the technology. Vi skal demonstrere teknologien sitt kommersielle potensial i en representativ modell, altså denne mini-bench-top-bioreaktoren, og vi skal dermed klargjøre teknologien for videre testing i 2025 i større skala. Det var... Det vi hadde tenkt å presentere i dag, så da må dere bare gi meg et lite halvminutt, så skal vi se om det er noen spørsmål som vi skal besvare. Vi har et spørsmål her. Forventes patenter i USA og Asia lik den dere fikk i Europa nå i høsten 2023? Som jeg nevnte at dette er en internasjonal patent. Dette er mRNA til tenkt i bruk i dermatologi, og det er søkt i de andre områdene også, så det må vi bare avvente. What other triggers and news can be expected in 2024, apart from the update around this collaboration included in Q4? We have presented today that it is a bioprocess that is in focus, and within the dermatology area, further development will be limited to eventual collaboration. So we have a question here. Are there other interests in bioprocessing than the partner we are now working with? And what we can say in general, Morten, is that we get different feedback on the scale the industry wants to see before they want to test our technology. The partner we are working with today was the one who was satisfied with the data at an early stage, who wanted to test it, while we have received feedback from others that we have to go up in this mini-bench top bioreactor volume before others are interested. So there is no facet answer to that, which volume you have to go up in. Men at det interesse, det føler jeg at vi har kommunisert, og at vår value proposition for teknologien blir godt tatt imot. Vet ikke om det er noe mer å føje til der, nei. So we have a question here. When do you expect to finally get an answer about a commercial agreement with the bioprocess partner? And there we can't say anything other than that the agreement is as we have reported earlier. And there is no clarification or it is not clarified in this part of the agreement. But we expect that this will be clarified within the financial runway that we have today. Someone is asking about the other cooperation agreements we have. We have communicated in the report today that the other cooperatives are inactive today. No active research is happening within the others, so they are so-called dormant, as we call them in the report. Then I think we have covered most of the questions here today. So then we say thank you for your attention and have a good day.