PCI Biotech Holding ASA

Hi, and welcome to PCI Biotech's first half-year 2024 presentation. My name is Ronny Skuggerahl. With me today is Morten Lur, who is responsible for business development and project manager for our bioprocess project. Let's take a look at our important notice and disclaimer. Agendaen i dag, først operational review, fokus på bioprosessprojektet vårt, så litt rundt finans og outlook, og så til slutt en Q&A session, og jeg oppfordrer dere allerede nå til å sende inn skriftlige spørsmål via webcast-konsolen, sånn at vi er sikre på at vi har dem i hendet før vi kommer så langt. Da I give the floor to Martin.

Good morning. Genetic therapies are biological drugs with life-saving potential, where there have been major breakthroughs in the treatment of both blood cancer and hereditary diseases in recent years. Brain gene therapy is divided into two categories, in vivo gene therapy and ex vivo gene therapy. PCI Biotech focuses on in vivo gene therapy, where a so-called viral vector is used to deliver genetic medicine directly to the patient. The genetic medicine recreates a certain function in the body, for example motor skills or vision. Some examples of such gene therapies are Solgensma from Novartis and Luxdurna from Spark Therapeutics. The downside of the medal with these groundbreaking medicines is that they are very expensive and have such a complex production process that it is almost impossible to make them for large patient populations. Improved production is therefore necessary to make gene therapy available to new and larger groups of patients. Let us now take a closer look at why viral vectors are so complicated to produce. There are mainly three reasons. Viral vectors are complex products. 2. Viral vectors must be made of living cells. 3. There is a limited supply of single technology for the production of viral vectors. The production of viral vectors is divided into an upstream and downstream process. Here you see an upstream and downstream process for the production of adeno-associated viruses, short for AAV, which we focus on. Cells in bioactors are used to create virus vectors. These cells are called production cells. As soon as the virus vectors are created, they pop up in the production cells. In order to separate the virus vectors from the production cells, the cells must be opened in a process called cellolysis. Cellolysis opens the cells so that the virus vectors are freed. This is shown to the right in this figure, where a cell opens up and virus vectors in red are freed. The problem is that the cell lights up and causes many irregularities to be freed from the production cells. The irregularities cause a danger to the patient and cause the cleaning process afterwards to be ineffective. Seventy percent loss of virus vectors is common in the downstream process, and irregularities from the production cells are an important reason for this. PcBiotech has developed a new cellulosis technology to extract virus vectors. The technology is called photochemical lysis, or PCL in short. The way PCL works is to treat production cells with photosensitizers shortly at the end of the flow process, and then light them. Due to the short treatment time, the photosensitizer will at this time be bound specifically to the outer membrane of the cell. When the photosensitizer is activated by light, the outer membrane of the cell will be selectively opened without the entire cell being destroyed. Industrial-standard cellulases are unselective and release a lot of microorganisms from production cells, as shown in the figure on the right. This creates problems in power generation, requires the use of expensive enzymes to remove microorganisms, and the loss of valuable virus vectors. PCL is selective, which enables the extraction of virus vectors with fewer microorganisms. We have received feedback from actors in the production of virus spectra that fewer irregularities give a more efficient downflow process and can actually result in increased net exchange. This means more patient doses per batch that have higher value. When it comes to IP, we received legal feedback on our patent application in the International Search Report, which was received earlier this year. In 2024, alpha testing of PCL in the upstream AAV process in bottles was completed. Good feedback from the tester, who considers it to be solid, was a green light for further development of PCL. What we saw was that PCL could extract virus vectors of the type AAV with fewer irregularities than industry standards in the upstream process in bottles. Several potential partners have followed data where the upstream process takes place in bioreactors, and the material undergoes full downstream cleaning. This is considered to be representative of large-scale production. To accelerate the escalation to BioActor, we have transferred PCL to a service provider within cell and gene therapy, which is an expert in process development. The first results indicate that we can remove the photosensitizer in the downstream cleaning, and that the photosensitizer does not have a negative impact on the virus vectors. These are early results, but at the same time exciting, as these are two areas that are important for potential partners. Furthermore, it is shown that PCL can increase yield with fewer irregularities compared to industrial standards and in the bioactor. Our original experimental model was adherent production cells in about 1 milliliter. Since we have alpha testing with a partner, it has shown that PCL works in 20 to 40 times larger volumes with suspension cells in bottles. Furthermore, we have a service provider that starts upscaling of PCL to mini-bioactor, which makes it possible to see how PCL affects the downstream process. Early data for this work is permissible with regard to removal of photosensitizers in the downstream process and preservation of the functionality of the virus vectors. In the future, we will work to defend a PCL that can increase the number of patient doses per batch with fewer irregularities compared to industrial standards in mini-bioreactors. Our goal is to develop PCL for commercial production of gene therapy, especially AAV, which takes place on a larger scale. It is often said that commercial production takes place at 200 liters and above, And to get there, we depend on partnerships. Feedback suggests that good data from MiniBioActor can enable partnerships on further escalation and development of a specially adapted light sign. With a focus on beta testing in 2025, the goal is to test PCL in BioActor externally and establish future partnerships for commercialization of PCL. I give the floor back to Ronny. Thank you.

Thank you, Morten. Let's take a look at the figures. At the beginning of June 2024, the company had a content retention of about 30 million kroner. This retention is estimated to secure operation in the second half of 2025. We had a net change in cash at minus 15 million last 12 months. This is also responsible for the 2023 calendar year, so we have had a stable cash consumption over time. Over the course of the year, we have received a new public support program. Up to 3 million kroner from Innovation Norway, and this is in connection with the file testing with an undisclosed partner. So for the reproduction of it and further development of the technology now through 2024. Beyond that, There is not much to say about the numbers here. I can comment on Other Income Public Grants. It looks like a big change from the first half of last year to this year. This is partly due to the new public funds, but also due to the time-saving of ordinary tax funds last year and this year. As Morten has said, we have finished early stage field testing with an undisclosed partner in an important upgrade of the technology for these shake flasks. The feedback we received was green light for further development. We have then taken it further on our own in mini bioreactors. There, we have carried out the first experiments, and as Morten commented, this volume of 250 milliliters has been made possible by a downstream process. There, we have received important answers, such as that our photosensitizer can be removed, and that it does not negatively affect the end product, these viral vectors, viruses, in the end. This is an early indication of this, but we have to work further with the upstream effect to get to the target where we want in mini bioreactors. And prepare for late stage field testing in 2025, as Morten also commented. har vi Q&A igjen på programmet, så da skal jeg ta en titt om det er noen innkommende spørsmål, så bare gi meg et lite halvminutt på det. We have some questions here that I will let Morten answer. We can start with, first, how many irregularities can PCL remove? Can you remove everything, or will there be a percentage of irregularities left?

Thank you for the question. We do not yet know how it will be in mini-bioactors, but what we have seen in our previous attempts is that we free up fewer impurities so that we do not actively remove impurities, we just avoid that they are freed. And if I can give you a number, we have seen a 50% reduction in impurities compared to industry standards in our previous models.

Let's see if there are any more related questions. Do you see the potential for some parts of the downstream process to be simplified or removed by TCL?

Our feedback from experts and actors within the production of virus vectors is very interested in having more irregularities in place, and has indicated that this will make the existing cleaning process better. Whether we can remove any cleaning tricks, we do not know yet. So it is first and foremost about improving existing cleaning tricks.

There is also a question here about when the first decisive results are ready. And how is the interest of the big players in the bioprocess? I can try to repeat what we said in the presentation today. We are working now in 2024 to get data in the mini bioreactor in place, with 250 milliliters of volume, which is considered to be representative for a larger scale, and it is such data Our interactions with external parties have been questioned. And that we have also presented that we have as a goal in 2025, in the course of 2025, to come into interaction with external parties to take it further. And that's a step we don't want to take on our own. I don't know if there's anything else to add to that. No. We have also received a question about how big the market is. The market for A and V production, if you look at the trends and expectations in the next ten years, is large. TCL can then contribute to this market by By increasing the net yield, we will be able to reduce costs in the production process. This will be a function of how much TCL contributes to cost reduction, which will be reflected in the value of our asset. It is difficult to say exactly how big this market is today. But even with moderate reductions in production costs, there is an external interest. We can say that for sure. Yes, I think we have been through most of the questions. There is another question. Do you use dose escalation in the bioreactor? I don't know if it's possible to tell us about that.

Yes, we use a form of dose escalation, perhaps not as we are familiar with in clinical development, but to find the best conditions is an important part of what we are doing now. So that can be in the form of changing the concentration of photosensitizers, it can be the way you illuminate the bioreactor or cells and test them. So that is what we are doing now.

I think we have answered all the questions, so thank you very much for that.