BioArctic AB

Good morning and welcome to Biotic's presentation for the second quarter of 2023. I'm Gunilla Osvald and I'm the CEO of Biotic. And I will share today's presentation with our CFO, Anders Martin Lööf. I think it's very exciting times for Biotic. It can be now granted full approval by the FDA last week and with CMS announcing a broader reimbursement. It's the beginning of a new era. And Biotic is behind this true breakthrough in the treatment of Alzheimer's disease. We can now help a large number of patients and their families. And I think that is extremely gratifying. And of course, I will talk more about Lecambi here today. Next slide, please. Biotic is listed at Nasdaq Stockholm Large Clap since January this year. And this is our disclaimer. Next slide, please. Lycambi is the trade name for leucanumab and that was approved last week in the US. And that means that Lycambi is the world's first fully approved disease modifying treatment for Alzheimer's disease. On the 9th of June, the FDA advisory committee had a meeting where they at the end voted and enormously confirming the clinical benefit of Lycambi. The advisory committee reviewed the efficacy data, the biomarker data, and the quality of life data, as well as having a thorough review on the safety data. The efficacy data are consistent across scales and across items in the phase three clarity AD study. It showed a reduction of the progression of the disease and slowing of cognitive as well as functional decline by 26 to 37%. The safety data was discussed in detail, in particular with regard to the side effect area, which is a class-related side effect. Dr. Sharon Cohen, she presented health-related quality of life data from both family and patient perspective with 38 to 56% less impairment after 18 months treatment of leucanumab. This underlines the ability of leucanumab to help patients to function independently for a longer time, And that could mean, for example, that patients are being able to dress, take care of family finances, feed themselves and participate in hobbies and activities of interest. The clinically meaningful effect of the can be was emphasized in this early and broad patient population that was included in the phase three trial. On the six of July, FDA granted AFI, a traditional approval for Lecambi for the treatment of Alzheimer's disease. This means that the previous approval, which was an accelerated approval, which was based on biomarker data from the Phase IIb trial, was now converted into a full approval based on the confirmatory Phase III clarity study verifying the clinical efficacy of Lecambi. If we compare the label from the accelerated approval to the full approval label, the main difference is the inclusion of a boxed warning for monoclonal antibodies against aggregated forms of amyloid beta, including lecambi. The warning specifically relates to the side effect area and the increased risk for homozygotes of APOE4 allele to create a foundation for patient and physician to have a good dialogue regarding risk benefit. It's quite common that new kind of treatments receive box warnings. And if we think about those that received an approval last year for first in class treatments by the FDA, more than 40% of them had a box warning. And I think this is very good, and I think it supports a responsible and informed introduction of Lecambi into the U.S. market. Teresa Boraccio, who is the acting director of the Office of Neuroscience in the FDA's CDAR, she said in the press release last week, Today's action is the first verification that a drug targeting the underlying disease process of Alzheimer's disease have shown clinical benefit in this devastating disease. This confirmatory study verified that it is a safe and effective treatment for patients with Alzheimer's disease. On the same day, CMS announced that based on the full FDA approval, Medicare will now provide a broad insurance coverage of Lecambi. And that is for all patients that are eligible according to the FDA approved label. Provided that a real world evidence is collected in an available easy to use patient registry. And the items to be registered are those that normally would be entered into medical records. So I think the burden of data entry is expected to be small. And I think it's extremely gratifying that Lecambi, which is originating from biotic, with Professor Lars Lampfeldt as the inventor, now can be helping many patients and their loved ones. Next slide, please. So Lecambi has the potential to become the first disease-modifying treatment for Alzheimer's disease. and to receive a full approval on a global level in all three major continents. It has already happened in the US with the FDA providing a full approval of Lecambi last week. Reimbursement is of course also important, and the Veterans Health Administration decided earlier this year to provide coverage for veterans with Alzheimer's disease. And now Medicare, which is the major insurance part, in the US. It's also covering Lecambi on a broad level. ASI is also exploring less frequent maintenance dosing and evaluating a subcutaneous administration by an auto injector and they plan to file first quarter of next year in the US. Lakembi is now also in a regulatory review process for a full approval in many other parts of the world. The next one to think about is Japan, where Lakembi has undergone a pre-review process of data during last year. And ASI submitted a full application in the beginning of this year to the Japanese authorities. And the application has then also been granted priority review, and ASI is expecting a response in September this year. In Europe, ASI submitted the MAA 9th of January, and that was based on both Phase 2b and Phase 3 data. And the application was accepted 26th of January, and it's now following a standard review process, and the response is expected first quarter next year. In China, ASI has initiated the application process in December last year, and the priority review designation was provided in February, and we are awaiting response in China by the first quarter of next year. Regulatory process is also ongoing in other parts of the world, for example in Canada, Great Britain, and South Korea. I want to compliment our partner ACI for their dedication and hard work with the clinical studies and the regulatory processes in such a timely way. I think this is very important since every day matters for the patients. Next slide, please. And if we reflect a little bit on the population of patients with early Alzheimer's disease, it is enormous. ASI has guided and estimated that the global prevalence for future early Alzheimer's disease could include about 240 million people by 2032. Of which then about 75 million of those people are in Americas, EMEA and Japan. But of course all the patients will not be treated by disease modifying therapies. The patients first of course need to come to healthcare and they need to be diagnosed with mild cognitive impairment or mild Alzheimer's disease with confirmed amyloid beta pathology in order to be eligible for a disease modifying treatment. Even if only a proportion of all patients with early Alzheimer's disease will be treated it's still a huge opportunity. And more and more patients could potentially be treated if we work on some of the challenges. ASI has estimated that approximately 3 million patients will be treated with disease modifying therapies by 2032, which is a lot of patients. There are several opportunities that could increase access, and some of them are listed to the right. We could, for example, work on increasing patient awareness, especially on the mild cognitive impairment part, which is not diagnosed so well yet. But now when there is a treatment, it's more focused on that as well. Also earlier signs of the disease and working on less stigma for Alzheimer's disease patients. Education or primary care on both diagnosis and biomarkers and treatment options. So they can refer the patients to specialists. Access to specialist care is, of course, also important to try to facilitate. And it's important role for the memory clinics to make sure that the right patients get the right treatment. Parts that are linked to that is, of course, confirming pathology with CSF or amyloid PET, following treatment with MRI. and ensuring access to infusions and so forth. Improved diagnostics is an important part and it's really reassuring to see how well the blood-based biomarkers are progressing in parallel with the treatment options. And the subcutaneous formulation is another important opportunity to increase access and make the administration more convenient by getting the treatment and also make it possible to get the treatment easier and at home. And we are working with our partners on all these aspects for the benefit of the patients. Of course, we would like as many patients as possible that could benefit from Lecambam to be able to get access to the treatment. ASI has forecasted that 10,000 patients will be treated by Lecambi at the end of first quarter next year. If we think about what that means with regard to the US Alzheimer population of approximately 6.7 million, that's about 0.15% of the Alzheimer population in the US. So I think that we can conclude that there is substantial room for growth and that Lecambi can be a treatment of major importance. Next slide, please. We are very happy about our long standing and successful partnership with ASI all the way back since 2005. And we have two license deals and several research collaborations with ASI. So far, we have received 35 million euros in regulator milestones from ASI this year. And we have another 101 million euros still remaining in milestones. if Lekanma continues to progress well. And that is mainly linked to regulatory approvals and to sales and marketing milestones. The next potential milestone would be related to regulatory approvals in Japan and in Europe. Biotic is also entitled to royalties of high single digit percentage for the first 10 years following launch and mid single digit percentage for the following five years on a country by country basis. I think this is of substantial value for Biotic, and it could be a blockbuster potential of leucanumab, which means that we could see revenues of more than one billion US dollars per year without having any cost for the clinical program in Alzheimer's disease and very limited costs for commercialization. Biotic has also retained rights to other indications and to market in the Nordics. And we are now preparing for that and very much looking forward to doing that together with ASI. Next slide, please. Leucanumab is, of course, a key project for Biotic. But I would like to emphasize that Biotic is more than Leucanumab. Alzheimer's disease is our largest area. And for Leucanumab, we have one more additional large phase three trial, which is ongoing in even earlier phases of Alzheimer's disease. So even before the symptoms appear. And even if it's the first step with the disease modifying treatments, which will be successful, there is still a large medical need for more treatment options and for combination of therapies. So therefore, it's important that Bioartic and many others continue research in this area. And we have four early disease modifying programs, including two of those that are combined with our brain transporter technology. We have also two of the four projects that are targeting truncated forms such as pyroglue A-beta. And that one of them is combined with our brain transporter technology. Based on Biotics positive phase three results, I think that the probability of success has increased in our other programs with similar approach when we are targeting the toxic soluble aggregated forms of proteins that we call oligomers or protofibers. In Alzheimer's disease, the proteins is amyloid beta, and in Parkinson's disease, the protein is alpha-synuclein, and in ALS, the protein is TDP43. I also want to mention that I think that our ALS program targeting TDP43 is progressing very well and quickly, and that is thanks to our technology platform and our vast experience from Alzheimer's disease and Parkinson's disease projects. We're also working on another rare disease, Gaucher disease, with an enzyme replacement therapy with the aim of also being able to target the CNS symptoms of Gaucher disease. And this is an unmet medical need today. And this is a rare disease indication. And then finally, our brain transporter technology, which I think is a very exciting part, is progressing really well. And it's now in preclinical development phase. And the brain transporter technology has now been included in projects in all our disease areas. And in the future, if it continues to progress well, our brain transporter technology could also be applied to other companies' antibodies or proteins on non-exclusive license basis. As I said, I think leucanumab is, of course, very important for biotic. But I want you to remember that biotic is more than leucanumab. And our portfolio is progressing really well. Next slide, please. And by that, we come to the financial summary and I will hand over to our CFO, Anders Martin Lööf. Next slide, please.

Thank you, Gunilla. If you start looking at the left hand side on the revenues graph, you see that our net revenues for the quarter were 3 million. But for the first half of the year, our revenues were 397 million. And that is explained by the three milestones that we received in the first quarter, totaling 35 million euros. And as Gunilla pointed out, we are entitled to one further milestone that could occur later this year if we do see approval in Japan that is forecasted for September by ASI. Over time, our revenues will become less lumpy as we now are receiving royalties after the launch of Lecambi. However, it will take some time before those revenues actually will become larger than the milestone payments. And just as an example, Gunilla mentioned that ASI are forecasting to have 10,000 patients only can be at the end of the first quarter of 2024. And if we would have 10,000 patients on average during full quarter, that would generate in the ballpark of 50 million Swedish kronors for that quarter. You should not see that as a forecast for the first few quarters of next year, but that gives a hunch for when do we expect to see significant royalties that are at par with the milestone payments. If we then turn to the midsection, you see that their operating expenses increased from 50 to 104 million in the second quarter, and they also doubled for the full six-month period, going from 98 to 200 million. That is mostly driven by increasing personnel costs that increased from 23 to 72 million in the second quarter. However, that is primarily driven by non-recurring costs for stock options and related social security contributions, and also by a repurchase that was made from Gunilla. So if you take away that, the increase of 48 million in personnel costs during the quarter, of the 48, roughly eight were driven by increasing staff. The rest were these non-recurring costs. However, over the longer term, our costs will continue to increase due to the build up of our commercial organization and certainly when we progress our project portfolio further. But they will not increase in the second half of the year. We still reiterate our full year guidance of 330 to 380 million of operating expenses. So you see that the costs are expected to decrease during the second half of the year compared with the first half. If you then look at the right hand side, you see that operating loss was 101 million for the second quarter, but we made a profit of 200 million for the first half of the year. And if you then combine that with our full year guidance, you understand that we should have a possibility to be profitable for 2023, even without an expected approval in Japan. If we then turn to slide 10, starting with the mid-graph, you see our cash flow. That was a negative 64 million in the second quarter. But all in all, for the full six-month period, it was a positive 235 million. And that's roughly 35 million better than the operating profit. And that is mostly due to the fact that the costs that are recorded in the operating profits are, to some extent, non-cash costs, especially the stock option costs. If we then look at the left-hand side, you see that we started the year with 805 million in cash, and we're currently at 1 billion 42 million. And we'll see when we end up towards the end of the year, if we get an approval in Japan, I believe that we will be above 1 billion Swedish at the end of the year. And on the right-hand side, you see the net result. We made a loss of 102 million for the second quarter and a profit of 192 for the combined period, January to June. And the decrease from the operating profits is mainly explained by a tax recorded of 20 million in the first quarter of this year. That concludes the financial section and I hand back to Gunilla.

Thank you so much Anders. And now we come to the upcoming news flow and closing remarks. Next slide and slide 12. So more data on Lekanumab will be presented at coming Alzheimer's disease congresses. And the next one is next week in Amsterdam. And there will be several presentations of Lekanumab. And you saw more details of that in the press release that was issued this morning. And then the next congress after that is CTAD in Boston in October, where there also will be several presentations on Lekanumab. The regulatory process continues and ASI expects response from the regulatory authorities in Japan in September and in Europe and China responses during first quarter of 2024. We will of course provide more information on other parts of the world when that is relevant. So I think that we can conclude that we had a fantastic first half of this year and that we have a very exciting time ahead of us. Next slide please. But I would like to conclude by saying that Biotic's aim is through world leading innovative research to create drugs that improve the lives of patients with neurodegenerative diseases. And we can conclude that Lekembe, which is originating from Biotic, is now the world's first and only fully approved disease modifying treatment for Alzheimer's disease. And it's leading a padding shift in the treatment of Alzheimer's disease. I think that Biotic is an innovative and dynamic and very exciting company with a huge potential. So by that, I say thank you for your attention, and we're happy to take some questions.