ExpreS2ion Biotech Holding AB (publ)

Welcome to today's event where we have the pleasure to present Expression Biotechnologies. To help us through today's event we are joined by CEO Ben Fransen, CFO Keith Alexander. Today, we will primarily go through the Q1 results, but I also guess we will address the rights issue, even if prospectus is coming. I think you mentioned the 5th of June. As always, you can ask questions in the box down below. Feel free to do it in English and Danish. If in Danish, I will try and translate to the best of my abilities. But I think for now, I will hand the call over to you, Ben.

Thank you very much, Michael. My name is Ben Fransen. I'm the CEO of Expression Biotech, and I'm joined by Keith Alexander, our CFO. And as Michael mentioned, we'll of course cover the Q1 report, which is the purpose of this webinar. We released it this morning, but we'll also take the opportunity to update you on our general business, the progression here, and not least also the rights issues that we announced shortly. First, the usual disclaimer. We'll let you read the details when we publish this on our web page later. So basically, so far in 2024, we've had some very good news. In fact, we have been rewarded with cash through our associated company at DATMAG. Back in February, ADAPBAC announced the phase three completion milestone payment from Bavaria Nordic for Bavaria Nordic's completion of the COVID-19 phase three study. And so this led into expression receiving 14.5 million DKK, approximately 22 million SEK, which we have just received there in the beginning of the second quarter. which is very nice for our runway. And also here in April, very importantly, we have completed the GLP safety study for the ES2P-C001, our breast cancer vaccine asset, a very important milestone for the company. And then lately, only shortly here in May, we have announced a rights issue to raise approximately 60 million SEK through a rights issue. If you look at our vaccine pipeline and the assets that we control, it's led by ES2B-C001, this very important asset. We have an outstanding preclinical package now, which documents both the efficacy and now also the safety We completed the safety package in non-human primates here very recently. And basically, we are in a clinical trial application enabling phase as we aim to progress into clinical phase one here within the next year. Furthermore, we have the CMV asset that we call ES2B-I002. This is in collaboration with Evaction Biotech. applying the AI platform and using expressionist expertise in making the appropriate antigens. And this is in a lead optimization phase. And then we have exploratory research on some exciting discovery projects that we are right now looking into the IP positioning and progressing on that as well. Common denominator for these assets is they're tapping into market sizes of multi-billion values. ESOB-C001 we are very excited about. It's a therapeutic breast cancer vaccine. It taps into an unmet medical need. And it's a HER2 positive breast cancer, the most common cancer. And unfortunately, a disease that takes more than 600,000 lives every year. The market size, in fact, the obtainable market, we conservatively estimate to 2.8 billion euro. So it's a blockbuster potential we're looking into with this asset. And a very nice thing about the technology platforms that we apply in this asset is that they have been clinically phase three validated most recently, as these are the same technologies that have been used in Bavaria Nordic's phase three stage COVID-19 vaccine. So that's a very good thing. And also, of course, we have a very strong team backing up this asset, those management board of directors level and importantly, also having a scientific advisory board with very strong oncology key opinion leadership. EF2B-C001 progresses across all the important stages of an asset like this. We have done the GLP safety study. We have the CMC manufacturing in place. We have done the drug substance manufacturing actually here in May, progressing with the drug product manufacturing. And then we have the clinical supply ready basically. We are in the middle of designing the clinical phase one trial right now. And in fact, pending selection of the trial manager, and the important investigators brochure and important document needed in this process. But we are on pass for making the clinical trial application here in the next quarter. Business development, we have initiated business development initiatives here. We have consultancy supporting us in opening doors to potential partners. So we are now actively marketing this product across the market. On the CMV side, ES2B I002, also a product on track together with Evaction, And we have done the antigen discovery, having identified potential targets, and we are in the middle of assessing preclinical work on this and continuing. The aim is to select a lead candidate by next year, where expression has the first right to select this and carry on the work under a license agreement. Our platform express has been validated now across many assets. I think it's important again to highlight the COVID-19 assets. It has been validated in clinical phase three. We have seen long-term efficacy. In fact, as far as we know, the only protein-based COVID-19 vaccine with more than 12 months protection from COVID-19. In terms of other clinical stage validation, the University of Oxford conducts several malaria clinical trials, all using the Express platform for the antigens. Earlier, we have, as I mentioned, the PR2 breast cancer, which we are now focusing on an expression to carry that on. And then we have the CMV project and other earlier stage projects, which are all grant sponsored, two within influenza and one within Nipah and filovirus vaccine. With respect to the malaria vaccine candidates, as I mentioned, these are actually all sponsored by University of Oxford. They have been super good in obtaining non-diluting grants to support their clinical development. This was lying still during the pandemic, where of course, even at University of Oxford, they were focusing on COVID-19 vaccine research. But I'm super pleased that since last year, they have really accelerated the work on the malaria vaccines. So in fact, these six different trials that I mentioned here cover four different malaria vaccine projects. all in or moving into clinical stage, and some even at the phase two level, which is important. And of course, we do everything to support University of Oxford in their endeavours to continue on these important works. That's a brief introduction to the business and where we are with our R&D. We have some upcoming events here in the short term where I will cover much more on this. Tune into the BioStock event on the 30th of May, as well as the H.E. Anderson Capital Life Science Seminar on the 4th of June, where Expression will present as well. I'll then hand over to Keith, who will go through our financial results and the rights issue.

Thank you, Bent. As you mentioned, my name is Keith Alexander and I'm the CFO of Expression Biotech. In the first quarter of 2024, Expression generated operating income of 1.6 million Swedish krona, a decrease of 40% compared to the prior year quarter. Our net loss in the quarter amounted to 12.9 million, which was 51% lower than in the first quarter of 2023, and drove a loss of 0.25 SEC per share, or 0.23 SEC on a fully diluted basis. At the end of March, Expression had 60 million SEC in cash, I'll dive into these figures and others in more detail in the coming slides. Starting with operating income, we experienced a 40% decrease year over year in the first quarter to approximately 1.6 million Swedish krona due to the progression of client projects. In the middle chart, we focus on net sales, which reflects revenue from projects, licenses and our webshop. They were well below the long term average in the quarter, reflecting the transition to a pipeline strategy strategy. In the chart on the right, we show other operating income, that is, grant-related income, which remained at elevated levels compared to history but was lower than last quarter. Moving to the cost side, which is much more significant than the income side, operating costs in Q1 amounted to approximately $16 million, a decrease of 52% compared with the first quarter of 2023. The decrease is primarily driven by external R&D costs, which I'll dive into in more detail on the next slide. Here we have illustrated the two largest components of operating costs. Starting on the left with external R&D costs, these peaked in the fourth quarter of 2022 due to preclinical development costs for the breast cancer vaccine and have followed a downward trajectory since then. This item is large, volatile, and very much driven by our pipeline activities. Moving to the chart on the right, we have removed the cost of share-based compensation from personnel costs to calculate an underlying personnel cost. This underlying figure is approximately the cash cost of personnel. It peaked in Q1 of 2023 and has since decreased by 37%. The decrease partially reflects the cost reduction program enacted last August. Note that personnel cost is sensitive to inflation and wages, wages are set by the market for talent and fx since we report in sec and pay wages in dkk moving to the net loss for the period after financial expenses and taxes we had a net loss of approximately 13 million sec in the first quarter a decrease of 51 we show the full year comparison for 2023 on the right Last year, the loss decreased 19% as compared to the 2022 result to 96 million SEC. Our next slide shows how our cash balance developed in the first quarter of 2024. At the start of the year, the company had a cash balance of 58 million SEC. Net cash flow from financing activities was negligible, as was cash flow from operations and investment activities. However, this does not reflect the underlying dynamics in which we received a large upfront payment related to a grant, which offset our operating loss. Note that the grant payment factors into cash, but only the realized portion is part of the operating income. As we complete the funded activities, we will realize the income in our income statement. Finally, we realize a 2 million krona gain from currency changes. Putting this all together, at the end of the quarter, the company had a cash balance of 60 million Swedish crowns, an increase of 2 million SEK in the quarter. The next slide we show our trend in the cash balance, which ended the quarter at 60 million. We received a dividend of approximately 22 million SEK from Adafact after the end of the quarter. This balance should carry us into 2025 under the current budget assumptions. However, additional capital is required to initiate a phase one trial of the breast cancer vaccine asset. This leads us to the rights issue launched on May 2nd, which I'll cover on the next two slides. The company's lead asset, the breast cancer vaccine, will soon be ready for clinical trials. As we've stated in many recent presentations, the phase one trial will require additional capital. We're exploring various sources as well as partnership opportunities, preferring not to dilute investors. Those other sources take time, as does establishing partnerships, and both are uncertain until terms are signed. While they may bear fruit in the future, the board decided to launch a rights issue now to prevent delay to the initiation of the phase one trial. The rights issue targets a capital raise of 60 million sec. As shown on this slide, approximately 65% of the targeted proceeds will fund clinical development of the breast cancer vaccine. 10% will fund continued development of the CMV vaccine, 5% will fund grant-sponsored projects, and 20% will fund working capital, including discovery and platform development. We have secured subscription intentions and guarantee commitments from insiders and investors amounting to approximately 50% of the targeted amount, or 30 million SEC. The rights issue includes two warrant series with subscription periods in Q4 2024 and Q3 2025, which we hope will result in additional funding. So how does the rights issue work? Investors who hold expression shares as of June 10th will receive seven unit rights for each existing share. Every six unit rights will entitle subscription in one unit in the rights issue for one SEC per unit. Each unit consists of one share and one warrant in each of the two warrant series. Looking at the timeline below, the key dates are the start of the subscription period, June 12th, and the end, June 24th. Participating investors must subscribe their unit rights during that period and ideally near the beginning as some banks cut off period for subscription may be shorter. This is unfortunately outside our control. After the subscription period, the outcome will be announced on July 1st, and the conversion to shares and warrants will occur around July 22nd. With that, I'll pass back to Michael for Q&A.

Perfect. There's a lot of questions, so we will jump right into it. There was some questions coming in on email. I have put those in, but let's start with the first one. There's also a question here. You have mentioned that you were seeking partners to this breast cancer vaccine, that you were looking for it, that that was the road you were going to because that was the only possibility without the right issue. Now you have decided to raise new equity. Can you comment a little bit on these discussions you have had there? So maybe we can get a feel on whether whether it's always going to be rights issues or new equity that is going to fund you or you have a feeling that it should be possible later on to fund it more with partners.

Yes, I can answer that. So with respect to business development, as I mentioned, we have actually retained a professional consulting agency specialized in this work. And it's very nice that at this very preliminary stage, we've had a few meetings, even with well-known pharma companies. but it's too early to to say that this can progress uh generally processes like this can take quite a long time and of course it's it's great that we can present the compelling package that we have made pre-clinically but clinical data really count and that's that's why it's good to have presented this initially it's good to actually be able to inform that we're progressing and that under this rights issue that hopefully we can move into the clinical phase one trial and progress on that generate the data that will ensure that the partners uh get back to us and actually potentially uh can move into some deal uh agreement discussions so that's kind of the the stage

And there's a question regarding that. How long will the first human trial on the breast cancer candidate run before potential data readout? Any indications? I know you have indicated, I think, 12 months from when you get the money, you will start the trials. And how long do they run afterwards there before there could be potential some kind of a data readout anybody could see or you could negotiate with?

Well, ideally, if everything goes well, we have data before the end of 2025. But I have to say that, as I mentioned earlier, we're actually in the middle of designing the clinical trials set up and are looking into several different clinical solutions. And so actually, it's important to To look at all parameters, when we look at this, the clinical support that we will get have different assumptions for patient recruitment rates, different assumptions regarding timelines and setup. So it's not such a clear answer on this. But in the best of cases, we could have some data before 2025. But it's also realistic to say that hopefully in the beginning of 2026, we have actually a phase one data package. Hopefully before that, of course, we will make some initial observations. Those are also data points, and that can come probably earlier in 2025. Yeah.

Perfect. Then there's a question, and I don't know whether you can comment on other companies. What are the activities that go on in Adaptvec and could there be further dividends in the future? I think they kept some of the cash to progress their projects over there. So I don't know whether you can comment on that.

Well, Adapmec is also a vaccine-focused company, and they own the VLP technology that Expression has in-licensed for the breast cancer vaccine asset, and which are very Nordic in-licensed for the COVID-19 vaccine asset, both of which coincidentally also apply Expression's Express technology. But Adapmec, they actually nowadays project the pipeline with expressions breast cancer vaccine as the lead asset so that's already out licensed to expression their further research work revolves malaria they have another malaria research setup which is coordinated by Copenhagen University and they have non-diluting funding for that so that's good they can progress on that as well as far as I know they also perform the research applying the VLP within gonorrhea vaccine It's an early research phase. And of course, they also have some operational activities they need to carry on. So some of the dividend, of course, or some of the proceeds from the phase three completion milestone payment is retained and adapted to secure that they have funding well into 2026. But it's a very nice setup, all this. I want to comment that, because it's exactly what we set out to do when we established ADAPT back in 2017, that together we could build novel vaccines. We showed that with COVID-19 and Bavaria Nordic carried it through to clinical phase three and paid a very sizable 10 million euro milestone payment for that work. And of course, we can build further on that.

Perfect. How far can you take the EES-2B-C001 in clinical development based on the assumption of a gross proceeds of SEK 30 million, which is the guaranteed amount and SEK 60 million from the rights issue?

We hope to gain the maximum of 60 million for approximately up to that level, because that will ensure that we can complete the phase one trial. That means that we will have cash into the beginning of 2026, where we expect the phase one trial to be completed. If we only get secured level of 30 million, it will help us still, but we will risk not having the finance to completely complete the phase one trial. And we will look into other sources of cash, of course. Actually, we are very active on looking into non-diluting funding and have some processes going on for that. But that's, of course, also risky processes that you never know if you can get awarded a grant, although we have a very nice track record in that sense. And of course, in parallel with this, we continue with the business development and letting potential partners know where we stand and continue the mutual discussions there.

Perfect. Will you seek external funding when you have chosen the lead CMV candidate? I think the 10% of the proceeds was going with that and you indicated that you might be able to choose a leading candidate there in 2025. But I guess that's where the funding takes you to. So is that enough to seek external funding, non-diluted funding, grants or something like that, or just to go a little bit further on? And I know we are in 2025 and it's hard to guess about the future, but any thoughts about that?

mean once we are at that stage where expression can select the lead cmb vaccine candidate then we know we have actually a compelling pre-clinical package and we can use that to apply for non-diluting funding going forward or maybe even take some partnering discussions to co-develop it taking it onwards but you're right at that point in time Either it may be a pity because we would have a compelling preclinical package or we are able to sponsor it in other ways.

And you returned again, Keith, because I think now there are some questions for you. Can you disclose which project the grant payment in Q1 is linked to? You had some cash flow effect. I think the next question also covers this. How much of the grant for the Nipah virus, I don't know whether that was the grant you got, do you expect to book this year in your P&L?

Well, I'm afraid I can't provide much disclosure here. It gets a little bit too specific for public disclosure. You can probably, you can look at the grants that were involved and they're all publicly disclosed. And maybe make a guess based on that. And we don't give forward guidance. So I'm not going to tell how much we expect to realize through the rest of the year.

Perfect. That was a clear answer. Then there's how much will the cost rise from the levels here in Q1 when you start the clinical trials on the breast cancer candidates?

Again, that's for guidance, but and we don't want to provide that we could have provided something on that in the q1 report, but it's not according to our IR policy to provide for for guns. And it also very much depends on which clinical program we decide to pursue. As Ben mentioned, a couple times in this call, it's, there's several options that we're looking at right now. And the cost will vary depending on which one we select.

Then there's a little bit of questions on, yeah, you again asked Ben to comment a little bit on other companies, but can you comment on the Novavax sale of the COVID vaccine last week? Why can't others see value in the Novavax vaccine and not the ANVCO2 V2 vaccine? And there's a question here, since Bavarian didn't continue the COVID vaccine, is it possible you could use it with another company or does it fully belong to Bavarian?

As long as that agreement exists between AdaptVac and Bavaria Nordic, it's Bavaria Nordic's rights. And they've decided to shield it as it is at this point in time. So it's lying there. And that's Bavaria Nordic's position.

And then the second question was, I asked you to comment a little bit on the Novavax deal that was out there. I don't know whether you want to comment on that, any signals in that on the vaccine front or something like that. I don't know how much.

I think Novavax is a very interesting company seen with expressions classes. they work with vaccines they work with the other insect cell based expression systems they work with vlp so there's some synergies in that company so i always find it interesting to follow follow them what they do and it's inspiring um so good luck they can progress that's good for all of us working in this field

Then there's some questions about the malaria vaccine. Is there anything special about your research regarding the malaria vaccine? Is something you expect something extraordinary in terms of resident? And is there a market for another malaria vaccine? So if I have studied well, there has been put a malaria vaccine. So maybe I think the questions are regarding, are there actually a market for another one? And is there something special in your approach to this?

yes apparently the antigen that we produce in our express platform shows the highest immunogenicity has been even clinical studies conducted with the antigens made in our express system documenting very high immunogenicity. That means a high level of protection. That's a clinical study that has been performed in infants, which are the most vulnerable population of malaria. this is being sponsored by university of oxford and and it's good so they keep on using our technology platform for making antigens for this now they run actually four different projects they're slightly different in terms of the antigen targets and it's good that they keep the options open and continue to fund this with the grants that they can obtain It appears that expression without technology has a very important position in the malaria field. And we are very thrilled that the University of Oxford, they continue to progress on these activities.

Then there's a question regarding the mechanics in the rights issue. Is the guaranteed commitment also secured if the rights issued exceed the minimum expected amount? So a little bit about those guarantees.

Sure. Well, I hope this will explain it in a clear way that is understandable. There are two types of guarantees. There are bottom guarantees and there are top guarantees. The bottom guarantees are what we have right now. And what they do is they secure a minimum amount that we raise. So you can consider it almost like insurance on the rights issue. A top guarantee would be on top of whatever else is raised in the rights issue. And obviously that's more attractive, but it also comes with a much, much higher cost. So it's much more expensive insurance and it's not always available. It's just like any kind of market. Sometimes things are for sale and sometimes they're not. And we all are aware of the challenges in the biotech fundraising market right now. So we have bottom guarantees in this rights issue.

I know we are a little bit over time, but one last question and then I will let you off the hook. I know you needed to go to 1030. So sorry. Will you need additional animal data once the GMP version of the CO11 vaccine is established?

No, the animal part of this asset is done. We have the functional data that we've documented

multiple times and then we have the preclinical safety package in non-human primates that's that's it so now it's onwards towards the first in human clinical trial perfect you answered short that's good i know i had two minutes over sorry for that guys i know i needed to let you go thank you for taking the questions thank you for presenting the results and thank you for people for listening in thank you thank you