Immunovia AB (publ)

Good morning and good afternoon to you all and welcome to this conference call following the Immunovia second quarter results. Presenting in this call is Jeff Borcharding, CEO of Immunovia and myself, Karen Alquist, being the CFO of the company. This presentation will be followed by a Q&A session, which will be guided by our operator. Here you are most welcome to give your questions either directly in the call or post them via the chat function. After we have closed today's call, you will find the presentation and recording on our website. And having said that, I would very much like to hand over to our CEO, Jeff, please.

Thanks very much, Karen. I appreciate it. And thank you all for joining us today. I'm incredibly excited to share the results that we have delivered in the second quarter, both as a company, as well as the performance that we're going to talk about with our next generation test. We have been working very, very hard over the last year to transform the company into a much leaner, more agile company that is very effective at developing our next generation test. And I'm excited to share that the second quarter was really a turning point for us. I think at this point, it's fair to say that we have absolutely transformed the company. We are a very different company. And in the process, we've been able to develop a next generation test to detect pancreatic cancer at stage one and two that is really accurate and will meet the needs of the market. And we're thrilled to be able to take that test into the next steps. We'll talk about those steps today and hopefully get the chance to hear some questions from you as well. Here's our agenda. We'll start with the most important news, which is the performance of our next generation test, as we saw in the model development study that we recently completed. We'll give you an update on our new lab in Research Triangle Park, North Carolina, and also the transition to our new lab platform, the ELISA platform. We'll also talk about our clinical roadmap. And from there, I'll hand it back to Karin to discuss our Q2 financials and our CAS position, as well as the really important rights issue that we're going to be doing to raise capital in order to take this test forward through additional testing. And again, we'll close with questions and answers. Certainly, the most important news on this call is the fact that we have now completed product development of our next generation test. In doing so, we have substantially increased the accuracy of the test. We now have a test with 98% specificity and 85% sensitivity. And let's talk a little bit about what that means. Sensitivity means, do you detect cancer when it's there? And the good news is that if there are seven patients that we test who have pancreatic cancer, we will detect that cancer in six of them, even at stage one and two, which is an incredibly difficult hurdle to clear because the cancer is at such an early stage. In addition to making sure that we find cancer when it's there, it's also critically important that we don't give false positive reports, meaning that we don't indicate that a patient has pancreatic cancer when in reality they don't. That is specificity. And the good news is with 98% specificity, essentially what that means is that if we tested 50 patients, we would only incorrectly identify pancreatic cancer one time if those 50 patients were all cancer free. So we're really, really limiting the number of those false positives. That combination of sensitivity and specificity at stage one and two is really critical. These kind of results give us the accuracy that we need to become a standard for monitoring those people who are at especially high risk for pancreatic cancer. One of the other really important things that came out during our model development study is that with these results, we are 20 percentage points more sensitive than CA-99. CA-99 is a biomarker that's often used today to track pancreatic cancer and having such a large performance gap, being 20 percentage points more sensitive than CA-99 is really crucial for two reasons. One, it gives clinicians confidence in the accuracy of our tests. And number two, it's really going to be critical when we seek reimbursement for our tests. CA-99 is a relatively low cost blood test. So in order to get reimbursement for our tests at a more attractive number, we need to be able to show much better performance and 20 percentage points certainly meets that threshold. So we are absolutely thrilled with the increased sensitivity and the specificity we've been able to deliver with our next generation tests. You may remember that we announced preliminary results from our model development study in April, and at the time, our sensitivity was 75 percent. We've now increased it to 85 percent. And how did we do that? Well, it's really two factors that led to the increase. One is that we increased the number of patient samples that we were studying in our model development study, and we included samples that had richer clinical data. This gave us greater insight into where the test was performing, where the test wasn't performing as well, and ways that we could improve that. The other thing that we did was more sophisticated statistical modeling. We brought in outside experts to partner up with our internal experts and looked at additional ways to model the test results so that we could really optimize performance. Those two changes led to an expansion of the number of biomarkers included in the test. It also led to changes in the equation that combines the biomarker levels. So essentially, we measure the biomarker results, and then we take those numbers, put them into an equation that calculates a probability that that patient either has cancer or does not. We were able to fine tune that equation using the steps that we just talked about here to get that significant increase of 10 percentage points, greater sensitivity without any decrease in specificity. So I can't say enough about the work of our R&D team, as well as our partners at Proteomedics, who did simply outstanding work to deliver performance with the test at these levels. We're excited to share these results at key conferences in 2024. You may have seen the press release that we shared our discovery study results at a conference called Pancreas Fest at the end of July. We have not announced this yet, but I am excited to share that we have already been accepted to present our data at two upcoming conferences, the American Association for Cancer Research, as well as the Collaborative Group of Americas for Inherited Gastrointestinal Cancer. These are two premier organizations that will give us the opportunity to share our data with key opinion leaders, top experts in the field, and really build awareness of the fantastic results that we're seeing with the next generation test from ImmunoVM. Changing gears now to a discussion about our lab and the new product platform that we're using to do our testing, I'm very excited to share that this team did fantastic work in an incredibly short period of time. We moved into our new lab on May 21st of 2024, and within just six weeks, the lab was fully operational. That meant our lab director, Lisa Ford, had hired the staff to run the lab equipment. All of that equipment was installed and validated. The team developed dozens of standard operating procedures, modified existing procedures to make sure that we have all of that documented. Those processes and that documentation are critical in order for us to be able to commercialize our test in 2025. In addition, I mentioned earlier that we've been partnering very closely with proteomics on the development of our next generation test. All of the individual assays that had been developed by proteomics were transferred to that lab in the U.S. And we're now up and running and doing all of the testing in our facility in North Carolina in the United States. The move to the new lab was really the last step in our transition from where we were in the past with testing, which was we used the proprietary MRAE platform to our future, which is using an ELISA-based platform. ELISA is a widely used, commercially available platform. And that transition together with the new lab in North Carolina gives us a number of advantages. We'll be able to measure the proteins in our test more accurately. Importantly, we can turn around the test in a shorter period of time. Most tests will be able to be completed the same day they are received in the lab. With MRAE pain candy, that process took two or even sometimes three days. That speed is important because you've got people who are at high risk for pancreatic cancer. They're concerned about their results. There's a lot of anxiety when they're waiting to hear what the test result is. So if we can shorten that timeline, it really becomes a driver of customer satisfaction. On the cost side, moving to the MRAE platform really lowered our costs in a few ways. First, we don't any longer have all of the fixed costs that we had previously in order to produce the components that we needed to do the testing on the MRAE platform. We had a lot of internal staff. We had a large facility that was in charge of producing those materials for testing. Now we will purchase those materials from third parties. Our only costs are the variable costs that we need to pay when we're ready for testing. So we don't have to carry the burden of all of those fixed costs. And then in addition to that, when we run each test, our labor costs as well as our materials costs will be lower because the process on ELISA, the process with our new test is simpler, it's streamlined, it requires less labor, and the materials that we will use for the test are less expensive. Just as a touch point to show where we are in this process relative to where we've been, we started with the development of our next generation test in the fourth quarter of 2022. Since then, we've made amazingly rapid progress going through the steps of discovering the protein biomarkers that might be good candidates for our test, the definition stage where we defined the test and made sure that we could deliver the accuracy that we talked about earlier. Now we're moving into the next two phases, which are analytical validation and clinical validation. And I'll talk a little bit more in detail about each of those. Analytical validation is really a very technical exercise. It will happen in our lab in North Carolina and will involve a series of more than 25 experiments over the course of several weeks. Essentially, what we're doing is we're looking at the individual assays that make up our test to make sure that each of those protein biomarker assays or biomarker tests are performing at a very high level. So we'll look at things like precision, stability, do we see the same results over time, ruggedness, meaning when we vary the conditions a little bit, do we still see the same kind of results and more. These experiments will be conducted under guidelines from the United States Food and Drug Administration, as well as CLIA, which is another lab regulatory framework in the U.S., as well as CLSI, which really sort of sets the standard for how these types of analytical validation studies should be done. Again, these are very technical results. These are the kind of things that don't necessarily drive the commercial success of the test, but they're critically important for making sure that we have a reliable, stable, accurate test, and we expect to complete the analytical validation work in September of 2024. From there, we'll move on to clinical validation. And our goal with clinical validation is really to confirm the performance and the accuracy results that we talked about earlier. We'll use an independent set of samples, and we'll do a test that's very similar to the model development study. We talk a lot about a case control study. Essentially, what we're doing is we're bringing in a number of blood samples. Some of those blood samples are from people who have pancreatic cancer. Many of them are from people who do not have pancreatic cancer. And essentially, what we want to confirm is that our test, when we run those blood samples, is able to distinguish pancreatic cancer from those who do not have it. And can we recreate or replicate that 85% sensitivity and 98% specificity that we talked about earlier? We'll do this in a large number of samples. Well over a thousand will be included in this study. And we've got partnerships in place with more than 10 of the top pancreatic cancer centers, both in the U.S. and in Europe, to collaborate with us on this study. This study is really the foundational study that we need to have in order to support the launch of the test in the United States, which is our first market. We will launch initially as a lab-developed test. And essentially what that means is that we will not have approval from the Food and Drug Administration, but we will be approved by the alternate approach, which is a lab-developed test. So that is our first step. We will ultimately seek FDA approval. But this test or this study really gives us the opportunity to launch in the U.S. Another reason this study is so important is that this will be a really critical study that will be evaluated by payers in the U.S., whether those are government payers or private health insurers, as they look at our next generation test and decide, do we consider this to be a good test, a test that's medically necessary for people at high risk? And we expect to complete this clinical validation very shortly, so by the end of the year in December of 2024. As we look beyond those two key next steps of analytical validation and clinical validation, and we look at 2025 and our plan there, our focus really shifts to two things. One is commercialization. The other is conducting additional clinical studies to support reimbursement. I'll talk about commercialization first. As we've mentioned previously on these calls and in our reports, we want to secure a partner that will help us commercialize the test in the United States. That will offer us a number of advantages. Most importantly, it will save quite a bit of money because we won't have to hire and build our own commercial team. In order to commercialize the test successfully, working with a partner will also enable us to leverage their existing relationships in the marketplace. Once we have the clinical validation study results complete, we will continue our conversations with strategic partners. As you can imagine, we've already had a number of conversations with about a dozen potential commercial partners. We continue those conversations, but the reality is those partners are in a wait and see mode right now. They want to make sure that we have a clinically valid test before they move forward. The closer we get to commercializing the test, the greater the interest will be from these potential commercial partners. We look to secure a partnership in 2025 and are tentatively planning for a commercial launch probably during the third quarter of 2025. In addition to commercialization, I mentioned that we'll be doing additional studies to support reimbursement. What we want to do is have a portfolio of clinical studies that really show the clinical value and the performance of our test across a variety of patient populations and in a variety of study settings. You may have seen the announcement this morning that we were very excited to share. Our next generation test has been selected to be included in a very large study that will be funded by the U.S. government. They have a branch of the government called the National Institutes of Health, or the NIH, and they have agreed to provide funding of 4.5 million U.S. dollars, which is approximately 48 million Swedish krona, for a study of people with pancreatic cysts. Pancreatic cysts are essentially tumors that exist in a person's pancreas that may or may not be cancer. In fact, most of the time, they are not cancer. But these cysts create a real challenge for clinicians in our space because they want to make sure that those cysts don't become cancer. But it's often hard to know whether they have. As a result of that, sometimes you'll have patients that undergo surgery to remove one of these cysts, and afterward, that clinician will find out that that cyst wasn't cancerous at all in the first place. So this program is a very large program. There's actually three clinical studies that will be part of it. The first study will essentially be one of those case control studies that I talked about earlier. This is an opportunity for the investigators of this study to be able to look at the accuracy of our tests in an independent way. Secondly, what they'll do is they will look at people who are undergoing surgery, people who are going in who have been told by their doctor, the doctor is worried about their cyst. They go in for surgery. They have the cyst removed. As I mentioned, sometimes those surgeries are done in error. We want to see whether our tests can help increase the accuracy and help clinicians make better decisions about when to go to surgery or not. And then the third part of the study will look at the biomarker performance of our tests over time in trying to detect early stage cancer in people who are undergoing annual surveillance. These are people who go to their physician once a year and get imaging done and have other tests done in order to see if their cyst has become cancerous. Our test will be incorporated into that effort to see whether we can help, again, clinicians make better decisions. One of the things that's really critical about this for a company at our stage is that this essentially allows us to do very, very robust research in a large number of patients at an incredibly low cost. Nearly all of the costs in this study will be paid by the National Institutes of Health, by NIH. Our investment will only be the cost to run our tests. We won't have to pay for any of the other medical costs or payments to these centers to have them execute the study. So we're incredibly grateful to be included. We think it's a really strong indication of the level of support and the level of confidence that clinicians have in our tests, even at this early stage. Importantly, this study will be led by Diane Simeone. She is a physician and she is a surgical oncologist who is located at the University of California at San Diego. Diane is one of our scientific advisory board members, and she was critical in getting us included in this study. You may remember Diane's name. She is also the founder and chair of the Proceed Consortium, which is a very large group of centers across the world that are doing research in pancreatic cancer. And we will continue to partner closely both with Diane as well as Proceed going forward. And with that, I'll hand it over to Karin for a look at our financial results.

Thank you so much, Jeff. And looking at the financials, perhaps needless to say, our main focus is cash and cash runway. We ended the second quarter with 37 million Swedish kronor in cash. And we estimate that our cash burn will be around eight to nine million Swedish kronor per month, which is in line with our previous guidance. Then the key question, of course, is how far will that take us? Being in the midst of a rights issue and trying to take a cautious view on the outcome of the rights issue, which is secured today by 50 percent. Our estimate is that the cash balance together with the proceeds from the rights issue will take the company through 2024 and secure the important studies that we are going to do this year. Moving into 2025, we will depend on the outcome of the proceeds from the warrants series that is linked to the rights issue. Looking at the year so far, first half of 2024, I think, can best be summarized in Imanovia delivering on plan and in line with guidance. If we compare outcome this year with last year, we have to bear in mind that in the second quarter 2023, we took huge one of items burdening our results, increasing our objects, which related to the decision to take the first generation test, the in-rate test of the market. This is why comparison between the quarters and also the year to date numbers is a bit difficult. However, if we exclude the one of items, we have reduced OPEC on a quarterly basis by approximately 20 million between the years. This is driven by a substantial decrease in headcount related cost, which for the quarter is down 74 percent between the years. Comparing consecutive quarters, we are flat versus Q1 2024. So all in all, OPEC and thereby our cash burn is in line with expectation. Our average cash burn during the quarter was nine and a half million per month and total for the quarter, 28 million. This should be compared with 43 million in cash burn a year back. And as said earlier, we estimate to be around eight to nine million kronor cash burn per month. And that's where we anticipate to stay for the remainder of the year. Moving to the next slide. As I said earlier, we are in the midst of a rights issue and we expect terms to be announced tomorrow on August 6. Size of the issue is 70 million Swedish kronor. And with the current subscription undertakings and guarantees we have, we have a secured level of 50 percent in the issue. The issue is a unit transaction and consists of shares and two series of warrants. And the subscription period for the rights issue is between August 16 to 30. This issue is critical for us as a company to be able for us to fund analytical and clinical validation studies. And we do hope for support from our shareholders. Moving to the next slide. We would like to give you a teaser of the landing page we have for the rights issue where you can learn more about the rights issue. But not only that, you can also learn more about the company and our next generation test. With that, back to you, Jeff.

So I hope through this presentation and with the Q2 report, it's become clear that we have turned the corner as a company. We are performing at a very high level as a company and we've developed a next generation test that is performing incredibly well in detecting early stage pancreatic cancer. As Karen mentioned, the rights issue that we have coming up in August is critical for funding those next steps to make sure that we can do the analytical validation, the clinical validation to support the company in getting ready for commercialization in 2025 and setting the stage for reimbursement after that. We really would appreciate your support and your investment in the rights issue. And I hope that we've shown you over the last year that your money invested in Immunovia will not only make an impact in the market, it will make an impact for people who are at high risk for pancreatic cancer. But I strongly believe that the momentum that we have will drive shareholder value and drive that positive return on investment over time. With that, we would love to answer any questions that you have and welcome those at this time.

We now begin the question and answer session. Anyone wish to ask a question, press star 1 on their telephone. You will be given a chance to look through the event of the queue. If you wish to remove yourself from the question queue, you may press star 2. Anyone with a question may press star 1 at this time. There are no more, no question at this time.

With that, perhaps we should then shift to the questions that have been submitted through the chat feature. The first question is, what feedback have you received from physicians on the test performance numbers you announced? And I would say that the feedback has been very, very positive. We've received feedback both from our scientific advisory board that has been working with us on the development of the test. And then informally, we've received feedback from a number of clinicians who saw the announcement on social media and reached out to us directly to congratulate us on the test results and talk about how excited they were about the results that we're seeing on the test. Moving on to some other questions. What is the definition on a high level of a high risk person? Great question. So there are a few different reasons that someone could be high risk for pancreatic cancer. Sometimes it's because they have a family history of pancreatic cancer. In other cases, it's because they have a genetic mutation that increases their risk for pancreatic cancer. There's another group, which is the group that we talked about in the context of the NIH study. So people who have cysts on their pancreas are considered to be at high risk of pancreatic cancer. And then the next largest group is really those people who have diabetes after the age of 50. And that nuance that diabetes can lead them to be high risk. So it's really those different groups that are at high risk. When do you expect you will be able or when do you expect you'll be ready to sign up with a partner? I think in a lot of ways that's really driven by the partner. So what we know is that the closer we get to revenue and the closer we get to commercialization, the more interest we will have. At a minimum, we know that we have to get through the clinical validation stage in the fourth quarter of this year. Once we get past that, I think then we will see, can we bring in a partner at that point? Or do we need to get a little bit more clinical data that would really give that partner the clarity that we will get reimbursement for the test? So business development is very difficult to predict in terms of timing. So that's why we are talking to a lot of different companies and why we are. We've started early. We've already been in conversations and developing these relationships. So I wish I could tell you exactly, but we just don't know at this point when that will happen. Another question. Have you begun pursuing regulatory approval for the test? That will really start once we have the clinical validation done in the fourth quarter of this year. This may have come in before the slides that Karen shared, but what is your cash runway is the next question. So, Karen, I'll let you answer that one.

So the cash runway is, as I commented during the call, that again, if we take a cautious approach to the rights issue, the proceeds that we will get from that together with the cash we have at hand will take us through this year and will enable us to do the critical studies that we need and want to do. And again, moving into 2025, we will then sort of be dependent on the proceeds from the warrants.

I think this next one is an important question. What is the risk that the analytical validation or clinical validation studies will fail or return poor results? It's a really important question. I think we are confident in our ability to succeed in both of those studies. It is science, and so there's always some risk. But the reality is that the work that we have done to this point has been very robust. We have taken a number of steps to ensure that when we move to the clinical validation stage that we can replicate the results that we saw in the model development study. We did that by using large numbers of samples in the model development study. We did it through the statistical modeling that we used. And the third thing is that we did it by making sure that when we did the original model development study, we didn't do anything to try to make the performance look better there that would create risk that we would not be able to reproduce those results in the clinical validation study. The analytical validation study is a relatively low risk exercise. That's essentially just a matter of conducting the experiments. In some cases, we may have to make some adjustments in the lab. But in general, we feel very good about our ability to replicate the results that we've seen so far in the clinical validation and to have success in the analytical validation study. How will you use the proceeds from the rights issue is the next question. Really, the most important things that we'll do will be to fund the analytical validation and clinical validation. Depending on the proceeds from the rights issue, my hope is that it will fund additional activities into 2025. And those would really be related to some of those additional clinical studies that we talked about that would help support both regulatory approval from FDA and European authorities, as well as, just as importantly, those additional studies would support reimbursement. A question about who do we want to partner with to commercialize the test? I think broad strokes, we are looking for a large diagnostics company that has commercial capability that would allow us to bring the test to market in a way that substantially reduces our required investment in a sales team and in other commercial activities. As you can imagine, there are a lot of different diagnostics companies out there, and they bring various assets to the table and would offer different benefits. And so we're casting a wide net and we're looking creatively at how we can bring the test to market and who can best help us do that. A question about timing. Are you confident in your ability to complete the clinical validation study this year? I would say yes. Really, the key thing there is just making sure that we have a sufficient number of samples in order to conduct that study. I mentioned earlier that we're working with a large number of expert pancreatic cancer centers, both in the US and in Europe. We've identified those centers. They have the samples that we need. And so it's just a matter of finalizing the agreements and getting those samples in-house. So, you know, there's always some risk of delay, but I feel confident in our ability to complete that clinical validation study in the fourth quarter of this year, as we talked about earlier. Are there any additional questions on the phone line?

No question at this time. If you wish to register for a question, we will present one on your telephone.

There was another question that came through. How many people are attending the call and chat today? I wish I knew. One of the interesting things about these conversations and presentations is that we don't find out until later how many people attended. But I hope that attendance was good and I hope that the recent news that we've shared generated enough interest that we had quite a number of people on the call. And I think that takes us through the questions. Okay. All right. Well, I really appreciate everyone's time. Thank you very much for joining us. I hope that this was informative. And again, as we approach the rights issue here in August, we would really, really appreciate your participation, your support of that rights issue, your investment in Immunovia will drive our momentum. It will continue to help us move this test forward to market and really put us in a position to create the kind of shareholder value that we all want to see as we bring the test to market and address this critical unmet need and pancreatic cancer. So thank you very much. And we appreciate your time.