Immunovia AB (publ)

Ladies and gentlemen, welcome to the Immunovia Q3 Interim Report 2024 conference call. I am Yousef, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Karin Almqvist-Levendahl, CFO. Please go ahead.

Thank you very much. And with that, I would like to say a good morning and a good afternoon and a warm welcome to all of you joining today to Immunovia's conference call following our third quarter results for 2024. Presenting in the call today is our CEO, Jeff Borcharding, and myself, Karin Ahnqvist, CFO of the company. As usual, the presentation will be followed by a Q&A session, which will be guided by our operator. You are welcome to give your questions in the call or post them via the chat function. After we have closed today's call, you will find the presentation and the recording on our website. And with that, I'd like to hand over to our CEO, Jeff, please.

Thanks, Karin. Thank you all for joining us today. I'm very excited to share our progress in Q3, as well as the progress that we've made since the close of the quarter, and to look ahead to 2025. We continue to achieve the milestones that we have laid out for you, our investors. We continue to see strong performance from our next generation test. And as we think about the transition in 2025 into a commercial company, we'll talk more about what's coming as we make that transition. Our agenda will start with a look back at the third quarter. We will talk through the results that we saw from the next generation test in the studies that we conducted in the third quarter. We'll also talk a little bit about the ongoing clinical validation that we're doing of the test. And then from there, we'll transition into a discussion of our financials and cash position before we do that preview of what lies ahead in 2025 and close with questions and answers. This is a slide that you may have seen before, and it really lays out the roadmap that we put in place two years ago to outline the work that we were going to do to develop our next generation test when we made the decision to transition away from the Emory pan candy test. We went through the research phase followed by the development phase where we shared the discovery results previously. That was where we had identified those proteins that were capable of detecting pancreatic cancer and detecting it at stage one and two, that point in the process where if we catch the cancer at that point, survival is more than 10 times higher. Following the discovery stage, we moved into the model development stage, and we shared a preview of those results on last quarter's call. And I want to go into a little bit more detail about the results that we saw in that study where we selected the final five biomarkers. We defined the test model and then demonstrated the accuracy of that model. So looking at the sensitivity, looking at the specificity. From there, we completed the analytical validation, and I'll share a little bit more about that with you today. That is more of a technical review of the individual tests that we will do to measure the specific proteins that make up the tests. It's a very technical exercise, very much focused in our lab. and is intended to give us confidence that for the five biomarkers that we've identified, we are measuring them in a way that's accurate, it's precise, it's repeatable, and it is stable across a variety of conditions. And now we're in the process of clinical validation. Essentially, this is to take another look at the sensitivity and the specificity of our new test and see how that compares to what we saw in the model development test and how it compares to the standards that we have set for the new test. So let me go back and just make sure that we're all clear on the performance of the test that we saw in that model development study, which was completed in Q3. The test model showed 85% sensitivity and 98% specificity. And you see here an illustration of what that means. Sensitivity essentially means if cancer is there, do we find it? So what we would expect is that if we had seven patients with cancer and we tested them, we would find that stage one or two pancreatic cancer in six out of every seven patients, which is a tremendous rate of success given the difficulty of diagnosing pancreatic cancer, especially at those early stages. When we switch over to specificity, essentially what that means is if you test healthy individuals who do not have cancer, do you avoid giving them a false positive? Do you avoid having a positive result that causes anxiety for that patient and requires additional clinical work to be done to investigate? So what we found with 98% specificity is that if we tested 50 individuals who are at risk but do not have cancer, we would only have one false positive out of every 50 patients that we tested. So very, very good accuracy on both the measure of sensitivity as well as the measure of specificity. One of the other key endpoints that we looked at in the model development study was, how does our test compare to CA19-9? CA19-9 is a test that is often used today in pancreatic cancer, particularly for those who have had cancer, to see if that cancer has come back. What we know is that even though CA-19-9 is used, it has some drawbacks. It is not sensitive and specific enough on its own to be used in high-risk surveillance. In addition, we also know that CA-19-9 is not produced by some individuals because of their genetic makeup. So about 10% of the population doesn't produce CA-19-9 at all. And so what we found when we compared our test performance to that of CA-19-9 was that we were 20 percentage points more sensitive. So 85% sensitivity for our test compared to 65% sensitivity for CA-19-9 at the same level of specificity. So very strong results from the model development study. Within that study, we also looked at different subgroups. What we wanted to see was, is our performance consistent across these different groups? For example, do we see equally good results in men and women? Do we see consistent results for both stage one cancer and stage two pancreatic cancer. And as you see here, when you look at the two columns on the right, our specificity and our sensitivity is quite consistent and quite good across these different groups. The one group where you do see lower sensitivity is the low CA-19-9 group. I mentioned in the prior slide that CA-19-9 has this disadvantage. It has a drawback in that some people don't produce CA-19-9 or they have low CA-19-9 even if they have cancer. What we did in our study was look at what happens for those patients that have a low CA-19-9 score. Can we still have reasonably good test accuracy. And what you see in the second line is that our specificity at 98% delivers sensitivity at 60%. So we would capture 60% of those cancers in a positive result. Conversely, CA-19-9 would miss almost all of those cancers. And so again, for that low CA-19-9 group, a very good result and one which gives us confidence in the other biomarkers that are part of our tasks. Following the model development study and the very positive results we saw there, we moved to the analytical validation. And again, this is where you look at those measurements of the individual protein biomarkers. So we're not necessarily looking at the overall We're looking at the specific protein biomarker tests. And can we measure those proteins precisely and accurately and in a way that's stable across a variety of conditions? We conducted more than 20 experiments in a variety of conditions. We followed guidelines for that type of study, completed that on schedule, and really saw excellent technical performance in measuring those target proteins. So we were very pleased with the performance of these assays, particularly because proteins can be difficult to measure. And we saw very strong, very clear results when we did the analytical validations. We're now moving, as you saw on the timeline earlier, to the clinical validation study. And we have begun that study. And essentially, our goal here is to evaluate the accuracy of the test in a different set of samples than the ones we used in the model development study. So this will be a case control study. And what that means is that we will use blood samples, some of them are from patients with pancreatic cancer. A lot of the blood samples are from high-risk people who do not have pancreatic cancer. Those are referred to as controls. Essentially, we run the test in a blinded fashion so that people in the lab do not know if a given blood sample is cancer or is a control. Then we look at the results to see how accurately we captured the stage 1 and 2 cancers and separated them from the high-risk controls. Again, we'll be looking at CA-19-9 alone in addition to the overall performance of the test, and then we'll also be looking at individuals 65 and older to see what our performance looks like there. We announced a while ago that we had acquired all of the samples that we need to conduct the clinical validation study. This was a significant accomplishment. We acquired more than a thousand of these blood samples, and we believe this is going to be the largest clinical validation study that's been done in pancreatic cancer. We have over 200 cases of pancreatic cancer and more than 800 high-risk controls. It's important to note that high-risk control is a challenging group to show a difference between the controls and the cases. Some companies that are developing these types of tests will test their test model on healthy controls. We think it's important to look at those individuals that are at high risk that may be more difficult to distinguish do they have cancer or not. To get all of these samples, we had tremendous collaborations with the institutions that you see on this slide. We are incredibly grateful to them for their support and for their enthusiasm. They are excited about Immunovia's next-generation test, and so they were willing to give us these precious blood samples for our clinical validation study. And that clinical validation study is ongoing now, and we expect to share results next month in December. And with that, I'll transition over to Karin to talk about our financial plan.

Thank you, Jeff. So, Immunovia continues to deliver, not only on the operational plan, but also on our financial plan. OpEx for the quarter was just over 30 million Swedish kronor, which is a reduction compared to the same quarter last year by 20%. This reduction in OPEX is driven by the sharp decline with over 60% in headcount costs, which in turn is a result of the profound restructuring that the company has been through. Cash burn for the quarter averaged at 7 million Swedish kronor, or a total for the quarter at 21 million Swedish kronor. This is down 40% relative to last year, which is really a sharp decline. Now, if we look ahead into Q4, we should, however, expect that we will not remain at this Q3 level when it comes to cash burn. We should expect cash burn to increase somewhat, and this is solely a reflection of what we're doing currently when it comes to R&D. And we should expect it to be in the range of, say, 8 to 10 million Swedish kronor. Moving on to the next slide, a few words on the recently executed rights issue that truly exceeded our expectations. In the issue, we were able to raise 52 million Swedish kronor net of issue costs. And this thanks to that we saw a subscription level of 91%, which was well above the guaranteed level of 50%. Thanks to the high participation level, we now have a good platform and we think we have a decent potential to raise money in the coming two series of warrants, TO2 and TO3. And then to sum up the quarter, we closed the quarter with a cash balance of 54 million Swedish kronor. And we have delivered on our financial plan. We have reduced OPEX and we have reduced cash burn. What we will see now when we move into 2025 is that OPEX will gradually shift from R&D to additional studies supporting reimbursement and thereby preparing for commercialization in the second half of 2025. With the cash balance at end Q3 and what we anticipate, which is not overly aggressive estimates relating to the net proceeds for TO2 and TO3 warrants, we should be able to fund our operating capital needs for the coming 12-month period. And with that, back to you, Jeff, again.

Thanks, Karin. Let's transition now to a discussion of the future and what 2025 will look like. So at the timeline at the bottom of the screen, you can see that We've got the recap of 2024 and our development phase. And then moving into 2025, we would call that the commercial phase. And there's really a few key things that I want to highlight here. The first is that we do expect to launch the test in the U.S. market. We've chosen the U.S. initially based on the market size, the regulatory environment, and ultimately the opportunity for reimbursement of the test and its revenue potential in the U.S. In order to launch the test, we believe it's important to have a strategic partner that has strong resources that they can bring to the table to help us drive the adoption and commercial success of the test. And then finally, in 2025, we will be conducting additional clinical studies for multiple reasons. Those studies will help us to support reimbursement, They will support regulatory filings. The other thing that those tests or those studies will do is provide additional confidence for the physicians who are using the test. So let's look at each of these three elements of the 2025 plan in a little bit more detail. And we'll start with the launch plan. So we plan to launch the test in the second half of 2025. Our objective will be to demonstrate physician and patient demand for the test. So our primary success metric will be test adoption and test volume at the targeted high-risk pancreatic cancer surveillance centers where we focus our launch efforts. Transparently, in 2025, revenue will be fairly limited because the initial revenue that we receive will be from patient payments. Those patient payments are generally lower than what we would expect to receive from payers once we are approved for reimbursement for the test. That reimbursement for payers is expected to begin in 2026, And the reason for that is that we need to continue to build out the collection of published clinical studies that show the effectiveness and the accuracy of our next generation test. Because of the fact that revenue will come later in larger quantities, our scope will initially be more targeted. Our goal is to move forward with a cost-effective launch at those high-risk centers, and we will do that with a small internal team. When we think about the broader launch, that will be where we engage a commercial partner, a strategic partner that has resources to drive the test to much greater volumes. As we think about that partner and what we're trying to achieve in securing a partner, it's really these three things. So first of all, we strongly believe that a partner is important to drive volume and adoption of the test. Because these organizations have existing sales teams with existing relationships with physicians who would be ordering the test, we can drive more volume faster with that established sales team. The other thing that a partner should allow us to do is commercialize the test at a lower level of operating expense and a lower level of investment. That's important in order to reduce the capital needs of the company and ensure that we don't get into a situation where our needs exceed our ability to raise capital. And then finally, these partners bring significant expertise to a relationship. There are certain areas where because of our limited staffing, it will be very beneficial to have expertise in areas like regulatory affairs and clinical affairs as well as legal affairs. Those are areas that we currently have support from outside resources, but it would be very productive for us to partner with a commercial partner to deliver those. And you see here the steps that we've already taken to develop a pipeline of strategic partners and be in a position where, as we move into 2025, we are continuing a process rather than initiating a process for finding that partner. We did research on more than 30 potential partners. We looked at partners across a variety of different types of companies, specialty diagnostics companies, reference labs, or in vitro diagnostics companies that actually produce the equipment on which these tests are often run. We took a look at each of those companies to say, what are the different ways that we might be able to collaborate with them in order to drive success for Immunovia? The most obvious one is to be able to partner with them and their sales team to promote our next generation test with clinicians. But there are some other opportunities as well. For example, would they be willing to make an investment in the company in order to help us bolster our cash reserves and do so in a way that reduces the dilution for our investors? Another opportunity might be reflex testing. We know that our test is often going to be used in people who have genetic testing that shows they're at higher risk for pancreatic cancer. Some of the companies that we are talking to are in the business of providing those hereditary cancer tests. And so there could be an opportunity to refer those patients to Immunovia for pancreatic cancer screening after they have that genetic test. After we've gone through that assessment process, we've narrowed things down. We have active conversations with about a dozen top companies in the space. And what I would say is that the release of the clinical validation data will be an important milestone for those partners. Frankly, they are not particularly interested in companies that don't yet have that clinical validation data in hand. And then from there, we will see what the opportunity is to negotiate and reach an agreement with these partners. And I do want to say that the timing of that agreement will depend on the terms that we can get. If we believe that the terms are not sufficiently beneficial to the company and our shareholders, we will delay signing an agreement until we've made further progress, until we've achieved additional milestones so that we can secure better terms. We don't want to be forced to take a deal in the short term that doesn't adequately reward shareholders for the value that we've developed with the next generation test. One of the things that we will do in order to continue to increase the value of the company and the value of our next generation test is conduct a series of additional clinical studies. This is a summary of those clinical studies. And admittedly, there's more detail here than what we'll have time to go through. But we did want to share it to give you a sense of the fact that we do have additional clinical studies planned. The purpose of those studies is partially to support our reimbursement efforts. It's partially to drive confidence in the minds of the physicians who will be using our tests. And it's also to expand the patient populations where we've shown good results beyond the familial and hereditary risk group that has been our focus up to this point. So we're very excited about this clinical program. One of the things that is important to highlight is the fact that we already have a number of assets that will enable us to conduct many of these studies at a very low cost. So I don't want to create the impression that we are looking at enormous investments to achieve success with these clinical studies. In many cases, we have the samples in-house to conduct these studies already. In other cases, these studies will largely be funded by government agencies like the National Institutes of Health in the U.S., which will be sponsoring the NIH Pancreatic Cyst Studies Program. that you see on the third line of the table. So, we're very excited about how expansive this set of studies will be and the fact that we can conduct them at a relatively modest level of investment because of the assets that we already have in place. So hopefully that gives you a sense of what 2025 looks like. As we sit here today, we are very excited about the fact that we continue to achieve our product development milestones. And as we look forward to 2025, we will shift our focus to launching the test, securing a commercial partner, and generating that additional clinical evidence that we just discussed. We continue to be very, very excited about the future ahead, and we hope you share that excitement. And with that, we will open it up for questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. Once again, to ask a question, please press star and 1 on your telephone.

While we're waiting for questions, I did want to point out on this slide, one of the things that we are trying to do is increase our communication, not just through more formal press releases, but also informally on social media channels, especially LinkedIn. I would encourage you to follow us on LinkedIn. Please follow both Immuno via AB as well as me personally. We'll share information kind of in between those press releases, things that don't necessarily rise to the level of importance that it justifies a press release. but things that we think would be interesting for our shareholders and our supporters to know so we try to communicate pretty regularly on those forums ladies and gentlemen there are no more questions at this are there any questions in the chat Okay. It does look like we have some questions from the chat. One question, when do you expect a decision and a press release on the grant of the patent application that was submitted a while back? That's an excellent question. At this point, the review of that patent application is on hold, and that's intentional. When we filed that application, we filed what is called a provisional patent application. What that does is it preserves our standing as the first to invent the invention. but it allows us to keep the application open so that we can provide more data to support the patentability of our invention. So as we conclude the clinical validation study, we will be submitting much more evidence to the Patent and Trademark Office for them to review. So we would expect an action on that later in 2025. But the good news is we've already sort of establish the fact that we have that invention. With a changed political landscape in the U.S., how will that impact you as a Swedish company? You know, I think that that's a very good question. And I think what we are focused on doing is making sure that we can be successful regardless of the political climate. So a really good example of that is in the U.S., the Food and Drug Administration issued what's called the final rule related to lab-developed tests like the one that we have been talking about here. FDA is going to increase their regulatory oversight of these types of tests. And so what we are doing is we are preparing for that additional oversight. despite the fact that the reality is some believe that that is not going to actually happen because of the election of President Trump in the U.S. So essentially what we're doing is moving forward on a conservative path, assuming that we will do those things and take the steps needed to be successful, regardless of what happens. Question, any ongoing discussions or conversations with potential partners? Very much so. I probably didn't do a good job of highlighting that. But the reality is that for about a dozen of the potential partners, we have an ongoing dialogue with them. We have conversations. regular meetings and email exchanges to share information as we develop it. So, for example, once we had the data from the model development study, we met with those potential partners, we shared the data from the analytical validation with them, and that's given us a good opportunity to build those relationships. Common here, congratulations on the solid clinical and financial development. Thank you for that. What would you consider to be viable results for accuracy in the clinical validation study? So in the clinical validation study, I would say we want to achieve a level of accuracy that meets the market need. So it doesn't necessarily have to be as high as what we saw in the model development study. but something that is above 70% sensitivity and probably in the, you know, call it 94, 95% specificity is what we would need to see in the clinical validation study. Technically, the success criteria for that study are a little bit lower, but I think that's more of what we would like to see. It's also important in that study that we show that we are statistically superior to CA-19-9. Regarding the size of the potential market, do you have an estimate of volumes of eligible high-risk individuals who are screened at high-risk centers currently? So that's a very good question. There is not very good data on that today. What we estimate is that there are, take the familial and hereditary group that we're focused on initially, there are at least 600,000 of those individuals who would enter the market every couple of years. We know that at the high-risk screening centers, they're probably only screening individuals somewhere around 20 or 25% of that group. And why is that? There are a variety of reasons. Some of it is capacity limitations. Today, at those high-risk centers, they have to do either an MRI or an endoscopic ultrasound. They just don't have the capacity to do that as much as they would like. And so they have to either turn people away or they push out the time period. Also, because the U.S. is such a geographically large country, there are a lot of people who don't live especially close to a high-risk center. So a blood test like the one that we're developing would enable them to get tested on an annual basis without having to drive two, three, four hours to get to one of those high-risk centers. So we think the total number of people that are eligible for high-risk screening in the U.S. is about 1.8 million people when you look at not only the familial and hereditary, but the other high-risk groups as well. So we think it's a very large market and one that we can expand with our blood tests. Do you think the market has correctly assessed the value of Immunovia at the current share price? I think it's always dangerous as a CEO to comment on the share price and to make an assessment of whether the market has fairly valued the company or not. I guess what I would say is I do see a lot of upside in the market value of the company when you think about what we are bringing to market, the need that we will solve, we see tremendous value and upside relative to what our current market capitalization is. Does December 2024 definitely hold as the month for the release of the clinical validation data? Yes. We're confident that we will be able to release the results next month. How confident are you in the clinical validation? I think this is an excellent question. So the reason that we do the clinical validation study is that it's important to not just rely on the model development study. You have to do that validation in an independent set of samples. Because this is science, there's always risk that we will see, you know, a different result in that clinical validation. But we do believe that we've taken steps to minimize that risk. And we certainly are hopeful that we will see good results. But it is an open question, and I think we will know the answer to that very shortly. And Again, I feel good about the quality of the work that we've done prior to the clinical validation, but we know it's always challenging when you move from model development to clinical validation. One question, what is the difference between the analytical validation you completed and the clinical validation that's happening now? The analytical validation is a much more technical exercise. The other big difference is that with the analytical validation, we're looking at the individual biomarker tests that make up the overall test. Immunovia next generation test. So we're looking at very technical measurements and experiments in a variety of conditions to see how precise we can measure those proteins in different conditions when we do the analytical validation. Conversely, the clinical validation is in some ways a much simpler test. Essentially, what we're doing is we're saying now take all of those biomarkers, put them together in our next generation test, generate test results for blood samples that are either cancer or controls. and assess the accuracy of the overall test, not the individual biomarkers. So that's really the difference between the two, and they both have an important role. But, you know, I think certainly it's fair to say that the clinical validation is the more important of the two. Okay. When do you expect to generate revenue? You know, as we mentioned earlier, we plan to launch the test in the second half of 2025. Our initial focus will be on generating volume more so than revenue because of the fact that the real driver of revenue will be reimbursement. And that will come in 2026 in all likelihood because of the need to generate that additional clinical data publish those clinical studies, and then have them reviewed by payer. So we would expect that reimbursement not to begin in 2025, but then later in 2026. Why do we need to do additional clinical studies after the clinical validation? This is a really good question I'm glad you asked. So there are a few reasons. The first reason is that it will allow us to expand the indicated uses of the test to different patient populations. Our initial study is in that familial and hereditary group that we talked about earlier. We'll also be looking at other groups like those with pancreatic cysts or those with new onset diabetes. In addition, those additional clinical studies are critically important for securing reimbursement. Payers in the U.S., whether they are government payers or commercial insurance companies, require a portfolio of clinical results before they will approve a test for reimbursement. So we need to have more than one clinical validation study In addition, they will also likely want to see what's called clinical utility. And that means that you can show either better patient outcomes or that you are changing the way physicians operate because they are using your test. So those are some of the reasons why it's important to do those additional clinical studies. And we're excited to get started on those once we complete the clinical validation that's underway now. A question here, how much do you expect to raise from the TO2 and TO3 warrants? I think, you know, one of the things that makes us confident or certainly optimistic is probably a better word about those capital opportunities is the fact that We saw such high participation in the original rights issue. It's probably premature for us to share an exact estimate of what we think we will raise. But as we noted in our Q3 report, we believe that the combination of the cash we have on hand, as well as the proceeds from TO2 and TO3, should provide us sufficient capital for the 12 months following Q3. And I think that is all of the questions.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Karin Algevist-Liedenwald for any closing remarks.

Well, I think both Jeff and I, we would jointly like to thank you all for participating in today's call and look forward to be online again in a quarter's time. Thank you very much.

Thank you everyone.