Moberg Pharma AB (publ)

Hello and welcome to the Moberg Pharma conference call. Throughout the call, all participants will be in listen-only mode, so there's no need to mute your own individual lines. And afterwards, there'll be a question and answer session. Just to remind you, this call is being recorded. Today, I'm pleased to present Anna Young. Please begin your meeting.

Thank you. Hello, everyone. My name is Anna Jung, and I'm the CEO of Moberg Pharma. I also have our VP of Finance, Mark Beveridge, with me here today. And I'm happy to present our entering report covering this last quarter, April to June. And you can find the report on our webpage. And there you can also find a PowerPoint presentation that I will use in this telephone meeting. I will start on page four in that presentation. with a brief summary. So we're a Swedish pharmaceutical company that based our products on drug delivery of known substances, which reduces time to market and development risk compared to traditional drug development. We have a clinical pipeline consisting of two late-stage drug candidates, MOP15 and BUPI, both of which have demonstrated strong clinical results, which indicate that they have the potential to become market leaders. Out of these two projects, we stand the majority of our efforts on MOB15 against onychomycosis, where we recently published the results from the Phase III trials in more than 800 patients. And these results will, of course, be my main focus on this presentation today. We have strong commercial partners in place for all major territories, except the U.S., where we want to build our own presence. And we also have strong patent protection until 2032 for both projects. Turning to page six and events during this period, the main event is the top line data for EU that we announced in June, where we met the primary endpoint showing non-inferiority versus sickly perox. These data are consistent with the data from the North American study with low complete cure rates, but very strong mycological cure rates. To date, our operations have not been significantly impacted by COVID-19. We currently have no ongoing clinical trials, and so far we have not had any high sick absence numbers, and we also have contingency plans in place. Earlier this year, we entered a financing agreement up to 216 million kronas with a Swiss investor in Ice and Green. This financing can cover the cost of an additional U.S. study, and to date we have used 9 million kronas out of this facility. We have further strengthened our management team with the recruitment of Cindy Wong, who used to be head of global clinical development at Merck's Pharmaceuticals, and she also has a background as CMO at QMED and has had senior positions at regulatory authorities in both Sweden and Australia. Finally, an expert evaluation has confirmed the validity of the clinical results also in the EU trial, and I'll continue on page 7 with EU results in more detail. So the European PACE-3 study for MOB15, it included a total of 452 patients, where two-thirds received MOB15 and one-third received cyclopirox, the most widely used topical drug for onychomycosis. The primary endpoint was met, showing that MOB15 is non-inferior to cyclopirox in achieving complete cure rate. however, at a higher mycological cure rate. Looking at the absolute number, the absolute number or low as the complete cure was only seen in a few patients. Mycological cure, however, was significantly higher and more rapid than expected, reaching 84% at week 52. And actually, already at week 12, 46% of the patients were fungus-free. and there were no safety issues identified in the study. Slide 8 shows the relationship between mycological cure rates and complete cure rates for current onychomycosis drugs. Just as the North American data point, the data point for the EU trial is also off the chart. For all of our competitors, it is a clear relationship between mycological cure rates and complete cure rates. The higher mycological cure rate that is achieved, the higher the complete cure rate. And already after the North American trial results, we had external experts reviewing all of the photos, and once we received the EU data, these experts also reviewed those photos and that data. The conclusions presented earlier this year remain, and we see the same pattern in EU as was seen in the North American trial. If anything, it's even more pronounced in the EU data set. So to summarize, the key opinion leaders, they found that the vehicle enables delivery of high amounts of turbinifim through the nail. However, the hydrating properties of the vehicle also cause whitening discoloration in nails. This phenomenon can be seen in a majority of the nails, but it is transient as the water content normalizes after end of treatment. This whitening makes the assessment of clinical cure challenging, since the physicians cannot distinguish between a nail that is discolored due to nail fungus or a nail that looks whitish due to the high water content in the nail. All the experts that we engage agree that the high antifungal effect is extremely attractive and that the product with this high mycological cure rate should, over time, also be able to achieve a high rate of complete cure. On slide nine, Based on all available data, we have identified a solution. A shorter treatment time has the potential to increase complete cure rates. And this is based on the high mycological cure rate of 70% to 84%. This is on par with or even higher than oral terpinafine. Forty times higher levels of terpinafine in the nail bed have been seen than for oral terpinafine. And we know that three-month treatment with oral terbinafine is a standard treatment, and that is effective. The onset of the antifungal effect is even more rapid for MOB15 than for oral terbinafine, as we're applying terbinafine directly on the nail with MOB15, delivering actually 46% mycological cure for this EU trial already after three months, versus 15% for oral terbinafine. and the reduction of the hydrating effect after the initial treatment phase, and then reducing the impact of the clinical cure assessment at week 52. So the expert's conclusion is that the ideal dosing is one daily treatment for not more than three months, followed by maintaining treatment once weekly. This should provide sufficiently high concentrations of turbinapine in the nail, and enable normalization of the water content in the nail during the maintenance treatment. And also from a patient perspective, a shorter treatment period is, of course, highly attractive. On slide 10, normally when you conduct a clinical study, you get either strong, weak, or somewhere in between data. In this case, it's an unusual situation as the results of the two main parameters, complete cure and mycological cure, are fundamentally different, with world-leading mycological cure rates, but rather low complete cure rates. As we met the primary endpoint, showing that MOB15 is non-inferior versus cycloperox in the EU study, in addition to the North American trial showing superiority versus the veto, These two studies can be used for registration in EU. In the U.S., FDA normally requires two studies showing superiority, and therefore one more study is likely needed for the U.S. As we have partnered our assets, we are not alone in taking these decisions, but of course need to involve our partners. As these are large companies, and also any interaction with regulatory authorities typically takes time. We expect this to take a few months, but we'll come back with more information as soon as possible. Moving on to the financial part of this report. On slide 12, there were no milestones this quarter, and on the cost side, costs are streamlined compared to last year. We're now a team of 12 employees, so limited costs apart from clinical studies. Our burn rate for operations is roughly 8 million kroners a quarter. But then, of course, we have external costs for clinical studies on top of that. And as we're finalizing the phase three studies, they're rather large at the end of the study. But in this quarter, we invested $10 million in the balance sheet to complete the study. On slide 18, to conclude this presentation, we remain fully committed to creating the future market leading on-coma courses. We now have two Phase III studies for MOB15 that have met the primary endpoint and can serve as a basis for EU registration. Our outcome, below complete cure and world-leading antifungal effect, is unusual. As we have partnered our assets, we're not alone in taking the decision going forward. We will discuss with our partners and regulatory authorities before deciding on the next step. With the financing agreement in place, this agreement can cover the cost of an additional U.S. budget. And we do have commercial agreements in place for the major markets, corresponding to a total deal value of $120 million, while we keep the rights by ourselves to the U.S. market, where we see the largest opportunity. And I'll stop there, and I'm happy to open up for questions.

Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial 02 to cancel. So once again, that's 01 to ask a question or 02 if you need to cancel. And our first question comes from the line of Klaus Pieck of Nordea. Please go ahead. Your line is open. Klaus, if your phone is on mute, you will need to unmute that then.

My apologies. I had it on mute. Hi, everyone, and thank you for taking my questions. My first one is, so can you give any indication of what your partners are telling you? Given the puzzling phase three results, do you see any risk of a partner not moving forward with the project until a new study has been completed? And my second question is if you could provide any indication of the timeline ahead, even though you will come back with more information in a few months' time. For example, approximately when do you expect to file for product registration in Europe? And when you are planning for the initial study? Thank you.

Thank you, Claes. So, of course, there is a lot of data for us and our partners to go through, and that is something that is ongoing right now. And as I indicated before, we believe that that will take a couple of months, especially as we think that we might have to involve regulatory authorities as well. So I think it will take a couple of months. Let's come back when we have that information. Of course, all of our partners have seen this initial data that we have received, and they are as thrilled as we are about the high mycological cure rate. But as I already said, it takes some time to find the right way forward here, and that will... that will happen over the next few months. But we have no reason to believe that any of our partners would like to leave the agreement. They're as thrilled as we are about the mycological curates.

Okay, thank you very much. That's it from me.

Thank you, Klaus.

Thank you. Our next question comes from the line of Kokana Almquist of Verdi. Please go ahead. Your line is open.

Hello, Anna and everybody. I have a question about the financing. Do you think, Anna, that the $216 million you can draw upon will be sufficient, and for how long?

Well, the financing, I think that has to follow when the overall strategy is set. Since we now have a period where we will discuss next steps with partners and regulatory authorities, then the natural time point to choose the financing strategy is after that. We do have this financing agreement in place with Nice and Green. that enables us to draw up to $216 million should we choose to do so. And that would be sufficient for one additional North American study if we end up wanting to do that. But we have to decide on the strategy first, and then we come back with information on the financing strategy after that.

And my next question is, do you have the study design of the new study already in place? Or what's the status there?

That is something that... Sorry, could you repeat that last thing?

Have you decided on the final design of the new study?

Now, that is something that we will decide in collaboration with our partners. So, first of all, we have to decide that we will start a study and then when to start the study and then the final design. Okay.

Okay, that's it for me. Thank you. Thank you.

Thank you. Once again, if there are any further questions, please dial 01 on your telephone keypad now. Okay, there seems to be no further questions coming through, so I'll hand back to Anna for the closing comments.

Thank you. Then I just want to thank everyone for participating today. And, of course, if you have any additional questions, don't hesitate to email either me or Mark. Thank you, everyone, and have a good day.