Modus Therapeutics Holding AB (publ)

I welcome you to today's live report from Modus Therapeutics where we usually have invited the CEO John Öd to go through the development during the second quarter of 2024. You who are here live can ask questions directly in the chat to John so I will pick them up wherever I find appropriate. I should also say that the link that was included in today's press release in connection with the report did not work as it should Hopefully you will find the link here anyway and we will be able to spread this interview further in the future. Welcome John to start with.

Thank you Jonathan. Before we start talking I just want to say that I have had some problems with my health and cough the last few weeks so if there are any problems with what I say at any time I apologize for that.

Shall we start with the result for the period? Is there anything to comment on that? It is a moving result of minus 4.8 million. Is it lower than the corresponding period last year? Is it harmful to increased research and development costs? Or is it behind the figure?

You mean decreased? Last year we had... Decreased,

exactly.

Minus 7.8 and here we see a decrease in comparison, or minus 10.7. This is about where we are in research work, that is, where the activities are. When you prepare, submit and send in a study for where we are now, where it is still located at the authorities, that work is very much done as office work. We do not understand the practical costs on clinics and research sites, and that means that we have not really gotten there yet, until the study is approved. Therefore, until now, the first two studies are at about 800,000 SEK. And that is not what really happened in practical research, where we were last year with another study. So that is completely in order. Then we can see that we have also made some effectiveness, especially on the IR side, that we have become more effective, and how we use that budget and have been able to see savings, especially on the admin side, thanks to that.

If you, from your perspective, would summarize what are the most important events during the quarter, what would you say?

Yes, but it is mainly that we have, and I think that is what we are trying to communicate most clearly in the Q2 report, that the study is now, for our part, ready for assessment at the authorities. And that is a big milestone, even if it is not a milestone that can be based on the same way. We do not usually talk about the study being sent in, but everything that leads to that means that the entire network, the entire design is done, all documentation is done, and that is of course a very large amount of internal services that are completed, a large amount of internal services that are completed. And a condition for the practical part of the research to be able to start. So I think that is important to maintain.

And of course, that has been the focus of the study start for Annamie Wienjursvik. Is it only that one who should draw attention to, as an investor, or how do you see the whole thing?

I think it is important to remember that we have brought forward a portfolio that is balanced, and at the same time that we work with it as a smaller biotech company that we are, sequentially, based on prioritization and balance in the portfolio. At the same time, you should remember that we have a Malaria project that is financed by external financiers, and that is run by resources at Imperial College in Kenya. And as long as we maintain our part of the agreement to maintain the drug to the study, this is a project that has great advantages for us and that rolls on without further investments from us. But with great possible advantages in other areas. And if we look at Sepsis, we can say that the reason why we prioritize, and as we have communicated, prioritize, the drug and Annamie now, has to do with the fact that we see this balance in the portfolio. We have a very good starting point in Sepsis. Our LPS study points to the fact that we will be able to move forward because we see the possibilities for effects in such conditions. But at the same time, if you break new ground, it is scientifically, it is an area that is quite unwise, scientifically. So the conceptual risk when you go forward and break new ground is good and balance against the more mature neurodegenerative anemia, which is two large, mature scientific therapy areas that are united in this project. So it helps the balance in the project portfolio. So therefore you should absolutely not forget the other projects, even if we sequentially work hard with the -anamie-study now.

And the -anamie-study, then we are waiting for an official approval and there you indicate in the words of the CEO that a new system called CTIS may be an explanation for the fact that it is a bit slow. Can you explain what this is for the system?

If we look at how we have communicated around this, it is that in the previous quarter we flagged that we saw that we could communicate a study start during Q2 and Q3. And that was to signal that there is an uncertainty. And it has not only to do with CTIS, but regulatory input is always surrounded by uncertainty because it is a process that is out of control. First, you prepare a lot of detailed documentation that should be handled to the ethics side of the authority function and partly to the medical side.

And

of course there is a big load to be pulled first, but when you have sent it in, it should be judged from these authority parts. And there is a lot that is, both before CTIS and now after CTIS has been introduced, contains uncertainties outside our control. And that's how it has always been.

So

far we think we are on track. And if things come up that would change in the future, then we will have to handle it. But so far I think we can say that we are on track.

You also mentioned some advantages with CTIS in the CEO word, and maybe we should highlight that there are positive aspects to a company that is being motivated by the system.

Absolutely. This is something that we are very positive about. And of course all these new systems that are being started up, they have some childhood sicknesses, but I think that phase is over now. Excuse me. The advantages are that a lot is being automated. And that feedback from the authorities gets higher precision because they have a much better overview of all the documentation that has been sent in. Then it's still there. So if you want to complete and change parts of such documentation, for example if you want to do what we call an amendment, a change in the design, then it is much more convenient. And if we want to introduce another country within EU, then that is also an upside with this system. It is also transparent that the goal with the system is that it should also be publicly available in the CTIS database. So there you can, now it is still early, but there you can access the documents that are registered there in a new way.

I thought you would also give your comment on the choice of CRO, or Clinical Research Organization, for this study. Italian Scalattes you have chosen there. What is the background there?

Primarily our idea is to run this study close to the scientific work that we have done to be able to build a good rationale for this study. We have worked with the University of Brescia, we have worked with experts from the University Clinic in Verona. And Lattis has a strong foundation in Italy and has a long-standing network of relations on these sites and is known for this whole scientific and clinical ecosystem. If we can work close to our experts, we see more advantages with this. We do not think that we will need to, if it is needed, to expand outside of Italy. You do not know that right now, but as we see it now, we will manage to do this as an Italian study. That is why we started there and why Lattis then. In that sense, a good choice. The other way is that we see that they have a size that works for our organization to work with. Again, we are high-quality but a small biotech company and need to do a lot of work on a personal basis in a smaller organization. There they can match us with that. We get a immediacy and a speed thanks to that. That is important for us. When we look at it, we think that their scientific comments correspond and complement ours.

We usually highlight that published articles in scientific journals is an important aspect of what you do. How fast does the work run?

The work runs very well. This is, of course, just like in the authorities outside our control, when and where such publications happen. But it has run fast, the work has run fast according to the plan. As soon as we have an update coming, we will get it out. We see that as a positive. We think that the work we do in our collaboration is very engaging and very important for Modus and the clinical studies we do.

It is also highlighted in the report that there is a great media interest around sepsis and leukaemia. How does this affect your interest in research in general? I

often highlight that the awareness of the medical problems, the general awareness and the community in the medical problems that the pharmaceutical companies address is incredibly important for the company. I think there is a direct connection to the awareness of the importance of the medical field, the treatment field and the integration and understanding and willingness to invest. It reflects how relevant our portfolio is. Since we have started developing our research portfolio, I think we have seen a positive trend in the general awareness of the activities we do, the areas where we are active.

Malaria is also constantly in the focus, as soon as new outbreaks occur. How do you see malaria in that context? Is there a will to invest in malaria or is it just that you see things happen but the will to invest is quite low?

I think that we see, unlike the last 15 years, that we see a development from having had a hard time 15-20 years ago to see what kind of business model would work in malaria considering malaria's spread and so on. In time with the systematic work that has been done to address malaria, for example Gates Foundation, Wellcome and so on, models have been developed. We look at the malaria vaccine project in Bräsen, where central purchases are made from manufacturers like GSK and in the future also the so-called Oxford vaccine. Here there is a business model where you can see, as we have started, that you divide the costs for the development and then have a way forward to be able to distribute and sell a medicine that may be approved. There we have seen a very positive development and it is more clear to us now how to be able to operate a business-wise healthy business in the malaria area.

I would like to conclude by saying that

a minimum of driving force for me, and I think for the general public, is that this is still such a big problem. In many ways it is a privilege to try to contribute to see a change and to be able to address this problem, to be a part of it. I believe that malaria is a part of the diseases that are changing and the spread is changing in time with things like environmental changes today. And that is one of the reasons why we see so much reporting of new outbreaks. And that over-flood is a very important part, for example temperature changes and so on. So it has not become less and more, if anything, it has become more and more.

If we can pull out the timeline a little here for the rest of the year, the second half of the year this year, what will happen with the modus then, from your perspective?

Then we will continue with the study. As always, we have a plan to be able to roll out the first part of the study within Q1 next year. And from there we have been clear that both the other projects, the other projects, or especially Cepsis in our portfolio, along with part two of this study, will be dependent on funding. But at the same time as we usually maintain, we have our three legs, which we all the time evaluate and look at. You have to, as a company, as a modus, evaluate the possibilities on the business development side, partnership and that type of activities. We have a strong, good and loyal owner who is going in the business for us and who has been able to improve the possibilities to get a good cadence in our financing cycle. And then we are also a noted company. So I feel confident about what we will need to finance up when we come to Q1.

Are there any partnering events or similar that you will be participating in during the second half of the year?

Yes, it will be up. We plan to be the closest to the Nordic Life Science Days and then follow LSX Copenhagen. They are the closest events. Then you can also remember that By Europe, which is a big and important conference in our area, will be in Stockholm this year.

Exciting. Then I say thank you for today and then we will follow the development here during the second half of the year and then we will see what happens next quarter. And of course we will return with such a challenge even after next quarter. Thank you for watching.

Look forward to it, Jonathan. And thank you very much to you and to those who are listening in after and who have listened in.