Nanexa AB (publ)

The clock is half past 12 and if you're not already out and eating lunch, you're here and watching when Nexa has released their report for the second quarter of 2022. The CEO, David Westberg, is here with me. Welcome! Thank you! If we start by going through the numbers a bit faster, you report a decrease in turnover from last year. Last year you reported 7.7, this quarter you could report 5.7. If you look at the turnover, it also dropped, and I should have said that, from 10 million to now 6.1 million. Phase 1 study initiated, can you summarize more about the quarter?

Yes, absolutely. The revenues are actually a variable that differs from quarter to quarter. So there's not much to comment on. We have a slightly lower return on the already paid revenues from Novo Nordisk, which really has nothing to do with the project itself, more in terms of bookings. The cost of the movement has improved a bit, and that's because we've reduced costs significantly during this quarter, and will continue to do so in the future. What else did you say? That we initiated Phase 1 study. That's what we see as the most fun thing in this quarter. We got approval from the Ministry of Health in Germany, and were able to run the study, and we see that the first cohort has gone very well, so we can move up to the next cohort. So that's...

We're going to talk about all of this, there have been a lot of questions, but I'm going to start by asking the question about Phase 1 study. A clear highlight, and I could tell you more about the study. How many patients have you dosed in this situation, and what is the timeline?

Yes, absolutely. This is really super fun, and we think that's a very interesting phase in the study. It's a relatively small study, where you go out and look at pharmacogenetics and safety, and safety is what makes this injection site reaction so outstanding. It's like getting some reactions at the injection site. You can start with pharmacogenetics, and it looks very good in this first cohort, and also the injection site reaction looks very good. You normally get some kind of reaction, but the minimal reactions we get in this dose that we have now given, and that makes it possible to go up to the next cohort. And so it's rolling now, and we'll be able to publish results from that later in the middle of September. And hopefully, with high probability, we'll be able to go up to a third cohort, and we'll be able to present results from that during the year. The number of patients is a small study, and as I said, it's normally three patients per cohort. That's how we see the

study. Are there three cohorts that you expect to be affected, or is it more?

No, we think that this study will stay at three cohorts. And the data we will collect, it's partly safety, as I mentioned, but then we also get a dose response curve on three different doses, which means that we can take back that information and see if we would need to formulate the scale to take it into a regular phase 1 study, a comparison with Victosa during 2025. And that's the next step into, and then we start talking about real regulatory studies.

Maybe a summary, but all patients are in cohort 2, are they all doses now?

Yes, all are doses.

And there are also some questions here about how your communication will look during this research. Will you inform the market in the same way you did in the first cohort?

Yes, that's how I see it. I think this project is so important for NEXA, so we will try to communicate when we go up to the next cohort and when we then draw conclusions from the whole study. So hopefully, excuse me, hopefully at least two communications during the autumn. Will you be able to expect that in this study?

The obstacle you got before you could start this phase 1 study was the need to leave completed data to the EMA. Could you describe what kind of data you had to leave and was this really such a big obstacle that you can believe when you read the PM? No,

it's not really. Normally when you leave in a clinical trial, you get questions. And we got that too. Then we left in before Christmas and we got a number of questions during the first months of this year. And we answered all the questions. And then a couple of follow-up questions came, which of course can be done. But when we would send in the answers to the follow-up questions, which we had, and there were no problems, then there was a stop in the system that the authorities now work with, the CTIS system. Which made us, for administrative reasons, forced to send in the application again. And then we got the application approved after a number of questions that are also normal. So there was really no problem, except that the system blocked us to answer four relatively simple questions. So that made us a little late in the start of the study. But we're eating that up now, so we're working on that during the year, so that we can finish, as we said from the beginning, during this year.

No changes in the schedule? No,

that won't happen. But

when you continue the project in NEXT 22 against the current month, are there any chances that this will be repeated?

Those questions... At every clinical trial, there are questions. There are no clinical trials, I think, that go through without having a question. Yes, there may be some, but... There are some significant questions when we go up to the next dose. Then we also have data from this study that will support that we do the next study. So, no, I think it looks pretty good for us.

And no stop in the system, either, I

think. No, it's probably going to be a mistake from the authorities, so we hope it won't be. When

can you expect to publish your first data on the Facade Study?

This one? Yes, but it will be at the end of the year, so we will be able to publish it. Then it is possible that it will take a month before next year, before we have the reports, of course. But definitely we will have so many results so that we can draw conclusions during this year.

If we move away from your research process, or rather, your approval process, and go instead to your partner project, Novo Nordic, you wrote about in the report, you have a partnership there where you develop your drug delivery system with their drug substance, as I understand it. What is the latest there?

The latest thing I can communicate, but the latest is that it is ongoing, I can say. We think it is going in a good way. It is a project, and I can't go into it, because I can't go into it, but it is a project that deals with a pre-clinical evaluation where we develop our system to make a one-month deposit of their substance. We develop it and they make a pre-clinical evaluation during this period of exclusivity.

There is a question here about this partnership you have with Novo Nordic. Is the step you are taking now in the project clinic something that would happen in connection with some form of formalities? Is it a license or something like that?

No, it will come later, but now we are doing this evaluation, or Novo Nordic is evaluating our technology, and if they feel satisfied with the result they get in that evaluation, then there is a built-in in the evaluation we have, that they have some time to negotiate a license agreement with us to take the project further,

I would say. And how do you see this exclusivity evaluation? Can you negotiate with other partners, despite the fact that you...

No, an exclusivity is an exclusivity, that's how it is. However, I can say that when it comes to an X22, we have the full freedom to proceed, even if we actually share some data from our X22 project with Novo. But there we have the possibility to proceed completely freely from Novo, if we would like to.

About this quarter and the collaboration with Novo, how much have you invested in the project?

I wrote that we have invested significant resources, I wrote in the CEO's word, and it is a lot about internal resources. We have worked a lot with that development to get it in place, basically.

If we talk about the changes that are being made at the company level, you mentioned that you have cut down on costs, and you do that through your commission. Could you develop a little what it is like to leave the company?

Absolutely, I can do that. It is a process that you would rather not want to go through. You want to keep all the competence you have, but since we took the strategic choice we made at the end of last year, that we should focus on the Novo Nordic and a couple of very prioritized partner projects, we saw the possibility to expand the runway, simply by cutting. Then there are a couple of resources in R&D and QA that have left us,

unfortunately. When talking about the management level, you are talking about Hannah Thilus now, who is the new manager. What does she do in the management?

She is a lawyer and advocate, and has worked a lot with both material and agreement issues for a long time. We got closer and closer to the phase when we hopefully sign agreements with big companies, and then it is a competence that is very good to have within the management.

You are here today, you usually be with your CFO, but he is one of the companies, and until September 1st you will have a new CFO, Cecilia Dankwärtt-Liljeström, who will be the new financial manager. Can you tell us a little bit about her? What kind of competence does she

have? She has been in the industry for a number of years, so she has some experience in the industry, in this type of company, in life science, and she has a lot of competence in the management and revision. She will be able to work a little differently than what Björn has done. I look forward to working with her, I think it is a great pity that Björn leaves, but I think very few have left the company, the personnel load is very low, so that is something to count on.

David, that was all my questions, but I will soon turn to the analytics, who have also come in to find questions, so I will make sure to get them all out. But Johan Widmark from Emerger, welcome to ask your questions.

Hi, thank you very much. I have three questions. First, you said that there were very few reactions to the injection site for the first cards. Are these anti-inflammatory solutions you have used there, and can you also tell us more about some of the limitations, is this an issue now, or do you want to develop a little?

I would be able to develop without, it is not that we have had to use an anti-inflammatory component in our formulation, but this is liraglutide, which has been used by the Sub-Gythian administration in so many millions of sprays over the years, so that you know that it is a substance that does not affect the wave in as great an extent as, for example, azazetidine in our X-18 project. The degree of the reactions, it is not that everyone has had any reaction at all, but the degree of reaction is partly superior and then of the absolute mildest classification, so that you see no, yes, that's how much I can say.

I understand, so anti-inflammatory is more like a backup solution for other partner projects or something like that? Yes,

I think that should be seen as a backup solution in the case where we need, where what should be injected has, for example, a cytostatic effect or a wave-irritating effect, then I think you should look at that possibility, and it is a unique opportunity we have to actually work with that type of project, but for GLP-1 we feel that we will not need that.

Okay, then you also asked, I understand that we have passed mid-2024 and therefore we have passed 12 months that are left until mid-2025, which was where the cash would have been enough earlier. There was a relatively low cash flow here in Q2, is the change in the formulation in the report, is it just a function of time? Or has the cost development been different or in phase with the previous expectations?

The formulation in the

report, what do you think? In Q1 it said that we are expected to be funded for 12 months in the future, but now in Q2 it is no longer the case, is it just a function of time? Yes,

it is a function of time, now we publish it in August, we still count on having money in the same way as we said earlier, and it is based on the cash we have and the income we expect to get during this time.

I understand. I know of course that the CEO should not comment on the course, but with less than a 12 month run-away, I think that within 69 months you will have to put your foot down if no license money or agreement comes in, and I assume that this can be relevant first because you have the results from phase 1 towards the end of the year. Can you tell us, given that you have this continued positive outcome from phase 1 in the back during the year, how do you see this window that you have on to decide the way forward? How confident are you that you will get money, license money if you have this positive result in the back?

That is a very interesting question, and if you look at it like this, we are getting these results now, we will reach out to a number of companies that could be interested in Nexu 2, for example. We have other partner projects that could generate more money than we have expected to get in, and we will also present Nexu 2 data on a conference in October in Boston. I expect that there will be a lot of interest from other companies. Then how fast this can go, if it leads to a business, is too early to say, but we will have our ears on the line and listen and see where we are, and then we will have to make decisions later on how we should do it. I can't describe it in another way right now, I think you all understand what we are going through, and I think we are seeing a hopeful situation ahead, to be able to get money in another way than through licenses and so on.

I understand, but I thought the course has since the bottom in the spring, and the course has doubled, so it's not like it's going to slip out of your hands, but you feel that the license is going to

go. I think we should wait and see, before we do anything. But the course development is fun, I shouldn't comment on it more than I think it feels great.

Thank you very much.

Thank you very much, Johan. I have brought up some questions that I think we should end with, and I think I'll start by building on that, because I have a question that follows. Will NX get its own patent for each individual license? Or how does IP Strategy look like in the context of new license applications, for example if a BP is interested in a new area?

Generally, our patent strategy is that when we enter a patent, we create the possibility to do so-called continuations of each patent. And then a continuation becomes a separate patent application, and then you can cut out a piece that is about GLP-1s, oncology drugs, or acetylene. We can do that in our basic patents, in the general patents. Then we also try for specific patents, specific projects that we find extra interesting. There we also try to create a patent, a patent specific to the type of molecules. But generally, this type is when you have a platform. It's about building a broad patent portfolio where you can do continuations. It's exactly how the big companies want it, because then it's the continuation or the distribution that you license.

Now, if I look at the question about the collaboration with Novo Nordisk, and I'll start with this one. You wrote in the article that this collaboration with Novo Nordisk is going to continue, with the goal of delivering formulations that can be taken further in clinical evaluation. Have you previously delivered formulations that are tested in clinical evaluation?

Yes, I think I said that. We have done that, and it has looked good, but it needs

to be adjusted a little. And about this evaluation in Novo Nordisk, is there one or more different Novo Nordisk molecules that you are looking at? I

don't think so, I can't

really answer that. And the next question from the same user. On the Capital Markets Day, you mentioned that during the remaining 2024, there will be two molecules that you are waiting for in this Novo Nordisk collaboration. One is the conclusion of the preclinical study. Which one is the other?

During 2024, there will be a couple of studies that they will do during this evaluation. I don't want to go into too much detail about Novo's project, it's so sensitive. I will probably leave it at

that. David Vestberg, CEO of Anexa, thank you for being here and answering our questions. Thank you.