Nanexa AB (publ)

The time is 12.30, and if you're not already out for lunch, you're here to watch when Nexa has released their report for Q2 2022. I have with me the CEO, David Westberg. A warm welcome. Thank you. If we start by going through the numbers a little quickly. You reported a somewhat declining turnover from last year. Last year you reported 7.7. This quarter, you reported 5.7. If you look at the turnover loss, it also drops, from 10 million to now 6.1 million. Phase 1 study initiated, can you summarize more about the quarter?

Yes, absolutely. This with the revenues is really a It's a variable that differs from quarter to quarter, so there's not much to comment on. We have a slightly lower provision of the already pre-paid income we have from Novo Nordisk, which doesn't have anything to do with the project itself, more in terms of bookkeeping. The cost of the moving capital or the moving result has improved somewhat, so to speak, and that is due to the fact that we have lowered costs significantly during this quarter and will do so in the future as well. What more did you say? It was another question. That we initiated phase 1. That we initiated a phase 1 study. Yes, that is what we see as the most fun this quarter. We received approval from the German Medical Association and were able to start the study. We also see that the first cohort has gone very well so that we can go up to the next cohort.

And of course we will talk about all that. There have been a lot of questions, but I think I will start by asking questions about the FAS-1 study. A clear highlight, and I could tell you a little more about the study. How many patients do you have in the current situation and what is the timeline?

Yes, absolutely. This is really super fun and we think we are entering a very, very interesting phase in the study. It's a relatively small study where you go out and look at pharmacogenetics and safety. Safety has to do with the injection site reactions. Is it difficult to get any reactions at the injection site? We can start with pharmacokinetics, which looks very good in the first cohort. Injection site reactions also look very good. Normally, we get some kind of reaction, but there are minimal reactions in the dose we have given. This allows us to move on to the next cohort. So it's rolling now, and we will be able to publish results from it in the latter half of September. And hopefully, and with high probability, we will be able to go up to a third cohort and will be able to present results during the year. And the number of patients, it's a small study as I said, it's normal to run three patients per cohort. So that's how we see the study.

Are there three cohorts that you expect to eliminate or is there more?

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

Maybe it's a repetition, but all patients are short of two. Are they in the dosage now?

Yes, all are in the dosage.

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

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

What was the biggest obstacle before you were able to start this phase 1 study? You had to submit completed documents to EMA. Can you describe what kind of documents you had to submit and was this really such a big obstacle that you can believe when you read the PM?

No, it really wasn't. Normally, when you submit a clinical prevention application, you get questions. And we got that too. Then there was, we left in right before Christmas, and then we got a number of questions during the first months of this year. And we answered all the questions. And then there were a couple of follow-up questions, which you can of course do. But when we would then send in the follow-up answers to the follow-up questions, which we had, and there were no oddities, then there was a stop in the system that the authorities now work with, the CITIS system. Which made us, for administrative reasons, forced to send in the application again. And then we got the application approved. After another number of questions, which is also normal. So there was nothing strange besides the fact that the system blocked us from answering four relatively simple questions. So that made us a little late in the start of the study, but we eat that up here now, so that time we work in during the year so that we can finish, as we said from the beginning, during this year.

No change in the timeline?

No, it will not be.

But when you continue the project in NEXT 22 towards the overall goal that you have, are there any chances that this will repeat itself? With every clinical trial application, there will be questions.

There are no clinical trial applications, I think, that go through without having received a question. Yes, there may be some. But we don't see that we could get any significant questions when we go up to the next dose. Then we also have data from this study that will support that you do the next study. No, I think it looks pretty good for us.

And there's no stop in the system either?

No, it's considered 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 Fawcett study? This one? It will be published at the end of the year. It is possible that it will take a month before next year, before we have the reports ready. But we will definitely have so many results that we can draw conclusions during this year.

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

The latest that I can communicate with the latest is that it is ongoing. We think it's going well. It's a project that's about a pre-clinical evaluation where we develop our system to make a one-month deposit of their substance. And we develop it and they do a pre-clinical evaluation during this period of exclusivity.

There is a question here regarding this collaboration that you have with Novo Nordisk. Is the step that you are taking now in pre-clinics something that would happen in connection with any form of formality? Is there a license or the like?

It will come later, but now we are doing this evaluation, or Novo Nordisk is evaluating our technology. And if they feel satisfied with the result they get in that evaluation, then it is built into the contract we have. That they have a certain amount of time to negotiate a license agreement with us to take the project further.

And how does this exclusivity agreement look? Can you negotiate with other partners even though you

An exclusivity is an exclusivity. However, when it comes to NEXT22, we have the full freedom to move on, even if we actually share some data from our NEXT22 project with Novo. But there we have the possibility to move on completely freely from Novo, if we would like to.

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

I wrote that we have invested significant resources. It is a lot about internal resources. We have worked a lot with that development to get it in place.

If we talk about the changes that are being made at the company level, you mentioned that you have reduced costs, and you do that through your crew. Could you tell us a little bit about what it is like to be able to leave the company?

Yes, absolutely. It's a process you don't want to go through. You want to keep all the expertise you have, but since we made the strategic choice we made at the end of last year, that we should focus on NEX 22, Novo Nordisk and a couple of very prioritized partner projects, we saw the opportunity to expand Runway by cutting, and then there are a couple of resources within R&D and within QA that have been left behind, unfortunately.

And when it comes to the level of the board, you include Hanna Thilus, who is now the new board leader.

What does she take with her to the board? She is a lawyer and has worked a lot with both material issues and contract issues for a long time. So we are getting closer and closer to a phase when we hopefully sign contracts with large companies. And then it is a competence that is very good to have within the board.

You're standing here today, you're usually here with your CFO, but he's the chairman of the company. And until September 1st, you'll get a new CFO, Cecilia Dank-Wert-Lilleström, who will become the new financial manager. Can you tell us a little bit about her?

What kind of committee is she going to take with her? She also has a few years on her neck in the industry. So she brings with her industry experience, this type of startup company in life science, and she brings with her a lot of competence in teaching 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's a pity that Björn is leaving, but that's the way it is. I think very few of us have left the company. The staff turnover is very low, so that's something to count on.

David, that was all my questions, but I will turn to the analysts who have also come in with questions. Johan Widmark from Emergers, welcome to ask your questions.

Hi, thank you very much. I have three questions. Firstly, you said that there were very few reactions on the injection site for the first cohort. Are these anti-inflammatory solutions you have used there, and can you also tell us more, are there any limits, is this a non-problem now, or do you want to develop that a bit?

Yes, I could develop it. It is not that we have needed to use an anti-inflammatory component in our formulation, I can say that, but this is Liraglutide as such has been used, subcutaneous administration in so many millions of sprays over the years, so that you know that it is a substance that does not affect the weaving in the same extent as, for example, Asacetidine in our Next18 project. The degree to which It's not that everyone has received any reaction at all, but the degree of reaction is both predominant and then of the absolute mildest classification, one could say. So there are no... Yes, that's as much I can say.

So anti-inflammatory drugs should be seen more as a backup solution for other partner projects or the like?

Yes, I think it should be seen as a backup solution in the case where what is to be injected has, for example, a cytostatic effect. or a weaving-irritating effect, then I think you should look at that possibility. And it's a unique opportunity we actually have to work with that type of project. But for the GLP-1s, we feel that we won't need that. Okay.

Then I also wonder, I understand that we have passed mid-2024 and therefore have passed 12 months that are left until mid-2025, which is where the budget 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 expectation?

The formulation in the report, what do you think?

Sorry, in Q1 it says that It is estimated to be financed for 12 months in advance, but it is no longer the case. Is it just a function of time?

Yes, it is a function of time. We are publishing it in August. We are still counting on having money in the same way as we said before. And it is based on the cash we have and the income we expect to get during this time. I understand.

Of course, I know that the CEO will not comment on the course, but with less than a 12-month runway, I think that within six to nine months you will have to put down your foot if no license money or agreement comes in. I assume that this can be relevant first because you have the results from phase 1 towards the end of the year shift. Can you tell us a little bit, given that you have this continued positive outfall from phase 1 in the back around the change of year, how do you look at this window that you have on you to decide the way forward? How confident are you that you get your license money if you have this positive result in the back?

That's of course a very interesting question. We're getting these results now. We will reach out to a number of companies that could be interested in Nexo 2, for example. We have other partner projects that could generate more money than we expected. And we will also present the NEXT22 data quite vigorously at a conference in October in Boston. So I expect that there will be quite a lot of interest from other companies. Then how fast it can go if it leads to a business is too early to say, but we will have our ears on the rail and listen and see where we are and then we will have to make decisions later on how we should do it. I don't know how to describe it in another way right now. I think you all understand the situation we are in. I think we still see a hopeful situation in the future to be able to raise money in a different way than through licenses and so on. I understand.

But I thought the course has since the bottom here in spring, the course has tripled so that it is not so that it sticks in the finger in some way. Somewhere, maybe it sticks in the finger, but you still feel that the license is gone.

I think we should wait. I think we should wait a while. Absolutely. Before we do anything. But the course development is fun. I'm not going to comment on it any more than I think it feels great. Thank you so much.

Thank you so much, Johan. I have brought up a few questions that I think we should finish with. I think I'll start with building on that. There was one question that follows this. Should Finanexa have its own patent for Farm and Shell for each single distribution agreement? Or what does the IP strategy look like for signed new distribution agreements? For example, if a BP is interested in a new area.

In general, our patent strategy is such that when we submit a patent, we create the opportunity to do so-called continuations of each patent. And then we hide a continuation. It becomes a separate patent. application. And then you can cut out a piece that is about GLP-1s or about oncology drugs or acesethidine or anything else. So we try, we can do that in our basic patents and in the general patents. Then we also try, so to speak, for specific patents, specific projects that we think are extra interesting. There we also try to create a patent specifically for that type of molecule. But generally, when you have a platform, it's about building a broad patent portfolio where you can do continuations. That's exactly what the big companies want, so to speak, because then it's that the continuation or the department that you then outsource.

Some more questions about the cooperation with Novo Nordisk, and I'll start with this one. You wrote in the article that this cooperation with Novo Nordisk is fast-growing with the goal of delivering formulations that can be passed on in pre-clinical evaluation. Have you previously delivered formulations that are tested in pre-clinics?

Yes, I think I said that we have done that and it has looked good, but it needs to be adjusted a little.

And regarding this evaluation in Novo Nordisk, are there one or more different Novo Nordisk molecules that you are looking at?

I don't think I can really answer that.

And a follow-up question from the same user. On Capital Market Day, you mentioned that during the rest of 2024, there are two milestones that you are waiting for in this Nordic cooperation. One is the conclusion of the preclinical study. Which is the other one?

under 2024. I'm not going to go into details, but there are a couple of studies that they are going to do under this evaluation, and I think I'll leave it to Novo. I don't want to go into too much detail with Novo's project. It's so sensitive, so I'll probably leave it at that. Okay.

David Wessberg, CEO at Annexa, thank you so much for being here and answering our questions. Yes, thank you.