Nanexa AB (publ)

Welcome to this report interview and final communication interview with the drug delivery company Nanexa in the fourth quarter. With us from the company is CEO Göran Ando and CEO David Westberg. Today we will start with a presentation of Göran Ando's GLP-1 overview before we let David in to comment on the quarter and they are both here in the studio. You who are watching can ask questions via live chat. Ladies and gentlemen, welcome. Thank you. It's great to have you here again. David, how happy are you with the report?

I am very happy. I am very happy with the conclusion of last year when we got the study results from our NEXU 2 project. Very happy.

And Göran, you will give us an insight into the wonderful world of GLP-1s.

I will try to give a short glimpse of what has happened during the last few months. This is an area that moves quite quickly, as you probably know. And not everyone follows it so closely. What I say is of course my opinions and my interpretation of it all. That's how I have to talk about it. There are only two companies that have approved preparations in the area. It is Nordic and it is Eli Lilly. In principle, they both have two preparations each. They ended the year in 2024 with sales between 20 and 30 billion dollars. So this is a very similar class together. They share roughly on the market right now in the USA, where you have the freshest data. In the rest of the world, Nordic is larger, but the big economic incitement right now is in the USA. What has happened? Nordic presented, just before Christmas, phase 3 results from its new, which is a solid combination preparation between semaglutide, i.e. Osempic, Vegui, and an amylin product called Kagri 99. The product is called Kagri Sema, at least right now. and they predicted a weight loss of 23%. And since the analysts had suggested 25% as the appropriate, some Norwegian lost about 2,000 billion SEK in a few days. What did not come out is that the study was made so that the patients, when they felt that they had reached a weight loss that they wanted, then had to end. The study actually shows that the majority of patients do not need more than 20% weight loss per time. If you think about the average of these patients, if we mix men and women, it was just over 100 kg. So they have lost just under 20 kg. It's a very similar drop in weight. And of course, with improved views, you walk better, it doesn't hurt your knees. You have a much lower risk of both stroke and heart attack and so on. That's what it actually showed. Many stopped voluntarily at about 20%, which also refers to the fact that since the average was 23%, many continued and had even more weight loss in percentage. So for me it was a very peculiar reaction, but maybe showed the sensitivity in this area and that both companies were highly valued. Elavilli lost quite a lot of money. They lost a medium-sized pharmaceutical company in their market cap when they showed their fourth quarter sales results. which was very good, but the analysts had wished for a little better and they thought that the forecasts for 2025 were a little disappointing as well. So they took a big blow from them for safety reasons. So all of these show that the area is growing rapidly. The area is very highly monitored and it is an area where there will be sensitivity. That it does not matter to me in terms of where this will go in the future, I think is quite obvious. It is clear that it is an incredibly effective product class. which will basically take over all the weight loss side. We also often forget that this is now more of a standard treatment for type 2 diabetes and it is not a small part of the sales of course. What else is happening besides this? Novo Nordisk just approved an indication in the US that the risk of cardiovascular diseases should be lowered. This should not be underestimated, it is a very important indication. It has been shown in a number of large studies, both for diabetics and non-diabetics, by lowering the weight in the way these products do. you reduce the risk, especially stroke and heart attacks, but also other heart-cell complications. And that was quite a significant decrease. So I think it will lead to an increase in the use of non-diabetic patients who need to lose weight, but above all they have risk factors within the cardiovascular system. So for me, at least to a large extent, it is a new group of patients that will appear. You have probably also seen interesting studies, so far relatively small studies, that show that treatment with Osempic or Vagovir not only reduces appetite, but also the craving for alcohol for alcoholics and drugs for drug addicts. The mechanism is difficult to be completely clear about, at least for me, but the results of several studies show exactly the same thing. So it is likely that this has a way forward and both Lilly and Novo Nordisk developed this as a a new indication in that way. So there you have further growth that comes. It is not a huge group, but it is interesting in many ways. Can it help in the problems that exist? Then it would be fantastic. Then, of course, there will be competition on this. Lelio Nordisk has sailed alone on this for a long time now. There will be a large number, especially small companies, that will come on the side and develop their drugs, which will always be an outfall where the majority will probably never get to the market. Some will get to the market. There are also a lot of big companies that work with this. Pfizer has had some setbacks, so I'm counting them off right now, but they will probably come back. Amgen is what's up right now for me. They have a product called Maritide that shows Good, not fantastic results, but good results, solid results and clearly a viable competitor in that way. One of the competition factors that I think is important and that we see here in the attention of this product is that it is dosed once a month. And that for me is an interesting game because it's something that we work with a lot. Therefore, I think that the environment that exists here now on the development side will help us to focus on what we do. I can only To reflect on what David said here in the beginning, we from the board are also pleased with how we have progressed during the fourth quarter. It was just as we had hoped that it would happen. It does not always happen as we hoped in our branch, so that is why we are all happy right now. David, any comments?

It's interesting with Amgen, I think. As I have said several times after this conference I was at in Boston, the pod conference, where both Lilly and Novo and everyone were, just the less frequent dosing. How important that is. How many point that out as a path to success. Convenience and adherence to treatment are factors that are at least as important as the big studies where they show if it's 20-23%. In real life, adherence to treatment is extremely important to achieve those results.

Thank you very much gentlemen. A very interesting exposure to the GLP-1 area. David, if we start with the financial part before we move on with your studies. You are reducing the turnover somewhat, but you are improving the movement result. Could you tell us why the numbers look like they did last quarter?

Yes, absolutely. We have had a focus on cost reduction during the last half of last year. has had an effect on both staff costs and direct costs, so to speak, so we have reduced that. It will be a full year's effect on that during next year, so to speak. And then when it comes to revenues, it is as if we We have focused this year, in other words in 2024, on our NEXT22 project and the NOVO Nordisk evaluation, and we have selected a certain number of highly prioritized cooperation projects. This has led to a slightly lower income, but we assess that it is so important to do this focus and we achieve the results that we have now achieved. achieved with Nexi 2 at the end of last year and those we will take on during this year and so on. But I'm not going to go into that before you ask those questions. But the economy is according to plan and I am very pleased with it.

We will let analyst Johan Widmark in, but I have a question from a viewer related to that. The periodization of revenues from Novomodisk shows a lower value. If the exclusivity has been extended, then Nanexa has received a replacement for that. Is a possible negotiation period involved in the periodization?

Yes, there is no difference. The agreement applies as it applies. We previously made a slightly different assessment of when we would be ready. But we will be ready with this evaluation, or Lenovo will be ready with this evaluation, during the time that has been agreed. So we just made a little adjustment there, so to speak. And the question of whether a potential license negotiation is within it, it does not do that.

Thank you. Then we will take and let in Johan Widmark from Emergers who will ask some questions. Welcome Johan.

Hi David and Göran. Hi. My first question concerns the fact that you have resumed phase 1 with dose escalation. Can you tell us about the background to this and how it affects the timeline that you have indicated earlier for 2025?

To start with the timeline, it does not affect the timeline at all. We continue in parallel with the form-optimization that we have said that we are going to do. We do that and then prepare to start the next study during this year sometime towards the end of the year. There is no effect on the timeline. The fact that we added a dose group with a higher dose had to do with the fact that When we looked at the results from the three first doses, we saw that it was such a good result and no side effects at all. We were a little careful when we did this first study. It could very well have been that we got quite a lot of side effects, but since we see that we do not have that, we chose to go up one dose more. And that is what we have the opportunity to do here now for practical reasons. So I assess that it will add security to the project and more data that could be valuable. But it does not affect either timeline or discussions with partners, but vice versa, so to speak, discussions with partners will support this data.

I understand, thank you. And then I wonder, earlier you said that the main scenario for financing was to find a regional licensing partner in China, Asia, something like that. And now you have secured a lot of financing here with the unit emission. But can you tell me, how does the licensing work continue? Is it with unlimited power against Asia, or have you changed the plan, or how do you think here?

That's a great question. Thank you for asking that question. Absolutely. Our initial focus was to do a local deal in Asia, China, Japan or India. What we see now, when we got these results and look forward, Yes, we look at that, but we focus more on a global deal, but with a co-development deal, where a company has the opportunity to buy in for a signing fee that costs phase 3 of the next study, and then has the option to license before a phase 3 study. These are our thoughts now. This will show when we discuss further with these companies that we are now in contact with. And maybe other companies that we are in contact with. But the licensing effort is the same or increases, possibly. I don't know if you have an answer to your question.

Yes, absolutely. I interpret it as a reduced focus on a regional point of view.

Yes, one of the reasons is that we are doubtful that we can get enough early capital for such a project. If someone suddenly shows up in China or something like that, who is extremely interested and has a big penny, then of course we do not say no to them and throw them out. But right now, in the form of trying to search, because now we must have a partner, we believe that a co-development with a global focus gives us a better opportunity.

Yes, but we are looking broadly, that's how it is, absolutely.

I understand. Then I had two questions about the market. As you described, this is a big pie and many want to be part of this pie. I first think of the license agreement that Ascendis made with Novo, which is a fairly close competitor to Teknik. Have you got any new indications of how it has progressed and their thoughts and reflections on the relationship with Ascendis and you?

Novo does not discuss Ascendis with us, but they discuss our project with us. We had a meeting with them about a week ago, the last meeting. I only comment on our project and it is full focus forward in the evaluation they do with us. I don't know if you want to comment, but we resonate in terms of that they will do parallel evaluations.

For me, it is not crystal clear that you only choose one technology. As I said, the turnover today is 25 billion dollars. Increases by 30% roughly per year, you can count yourself. In the same period, the patent 32 goes off in the first countries. So before that, you probably want to do a couple of things to protect your franchise, which will then maybe be 75 billion dollars. Who knows? It will be very big in any case. So that you only go with one new technology is unlikely for me. But it is those who do not decide.

I understand. And then a little on the same topic. I know that Novo Ventures has invested in another similar company that works with NASA administration of GLP-1. What do you think about the possibility of administering GLP-1 NASA?

I don't believe that, but that's my own opinion. This is a chronic administration. This will be around me for a long time. And to clean the Näslemhinnan The absorption depends on that the mucous membranes feel good, that they are not irritated, that you are not cold and that you do not have anything else in the nose that disturbs the whole thing. You have a built-in insecurity on that side. Thank you very much.

Thank you very much, Johan Vidmark, Emergers. I will now raise another viewer question. To Göran, what does the board think about not being able to reach an extended development or license agreement, even though it has been an ambition for several years? What is missing to reach the goal?

That's a good question. And for an unbearable guy like me, I stand in the same room as the board meeting we had yesterday. Where we look at if we can optimize in any way. There is no doubt that we now have so much data, and we have received it in the last three to four months. So we are in a completely different situation to attract potential collaboration partners. But if you ask if it is a disappointment, yes it is a disappointment that we have not reached there. Absolutely, that is the first thing to admit. We will put more resources into our very limited budget, without going crazy on the cost side. On the whole business development side now, with David focusing more and more of his time. We will also bring in external resources to help us on this side during this year. That's what we're completely capable of.

Thank you, Göran. Another question. How do you assess that Pharmacel stands out from a production cost perspective compared to, for example, Transcon or other well-known technologies? What production shares do you see with Pharmacel from a commercial point of view?

That's a good question. One of the advantages of Pharmacel is the production technology. If you compare it with many other technologies for drug delivery systems, it is about that there are solvents, there are liquids, there are polymers and other things that are unstable. We build the entire production on a gas phase technology in a dry environment. So we don't have cleaning steps, for example, which are usually costly. We have no other, but it's two unit operations, so two steps. It's partly to build the shell, and then we have a step where we deagglomerate particles so we keep them as primary particles. Even though it is not a well-known technology in the pharmaceutical industry, it is well-known in other industries. There is an escalation of technology. It will be a very advantageous cost of goods for this production.

There are a few other things. One thing that is important in this industry is that this is a finished product that can be injected with very thin needles. When you are a diabetic, you know that it is important. If you give yourself one injection, it does not do much, but a thick needle does. a lot more pain than a thin lacquer. And if you want to do that with even space over the years, then it is very important. And I think we have a clear advantage there.

Yes, we have an advantage. And if you look at the cost, what we are looking at is an opportunity to produce this with so-called terminal sterilization and intraceptive. There you can save a lot in production costs. When we also see that we In any case, we have indications that this can have a storage in room temperature and transport to room temperature instead of cooling storage. So it takes away x number of percent in cost, logistics cost. So yes, we see big advantages and I think that Novo and other companies also do.

Another question. Do you think that you can take more money for an evaluation today after the positive phase 1 results for NEX-22 than before? Absolutely, I say on that question. A ringing yes.

Yes, and a lot. I think we have to do that and focus in that way. If that means that some small potential collaborations do not happen, then so be it. We have to focus on larger collaborations that give us the income we need.

And I can say that this is exactly what we have done. When we talk about focusing on business development, that is one of the things we have done.

Thank you. You write in the report that Focus now is to get a license deal in parallel with the next phase with a higher dose, where you expect to reach a full clinical dose, which makes it possible to assign this simplified registration route to the FDA in the USA. How is it formulated to open that route?

No, but in the study that we will start towards the end of this year, which we call Phase 1b, there will be a direct comparison with Victoza. And then you measure pharmacogenetics. And then you have, above all, one parameter that will be important there, and that is area under curve, AUC, which is usually shortened. Then we will compare our formulation in the right clinical dose with 28 injections of Victoza. And what we need is a so-called similarity. It should not be decisive higher and not decisive lower, but it should be roughly the same. That study in itself is a brewing study back to Victoza's original NDA, their documentation. What we then need to do in order to meet the requirements from the FDA is to do a limited phase 3 study with maybe 300-400 patients. After that, the whole clinical program is over. Back to the question about the next study, that's the comparison we're going to make there.

Thank you. How will you be able to communicate about the phase 1b study and when the first patient will be dose?

We calculate in the plan we have laid that the first patient will be dose this year. We have to wait a little bit, but it depends a little bit on about a few other activities, but it is our absolute focus to get it started this year. Then we really start to trigger time to market. Or it is already now, but we will put a lot of resources on that.

You have now proven a month's delay and also preclinical positive results for a three-month delay. What does this mean in terms of the possibilities for an annexation?

That's a bit funny actually. Take Nova or Lilly or any of those companies as an example. And then you think of Line Extension and Life Cycle Management. What you want to do is create a product that differs from the other products on the market and that is better for the patient. And then one step is to go to a one-month product. And we assess that it is a very strong product, an incredibly strong product. But when the market has moved there, So having a quarterly dosing can in many cases, and maybe especially for the obesity market, be incredibly powerful. That's how we see it.

Absolutely. For me, The long-lasting preparation is also attractive, not only because it is comfortable for the patient and simple and it reduces costs. Instead of 28 syringes or whatever it is now, how many syringes, you give one or two. It should also give less side effects. And possibly a better effect. Because you have what is called a zero order kinetics. So it is completely stable in the body. The side effects often come when you get peaks like this. And especially on these products, it is very related to the tops in the blood. The effect is not that great, but it should be. At least not worse. With a little luck, you can also show better effects. There are quite attractive potentials to look at.

There are a lot of shareholders who express their patience. How do you deal with your patience?

We work on it. Both Göran and I expressed it. We are a little frustrated that we don't have a contract that is of a dignity that we want. We really think that we are in that position now, and I have to say, especially after the phase 1 data on Nexo 2, because there we have shown something that is completely unique. We have a handful of companies that have listened to each other after that, and we have some discussions on that. with companies that we have worked with over the past few years, who also see this data. We are frustrated about that, but one out of three happens. The more you work, the more we will get an agreement, or two or three. I dare to promise.

You can confirm for me what you confirmed before, when we have more listeners, that you will communicate when this agreement is in place, not before.

Yes, and we must have respect for that. It is very difficult to comment when you are in the middle of a negotiation.

It just doesn't work. Last question. You are going to visit BioAsia in India in a week.

What do you hope to get out of it? With regard to the small shift we mentioned earlier about the local deal, we have actually switched over so that we will instead be on BioEurope. But it was well caught. We can ask again then, what is the purpose and what is BioEurope? The big purpose with BioEurope is ENX22. We will launch it, we are just about to set up all the meetings here and now. And it will be a continuous meeting with a number of companies that we already have discussions with. And I also hope that we will get a handful more on the track where we can initiate real discussions. We will also talk about Pharmacel as such. Because there is a lot of use of Pharmacel outside GLP-1 market. We have monoclonal antibodies, we have oligonucleotides, we have other peptides that are very, very interesting. I see ahead of me some full-fledged days there in Bayer Europe.

I think it's important that Our shareholders understand that last year we had quite a sensitive balance with saving money to stretch out the cash we had as far as it went and drive our projects forward. It did just as David said that we very much limited what we did for something. not be present at a number of conferences. We simply did not have the means. We did not do some pre-clinical studies, which would have been good to do, but we decided that it is more important to save money in that way. And that has made it possible to blame it a little bit that we have not come as far as we have wanted. But it was a balance and we chose that balance. Now we are pulling up the business development side strongly and that focus is very strong because we think we have enough with exciting data. Data does not only apply to the XQ2, as we have shown, but it is also very easy to translate to other products.

Thank you, that was a positive conclusion to this broadcast. Thank you very much for coming and sharing with us. Thank you for watching and welcome back in about three months when we talk about the first quarter of 2024.