Oncopeptides AB (publ)

Hi everyone and welcome to this presentation of our report for the third quarter of 2024. This is our standard disclaimer. As always, I have Henrik Bergentoft with me who will give a financial update. Before that, I will go over some key points for the third quarter. I will then come back with an update of our European commercialization and provide a deep dive on our three key markets in Europe. Germany, including Austria, Spain and Italy. Starting off with some key highlights. The revenue in Q3 was 8.5 million, a slight increase versus Q2. And without the milestone payment from SEBIO for South Korea, European sales in third quarter are slightly lower than in the second quarter, which in turn showed a 60% increase over Q1. We do see a strong start in Spain, where we during this quarter have broadened regional access. Year to date, we have unlocked 80% of the region, which we are pleased with. The speed we are moving with is due to a high unmet need for perpactity and a function of the positive clinical experience pre-launch among investigators and top key opinion leaders. This means that the strong initial interest we saw in Spain in the second quarter has started to transform into sales. This is, however, offset by a soft German market where we see slower than expected growth. The slightly lower sales is due to change in ordering patterns in Greece by the authority, meaning very low sales in this country during Q3. Hence Q3 as a whole is based on this dynamic and mixed quarter, illustrating volatility in an early stage launch. On the market reactions this morning, we do appreciate there are high expectations. And rest assured, we are fully committed to continue to grow sales to reach our profitability goal in 2026. Following this slower than expected sales development in Q3, OncoPeptides is acting by implementing an even stronger focus on our three largest markets, Germany, Spain and Italy, reducing our cost base elsewhere. We are doing this without impairing our ability to market and sell perpactity in the countries where we see the greatest near-term potential. I will talk more about our key markets and the strategy we have, but first I will hand over to Henrik for a detailed look at the finances.

Thank you, Sofia. Starting off with an overview of the profit and loss statement for the first quarter and nine months here compared to same period last year. Firstly, I want to highlight with regards to sales that last year includes a reversal of return reserve in the US, where underlying sales for the nine month period in 2023 amounts to 5.6 million SEC, compared now to the 21.7 million SEC for the nine month period of 2024. Secondly, last year's operating expenses is positively affected by a refund of 43 million SEC related to the closure of a clinical study, meaning that underlying expenses for the nine month period 2023 amounts to 255 million SEC, compared to 225 million SEC current year, hence a cost decrease of some 12%. With this, we want to underscore that we are and will be very cost-conscious and careful in how we prioritize our resources on our way to profitability in 2026. Focusing on our key markets, Germany, Spain and Italy. By that, we can move to the next slide where we take a closer look at operating expenses. Our research and development expenses decreased from underlying 49 million SEC in 2023 to 22 million SEC in this year's quarter. No clinical studies are currently ongoing, with the phase three study ocean was completed during the third quarter of 2023. And just as mentioned, during the third quarter of 2023, refunds of 43 million SEC were received regarding final settlements for the completed studies, which positively affected the cost. And corresponding refunds have not occurred during 2024. Hence, the underlying R&D cost is year to date 34% below last year. If we look at our marketing and sales costs, those amounted to 30 million SEC for this quarter compared to 29 million SEC last year. Behind the slightly increased cost is the ongoing commercialization activities in Europe, which Sophia will describe in more detail further in the presentation. Our administrative costs for the nine-month period amounted to 53 million SEC, which is on par with last year's 53 million SEC. As the graph displays, we are actually decreasing costs current quarter compared to last year. We should be perceived as oncopeptides building its organization and cost consciousness in a very effective way. By that, we can move to the next slide and have a look at our liquidity position. By the end of the quarter, we had 250 million SEC cash at hand, of course infused by the rights issue that was completed in May 2024. I also want to highlight that cash flow from operation in Q3 includes a negative timing effect of -and-out coming VAT payment of 105 million SEC, with corresponding positive effect in the prior second quarter, meaning that the 250 million SEC is real and true cash at the back. And by that, back to you Sophia again.

Thank you, Henrik. I will now talk a bit about the status of our European commercialization in general, followed by a deep dive into the dynamics, potential and challenges of our three focus markets, with a particular focus on Germany. We expect the countries we are now increasing our focus on Germany, Spain and Italy to be enough to take us to profitability at the end of 2026. The drivers of growth are that we have an innovative price negotiated in Germany and Spain, and we do see an encouraging progress in Italy according to our plan. We also have national guideline updates in Germany and Spain just recently. We do see increased positive clinical experience, KOL advocacy, -to-peer exchange and increased awareness in Germany. We are already accessing 80% of the regions in Spain, which is encouraging for the sales pick up in the second half of 2024 and the beginning of 2025. The graph shows our sales trajectory in revenue quarter of the quarter since the first quarter 23 up until the third quarter 2024. We do see a clear positive growth trend with variation informed by different factors to different quarters. In Q3, we did see strong growth in Spain, both in revenue and in vials. We did see a small growth in Germany in both revenue and vials. In fact, between Spain and Germany, we saw a double-digit growth in vials. Due to the decline in Greece, this was not fully translated into revenue, but still speaks to the growing demand in two of our key markets. Our European commercialization case is based on that Oncopeptides has a fully approved drug for treatment of an incurable disease that provides an expanding market opportunity valued at 1.5 billion SEC. Our focus right now is growing sales in the markets where we have secured access and adding diversity to our revenue stream by unlocking new markets and finding partnerships for our geographic expansion. There are different steps in the market access process, and let me remind you of that the timelines for the review and negotiation phases are country specific and at large controlled by payers. Since our quarterly update, we have progressed really well with Spain, and we are now in the last phase of market access, which is to obtain regional access. And as said, we have in record time ensured to gain access to approximately 80% of Spain. This has been achieved in such a short time due to a high unmet need and the foundation of a positive clinical experience generating a demand for PEPAXT. I will speak even more about Spain in a little while. Italy has moved into price negotiation phase and we are so far progressing according to our plan. Regarding Netherlands, the payer environment is strict. There are intense discussions on how to get any new multiple myeloma drugs reimbursed. These restrictions will delay time to market for all drugs, and we have decided to put our efforts on hold until we do see improved willingness to pay. This is unfortunate, but out of our control. We still do see long term potential in this market, but right now we have decided to adjust our investment to the markets where we do have access. We will have to carefully follow the development to take an informed decision when to restart our efforts. Should we take out the market completely of our launch plan, we will of course clearly communicate that. And that is not the case here. We are strengthening our focus on the markets that we believe have the potential to make a true difference and bring us to profitability by the end of 2026. And I will now give an overview of these three markets with an emphasis on Germany. What is very apparent when you take a look at the three key markets, the two oncopeptides next to each other, is the lack of clinical experience we had in Germany when launching PEPAXI. We are working hard to catch up. At the same time, the potential for a stronger sales pickup in markets where we have clinical experience is confirmed by the start in Spain. We in addition have similar positive clinical experience pre-launch in Italy from both key opinion leaders and early access programs and investigators, which we believe will support the launch. From a prescriber perspective, Germany is the most scattered market, Spain and Italy more centralized. And regarding the size of the different target population, Germany is the largest followed by Italy and then Spain. Now I wish to give you a better understanding of the dynamic, the critical success factors and opportunities in Germany. But first, if we boil down to what really matters with a product like PEPAXI, I will repeat myself. It's all about generating a positive clinical experience that demonstrates the value of the drug. And we do have the opportunity as we see that physicians starting to prescribe PEPAXI continue. There are many patients that can't tolerate or will respond to immunotherapy and are in need of an option that have got a balance of clinically meaningful efficacy, tolerability and quality of life. Looking at the different barriers, critical success factors and opportunities in Germany. As said, we only had one key opinion leader with very limited clinical experience at launch in Germany. The critical success factor here is to ensure that key opinion leaders do get a positive clinical experience to be able to recommend and advocate for the drug. As of today, we have managed to get nine out of 17 key opinion leaders to gain positive clinical experience. And I will show you a bit later what effect that can have on a territory. The first national guideline update since we launched occurred just now. And we do know that we are included in the guidelines as the draft guidelines were presented and impacted including included just recently. This will of course also support the launch as all the medical education meetings are reviewing the guidelines. We had no clinical experience at launch among the prescribing physicians in hospitals or in office based settings in Germany. Physicians commonly listen to their colleagues and peer to peer exchange is critical to success. And as PEPAXI is a product that is generating a positive clinical experience, the peer to peer exchange is increasing in the everyday practice. We do see several local protocols and guidelines being updated and we do publish case reports to spread the experience generated. Germany is a very scattered market with many treating physicians, which is making it even more difficult to start to build clinical experience from start of a launch. The key to success in such a market is as I have already mentioned to gain KOL advocacy. This is a heat map of Germany and it's showing the population density of persons 65 years and older. That is the age of our patients. The bubbles in orange shows the cumulative number of PEPAXI vials in Sloan until the end of the third quarter 2024 by ordering pharmacy location. As you can see, we are focusing on the most population dense areas and in the regions where we generate clinical experience and we have key opinion leaders and key accounts, sales uptake is growing and accelerating. We have regions starting to generate experience second half of 2023 and they stand for the majority of sales. We also have seen several regions started to gain experience in the second and third quarter of 2024 and we are expecting them to increase the coming six months. Let's take a closer look at this. This graph shows five of the largest territories with the most dense population and as you can see there is a clear difference. In region one, two and five, we do have obtained sales and first prescriptions from KOLs during 2023 and as you can see it takes one to two quarters to see an acceleration in that territory. This is due to that there is a positive clinical experience generated and peer to peer exchange starts to take off. The last couple of quarters we have seen the first orders from key accounts into other regions with a great potential. And even if it's early days, we do believe that these territories will also be able to take off the coming six months and support the acceleration of sales growth in Germany. The potential of Oncopeptides has not changed. While we are putting more effort into the first cycle, our core business, we have in no way forgotten about the next step value drivers. During the third quarter, we signed a partnership with SE Bio and we have received a first milestone payment. The first ever for Oncopeptides and the testament to our ambition to build sales outside of Europe. We continue to entertain discussions with potential partners in both Japan and China. We also continue to progress our pipeline in a smart and efficient way and we remain very confident in its potential to provide value to our shareholders and patients. As for next steps, we focus our efforts on the OPSP1 molecule announced in the last quarter moving towards IND. Meanwhile, we continue to evaluate the best way forward for our PDC molecules. And with that, I would like to say thank you to everyone listening and hand over to the moderator for any questions.

The next question comes from Richard Romanius from Redeye. Please go ahead.

Good morning. Thanks for taking my questions. So starting with Germany, would you say that you have experienced good repeat orders from activated accounts?

Thank you Richard and good morning. Looking at the third quarter in Germany, as we all know, it's a quarter of the vacation period. And what we did see that we did get repeated orders. We did not have a lot of dropout patients, but we also saw some delay and adjustment to the holiday period. So, for example, some of the key accounts and key territories ordered with a longer interval between the different orders. And that is, of course, a benefit for patients and physicians with perpaxity that if you have a response, you can look into delayed treatment slightly and adjust according to holidays and other factors. So the short answer to your question is yes, we do see repeat orders. We continue to see the positive clinical experience. But we also did see an impact of less frequent repeat orders during this quarter due to the holiday period.

Okay, you mentioned that Greece had a negative impact on sales. I thought that was a quite small market. Could you say something about how important Greece has been for the sales launch this far?

So when it comes to Greece, I just would like to remind of the mechanisms we are selling on there. So in Greece, we're selling on named patient sales basis. And there is an authority called IFET that is ordering. And in Greece, commonly they order for more than one cycle of treatment. And what happened the last quarter is that they used stock that they had stock up for the patients in need of new treatments during this quarter. In regards to how important Greece is to our profitability goal and to our sales, we do not consider Greece to be a key market. I would like to emphasize that it's Germany, Spain and Italy that are the markets of focus and with the greatest potential. Greece is a fairly small country with a population of 10 million. But the ordering pattern of them changed and given that we are so early in the launch, of course, any decrease in orders will affect us.

Okay, and considering your shopping strategy to focus more on the three main markets, what does that mean for the other markets? Does that mean you will have less activities to gain access in the other countries and will they be slightly delayed then?

So when it comes to our launch phases, if you recall, we have phase one, two, three and four. And the only market that we are putting on hold now is Netherlands due to the pay environment because there is no way to get through there for us the coming time. Hence, we would like to focus the investment on our key markets where we do have access to see the opportunity for access. When it comes to smaller markets outside of Germany, and when I say Germany, I also include Austria, Spain and Italy, we are continuing with market access activities. And we will, of course, when we gain access, ensure to have a focused and sort through investment in those markets.

Okay, last question. Could you say anything more about when you think you can launch in Italy or any more details about progress with the market access there?

All I can share currently is that we have moved from the benefit assessment that was positive into negotiation phase. And in regards to timelines, as I've already shared, this is controlled by the payers and I can't give you a specific timeline, but we do see an encouraging progress.

Okay, great. Thanks.

Thank

you so much. The next question comes from Suzanne Van Vosuizen from Van Lanshot Kempen. Please go ahead.

Good morning. This is Sven Dailing for Suzanne. Thank you for taking our questions. So my first question is about the lower than expected sales performance in Germany and Greece. Like for Germany, is it only impacted by the vacation period or were there also other things that caused this?

It was primarily, if we look at those, so we buy sales data from our competitors and overall the market flattened out during the third quarter and we do our deep dive analysis, we can see that it's clear and that's what you see on the map. We have certain territories where we are really accelerating and when those territories had vacation, there was, as I also told Richard, more of a delay in ordering. So we don't see any other factors than that we are still early on with our launch efforts as we're coming from a situation where we basically had to start to prepare the launch while we were launching. And we have of course been checking in with all our customers, ensuring that patients are doing good and understanding the experience that we are generating to ensure that we don't miss anything in the market. But the feedback is very positive from the experience perspective and we don't see any other alarming dynamic. So it is really based on where we stand currently, how vulnerable we are to small changes during the quarter that is making this. And then I would like to emphasize that we did grow in Germany a little compared to, for example, Spain, but we still saw a growth. So it is really the Greek decline that is making our results of kind of revenue decrease.

Okay, that's clear. And then I also wanted to know that the things that caused the lower than expected sales, do you think that is also a risk in other markets like Italy and Spain?

Well, Italy and Spain are very different from Germany. And then the strapped markets in terms of how scattered they are versus centralized, where Spain and Italy are more centralized. And there is also a difference in access as you go for national access at first and then you need to negotiate your or unlock your regional access in both Spain and Italy. It's difficult to compare the three markets on kind of launch uptake because Germany has been mostly influenced by the lack of ability to prepare the launch properly based on where we're coming from. While Spain and Italy are in pre-launch phase longer as we need to unlock regional access and that is a very decentralized process where the different regions are unlocked at different time points. That's also why I'm emphasizing that we have had a national price for a quite short time in Spain and yet we managed to unlock 80% of the regional access in Spain, which is very promising for the future. Because looking at the drivers of sales, it is really a product that is giving a positive experience to both patients and physicians, of course, for the right target patients. And that is really supporting us in Spain because we had that experience from before. So the physicians know how to use the drug and we do foresee that that will be the case in Italy as well based on the vast experience from both clinical trials and early access program.

Okay, thank you. And then my last question is about the pre-clinical programs. So what are the next steps and when will you close further data?

So we have two platforms. We have the Spike platform and as I mentioned, we have our first candidate drug, OPSP1. So we are moving OPSP1 in pre-clinic towards IND doing CMC work as one example of the OPA activity. So we have a very good case. When it comes to the clinical program and clinical data, we have still not secured financing for the clinical program. And we will, of course, work on that to be able to share when you will get more clinical data during the coming time basically.

Okay, thank you.

Thank you so much.

The next question comes from Ui Serf from NA. Please go ahead.

Hi, morning question. So I can see that some very famous global opinion leaders continue promoting Moflutin to POP stay in various conferences, but Octopeptide seems to be incapable of growing sales at the pace that you should. Can now be the time to think about seeking a different owner for the program who can realize the full potential? Thank you.

So you're right that we do have global key opinion leaders supporting us. That is again based on their experience in the clinical development program. The reason why we have difficulties to really deliver on the expectations on the market from a German perspective is that we lacked that local endorsement. And Germany is a market largely driven by the local KOLs, as most of the prescribers are out in the office-based setting. So from that perspective, we do not see the difference between us or if another company would take on PAPAXTI because the same job has to be done. And it is about unlocking the KOL advocacy by generating positive clinical experience. We also do have a team that is covering all of Germany and we have recruited team members from various companies with good networks within this community. So we are confident in our model because we can see that it works, as I showed you on the graph. And then we as a company will always continue to assess how we can optimize and how we can accelerate.

But surely a larger former company with an established name and established network would be able to do that job more quickly.

So if you look at the market in Germany and look at the sales data, there are much larger companies launching currently. So we have Pfizer launching and we have Menelini Stemline launching their product. And we don't see a lot of difference in the pace of growth between us and them. So you are right and I understand your reasoning and thinking. And of course, our responsibility is always to pressure test our model. But for us, it's very clear what we need to do. And even though we are moving slower, we are moving in the right direction. And if we believe that another player would be able to do it even better when we look at the comparisons to our competitors, we would of course look into that opportunity because we are really here to ensure that the vaccine reaches patients.

OK, thank you.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Yes, there's one David here, head of IR. There's one written question. I think you addressed it already, Sofia, but let's repeat. When can we expect the company to go into a phase one with the spike?

So I said we are moving in the pre clinic and we are doing activities to move towards I and D preparedness. We are looking into different options on how to finance the clinical trials, hence phase one for the spike program. And we will have to get back on timelines when we have decided in which direction we are moving towards.

That's all the written questions. So back to you, Sofia, to closing your remarks.

So thank you, everyone, for listening in today. And thank you so much for all the questions. I appreciate that you asked questions and that we get to clarify. And as always, we are here to respond if there are further un-clarities. And by that, I would like to say thank you and wish you a good day.