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 capacity 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, Onco Peptides 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 pipaxity 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 the same period last year. Firstly, I want to highlight with regards to sales that last year includes a reversal of return reserve in the U.S. 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 months here in 2023 amounted to 255 million SEK compared to 225 million SEK 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. And 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 SEK in 2023 to 22 million SEK in this year's quarter. No clinical studies are currently ongoing, but 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 SEK were received regarding final settlement for the completed study, which possibly 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 cost, those amounted to 30 million SEK for this quarter compared to 29 million SEK last year. Behind the slightly increased cost is the ongoing commercialization activities in Europe, which Sofia will describe in more detail further in the presentation. Our administrative costs for the nine-month period amounted to 53 million SEK, which is on par with last year's 53 million SEK. As the graph displays, we are actually decreasing costs current quarter compared to last year. We should be perceived as OncoPeptide's building its organization in cost consciousness and a very effective way. But we can move to the next slide and have a look at our liquidity position. So by the end of the quarter, we had 250 million SEK 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 in and out going VAT payment of 105 million SEK with corresponding positive effect in the prior second quarter. Meaning that the 250 million SEK that is real and true cash at the bank. And by that, back to you, Sofia, 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, peer-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 in the beginning of 2025. The graph shows our sales trajectory in revenue quarter over 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 SEK. 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 I 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 PEPAX-D. 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 for oncopeptides next to each other is the lack of clinical experience we had in Germany when launching Petaxty. 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 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 Pepaxity, 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 papaxi 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 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 setting in Germany. Physicians commonly listen to their colleagues, and peer-to-peer exchange is critical to success. And as Papaxi 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've 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 papax devials since launch 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 SC Bio and we have received a first milestone payment. The first ever for Oncopeptides and a 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.