Xbrane Biopharma AB (publ)

Welcome to our webcast in relation to Q1 report 2024 for X-Brain Biopharma. I'm Martin Aumark, CEO and I have with me Anette Lindqvist, our CFO. We're going to talk about the development activities we had during the course of the quarter and I think one thing we'll get back to is that we successfully have been able to scale up the production process of our Optivo Biosimilar candidate X-Divane, which I think is a good achievement of the team since this is our first product being expressed in mammalian cells and demonstrates the feasibility of our platform technology for mammalian cells being successful in scale up. okay so yes to recap our development portfolio for those of you that have followed us for quite some time we are dedicated solely to development of biosimilars and we have a portfolio of four biosimilar candidates first one is Ximluci biosimilar to Lucentis launched in Europe commercialized by our partners DADA and undergoing regulatory process with FDA for US approval and recently we entered into a partnership with Valorum Biologics for commercialization of this biosimilar candidate in the US. The second biosimilar candidate is referencing SIMSIA And here we have a partnership with Biogen. This is a product which is undergoing scale up and production of clinical material during the course of this year. And then we have development programs on biosimilar candidates to Opdivo and Darcelex, respectively, where we have active ongoing out licensing processes. And To start off and talk a little bit about the developments when it comes to sales of Ximilusi across Europe. A snapshot first of the market situation. If we look at the market for anti-VGFs for ophthalmic purposes, this is a market of about 5.3 billion euro annually. and we are tracking this on a quarterly basis this is based on collection of revenues of the relevant products from quarterly reports of the respective companies selling these drugs and what we can see first quarter 2024 is actually that Ranubizumab as a molecule and that is done to say Lucentis plus the Lucentis biosimilars currently being present in Europe it's the second fastest growing molecule first quarter versus then fourth quarter 2023 so we saw an eight percent growth versus two percent growth for the overall market the fastest growing product is Vabysmo but it seems like this is gaining market share mainly from ILEA who is seeing a slight decline it seems like in the quarter and it's still so that biosimilar market to Radavizumab is nascent and uptake is moving ahead but it still goes rather slowly in comparison to what we've seen with biosimilar launches on other biological drugs. However, we are still believing in the long-term trajectory and prospects of biosimilars to Ranabizumab. We believe that they eventually will take up to 70% of the overall Ranabizumab market, similar to what we've seen in situations where biosimilars have been launched to biologics in oncology and immunology. So that long-term view still holds true. Then looking at Eximulus specifically, now in Q1 2024, the product is launched across 16 countries in Europe. And a few notes to make, recent launch in Italy, which is the fourth of the five big European countries where the product is launched. The only country out of the five big ones remaining for launch is France. and in the UK this NHS frame agreement which was entered into by Stada last year has been prolonged so that's another development and Stada is working actively with citizen marketing activities in order to drive penetration further and increase the sales across these different markets I think needless to say most significant prospect ahead is to further penetrate the four big European countries where the product is launched what we saw during first quarter was that Ximulus had approximately one percent market share and this is X-Brain estimates based again on collection of revenues of the respective products and it's one percent within the Ranibisma market, so Lucentis plus the Lucentis biosimilars. And that was a market of about 320 million euro for first quarter of 2024. Ximulusi remains number two amongst Ranibisma biosimilars in Europe and we saw an end-user volume growth of 30% versus fourth quarter 2023. And you can see on the graph here on the right hand of this slide the growth in the respective quarter versus the previous quarter where we can see that actually the volume growth has been increasing even over time the last three quarters so we're making progress and I think also this is reflected as Annette will go through the financials in more detail where we can see that although we did not ship any finished goods to Stada so that a portion of our revenue which you saw during last year did not come in during this quarter but the revenues we generated of 14 million Swedish crowns related to profit sharing from Stadan hence also that positively impacts our gross profit margin and gross profit so I think that's an important read from our financials this quarter then We're happy to sign the license agreement together with Stata with Valorum Biologics. We have a separate webcast around that. We're also par from Valorum presented the company. Here's a snapshot of the terms of this deal. It's a rather traditional license arrangement, I would say. It's a license fee of up to 45 million US dollar, which is then split into an upfront and milestones on regulatory development, as well as sales-related milestones, and then royalties eventually on net sales. Important to note, of course, that we're doing this together with Stada under the co-development agreement already signed with them. Hence, all proceeds from Valorant will be split 50-50 between Stada and Xprint. X-Brain has also signed the supply agreement with Valorum under which we're going to supply finished goods to Valorum and we're doing that with a markup over production cost and we're also happy to have Valorum as a partner now we're going to work together X-Brain Stada and Valorum in order to bring product to resubmission to FDA as soon as possible something which we are going to get back to within short with regards to planned timing for resubmission then talking a little bit about the developments on our preclinical portfolio here first be beta one here we are going through the scale up process we have successfully done the first part of the scale up which we're very happy with and that means as you who are familiar with this kind of production processes the fermentation process which we've done at the intended clinical scales together with our contract manufacturer we are going to run the first full scale updash and that is to say the fermentation process plus the purification process during the summer and we hope that it's of course going to be successful and trigger a milestone from Biogen and late sale of upcoming batches. Then on X-Devane we actually did now the first full scale-up batch at full commercial and clinical scale together with our contract manufacturer so that's going to be continued with the production of clinical material during the course of the year but then full focus for this program is related to out licensing of the global rights of this program to suitable commercialization partner so that we together can go into clinical development which is the next step really for this program And then on xDAR-SANE by similar candidate to DARS-LX it's now undergoing early stage process development in-house. So we can comment also here that you see our expenses still being at rather high levels and this is related to particularly B8.1 and xD-Vein scale up processes which we now show good results from and have been long-term commitments versus partners and contract manufacturers to continue with and we believe strongly in both of these two programs while as Ekstar is saying is in a more is not consuming a lot of capital at this time since it's going through process development at pilot scale in-house So that's a brief update operationally. And I then hand over to Annette to go through the financials in more detail.

Thank you, Martin. My name is Annette Lindqvist. I'm the CFO of Xbrain. I'm going to take you through a few slides and to share some more details around our cost base and specifically net sales. Kicking off with the revenue stream, which is, as Martin said earlier, lower than previous quarters. It's mainly net profit generated from Stata. with a strong gross margin. So as you can see, 14 million net sales and 9 million gross margin. For those of you who has been with us for some time, you would remember that we have three income streams or income sources. First one is shipment to Stada with no profit, no profit at all. Number two, net profit from Stada with a strong gross margin. The only thing that impacts that number is ordinary production variances on an ongoing basis. And three, license agreements, generating income with more or less full gross margin. So for the next coming quarters, you will see that we will generate the number three from the agreement with Valorum. And this will be, and is, will be for X-bray a common pattern. It will vary from quarter to quarter, and it will be impacted strongly in case we have shipments done or license agreements done, and whether those license agreements are also phased or we can actually do revenue recognition immediately. So in case any questions around this, I'm happy to take them after. So next slide, please. For our company expenses, those are slightly higher in the quarter than versus Q4 2023. And as Martin said, the drivers here are really the pre-commitment development expenses related to First and foremost, the CMOs for BIP801 and X-Devay. BIP801 consumes quite a lot of capital and will be consuming, but however, it will also generate income later in the quarter. So hence, that's why it's important that we continue to invest behind that program to make sure that we can get that income later in the year. For Ex Devane, similarly, we are proceeding well with our CMO and we want to continue to do so to make sure that we are on track when we can enter an agreement. Also, first and foremost, to keep the timelines for the overall timeline for the programme to make sure that we can go live in the market when the patent expires. Ximluci is also... consuming a bit. There's also more cash than P&L, but I'll come back to that later. I also wanted to mention the cost savings scheme that we communicated in the autumn. That is now well underway and the majority of the headcount left the company in Q1. Consultants already in December, they were phased out as quickly as possible, but now Roughly 20-ish employees left in the first quarter. Majority, though, late March, while those savings will be seen later in the year. And also following that, savings will be gradually realised up until Q3 2024. So we'll come back to this number and present how much savings we can generate that in the future quarters. Next slide, then, please. So, cash. Obviously, we left the quarter with a very strong cash position because of the share emission. So, we left the quarter with 270 million. The burn rate in Q1, as we can see on the right-hand side, was more... Hefty than the previous quarter. It was 113 million. But obviously cash, majority of that is related to the inventory build. And those are the, as Martin said, the long-term binding agreement we have with the CMOs. So rather than to cancel those and have the same, cancel those slots with the CMOs, which would then be the same cost for us, we made sure that we could actually secure those. And hence, for those of you who have seen the stock bill, it is quite strong now. We expect that inventory level now to stabilise and also then obviously be impacted by any further shipments to start. But we already know now that those will not come regularly in 2024. So with that, I think over to you, Martin.

Yes. And to then summarize key takeaways from the quarter, as we said, revenues generated of 14 million Swedish crowns, mainly coming from profit sharing. And we expect and hope that this will increase during the course of the quarter based on continued growth of end sales revenues. and continued scale effects in the sales and marketing leg. Then successful scale up of ExDevane and Partly on B-Beta once we're making good progresses on these two programs. Now key thing for those programs of course to monetize on these developments for BIB801 to get to the stage of triggering the first milestone with Biogen and ExDevane with regards to out licensing the rides. The key priorities for the year remain the same as we communicated before. Continue to support Stada with regards to Ximulus in Europe. Work towards being able to launch Prefix syringe during the course of 2025. work together with our partners for resubmission of the BLA of Leucamcid the brand name in the US for our Ranibus mamba is similar and then also work together with Stata to get additional launches or regulatory approvals and launches in other territories for Xymilusi So these are our key priorities for the course of the year and we hope we're going to be able to get back on successful outcome of these ones in upcoming calls with our quarterly reports. So with that said I think we can open up for questions first on the phone line.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Dan Akshuti from Pareto Securities. Please go ahead.

Hello, Martin, and thank you for taking my questions. Just two questions. One, do you have any Any news to share with us regarding the communication with the FDA and the meeting with them, or just when approximately you're expecting to be able to update the market on that? And the second question would be regarding the profit that you now reported from Ximiluki in Europe. Is that something you expect to continue, or are there fluctuations in Stardust's operational cost for Ximiluki so that the profit is up?

go down again or do you expect that to hold up and grow with 30 percent or maybe accelerating growth this year thank you so we expect to be able to get back to the market to communicate on timing of resubmission of the BLA in June we are in communication with the FDA but so is also our production sites and they're making and we are making the plans for activities that need to take place prior to resubmission as we speak and we are going to get back in June on an update with regards to the levels of profit sharing on sales of Ximilusi we hope of course that the end sales from Stada is continuing to grow at the levels we've seen historically and hence also that the levels of profit sharing increases at the same pace I shall add though that when it comes to sales and marketing expenses those are a little bit harder for us to predict and there can be specific activities during a certain quarter which makes them also a little bit volatile but we do expect the level to increase generally in a little bit longer term perspective in line with the end sales growth of Stada.

Thank you very much.

The next question comes from Philip Enison from Redeye. Please go ahead.

Hello, Martin and Annette. I wanted to start on the Kimuchi and I was interested if you could provide some color on the inventory levels and how they're looking for, let's say, the quarters ahead. Do you expect SADA to buy more finished product from you in Q2, for example?

Yeah, I mean, as Annette mentioned, We have had long-term production commitments versus contract manufacturers which were active during the course of Q1 and are now coming to an end if you will. so we believe that inventory level will stabilize during the course or for next quarter essentially or this quarter and but then when it comes to sales of finished goods it's harder to predict exactly how let's say fast that inventory level could go down due to deliveries to Stada I think a reasonable expectation is that the inventory level remains at the similar level where it is today during the large part of the years and then gradually goes down.

Right and also do you have any updates on the partnering side discussions for XTLA?

So we are running an active auto-licensing process of Extivain and we're having a multitude of active discussions with potential counterparties and we are hopeful that we're going to be able to find a suitable partner for that program. It is taking a little bit longer than what we previously anticipated, but I think now the process is moving ahead well. Okay, thanks a lot.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. 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.

So thank you, operator. I think from what I can see on the, on the written questions, they are more related text to vein and when we can expect a deal and how that partnering is going. So I think that you just responded to that Martin, in case you want to add or expand a bit further.

No, I think we already responded to that one. For sure, our ambition is to close the deal during the course of the year. But at this point in time, I don't think we can be more specific than that.

Okay, so there are no more written questions. So operator, whether there is any closing questions from the phone line?

We have no further questions on the phone line.

Okay so Martin any summary remarks?

Big thanks to all of you who call in and who are following us and we are always here if you have any further questions either via email or phone we should do our best to respond and otherwise thanks for now and have a good day.