Xbrane Biopharma AB (publ)

And welcome to our webcast in relation to Q1 report 2024 for X-Brain Bio Pharma. I'm Martin Åmark, CEO, and I have with me Annette 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 Bio Simulator candidate X-Brain, which I think is a good achievement of the team. So this is our first product being expressed in mammalian cells and demonstrates the feasibility of our platform technology for mammalian cells being successfully scaled up. Okay, so just 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 Ximlusi, 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 Simzia. 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 Optivo and Darselex 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 Ximlusi 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 ranibizumab as a molecule, and that is done to say, lucentes plus the lucentes biosimilars currently being present in Europe is the second fastest growing molecule. First quarter versus then fourth quarter 2023. So it's on 8% growth versus 2% growth for the overall market. The fastest growing product is Vabismo, but it seems like this is gaining market share mainly from Ailea who is seeing a slight decline, it seems like in the quarter. It's still so that by similar market to ranibizumab is nascent and update is moving ahead, but it still goes rather slowly in comparison to what we've seen with biosimilars launches on other biological drugs. However, we are still believing in the long-term trajectory and prospects of biosimilars to ranibizumab. We believe that they eventually will take up to 70% of the overall ranibizumab market, similar to what we've seen in situations whereby similars have been launched to biologics in oncology and immunology. So that long-term view still holds true. Then looking at the similars 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 the 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 sales and 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 similars had approximately 1% market share. And this is explain estimates based again on collection of revenues of the respective products. And that's 1% within the Anabismap market. So Lucentis plus the Lucentis biosimilars. And that was a market of about 320 million Euro for first quarter of 2024. Similars remains number two amongst the Anabismap 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 start us at that 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 start and 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 part from Valorum presented the company. Yes, a snapshot of the terms of this deal. It's 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 a 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 Stata under the co-development agreement already signed with them hence all proceeds from Valorum will be split 50-50 between Stata and X-Brain. X-Brain has also signed a 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, Stata and Valorum in order to bring the 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 1. 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 up batch. And that is to say the fermentation process plus the purification process during the summer. And we hope that that's of course going to be successful and trigger a milestone from Biogen and let sale of upcoming batches. Then on X-Brain, 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 relate 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. Then on -DARC-ZEN by similar candidate to DARC-ALEX, 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 B-Bait 1 and X-Divane 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 -DARC-ZEN 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.

So thank you, Martin. And my name is Annette Lindquist. I'm the CFO of X-Brain. I'm going to take you through a few slides and to share some more details around our cost base and specifically net sales. So kicking off with the revenue stream, which is as Martin said earlier, lower than previous quarters. It's mainly net profit generated from Stada 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 Kemi quarters, you will see that we will generate the number three from the agreement with Valorum. And this will be a very, will be for X-Brain, a common pattern. It will vary from quarter to quarter. And it will be impacted strongly with, in case we have shipments done or license agreements done. And whether those license agreements are also faced 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 B-Beta 1 and X-Brain. B-Beta 1 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 X-Brain 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 program to make sure that we can go live in the market when the patent expires. Ximlucchi is also consuming a bit, that's also more cash than P&L, but I'll come back to that later. I also wanted to mention the cost saving scheme that we communicated in the autumn. That is now well underway. And the majority of the head count was, 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, why those savings will be seen later in the year. And also following that savings will be gradually realized up until Q3 2024. So we'll come back to this number and percent, how much savings we can generate that in the future, for just. 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 more than 13 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, same cancel those slots with the CMOs, which would then be the same cost for us, we made sure that we could actually, that we could secure those. And hence, for those of you who have seen the stock build, it is quite strong now. We expect that inventory level now to stabilize, and also then obviously be impacted by any further shipments to start up. 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 and continued scale effects in the sales and marketing league. Then success of scale up of Exdevain and partly on Bb821. So we're making good progresses on these two programs. Now, key thing for those programs, of course, to monetize on these developments for Bb821 to get to the stage of triggering the first milestone with Biogen and Exdevain with regards to out licensing the rights. The key priorities for the year remain the same as we've communicated before. Continue to support Stada with regards to KSIMLUS in Europe, work towards being able to launch previous syringe during the course of 2025. Work together with our partners for resubmission of the BLA of Lukamse, the brand name in the US for our brand new Bismar biostimulator. And then also work together with Stada to get additional launches or regulatory approvals and launches in other territories for KSIMLUS. 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 the successful outcome of these ones in upcoming course with a quarterly report. 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 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 Simuluki in Europe. Is that something you expect to continue or are there fluctuations in Stardust's operation cost for Simuluki so that the profit could go down again? Or do you expect that to hold up and grow with 30% 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 needs 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 Simuluki, 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 they 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 Enersen from Redeye. Please go ahead.

Hello Martin and Annette. I wanted to start on Simuluki 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 Stada to buy more finished products 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 the inventory level will stabilize during the course or for next quarter essentially or this quarter. 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 through the last part of the years and then gradually goes down.

Right, and also do you have any updates on the partnering side discussions for X2A?

So we are running an active -of-touch processing process of X2A 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 written questions, they are more related to X2Vane 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 mission is to close a 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.