Xbrane Biopharma AB (publ)

Hello everybody and welcome to this webcast in relation to our quarterly report the third quarter of 2024 explain biopharma I am Martin Olmark the CEO and I have with me also Annette Lindqvist our CFO in this call we will as usually go through the highlights operationally and financially of the quarter and then we will open up for questions both via audio as well as on the chat so let's start here and most of the most of you who are calling in probably are aware of our business model we are engaged in development of biosimilars we have portfolio that consists of four biosimilars and biosimilar candidates under development all in all addressing reference product sales expected to reach about 26 billion euro by 2026 Our first program Eximilusi by similar to the Hydraglucentis approved in Europe and launched in Europe since March 2023 by our partner Stada and going through a regulatory process for approval in the US and subsequently post approval to be launched by our US partner Valorum Biologics. We have then two programs are SIMSA and Optiva by similar candidates respectively that are in the late pre-clinical stage. We have successfully scaled up the respective production processes and demonstrated the comparative analytical similarity to respective reference product and we are ready to take the programs into clinical trials during the course of next year and for these two programs we're also running very active out licensing processes with ambition to identify entire commercialization partner that also can co-fund a significant portion of the continued development of these biosimilar candidates up until they reach approval stage in Europe and US. Then we have early stage development of biosimilar candidate to DARS-LX. But we'll start off with Ximilusi. And this is a snapshot of where we together with Stada are from a commercialization perspective across Europe and Middle East. We are continuing to see a solid volume growth. We had a volume growth of about 23% Q3 versus Q2 this year. And that is to say units being sold to end customers. Despite that, we saw more or less a stable net sales level, which then was due to a slightly negative mix effect, which is essentially the relative volumes coming in from different regions with slightly different pricing, essentially. And that is most likely going to vary a little bit from quarter to quarter as we continue this journey. But I think the important thing here is that we are continuing to see the strong volume growth trend and we're very pleased with that and Stada is making good progress across a multitude of the different countries that the purchase launched in in Europe overall then we estimate that Ximilusi has a value market share of a little bit above one percent in a market of about 1.2 billion euro and that is then considering annual net sales of the originated product Lucentis and Lucentis biosimilars on the market in this region and we're happy to see also that the Ximilusi is number two from a market share perspective across the different Ranavisma biosimilars in this region So I think continued development according to plan when it comes to the ongoing commercialization efforts of Ximilusi in Europe. We also started to see approvals across some countries outside of Europe. We've seen approvals in Bahrain, UAE and Uzbekistan and Switzerland coming in in the recent past now and we are expecting to see launches across these countries in the near-term future along with more approvals in additional countries particularly in the Middle East region where we have ongoing regulatory processes. And we are working according to previously communicated plan to resubmit the BLA to FDA in the fourth quarter of this year. so for those of you who have followed us we received a complete response letter on our initial BLA or that is to say biologics license application to FDA for XimiluSim we received a complete response letter in April and we've since then worked through the deficiencies stated by the FDA stated in the in the complete response letter and that entailed on the one hand the qualification of a new reference standard since FDA wanted to see a slight stricter band when it comes to the for one specific analytical method on the reference standard to be used for release of the product to the US. So that is going according to plan and we're also working together with our respective contract manufacturers to address certain observations and deficiencies identified by the FDA in the pre-approval inspections that took place as part of the original procedure. And it's a six-month review process of a resubmitted BLA. Hence, we are expecting to have a new so-called BESUFA date or decision date in Q2 next year and we then hope for an approval and that we after that subsequently can move towards supporting our US partner Valoran Biologics for launch of the product in the US. We're also working together with Stada on pre-filled syringe for a regulatory process in Europe and we hope that we can get an approval of the previous arrangement that can be launched during the course of next year. Moving on to XB-003, our by-similar candidate to CIMSIA. Here, as you might recall, we regained the full rights to this program from Bayern at the beginning of August. this year and we have since then been running an active out licensing process trying to identify a new suitable commercialization partner and that is moving along and supported by an advisory firm specialized in this kind of processes and we have received the first non-binding proposals for such arrangements and due diligence is ongoing by several different potential counterparties. And we are optimistic in being able to finalize this process and identify suitable new commercialization partner for this program. I think we also have made quite significant progress in the development. We have successfully scaled up the production process on the drug substance side. which we were very happy with and we've confirmed analytical similarity versus the reference product at scale. So the product is getting ready for going into clinic and we are planning to have scientific advice meetings with both EMA and FDA in the near term future to discuss and align on a suitable clinical development plan for this program. And then we come to Extivain, our biosimilar candidate to Opdivo. Here we have also successfully scaled up the drug substance process and confirmed analytical similarity versus the reference product at what is going to be clinical and commercial scale on the drug substance side. So we're very pleased with that. We also have had interactions with both EMA and FDA and we have reached an alignment and acceptance on a clinical development plan which is streamlined in comparison to the guidelines for development of biosimilars and we're planning here one single pivotal trial and in that streamlined approach we were able to significantly reduce the envisioned development budget or clinical budget which we're happy with and significantly improves the prospects when it comes to identifying and tying up a suitable commercialization partner for that for this program and in that process we are also making quite some progress we have entered into agreement negotiation phase and we are hopeful that we in the near term future going to be able to finalize an agreement with a commercialization partner for this program and that we then can move into initiating the clinical trial during the course of next year together with a future partner and so that's a brief update we were at from an operational perspective. So with that said, I'm probably going to hand over to Annette to go through the highlights on the financials.

Thank you, Martin. So my name is Annette Lindqvist. I'm the CFO of Xbrain and I have the pleasure to take you through some of the financials for the quarter. If we start to look at the net revenues and just as a bit of repetition, let me take a few seconds to take you through the diagram, which can look a bit complicated at first glance. So the first thing is to notice that the bars represent the revenue streams by quarter and the line is then representing the gross margin. The bars fluctuate quite a bit as revenue will and do fluctuate for X-Brain, and that's driven by, well, two major things. The first one is product deliveries to startup, which happens occasionally and at greater scale. That said, that sale is with little or no margin. Second is contractual payments, can be milestones or other contractual payments with various gross margins. So this quarter, we have a total revenue of 67 million with a gross margin of 45. Last year for Q3, then similarly, we had 59 with a gross margin of four. And on this occasion, that is explained totally by the fact that last year we had product deliveries to starter. In fact, we haven't had any product deliveries to starter this year. as we have quite a considerable inventory with Stada. The net profit share for Semluchi was 16 million, as Martin said, somewhat lower than Q2, and that was driven mainly by one-time marketing cost and a slightly lower price mix than we experienced in Q2. We have a milestone attributable to the license agreement with Biogen. And for the gross margin, we have some cancellation fees with our CMOs related to Xynlochi and also some negative product deviations. Looking at the expenses, the overall expense in the quarter versus Q2 Q4 was a decrease by 34%. That is driven mainly because of Ex-Divane. As we received the positive feedback from IMA, from a reduced clinical program, the program met all the capitalization criteria. So hence, from July onwards, we are capitalizing the majority of the cost for Ex-Divane. and that impacts P&L in the quarter with 12 million. The overall cost saving scheme and also in addition, a very, very conscious cost management with OPEX being held to a minimum. Of course, we have prioritized program spend, but overall, all other OPEX is really held to a minimum. Majority of the R&D spend in the quarter relates to a successful engineering brand with our CMO for XB0CF3. I also would like to repeat that of the launched cost savings scheme launched in November last year, we have now realized 22 million savings and we have staff reductions of 35 of the around about 40 as was communicated by the programme. And we are well on track to deliver the 50 million annually in generated savings. The cash position, I'll take you through some of the major cash flow implications. At the end of June, we had 73 million. The first waterfall stone is prepayments and net profit generation from Stada, which gave us 56 million in the quarter. We have Sinluchi production cost, 37. Majority is cancellation fees and production costs. And also some PFS, sorry, production costs. We have ex-devane development expense, the 12 million, as I was referring to, that was then capitalized later. Ex-B0303, upscaling activities, nine. Ex-LUK development, that's where the PFS activities should be, so around about 12 million. Organization of costs, like salaries, office, consultants, et cetera, is 23 million. And then other activities. and others really interest, patents and everything else is four. So we leave the quarter with a cash position of 31 million. And hence, again, we leave 31 million and the operating cash flow is 15. And obviously that is then impacted by the capitalization activities and also agreed deferral payment plans with our or major CMOs. And by that, I turn the word to Martin.

Yeah, so the key takeaways from the quarter, revenues of 67 Swedish crowns coming then from St. Lucie profit sharing, as well as milestone from Bayern, And as we said, we're happy to see the continued growth from a volume perspective on XM-Lucy across Europe. We are progressing on the out-licensing efforts on both XB-003 and X-Divane and we are optimistic in being able to perhaps as well commercialization parts on both programs and get to a finalized agreement with Extavain in the near term future. So that's all the highlights and also ties together with the priorities going forward as you were very well aware and consistent with our recent communication via press releases. Very much focused now on finalizing these out licensing deals on both Extavain and XP-003. to resubmit the BLA for Xymlucia or Leucombs which is going to be the US brand name in the fourth quarter to FDA. And then going into next year, together with partners, Advanced Extubate and XP-003 towards clinic and support Stada in continued sales uptake for Xymlucia in Europe and also introduction of the Prefix syringe. And then of course also support both SADA and Valorum in launches in additional countries and for Valorum of course US dependent on an FDA approval so those are the priorities going forward here and with that I think we probably conclude the presentation and open up for potential questions and we can start with questions via audio