Xbrane Biopharma AB (publ)

Hello everybody and welcome to this webcast in relation to our quarterly report, the third quarter of 2024, Explained Bio Pharma. I am Martin Åmark, 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 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 on the development all in all addressing reference product sales expected to reach about 26 billion euro by 2026. Our first program, Ximilusi by similar to the iDRAG Lucentis approved in Europe and 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, Ximsi and Optivo by similar candidates respectively that are in the late pre-clinical stage. We have successfully scaled up the respective production processes and demonstrated a comparative analytical similarity to the respective reference product and we are ready to take the programs into clinical trials during the course of next year. 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 Darcelex. 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 the 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 a more or less 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. 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. Stada is making good progress across a multitude of the different countries that the party's launched in Europe. Overall then we estimate that Ximilusi has a value market share of a little bit above 1% in a market of about 1.2 billion euro and that is then considering annual net sales of the originated product Lucentis and Lucentis Biosimilus on the market in this region. We're happy to see also that Ximilusi is number two from a market share perspective across the different runnabism Biosimilus in this region. So I think continued development according to plan when it comes to the ongoing commercialization efforts of Ximilusi in Europe. We're also starting 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 a 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 by logic's license application to FDA for Ximilusi. We received a complete response letter in April and we've since then worked through the deficiencies stated by the FDA, stated 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 slightly stricter ban 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 BSUFA 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 Valorant Biologics for launch of the product in the US. We're also working together with Stada on pre-fill syringe for a regulatory process in Europe and we hope that we can get an approval of the pre-fill syringe and that that can be launched in the course of next year. Moving on to XB003 our by similar candidate to SIMCIA. Here as you might recall we regained the full rights to this program from Bayan 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. We have received the first non-binding proposals for such arrangements and different potential counterparts 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 XT-Vane our by similar candidate to Optivo. 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 a 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 by similars. 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 very 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 are 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. 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.

So thank you Martin. So my name is Annette Lindquist I'm the CFO of X-Brain and I'll 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 very 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 as driven by two major things. The first one is product deliveries to starter 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 the 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 have no we haven't had any product deliveries to starter this year as we have quite a considerable inventory as both with starter. The net profit share for Simlux was 16 million as Martin said somewhat lower than Q3, Q2 and that was driven mainly by one 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 Simlux and also some negative product deviations. Looking at the expenses the overall expense in the quarter versus Q4 was a decrease by 34 percent and that is driven mainly because of X-Divane. As we received the positive feedback from IMA from a reduced clinical program the program met all the capitalisation criteria so hence from July onwards we are capitalising the majority of the cost for X-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 prioritised program spend but overall all other OPEX is really held to a minimum. The majority of the R&D spend in the quarter relates to a successful engineering run with our CMO for XB-0303. I also would like to repeat that of the cost saving scheme launched in November last year we have now realised 22 million savings and we have staff reductions of 35 of the round about 40 as was communicated by the program. And we are well on track to deliver the 15 million annually in generated savings. The cash position I'll take you through some of the major cash flow implications. End of June we had 73 million. The first waterfall stone is prepayments and net profit generated from Stada which gave us 56 million in the quarter. We have Singlucci production cost 37, majorities cancellation fees and production costs and also some PFS production costs. We have X-devailing development expense the 12 million as I was referring to that was then capitalised later. XB-0303 upscaling activities 9. X-locay development that's where the PFS activities should be so around about 12 million. Organisational costs like salaries, office, consultants etc. is 23 million and then other 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 capitalisation activities and also agreed deferral payment plans with our 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 KSIM-Lucy profit sharing as well as a milestone from Bayern. And as we said we're happy to see the continued growth from a volume perspective on KSIM-Lucy across Europe. We are progressing on the out licensing efforts from both XB-0303 and X-devailing and we are optimistic in being able to perhaps commercialisation both programmes and get to a finalised agreement with X-Devailing in the near term future. So that's probably 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 finalising these out licensing deals on both X-Devailing and XB-0303 to resubmit the BLA for KSIM-Lucy or LUCAMS which is going to be the US brand name in the fourth quarter to FDA. And then going into next year together with partners X-Devailing and XB-0303 towards clinic and support Stada in continued sales up to KSIM-Lucy in Europe and also introduction of the previous syringe and then of course also support both Stada and Valorum in launches in additional countries and 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.

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 Philip Enison from Redeye. Please go ahead.

Hello everybody. So I'm curious are there big cork early volatilities related to Stada's KSIM-Lucy related costs given that the profit split in Q3 is lower than in Q2 despite the growth of 20 percent and even more in volume?

I would say that it hasn't historically been a huge volatility but a consistent you know from a percentage perspective trend towards a stable level but we had some one-time marketing costs coming in in this quarter which we expect not to see in the coming quarter quarter at least but we can't outrule of course that such efforts will have to be done in the future as well but it was a one-time effect this quarter.

Right thank you. So the next one relates to the Xtivane out licensing and as you mentioned you're in the negotiation stage. Can you provide any guidance on what parts of the deal which is currently being negotiated on?

So this is Xtivane and the purpose here is to find a commercialization partner to whom we then are granting an exclusive license to the whole program for commercialization in a certain region if you will. So we are having different dialogues which some of which are on a global basis other which are on let's say one out of the two big territories and we are also looking at the market potential perspective at least being Europe or US. So that's the nature of the arrangement and as we also have been quite explicit about previously we're seeking a partner who can bear a rather significant portion of the upcoming development and who we believe successfully can eventually commercialize the product.

Got it and I understand from your answer that that is more than one interested part at this point.

Yes it's still more than one that is in the process.

Right and the last one on this deal then is I mean given the circumstances and the press releases you have sent out recently how certain are you you are going to be able to secure a deal with Xtivane and what happens if you don't? Any comments on that?

Yeah and I mean we're optimistic given the stage we're at and yeah the alignment on timelines with respective counterparts if you will. So we're optimistic but of course we are also as we've always been in close dialogue with existing shareholders as well as potential new investors both on the debt and equity side and we were having continuous such dialogues and we would be hopeful that if we weren't to be able to meet the dictated timeline we could find a solution in those discussions to further prolong let's say the deadline we would have in until finalizing such an agreement.

Got it and the last one for me how should we view the R&D cost base in the coming let's say two quarters given the ongoing activities?

Yeah I mean we do still have quite significant commitments and undertakings on the three first programs I mean simulusio when it comes to the BLA and the FDA approval as well as the pre-filled syringe we have a quite significant development undertaking there and then on Xtivane and XB003 we also have undertakings with regards to finalizing all preparations for going into clinic including finalizing production of clinical material as well as preparing all documentation for clinical trial application. So we have still quite significant undertakings and commitments from a development perspective on all these three programs which makes me believe that R&D spend is gonna it goes up from quarter to quarter but overall should look quite similar to what the weight has been seen the last quarters I think as far as when we come into Q2 next year and onwards where we are coming out from the R&D spend and then of course dependent on where we are from a financial perspective and what resources we have can consider initiation of new programs or let's say acceleration of the fourth program in our portfolio the DAR selects by similar candidate and then of course we can those decisions will also determine the R&D spend from that point and onwards.

All right that's all for me thanks a lot.

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

Okay thank you speaker. So the first question coming in from Magnus Hildberg and I think that we have regarding the backup plan in case an agreement is delayed from November and pushed out into December or onwards I think that you just responded to that Martin so we will go to Magnus Hildberg. So what's the reasonable upfront payment for Xtivane and for XB Series A3 if the deals are completed can investors hope for a plus 10 million US upfront for the products combined?

Yeah I think that's a reasonable aspiration I can remind you that when we out licensed Xtivane Lucid to start we had an upfront of 8 million euro and when we out licensed XB Series A3 to buy and we had an 8 million US dollar upfront so that gives an indication of let's say normal and previously seen upfront payments in licensed deals like this.

Next question comes from Joachim how long is expected approval time for the PFS after EMA has received the application?

Yes a little bit dependent on the amount and nature of questions received but I think the time frame is between four to six months.

Okay so next question from Joachim again any possibility to provide any insight on the planned Phase 3 studies which indications or I guess labelings are you planning to study in clinic for Xtivane and XB Series A3?

Yes in Xtivane we have planned the study design for the upcoming trial and here the most likely indication is in melanoma that is the main indication of the reference product and the one which we believe is most feasible from the perspective of being able to recruit patients within the shortest possible time and also find a setting where we can do this trial in a monotherapy setting which simplifies a lot when it comes to particularly measuring pharmacokinetics which is going to be key in this upcoming trial. When it comes to XimSain or XB003 we are in the phase now of actually designing the clinical trial and we're going to have interactions with the regulatory authorities first quarter of next year and I guess ambition is to do Phase 1 and I guess ambition is that that also could be the single pivotal trial and to do that in healthy volunteers because that's possible for that product. If not then if a study in patients would be required it's probably going to be done in psoriasis indication but we haven't fully decided yet as we're going through the design of those respective planned studies and are also having the scientific advice with EMA and FDA pending.

Okay then it's about the attractiveness for XDA regarding EMA and FDA's positive feedback on the stream-like clinical development plans. How do you feel this will help in securing a larger upfront payment from the non-binding proposals that we already received versus now the an agreement on the table?

And I think it more will be reflecting so a smaller investment needed to be done on a potential partner side I think more is going to then reflect the higher profit sharing on behalf of XBrain than what would otherwise be the case if two separate Phase 1 and Phase 3 trials would be conducted with a budget that would have been more than the double compared to what we currently are looking at. So I think it's more that aspect that is going to be impacted rather than the upfront itself and we discussed in a previous question what has previously been seen and what reasonably can be expected when it comes to upfronts on this specific program.

Okay so then next question from Angus Tilberg. In case the share is significantly higher than 0.29 at the end of the year how do you plan to manage that?

I think this question is probably related to the outstanding series of warrants which have a strike price of 0.29 Swedish crowns. So if those warrants would not be in the money that would mean they would most likely not be exercised and it would be yeah a short fall in cash influx into the company which otherwise would be the case if share price would be above 0.29 Swedish crowns and warrants would be in the money and as a consequence most likely being exercised. So I guess this is the consequence but that is just one other uncertainty when it comes to upcoming cash flow in combination with a few others let's say. So that I guess is the way we're handling it.

Okay I don't see any more questions so operator is there anything more from the audio?

There are no more questions on the teleconference. You can proceed with your final greetings.

Okay then we thank all of you who participated in the call and as always we are here. Should you have any further questions we're available over email or phone and we hope to be able to communicate back to all of you in the near-term future with hopefully being able to be successful in our endeavors and finalize license agreements with both XTV and XP-03 and then follow on with our other ambitions for the upcoming year. Thank you.