Xbrane Biopharma AB (publ)

the webcast connected to the Q2 2025 report of Exprin Biopharma. My name is Martin Aumark. I'm the CEO and I have with me our CFO Jane also online. We will, as usually, go through the operational activities and an update for the quarter. I will start with that and then Jane will take over and go through the financials for the quarter. Then we will have a Q&A session afterwards in which you can, if you've called in, ask questions via audio or otherwise write questions in the chat. So let's start I'm shifting here to the first slide we will start to talk a little bit about Exim Lucy our Lucentis bisimilar then I will shift over and talk a little bit about Exdivane our Optivo bisimilar candidate as most of you that follow us knows we have one product which is being commercialized and that is Exim Lucy and by similar to Lucentis, an eye drug used in treatment of several severe eye diseases, mainly age-related macular degeneration. We have, since 2018, a co-development agreement with Stada, a German generics and biosimilar company with about 11,000 employees or so. we have co-developed the product and they are commercializing the product since March 2023 when we got an approval in Europe from EMA the arrangement is that we are essentially sharing the profit contribution from sales and marketing of the product 50 50 between the parties Ximulus is now launched by Stada in 24 countries out of which 20 in Europe and four in the Middle East and so we are gradually getting to cover the majority of the countries in Europe and we are also together with Stada expanding in the Middle East and broader Asia. and we'll go through a little bit where we're at we in looking at Europe only Ximilusi had a volume market share of eight percent in the quarter and that is looking at the Randevismab market so Randevismab is the active ingredient in Lucentis so when we say the Randevismab market it consists of Lucentis, the originated product, commercialized by Novartis, and the Lucentis biosimilars on the market in Europe, out of which Ximilusi is one. So in that Ranevisma market, Ximilusi had an 8% volume market share. Looking at this from a growth perspective, we have historically been trending at about 20% to 25% quarterly volume growth. it was a little bit lower this quarter compared to first quarter of 2025 if we only focus on Europe we had an 11% growth in Q2 versus Q1 2025 if we look at all markets including Middle East and Asia it was a negative growth of 8% and that is due to a high shipment which was done by Stada in Q1 for launch volumes in some Middle East countries so it will be a little bit the shipments will be varying a bit in that region in the launch phase so thereby it can cause some variability when we look at the growth from a quarterly to quarterly perspective including all markets Then if we look at the profit generation by X-brain since the launch of Ximilusi it has accumulated to 116 million Swedish crowns and I shall now take the opportunity also to go through a little bit how we work with revenue recognition of Ximilusi because I do understand it might cause some confusion. We are shipping Ximilusi finished goods to Stada under supply agreement under which we get paid a supply price which equals our production cost. Then Stada are selling the product to end customers and generating a profit contribution so after subtracting the production cost and sales and marketing expenses and that profit contribution is split 50-50. Now we do revenue recognition of the income stream coming from supply of finished goods and the expected profit share that that shipment is expected to result in when we do the shipment. So for example if in a given quarter we make a shipment to Stada of 100 units just to make it easy and we have a supply price of 100 and we do expect to get profit sharing of additional 100 and now when we make the shipment we get paid 100 but we make a revenue recognition of 200 euro per unit. So if we make no shipment and if there's no adjustment needed to be made in relation to our expectations of the profit sharing to come from that shipment we did there's got to be no revenue recognition in that given quarter. So looking at Q2 specifically we did no shipments to Stata and hence there was practically no revenue recognition but we had a cash profit sharing coming in during Q2 at about 10 million Swedish crowns so profit contribution from cash perspective is still coming but it's coming from shipments that was made a couple of quarters ago now looking ahead we are going to resume shipments as of this quarter and I foresee that we are going to make shipments to start all the quarters in our forecasting period essentially so looking ahead six eight quarters essentially so then of course we will then make revenue recognition the value of the shipment in addition to the expected profit sharing it will ultimately result in so you have to clear that out and this is also described in our accounting principles in our annual reports for those of you interested I wanted to read more and Jane is also available to describe this further should this not have been sufficiently clarified. Okay and good news also due to now shipments being resumed is that we have a quite significant inventory built up on X-Brain side of Xymilusin particularly drug substance this was built up during the course of particularly 2023 but also to some extent 2024 as we essentially sales were progressing slower than anticipated and we had quite some capacity booked with our contract manufacturers so we ended up producing more than what we shipped to start up but now as shipments are being resumed we're also starting to convert that inventory into cash as a start of this quarter and onwards that's good news and net of prepayments that has been done from Stada the value of that inventory is at about 170 million Swedish crowns which we foresee to convert into cash essentially from now up until end of 27. So that was an update on Ximilusi in Europe and then of course we're shifting over to the US. So this is the big milestone we have ahead of us during the remainder of this year I would say. We have a regulatory process ongoing for Ximilusi or the brand name of the Lucentis Biosimilar is going to be Lucamsi in the US. That's submitted December 24. Formally the regulatory process was initiated in April by the FDA and we now have a BESUFA date 21st of October. We have an ongoing re-inspection of our drug product site or our contract manufacturers drug product site as we speak. It's going to be concluded this week and we have a re-inspection by the FDA starting mid-September or so on the drug substance side also owned and run by a contract manufacturer. So of course an approval is contingent upon successful re-inspections. I think we on our end are cautiously optimistic. Those of you who have followed us know that these sites were inspected as a result of our application in the first quarter of 24 and there were some observations particularly on the drug product site which led to a required reconstruction of the site that has now been done as far as we can tell successfully and hence we do believe that the observations that the FDA had has been successfully resolved and as we are cautiously optimistic that this time we will get an approval we will not communicate anything immediately post this re-inspections as is natural in such an inspection is that you get some observations from the FDA and then you have a 30-day time frame to resolve those or respond to those observations to the FDA. It is though going to be a little bit of a guessing game to judge whether any of those observations potentially can be of a probability nature or could be an issue for probability of the product. we're not going to go into that guessing game and communicate in relation to the re-inspections but rather await the actual decision date which again is on the 21st of October and then communicate as we receive communication from the FTA and we have our partner Valorum Biologics who are going to commercialize the product in the US and we are working with them to make the proper preparations to get the program launched post approval and after an approval what needs to be done is to get the so-called Q code which essentially allows the eye clinics to get paid from Medicare immediately upon receiving the product so that's going to be crucial ahead of a launch and it's a six month time frame to get the Q code there's no risk in getting the Q code or not it's just a bureaucratic process but it needs to be done so a launch can happen six months post approval So we have the timing of that cleared. Now, looking at the US, we are still very optimistic about the opportunities for Leucamze in the US. It's a very sizable market, about 8 million units of VEGF inhibitors for retinal disorders being chipped each year. From a value perspective, about 10 billion US dollar market. It's a very sizable market. it's a dynamic marketplace a lot of things are happening as I think we talked about last time Sandoz with their Lucentis Biosimilar withdraw from the market and we'll see if they're getting back during the course of 26 or what is happening but we think that this has left a void when it comes to Lucentis Biosimilars and we're very optimistic in being to fill that being able to fill that void with Lucamsi together with Valorum and we've been calculating on some scenarios what different volume market shares could mean as you see in the table in the bottom corner there but we do believe that this could result in somewhere between 120 to 220 million Swedish crowns an annual profit sharing to explain a little bit dependent on what you choose to believe from a volume market share perspective then again volume market share in the business market and the average selling price so we're optimistic but first things first of course the approval by fda is absolutely critical 21st of october so we'll get back we'll get back then with the communication of course okay moving over to ex-devane and i think this program so this is by similar candidate to cancer drug Optivo very sizable originated product about 80 billion US dollar of annual sales expected to reach some 13 billion US dollar by time of patent expiration in the US which is end of 2028. We partnered this program up with Intas last year and we are working according to the development timeline and Now the clinical trial is being initiated, the clinical trial is being run by our partner INTAS and it's a trial in which about 340 patients with melanoma are going to be recruited and it's a streamlined trial in comparison to existing biosimilar development guidelines. We're very happy to be successful in dialogues with both EMA and FDA to achieve this. We're, as a primary endpoint, we're looking at comparative pharmacokinetics. And we are very confident in that this trial can be concluded in time. We have, or INTOS has, and we have supported them to submit the clinical trial application. across a handful of countries we have approval in first country already which is triggering a development milestone of 2 million euro according to our agreement with Intas and that is then going to be recognized as a revenue in Q3 and also being paid hopefully in Q3 so This is going according to plan and we're all very much focused on getting to a submission Q4 27 in the US to get an approval towards the end of 28 and then being able to launch at the time of expected patent expiration of the originator. And we are still very optimistic about the prospects of ExDeVane. We still see what I would say limited competition from other biosimilar developers given the size of the originator product. Our base case assumption is that XDVM will be one out of four biosimilars by patent expiration. If you look at how biosimilars in oncology field has developed in the US, three years post-launch, they've had an average of 75% volume market share together. And we see nothing that would change the situation with X-Devane or Optivo biosimilars generally compared to the historics when it comes to oncology biosimilars. So looking at accounting on that and they expected the competition, a fair volume market share would be up to 19%. We've also in this scenario calculations in the table, been calculating with up to six by similar competitors, which could lead to 30% volume market share. And then, of course, one would have to model different discounts on the pricing side compared to the originator. And one could see also how average sales price is trending downwards from launch of the first buy similar and the years thereafter. But even if we calculate with a 70% discount to the originator and 30% volume market share for XTV and it could result in a billion Swedish crowns of annual profit sharing coming into XMA. So this is really the big upside, I would say, for the company. So we're very much focused now on getting this product together with Intas approved in time first in the US so that's a brief operational update and with that I will hand over to Jane to go through the financials yes hello and so the revenue for the second quarter amounted to 39.9 million Swedish crowns with a gross margin of 100 percent

This revenue is 100% attributable to the license agreement with INPAS with regards to the XDV program. So there were no revenue recognized from any shipments or any profit sharing, as mentioned by Martin, due to our revenue recognition model. The profit from the discontinued operations, the divestment to Alvotek amounted to 185 million Swedish crowns and the EBITDA from the discontinued operations amounted to 210 million Swedish crowns. And the expenses for the quarter, one must remember that two months were normal operations, including the R&D and the full organizations with more employees. So the total administration expenses for the second quarter amounted to 18.3 million Swedish crowns, including 9 million Swedish crowns from non-recurring items with connection to the transaction with Alvotek. The R&D expenses amounted to 26.3 million Swedish crowns and 48.9 million Swedish crowns were capitalized in different programs that we are working on. So the transaction with Alvatech was finalized in the beginning of June and we are now looking at fixed cost of approximately 12.5 million Swedish crowns quarterly from the third quarter and onwards. This is a small chart of the cash effect from the transactions with Alvotek, just to try to explain a little bit. So we had an opening balance of 25 million Swedish crowns. The proceeds from the Alvotek transaction was 275 million Swedish crowns and 5 million Swedish crowns were retained by Alvotek for a later payment. And the convertible bond was settled fully by Alvotek with 153 million Swedish crowns and built up accounts payables connected to our main CMOs for 90 million Swedish crowns were settled as well. And other operating accounts payables amounted to 47 million Swedish crowns, which leads to an close imbalance of 6 million Swedish crowns, more or less. And we had a directed share issue, which was conducted in the third quarter, beginning of July, which amounted to 240 million Swedish crowns prior to transaction costs. But as I mentioned, it was settled in the third quarter. That's why it's not included in our books here. So as I mentioned, the cash equivalent was amounting to 6 million Swedish crowns at the end of the quarter. And the operating cash flow amounted to 65 million Swedish crowns.

Thanks, Jane. So to summarize takeaways from Q2, XM Lucy launched in 24 countries, 11% volume growth in Europe, Q2 versus Q1, 25%. Ex Devane is progressing according to plan we have a 2 million euro development milestone being triggered due to clinical trial application being approved in first country and the clinical trial is then underway according to plan and as Jane described the transaction with Alvatec was concluded and we were able to reduce our debt position in a quite significant way as a result of that and then we executed the directed cherish of 200 million Swedish 240 million Swedish crowns but closed in July as Jane mentioned now looking ahead the priorities coming up here of course exclusive USFTA approval on October 21st so that's what we're very much focused on now and then the preparations leading to a launch by our partner Valorum in the US it's a big priority then to continue to support Stada in the continued penetration of European and Middle East market and we have a couple of important initiatives together with Stada to continuously drive down the production production cost of Ximilusi to stay competitive in the long-term perspective for this product as well as the pre-filled syringe which we are working on actively and then of course on the X-Divane side Apart from the clinical trial which now is being run by our partner Intas, X-Brain has the development responsibility related to process characterization and validation which we are actively working on now to get that development activity also concluded well in time for a Q427 submission to US FDA. those are our ongoing uh priorities here so with that said i think we can stop the formal presentation and open up for um for questions so i guess we start to see if there are any questions from from people calling in so we have 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, Martina and Jane, and thank you for the presentation. So I thought we could start on the volume sold out in Europe compared to previous quarters. Could you just elaborate a little bit more on that, please?

yeah if we look at the volumes being sold by our partner Stada to end customers in Europe we had a growth of 11% compared to Q1 this year but if we look at total markets with which the product is launched including Middle East it was a negative growth of 8% and again result that was due to a pretty sizable shipment they did in the Middle East in Q1 considered as launch volumes if you will so they're thereby some variability and also to be expected going forward from these recently launched countries in the Middle East okay so it's not would you say primary demand related No, it was related to call it the discrete initial shipment in Middle East, which was not repeated in Q2, but are probably going to be resumed. But at different levels in different countries, you know, Q3, Q4 is a little bit hard to predict exactly at what levels.

Okay, good. And I'm also curious on the, if you could expand on the initiatives to improve production costs.

and yeah we are working actively with Stada and our contract manufacturers to essentially bring down production cost and what we're doing there is to look at measures to increase productivity both in the drug substance production process as well as the drug product production process and that includes a lot to reduce waste for example of drug substance in the drug product process and that is to say when you're filling the drug substance into vials to reduce losses of drug substance and increase the productivity essentially these are important measures to bring down the production cost as well as negotiating with contract manufacturers on the better pricing and so on and so forth so a number of different initiatives all with ambition to bring down the production cost you got it so could you also give us an estimate on when we should expect this to maybe be visible in the numbers yeah I think it's it all these are going to lead to gradual decreases in the production cost but I would probably have like a two-year time horizon for this to be fully materialized.

Right and also could you provide us an update on the current operations relating to the pre-filled syringe is there anything new there?

We're still working actively finalizing I would say the development which entails validation of the sterilization process of the outer surface of the syringe and we are looking towards submission in EMA next year as a variation to the existing approval.

Okay and the last one on my end and with the cash coming in that came in in July should we expect X-Brain to operate as a debt-free entity or how should we view the use of this liquidity?

Yes you should view it as we post that transaction going to further reduce our accounts payables so that we after that are operating with a normal working capital if you will so normal accounts payable position for the running business as you probably recall we accumulated quite some debt to three of our main suppliers or contract manufacturers last 18 months or so and now what Jane described we paid off quite some part of that debt and we are going to with the proceeds coming in from this directed share issue repay the final part of that and then operating with the let's call it a normal working capital position so great that was all on my end thank you for taking my questions

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Yeah, we have two questions here in the chat. So let us take these questions. First one, do you expect more cash flows such as Alvatec deal to be recognized in the coming quarters? So I would not have such expectations. We currently have two active programs, which we've described in this call, the XM Lucy program, as well as the Xtivine program which already are partnered Ximulus with Stada and Valorum and then Xtivine with Intas there are some agreed upon development milestones in those agreements which will be coming in and recognized in coming quarters including the 2 million euro milestone from Intas which we talked about in Q3 But we foresee, you know, no additional deal coming quarters of that nature. So that was that question. Next question, some confusion on the market volume for Ximluci in the report. Okay, so let's try to address that. Simluciden by similar to Lucentis and we talk about in some place what the sales of the originated product is and that is at about 1 billion euro but then we also talk about total market potential if you will or total addressable market more correctly said which includes all products which are vgf inhibitors for retinal disorders and that amounts to at about 13 billion euros so it's a little bit different market definitions if you will next question here what is your expected cash runway so with this directed cherish we recently did and provided we get an FDA approval on 21st of October and the related income streams which we expect from our US partner we do believe that we can manage from a cash perspective going forward but if it should be so that we would not get an approval from the FDA that would have to be reviewed and we would have to get back post such potential news next question here you estimate 12.5 million Swedish crowns fixed cost from q3 and forward what total cost can we count on i.e what is not calculated in the fixed costs when do you estimate becoming cash flow positive okay The fixed cost which we refer to of 12.5 million Swedish crowns that is related to personnel and normal kind of administrative expenses. What we do on top of that is investing in certain development activities and particularly going forward on Ex Devane side where again we have the responsibility for process characterization and validation which we are doing together with a selected contract manufacturer so that is an investment of at about 200 million Swedish crowns which we previously have communicated and an activity which is running essentially from now and up until mid 27 or so or towards the end of 27 and that investment though is being capitalized according to our accounting principles again described in our annual report so it's not taken as a cost but rather as an investment so I hope that clears the picture and the question of becoming cash flow positive Again, I think it's dependent on potential FDA approval and timing of a launch of Eximulus or Leucamse in the US, as well as progress of European sales. And I think we've also talked about previously the timing of being able to convert Eximulus inventory to cash versus this investment we are now doing over the coming years in Exdivane. So the relative timing of these two cash in and out streams are going to dictate that so I think it's better that we get back post 21st of October on an overview of when the company can become cash through positive good so I think that concluded the questions we had coming in also over the chat Jane and myself we are available over phone or email should you have any further questions but with that said we thank you all for listening in and posting questions and have a good rest of the day thank you