Welcome to Xbrane Biopharma Press Conference 2023. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now, I will hand the conference over CEO Martin Åmark. Please go ahead. Thank you and hello, everybody. My name is Martin. I'm the CEO of Xbrane, and thanks for calling in. We wanted to hold this phone conference for investors, since we came out with the press release this morning, that the license agreement with Bausch + Lomb, regarding commercialization of our Lucentis biosimilar in North America, has been terminated. I wanted to provide a little bit of an overview of the way we see the opportunity for our Lucentis biosimilar in the U.S., an update on the regulatory process, and also how we intend to approach the commercialization now, when we do no longer have Bausch + Lomb as a partner. Of course, I wanted to offer an opportunity for all of you to ask any potential questions that you have. I'll go through a brief presentation, and then we will be opening up for questions, both on audio and then also on the chat. The license agreement with Bausch + Lomb has then been terminated. It was signed in May 2020, as you might recall. The background to the recent termination is that Bausch + Lomb had a new CEO coming in in March. There's been a strategic shift, really, and a refocus of the priorities and a shift away from biosimilars. This led to Bausch + Lomb communicating to us and our co-development partner, STADA, their intention to terminate the agreement, which they had a right to, according to the agreement in December 2023. We decided Xbrane and STADA to accelerate the termination because we believe it's now crucial, given that we are less than 12 months away from expected approval and the potential launch of the product, to identify another commercialization partner as quickly as possible in order for them and us jointly to be able to do the appropriate preparations for a launch. What this termination means is that the license for the product for North America is handed back from Bausch + Lomb to Xbrane and STADA, and it's jointly owned 50/50 by Xbrane and STADA. Also the intended trademark in the U.S., it's handed back to Xbrane and STADA. It was an upfront payment made when we entered into this agreement in May 2020, which is non-refundable, but the intended further milestones, which were due on FDA approval and launch, are not going to be paid. What this also means is that Xbrane and STADA will resume responsibility over the patent dance process, which is essentially a structured process in the U.S. to resolve any potential issues around IP with the originator of the product which you're developing a biosimilar to. I should say also that we don't expect that this will have any material impact on the actual regulatory process versus the FDA. Xbrane is the applicant for the marketing authorisation, and we had regulatory support from Bausch + Lomb, but we believe that with the continued support from STADA, with our own regulatory team and the consultants we're working with, we're going to be able to navigate through the regulatory process without any delays. What it also means now is that we are initiating a process to identify a new commercialization partner for North America, and that is still our joint ambition and primary goal. It's a process which now is being initiated, and we have the ambition to conclude it during the course of this year. Looking on the timeline from a development perspective here, as you will probably recall, we submitted the BLA to FDA in April this year. It was validated and filed by the FDA in June, and we now have a decision date of 21st of April 2024. That is when FDA then intends to make a decision on potentially granting an approval for the product in the US. We, as I said, see no delays to this process due to the termination of the license agreement with Bausch + Lomb. In parallel, we're working on scale-ups on the drug substance side in order to further be able to drive down production costs and increase capacity. We also are developing a prefilled syringe, which we intend to bring to market beginning of 2025. That will come alongside the vial, which we currently are seeking approval for in the U.S. Taking a look at the most recent development in the market for anti-VEGFs for retinal disorders, you can see on the left-hand side here, quarterly combined sales of the anti-VEGFs approved for the different retinal indications. It's about an $8 billion market yearly, all in all. You can see here that the recently launched product by Roche, Vabysmo, is gaining share in the market. You can also see that, and we'll come to this later as well, that the biosimilars to Lucentis are having a rather slow uptake, I would be saying. It's combined sales of $14.4 million, Q1 2023. Looking at Lucentis specifically, it's about $200 million Q1 2023, so in about $800 million annual market, if we directly talk about the reference product. Looking at this from a volume perspective on the right-hand side, and this is annual figures 2022, we have about 7 million units being sold in the U.S. Here you can see also the off-label usage of Avastin, which constitutes close to 40% of the total volumes. Really, the way we view it is that the total addressable market for our Lucentis biosimilar is really an $8 billion market and 7 million units. We believe, apart from taking share directly from the reference product, Lucentis, there's an apparent opportunity, particularly in shifting volumes from off-label Avastin to Lucentis biosimilars. Generally speaking, provided the pricing is right and an opportunity we for sure are going to exploit. This is the latest, specifically looking only at ranibizumab units originator versus the two biosimilars. On the left-hand side, you can see that in Q1, 2023, the biosimilars had an 8% volume market share versus the originator. It's a rather slow uptake so far in the market. Also, if you compare to biosimilar launches in other therapeutical areas. We can see from a pricing perspective on the right-hand side, that if you were to compare now with Lucentis' pricing or average sales price prior to biosimilar launch, which was close to $1,300, currently, if you were to calculate the average biosimilar selling price, it's about $1,173. It's about a 10% discount versus pre-launch of biosimilars Lucentis pricing. The average sales price of Cimerli is not fully established yet, so we need to give it another quarter or two for that to be established and see the full picture. We can see, though, that Byooviz is priced at about 22% below Lucentis' pricing pre-launch of Byooviz. That's what we can see from a pricing perspective. I think this is interesting also, and this is from a recent survey done by Cardinal Health with 64 ophthalmologists in the US to really track their familiarity and perspectives on biosimilars now when the first biosimilars to Lucentis are being launched. I think what we can see from these two graphs on the left-hand side is that ophthalmologists, on average, are less familiar with biosimilars than in the main other therapeutical areas where biosimilars have been launched. I think what's happening now is that we're seeing the comparatively speaking, rather slow uptake of biosimilars due to a non-familiarity with biosimilars in the ophthalmology community. There is need and an ongoing process of education about what biosimilars are, the clinical trials that underpin the approval by the FDA, and why ophthalmologists should feel comfortable in prescribing and using the biosimilars, given the robust clinical and also analytical comparative data. This is an educational process, which will take some time, and I think this is the reason why the uptake is now being a little bit slower than maybe anticipated. I do think also, given that we're coming a few quarters after the first or first biosimilar was launched in the US, I think this is a good thing for. Xbrane and our biosimilar candidate, since the market is not fully formed yet, and we can take part of the formation process, provided that we get an approval and come to market, second quarter of next year. I think encouraging on the right-hand side here in this survey is that, still a given, comparatively speaking, rather low level of familiarity, 64% of ophthalmologists are likely to use biosimilars in their practice. Which I think is a rather high number and shall give confidence that eventually, biosimilars to Lucentis will pick up and take a significant share versus the originated product. I think this question also provides great insight, which is really asking to which extent that ophthalmologists agree to the statement that availability of Lucentis or Eylea biosimilars will shift utilization away from off-label Avastin if price discount are significant enough. A significant portion of the ophthalmologists agree with that statement. I believe there is a really meaningful opportunity to, for Lucentis biosimilars to take market share from off-label Avastin, which is about 2.6 million annual units. It's a huge part of the market, close to 40% of the market, as we saw on the previous slide. This, I think this is very interesting. Of course, what price discount that are significant enough remains to be proven. I think that here is an opportunity also for us and for our biosimilar candidate, because I'm confident with the ongoing scale-ups we're going through on the drug substance side, that we will have the most competitive production cost, and also the best capacity in the industry. I think we're going to be the provider that to the best extent, I believe, can benefit from this shift from off-label Avastin into Lucentis biosimilars. That was just some brief perspectives on what we're seeing in the U.S. market for anti-VEGF for retinal disorders. To summarize a little bit, the way we view now, the opportunity for our Lucentis biosimilar, Ximluci, in North America. It's a sizable market, as we've talked about. In total, $8 billion. Only like looking at Lucentis, about $800 million. I think still, comparatively speaking, is limited by similar competition to biosimilars approved and launched so far. We expect we'll be the third, that there will be no more than 3 biosimilars to Lucentis in the market in the US. Slow uptake so far, the biosimilar market is not fully formed yet. There is an opportunity for us to take part of the important formation process, despite us being a little bit late into the market. I think that we have a particularly strong opportunity in the off-label Avastin portion of the market, given our competitive production cost and the capacity which will allow flexibility on the pricing end for a commercialization partner that we enter into agreement with. Also having the right capacity to be able to tap into these opportunities, of course, also important, which we will have after we've gone through the drug substance scale-up process. I believe now it's a meaningful opportunity for us with our licensing process. Of course, as I said initially, the upfront paid by Bausch + Lomb is non-refundable, and now we have an opportunity to Since the program now is more advanced, we've come further into the development process. We have submitted a BLA, and we've gone through the approval process. I think we have an opportunity to get a better deal, essentially speaking, compared to that what we have in Bausch + Lomb. We have an opportunity for an additional potential upfront payment and milestones upon FDA approval. I have the hopes that we can get a better deal with regards to the profit share we ultimately end up with getting in the US, compared to the agreement with Bausch + Lomb. That's really the priority for us right now, together with STADA, to go through process of finding a suitable commercialization partner. Of course, we now have been looking back at the material from the reach-outs we did when we entered a deal with Bausch + Lomb. Of course, we are now reaching out to the companies we had a dialogue with at that point in time. We have the ambition to close the deal during the course of this year, and then, of course, get back to all of you with news on that. That's the brief presentation, and with that, I want to open up for potential questions. First, let's see if there are any questions from people calling in, and then we'll go to the chat. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Sebastiaan van der Schoot from Van Lanschot Kempen. Please go ahead. Hi. Good morning, everyone, thank you for taking my question. For the first one, in the press release, you mentioned that the commercialization in the U.S. by yourself and STADA is an option. Is that really feasible, or is the preference going for a partner? Has STADA already had experience with launching in the U.S.? I was also wondering how much you factor in the Ximluci launch in the U.S. towards your guidance on being cash flow positive in 2024. I also have a follow-up question. Sure. The first one, our priority is to find a new commercialization partner. In parallel with going through that process, we're also evaluating how it could look like with us commercializing ourselves or Xbrane together with STADA. STADA, they do not have currently infrastructure to sell and market biosimilars in the U.S. There are, you know, companies which can provide, let's say, sales forces as a service and so on. There could be cost-efficient ways of getting the process initiated in the U.S. It's a process now of evaluating that alongside trying to find a suitable commercialization partner. First priority, for sure, is to find a partner. The second question. Sales or proceeds from the U.S. are included in our earlier communicated ambition to get to income generated from Ximluci of $100 million or EUR 100 million. Definitely. I do believe that we can get to cash flow positive state without sales from U.S., and that was also what we planned and intended, since an approval will come Q2 next year, and effectively, there will be no, you know, material sales, since approval is expected in April. Reaching a positive cash flow Q2 next year is expected to be realized without sales from the U.S. and only reliant on income coming from Ximluci in Europe and also income from other programs, mainly the Xcimzia biosimilar candidate. Okay, got it. Can you maybe provide some insight on how the launch in Europe has been going by STADA, and how many countries is Ximluci now available? Can you maybe discuss a little bit on how the scaling up is now ongoing? Yeah. When it comes to sales progress in Europe, we'll get back to that in connection with the release of our Q2 report, which is due 29th of August, and we'll have a webcast in connection with that. When it comes to the process for scaling up drug substance, it's going according to plan, and we intend to get regulatory approval for the larger scale mid-next year, and then being able to supply to the market from that larger scale. Okay, got it. Thank You so much. The next question comes from Dan Akschuti from Pareto Securities. Please go ahead. Hello, Martin, and thank you for taking my questions. Also thank you for giving a bit of a market update. Just one question, considering that this came quite as a surprise. Could you mention to us, when approximately Bausch + Lomb kind of, mentioned that they would terminate the agreement with you? Sure. It was recent, so it all went very fast now. Just two weeks back or so, and then it went very fast, everything, with us kind of wanting to expedite this termination in order to be able to quickly find a new partner. Okay, thank you. Is the commercialization by yourself with STADA in the U.S. an option, or is that not on the table at all? It is an option, but frankly speaking, we need to take some time to evaluate this further and further understand how that would look like from kind of an organizational development perspective and what kind of an investment would have to go into such an approach. We're evaluating that alongside with trying to identify or, and find and tie up another commercialization partner. It's something we're evaluating, but priority is to find another commercialization partner. Okay, thank you. Just to take the opportunity to ask on your supply chain, is everything intact there, and also development of the prefilled syringe, do you still expect that to be completed next year? Yes. We expect that the prefilled syringe can be launched Q1 of 2025, both in Europe and the US. That's still the planning. Okay. Thank you very much. As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. There are no more questions at this time, I hand the conference back to the speakers for any written questions. Thank you. I have a couple of questions here in the chat. Let me walk them through. I'll read them up and then do my best to try to answer to them. First one: How likely do you think it is that a new partner has been found for Ximluci for the U.S. market before the marketing authorisation has been granted? I think it's likely. I think it's very likely that we are going to be able to tie another partner up towards the end of the year. We're going to run an expedited process. We already have a list of, let's say, the 10, 15 companies which could be relevant here, and many of them we had a dialogue with by the time we entered the deal with Bausch + Lomb. I think that potential commercialization partners will also understand the need to move quickly here, because they will also need to prepare properly to take advantage of this opportunity. I'm confident we're going to be able to close something during the course of this year. Next question. Are negotiations already underway with new partner candidates for the U.S. market? No, negotiations are not underway at this point in time. Next question, will X-SPIN still be able to generate positive operating cash flow in 2024? Yes, we discussed that previously. That is, the planning is reliant on sales of Ximluci in Europe and also other sources of income. Next question: What are the consequences of terminating the agreement? Will the launch in the U.S. now be delayed? Well, provided that we find another commercialization partner during the course of this year, I do not think that the launch will be delayed, but of course, it's contingent upon that. Next question: Do you expect a delay in U.S. launch according to the time needed for preparation, when at the latest to sign a new partner in order to launch on time? I think that's towards the end of the year. If we sign up a partner towards the end of the year, I think still we're going to be able to keep the planning with regards to timing of a potential launch. How many potential new partners have you identified? As I said, we have now a list of 10, 15 potential partners, which many of them we had a dialogue with in 2020, 2019 and 2020, when we did a deal with Bausch + Lomb. Next question: Has STADA no interest in the U.S. market? If not, how come? STADA have interest in the U.S. market, like we do, since they believe that it's a very good opportunity to generate income from Ximluci, but they do not have their own sales and marketing infrastructure set up in the U.S. They do not have a natural infrastructure to source this product through. Next question: Does STADA have a U.S. partner that may be a natural candidate for partnership? Well, I would say STADA have many connections and relationships, which of course, they will bring to bear on this process. I don't think that they currently have a partnership in the U.S. which could be leveraged for this product. Again, they have many relationships and know most of the companies that are relevant in the U.S., and of course, those relationships will be leveraged. Next question: How much do you count in monetary terms to get to market in North America? I think that this question relates to the investment we need to do in terms of commercializing the product. Well, as I said, the priority here is to find a partner. Then, the partner would take that investment into a commercialization infrastructure. I mean, the idea is to find a partner who already has that set up, so they can slot this product into an existing infrastructure. Rather the opposite, we are expecting income from this opportunity in terms of outlicensing, the rights for North America, getting an upfront payment and also milestones on approval. That's, that's the intention here and what we try to accomplish. Next question: You mentioned, supply is some sort of bottleneck where while sales are accelerating, have you already manufactured Ximluci that can be used in the U.S., or can everything manufactured, planned to be manufactured already be sold in Europe? We are producing during the fall batches, which are going to be earmarked and dedicated to a U.S. launch. That is built into the planning. Next question. How much involved was Bausch + Lomb in the regulatory process ahead of the submission approval? We worked intimately with Bausch + Lomb. Their regulatory team reviewed the whole BLA and provided their feedback. Of course, the idea was for Bausch + Lomb to be involved in responding to questions coming from the FDA. So was STADA and the regulatory team of STADA. I don't think that the termination with Bausch + Lomb will materially affect the regulatory process. I think we're well set up to handle that by ourselves and together with STADA. Next question. One of the competitors to Xbrane is Formycon in Germany. They have decided to develop a biosimilar for both Lucentis and Eylea. Both are competing ophthalmological products. Do you see any rationale in this decision, and have you at Xbrane at any time considered to do the same? We at Xbrane didn't have, let's say, the capacity at the time when we will have to have started the development of a biosimilar to Eylea. That, I think, was the main reason for us not going in that direction. There is a certain cannibalization effect between the two products, but I wouldn't be so concerned about that if I'm thinking as a biosimilar developer. Effectively, you can see in our oncology portfolio, we're developing both a biosimilar to Opdivo and Keytruda, although they have quite some overlap when it comes to the indications they are approved for and use and treatment of. For us, it was mainly due to not having the capacity at the time when we would have to have started such a development. Would it be feasible to commercialize Ximluci on your own, or would it require a too large sales force? Well, as I've said, it's something that we're evaluating alongside with, the process of, finding another commercialization partner. Feasible? I think, yes, based on what I know, but of course, it would come at, an initial investment in terms of, setting up, a team in the U.S., on the market access front, but then also sales force. I don't think, necessarily speaking, the sales force would have to have, would have to be, so large. Then again, good salespersons in the U.S. are quite costly, so still, you know, it would be a material investment in taking such an approach. Of course, it would come at the benefit of taking the full profits ourselves, still. Okay, next question. Will you launch in the U.S. without any partner? I think this is a question we've discussed, something we'll get back to, should it be so that we're not successful in finding a commercialization partner. Does your target of $100 million in annual income from Ximluci 3 year post-launch still stand? Yes, it stands, it includes the U.S. opportunity. Getting there, it's required for us to get approval in the U.S. and also have the product launched in the U.S. Next question. Can it be so that biosimilars in the U.S. are having other legal problems than in Europe for physicians? Are there larger risks regarding adverse events? I would say that there are, of course, another, let's say, legal environment in the U.S. where there is an opportunity for patients to, yeah, to take legal actions versus physicians in court, if there are any adverse events in the treatment and ultimately also versus the drug manufacturers, of course, it's such an environment. I think that, if the products are approved by the FDA, they are, they have really gone through the very strict process of getting a regulatory approval and ophthalmologists shall feel comfortable with using those products without higher risks of adverse events compared to the originator product. I would be thinking that this is not a material driver for the ophthalmologists in considering in using biosimilars or not. Next question. If all doses manufactured are sold in Europe instead of U.S., how much will this generate in cash flow compared to that these would have been sold in the U.S.? Assuming that manufacturing is some sort of bottleneck. Can you comment on this? Well, it's hard to get to give a precise answer on that one. It's true, as you also saw in this presentation, that average sales price of biosimilars in the U.S. are higher than in Europe. Currently, Lucentis biosimilars are being sold at about $1,000. You know that the originator in Europe is priced at about EUR 600, so it's quite some difference there. To answer this question, we'll have to have sorted out how the economical terms would look like with the commercialization partner, and therefore, what our part of the profits will be, and therefore, if we would have higher profits on a unit basis in the US than in Europe. Next question. Did you have other interested partners when you struck a deal with the Bausch + Lomb? Yes, we had. That's the list we're going back to now. Next question: How confident are you on signing a deal, and do you think terms would be worse than the one signed with Bausch + Lomb three years ago, given that you now will be third to market and opportunity is shrinking due to the success of Vabysmo, which wasn't the base case when the deal was signed? Well, our ambition is actually to do a better deal now than what we did with Bausch + Lomb, since the development is far advanced, it's closer to market. Actually, as I alluded to in the presentation, I'm not so concerned of that the product is coming third to market from a biosimilar perspective, since the market is still going through the formation process, and the uptake is slower than anticipated. I'm very encouraged by the meaningful opportunity when it comes to off-label use in volumes. Next question: Have you already had interest from any potential partners, or is it too soon? It's a little bit too soon to say. Again, we have a list of partners we believe could be interested, so we'll have to then get back to you in the course of the remainder of this year with an update when we've been able to do a deal. Next question: Given capacity constraints on your own volumes, how much difference will this make to your revenue expectations for 2024? Can more volume go to Europe instead? Of course, we're going to have to make the trade-offs of sourcing volumes to Europe versus the US, but it's still too early to say how this can impact the revenue expectations for 2024. We need to give it a year, and let us go through this out-licensing process, and then we can answer this question more precisely. Next question: Does this affect your thinking of paying convertible in shares or cash? Not right now. It, of course, can have going forward, dependent, again, on our success in this out-licensing process, since, of course, you know, getting to cash flow positive stage, we believe we're gonna do without sales from the US in Q2. Of course, is the magnitude of the cash flow generated, which also is going to impact a decision on amortizing the convertible in shares or cash. Next question: When will scale-up of production be finished? Essentially, during the course of this year, in terms of the validation campaign. Next question: Are there any negotiations ongoing on the oncology franchise? Can you provide some guidance on when we can expect more news flow on this topic or on Cimzia biosimilar? Yeah, on the oncology pipeline, yes, we are in discussions with a few interested parties, and again, we've been guiding that we have the intentions and ambitions to close the deal during the course of this year, and that's still the ambition. Also a topic we'll have to get back to. News flow on Cimzia biosimilar. Here we are going through the process of scale-up and production of clinical material. I think we'll be able to guide a little bit more on that one in our call in relation to the Q2 report. Next question: How much can Xbrane impact the new partner for the U.S. market, or is it solely Xbrane's decision? Here, this is a joint decision, essentially, it will be both of us, but I think we most of the times are aligned and driven by the same interest, so to say, to make the best out of the opportunity for us. Next question: You mentioned that this was a mutual agreement between the parties. What potential upside do you see for Xbrane? Well, the upside I see for us is, if we can find a partner with better deal terms. I mean, Bausch + Lomb was a good partner for us in terms of their focus in ophthalmology, but if they're not prioritizing this specific product, it's not any longer a good partner. The opportunity, of course, is to find a partner with good, economical terms, so we hopefully can get a bigger portion of the profits generated in the US, and also a partner who really are going to focus on this product from a sales and marketing perspective. Next question: Hi, do you know why Bausch + Lomb do not focus on biosimilars? Why are they changing their plan? I do not have that insight specifically. It was a shift, as I said initially in the call, based on new CEO coming in March this year. Next question: Will the sale of the oncology franchise be needed to reach cash flow positivity in Q2 2024? Well, yes, it's needed for us to do a deal with, at least the most advanced product in oncology pipeline, that is to say, the Xdivane biosimilar candidate, and primarily in order to be able to, you know, either via license payments or some other structure, share a part of the development cost associated with that program. Next question: Will Xbrane have Capital Markets Day in the near future, yes, as last year, it was highly appreciated. Thanks for that comment, and something also I ask that we can get back to in our Q2 call towards the end of August. That was all the questions that came in via the chat. With that said, I think we've come to the end of this call. I tried to do my best to respond to all the questions, but if something was unclear or if you have further questions, don't hesitate to reach out via email or via phone, and we'll do our best to respond to your questions. Thanks a lot to all of you for calling in on such short notice and also given summertime and vacation period. Thank you very much.