Bioarctic (Stockholm:BIOA B) Q2 2026 Earnings Call

0:01 Thank you so much, and good morning, and welcome to BioArctic's presentation for the second quarter of twenty twenty six. Leukembi continues to progress really well with new approvals and launches. And BioArctic has signed additional strategic partnerships, and we will talk more about this in today's webcast. Next slide, please.

0:24 BioArctic is listed at nastax.comlargecap, and this is our disclaimer. Next slide, please. I'm Gunilla Osvald, the CEO of BIOAARTIK, and I will share today's presentation with our CFO, Anders Martin Leung and our Chief R and D Officer, Johanna Felting and our Chief Commercial Officer, Anna Kayagranblad. Next slide, please. I will start our presentation by giving some key highlights. Next slide, please. BIOAARTIQ is among world leaders in two different areas. The first one is, regarding highly selective antibodies where we are innovative and we are generating highly selective antibodies targeting aggregated misfolded forms of toxic proteins.

1:11 And here we have the front runner lecanumab and we also have projects targeting alpha synuclein and t d p 43, for example. The second area is when we're utilizing our brain transporter platform in an innovative and differentiated ways to deliver antibodies. And I also want to highlight that we are broadening the platform to enable more efficient transportation into the brain of other modalities

1:42 and this could be utilized for enzymes and genetic medicines like ASOS and siRNA. So a lot of new innovation is coming from BIOATIQ. Next slide, please. We are already delivering on our 2,030 ambitions, and they are in four different areas. The first one is regarding Lykkembe to get it as an established treatment for Alzheimer's disease. And the Lekembi demand shows a steady growth to more and more patients on a global level. Sales are progressing in line with our partner Eisai's guidance. A true highlight during this summer was the FDA approval of iClick, the subcutaneous formulation with an auto injector.

2:27 And we got the approval from the FDA July 13 and The U. S. Launch was started this week. This means that there is an increased convenience for the patients to have the possibility to get their treatment at home instead of going to the infusion center. So I think it looks really bright also for further approvals and implementation of blood based biomarkers, which also will simplify the diagnosis for patients. So these two aspects, the subcutaneous formulation together with the blood based biomarkers for diagnosis are important for patients and for healthcare and is less costly for society and can lead to a broader uptake on the market. The second area is with regard to a balanced and broader pipeline with project in all stages of development.

3:19 And here I want to highlight exedavimab, our alphasnuclein project, which is in Phase 2a in both Parkinson's disease and multiple systemic atrophy. And we had a planned safety review during this summer, and it was concluded that exidavimab showed a favorable safety profile and it supports progression into Phase 2b, which is in planning. The other alphasnuclein follow-up compound called BAN-two thousand two hundred thirty eight is a follow-up compound to exudanemab with brain transporter. And here we selected a candidate drug late last year and the IND enabling activities are progressing really well. And the pipeline overall continues to expand and we have added new projects, for example, the ones due to new partnerships.

4:13 The third area is to have additional successful global partnerships. And we are very pleased with our new license agreement and collaboration with Eli Lilly, as well as our previous collaborations together with Bristol Myers Squibb and Novartis, and of course, our partners since long time ago, Eisai. And all these are working in every generation in different approaches. Our latest research collaboration with Mesenkia, a small Swedish biotech company opens up utilization of our brain transporter in a new area, oncology, where better penetration into the brain is wanted. And here we are focusing to start with on glioblastoma. I think it's great to see the continued strong interest in our brain transporter technology as well as in our proprietary programs.

5:08 The fourth area is that our aim is to be profitable and have recurring dividends in the future. We were highly profitable last year and our strong financial position allows us to continue to invest heavily in our business as well as giving dividends to our shareholders.

5:27 We have a strong financial position with about SEK 2,000,000,000 in cash at the end of the second quarter, and this is even without the upfront payment from Eli Lilly of US30 million dollars and we expect to be profitable this year. Next slide, please. Partnerships is the cornerstone in our business model and the key component behind our success. Our focus has been on big pharma and different business models. So we have two different business models here. The first category, we can see Eisai, AbbVie and Bristol Myers Squibb, where they have done in license agreements on innovative BIOATIQ developed programs.

6:14 The second category is Novartis and Eli Lilly, who are utilizing BIOATIQ as a platform company. So they bring their compounds to BIOAARTIC, we reengineer the compounds and build in our brain transporter technology into new compounds. And we check them the transferrin receptor functionality and then hand it back to the partner who drives and finance the program further. Then I also want to add a new kind of addition to our business model is what we are doing with Mesenkia. I think this represents another category collaboration that could also lead to future business. Next slide, please. Now I hand over to our Chief R and D Officer, Johanna Felty.

7:02 Thank you so much, Gunilla. Next slide, please. So our R and D portfolio continues to advance as Gunilla has described. And this is really built on two complementary platforms, the antibodies and the brain transporter platform. A balanced mix of funded partnership with Eisai, BMS, Novartis and Lilly together with proprietary programs provide an external validate both external validation and significant long term value creation opportunities in the portfolio.

7:34 All brain transport collaborations are progressing well. And during the quarter, we have further strengthening the platform through two new collaborations, the Lilly partnership that represents a major validation by a leading neuroscience company and highlights also the platform's broad utility in or potential in CNS. And then we have the Mesenkia collaboration that marks our first step into oncology, expanding the brain transporter platform beyond neurodegenerative diseases and broadening its future application potential. So overall, we continue to advance the diverse, increasingly partner validated pipeline with expanding scientific and commercial potential, both for our antibody and our brain transport platform.

8:21 Next slide, please. So taking a closer look at our alpha synuclein portfolio, it is moving forward and expanding. So for exudabnamab, during the quarter, we have evaluated the safety data from the Phase 2a Exist study of exudabnamab in both Parkinson's and multiple systemic atrophy. And the results confirmed a favorable safety profile of the antibody, which is an important milestone for the program. So this data will provide a strong foundation for the next step of development and we are currently planning for Phase 2b studies in both multiple systemic atrophy and Parkinson disease related dementia with the ambition to initiate these studies during next year.

9:06 So exudavimab remains the most advanced alpha synuclein targeting programs in our pipeline and addresses a significant unmet medical need in neurodegenerative diseases. And for BAN-two 238, our brain transporter enabled alpha synuclein antibody, we continue to make progress with the IND enabling activities during the quarter. And BAN 2,238, it combines our disease expertise in alpha synuclein biology with the brain transporter technology, which is then designed to enhance the antibodies delivery across the blood brain barrier. And this program is progressing according to plan, and we are currently expecting to initiate clinical development in next year. So together, exudafenamab and BAN-two thousand two hundred thirty eight represent a complementary strategy, combining the most advanced clinical stage asset with next generation brain transporter enabling program, targeting the same underlying disease biology.

10:07 So next slide, please. So one of the quarter's key highlights for us was really the new Brain Transporter collaboration with Lilly. Lilly's selection of the Brain Transporter for next generation therapies provide a strong validation from a leading pharmaceutical company and reinforces the importance of efficient blood brain delivery for CNS drug development. And this collaboration expands, of course, the further potential on the application of the brain transporter beyond our internal programs.

10:42 And it combines BioArctic neuroscience expertise with Lilly's global development capabilities further strengthening the platform for long term strategic and commercial value. The Mesenkia collaboration in oncology marks BioArctic's entry into the oncology target space and expands the application of the brain transporter beyond neurodegenerative diseases. And the main focus here is glioblastoma, which is a highly aggressive brain cancer with significant unmet medical need. And together with Mesenkia, we are now evaluating a novel approach by combining the brain transporter with Mesenkia's HVEM targeting antibody, enhancing the drug delivery via this brain to the brain and also the capability to reach the tumor cells associated with reoccurrence and treatment resistance.

11:33 So this initial goal is to generate a drug candidate and establish a preclinical proof of concept in the program further demonstrating the versatility of the brain transporter platform. So taken together, the Lilly and the Mesenkia collaboration highlights the broad potential of the brain transporter. Lilly validates the platform in newer generation, while Mesenkia extends its application into oncology, demonstrating its versatility across multiple disease areas. So next slide, please. And then I will hand over to our Chief Commercial Officer, Anna Karya Grunval. Thank you, Johanna. So let me go back to Lekambi and the global rollout of the subcutaneous initiation treatment.

12:21 As Ganilla already mentioned, This is clearly an important step in really expanding the patient access and further strengthening our continued growth. So in The US, the FDA approved the approval came in July for the Leukembi iClick initiation treatment and it is available as of this week. So this will increase clearly the momentum as we now move into the second half of twenty twenty six. This will allow people the option to inject the drug themselves instead of going to the hospitals, so they can do this at home for the whole course of treatment. So without having to come to the clinic for the time consuming and more invasive infusions. So this change is really expected to broaden uptake, especially for the people who live far from the clinics or travel frequently.

13:15 Looking at other benchmarks in the industry, we believe the uptake in The US will happen gradually as the coverage will broaden at different time points with an unexpected shift potentially coming in the beginning of twenty twenty seven. And we hope that the Medicare Part D coverage for both the initiation and maintenance can begin in January 2027. But we believe it will clearly be a commercial game changer and an advantage versus the competition. In Japan, we expect approval soon in this third quarter of twenty twenty six and reimbursement a bit later expected to follow in the fourth quarter. And in China, the product is currently under priority review and we expect the approval in the first half of twenty twenty seven.

14:06 So importantly also is that data presented in July this summer at the AIC Congress in London, it showed really that the efficacy and the safety of the subcutaneous administration is comparable to the IV treatment. So it's clearly supporting the potential of this more convenient treatment option. ESA also continued to make progress across other international markets. So during the second quarter, LUKAMBI was launched in Australia, Belgium, Brazil and India. And at the same time as market interest unfortunately is generally slower in Europe, the process continue to improve patient access across Europe. Here, the less frequent IV maintenance dosing is currently under EMA regulatory review.

14:57 And if approved, this could not only enhance the convenience of continuous treatment, but also facilitate access discussions in some of the countries in Europe.

15:07 In The UK, commercial discussions between Eisai and the NHS England are ongoing. And finally, we are seeing some encouraging interest from several private clinics in the Nordic countries and as we progress also the discussions for more broader public reimbursement. So overall, we're very pleased with the progress and together with the uptake of the usage of blood based biomarkers, we see really significant opportunities to further expand patient access and growth. If you go to the next slide. So coming back to the AI Congress in London this summer, several speakers showed data on how the drug is performing in the real world. Here I'm highlighting a US post market study called LEADER, which now include 16 clinical sites across the country.

16:03 In London, data were presented for a bit more than 400 patients from 13 sites. And after an average of seventeen months of Lykamba use, approximately eighty three percent had not progressed to more advanced disease as assessed by a clinician. So of these seventy six percent remained at the same disease stage and six point five percent improved. For a bit more than two hundred people who have reached two years of treatment, the data are similar seventy four percent was stable and nine percent improved. Among the a bit more than two hundred patients that has been on treatment for more than eighteen months, almost eighty percent transition to maintenance treatment either with the can be IV or subcutaneous eye click.

16:55 So finally, safety observations in this real world study were consistent with the FDA approved label. So we're looking forward to the next data cut of approximately 600 patients that would probably be presented in November at the CTEP Congress. So by that, I hand over to Anders, our CFO. Thank you, Anika. And if we then turn to the Lycanbi numbers, we can see that the Lycanbi growth continues. The global Q2 sales were JPY 29,300,000,000 or roughly $184,000,000 representing a healthy 12% increase from the first quarter or 27% increase from the second quarter of twenty twenty five. If we translate that into our royalties, you see that our royalties grew to by 12% to SEK 179,400,000 the second quarter.

17:47 It doesn't look as fantastic if you compare with the second quarter twenty twenty five. But as you remember, there was a very large stockpiling effect in the second quarter of twenty twenty five. And if you remove that one time effect, the annual growth would have been roughly 43% in terms of royalties. So all in all, on a global scale, growth looks really, really good. But then turning to U. S, the growth

18:13 there, 13% going to $27,000,000 in the quarter is now mainly driven by Simplify Diagnosis. And you should understand that there's a very tough competitive situation right now in The U. S. In the period that ended. So the iClick launch that happened earlier this week is going to be really, really exciting to follow. This has the potential to drive the royalties from the can be in a number of ways. First of all, like I mentioned that the uptake of patients is likely,

18:52 going to increase due to the fact that it's so much easier for patients to access the therapy this way. On top of that, Lycanby should be able to generate a larger share of new patients as it will be the only drug that is available in the subcutaneous formulation. And third factor is that since this is a much more efficient way of delivering these

19:15 therapeutics, a larger share will end up with the pharmaceutical part of the treatment cost. So the revenue per patient is likely to go up as well. So all in all, this will be a very important factor for the royalties in the future And it would be very, very exciting to follow. In China, we also saw a very healthy growth going up to $30,000,000 Here, we will also most likely see the introduction of the subcutaneous version in the beginning of twenty twenty seven. We are also seeing broader insurance coverage, ASI communicated that, that will start to come into place in the fourth quarter of this year, also very intriguing development. Japan was tough this quarter. It was flat from the first quarter, roughly $38,000,000 in sales.

20:08 And it seems like based on presentations that we saw at the large conferences this summer that the issue of capacity for infusions in Japan has been tougher there than in other markets. So it would be very, very important now that we expect to see the subcutaneous version come out also in Japan. We're expecting approval in the third quarter of this year and reimbursement and launch towards the end of this year. So all in all, I think things are going fairly well, but the subcutaneous introduction will really have an impact here, even though it may not come directly, but gradually, this will have a very large impact on the royalties.

20:59 EU has been slow. We've talked about that in previous presentations, and it's still slow. So we'll not dwell on that too much.

21:10 All in all, Eisai reiterated their forecast of JPY 143,500,000,000 in their fiscal year 2026. That is roughly $900,000,000 of sales this year. And that corresponds to roughly SEK $880,000,000

21:27 in royalties during the time period. If we then turn to our numbers, starting from the left, you see our net revenues that amounted to $248,000,000 in the second quarter. That looks like we're shrinking from the second quarter of twenty twenty five. But this is all due to the fact that there was a milestone of $223,000,000 in 2025, and there were no milestones that were paid in the second quarter of this year. The underlying recurring revenues did continue to increase. The royalties were roughly $179,000,000 and then also had core promotion revenues. So we're approaching $200,000,000 in recurring revenues every quarter, which is very healthy. We also have some revenues from our collaborations.

22:14 We entered into a collaboration with Novartis last year, where we recognized $51,000,000 from that upfront payment in the second quarter. And as Gernigal already mentioned, we also entered into a collaboration with Lilly in the second quarter this year. None of that was recognized in the second quarter.

22:34 We'll start to recognize that from the third quarter and we expect that roughly 40% of the $30,000,000 will be recognized during the remainder of 2026. Turning then to our costs, they continue to increase. They were $232,000,000 in the second quarter, up from 193,000,000 a year ago. And this is all due to the fact that we're investing more and more in our project portfolio in preparations for our exciting trials with exudalumab. And we reiterate here that for the full year 2026, the costs the operating costs, I should say, are expected to increase by 40% to 60% compared to the year before. So if anything, I would say in the low range of that span, but we reiterate roughly 40% to 60%.

23:25 And as you see in the right hand graph, we were not making a profit in the second quarter, but all in all, in the first half of the year, we made a profit of $179,000,000 and we still expect to be profitable for the full year.

23:41 If we then turn to the net result, you see that was slightly negative due to an impact on financial net and tax. The cash flow was very positive, much stronger than the operating profit. That is due to the fact that Eisai EUR 20,000,000 sales milestone was paid in May. And then cash and cash equivalents was roughly $2,000,000,000 at the end of the second quarter, and that's despite us paying a dividend of $177,000,000 in June. And this does not then include the Lilly $30,000,000 upfront payment that was paid in July. So at the end of July, we had over $2,300,000,000 in cash. So all in all, our position remains extremely solid with plenty of room to keep investing in our R and D portfolio.

24:33 With that, I hand over back to Gineela. Thank you so much, Anders. So we are coming towards the end of today's presentation with some upcoming news flow and some closing remarks. Next slide, please. So if we look at the second quarter, I think it was great to see more patients getting access to lycanbi around the globe, also in smaller scale in The Nordics so far through the private clinics in Finland, and hopefully soon also in other Nordic countries. Eisai is driving continued regulatory processes on lecanumab in a great way,

25:06 And the iClip, the subcutaneous version with an auto injector was recently approved and launched, now also for initiation in The U. S. And later this year, we expect response from authorities in Japan and in China next year. We also heard about continued impressive results from real world usage when we were at AIC Congress in London in July, as Annika alluded to, and also for subcutaneous data. We are looking forward to the next big Alzheimer's Congress called CTAD, Clinical Trials in Alzheimer's Disease, which is in Boston in November, where we also expect more presentations around lecanumab. Excedavanumab, the Phase 2a study, study results are expected later this year. We heard some really important safety data that was coming during the summer, but the full study is expected

26:05 to read out late this year. And we are preparing for starting Phase 2b next year. We will communicate on further potential partnership milestones, etcetera, when that is relevant. Next slide, please. So some key takeaways from today's presentation. I think BIOAARTIQ shows continued growth and we have a great progress both on Lekembi as well as the rest of our portfolio and the brain transporter technology. As I said, we are delivering on our 2,030 ambitions already in a great way. Lekambi is well on track to become an established treatment in Alzheimer's disease and sales continue to show increasingly glommed demand globally. This subcutaneous auto injector iClick has now been launched in The U. S. Also for initiation treatment, which is a major milestone.

27:02 Our business development efforts continue to deliver, and we have just concluded a landmark deal with ALI Lilly with our brain transporter technology. And we have expanded our project portfolio also into oncology by the new research collaboration with Mesenkia, also utilizing our Brain Transporter technology. And last but not least, we have a very strong financial position with which was about SEK 2,000,000,000 in cash at the end of June. And this is after the dividend of SEK 2 per share and before receiving the upfront of USD 30,000,000 from Lilly. And we expect a positive result this year. So all in all, I think BIOATIZ is exceptionally well positioned for continued growth.

27:51 And the future looks very bright for BIOATIZ and that brings hope for many patients. Next slide, please. So by that, we say thank you so much for your attention, and we are happy to take some questions. The next question comes from Joseph Hedden from Rx Securities. Please go ahead. Good morning. Thanks for taking my questions. Congratulations on the collaboration with Senkia. That certainly looks like an exciting application for brain transporter. Just wondering if you could give us your thoughts on the time line to the preclinical validation.

28:40 And then any details you can give us on additional aspects of the deal, who would be in control of clinical development? Or are you going to be looking for a partner? And secondly, if I could just on exasabinib. So you stated that you passed safety analysis that facilitates Phase 2b. Do you still expect to be presenting results from the study? Thank you. Sorry, I had a little bit difficult to hear the first question. It was on the Senkia timelines. Senkia, okay. I thought it was Lily. Okay, so Senkia. Okay, maybe Johanna want to Yes. Thank you, Josep, for those questions. So I can start with a question on Mesenkia. This is a preclinical research collaboration that will validate preclinically the target together with our brain transporters.

29:35 So after that, we will continue with discussions on how we should progress this. But I think it's it's a bit too early to talk about the timelines really on and and when this kind of program could go into into clinic. But this is a first research collaboration where we do some things and they do some things and we will we will do a sort of a preclinical evaluation in a in a disease model and see if the concept works, and then we will go on into further discussions on how to progress if positive. And the second question was with regard to exudablimab. So maybe you want to take that also, Joanna? Yes. So that was the exudablimab EXIST study. And yes, our plan is to conclude this study by the end of the year and then also report some data from that.

30:25 Thank you. And just a follow-up on the same here, if I could. Are there any other companies looking at that specific target in glioblastoma? Or is this a completely novel program? As far as we know, I think this is a unique target and that's why we think it's really, really interesting. And I think it's also unique combining one of these diseases together with the brain transporter platform. As far as we know, there are no other programs out there trying to treat glioblastoma with any target and in combination with the transporine receptor brain transporter platform. So I think that it's a really interesting program and we really think it's solid and really nice science behind Miesenkia's ideas entering what can be seen as a standstill for these cancer drugs in extremely difficult to treat patient population and disease.

31:28 Okay, got it. Thank you. Thank you, Joseph. The next question comes from Max Dah from Goldman Sachs. Please go ahead. Hi, this is Max Dah for Rajan Sharma. Thank you for taking my questions. I have a few. The first question is about Xtantamab. So in your Phase 2a study, did you see any efficacy signal? And when should we expect results from the Phase 2b study? Second question, how will you prioritize between xtanimab and BAN38? Also, if I can have another question. Could you talk about when Eli Lilly will make decision to move the program forward to clinical development? Thank you very much.

32:24 Do you want to take it? Yes, absolutely. So if we start with the question on exudavimab efficacy from the EXIST study, I think that you should remember that this study that we are now concluding is a Phase 2a study. So it's a small study and the primary endpoint is safety and tolerability. We are also looking at biomarkers exploratory, but I don't think we should get our hopes up too high on that one, because the study is not powered to look for a clinical efficacy and it's not long enough, it's three months. And I think that you need much longer time for that. But we are definitely looking into that, but the primary endpoint is safety and tolerability. And in terms of the Phase 2b results, I think that we haven't communicated externally on those timelines.

33:12 We're still looking at the design and planning this study. And in terms of the prioritization between exudaimumab and BAN-two thousand two hundred thirty eight, I mean, think the real strength with this portfolio is that there are so many diseases here to treat. Alpha synuclein is a key component in Parkinson's, in MSA and in DLB and potentially also some other diseases. I mean, we see a lot of co pathology also with Alzheimer's. So my hope would be that we don't need to prioritize between these two that we can actually maybe position them for different diseases, depending on how they span out. So I think that there is a real strength in having two different options that might be able to be positioned to different diseases. And the third question was with regard to Lilly and the collaboration there, and we do not disclose details on that.

34:09 Got it. Thank you very much. Thank The next question comes from Matthias Hegblom from Nordea. Please go ahead. Yes, thanks so much. Thanks for taking my question. I have two, please. So firstly, on exudaflimab, now with a confirmed favorable safety profile from the ongoing Phase 2a testing in Parkinson's and MSA patients. Sometimes the pushback around this asset is coming back to the fact that it's now roughly four years or somewhat more than four years that the asset was handed back to you. So I guess the question is, was there any point in time where there was a chance to use maybe BIOACEN clinical trial design to possibly speed up clinical development and explore the optimal dose? And if not, why? And then secondly, with draft guidance from FDA on BIOACEN trial design in January, how is the company thinking about this as a tool across the rest of the portfolio in real terms?

35:17 So should I or do you want to you can Yes. No. So I think I agree with you that, I mean, we got the exedavnimod program back from AbbVie twenty twenty two. And when they had done two Phase one studies and both of those studies showed excellent data with regard to safety, tolerability and pharmacokinetics. So the next thing that needed to be done was, of course, to look at multiple dosing. And we did that then in Parkinson's patients and we also add the MSA patients. So we have expanded this into and we see more opportunities for further indications as well.

36:04 So of course, you are right that there is a lot of interest in different kind of innovative clinical design models and with the Bayesian statistics, and we did utilize that for lecanumab. So far for exe dabnamumab, we have done more traditional design and are taking it a bit more stepwise here. So I think that I really incubation design is really interesting when it is the right thing. But so far for exudablimab, we have utilized traditional design. And any general thoughts around baseline trial design for the rest of the portfolio or what is draft guidance updated in January may possibly mean?

36:54 Yes. No, I think, I mean, it's definitely something which is important and will continue to be important. And I think that how it was utilized for lecanumab is really also seen as a role model. That Phase 2b study with this adaptive design and with Bayesian design, I think it was really innovative and also came with really good results, understanding the dose that could be used in phase three with a more traditional design was used. So I think, yeah, I I really think that it's important sometimes with the traditional design, but also in in the future, of course, to look at adaptive designs and Bayesian design. 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.

37:50 Thank you so much. We have a couple of written questions here. We'll start with one from Mr. Tulin. He's asking about the research collaboration that we have ongoing for BAN2402 with Eisai and if there are any updates we can give there. So I'm so sorry to disappoint you when it comes to different collaborations and discussions with partners. We cannot disclose. We can just say that everything looks really, really great that we have with 2,802 and that we are in discussions with Eisai, but we cannot disclose anything more at this moment. Thank you. And then another presentation from Mr. Balder, and he's asking about the Bristol Myers Squibb collaboration, if it's still in preclinical phase and when it can be expected to enter patients.

38:48 So I can say, I think we have a really great collaboration also with Bristol Myers Squibb. And again, we cannot disclose details of their program. Sorry. Great. Thank you, Gunilla. I think there are no more people in the queue presenting and there are no more written questions either. If you have any follow-up questions, you're obviously always welcome to give us a call or send us an email. But I think that concludes today's call. See you again in three months. Thank you so much. Have a great day.