Texted version of the presentation for the year end report 2019. Date: 28 February 2020 Presenters: Martin Åmark, CEO and Susanna Helgesen, CFO Martin: Thank you very much. Hello everybody and welcome to this webcast in relation to our year end report for 2019. So I will first just give a brief update of where we are from a business perspective, and then I will hand over to our CFO, Susana, who will walk you through the financials. Martin: If we go to page number three here. The highlights are the following, if we first talk a little bit about Xlucane, our leading biosimilar to the ophthalmology drug, Lucentis. We'll talk a little bit about where we are in the development. Xplore, which is the ongoing phase three trial for Xlucane. It's an equivalence trial where the objective is to demonstrate the equivalence versus the originator drug Lucentis. Martin: We are in full speed recruitment and the trial is going very well. As many of you probably know, we're targeting to recruit 580 patients with age-related macular degeneration. We are working now with a little bit over 130 actively recruiting clinics all over the world. And we reached well over 50% of the intended sample size in the trial and it's now going very quickly ahead, with some 60 to 80 patients being recruited on a monthly basis into the trial. Martin: I think now it progresses very well and we're aware that it has been a marginal delay as per the originally communicated timeline with regards to recruitment, but I think it's now we see that the recruitment speed really has picked up and I think it's due to several factors. On the one hand that we now have all the intended clinics up and running and actively recruiting. Martin: And as you who have been involved or following these kind of trials before, you probably know that the recruitment typically follows more of an exponential curve than a linear curve and it was due to the ramp up time it takes to get up all the sites up and running and actively recruiting. Martin: So now we have that, then the competition for patients has decreased significantly after Christmas as a larger clinical trial finalized their recruitment before Christmas to some extent at least competing with Xplore with regards to the patients we've recruited. So now when that also came to an end, it also contributed significantly to an increased recruitment speed. Martin: We have strict inclusion criteria in the trial to have an as homogeneous patient population as possible, particularly with regards to the visual acuity at entering the trial. This is good, we believe, from the
perspective of demonstrating ultimately equivalence versus the originator and then having as homogeneous patient population as possible is beneficial. But the backside of it is that it leads to a little bit higher screen failure rate than anticipated. But I think there's a good side of it, which is beneficial from demonstrating what we want to demonstrate equivalence. Martin: Now it's moving ahead very quick to action and I think it looks very good. And then as you can imagine, a lot of the ongoing activities within the company and together with our partner STADA in relation to preparing for filing with at least EMA and FDA. In order to finalize the setup of our commercial supply chain so that you have that up and running and prepared and everything is moving on track to have an approval in place and being able to launch the product together with STADA as the originators patent protection expires in July 2022. Overall I think this is moving along very nicely and we were enthusiastic about the big development and our partnership with STADA and the prospects we have for this product commercially and also what we can do for the patients with these different indications. Martin: Okay. So moving along to what we do with the preclinical portfolio, we work very actively on development of our biosimilar to Cimzia and to Opdivo. It is the two programs we are working heavily with from a preclinical perspective and they both are moving along very nicely. And to say a few words about the Cimzia biosimilar here, we think this is a very nice target, patent expiration 2024/ 2025 as of now we are the only biosimilar developer going for this target. Cimzia is a sizable product of 1.7 billion Euro in sales and actually growing with some 18% and now in 2019, so strongly growing product as well. Martin: I think this looks more and more as we move along as a more attractive target and a product we really believe will have the potential to be a commercial success for us. And with regards to the Opdivo biosimilar, we have are one of the front runners with. As you probably all know, Opdivo, is a larger product then Cimzia, with some seven billion Euro of annual sales now and growing strongly also. The patent expiration from 2026 and onwards. So we also would believe that we'll be able to do strong commercial case out of this. Martin: Also we are working a lot on strengthening our platform technology, both from a scientific perspective but now also from an IP protection perspective. We have recruited an IP professional, and created a small IP department, which allows us to pick up all the great innovations coming out of our scientific team and file patent applications to build more of an IP portfolio around our platform. We filed three patent applications this year and I'm sure that we're going to file additional patent applications throughout the course of this year covering essential aspects of our platform technology targeting cost efficient production of biologics. Although now we are applying it on biosimilars, but it's a platform that really can be leveraged for any biological product with the benefit of low production costs. Martin: Now we're talking more about the financials but coming out of 2019 we had a cash position of 164 million Swedish Krona, which is as per the budget we had. Let me open the next page, yes, a few words from the market's perspective, particularly in Europe and the US we see biosimilars continuously in Europe taking higher and higher market shares versus their respective originator product and it's going
quicker and quicker in the launches that we see. We're happy to see that in the US also now we see signs of commercial success for biosimilar developers now in particularly the Coherus biosimilar to peg- filgrastim, which actually ended 2019 with a $356 million of sales. Martin: So I think that Coherus has demonstrated in a way what can be done in terms of biosimilar launches and commercial successful biosimilars in the US. Looking at these figures the leading biosimilars have reached 400 plus million Euro in annual sales, which is in the vicinity of what we have explicitly targeted as, as our net sales ambitions for our leading biosimilar Xlucane. Martin: Okay. We can move on to the next page, and we're also of course monitoring the direct market which is being addressed by Xlucane and the market for VEGFa- inhibitors for ophthalmic use. With the key products Lucentis and Eylea and now also, Novartis launched their VEGFa- inhibitors Beavou in 2019 this market is growing strongly, some 10% of annual growth, and Lucentis, the originating product that we are targeting here, is also growing in the market, so it's a very sizable market that we are addressing and growing market. And I think there's still plenty of room for further growth of these respective products, and given the amount of patients which currently are going untreated or are not getting sufficient treatment, if you will in terms of number of doses on an annual basis due to the high costs of these respective originated products and the limitations in reimbursement. Martin: I do believe that we are going to see continued growth in this market and also that given the issues we have with the costs of the respective products, biosimilars will take a prominent place in this market as they start to launch 2022 and onwards. Martin: Okay. So that's the brief update from where we are from the business perspective and all. We are going to hand over to Susana to walk you through the financials. Susanna: Thank you Martin. Let's move over to page six and the update on the Q4 financials in the financial summary for Q4 as well as for the full year, you can see that the Xbrane did not report any revenues. This is due to the cost sales of tour sites to Iran, RND expenses for Q4 amounted to 26 million Swedish Kronas which is in line with same period last year. R&D expenses for a full year amounted to 116 million Swedish Krona and the increase is primarily due to the ongoing explorer phase three study regulatory preparation for MAA/BLA filings as well as establishment of manufacturing and supply chain for Xlucane. Out of total operating expenses, R&D represented 67% in Q4 and 78% for the full year. Operating loss amounted to 56 million Swedish Kronas in Q4 the greater loss in Q4 compared to last year is primarily due to write down of Spherotide inventory and production facilities in Italy. Susanna: This due to the bankruptcy of the parent company of our CMO in whose facilities we have our production equipment installed. Operating loss for the full year amounted to 165 million Swedish Kronas and the greater loss compared to last year is because we did not have any material revenues from sales or out licensing and that our cost of R&D and SG&A have increased. EBITDA amounted to minus 37
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