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BioArctic
Quarterly Report • May 17, 2024
3012_10-q_2024-05-17_d54bc4dc-f563-4521-990e-0fc994a5c094.pdf
Quarterly Report
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BioArctic
INTERIM REPORT JANUARY – MARCH 2024
First BrainTransporter technology agreement signed
EVENTS DURING THE FIRST QUARTER 2024
- Leqembi® was approved for the treatment of Alzheimer's disease in China launch planned for July 2024
- The European Medicines Agency (EMA) announced that its deliberations on lecanemab regarding the Marketing Authorisation Application has been rescheduled due to procedural reasons
EVENTS AFTER THE END OF THE FIRST QUARTER
- BioArctic's partner Eisai submitted a supplemental Biologics License Application (sBLA) for less frequent intravenous (IV) maintenance dosing with lecanemab to the U.S. Food and Drug Administration (FDA)
- BioArctic was included in Nasdaq Stockholm's new ESG Responsibility Index
- BioArctic and Eisai entered into a research evaluation agreement regarding BAN2802, a potential new treatment combining BioArctic's proprietary BrainTransporter™ technology with an Alzheimer drug candidate
- Eisai received Fast Track designation and initiated a rolling Biologics License Application (BLA) to the FDA for subcutaneous maintenance dosing of Leqembi
- Eisai published sales projection for Leqembi for fiscal year 2024 (April 2024 March 2025) of JPY 56.5 billion
FINANCIAL SUMMARY JANUARY – MARCH 2024
- Net revenues for the period amounted to SEK 29.6 M (393.4), of which SEK 21.3 M (-) in royalties for Leqembi
- Operating profit amounted to SEK -73.1 M (300.6)
- Profit for the period amounted to SEK -57.6 M (293.9)
- Earnings per share before dilution was SEK -0.65 (3.33) and after dilution -0.65 (3.31)
- Cash flow from operating activities amounted to a negative SEK 114.4 M (299.0)
- Cash and cash equivalents and short term investments at the end of the period amounted to SEK 991 M (1,106)
KEY FINANCIAL PERFORMANCE INDICATORS 1
| Q1 | |||
|---|---|---|---|
| SEK M | 2024 | 2023 | 2023 |
| Net revenues | 29.6 | 393.4 | 616.0 |
| Other operating income | 2.0 | 3.3 | 4.1 |
| Operating profit/loss | -73.1 | 300.6 | 252.6 |
| Operating margin, % | neg | 76.4 | 41.0 |
| Profit/loss for the period | -57.6 | 293.9 | 229.2 |
| Earnings per share before dilution, SEK | -0.65 | 3.33 | 2.60 |
| Earnings per share after dilution, SEK | -0.65 | 3.31 | 2.59 |
| Equity per share, SEK | 11.24 | 12.31 | 11.85 |
| Cash flow from operating activities | -114.4 | 299.0 | 299.0 |
| Cash flow from operating activities per share, SEK | -1.30 | 3.39 | 3.39 |
| Cash, cash equivalents and short term investments | 991.0 | 1,106.0 | 1,111.6 |
| Equity/assets ratio, % | 87.4 | 94.0 | 88.2 |
| Return on equity, % | -5.6 | 31.4 | 25.0 |
| Share price at the end of the period, SEK | 215.40 | 251.40 | 267.80 |
Unless otherwise stated, this Interim report refers to the Group. Figures in parentheses refer to the corresponding period last year. The amounts stated are rounded, which sometimes leads to some totals not being exact.
1 For the definition of financial performance indicators, see page 21
Comments from the CEO
Step by step, Leqembi (lecanemab) for early Alzheimer's disease is being rolled out in the US and Japan. It is encouraging to see the continuous increase in sales and that the drug is helping more and more patients. Total sales of Leqembi in the first quarter amounted to JPY 2.83 billion (approx. SEK 200 M), which means that BioArctic received royalty of SEK 19 M net, less royalties granted. For the coming 12 months, Eisai is projecting sales of JPY 56.5 billion (approx. SEK 4 billion), which corresponds to around SEK 360 M in net royalty to BioArctic.
In January, lecanemab was approved in China and Eisai estimates that there are 17 million patients with early Alzheimer's disease in China, and it is preparing the market launch in July 2024.
Unfortunately, patients in the EU will have to wait for the treatment as the European Medicines Agency postponed the approval process based on potential conflicts of interest among the members of its Scientific Advisory Group. Delays of this type are very trying, but it is important to emphasize that this is a delay that has nothing to do with the lecanemab application.
In the US, Eisai's systematic launch is starting to pay off and they have declared that the patient pathway has been established and that they are now transitioning into a prescription expansion phase. Eisai is also working hard to simplify the treatment. They recently submitted a supplementary Biologics License Application for maintenance treatment with lecanemab in the form of monthly intravenous dosing. Currently, both the initiation phase and maintenance treatment involve treatment every other week. If the application is granted, patients will be able to switch to monthly intravenous treatment after an initiation phase with treatment every other week. The next major improvement opportunity is the subcutaneous formulation with an autoinjector where Eisai have now received Fast Track designation and started a rolling submission for maintenance dosing. If approved, the treatment can be administered weekly in the patient's home environment instead of in healthcare facilities.
It's an important milestone that we have now signed our first agreement, where our BrainTransporter technology will be used with a drug candidate against Alzheimer's disease. The research evaluation agreement with Eisai regarding BAN2802 is a potential new treatment combining our technology with an undisclosed Alzheimer drug candidate. In parallel, we are increasing the investments in our other Alzheimer's project with BrainTransporter, BAN2803. The BrainTransporter platform has tremendous potential for improving many different drug projects, which will give BioArctic opportunities to form strategic partnerships with external partners.
In March, this year's international AD/PD™ congress was held in Lisbon. The atmosphere was very positive with a strong forward-looking spirit. The lecanemab presentations at the meeting highlighted the long-term treatment benefit and the extra time that patients can gain by extending the earlier stages of the disease and postponing the more severe stages when they become more dependent on others. Additional data was presented that indicate even better efficacy if the treatment is initiated early on in the disease. The development of blood-based
biomarkers, which are important for identifying the patients that can benefit from the treatment, continues progress well. These biomarkers will over time permit more patients to gain access to treatment at earlier stages. Moreover, I was able to draw two further distinct conclusions from the congress. Firstly, the field of antibodies against synucleopathies such as Parkinson's disease, Lewy body dementia and multiple system atrophy (MSA) is evolving rapidly, both as regards treatment and biomarkers. Secondly, we are hearing more and more that the next major advance in the CNS field will be based on developments in active transport of drugs across the blood-brain barrier. With BioArctic's significant initiatives in both fields, we are well positioned in the field.
As far as we are aware, BioArctic has the world's most selective antibodies against the pathological forms of the protein alpha-synuclein, which is a driver in several synucleopathies. We are now preparing for a Phase 2a trial with Exidavnemab in Parkinson's disease, which we plan to initiate in the autumn. The study is designed to create opportunities in several diseases such as Parkinson's disease, Parkinson's disease dementia, Lewy body dementia and multiple system atrophy. Once the trial has concluded, we will be able to make a well-founded decision based on the findings and careful analyses to develop Exidavnemab within the indication or indications where the treatment can be of the greatest benefit.
We are also happy to see that BioArctic's sustainability focus is receiving attention. Recently, we were included in the new Nasdaq OMX Sweden Small Cap 30 ESG Responsibility Index, based on our sustainable innovation strategy, which combines scientific advances with responsible business practices. Our most important contribution to a sustainable future is innovation and development of safe and efficacious drugs against neurodegenerative diseases, an effort that we remain deeply engaged in every day.
Gunilla Osswald CEO, BioArctic AB
BioArctic in short
BioArctic AB (publ) is a Swedish research-based biopharma company focusing on treatments that can delay or stop the progression of neurodegenerative diseases. The company invented Leqembi® (lecanemab) – the world's first approved drug proven to slow the progression of the disease and reduce cognitive impairment in early Alzheimer's disease. Leqembi has been developed together with BioArctic's partner Eisai, who are responsible for regulatory interactions and commercialization globally. In addition to Leqembi, BioArctic has a broad research portfolio with antibodies against Parkinson's disease and ALS as well as additional projects against Alzheimer's disease. Several of the projects utilize the company's proprietary BrainTransporter™ technology, which has the potential to actively transport antibodies across the blood-brain barrier to enhance the efficacy of the treatment. BioArctic's B share (BIOA B) is listed on Nasdaq Stockholm Large Cap.
Strategy for sustainable growth
Vision
A world in which we successfully stop the onset of neurodegenerative diseases
Mission
Together, we create, develop, and provide drugs of the future for patients with severe neurodegenerative diseases and other conditions with significant medical needs
Business concept
• Through pioneering research, BioArctic creates and develops biological drugs for patients with neurodegenerative diseases
• BioArctic shall generate revenue and increase the value of the company by out-licensing or commercializing proprietary drugs
Overarching company- and operational strategy BioArctic is a biopharmaceutical company that creates, develops, and provides disease-modifying treatments for severe neurodegenerative diseases and other conditions with significant medical needs.
Operations
BioArctic mainly conducts its research in four focus areas:
- Alzheimer's disease
- Parkinson's disease
- Other CNS disorders
- Blood-brain barrier crossing technology
Neurodegenerative disorders are conditions in which cells in the brain degenerate and die. Normally the neurodegenerative processes begin long before any symptoms appear. Neurodegenerative disorders affect the lives of millions of people and constitute a growing global health care problem.
A key cause of Alzheimer's disease and Parkinson's disease is believed to be misfolding and aggregation of
Research and development:
• BioArctic develop new, innovative product candidates for Alzheimer's disease, Parkinson's disease and ALS based on scientific excellence and evidence in neurodegenerative diseases and scientific knowledge in antibody and protein technology
• BioArctic continuously develops the product portfolio based on scientific and commercial considerations to optimize our scientific competence and financial abilities
Commercialization:
• BioArctic prioritize long-term partnerships that
complements our key competences, finances late-phase clinical development, and maximizes the global commercial potential of our products
• We commercialize our treatments in the Nordics and in the future also in Europe
proteins. The spreading of aggregated soluble forms of proteins leads to neuronal dysfunction, cell death, brain damage and symptoms of disease. Each neurodegenerative disorder is characterized by different aggregated proteins. The protein amyloid beta (Aβ) is involved in Alzheimer's disease, the protein alpha-synuclein (α-synuclein) is involved in Parkinson's disease, while for ALS2) , it is the protein TDP-43. BioArctic's aim with the antibodies currently in clinical phase, is to achieve a diseasemodifying effect through the selective binding of antibodies, and elimination of the harmful soluble aggregated forms (oligomers/protofibrils) of the amyloid beta protein and the alpha-synuclein protein in the brain.
2 Amyotrophic lateral sclerosis, a group of motor neuron diseases
Project portfolio
BioArctic has a balanced, competitive portfolio consisting of unique product candidates and technology platforms. All projects are focused on disorders of the central nervous system. The projects are a combination of fully funded projects run in partnership with the global Japanese pharma company Eisai and innovative inhouse projects with significant market- and out-licensing potential. The projects are in various phases: from discovery to commercialization.
As of March 31, 2024, the project portfolio consisted of:
3 Partner with Eisai for lecanemab for treatment of Alzheimer's disease since 2007 Eisai entered partnership with Biogen regarding BAN2401 (lecanemab) in 2014
4 Mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease
5 Normal cognitive function with intermediate or elevated levels of amyloid in the brain
6 Dementia and cognitive impairment associated with Down's syndrome and with traumatic brain injury
ALZHEIMER'S DISEASE
In Alzheimer's disease, the amyloid beta protein clumps together into increasingly larger aggregates in the brain – from the harmless form with a normal function (monomers) to larger forms such as oligomers, protofibrils, fibrils and finally amyloid plaques containing fibrils. Oligomers and protofibrils are considered the most harmful forms of amyloid beta that initiate the process of Alzheimer's disease. BioArctic has developed several unique and selective antibodies with the potential to slow or halt the progression of Alzheimer's disease. Lecanemab, which is the first and only fully approved disease-modifying drug for Alzheimer's disease. The drug is approved in the US, Japan and China under the brand name Leqembi. The development of lecanemab against Alzheimer's disease is being financed and pursued by BioArctic's partner Eisai, which also co-owns the rights to another antibody called lecanemab back-up. BioArctic has four additional antibodies projects against Alzheimer's disease in its project portfolio, two of which are connected with the BrainTransporter technology.
Drug candidate lecanemab (collaboration with Eisai), brand name Leqembi
Lecanemab, which is the result of a long-term strategic research collaboration between BioArctic and Eisai, is a humanized monoclonal antibody against Alzheimer's disease. Eisai is responsible for the clinical development of lecanemab in Alzheimer's disease. The project is based on research from BioArctic, Uppsala University and Karolinska Institutet, Sweden.
Lecanemab has a unique binding profile that distinguishes it from other amyloid beta antibodies. It selectively binds to neutralize and eliminate soluble toxic Aβ aggregates (protofibrils) that are thought to contribute to the neurodegenerative process in Alzheimer's disease. BioArctic has an ongoing research collaboration with Eisai in order to further deepen the knowledge about the drug candidate lecanemab.
Clarity AD was a global confirmatory 18-month Phase 3 placebo-controlled, double-blind, parallel-group, randomized study in 1,795 people with early Alzheimer's disease. The treatment group was administered lecanemab 10 mg/kg biweekly, with participants allocated in a 1:1 ratio to receive either placebo or lecanemab. Eisai's recruitment strategy led to a broad inclusion of patients to be as similar as possible to the early Alzheimer's population in society. In the study, patients with a wide range of other diseases and concurrent medication with other drugs including anticoagulants were allowed. Eisai also ensured greater inclusion of ethnic and racial populations, resulting in approximately 25 percent of the total US enrollment including persons of Latino and African American origin living with early Alzheimer's disease.
Results from the pivotal Phase 3 study Clarity AD showed that lecanemab achieved the primary endpoint of reducing clinical decline from baseline on the global cognitive and functional scale CDR-SB (Clinical Dementia Rating-Sum of Boxes) compared to placebo with 27 percent, with high statistical significance (p=0.00005). Already at 6 months and across all time points thereafter, lecanemab showed statistical significance compared to placebo (p<0.01) in slowing clinical decline. All secondary efficacy measures were also achieved with high statistical significance (p<0.01).
Notably, lecanemab slowed functional deterioration by 37 percent as measured by the ADCS MCI-ADL scale, which measures how well the patient manages activities in daily life, and positively affected biomarkers for amyloid, tau7 and neurodegeneration. This shows that lecanemab affects the underlying disease. For patients, this could equal remaining in the earlier stages of the disease for an additional 2-3 years longer, according to a modeling study, performed and published by Eisai.
Furthermore, the safety profile of lecanemab was in line with expectations based on the Phase 2b study. An open-label extension study of Clarity AD is ongoing for those patients who completed the core study, to further evaluate the safety and efficacy of lecanemab.
Eisai has also conducted a Phase 1 study for subcutaneous dosing of lecanemab and the subcutaneous formulation is currently being evaluated in the open-label extension study of Clarity AD.
In addition, since July 2020, Eisai's Phase 3 clinical study (AHEAD 3-45) for individuals with preclinical Alzheimer's disease, having intermediate or elevated levels of amyloid in their brains but no symptoms, is ongoing. AHEAD 3-45 is conducted as a public-private partnership between the Alzheimer's Clinical Trial Consortium that provides the infrastructure for academic clinical trials in Alzheimer's disease and related dementias in the U.S, funded by the National Institute on Aging, part of the National Institutes of Health and Eisai.
Since January 2022, the Tau NexGen clinical study for Dominantly Inherited AD (DIAD) is ongoing, where lecanemab is given as a background anti-amyloid treatment when exploring combination therapies with an intracellular protein anti-tau treatment. The study is conducted by Dominantly Inherited Alzheimer Network Trials Unit (DIAN-TU).
7 Cognitive deterioration in Alzheimer's disease is closely associated with increasing levels of the tau protein in brain nerve cells.
Process of approval of Leqembi in the world: USA
• In July 2023, FDA granted Leqembi traditional approval for the treatment of Alzheimer's disease. In conjunction with the approval the Centers for Medicare and Medicaid Services, CMS, announced that Medicare will provide broad coverage of Leqembi according to the FDA approved label.
EU
• In January 2023, Eisai submitted applications for marketing authorization in the EU. In January 2024 the European Medicines Agency (EMA) announced that the Scientific Advisory Group (SAG) will discuss the Marketing Authorisation Application (MAA) of lecanemab. In March 2024 (EMA) announced that its deliberations on lecanemab regarding the Marketing Authorisation Application has been rescheduled as the SAG meeting has been annulled and needs to be redone due to procedural reasons.
Japan
• In September 2023, Leqembi was approved in Japan for the treatment of Alzheimer's disease and subsequently launched towards the end of 2023.
China
• In January 2024, Leqembi was approved in China for the treatment of Alzheimer's disease. Eisai is preparing for a launch in July 2024.
The rest of the world
• Eisai has also submitted applications for approval of lecanemab in Canada, Great Britain, Australia, Switzerland, South Korea, Israel, Singapore, Taiwan, Brazil, Hong Kong, Russia, Saudi Arabia and India. In Israel, the applications have been designated for priority review, and in Great Britain, lecanemab has been
designated for the Innovative Licensing and Access Pathway (ILAP), which aims to reduce the time to market for innovative medicines.
Lecanemab back-up candidate (collaboration with Eisai)
The antibody is a refined version of lecanemab for the treatment of Alzheimer's disease. The antibody was developed in collaboration with Eisai, which resulted in a new license agreement in 2015. The project is driven and financed by Eisai and is in the preclinical phase.
Projects BAN1503 and AD2603 (owned by BioArctic) BioArctic has two additional antibody projects against Alzheimer's disease in its project portfolio in research phase. These antibodies have the potential to become a diseasemodifying treatments for Alzheimer's disease. BAN1503 is an antibody project against a shorter (truncated) form of amyloid beta (PyroGlu-Aβ). That form of Aβ has a pronounced ability to aggregate and become toxic.
Drug projects BAN2802 (research evaluation agreement with Eisai) and BAN2803 (owned by BioArctic)
BioArctic has two potential new antibody treatments against Alzheimer's disease that are being combined with the bloodbrain barrier technology — BrainTransporter, or BT — to facilitate uptake of drug in the brain.
In April 2024, BioArctic entered into a research evaluation agreement with Eisai regarding BAN2802. At the end of the collaboration, Eisai will evaluate the data generated and decide if they chose to exercise an option to license BAN2802 for the treatment of Alzheimer's disease.
BAN2803, so far being operated in-house by BioArctic, targets a shorter (truncated) form of amyloid beta (PyroGlu-Aβ), that have a central role in Alzheimer's disease.
PARKINSON'S DISEASE
BioArctic's antibodies for misfolded aggregated alpha-synuclein have the potential to be efficacious diseasemodifying treatments for synucleinopathies such as Parkinson's disease. Exidavnemab (BAN0805) is a monoclonal antibody that selectively binds to and eliminates neurotoxic aggregated forms of alpha-synuclein.
Drug candidate Exidavnemab (BAN0805) and drug projects PD1601, PD1602 and PD-BT2238 The objective of the project portfolio is to develop diseasemodifying treatments for synucleinopathies such as Parkinson's disease, Lewy body dementia and multiple system atrophy.
Exidavnemab is a monoclonal antibody that selectively binds to and eliminates neurotoxic aggregated forms of alphasynuclein. The goal is to develop a disease modifying treatment that stops or slows down disease progression. The project is based on research from Uppsala University.
At the International Congress of Parkinson's Disease and Movement Disorders® (MDS) in September 2021, preclinical results and results from the Phase 1 study that support continued development of the antibody in a Phase 2 study with dosing once a month were presented. In November 2021, Neurobiology of Disease published an article from BioArctic that describes new preclinical data for the anti-alpha synuclein antibody exidavnemab. The article contains data demonstrating the antibody's ability to selectively bind toxic soluble alpha-synuclein aggregates. In May 2022, an additional drug substance patent for exidavnemab was granted in the US, which is valid until 2041, with a possible extension until 2046. In August 2023, an extended drug substance patent for exidavnemab was granted in Japan, which is valid until 2041, with a possible extension until 2046.
The board of BioArctic has decided to initiate a phase 2a study of exidavnemab in individuals with Parkinson's disease. The study is expected to start in the second half of 2024.
The PD1601 and PD1602 antibody projects also target alpha-synuclein.
At the end of 2022, BioArctic expanded the project portfolio in Parkinson's disease with project PD-BT2238, which combines a selective antibody directed against soluble alpha-synuclein aggregates (so-called oligomers and protofibrils) with BioArctic's BrainTransporter technology.
OTHER NEURODEGENERATIVE DISEASES
BioArctic aims to improve the treatment of a number of central nervous system disorders. The company is evaluating the possibility of developing its existing as well as new antibodies against other diseases in the central nervous system.
Drug candidate lecanemab (indications other than Alzheimer's disease, owned by BioArctic) Lecanemab can potentially also be used for other indications which in that case would be owned by BioArctic. The antibody is in the preclinical phase as a potential treatment of cognitive disorders in conjunction with for example Down's syndrome and traumatic brain injury. BioArctic has presented findings supporting that lecanemab also could be developed into a disease modifying treatment benefiting individuals with Down's syndrome with dementia.
Project ND3014, ND-BT3814 and GD-BT6822 (owned by BioArctic)
The drug projects ND3014 and ND-BT3814 are focused on developing antibody drugs against TDP-43, a protein that is believed to play a key role in the development of the rare neurodegenerative disease ALS. The ND-BT3814 project is linked to BioArctic's blood-brain barrier technology. The projects are in research phase.
During the end 2022, BioArctic's project portfolio was expanded with a new project focused on enzyme replacement therapy for Gaucher disease in combination with the company's BrainTransporter technology to address the CNSsymptoms of the disease.
BLOOD-BRAIN BARRIER TECHNOLOGY
BioArctic's BrainTransporter technology is a technology for facilitating the passage of biological drugs as for example antibodies into the brain. The technology is being applied to select in-house drug projects and is applied in the research evaluation agreement with Eisai regarding BAN2802. In the future the technology may also become part of future collaborations with other pharma companies.
BRAINTRANSPORTER™ TECHNOLOGY (owned by BioArctic)
The blood-brain barrier controls the passage of substances between the blood and the brain. It protects the brain from harmful substances, but at the same time it can make it difficult for drugs to reach the brain.
BioArctic is now developing the second generation of this technology, which has already demonstrated a profound increase and improved exposure of antibodies in the brain.
The technology is now being used in five earlier projects, two against Alzheimer's disease, BAN2802, BAN2803, one in Parkinson´s disease, PD-BT2238, one in ALS, ND-BT3814, and one in Gaucher disease, GD-BT6822. The technology, which is now in the pre-clinical phase, has significant potential for many treatments for diseases of the brain.
Comments to the financial development, revenues and result
Revenues consist of milestone payments, royalty, co-promotion, payments from research agreements and research grants. Because of the nature of the business operations, the revenues may fluctuate significantly from quarter to quarter, as revenues from milestone payments are recognized at the point in time when performance obligations are fulfilled.
Net revenues in the first quarter amounted to SEK 29.6 M (393.4). Net revenues included SEK 21.3 M (-) in royalties for Leqembi sales and SEK 5.4 M from research collaboration agreements. Further co-promotion revenues from commercialization of lecanemab in the Nordic region with Eisai amounted to SEK 2.9 M. During the first quarter last year three milestone payments were received, amounting to a total of SEK 391.1 M, equivalent to EUR 35 M. No milestone payments were received in the first quarter 2024.
Cost of sales consist of royalties paid for the commitments that BioArctic has towards LifeArc.
Other operating income relates to operating exchange rate gains, forwarded costs and research grants. Other operating income amounted to SEK 2.0 M (3.3) in the first quarter.
Operational costs for the business amounted to SEK 100.5 M (78.9) for the first quarter. Costs for research- and development increased to 63.0 M (47.3) during the quarter due to that several projects are in a later phase, that the pace of the development of the projects has increased and thereby also the number of employees in research and development. Since BioArctic's proprietary projects are in an early research phase they do not meet the criteria for capitalization of R&D expenses, so all such costs have been charged to the income statement.
Costs of marketing and sales in the quarter increased to SEK 12.5 M (9.0) as a consequence of a growing Nordic commercial organization and intensified work to prepare for the launch of lecanemab in the Nordics. Also general costs and administration, including costs for central overhead and rents, increased during the quarter to SEK 26.3 M (23.3). Other operating expenses, mainly realized operating exchange rate losses, decreased during the quarter to SEK 0.7 M (2.5).
Operating loss before net financial items (EBIT) amounted to SEK -73.1 M (300.6) for the first quarter. The decrease in profit during the first quarter is mainly due to that milestone payments were received last year but not this year and a more extensive operation driving increasing costs.
Net financial items totaled SEK 15.6 M (3.3) for the first quarter. The increase is attributable to higher interest income on short-term investments. Interest income and similar items consists of interest income on investments. Interest expenses and similar items consist of exchange rate losses and interest on leasing liabilities.
Tax related cost totaled SEK 0.1 M (10.1) for the first quarter.
The profit for the period amounted to SEK -57.6 M (293.9) for the first quarter.
Profit per share before dilution amounted to SEK -0.65 (3.33) and to SEK -0.65 (3.31) after dilution for the first quarter.
Net revenues (SEK M)
Operational costs (SEK M)
Profit/loss for the period (SEK M)
CASH FLOW AND INVESTMENTS
Cash flow from operating activities for the first quarter amounted to SEK neg. 114.4 M (299.0). The main explanation for the change is a lower result due to that no milestone payments were received during the quarter.
Cash flow from investing activities for the first quarter amounted to a negative SEK 13.5 M (neg.: 0.1). The investments were mainly related to laboratory equipment.
Cash flow from financing activities amounted to SEK 2.1 M (1.3) for the first quarter and was related to amortization of leasing debt, as well as new share issue with the support of employee options during the first quarter.
LIQUIDITY AND FINANCIAL POSITION
Equity amounted to SEK 992.7 M as of March 31, 2024, compared with SEK 1,046.6 M as of December 31, 2023. This corresponds to equity per outstanding share of SEK 11.24 (12.31). The equity/asset ratio was 87.4 percent as of March 31, 2024, compared with 88.2 percent as of December 31, 2023.
The Group's cash and cash equivalents consist of bank balances of SEK 491.0 M. Short-term investments, classified as current assets excluding cash and cash equivalents, amount to SEK 500.0. Cash and cash equivalents and short-term investments amount to a total of SEK 991.0 M as of March 2024 compared with SEK 1,111.6 M as of December 31, 2023. There were no loans as of March 31, 2024, and no loans have been taken since this date. The Group has no other credit facility or loan commitments.
In order to neutralize foreign exchange rate exposure some liquid funds are held in foreign currency. This has implications on reporting in conjunction with revaluation of currency to current rate. These effects are recognized in financial income and expenses.
PARENT COMPANY
The Group's business operations are mainly conducted in the Parent Company.
EVENTS DURING THE FIRST QUARTER 2024
- Leqembi was approved for the treatment of Alzheimer's disease in China – launch planned for in July 2024
- The European Medicines Agency (EMA) announced that its deliberations on lecanemab regarding the Marketing Authorisation Application has been rescheduled due to procedural reasons
Cash, cash equivalents and shortterm investments (SEK M)
Financial position (SEK M)
| 31 Mar 2024 |
31 dec 2023 |
|
|---|---|---|
| Non-current lease liabilities | 2.4 | 2.2 |
| Current lease liabilities | 1.9 | 2.8 |
| Cash, cash equivalents and short term investments |
991.0 | 1,111.6 |
| Net cash position | 986.7 | 1,106.6 |
Cash flow from operating activities (SEK M)
Cash, cash equivalents and shortterm investments (SEK M)
991
Other information
EVENTS AFTER THE END OF THE FIRST QUARTER
- BioArctic's partner Eisai submitted a supplemental Biologics License Application (sBLA) for less frequent intravenous (IV) maintenance dosing with lecanemab to the FDA
- BioArctic was included in Nasdaq Stockholm's new ESG Responsibility Index
- BioArctic and Eisai entered into a research evaluation agreement regarding BAN2802, a potential new treatment combining BioArctic's proprietary BrainTransporter™ technology with an Alzheimer drug candidate
- Eisai initiated a rolling Biologics License Application (BLA) to the FDA for subcutaneous maintenance dosing of Leqembi
PATENTS
Patents are crucial to the company's future commercial opportunities. BioArctic has therefore an active patent strategy covering all major pharmaceutical markets including the US, EU, Japan and China. At the end of March 2024, BioArctic's patent portfolio consisted of 16 patent families with approx. 250 granted patents and more than 90 ongoing patent applications.
PARTNERSHIPS, COLLABORATIONS AND MAJOR AGREEMENTS
Collaborations and license agreements with leading pharma and biopharma companies are an important part of BioArctic's strategy. In addition to financial compensation, BioArctic benefits from the expertise the company's partners contribute in drug development, manufacturing and commercialization. BioArctic has entered into a number of such agreements with the global Japanese pharma company Eisai and previously also with the global American biopharma company AbbVie. These strategic partnerships with leading global companies confirm that BioArctic's research is of very high quality. In the future BioArctic may enter into new agreements that can contribute further funding and research and development competence for those product candidates in preclinical and clinical phase, manufacturing and marketing competence, geographic coverage, and other resources.
BioArctic has been collaborating with Eisai in the field of Alzheimer's disease since 2005. The company has signed research and licensing agreements concerning the lecanemab, lecanemab back-up antibodies and BAN2802. The total value of lecanemab and lecanemab back-up agreements may amount to EUR 222 M in addition to royalty. As of 31 March 2024, up to EUR 84 M in milestone payments remains from Eisai under existing agreements.
BioArctic and Eisai have agreed on commercialization and co-promotion for the Nordic countries based on a fifty-fifty profit share for the region and thus no sales royalty is received as in other markets. According to the agreement Eisai will be responsible for pricing and reimbursement as well as distribution whereas BioArctic will take on a larger responsibility for the customer interaction. Eisai is the
Marketing Authorization Holder in Europe, and the intention is that BioArctic will be local representative at the point of commercial launch. The collaboration will be governed by a joint Nordic commercialization committee.
Collaborating with universities is also of great importance to BioArctic. The company has ongoing collaborations with academic research groups at a number of universities.
RISKS AND UNCERTAINTY FACTORS
The management makes assumptions, judgments and estimates that affect the content of the financial statements. Actual results may differ from these assumptions and estimates, as is also stated in the accounting principles. The objective of the Group's risk management is to identify, mitigate, measure, control, and limit business risks. Significant risks are the same for the Parent Company and the Group.
BioArctic's operational and external risks mainly consist of risks related to research and development, clinical trials, and dependence on key employees.
A detailed description of exposure and risk management is presented in the Annual Report 2023 on pages 53-57.
FLUCTUATIONS IN REVENUE GENERATION
BioArctic is developing a number of drug candidates for chronic neurodegenerative diseases in partnership with global pharma companies. The company also conducts research for proprietary projects including new potential antibody treatments as well as a blood-brain barrier technology platform. The company signs research and licensing agreements with partners and then receives remuneration for research as well as milestone payments and royalty, which the company uses to finance current and new projects. Milestone payments are normally received when the project reaches predetermined development targets – the start of clinical trials, for example – or when clinical trials move from one phase to a later phase. Milestone payments may also be paid upon submissions of applications to regulatory authorities, approvals, and sales milestones. Thus, these payments arise unevenly over time. BioArctic also receives royalty income from the sale of Leqembi and as these revenues increase, the fluctuations will decrease.
FUTURE PROSPECTS
We are of the opinion that, as a result of the approval of the drug lecanemab, the company's future income generation is very good. The global launch of the drug has commenced and, it is felt, will enable gradually increasing revenue over the long term. Operating expenses for financial year 2024 are expected to increase as a result of the build-up of the commercial organization ahead of the potential launch of lecanemab in the Nordic region and costs for the expanded and more advanced in-house project portfolio. BioArctic has a business model in which its revenue and earnings are primarily based on milestone payments, royalty income and revenue from co-promotion agreements that the company has
signed. All of BioArctic's therapeutic areas, such as Alzheimer's disease, Parkinson's disease, ALS and other neurodegenerative diseases are areas with significant medical need for effective treatments and have great market potential. The company's ambition is to continue generate the drugs of the future that improve life for people with disorders of the central nervous system. The company's financial position remains strong, which creates possibilities for the continued exciting development of BioArctic.
EMPLOYEES
At the end of the first quarter, the number of full-time employees was 90 (69) of which 57 (44) women and 33 (25) are men. 68 (80) percent of the employees work in R&D and of these 82 (85) percent are PhDs. The turnover rate in the quarter was 1.1 (0) percent.
ANNUAL GENERAL MEETING 2024
BioArctic's Annual General Meeting will take place on May 22 at 16:30. More details about the meeting are available in the notice to the AGM on the company web.
THE SHARE AND SHAREHOLDINGS
The share capital in BioArctic amounts to SEK 1,766,454 divided by 88,322,685 shares which is split between 14,399,996 A-shares and 73,922,689 B-shares. The number of shares increased during the first quarter by 7,700 shares as a result of the subscription of shares by participants in the employee stock option program 2019/2028. The quotient value for both A- and B-shares is SEK 0.02. The A-share has 10 votes per share and the B-share has 1 vote per share.
LARGEST SHAREHOLDERS AS OF MARCH 31, 20248
| Number | Share of (%) | |||
|---|---|---|---|---|
| A-shares | B-shares capital, votes, | |||
| Demban AB (Lars Lannfelt) | 8,639,998 | 20,885,052 | 33.4 | 49.2 |
| Ackelsta AB (Pär Gellerfors) | 5,759,998 | 13,343,201 | 21.6 | 32.6 |
| Fourth Swedish National Pensio | - | 4,871,714 | 5.5 | 2.2 |
| Third Swedish National Pension | - | 3,348,378 | 3.8 | 1.5 |
| RA Capital Management LP | - | 3,117,736 | 3.5 | 1.4 |
| Swedbank Robur Fonder | - | 2,682,433 | 3.0 | 1.2 |
| Nordea Funds | - | 2,063,165 | 2.3 | 0.9 |
| Handelsbanken Fonder | - | 1,947,963 | 2.2 | 0.9 |
| Unionen | - | 1,610,223 | 1.8 | 0.7 |
| Vanguard | - | 1,233,330 | 1.4 | 0.6 |
| Tot. 10 largest shareholders 14,399,996 | 55,103,195 | 78.7 | 91.4 | |
| Other | - | 18,819,494 | 21.3 | 8.6 |
| Total | 14,399,996 | 73,922,689 | 100.0 | 100.0 |
LONG-TERM INCENTIVE PROGRAMS
BioArctic has two ongoing long-term incentive programs that were approved at the AGM 2019 and at the AGM 2023.
A maximum of 1, 000,000 stock options may be granted within the Stock Option Program 2019/2028. To enable the company's delivery of shares under program, the Annual General Meeting approved a directed issue of a maximum of 1,000,000 warrants. The employee stock options may be exercised three to five years after grant. As of the end of the first quarter 2024, a total of 915,000 options had been granted, and no further grants may occur. The number of lapsed and repurchased options amounted to 75,000 and the number of exercised options amounted to 262,700 as of March 31, which means that 577,300 employee stock options remain outstanding at the end of the quarter corresponding to a dilutive effect of up to 0.7 percent of the share capital at the end of the reporting period.
The Performance Share Unit (PSU) program 2023/2026 is a three-year incentive program including a maximum of 125,000 PSUs that, provided that the share price increases by at least 30 percent during a three-year period, entitles the participants to receive shares free of charge or a cash payment. To enable the company's delivery of shares under program, the Annual General Meeting approved a directed issue of a maximum of 125,000 warrants. A total of 117,500 performance share units have been granted, and no further grants may occur. The number of lapsed and repurchased performance share units amounted to 500 as of March 31, which means that 117,000 shares units remain outstanding corresponding to a dilutive effect of up to 0.1 percent of the share capital at the end of the reporting period.
In total, the maximum dilution effect of the two incentive programs amounted to 0.8 percent of the shares at the end of the quarter.
REVIEW AND SUBMISSION OF REPORT This interim report has not been subject to review by BioArctic's auditors.
Stockholm, Sweden, May 17, 2024 Gunilla Osswald, CEO BioArctic AB (publ)
8 Monitor by Modular Finance AB. Compiled and processed data from various sources, including Euroclear, Morningstar and Swedish Financial Supervisory Authority (Finansinspektionen)
INVITATION TO PRESENTATION OF THE FIRST QUARTER REPORT FOR JANUARY – MARCH 2024
BioArctic invites investors, analysts, and media to an audiocast with teleconference (in English) today, May 17, at 9:30–10:30 a.m. CET. CEO Gunilla Osswald and CFO Anders Martin-Löf will present BioArctic, comment on the interim report and answer questions. Webcast:
https://ir.financialhearings.com/bioarctic-q1-report-2024
FOR FURTHER INFORMATION PLEASE CONTACT
Anders Martin-Löf, CFO [email protected] phone +46 70 683 79 77
Oskar Bosson, VP Communications & Investor Relations [email protected] phone +46 70 410 71 80
CALENDAR 2024/2025
| Annual General Meeting 2024 | May 22, 2024, at 4:30 p.m. CEST |
|---|---|
| Half-Year Report Jan-June 2024 | August 29, 2024, at 8:00 a.m. CEST |
| Quarterly Report Jan-Sep 2024 | November 14, 2024, at 8:00 a.m. CEST |
| Full Year Report Jan-Mar 2024 | February 13, 2025 at 8:00 a.m. CEST |
Swedish Corporate Identity Number 556601-2679 Warfvinges väg 35, SE-112 51, Stockholm, Sweden Telephone +46 (0)8 695 69 30 www.bioarctic.com
The interim report is such information as BioArctic AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication, through the agency of the contact persons set out on this page, at 08.00 CET on May 17, 2024.
This report has been prepared in a Swedish original version and translated into English. In the event of any inconsistency between the two versions, the Swedish language version applies.
Financial statements, Group
CONSOLIDATED INCOME STATEMENT9
| Q1 | Jan-Dec | ||||
|---|---|---|---|---|---|
| kSEK | 2024 | 2023 | 2023 | ||
| Net revenues (note 4) | 29,639 | 393,426 | 615,995 | ||
| Cost of sales | -2,236 | -13,963 | -14,988 | ||
| Gross margin | 27,403 | 379,463 | 601,007 | ||
| Research and development cost | -62,973 | -47,294 | -173,479 | ||
| Marketing and sales cost | -12,535 | -9,033 | -43,706 | ||
| General and administration cost | -26,278 | -23,339 | -127,133 | ||
| Other operating income | 1,984 | 3,299 | 4,082 | ||
| Other operating expenses | -700 | -2,512 | -8,132 | ||
| Total operating expenses | -100,501 | -78,879 | -348,368 | ||
| Operating profit/loss | -73,098 | 300,584 | 252,640 | ||
| Interest income and similar items | 15,724 | 5,448 | 34,228 | ||
| Interest expenses and similar items | -114 | -2,101 | -10,382 | ||
| Financial items net | 15,610 | 3,348 | 23,846 | ||
| Profit/loss before tax | -57,488 | 303,932 | 276,485 | ||
| Tax | -75 | -10,075 | -47,237 | ||
| Profit/loss for the period | -57,563 | 293,857 | 229,249 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Q1 | Jan-Dec | |||
|---|---|---|---|---|
| kSEK | 2024 | 2023 | 2023 | |
| Profit/loss for the period | -57,563 | 293,857 | 229,249 | |
| Exchange rate differences connected to foreign operations | 53 | - | -26 | |
| Comprehensive income for the period | -57,510 | 293,857 | 229,223 |
CONSOLIDATED BALANCE SHEET
| kSEK | 31 Mar 2024 | 31 Mar 2023 | 31 dec 2023 |
|---|---|---|---|
| Assets | |||
| Tangible fixed assets | 33,162 | 21,817 | 23,536 |
| Right-to-use assets | 5,453 | 9,954 | 7,590 |
| Deferred tax assets | 580 | 577 | 566 |
| Other financial assets | 3,401 | 1,613 | 1,647 |
| Current assets excluding cash and cash equivalents | 602,707 | 14,973 | 541,172 |
| Cash and cash equivalents | 491,031 | 1,106,000 | 611,567 |
| Total assets | 1,136,334 | 1,154,934 | 1,186,078 |
| Equity and liabilities | |||
| Equity | 992,728 | 1,085,374 | 1,046,575 |
| Deferred tax liabilities | 12,385 | - | 12,385 |
| Non-current lease liabilities | 2,381 | 717 | 2,152 |
| Current lease liabilities | 1,939 | 7,203 | 2,827 |
| Other current liabilities | 85,610 | 26,368 | 73,290 |
| Accrued expenses and deferred income | 41,291 | 35,272 | 48,849 |
| Equity and liabilities | 1,136,334 | 1,154,934 | 1,186,078 |
9 From the first quarter of 2024, BioArctic transitioned from a cost-type to a function-type accounting. The reason for the change is that a function-divided accounting better shows how resources are consumed within the main functions of the business. More information can be found in note 2.
CONSOLIDATED STATEMENT OF CHANGE IN EQUITY (CONDENSED)
| kSEK | 31 Mar 2024 | 31 Mar 2023 | 31 dec 2023 |
|---|---|---|---|
| Opening balance at 1 January | 1,046,575 | 786,241 | 786,241 |
| Comprehensive income for the period | -57,563 | 293,857 | 229,249 |
| Share issue connected to exercised employee warrants | 647 | 4,051 | 14,978 |
| Share capital | - | - | 4 |
| Share-based payments | 3,016 | 1,236 | 16,132 |
| Exchange rate differences | 53 | -12 | -29 |
| Closing balance | 992,728 | 1,085,374 | 1,046,575 |
CONSOLIDATED STATEMENT OF CASH FLOW (CONDENSED)
| Q1 | ||||
|---|---|---|---|---|
| kSEK | 2024 | 2023 | 2023 | |
| Operating profit | -73,098 | 300,584 | 252,640 | |
| Adjustment for non-cash items | -9,325 | 5,045 | 9,235 | |
| Interest received/paid | 10,453 | 3,348 | 22,586 | |
| Income tax paid | 2,113 | 1,264 | 156 | |
| Cash flow from operating activities before changes in working capital | -69,857 | 310,241 | 284,617 | |
| Change in working capital | -44,548 | -11,225 | 14,415 | |
| Cash flow from operating activities after changes in working capital | -114,405 | 299,016 | 299,032 | |
| Cash flow from investing activities | -13,468 | -139 | -506,825 | |
| Cash flow from financing activities | 2,124 | 1,276 | 14,064 | |
| Cash flow for the period | -125,749 | 300,153 | -193,729 | |
| Cash and cash equivalents at beginning of period | 611,567 | 805,386 | 805,386 | |
| Exchange rate differences in cash and cash equivalents | 5,213 | 461 | -91 | |
| Cash and cash equivalents at end of period | 491,031 | 1,106,000 | 611,567 |
CONSOLIDATED QUARTERLY DATA
| 2024 | 2023 | 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | |
|---|---|---|---|---|---|---|---|---|
| SEK M | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Income statement | ||||||||
| Net revenues | 30 | 11 | 209 | 3 | 393 | 2 | 218 | 4 |
| Cost of sales | -2 | -1 | -0 | -0 | -14 | -0 | -8 | - |
| Total operating expenses | -101 | -88 | -78 | -104 | -79 | -61 | -78 | -50 |
| Operating profit/loss | -73 | -78 | 131 | -101 | 301 | -60 | 132 | -46 |
| Operating margin, % | neg | neg | 62.7 | neg | 76.4 | neg | 60.7 | neg |
| Profit/loss for the period | -58 | -87 | 125 | -102 | 294 | -58 | 137 | -46 |
| Balance sheet | ||||||||
| Fixed assets | 43 | 33 | 28 | 31 | 34 | 37 | 35 | 37 |
| Current assets | 603 | 541 | 516 | 13 | 15 | 15 | 8 | 6 |
| Cash and cash equivalents | 491 | 612 | 698 | 1,042 | 1,106 | 805 | 863 | 752 |
| Equity | 993 | 1,047 | 1,129 | 994 | 1,085 | 786 | 837 | 700 |
| Deferred tax liabilities | 12 | 12 | - | - | - | - | - | - |
| Lease liabilities | 4 | 5 | 3 | 6 | 8 | 10 | 10 | 12 |
| Current liabilities | 127 | 122 | 110 | 86 | 62 | 62 | 58 | 82 |
| Cash flow | ||||||||
| From operating activities | -114 | 117 | -53 | -64 | 299 | -58 | 112 | -46 |
| From investing activities | -13 | -204 | -302 | -1 | -0 | -4 | -1 | -2 |
| From financing activities | 2 | 1 | 11 | 1 | 1 | 3 | -2 | -2 |
| Cash flow for the period | -126 | -86 | -344 | -64 | 300 | -59 | 108 | -49 |
| Key ratios | ||||||||
| Equity/asset ratio, % | 87.4 | 88.2 | 90.9 | 91.5 | 94.0 | 91.6 | 92.5 | 88.1 |
| Return on equity, % | -5.6 | -8.0 | 11.8 | -9.8 | 31.4 | -7.1 | 17.8 | -6.3 |
| Data per share | ||||||||
| Earnings per share before dilution, SEK | -0.65 | -0.99 | 1.42 | -1.16 | 3.33 | -0.66 | 1.55 | -0.52 |
| Earnings per share after dilution, SEK | -0.65 | -0.99 | 1.41 | -1.16 | 3.31 | -0.66 | 1.55 | -0.52 |
| Equity per share, SEK | 11.24 | 11.85 | 12.78 | 11.27 | 12.31 | 8.92 | 9.51 | 7.95 |
| Cash flow operating activities per share, SEK | -1.30 | 1.32 | -0.60 | -0.72 | 3.39 | -0.66 | 1.27 | -0.52 |
| Share price at the end of the period, SEK | 215.40 | 267.80 | 283.00 | 282.00 | 251.40 | 272.00 | 271.60 | 77.45 |
| Number of shares outstanding, thousands | 88,323 | 88,315 | 88,299 | 88,226 | 88,181 | 88,132 | 88,060 | 88,060 |
| Average number of shares outstanding, thousands | 88,319 | 88,307 | 88,263 | 88,204 | 88,156 | 88,096 | 88,060 | 88,060 |
Financial statements, Parent company
PARENT COMPANY INCOME STATEMENT10
| Q1 | Jan-Dec | |||
|---|---|---|---|---|
| kSEK | 2024 | 2023 | 2023 | |
| Net revenues (note 4) | 29,639 | 393,426 | 615,995 | |
| Cost of sales | -2,236 | -13,963 | -14,988 | |
| Gross margin | 27,403 | 379,463 | 601,007 | |
| Research and development cost | -62,973 | -47,294 | -173,639 | |
| Marketing and sales cost (note 5) | -12,983 | -8,977 | -42,868 | |
| General and administration cost | -26,426 | -23,740 | -129,715 | |
| Other operating income (note 5) | 2,011 | 3,299 | 4,124 | |
| Other operating expenses | -700 | -2,512 | -8,132 | |
| Total operating expenses | -101,071 | -79,224 | -350,230 | |
| Operating profit/loss | -73,668 | 300,239 | 250,777 | |
| Interest income and similar items | 15,716 | 5,448 | 34,225 | |
| Interest expenses and similar items | -37 | -1,987 | -10,011 | |
| Financial items net | 15,680 | 3,461 | 24,215 | |
| Profit/loss after financial items | -57,988 | 303,700 | 274,993 | |
| Change in tax allocation reserves | - | - | -60,122 | |
| Profit/loss before tax | -57,988 | 303,700 | 214,870 | |
| Tax | 31 | -10,035 | -34,538 | |
| Profit/loss for the period | -57,957 | 293,665 | 180,333 |
There are no items recognized as other comprehensive income in the Parent Company. Accordingly, total comprehensive income matches profit for the year.
PARENT COMPANY BALANCE SHEET (CONDENSED)
| kSEK | 31 Mar 2024 | 31 Mar 2023 | 31 dec 2023 |
|---|---|---|---|
| Assets | |||
| Tangible fixed assets | 33,108 | 21,817 | 23,476 |
| Deferred tax assets | 564 | 473 | 533 |
| Other financial assets | 3,520 | 1,746 | 1,767 |
| Current assets excluding cash and cash equivalents | 605,638 | 17,960 | 545,250 |
| Cash and cash equivalents | 488,385 | 1,105,927 | 609,417 |
| Total assets | 1,131,215 | 1,147,923 | 1,180,444 |
| Equity and liabilities | |||
| Equity | 943,213 | 1,085,750 | 997,642 |
| Tax allocation reserve | 60,122 | - | 60,122 |
| Other current liabilities | 88,087 | 26,197 | 74,930 |
| Accrued expenses and deferred income | 39,793 | 35,975 | 47,750 |
| Equity and liabilities | 1,131,215 | 1,147,923 | 1,180,444 |
Notes
10 From the first quarter of 2024, BioArctic transitioned from a cost-type to a function-type accounting. The reason for the change is that a function-divided accounting better shows how resources are consumed within the main functions of the business. More information can be found in note 2.
NOTE 1 GENERAL INFORMATION
This interim report for the period January – March 2024 covers the Swedish Parent Company BioArctic AB (publ), Swedish Corporate Identity Number 556601-2679, and the fully owned subsidiaries LPB Sweden AB, BioArctic Denmark ApS, BioArctic Finland Oy and BioArctic Norway A/S. During the first quarter, liquidation of the dormant subsidiary LPB Sweden AB began. The Group's business operations are mainly conducted in the Parent Company. The Nordic subsidiaries belong to the commercial organization whose main activity is aimed at preparing for the launch of lecanemab in the Nordics. BioArctic is a Swedish limited liability company registered in and with its registered office in Stockholm. The head office is located at Warfvinges väg 35, SE-112 51, Stockholm, Sweden.
NOTE 2 ACCOUNTING PRINCIPLES
The consolidated financial statements for BioArctic AB (publ) have been prepared in accordance with IFRS (International Financial Reporting Standards) as adopted by the EU, the Annual Accounts Act and the Swedish Financial Reporting Board's RFR 1 Supplementary Accounting Rules for Groups. The Parent Company's financial statements are presented in accordance with the Swedish Annual Accounts Act and RFR 2 Accounting for Legal Entities.
The interim report for the period January – March 2024 is presented in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34 are presented both in notes and elsewhere in interim report. The accounting principles and calculation methods applied are in accordance with those described in the Annual Report 2023. New and amended IFRS standards and interpretations applied from 2024 have not had a material impact on the financial statements.
The guidelines of the European Securities and Markets Authority (ESMA) on alternative performance measures have been applied. This involves disclosure requirements for financial measures that are not defined by IFRS. For performance measures not defined by IFRS, see the Calculations of key figures section.
From the first quarter of 2024, BioArctic transitioned from reporting by cost-type to using a breakdown by function. The reason for the change is partly that a function-divided accounting better shows how resources are used within the main functions of the business, and partly that such a form facilitates comparison with other companies. The change has not resulted in any changed historical key figures according to the definitions on page 21.
From the first quarter of 2024, royalties and co-promotion per geographic market in note 4 are reported based on where the revenue is generated, rather than in which part of the world the customer is based. The change is also applied to the comparative figures.
NOTE 3 SEGMENT INFORMATION
An operating segment is a part of the Group that conducts operations from which it can generate income and incur costs and for which independent financial information is available. The highest executive decision-maker in the Group follows up the operations on aggregated level, which means that the operations constitute one and the same segment and thus no separate segment information is presented. The Board of Directors is identified as the highest executive decision maker in the Group.
| NOTE 4 NET REVENUES | ||
|---|---|---|
| -- | -- | --------------------- |
| Q1 | Jan-Dec | ||
|---|---|---|---|
| kSEK | 2024 | 2023 | 2023 |
| Geographic breakdown of net revnues | |||
| Europe | 2,921 | - | 5,472 |
| North America | 18,284 | - | 10,095 |
| Asia | 8,434 | 393,426 | 600,427 |
| Total net revenues | 29,639 | 393,426 | 615,994 |
| Net revenues per revenue type | |||
| Royalty | 21,295 | - | 10,203 |
| Co-promotion | 2,921 | - | 5,472 |
| Milestone payments | - | 391,058 | 592,017 |
| Research collaborations | 5,423 | 2,368 | 8,303 |
| Total net revenues | 29,639 | 393,426 | 615,995 |
BioArctic's net revenues consist of royalties based on sales of lecanemab, co-promotional income, milestone payments and payments from research collaborations with Eisai in Alzheimer's disease. Revenues reported are divided as:
• In total royalty income amounted to SEK 21.3 M (-) in the first quarter. The compensation received from Eisai includes two parts; royalty income to BioArctic of 9 percent on global sales, excluding the Nordics, and
compensation of 1 percent of sales in the USA and 1.5 percent of sales in the rest of the world which BioArctic pays to LifeArc for the royalty commitments BioArctic has towards LifeArc.
• BioArctic has a collaboration agreement with Eisai, copromotion, where the parties contribute with resources with the aim of jointly selling lecanemab in the Nordic countries. The result from the collaboration is split evenly between the parties. In the first quarter compensation from this agreement for incurred costs amounted to SEK 2.9 M (-). The incurred costs that are reimbursed aim to prepare for launch.
- No milestone payments were recognized as revenue during the first quarter.
- During the first quarter BioArctic had two ongoing research collaboration agreements with Eisai. During the quarter SEK 5.4 M (2.4) was recognized as revenue from these collaboration agreements.
NOTE 5 INTRA-GROUP PURCHASES AND SALES The parent company's income from group companies amounted to SEK 0.04 M (0.04) for the first quarter and consisted of forwarded costs. The parent company's costs from group companies amounted to SEK 5.5 M (0.8) for the first quarter and was related to services rendered.
NOTE 6 RELATED PARTY TRANSACTIONS Remuneration to senior management has been paid in accordance with current policies. During the first quarter, the company had expenses amounting to SEK 0.1 M regarding consulting services from Ackelsta AB, which is owned by board member Pär Gellerfors. All transactions have been carried out at market conditions.
Definition of key ratios
In this financial report BioArctic reports key financial ratios, some of which are not defined by IFRS. The Company's assesses that these key ratios are important additional information, since they enable investors, securities analysts, management of the company and other stakeholders to better analyze and evaluate the company's business and financial trends. These key ratios should not be analyzed separately or replace key ratios that have been calculated in accordance with IFRS. Neither should they be compared to other key
ratios with similar names applied by other companies, as key ratios cannot always be defined in the same way. Other companies may calculate them in a different way than BioArctic.
The key ratios "Net revenues", "Result for the period", "Earnings per share" and "Cash flow from operating activities" are defined according to IFRS.
| Key ratios | Definition |
|---|---|
| Other income | Other income than net revenue |
| Operating profit | Result before financial items |
| Operating margin, % | Operating profit divided by net revenues |
| Cash flow from operating activities per share, SEK |
The cash flow from operating activities for the period divided by the weighted number of shares |
| Cash and cash equivalents and short term investments |
Bank balances and short term investments with a term no longer than one year |
| Equity/asset ratio, % | Adjusted equity divided by total assets |
| Return on equity, % | Net income divided by equity expressed as a percentage |
| Equity per share | Adjusted equity divided by the number of shares at the end of the period |
Glossary
Accelerated approval
An application process which gives an opportunity for an early approval of a drug candidate, where the company at a later stage is required to present additional data to verify clinical effect in order to receive full marketing approval.
Alfa-synuclein (α-synuclein)
A naturally occurring protein in the body that, in conjunction with Parkinson's disease, misfolds and forms harmful structures in brain cells.
Amyloid beta (Aβ)
A naturally occurring protein in the brain that, in conjunction with Alzheimer's disease, misfolds into harmful structures in brain cells. Amyloid beta form the plaque around brain cells visible in patients with Alzheimer's disease.
Antibody
A biological molecule originating in the immune system that binds to a target molecule with a high degree of accuracy.
ApoE (Apolipoprotein E)
ApoE transports fats in the blood. ApoE comes in three forms. Individuals expressing the ApoE4 form are at greater risk of developing Alzheimer's disease.
ARIA-E
A form of cerebral edema that occurs in some patients treated with anti-amyloid monoclonal antibodies for Alzheimer's disease.
ARIA-H
Combined cerebral microhemorrhages, cerebral macrohemorrhages, and superficial siderosis.
Binding profile
A binding profile specifies in which way, and to which forms of a protein (such as amyloid beta or alpha-synuclein) an antibody binds.
Biomarker
A measurable molecule, the levels of which can indicate a change in the body and enable diagnosis of a patient or measurement of the effect of a drug.
Blood-brain barrier
A structure of tightly bound cells that surround blood vessels in the brain. This barrier regulates the exchange of nutrients and waste and protects against bacteria and viruses.
BrainTransporter™-technology
BioArctic's technology that promotes the passage of biological drugs to the brain and increases and improves the exposure of the antibodies in the brain.
Breakthrough therapy designation
The breakthrough therapy designation is an FDA program intended to facilitate and accelerate the development and review of drugs for serious or life-threatening conditions.
CNS - Central nervous system
The part of the body's nervous system comprising the brain and spinal cord.
Clinical studies Drug trials performed in human subjects.
CMS - Centers for Medicare and Medicaid A federal agency in the US Department of Health and Human Services (HHS) that administers the Medicare program and works in partnership with state governments to administer Medicaid.
Disease modifying treatment
A treatment that interferes with the processes of the disease and changes it in a positive way.
Dose dependent Increased effect at higher dose.
Drug candidate A drug under development that has not yet gained marketing approval.
Early Alzheimer's disease Mild cognitive impairment due to Alzheimer's disease and mild Alzheimer's disease.
Fast Track Designation
Fast Track designation is an FDA program intended to facilitate and expedite the development and review of drugs for serious or life-threatening conditions.
FDA
The US Food and Drug Administration.
Lecanemab -irmb
Lecanemab has been given the -irmb add-on by the FDA for the approved substance. -irmb is a suffix assigned by the FDA. Suffixes are used to differentiate originator biological products, related biological products, and biosimilar products containing related drug substances
Licensing
Agreement where a company that has invented a drug gives another company the right to further develop and sell the drug for certain payments.
Milestone payment
Financial remuneration received as part of a project or collaboration agreement once a specified goal has been achieved.
Monomer
An individual molecule with the ability to bind to other similar molecules to form larger structures such as oligomers and protofibrils.
Neurodegenerative disease
A disease that entails a gradual breakdown and degeneration in brain and nervous system function.
Oligomer
Molecules consisting of a number of monomers.
Open-label extension study
Clinical study conducted after a completed randomized and placebo-controlled study in which all patients receive active substance.
Pathology
The study of diseases and how they are diagnosed, through analysis of molecules, cells, tissues and organs.
Phase 1 studies
Studies the safety and tolerability of a drug. Performed in a limited number of healthy human volunteers or patients.
Phase 2 studies
Studies the safety and efficacy of a drug. Performed in a limited number of patients. Later stages of phase 2 studies can be called phase 2b and evaluate the optimal dose of the studied drug.
Phase 3 studies
Confirms the efficacy and safety of a drug. Performed in a large number of patients.
Placebo-controlled
A study design in research which means that some of the patients receive inactive compound to obtain a relevant control group.
Preclinical (asymptomatic) Alzheimer's disease Normal cognitive function but with intermediate or elevated levels of amyloid in the brain.
Preclinical phase
Stage of development where preclinical studies of drug candidates are conducted to prepare for clinical studies.
Preclinical studies
Studies conducted in model systems in laboratories prior to conducting clinical trials in humans.
Product candidate
A product under development that has not yet gained marketing approval.
Protofibril
A harmful aggregation of amyloid beta formed in the brain, which gives rise to Alzheimer's disease, or a harmful aggregation of alpha-synuclein formed in the brain and gives rise to Parkinson's disease.
Research phase
Early research focused on studying and elucidating the underlying molecular disease mechanisms and generation of potential drug candidates.
Selective binding
The affinity of a molecule for binding to a specific receptor.
Subcutaneous treatment
That the drug is given to the patient through an injection under the skin.
Tau
A protein which aggregates intracellularly in Alzheimer's disease, which damages the function and survival of neurons. Tau can be measured in plasma, cerebrospinal fluid and with positron emission tomography (PET).
Titration of dose
Stepwise increase in medication dose in order to achieve a certain beneficial effect with a delay with the aim of reducing the risk of side effects.
Tolerability
The degree of side effects from a drug that can be tolerated by a patient.
Truncated amyloid beta
Shortened (truncated) forms of the amyloid beta protein.
