Earnings call transcript: Oncopeptides Q4 2024 sees European sales surge

Oncopeptides (ONCO) reported significant growth in its Q4 2024 earnings, driven by strong European sales and strategic market expansions. According to InvestingPro data, the stock has experienced significant volatility, with a -95.56% return over the past year and currently trades near its 52-week low of $0.32. This volatility reflects investor reactions to the company’s financial performance and future guidance. InvestingPro analysis suggests the stock is currently trading below its Fair Value, though investors should note the company’s weak financial health score of 1.0 out of 5.

Key Takeaways

• Oncopeptides reported a 35% increase in European sales in Q4 compared to Q3.
• The company is expanding its market presence in key European countries and exploring new markets in Japan and South Korea.
• Oncopeptides aims for cash flow positivity by the end of 2026.

Company Performance

Oncopeptides demonstrated robust growth in Q4 2024, with a 35% increase in European sales compared to Q3. The company has been successful in securing significant market access, particularly in Spain and Germany, which are key markets for its primary product, COPAXITY, used in multiple myeloma treatment. The company is also making strides in regulatory progress in Japan and South Korea, which could open new revenue streams.

Financial Highlights

• Full Year 2024 Sales: SEK 31.6 million, up from SEK 10.9 million in 2023.
• Q4 Revenue: SEK 9.9 million.
• Cash Position: SEK 179 million.
• Total (EPA:TTEF) Operating Expenses: SEK 390 million, up from SEK 338 million in 2023.
• Marketing & Sales Costs: SEK 43 million in Q4, compared to SEK 33 million last year.

Outlook & Guidance

Oncopeptides is focusing on expanding its market presence in Europe and entering the Japanese market, which is expected to have a significant financial impact. The company is targeting cash flow positivity by the end of 2026 and anticipates its first sales in Italy during the first half of 2025.

Executive Commentary

CEO Sofia Davies expressed optimism about the company’s future, stating, "Twenty twenty-five is the Oncopeptides’ twenty-sixth anniversary, and I am optimistic that it’s also going to be one of the most exciting years in its existence." CFO Henrik Bergentoft added, "Our cash position is estimated to take us to cash flow positivity by 2026."

Risks and Challenges

• Regulatory hurdles in new markets such as Japan and South Korea.
• Market competition from established players in the multiple myeloma treatment space.
• Economic uncertainties that could impact healthcare budgets and spending.

Oncopeptides is navigating a complex market landscape with strategic expansions and product innovations. The company’s focus on key European markets and potential entry into Japan and South Korea could bolster its growth trajectory, despite current stock volatility. For a comprehensive understanding of Oncopeptides’ potential, InvestingPro subscribers can access detailed financial health metrics, valuation analysis, and expert insights through our exclusive Pro Research Report, part of our coverage of over 1,400 US equities.

Full transcript - Onconetix Inc (ONCO) Q4 2024:

Conference Moderator: Welcome to Oncopeptides Q4 Earnings Call for twenty twenty four. For the first part of the conference call, the participants will be in listen only mode. During the questions and answers session, participants are able to ask questions by dialing key 5 on their telephone keypad. Now I will hand the conference over to CEO, Sofia Hijges and CFO, Henrik Bergentoft. Please go ahead.

Sofia Davies, CEO, Oncopeptides: Hi, everyone, and welcome to this presentation of our year end report of 2024. This is our standard disclaimer. I am Sofia Davies, CEO of OncoPept Peptides. And with me, I have Henrik Berrentoft, who will give the financial update later. First, I will go through some of the key highlights of the fourth quarter and the beginning of twenty twenty five.

Revenue in Q4 was SEK9.9 million. And while we are still not at the level of sales where we would want to be, we are encouraged by a 35% increase of European sales in Q4 versus Q3. The cash position was SEK179 million by the end of the year, and we remain on track for cash flow positivity towards the end of twenty twenty six. The promising start we saw in Spain continued into Q4 and we have now secured regional access to ensure we can deliver on our financial projections for Spain in 2025. Germany was a major contributing market to our reported growth.

We have seen a strong increase in momentum during the last few weeks of Q4 and in the beginning of twenty twenty five, which support our confidence in that we have reached a new level of sales that supports further acceleration this year. During Q4, we reached an agreement with Italian medicines agency, IFA, regarding pricing and reimbursement in Italy, paving the way for the formal approval that we received in January. We are now fully focused on unlocking regional access and expect sales during the first half of the year. Outside of the European market, I’m excited to share that we are advancing in Japan. We have taken some important steps including both an alignment with the Japanese regulator on a path forward, as well as moving into advanced stage of negotiations with a partner regarding a licensing deal.

The deal for the Japanese market carries significant potential for Oncotype types in terms of financial impact. Looking to the events after the period, we have announced the publication of strong real world experience on melflufen from The U. S. Market. Additionally, we had an exploratory discussion with the FDA on our pipeline molecule OP5D.

I will come back to all of these topics in a short while. Now let me hand over to Hendrik for a financial update.

Henrik Bergentoft, CFO, Oncopeptides: Thank you so much, Sophia. And starting off with an overview of the profit and loss statement for the fourth quarter and full year compared to same period last year. Sales for the full year 2024 amounted to SEK31.6 million compared to underlying SEK 10,900,000.0 in 2023, excluding effects of a reversal of a return reserve in The US. Total operating expenses for the full year amounted to SEK $390,000,000 to be compared with underlying SEK $338,000,000 last year, adjusting for a refund related to closed clinical studies in 2023 of SEK43 million. So in summary, Oncopeptide has invested heavily in building a commercial organization in Europe, primarily in Germany, Spain and Italy that has and will generate sales growth, but in total with a lower cost base.

Signarily, that the company is completely focused on sales growth in combination with cost efficiency. Now moving to the next slide to take a closer look at our operating expenses. Marketing and sales cost amounted to SEK43 million in the quarter compared to SEK33 million last year. Behind the increased cost is the ongoing commercialization activities in Europe, which Sofia will describe in more detail further in the presentation. Administrative costs for the quarter amounted to SEK8 million compared to SEK60 million last year, a decrease that is a direct function of the cost focus initiated in the later part of 2024.

Research and development cost amounted to SEK43 million in the quarter, an increase compared to last year’s SEK 33,000,000. No clinical studies are currently ongoing, but in the quarter some investments have been made in the preclinical portfolio, including securing important patents. In addition, we had a mandatory EMA regulatory inspection during Q4 driving some one off costs. Hence, the Q4 cost level of research and development is not to be perceived as the run rate going into 2025. So let’s move to the next slide for our liquidity position.

So our cash position at the end of the year amounted to SEK 179,000,000 And this cash position is in accordance with our internal plans to take us to cash growth also in 2026. Of course, there is a gain on that we meet our plans on sales growth and conclude additional business development partnerships as a minimum. So with that, I conclude the financial section and hand over back to you again, Saphir.

Sofia Davies, CEO, Oncopeptides: Thank you, Henrik. I will now talk a bit about our European commercialization in general followed by more details on Germany and Italy. As a reminder, our key markets are Germany, including Austria, Spain and Italy. These countries will be able to take us to profitability by the end of twenty twenty six. This graph shows our sales trajectory in revenue quarter over quarter since Q1 twenty twenty three up until Q4 twenty twenty four.

Should the trend continue in the pace we saw in q four, we are on track to become profitable by the end of twenty twenty six. Further growth will be based on that we now have managed to secure 85% of regional access in Spain, which in fact is all we need to capture the major potential of Spain. A clear step up in Germany based on the positive clinical experience in key accounts, supporting prescriber breadth and depth, and the addition of Italy to our revenue stream. Our European commercialization case is based on that we have a fully approved drug for treatment of an incurable disease that provides an expanding market opportunity valued at SEK1.5 billion. As a reminder, while our focus is on reaching profitability through our key markets, we are continuing to work with payers to gain access in more markets to be able to address the full market potential.

I wish to remind you that the market access processes are different in time and effort between the different European markets. And in our next phase of markets, it is longer and more complicated than the first phases. Looking at the roadmap, one such example is France, where we recently received a decision by the Hass regarding the Pacesti, advising against reimbursement in France. We do respect the outcome, which was expected based on assessments and time to market for other drugs in France. We, however, do have KOM supporting the unmet need for COPAXI and reducing that we can make a difference for patients also in France, which is why we will continue to engage with health and healthcare stakeholders to find a pathway ensuring patients do gain access to COPAXI and we can start to sell.

As a reminder, France is not part of our goal to become profitable in 2026. Italy, on the other hand, is and we are strict that we have now secured national access in all of our key markets and full regional access as we need in Spain. Regarding Italy, the reimbursement decision was the key milestone of Q4 followed by the price publication in January, which allow us to move on to regional access. As a reminder, Italy is a strong market, has strong clinical experience, which we do expect to support the launch. In terms of the size of the market, Italy is larger than Spain and smaller than Germany.

But again, once we have unlocked the region, we expect more rapid uptake than in Germany, this given the high unmet need demonstrated by the number of patients in the early access access program and the positive clinical experience gained not only during the EAP, but also during the clinical development program where we had 79 Italian patients included. As the next step, we are now then in the process to ensuring regional access. And to the right, you can see the map of Italy with the 20 regions we are currently working on. The timelines to unlock regional access varies from two months up to more than twelve months for some of the smaller regions. As previously communicated, we do expect to see first stage during the first half of twenty twenty five.

Moving to Germany, it is a scattered market with our target population of 2,500 patients intrigued by 2,000 prescribers, generating a positive clinical experience in key accounts to drive volumes, not only through our own team members, but in addition to peer to peer recommendations is key to succeed in Germany. This map illustrates the population density of 65 year old people in Germany, and the orange balance represents capacity sales across the country. We are encouraged that the feedback on our product is so far overall positive. And in 2024, we did get the sales dynamic confirmed by seeing acceleration in territories, both smaller and larger sites once we have unlocked the key accounts. This trend has continued and the step up in Q4 was based on simultaneous increase in prescriber debt and breadth, which in turn will ensure future demand.

I’m happy to share that we have actively tested one of the most difficult yet important accounts in Germany during the fourth quarter, and this means that we today have 10 out of 12 key accounts in Germany with positive clinical experience recommended capacity. We are, of course, working hard to unlock the two last. We saw a 30% increase in number of prescribers in Q4 versus Q3, and we are also seeing that the duration of therapy is gradually increasing in Germany. This indicates even better patient selection and therapy management, which is based on a better understanding of COPIKTIGI due to gain clinical experience. Longer duration of therapy will naturally further support our growth.

Moving to our next step value drivers, we continue to see exciting opportunities outside of Europe. Particularly this quarter, we have progressed in both our pipeline and the rest of the world opportunities. Let me start with progress in Japan. In 2024, we took several steps. We consulted with the Japanese Medicines Agency, PMDA, to get clarity on the regulatory path for Japan.

During this consultation, we have ensured that we and the regulator agreed on a high unmet need for our drug and regulatory path way forward. This means we now have regulatory alignment and clarity on what it would take to get an approval for COPAXI in Japan. In addition, we have several advisory boards with KOLs that confirms the high unmet need for COPAXI. COPAXT. This confirmation from both regulators and KOLs has in turn triggered interest from several potential partners.

We are currently in advanced negotiations with one specific partner. And as already mentioned, a deal for the Japanese market carries significant potential for Oncopeptides, both in terms of financial impact, but it also demonstrates the high unmet need for capacity. Regarding our current partnerships, our South Korea partner, SC Bio, filed documents for capacity to the regulatory authority for a preliminary review earlier than expected, and we anticipate clarity regarding next steps during the first half of twenty twenty five. We expect first days in other markets where we have partnerships through the World Orphan Drug Alliance during the first half of the year. As for our pipeline, we have over the winter been engaging in exploratory discussions with U.

S. FDA regarding our molecule O3-five. O3-five is a follow on molecule to COPAXITY with a potential improved risk benefit profile and longer patent protection. The feedback received was positive and in line with our expectations, and we are currently working on outlining a clinical development path based on advice from the FDA. While there is a no way from here to commercialization, we are confident that OPD5 is an asset with true potential to get us back to the important U.

S. Market in the future, as the unmet need for PDCs remains. This was confirmed by U. S. European leaders in an advisory board that we held during the fourth quarter.

To note this, that just this week in article suggesting strong rework efficacy and safety data for COPAXI, written by researchers at the Nant Harvard Cancer Institute in Boston Harvard, was published in the European Journal of Hematology. This article demonstrates strong real world experience with men’s movement in The U. S. And the authors conclude high unmet need for new mode of actions complementing immunotherapy. The data is encouraging and confirm our view from Europe that melflutin can really make a difference to patients also in the real world setting, which consists on more elderly and frail patients than in clinical trials.

Regarding the rest of our pipeline and particularly the SPICE platform, we’re proceeding with preclinical work. And in addition, we are currently focused on assessing the scientific rationale and business opportunity for SPICE in autoimmune diseases. This is a market with high unmet need for new treatment approaches and innovative medicines in multiple diseases and indications. And with that, I would like to say thank you to everyone for listening and hand over to the moderator for

Conference Moderator: The next question comes from Richard Romanius from Redi. Please go ahead.

Richard Romanius, Analyst, Redi: Good morning. I had some questions. Let’s start with one about sales. Could you describe the relative sales contributions from Spain and Japan in Q4? And also how you see them developing in 2025?

Sofia Davies, CEO, Oncopeptides: So good morning, Richard. I assume you mean the sales in Spain and Germany, correct?

Richard Romanius, Analyst, Redi: Yes, yes. And well, if you could comment on Italy, that would be useful. Yes.

Sofia Davies, CEO, Oncopeptides: So just as I said, if we look at the fourth quarter, Germany really leveled up towards the end of the quarter and had the greatest contribution to sales. When it comes to Spain, we have seen an encouraging start, as we have said, but given that we in parallel started to sell and secured in regional access and it’s first at the end of last year, we managed to get 85% of the regional access. Of course, the volume is less than Germany. So the relative the relation between the two is that Germany is dominating. However, looking at the time from launch, Spain is very encouraging.

Richard Romanius, Analyst, Redi: Okay. Can you say something about the market potential in Japan?

Sofia Davies, CEO, Oncopeptides: So Japan is a large market, as you may know. It’s a population of 125,000,000 people. If we compare that to the European market, I would say that Germany is the closest one with 80,000,000 people, and this is given that Japan has a lower incidence of multiple myeloma than the European population. This is however increasing and it’s also an elderly population. But if I am going to make some kind of comparison, I would compare the Japanese market in terms of number of patients with the German market in Europe.

Richard Romanius, Analyst, Redi: Okay. I guess you can’t give any details about our potential licensing agreement might look like in terms of upfront and then loyalty.

Sofia Davies, CEO, Oncopeptides: So I said we are in advanced negotiations, and I can’t comment on the details. What I can say is that this is naturally a deal that is leaning on the foundation on that. We have regulatory advice, we have aligned on the regulatory pathway, and the KOMs are supporting the or the welcoming the entrance of capacity to Japan. And all these factors matters when you make the deal. So if you compare this to when we made a deal in South Korea, we had the cable support, but there was no regulatory understanding or alignment.

So that was a much earlier deal. And I would say that this is then one step further because we have done the regulatory homework here. And as I said during the call, it will carry significant financial impact for all of that types.

Richard Romanius, Analyst, Redi: Yes, I understand. How long do you estimate your cash position will last? And do you expect to use the loan arrangement with the EIP? IP?

Henrik Bergentoft, CFO, Oncopeptides: Thank you, Richard. It’s Henrik, and I’ll be happy to answer that question. As stated, our cash position is estimated to take us to cash flow positivity by 2026. And that is of course continued that we continues our sales uptake of Pataxia and that we also conclude additional business development opportunities. So that’s the core plan.

But of course, every good plan needs to have backup plans and where the EIB loan certainly is one of those backup plans. But core plan is that our own business will take us to cash flow positivity.

Richard Romanius, Analyst, Redi: One last question, if you like to comment, there have been some articles about elenamide and they want to stop using it in Denmark. Do you have any comments on that? And do you think that is relevant for the PAX fee?

Sofia Davies, CEO, Oncopeptides: I think it’s important to comment that this is of course not related to COPXI, but it’s related the drug trials that we had as a comparison of Phase III study even though we compared the complexity of the thomalidomide. And as you know, we have made a lot of analysis of the OCEAN trial. And in those analyses, we looked also beyond the efficacy to fully understand the results as we have to understand the comparator artfully. The decision in Denmark is made by the medicine Roervet, which is a guiding body for reimbursement and payment, so they provide medical guidance on what the regions in Denmark should be using. And their analysis is based on real world data from Denmark.

And even though that analysis is made on lenalidomide, it basically aligns with the analysis that we have made for the full INID group. So that is just to frame what this is all about. Then when it comes to to COPAXI, I would say that this is a decision that is made completely independent of us and it’s not related to the comparative drug of our study and it’s not related to COPAXI. So from our perspective, we, of course, welcome that data is analyzed and that different authorities are taking decisions that support patients to get the right treatments, but I don’t see any immediate impact on peptides based on this decision.

Conference Moderator: The next question comes from Patrick Ling from DNB Markets.

Patrick Ling, Analyst, DNB Markets: Hi, guys. A couple of questions, if I may. First, maybe a question for Henrik. When it comes to the R and D spend, you talked about R and D coming up in the quarter and there was some one off ish costs related to the EMA inspection. Maybe you can help us sort out a little bit what is how much those costs were in the fourth quarter?

How much you actually spend on and how much you actually spend on the preclinical side?

Henrik Bergentoft, CFO, Oncopeptides: Yes. Thanks for that question. And I would say that if you look at R and D spending in the third quarter, that is what you could put in your model for 2025. So the difference between Q3 and Q4 is really made up of those items that you just mentioned.

Patrick Ling, Analyst, DNB Markets: Okay, great. Great. And then also on sales and marketing, where we see a step up here, and I suppose it’s you building out your organization. Is Q4 a good proxy or should we expect it to increase from this level or are there any initial startup costs for building the organization that we should be mindful about?

Henrik Bergentoft, CFO, Oncopeptides: I think if you zoom out and look at total operating expenses, you should expect that 2025 will not be an increase compared to 2024, if we take the full picture, so to speak. But in that, of course, we, as I just mentioned with R and D, that is expected to go down during 2025 and What will go up slightly is the sales and marketing costs because as you mentioned yourself, we’re still building the organization, albeit we are very much in the end of that building.

Patrick Ling, Analyst, DNB Markets: Okay, great. Thank you. Then I actually entered the call a little bit late, so maybe I missed that when you were talking, Cecilia. But you said that the markets where you’re in right now, which I suppose is Spain, Germany, Italy, Austria and Switzerland, are the markets that are needed to take you to cash flow positivity. Was that correct?

Sofia Davies, CEO, Oncopeptides: Yes, that’s correct. So with those markets where we’re currently dwelling and where we have secured market access, we can reach our profitability going towards the end of twenty twenty six.

Patrick Ling, Analyst, DNB Markets: But how should I look at that statement in relationship to what you write about twelve months of going concern and Henrik’s comments about a deal in Japan that that is very important for your ability to reach cash flow positivity?

Henrik Bergentoft, CFO, Oncopeptides: Yes, I mean cash flow positivity is connected to the sales range that we have supplied and that is related to capacity in Europe. But outside of that, we also need to conclude additional partnership deals, if that is clearly clear enough.

Patrick Ling, Analyst, DNB Markets: Okay, great. Good. Thank you. That was all from me

Henrik Bergentoft, CFO, Oncopeptides: right now.

Sofia Davies, CEO, Oncopeptides: Thank

Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Henrik Bergentoft, CFO, Oncopeptides: So in addition to the spoken questions, there has been a few written questions, mostly been covered by the verbal questions. One part of our question asking for update on Norway.

Sofia Davies, CEO, Oncopeptides: Yes. So when it comes to Norway, and thank you for the question, we are still in negotiation with Norwegian Payor. I think it’s well known. And if you follow the debate in Norway, you will see that it’s difficult to get reimbursement in Norway based on the process they’re having and their way of negotiating. But we are in that process currently and we will of course update the market if we should conclude anything.

Henrik Bergentoft, CFO, Oncopeptides: Great. And last question from the Rafal Verdin questions. When you say significant impacts for Oncotypeptides financially in regards to Japan, I want to know if that’s related to the company’s SEK 400,000,000 yearly sales in that of 2026. So just to understand the substance of significance.

Sofia Davies, CEO, Oncopeptides: So when it comes to our profitability goal and when we have been talking about sales, just like Henrik just mentioned, we are then referring to European sales. So we don’t anticipate or expect that we would start to sell in Japan before the end of twenty twenty six. Having said that, the deal is, of course, connected with different milestone payments, such as an upfront payment. And just as Henrik mentioned, it will be important for us to up until a time point, secure partnerships. And and Japan is one of the examples and where we are most advanced to be able to do so.

But I would also like to reiterate as you’re asking about the substance and the significance that for oncopeptides, a Japanese deal and I mean you can look at the different hematology deals that has been made in Japan in the last year comes with significance for us also on a financial from a financial viewpoint.

Henrik Bergentoft, CFO, Oncopeptides: That’s all there were two questions there. Any last concluding remarks?

Sofia Davies, CEO, Oncopeptides: So once more, thank you for joining and thank you for the questions that you have posed. Twenty twenty five is the Onco website’s twenty sixth anniversary, and I am optimistic about that it’s also going to be one of the most exciting years in its existence due to all the topics that we have mentioned today. So for now, we will continue to work hard to reach our goals and be able to update you on progress. And I wish that all of you have a good day and rest of the

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