HCA Capital: Wrap up from 2024 Life Science seminar

The well-attended seminar with more than 100 live viewers was a clear testament to the ongoing progress of Danish and Swedish based BioTech and Life Science companies’ ability to develop new medicine or disruptive diagnostic technologies. To the benefit of patients and society, but also to potentially benefit investors, as illustrated by the enormous value that has historically been created once new products have been regulatory approved and launched in the marketplace. 

The positive tone contrasts with the general sentiment that BioTech and Life Science stocks are being challenged by higher interest rates and low risk appetite. These factors continue to negatively affect companies in the sector's ability to refund their operations, and some of the participating companies at the seminar were no exception to this challenge.

Although we acknowledge the short-term headwinds for many companies in the BioTech and Life Science sector, at HCA Capital we think it is also relevant to emphasize that there are fundamental and long-term factors that continue to support a positive view of the sector from an investment perspective. At the seminar we mentioned some of the more important ones being:

- An increasing interest from Big Pharma to conduct M&A as they have more than USD 1t to spend to close their looming patent expiry gaps.

- The medical advancement that continues to unfold and is now being increasingly aided by the usage of Artificial Intelligence (AI).

- Low valuation of the sector in general and the market implicitly discounting a low likelihood of commercial success by many individual BioTech and Life Science companies.

AI is at the forefront of many investors' minds and was also a general topic for discussion at the seminar. When asked, some of the participating companies mentioned that they are already using AI to make the drug discovery phase generally more efficient, faster, and less costly. But some also confirmed HCA's general view that that regulatory guidelines and process protocols still need to be considered, putting a limit to the short-term potential of AI use. Ascelia Pharma gave the example they could have saved a lot of time and money in their study process if AI based image readers existed and would have been regulatory accepted to be used to replace or aid physical image reading by human radiologists.

Turning to the presenting companies, the most important overall takeaway from the seminar is that medical advancement continues to unfold or has now even been replaced by preparation for commercial launch in some cases where the medical development has been completed. Moving forward as planned with regards to medical development or commercialization preparation should not be underestimated, and the stock market has also reacted accordingly, sending the shares of some of the participating companies soaring this year.

‘It is super exiting times for Ascelia’, CEO Magnus Corfitzen as Ascelia Pharma is looking for a US partner.

Ascelia Pharma, who had previously had to postpone and re-evaluate its final Phase III (SPARKLE) study of its Orviglance product, has recently completed the study with good headline results. Fully back on track, CEO Magnus Coriftzen made an upbeat and confident presentation concluding it is ‘super exciting times for Ascelia’ as the company is now looking for a regional or global partner to commercialize Orviglance on the addressable annual USD 800 million market, of which half is in the US. As Ascelia Pharma expects that 75 percent of the US market could be reached through relatively few hospitals, they are looking for a partner with a focused and effective footprint instead of a big salesforce. In terms of Oncoral, CEO Magnus Corfitzen commented he ‘would love to get going on Oncoral as there is a lot of potential and it is a really interesting drug’, but right now all focus is on Orviglance.

Watch the Ascelia Pharma interview here: Ascelia Pharma

 

‘We couldn’t have wished for a better start to the year’, CFO Kristian Borbos, Gubra on record growth and margins in 1st quarter of 2024 in its service business.

Gubra was represented by CEO Henrik Blou and CFO Kristian Borbos, who took viewers through the company’s unique business model that combines a high-growing, high margin, and cash flow generating contract research organization (CRO) service business with a traditional early-stage drug discovery business, where part of the pipeline of product candidates have already been validated through partnerships. Gubra is well known for its obesity exposure in its drug discovery business, but the CRO segment has also been positively affected by the general increased interest for obesity-related projects from its CRO clients. This has led to record organic revenue growth of approximately 50 percent and record high margins of almost 40 percent, leading CFO Kristian Borbos to conclude that Gubra couldn’t have wished for a better start to the year and had the company raise its full-year guidance already after the 1st quarter. In its diversified but obesity-focused pipeline of early-stage product candidates, CEO Henrik Blou highlighted that Gubra’s Amylin-analog-based product candidate, GUBamy, is progressing as planned as Gubra is preparing for a clinical phase 1 trial. Instead, CEO Henrik Blou took the opportunity to describe in greater detail its recently announced new – also obesity-related – product candidate, UNC2, which Gubra suggests could be an example of a novel weight-loss agent that does not lose lean (muscle and bone) mass but only fat mass, thereby being an example what is often referred to as ‘healthy weight loss’ product candidates. Finally, on the use of AI, CEO Henrik Blou described how Gubra has been using AI to design peptides for many years in its streaMLine platform.

Watch the Gubra interview here: Gubra

 

‘You don’t get good people without a good story and a good product’, CEO Peter Mørch Eriksen, BioPorto on how to attract talented people.

BioPorto also gave a confident presentation by CEO Peter Mørch Eriksen as the company embarks on its commercialization efforts to launch its NGAL test (ProNephro AKI) for pediatrics in the US and using the NGAL trial data for pediatrics to leverage into a potential faster approval of the NGAL test for adult use. CEO Peter Mørch Eriksen commented he was very excited as its distributor and test equipment manufacturer Roche are ready to start sales in the second half of 2024. Once started, CEO Peter Mørch Eriksen expects uptake in sales to be much faster in the US than in Europe as the prevalence of early adopters is much higher in the US than in Europe. To further strengthen its commercialization efforts, CEO Peter Mørch Eriksen confirmed that more distributors should be added, and when asked if Abbot could be next after the recent hiring of its CEO for US, Jeffrey N. Haas, who has been with Abbot before, CEO Peter Mørch Eriksen suggested ‘it probably wouldn’t hurt the chances, and underscored BioPorto’s ability to attract talented people, stating, that ‘you don’t get good people without a good story and a good product’.

Watch the Bioporto interview here: Bioporto

 

‘We will never enter phase 3 on our own’, CEO Thomas Kaas Selsø, Pharma Equity Group on being committed to its partner-based strategy.

Pharma Equity Group presented its unique repositioning strategy where CEO Thomas Kaas Selsø described how the company benefits its drug development by using already developed compounds for other indications focusing on local treatments related to inflammatory diseases. To minimize cost, the company takes pride in taking its pipeline product candidates to Phase 2 by providing the best available proof of concept and then engaging with partners to conduct the bigger trials, underscoring that Pharma Equity Group will never take candidates into Phase 3 by themselves. At the presentation, CEO Thomas Kaas Selsø focused on describing the company’s most valuable project, RNX-051, to treat colorectal cancer. The recently published data suggest that RNX-051 after surgery can remove the biofilm that ‘protect’ the early-stage colorectal cancer cell’s ability to grow. When removed, the normal immune system has a better chance of preventing the cancer cells from growing. Pharma Equity Group estimates that the addressable market for RNX-051 is close to USD 10 billion, highlighting experts’ projections that colorectal cancer is increasingly also being seen in young people and, unfortunately, expected to grow 60 percent in this population within the next 15 years. To strengthen the financial flexibility while Pharma Equity Group awaits the entering of partnerships, the company is considering doing a directed capital raise that – although partly dilutive – will be less costly.

Watch the Pharma Equity Group interview here: Pharma Equity Group

 

‘It has Blockbuster potential of reaching EUR 3b in revenue’, CEO Bent Frandsen, Expres2ion Biotech on the prospects of its breast cancer vaccine.

Expres2ion Biotech was represented by CEO Bent Frandsen, who - as always - gave a convincing presentation emphasizing the strength of the company’s protein production technology platform that has been validated through external phase 3 projects (by Bavarian Nordic) where primary endpoints were met, and currently is being used in different development projects. The most important one is the development of Expres2ion Biotech’s own primary product candidate, the HER2+ breast cancer vaccine, ES2B-C001, which in pre-clinical studies has shown the ability to completely inhibit the growth of tumors, making it plausible that the vaccine has Blockbuster potential of reaching the EUR 3b in revenue according to CEO Bent Frandsen. To finance further development of ES2B-C001 into clinical trials, but also continue development of the rest of the pipeline, Expres2ion Biotech is currently about to initiate a partly guaranteed rights issue expected to raise SEK 60 million (before costs). On the topic of AI, CEO Bent Frandsen described how Expres2ion Biotech has used AI ‘for the last many years’ making AI-based protein designs, also in collaboration with Danish-based Evaxion Biotech.

Watch the Expres2ion Biotechnolgies interview here: Expres2ion Biotechnologies

Disclaimer: HC Andersen Capital receives payment from all Companies for a Digital IR/Corporate Visibility subscription agreement. Further we receives payment from Bioporto for a IR advisory agreement /Claus Thestrup 11:30 AM - 06-06-2024