Molecular Partners AG Q2 FY2022 Earnings Call

Good day, and welcome to the Molecular Partners Second Quarter 2022 Half Year Report. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Seth Lewis, Senior Vice President of Investor Relations. Please go ahead.

Thanks, Jason. And welcome, everyone, to the Molecular Partners 2022 Half Year Results Conference Call. My name is Seth Lewis, and I'm joined today by our CFO, Andreas Emmenegger; and our CEO, Patrick Amstutz. Today's call is a chance to catch up and recap the events of the first half of 2022 and is accompanied by the press release and half-year report issued yesterday. If you've not had a chance to review these, they are available on our website, molecularpartners.com. Following our prepared remarks, we will open for questions. And as a reminder, during today's call, Management will be making certain forward-looking statements, and these statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. This webcast is being recorded on August 26, 2022, and we refer you to our website, molecularpartners.com, to ensure that you are in receipt of any material updates following the date of this webcast. With that, I'm happy to turn the call over to our CEO, Patrick Amstutz. Please go ahead.

Thanks, Seth, and thanks for everybody dialing in. Warm welcome from my side. And I will be referring to slide numbers that you also find on our homepage. So please go there. Perhaps, then it will be much easier to follow my speech. So the first half of this year was really transformative for us at Molecular Partners. And I'm not talking about the global biotech crisis in conjunction with the need for the full Phase 3 for Ensovibep that had that negative share price reaction that we're all aware of. No, I'm talking about the moment when we unblinded our first-ever Phase 2 blinded trial at Molecular Partners. That was in early this year, and it was really an amazing moment for all of us. It was the first time we did so unblinding and seeing that the data hits that we have saved patient lives; our job did exactly what we designed it for. And that we accomplished in record speed, 18 months from idea to those data with a trispecific anti-COVID product. We're also sad that it then didn't go through, and the EUA is still open now, but we definitely wished for another outcome. But the work by the team, the engagement, the energy that we bring and the validation that is still there. Together with the strong cash position, that is really what puts us in an optimal position to execute our strategy and build value going forward. Now on Slide 2, that's our disclaimer. I'll echo what Seth said; I will be making forward-looking statements. Now Slide number 3. I'll start with the science highlights, and I will start with 533, which is our AML drug. It's trispecific, bispecific, making great progress; the clinic sites are approaching us to be part of that clinical trial. There is huge excitement. We have presentations upcoming, and I will also have a slide as a, call it, pertain razor safe to date for an ASH meeting, where we invite you all to join and listen to the experts talk about 533. 317 is in Phase 1. We're excited about that. Why are we excited? We're reaching 1 milligram per kilogram, which is the dose where others started to see dose-limiting toxicities. So far, we're moving strong on that, and we're very hopeful to be able to dose escalate and have meaningful data in the second half of this year but also next year. We have in Ensovibep, I just spoke about that, the positive data, the license to Novartis or the option exercise: 150 million milestones, 210 million in total. I think that puts us in a great position as you will see. But also, the EUA is still open and pending. Should the variant of concern come back that is stronger, I believe that EUA will also be used. At the same time, Novartis is still engaged with the FDA, but trying to find a design that in the current situation allows Phase 3 is not trivial, and they're working hard on that. We have Radioligand Therapies, also on the right side of the slide. This is something that we're not only moving forward with Novartis but also internally, and I will highlight that in a few slides down the road. Just give you a bit more reason why we think DARPins are meaningful. We have Abicipar back on this slide as the team has likely solved the inflammation problem and how we want to remove the inflammation-causing agent and see the path forward with the FDA. We will not fund this trial; we will not run that trial, but we will definitely see if we can find somebody who will do that. And maybe the most important point here, and this refers back to the global situation. I mean, it's not every biotech that can say they're funded into '26. We have 285 million in cash. We have a great team. We have a strong pipeline building. We are in the best position you can wish for to execute and go forward while many others actually have to make sure that they survive. We can really build value and thrive. Let me just use Slide number 4 for a recap of our strategy, and it also explains a bit and helps you understand which programs we will invest as Molecular Partners and which ones maybe are more for partnering. The first one is true patient value in an early clinical readout by directly changing the course of disease. What we're looking for is sort of single-agent activity. That's something like Ensovibep, like AML, and it's a bit less like 317 or 310, where your Phase 1 is a safety trial, then you go signal seeking in combination. We can't afford that, and that's kind of out of strategy going forward. Everything that will come that we will introduce also Radioligand, you can be sure that we can see value in an early trial. Second point, DARPins provide a unique solution. I think that's the one point that really sets the platform apart that we're not going to try to do me-toos or even me-better products but really solutions that matter that are as unique to DARPins as they can be. And the biological hypothesis—so we like clinical problems that have a clear biology, a problem that showed itself clinically that we can solve and that we can also test preclinically if we're on the right track. As our name says, as you will know, partnering, partnerships, Molecular Partners, it's really in our DNA. We always use collaboration. We had several on Ensovibep but also—I'm talking about academic collaborations, clinicians, pharma, and biotech collaborations to advance what we're doing, always tailored to each individual program. Moving now to Slide number 5. This is a pipeline overview, and you see the whole pipeline from Ensovibep, Radioligand therapy, the lower two boxes—that's where we're really investing in new ideas. So in fact, there you see mostly oncology but also some additional infections. I will spend time on 317, 533 and the Abicipar and Radioligand Therapy. Abicipar will be the last one I will cover. Let's start with 317, the clinical candidate that is now in Phase 1. What are we trying to achieve? Immuno-oncology is great, but too few patients can actually profit. That’s the problem— the immune activity in the tumor is not strong enough. CD40 is a target that activates immune cells. It sort of heats up a tumor that a cold tumor could become a hot tumor. The problem with CD40 is if you heat up the whole body, you have side effects and your dose-limiting side effects at rather low doses. What we're trying to do is take a DARPin binding to FAP and CD40. FAP is tumor-local multimer and if FAP binds in CD40 at the same time, that causes the CD40 on immune cells to cluster and activate. We can get intra-tumoral immune activation without systemic toxicity. That's the aim. We have shown that preclinically, and we have demonstrated with 310 that the FAP module actually goes to the tumor and can cluster 4-1BB in that case. Now we have reached a dose level without DLTs, where others had to stop before they reached that, that's the 1 milligram per kilogram dose. So we're excited about that, and we are filling those escalations. We are hopeful to reach the next doses going forward, and I have a slide on that. While safety is obviously key, and that may be the unlocking event, we're also looking into PD markers. Can we see those cells activated than we did through parabiopsy? As I was speaking about strategy, we will likely partner this asset as we cannot then go into combination trials—that's something for next year? Just a reminder on Slide 7, we're also giving a bit more clarity on doses. We started with a very low dose, 0.03 milligram. We've ramped up now to the 1-milligram per kilogram cohort. That's where we are. We will try two things here: go to a higher dose and also more frequent dosing, obviously, always looking at safety and the PD. Why do we do both every 3 and every week? That's also the partnering dimension, as in combination trials you want to have the flexibility to go more often if the partner product is given more frequently, and 2 to 3 weeks would allow for more extended less frequent dosing, but then you can actually choose what you want to do. I think partners will very much respect this extra activity. So let's go to the next program, which is 533. This is an admitted treat-driven selective killing instrument for blast and leukemic stem cells. What's the problem? The problem is AML remains a deadly disease. Leukemic stem cells are the driver while blasts are columns’ killers. We need to kill both, but we have to focus on the leukemic stem cell. They are really difficult because they are less sensitive to chemo. They do not have good strong surface markers. What we have now tried is the following: LSC, so leukemic stem cells and blasts, they express CD33, CD70, and CD123. CD70 is rather specific. So there, we take a high-affinity DARPin. 33 and 123 are also in healthy cells. So we go for lower affinity—that’s what we call optimized affinity. We try to kill those cells that have either 70 and 33 and 123 and not the mono 33 and 123. That would then open a therapeutic window that we can use MP0533 in AML set for targets that usually have a very narrow or even closed window and others have tried. Preclinical results show that it works. We also could show the preferential timing of leukemic stem cells and blasts in ex vivo patient samples, and that’s the strongest data you can get. That’s what we say is high translatable value, as we take samples from these patients and could show the differentiator leukemic. First, in human, we're very excited about that. We’re progressing towards that moment, and we will give you an update at ASH. I have a slide on that. How will the trial look? This is a bit more information. It’s AML and high-risk MDF patients. Inclusion criteria are listed here, also exclusion criteria, which is not to be underestimated, and you see we'll try to include around 20 to 45 patients. The primary endpoint is safety and tolerability, but main secondary endpoints are also efficacy. We do believe that this molecule will show itself in Phase 1, and we will know if we have a drug candidate in hand or not. Very different from 310 or 317 that needed to have much longer clinical trials until they showed value. Again, trial initiation plans for late 2022. As I have pointed out before, Slide number 10, the ASH event. That's really the holy curtain raiser for the program we want to bring together key experts and also discuss with you how they see the program and where the value of it will be. A few words now to Slide 11 on Radioligand Therapy. We all know radiation is a very good way to kill tumors. We also know it has a very limited scope to tumors that are well localized. They can do up to 5 lesions, but then it's done. The delivery of radiation with small or large therapeutic modalities like antibodies or peptides can work but is restricted. We believe the DARPin could really bring a more general solution. It is small and ultra-high affinity, and it can bring the radiometric for high accumulation in the tumor, very fast half-life, so limited systemic exposure, good penetration through the size and high affinity will keep it at the tumor longer. What we're now working on is really the kidney exposure, so limiting the kidney exposure. That’s work ongoing. We have demonstrated the penetration at the affinity part. We have validated indirectly with the collaboration with Novartis, and kind of ongoing is optimization for kidney exposure. When we’re there and we are moving forward, we will also work on first candidates and announce those ideally—I hope I can see standing here and do that next year. Just two slides on the science as we are excited about that. I was before pointing out the antibodies and the peptides. Low molecular weight compounds are usually peptides or peptide derivatives. Antibodies are good, but they are large. They have less tumor penetration, and they also have a higher exposure to normal tissue as they do circulate very long. Unfortunately, as antibody fragments, up to single changes at least, don't bring the deep tumor penetration; they’re too large. You have to go below 20 kilodalton, and that's where DARPins are. Now peptide, low molecular weight compounds have many benefits but usually don’t have the super high affinity, and they’re also restricted to some targets. That’s exactly the sweet spot where we think we can actually have all the benefits of the antibody combined with the benefit of the small size. I’m just going to Slide 13 so you understand how such a flow would look like. We have the tumor, infuse the drug, which is not one for one, not half last extended, so no HSA DARPin. The drug goes throughout the whole body, goes everywhere also into the tumor and deep into it. We stop the infusion. The drug is excreted very fast through the kidney. This is the first kidney pass, so literally within an hour or so the body has no DARPin or radio activity. We actually, with the high affinity, stay in the tumor for a long time, and the radiation can do its job. We're very excited about this. Obviously, we can do it alone. We’re also speaking with companies that have radioligands, and that also work—that is ongoing by our collaboration and alliance team. With this, I'll stop here, and I'm happy to hand over to Andreas to give you a bit more flavor on the financials where we stand. Andreas, the floor is yours.

Thank you, Patrick. I hope you hear me well. We had to switch to a mobile connection. With that, I'm very happy to give you some background on the financials, which look very, very good for the first half year as we have a very strong balance sheet. In the balance sheet, we have CHF 285 million in cash, as Patrick was saying, which gives us a very substantial long runway to execute our strategy. In the first half of '22, we booked CHF 184.5 million in revenue, and the bulk of that was coming from Novartis, primarily due to the 150 million milestone payment for the exercise of the Ensovibep option. With that, we generated high operating cash from—mainly from this collaboration and total CHF 151 million in H1 '22, resulting in an operating profit of CHF 146.3 million and a net profit of CHF 148.6 million. As stated repeatedly, we are funded into '26. We also updated the full-year expense guidance; it was in the CHF 75 million to CHF 85 million range. We reduced it now to CHF 70 million to CHF 80 million. I would say the midpoint of that is certainly a reasonable assumption to take for full-year expenses. Lastly, we also issued 3.5 million treasury shares. Actually, that was yesterday. This is a result of our shelf filing, which we did in July '22, which is very customary for U.S. listed companies to do that one year of the listing. Then I move to Slide number 16, the key figures. Again, a bit of the same, but this time compared with the first half of '21. Revenues, again, much, much higher than last year, as you see a bit more background on the details out of the CHF 184 million, CHF 168 million came from Novartis, and the rest from other collaborations. Total operating expenses were CHF 38.3 million. That's about CHF 1 million less than the first half of '21. The CHF 38.3 million were invested into personnel of about CHF 20.5 million, external R&D, CHF 9.5 million and other expenses of CHF 8.3 million. Operating result, again, CHF 146.3 million versus an operating loss of CHF 34.8 million last year. The net financial result is CHF 2.3 million, and we made a profit there, mainly driven by the non-realized currency gains on the U.S. dollar position, resulting in a net result of CHF 148.6 million, as I said before, versus a loss of last year. One thing to add is we have not been paying taxes because we have losses carried forward in the balance sheet. Last year, we had CHF 212 million tax losses carried forward. We could use a big bulk of that and so that we didn't have to pay taxes, and we still have some tax losses carried forward left. Yes, net cash from operations is CHF 151 million versus a net cash out of CHF 52.5 million last year for the first six months. Cash balance is CHF 285 million, which is CHF 110 million more than a year ago. FTEs grew a bit, but not much from 158.3 to 164 FTEs on our payroll. Then I'll move to Slide number 17, the balance sheet. It's very simple, but very remarkable. We are debt-free, obviously, driven by the cash balance, with CHF 285 million in terms of some other assets on the asset side and on the right-hand side, equity very strong, CHF 266 million, with some liabilities of CHF 33 million. But CHF 14.4 million of these CHF 30.3 million are not through liabilities, it's the CHF 14.4 million or so-called deferred revenues from the NIBR collaboration for radioligand therapy. The CHF 14.4 million, maybe that's more for the analyst to know—they expect six of them to be recognized in the second half of this year, CHF 5 million in '23 and CHF 3 million in '24. Obviously, this is subject to the progress and can always change. But just to give you a bit of guidance so that you can make your mass properly. With that, I move to the guidance '22. Again, just in summary, I expect total expenses of CHF 70 million to CHF 80 million for the full year, of which around CHF 9 million are non-cash effective costs. Yes, the CHF 285 million gives us a runway into '26, and all this excludes any potential receipts from current or potential future partnerships. Everything is subject to progress and changes of pipeline, as well as, of course, as we all know, the financial market sometimes can also make a difference. With that, I hand back to Patrick, and I'm sure you might have one or the other question at the end.

Thanks, Andreas. Before we actually go to questions, in summary, I would just have two or three slides on Abicipar, which is a long-standing program, our first to go to the clinics. It was with Allergan and then transitioned, and we have regained brands. Let me quickly recap where we are with that. It's Slide 20 now. As far as the Long-Acting Anti-VEGF in Wet AMD, obviously, with potential in DME and RVO. It's a huge market, and there is a new player out there, a new winner called Faricimab. That’s a fixed 8-week treatment that extends to 16 weeks. The treatment extend looks great in clinical trials, but in the real-world setting, patients lose vision. We actually think that our 12-week dosing now in the history of Abicipar could even be at least a good competitor to Faricimab. I don’t want to take away the 15% inflammation; that’s all not good, but we believe we can solve that. We are not going to move that forward ourselves, but we’re speaking to interested parties, and there’s also interest from investors to fund that trial as it is a single trial towards approval. Those are the avenues we’re looking into. For the experts in business and finance, there are very high question marks here if this deal can happen or not. We just wanted to raise it to your attention that we have such discussions as we felt people have totally disregarded that opportunity. Good. With that, I want to come to the outlook, and we touched on the EUA being open. We are certainly waiting since next fall and winter. Let’s see. Let's hope we don't need it. But if we do, there it is. The full Phase 3 is still under discussion that a difficult situation for everyone. Nobody knows how to run such trials at the moment. We're working on it; we have a next-generation candidate to end the pandemic raised from the current one. 310, we got back the tumor-local T-cell activator we, as Molecular Partners, will conclude Phase 1 and we will see if there are applications if others validate 4-1BB as a good target, which has not happened so far. That's one that we keep, but we don't invest in going forward and see how 4-1BB as a target develops. 317, CD40, we talked about initial results first, second half of this year, and then more to come early next year and definitely slated for partnering. 533—that’s where we want to find to signal ourselves, highly excited that the trial will start this year to collect data next year. The basic part, we just touched on, and then there's Radioligand, but also other things we're doing—kind of really exciting times for building value in our pipeline, and we look forward especially to next year where we can unveil a few of our programs that are then likely going to reach the candidate stage and we'll be ready to be discussed with you. Most importantly, cash in to '26, I don’t think many biotechs at this point in time can say that. We are well funded. We are less hit by the biotech crisis. We're in a great situation, proven technology, super motivated team. We know we can do it, and we have the need to do it. So really a good moment for us, and definitely a moment where we see a lot of value ahead of us. With that, I want to thank the team that was in New York or on the call, but actually the entire Molecular Partners team. They are energetic. They know what they're doing. I'm repeating myself, but it's so important in a biotech crisis to have such a team that is not thinking twice but executing with the cash we have. I also want to thank all of our collaborators; we’re not doing this alone. We're working with clinicians, partners, suppliers, and all of them are really helping us to move forward. Especially, we want to thank the physicians and the patients in our trial because that's really why we get up in the morning. We are a totally patient-centric, patient-focused company, and that's linking myself back to my intro when we see that we can bring value, we know we have the right job. With that, I thank you for your attention, and I will open for questions.

Our first question comes from Georgi Yordanov from Cowen and Company. Please go ahead.

Hey guys, congratulations on all the progress. Thanks for taking my questions. So maybe starting with 317, what should investors expect or I guess focus on from the data disclosure later this year? Can you just walk us through how do you expect to use this initial data for a go, no-go decision for further development? And then just on 533, as we're thinking about the Phase 1 trial, do we have any data about the percentage of AML blasts that express at least two of these markers? Do we know whether this ratio is also seen in heavily pretreated patients and the specific patient population you're targeting in the Phase 1 trial? And maybe if you can talk about whether or not you expect to see monotherapy activity. And then we have just one follow-on question.

Sure. Thanks, Georgi, all good questions. So I'll start with MP0317. It is not so easy to kind of—what data will we share that is sort of interesting or valuable for, let's call it, analysts and investors. What we want to do is partner up. So most of the data we will not actually share with the public but in partnering discussions. What we are aiming to do is show that the drug is active and show that it does not have the side effects that other tumor-targeted activities of CD40 have. Many companies are working on CD40; people believe there is value in that pathway but they can't unlock it. The first thing, and that's why we are really also excited today to show that 1 milligram is that you actually can dose into a region where you hope you actually have activity. The PD markers in paired biopsies, that's a bit more up in the air because you can really show how that works. The safety is key. With the paired biopsies, that's what we need to have to convince partners to then enter into discussions and in the end, do a partnership with us to look for combination trials. The data we will share with the public is maybe much more limited than what we share with potential partners. Those partnering discussions are certainly starting up, and the good thing is the industry likes and believes in the target. We can sort of ask large and midsized pharmas that are on that pathway, and the interest is definitely there to look at the data and let’s see when the data holds also partner. Now for MP0533, the Phase 1 trial; you were asking kind of what is the percentage of co-expression. The percentage is very high; we're talking above 90% for sure. That's on the co-expression. As for the pretreatment; we have an interesting situation as one of the successful drugs there—venetoclax actually drives CD70 upregulation. We believe the right pretreatment can help us to have more effect with our CD70 targeting domain that is in this. So we actually do expect that most patients in principle will be able to profit. It won't be 100% for sure, but we definitely believe that the number of patients that have the phenotype to profit is above 50%. We're looking into this, and we will get the data. To your last point, we do expect that we should see single-agent activity. We actually need single-agent activities. These are so deadly that if we don't have even fast single-agent activity, it won't help. We need to see this early, and the drug is designed to do that. I think the risk—call it risk—is maybe less on the targeting side and more on the T-cell side. The question is how many active T-cells that your patients have. That’s why you will see some of our exclusion criteria. Those patients that have no T-cells cannot profit. We have to make sure they actually have a good immune system that can be activated. I'll repeat myself: We expect data next year. I cannot say when; it depends on which dose actually shows activity. I have to say we will start with a very low dose since we have no cross-reactivity to monkeys. So there's no formal cruelty-free testing; we have to start at a lower dose, but we definitely see fast dose escalation. I invite you all to ASH; that’s where the experts can answer those questions in much more depth than I can. That’s a good repetition of the ASH event.

Thanks, Patrick. Georgi, it's Seth as well, just to follow up on Patrick's point. You're asking about the amount of patients who have expression of these markers, and he's right; it’s a very high number. But you have to remember, the mechanism of action for MP0533 is avidity driven to activate the CD3 T-cell engager in the presence of either 2 or 3 of the expressed markers. So that high number would be any combination of those 3 markers resulting in that high number of expressing patients. Just to make sure that was clarified. Thanks.

Great. Thank you. And then just finally, on the radioligand assays, also a very interesting application of the DARPin technology. Just briefly, are there any initial indications you feel like you could be differentiated in? When would we be expecting the next milestone in terms of payment from your collaborator?

Yes. So indications, you're looking at really hard-to-treat tumors that are highly metastasized, where other approaches will not be ideal. You have to go into that segment where you’re looking for the highest-value rise. The big milestone next year would be that we come up with or come up with—we’re working on targets that we disclosed, which targets we're working on, and maybe present the development candidate. Then it can be rather rapidly progressed towards the clinic. This is a moment DARPin; it just needs to be linked. So this is a rather type path forward. Milestones with Novartis, I can't comment on because that's going to fund this growth when they come. The collaboration is going really well, and we're making very good progress. On milestones and timing of that, I cannot comment.

Thank you guys. Thank you so much.

Maybe I’ll just add that—if the radioligand space works, we're not in principle restricted to radioligand as a warhead. For us, it’s a great showcase to optimize the tumor to kidney ratio. Then we can also replace a radioligand with another drug conjugate. We see this also as a bit of a proof of principle for short, fast in, fast out, hit hard approaches, starting with radioligand because you can follow it, you can do the science. If that works, you can also then have, call it, spillover effect into the drug conjugate space, so DARPin drug conjugates. We’re not engaging yet there, but keep that in mind; if this works, there’s more to come.

The next question comes from Richard Vosser from JPMorgan. Please go ahead.

Sorry, excuse me. Thanks for taking my questions. So just two, please. On Ensovibep, you mentioned the path forward and Novartis looking at a Phase 3 trial. How long do you think it will take for them to maybe work through that and get that started? Some idea of timelines, if possible, would be useful. Then on Abicipar, maybe you could elaborate a little bit on the causes of inflammation and the processes to remove that inflammation given the many processes we tried in the past. Do you have any data to show that preclinically or otherwise that the inflammation has gone in the new material?

I'll take the difficult question first, which is Ensovibep. The problem with Ensovibep at the moment is that the endpoints we had in Phase 2, which were hospitalization and death, have changed. You can't use at this point in time; you might use the same endpoint, but the number of patients you would have to include are very high. That's not a straight path forward. Again, we have variations of different viruses, and it is really how would you prepare to be ready for the next barrier to come that you then have an agreed endpoint and you can run that trial fast. I find it difficult, and I know that Novartis is engaged in that discussion. Other companies in that space are also experiencing similar challenges. Timing—when we will know, I cannot comment on; that's really something for Novartis. But again, the EUA is open. This is an insurance policy should a really bad strain come up, and that’s how we see it for now. We’ll see how this drug can be developed once we know more about the variants that come. This will depend a bit on the vaccines. You can think that now we will have Omicron vaccines. The Omicron vaccines will then give protection like Omicron, but maybe we’ll then see a resurgence of the original variants again. That may spend the time for Ensovibep. But that’s me speculating here, and I’ll leave it with that. For Abicipar, I think that's a great question. I can tell you what we found. First of all, we have invested a lot in purity. This is really what we had to get right. It was a few iterations until we think now that we are at very, very good purity that should not cause inflammation. We have the conundrum that we have this high purity but still inflammation, and that was the MAPLE trial. It turns out what was happening, and this is both good and bad; it's a contaminant introduced in the syringe, which is silicone oil. Silicone oil is used to lubricate syringes. With the DARPin that is pegylated, you can cause, call it, sub-physical particles that can drive inflammation. If we take non-silicone oil syringes, we can take that away. We’ve shown that with impressive animal data in rabbits. Rabbits have more sensitive eyes than humans, and we really bring the inflammation down to almost zero. We were fortunate to have found what it was; it was not causing the inflammation in the DARPin, but it was in the syringe. By all the materials we have, we can actually use. While it is not ideal to discover that so late, at least this is something we can easily fix.

Very clear. Thank you.

The next question comes from Daina Graybosch from SVB Securities. Please go ahead.

A couple more on Ensovibep. I wonder if you can clarify whether you've looked in vitro and located activity with circulating BA2 claim variants. The second question is, could you help us a little bit more with potential scenarios for Phase 3 if the disease doesn't come back? Are there any paths in terms of new endpoints? How do you have to combine on top of standard care? I think I'll leave it there. Thank you.

Sure. I’ll start where we’re not active just to remind everyone; we’re super transparent here. The mutation where Ensovibep will not be active is the 486 mutation. We always knew that's the Achilles heel, and you’ll find that in the variants 4 and 5. But the VA2 does not carry that mutation, so we see activity there, and we have shown that. If now the boosters come with more Omicron variants, I think that's definitely not a bad thing for us. In principle, we believe the drug should be active and has a good chance to be active on future variants; let’s keep it with that. We never know how it pans out. The other discussions are really complex and I don't think anybody knows how this will be developed with Novartis. Very different angles here. I was on the phone also with Lutz, the Head of Global Health, and it might be a global health issue. There are different ways to look at it. Novartis will not comment on that. I think we have to understand that. We need to respect that. They have done a great job in bringing this forward. I can tell you—they've mastered manufacturing. This is flawless, which is a good validation for the whole platform.

Thank you.

The next question comes from Jo Walton from Credit Suisse. Please go ahead.

Thank you. Just a few financial questions really. Firstly, just to understand your freedom to operate in radioligands outside of Novartis. All the work that you're doing at the moment is effectively within that collaboration. But you talk about your proprietary work and freedom to operate. When would you expect everything to be with Novartis for the next couple of years? When would you expect to be able to do something on your own? My second question is just a tiny one on Ensovibep and Swiss authorities putting money up there. Is there a chance that the Swiss—there is any progress outside of the U.S.? I know we're incredibly focused on what the FDA wants to do. If there were to be some sort of resurgence in Europe, could there be a small amount of income perhaps from Switzerland this year? Finally, I actually have one moving on finance. You're spending CHF 70 million to CHF 80 million a year, and there’s a bit that’s non-cash within that. You say you’ve got funding to 2026, but that doesn’t allow for much of a step up in your spending. You’re at the very, very early stages with a lot of your products. I imagine that you want to do more of the work yourself. So can you just tell us a little bit more about your ambition where you would want to do more work for yourself which will keep more for yourself, but will be expensive versus your willingness to partner?

Jo, great questions. Let me first focus on the freedom to operate, as you call it. What we have licensed to Novartis is the exclusivity for radioligand therapies and mono-activity on two individual tumor-associated antigens. Two column targets are with Novartis. Molecular Partners have the full right to do anything on all other targets in radioligand therapy. There is absolutely no exclusivity going on with Novartis. We can start programs tomorrow if we want. We actually have research activities ongoing on targets, as we speak. So that's important. We’re not linked to Novartis; we collaborate with Novartis on two targets. It might make sense because what type of radioligand might be indication-specific might be targeting specifics. It’s better to have multiple options than being too exclusive to one ligand in the beginning. Regarding Ensovibep outside the U.S—interesting question and I haven’t thought it through. If a variant wave occurs in a specific country, how will that play out? I don't know, but it’s definitely something I’ll bring up in the market. I think there is a moral obligation to make that drug available in that country. I’ll raise it and let’s see. Now your last question about how far does the money bring us. I love it because I can explain how capital effective we are. Keep in mind—we’re looking for programs like MP0533 where after a few patients we will know if the drug works. We don’t have to do Phase 1 safety trials and combination trials. So with a rather limited amount, in the CHF 70 million to CHF 80 million per year, we can bring compounds to the clinics, manufacture, and run those trials. When we have the signal you’re absolutely right if AML hits, we think we need to move forward, then our cash won’t be sufficient. We will have to raise new cash, but that's after the signal. This is a worst-case scenario. If you want we will not have a signal too late. In that case, we hit early share prices that will react and then we will have to find the need for capital either through a partnership or through a category, and we will find out if we have enough information on the compounds. We see better returns on investment.

Thank you. And for clarity, about your comment that we wouldn't see much data on MP0317 because most of it would be based on discussions with partners. Isn’t it to your advantage to make everything as obvious as possible in order to bring the partners in? Or are you already having discussions with partners?

Yes. You see, those companies who know CD40—we are in contact with them anyways. We might show data. If you go for public publication, we can’t wait. We have to share it with those partners as we get the data. It will likely, hopefully, at least; it’s a competitive process. It seems to be that way. People are asking because this is a target that people are following. So that was my comment. We will show you the data, but we will definitely give a preferential look to those parties who are interested in a transaction.

You're still expecting to show us some data late this year?

Yes, a sum of data will be definitely—mostly safety data. We can give you an update. We’re in dose cohort 1 milligram per kilogram and you can go to other CD40 studies; not many have reached that. So we’re already at a meaningful dose. That’s why the disclosure today is meaningful. We will dose escalate to higher doses. We will keep you posted. We’ll do more frequent injections, then the biomarker data showing that the immune cells locally react is something more for the beginning of next year. We will definitely keep you updated. But there is a preference to show to partners.

But Jo, it's Seth. Directly to your point, yes, we've submitted to Scientific Congress for the second half of this year based on the accumulation of data we are gathering and yes, the plan is to have personal human data publicly displayed in Scientific Congress this year.

Thank you very much.

You can ask what, it’s a liitle bit indiscernible.

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