Molecular Partners AG (MOLN) Q4 2021 Earnings Report, Transcript and Summary

Good morning and thank you for standing by. Welcome to the Publication of Full Year Results 2021. [Operator Instructions] Please be advised that today’s conference may be recorded. I would now like to hand the conference over to your speaker today, Seth Lewis, Head of IR. Please go ahead.

Thank you, and welcome. Welcome everybody, to Molecular Partners’ 2021 year end results conference call. My name is Seth Lewis, Head of Investor Relations. And we are joined this morning by Patrick Amstutz, Chief Executive Officer; and Andreas Emmenegger, our Chief Financial Officer. If you do not have a copy of today’s results presentation, you may find it on the Investors section of our website, www.molecularpartners.com under the Events tab, and it is also available on the webcast link, if you are listening to us on the webcast today. Management will be making a few brief prepared remarks, and then we will open for your questions. If you’re planning to ask a question, please be sure you are dialed into the call as the webcast is listen-only. And please note that management will be making certain forward-looking statements during today’s call, and these forward-looking statements may differ materially from future events and will be reflected to certain words such as anticipate, believe, could, expect, and words similar to this, but not including all of those. Some key facts may differ materially than our expectations, and we would refer you to our most recent filings on our website, as previously noted. If you’re listening to this on replay, please note that the call was recorded on March 16, 2022. And we would encourage you to refer to our website for the most recent announcements in public filings that they may have changed since a recording of this call. With that, I will turn the call over to Patrick. Please go ahead.

Thanks, Seth, for the introduction also for the nice disclaimer, and I want to kick off with a very warm welcome from my side. I’ll give you also a moment to bring up the slides on our – that are on our homepage. We’ll keep the presentation for this year very short. And Chris, that we have more time for your questions I think that’s where we can add more value. 2021 was an amazing year, and I do want to start the call by thanking my team and all parts of the team that made this an amazing year, and we will work through all the accomplishments, which were really many. And that was only possible by teamwork and having really skilled experts working together and really bringing forward drug candidates in all stages of development. And that, just to remind us during a global pandemic that at this point in time might be a bit less in front of us also because other things are more in front of us. But I do think it’s far too early to call it a day on the global pandemic, and that will also be part, I guess, of the Q&A section, especially around ensovibep. So let’s go to Slide #3. I hope you have the time to pull up the slides. Slide #3 are the accomplishments of the last year. And I do want to start with the R&D section. There, just to remind us, we advanced in ensovibep from a preclinical compound within 1 year to the Phase 2 readout called empathy with Novartis, with those amazing results showing that we can inhibit the virus, that we can knock down viral load and protect around 4 out of 5 patients from going to the emergency room going to the hospital or dying and even 9 out of 10, if you take emergency room out, meaning hospitalization and death. At the same time, we advanced AMD 506 and MP0310. We made that a second priority to ensovibep. So this is where we had, let’s call it, a calculated delay. Good news is we are now kind of back on track with that. And we are testing the weekly dosing with the aim to reduce IRRs and find an optimized activity window for 4-1BB activation, namely for T cell activation. We also have a new molecule in the clinic since last year, that’s MP0317.That’s a CD40 FAP, so very close to the AMG 506 concept and obviously, there is a lot of cross-talk between these programs and learnings from AMG 506 can go into 317. We’re also proud to have nominated 533, which is a tri-specific T-cell engager or tri-specific, bispecific in AML. I’ll also touch on that drug on the next slide. We’re very proud of this one. It is tri-specific as ensovibep is tri-specific, but a mode of action is a bit more complex, and it took us literally 2 years to engineer the right affinities. And now we are pushing forward towards first in-human with that drug where we see a lot of potential in an underserved patient population. At the same time, we initiated a new program. That’s the radioligand therapy program with Novartis, and we closed the deal there. I’ll come to that on the same slide a bit lower down, but also there, starting a new activity on our platform. And staying with the new – we introduced the switch concept, which is a unique feature that you can build into DARPins that you can make a DARPin that either binds target A or target B, something that is much more difficult to do with, let’s call it, conventional binding proteins like antibodies. For us, this is a new technology feature that we will be looking to move into product in this year and also the years to come. Moving from R&D to the corporate side, also there, a lot of activities. So we listed our company in the U.S., so I have now a dual-listed company raising CHF63 million in cash. The EMPATHY results they triggered the option exercise of Novartis for ensovibep with a CHF150 million payment and reminding us that we have 22% royalties in the high income countries. And also, the radioligand partnership with Novartis was attached to a CHF20 million upfront and milestones and then also royalties. So overall, also on the corporate/cash side, a very fruitful year that now gives us funds that carry us well into 25 and Andreas will point that out in more detail in his part of the presentation. So the one slide we have is now Slide #4 that’s sort of the reminder of what we’re all doing, that’s our core business. And in simple, it’s three dimensions, is we take DARPin features that are DARPin unique, we turn it into differentiated candidates. So candidate buildup mono-DARPins, multi-DARPins that are different than what you find with other therapeutic modalities and then that aims to benefit a patient – so the patient benefit. I want to kick off with the blue boxes, that’s the core, that’s multi-specificity. And in the last years, you will have heard me tell many times ankyrins or repeat proteins or nature’s choice for multi-specifics and that’s one natural angle that we have. And the one thing I want to point out is that if you say multi-specifics, many people here bispecifics. And it’s not only bispecifics, it’s tri, tetra, penta and so on, as you see in this picture. So it’s far beyond conventional bispecificity. In the middle there, we have 3 tenants, 317. These are molecules that work by co-engaging two targets and only the co-engagement triggers activity. So it’s a smart drop that looks for both targets, if it binds them at the same time, it activates immune cells from dendritic cells, B cells on the 317 more towards the T cells for 310. Now the only, let’s call it, a little kink there is that these are activators of immune cells, but likely will not have single-agent activity, so they need to be combined and as such, are more programs to be partnered. So we added a layer of strategy into that, that we would also from now on or from then on, look for programs, which have, call it, single agent activity or at least show themselves or show their activity as single agent. So we are now branching to ensovibep, that’s the tri-specific SARS-CoV-2 inhibitor. It binds the RBD of the spike protein, and it was designed to prevent escape, as we all have witnessed, especially when we showed the data on Omicron where I think we were really the only compound of the first generation that is still inhibiting that viral variants. And to my intro statement, we do think that there’s next variants to come, and we are very confident that Ensovipeb can help us if those, and when those, viral variants show up. Moving now to 533, that’s also tri-specific then engage in T cell engagers. And here the complexity is different. As Ensovipeb has 3 superpotent binders, we had to engineer the affinity of 533 to 3 targets, namely CD33, 70 and 123. And these targets are all not unique for the AML cells, they are also found on hemopoietic stem cells. So the trick was to make a DARPin that does not kill mono-expressing healthy hemopoietic stem cells but has a favor for the AML, the leukemic stem cells that then are killed. And this is what we did in 2 years optimizing affinity and engineering, and now we’re proud of this molecule moving towards the clinic. Having said that, I’ll now go to let’s call an branch out of the blue box, the multi-specificity as our team has also invested other DARPin features that can lead to differentiation namely the radical simplicity, which actually speaks to small-sized high affinity. And if you go into the radioligand therapy field, what people call the delivery agent, they call it a vector. So here we’re using DARPin as delivery vectors to deliver payloads in this case, radioligands but you can also think of drug conjugates. So that could be a sub idea of those activities. And here, it is all about small size, high affinity to penetrate deep into the tumor, stay there long, but not affect the whole system long term as you will have a very short systemic half-life. We’re excited to move that forward, mainly in a collaboration with Novartis, but we’ll also invest some of our activities to look into additional programs next to the partnered ones. And then moving to the green side, the other side, which is the switch concept, and that’s this DARPin that carries the blue and the yellow binding site. And as you see, just by the steric positioning of the binding site in one, this DARPin has to decide whom I bind? Do I bind A or B? It cannot bind both at the same time. And by tuning the affinities to these targets and by the abundance of the targets in the system or not, we have built or we can program the DARPin to act as a switch that locally or in a specific situation opens up and activates. We like to call this a smart drug and while this is not yet built into a candidate, we are – have a few ideas, what we want to do. And we also invite – want to invite other companies, other groups, biologists, medics to think about how to best use this technology that so far was maybe more a dream, and I think we can make that reality. With that, I’ll come to the upcoming milestones. I’ll start with ensovibep. Here this is with Novartis, you’ll also have to accept that we cannot speak too much about it as Novartis is in the lead, and we get information that we can then share or not. And often kind of we are not generating that information, this is with Novartis. There is an EUA review ongoing. Obviously, there is also parallel discussions with governments about stockpiling and getting ready for the next variant to come, plus, and this is something that will likely be a Virology Day for us in Q2 of this year, where we want to present more data and Novartis has an elaborate presentation strategy for the compound for this year. And moving now to AMG 506, here we will expect to have more data on the weekly dosing that we then share with Amgen that they can review and we should then have a decision mid of this year, how that program can, and if, move on. 317 initial data, so likely very similar data to 310 by second half of this year and also 533 going into the clinic towards the end of this year. Radioligand therapy, I did touch on. There is no big collaboration with NIBR, but also additional work that we will be starting up ourselves. And a side note on abicipar, that’s the ophthalmology drug that we have gotten back. There is a few slides in the back of this presentation. We now have a full package on the, let’s call it, new safety. We have gathered the feedback of the agency, how a trial would look like or need to look like to get this towards approval. And together with the data, the path forward, we can now engage with potential collaborators on their interest and how they see it, if there is a partner for path-forward. With this, I would close this part, and I would hand over to Andreas to give us the highlights on the key figures and financial side.

Very good. Thank you, Patrick. So I’m now on Slide 6 and I am happy to tell you more about the ‘21 financials and also maybe more important, the outlook for this and coming years on the finance side. I only cover some highlights, so you find many more details in the appendix of the presentation and of course, in the Annual Report that’s available on our website. So the numbers for ‘21 do not include anything surprising. It’s always in the latest public guidance and also within our own internal budget. We recognized total revenues and other income of CHF9.8 million compared to CHF9.3 million the year before. We incurred total expenses of CHF73.2 million, which means we invested about CHF5.5 million more than the year before. This led to an operating loss of CHF63.4 million compared to CHF58.3 million the year before. Net financial loss was just – was CHF0.4 million compared to CHF4.4 million the year before. This is rather volatile year-to-year because of the related to unrealized currency losses on our U.S. dollar and euro cash position, it’s unrealized. And we do not do active hedging because we – I plan to keep the currencies in the size and amount that we expect to be needed going forward to execute on our plans. Bottom line, this resulted in a net loss of CHF63.8 million, which is CHF1 million more than the year before. Net cash used for operating activities in 2021 was CHF91 million, which is about CHF20 million more than our P&L expenses due to our contribution to the manufacturing of commercial supply of ensovibep. We ended the year with a solid cash balance of CHF132.8 million and 163 FTEs on our payroll. I move to Slide 7 with our balance sheet as per the end of ‘21, it continued to be strong and dominated by the cash position. End of ‘21, it was CHF132 million, a solid equity position, CHF173 million and no debt. Early this year, and this is the bullet on the bottom right side, early this year, we were able to add another CHF170 million to our cash balance with the receipt of CHF150 million for the option exercise for ensovibep as well as the CHF20 million from NIBR on the new RLT or radioligand therapy, collaboration signed in December last year. This brought our cash balance to close to CHF300 million, or to be more precise, CHF291 million as per the end of February ‘22. The contract liabilities of CHF35.2 million are expected to be recognized into revenue in ‘22, always subject to the progress and costs of the underlying collaborations and programs at Amgen, Novartis and Swiss government. In other words, these are not financial liabilities, but part on the balance sheet until they go into revenue. So they are nonrefundable. Other assets and other liabilities are mostly related to lease, pension accounting as well as equipment and general working capital positions. With that, I move to my last slide and maybe most important one. So we had a very exciting study to deal with the great ensovibep data. And with that, the excess option exercised by Novartis, which triggered a CHF150 million payment, as I said before. And we also added a CHF20 million from the NIBR collaboration. So we increased the balance sheet to close to CHF300 million by the end of February. And with that, we have secured the funding into ‘25, so more than 3 years from now. We are in a very good position to execute on our plan, also considering the rough biotech markets out there. This excludes, and that’s important, any potential further payments from existing or new partnerships, including the potential 22% royalties on ensovibep sales as well as potential milestone payments from Amgen or from NIBR in Boston. In terms of P&L expense, we guide for between CHF75 million to CHF85 million for the year 2022. This is about 10% more than last year. For total full year ‘22, we anticipate to make operational profit and positive cash flows as a result of the large collections we made early this year. How much this profit will be at the end, we cannot guide because it very much depends on the success of ensovibep. And as always, this guidance is subject to progress and changes in our pipeline. With that, I am at the end happy to take more detailed questions if needed on this call or in one-on-ones, and I hand back to Seth or Patrick.

Thanks, Andreas. I appreciate it both. Operator, we’re okay to go for questions now, please.

Thank you. [Operator Instructions] Our first question comes from Richard Vosser with JPMorgan. Your line is open.

Hi, thanks for taking my questions. A couple – Patrick, I know you mentioned the process of EUA is with Novartis, but any insight, any help you can give us on timing or progress of that process? That would be question one. Secondly, just on the EMPATHY trial and the move to subcutaneous versions of ensovibep, could you give us an update on Part B, has that started and recruitment there and where that trial may be recruiting and the subcutaneous version thoughts on progress there? And then, finally, maybe just the Virology Day, can we see progress on other virology candidates this year? I know it’s not part of your targets or news flow, but just thoughts there, please. Thanks very much.

Hi, thanks, Richard, all really great questions and I’ll be happy to elaborate on as much as I can. So the EUA, as you know, was filed. It’s in the hands of Novartis, and it is an active process, and they are working very closely with the agency on this. And from what we hear, this discussion is going well, and there is real interest, I guess, from the agency to dig into this. I can’t guide you on the time. I don’t think there is a stop date. I think this is definitely something that kind of both sides are navigating. So we don’t know. And we – if we would, we couldn’t share what the timing is, and I don’t think there is a fixed timeline. On the EMPATHY side, I think I can just speak maybe a bit in general terms. You were asking about the Part B and the subcu part or, let’s say, injection that would then definitely also add, let’s call it, a more broad application opportunity for ensovibep. I think what we all saw is that with Omicron the situation changed in that, that many more people now have COVID, but also less are ending up in the hospital. So to repeat Part A and Part B on the outcomes is quasi impossible as you will have less hospitalization. So either you have a huge number of patients or you move to other endpoints or you have to wait for a next variant that I think will come and then you’re back. And I think those discussions are all ongoing. And I know also Novartis internally plus the agency, how to deal with this. Here, nothing has been decided. There is no active trial at the moment. So ACTIV-2 actually also was winding down, but the subcu is we’re not dosing patients. Part B is not going forward until we know how we want to navigate that space. On the one hand, this is disappointing, as you would want to have immediately run Part B and to subcu. On the other hand, it’s also sort of – and this is a term set [indiscernible]. We have a last mover advantage because, at the moment, also, no one else will be able to bring a COVID drug forward on the endpoints that we had. So it’s pro and con in one. So we need to now navigate the space, maybe move towards, let’s say, a different outcome could be viral load reduction could be symptom reductions, but hospitalization is a difficult one or maybe death. So far – and there is nothing decided, but those are the thoughts that are sort of obvious and we are debating, but also Novartis and the agency are looking into. I’ll now move to the virology question. Yes, we are working on a few viruses. We have not disclosed which ones. We will not have final data by the R&D Day or indeed the Virology Day, but we will give an update on our ideas on some of the viruses we’re working on. But at that point in time, we will not have nominated candidates. And obviously, that’s what we then want to do. So this will be sort of a day where we will hopefully be able to show more data of ensovibep, we will also have more data coming there. I mean that was an interim 29-day cutoff. We should have more data from that plus at one point in time also the 91-day data. Then we will definitely talk about our ideas in virology and maybe a bit the progress on one or the other virus. But you’re right to point out, obviously, I was only speaking about candidates 80% of our coworkers are working on candidates or pre-candidate stage research candidates that we hope to move into development. And yes, in virology, we have a few – a handful of candidates we’re looking into.

Great. Thank you very much.

Thanks.

Thank you. Our next question comes from Georgi Yordanov with Cowen & Company. Your line is open.

Thank you so much and congratulations on all the progress. So on ensovibep, but what additional data might be required from regulatory agencies ahead of receiving EUA approval? Is there – do you expect anything kind of like clinical that the agency would need? And I guess if you plan to submit additional follow-up data showing efficacy against Omicron? And then on 317, what have we learned from 310 that might be applicable to the development of 317 specifically for the monotherapy trial? Do you expect any monotherapy activity? And then may be if you can talk about the potential partnership opportunities? And lastly, on 533, maybe if you can just briefly talk about some of the challenges we’ve seen to date with bispecific antibodies in AML, co-targeting CD33 or CD123 with CD3. Have you identified any structural trade-offs of combining multiple DARPins?

Yes. Hi, thanks. All great questions. So I’ll start with Enso and data. So I mean, all would be so the data that we could show the agency or Novartis can show the agencies all additional data from Part A as Part B is not going on. And so, I think that is just safety data after day 29. There is just more there is efficacy data, so call it maybe long COVID data that might be showing up there. So those are the data pieces that Novartis is collecting, but also additional data that we didn’t have then. For sure, I mean, the sample of 400 patients that is not the largest trial. So we definitely are looking forward when we can start Part B and gather just more data in patients with ensovibep moving forward, especially as also Richard was pointing out, to be to go into a subcu formulation that would definitely be the best for application. So I think that the subcu is an important part, but that’s not linked to the EUA. You were also asking about Omicron. So that data is all preclinical. And from what we know and also how the agency has seen that the preclinical data, so live-virus but [indiscernible] virus data is good enough to expand the label for the variants. So this was also done for a Lilly antibody that did show positive effects in specific settings, but not on Omicron patients, but in vitro on Omicron. So we believe our data that we have from the lab is strong enough to cover also for the clinical setting. And then, hopefully, that’s also for future variants that could come from Omicron. I heard it is now paired with Deltacron and who knows what the next variants will be. I think there just a word of caution to all of us. I mean I remember a year ago, everybody said that wave is over, your product is not needed. And we feel a bit the same this year, we sort of predicted that. People will say you don’t need it. Now it’s over. But I do think next fall will be here a new variant will come. With that, I’ll go for 310, 317 and maybe just quickly remind you of the data that we have so – and maybe what the molecule does. So you dose – you co-engage FAP and in 310 work that’s FAP and 4-1BB. That leads to co-engagement in the tumor that leads to activation of T cells. If you give too much and you find both targets – saturate both targets individually, you don’t get activation that leads to a bell-shaped activation curve. So you don’t want to over dose. At the same time, giving some high doses, especially, you can also see infusion-related reactions that we also reported as quality only side effect. So going to, let’s call it, a lower more controlled dose, by weekly dosing, we are hoping to kind of reach both less IRRs and a better exposure profile, not overloading or underloading the system. And from the data we have on that, that should translate hopefully not one-on-one, but very closely from 310 to 317, again, the bell-shaped curve and the activation, we haven’t – or we cannot comment on IRRs as we first have to dose escalate to higher doses is that also would show for 317. But those are the dimensions we would look into and hopefully learn from one to the other. So we’re also looking into a weekly dosing and the 3 weekly dosing for 317, maybe even do it in parallel, not to lose time and find different dosing schemes that then can be later used for combination trials for 317. I hope that is helpful. Then maybe the partnership, I’ll directly link to 317 or 310, the question. For 317, you’re activating dendritic cells, macrophages B cells and that is upstream of T cells. For 310, that’s the T cell world. We are partnered with Amgen as they have a lot of T cell engagers and that combination makes sense. 317 that is upstream can be really combined with many approaches in oncology. It is immuno-oncology, it’s a more conventional oncology. So there, we would also be open for partnerships as only activating the immune system will not be enough. So also there, combo trials will be needed. And the partner that can it look into more than one combination, I think, would be beneficial for the molecule and for us as a company as we will not be able to run several trials in parallel. I’ll now go to Slide 33, that’s the tri-specific, bispecific. And yes, the key problem that we are trying to solve is that many of these targets on AML cells, I was talking about – you brought up CD33 and 123 are not exclusively found on AML cells. And in our term, we call them, these are not clean targets. The problem is that you then get on target side effects. So you are killing healthy cells of the blood system, so hemopoietic stem cells. You also get a lot of cytokine release, you get cytokine storm. And you can measure that in the test tube, but also in the clinics as some of these molecules have been stopped and then less active forms of them have been moved into the clinic. And I think MacroGenics was the most recent one to do so. Maybe Seth, correct me if that was the wrong one, but I think they just gave an update to move to a less active form.

Right.

Now at the same time, we have a molecule that binds these targets with low affinity. So on the healthy cells where you have a low expression, you do have expression, but maybe just one and not two, and at a lower level, you are not killing those cells. And then on the AML cells on the blast, but especially on the leukemic stem cells, you find high expression of at least two of these targets that we are targeting. And we see very nice killing, but we also see at the same time that we are not having the side effect on the healthy blood cells. And this therapeutic window that we hope to open is really the differentiation angle of this approach. I hope that was helpful, and please follow-up if I did not cover your questions.

Thank you so much, incredibly thorough and answered all the questions. Thank you and congratulations again.

Thanks.

Thank you. Our next question comes from Jo Walton with Credit Suisse. Your line is open.

Thank you. Just a few clarification questions, please. Your EUA progress, you talked about the agency, but can we assume that this is both the U.S. and the European agencies. And on the timeline that you understand, would it be sensible for us to model a 2Q ‘22 approval in at least one of those regions? Can I ask – historically, you said that you thought you would need about 1,700 patients in EMPATHY B, given the change in the market background and you – fewer people needing to go to hospital, are you suggesting that this would have to be materially higher than that in order to get the data that you wanted? And is it possible for you to do a subcut smaller study or do you have to start EMPATHY B before you can start the subcut with it because the subcut clearly is the one with a particular sort of commercial need, I would have thought? Can I ask on abicipar, if you can give us any hint of what was said in your meetings with the FDA in the sense of whether we would be expecting to see effectively a rerun of a Phase 3 study? So, a really material additional study that would be required that may help us work out our probabilities of you getting a partner on that? And my final question is one on finance. In your 20-F, it says that you have got a University of Zurich royalty payment to make, which is tiered on the royalties that you get. If we were lucky enough to see material ensovibep revenues this year, would we see a royalty go out that would take that net contribution of 22% down materially this year? And if you could also just help us on any other elements that might come into your P&L if ensovibep comes on, you mentioned that you had some manufacturing costs last year. Would we see any manufacturing costs this year or is it just a simple royalty relationship where Novartis would just pay you effectively, all of that is now done by them? Many thanks.

Hi. Thanks Jo. And I will try our best to kind of cover all those questions. So, the first is the EUA. And I think formally speaking, yes, and Novartis is going to look for global approval as fast as they can for ensovibep. I think it is not called an EUA in Europe or other legislations, I think there is a more rolling review. And yes, Novartis has started those discussions, including Europe, including Switzerland, including the U.S. And just historically speaking, the U.S. is usually the fastest in those discussions and maybe also the most meaningful for potential government contracts. So, that’s why I was hinting more towards the U.S., but you are absolutely right, this is going to be a global approach. On how and…

But to be specifically clear – sorry Pat, to be specifically clear to her question, the application for the EUA is with the FDA that’s where that – there is no EUA application in Europe, submitted well, A because of Patrick’s saying, it’s true that they don’t have that exact process, but that has yet to come. There has not been an official filing in Europe at this moment.

Yes. But the discussions obviously predate that. And then the model, I think that I have to leave to you, how you model that and the timelines and how you see that. I would rather go toward the patients. And yes, the way I think we see it at the moment, if you run an Omicron patients and you want the same endpoint as in Part A, for Part B, you would need more patients. I think that is rather logic or you change the endpoints and go for viral load reduction or symptom reduction. So, I think you can go both ways. And Novartis is debating everything, and they will definitely update us and the public once they have made progress on that discussion. How to bridge subcut, is a good question. I think there is many ways how to deal with that. I cannot comment on them. Also, I think is it a bridging trial, is it more a PK trial, is it a PD trial, I wouldn’t know what the best strategy today is and Novartis will give us both updates once they know more. Let’s quickly go to the abicipar question, which is a good one. So, just to remind us what kind of – the pace of the program, so we have partnered that 10 years ago with Allergan. They had run a Phase 2/3 – sorry, Phase 3 called CEDAR and SEQUOIA. So, two Phase 3 trials that actually had a positive readout for the every two and every three monthly dosing, but we have this inflammation rate of 15%. Allergan improved the material in the first step and brought that down to below 10% in a MAPLE trial. That was a smaller Phase 2 trial. And then AbbVie took over and further improved the material, especially also the syringe and how you apply the materials. So, they brought this whole manufacturing, including syringe to a next level. Actually, this is summarized on Slide 17 of our deck if you are interested. We then got it back as AbbVie decided to go more for gene therapy and not injected VEGF in ophthalmology. That was a strategic decision. We got it back. And we then took all the data looked at the data and also engaged with the agency to find out what trial would be needed to go towards approval. And I think we kind of have summarized that there. So, resubmission of the BLA would be possible with the primary readout at 48 weeks. It is a controlled trial. So, likely against Eylea, so masked. They don’t like the word blinded in ophthalmology, a mask trial. And if everything looks good, we can use the CEDAR and SEQUOIA data for approval. So, I think it’s something in between. It’s not the full blown Phase 3 that we have. It’s also not only a little safety trial. So, it’s somewhere in the middle there. We know what we would propose that’s not yet in the public, but it is more than only a short safety trial, but it’s also not the 1,000 patient trials. So, it’s nicely in the middle there and I think it allows us to now engage with potential partners understand what the investment would be to get abicipar approved. And I think this is for us the unknown so far. I think everything else we cannot put together. But how the, let’s say, the field has kind of evolved, I mean there was the new data, but there was a faricimab approval. It’s an interesting setting, and we will test the waters and see how companies come back. I think good news for us is that we believe that the inflammation question is solved. There is also learnings for us there. And now we have to find out, is there still a commercial opportunity here and with that a partner to unlock the commercial opportunity. So, we are not guiding that we will invest any money here, but we will invest it needs to find out if there is a partnership to be done. I will hand over to Andreas for the financial question.

Yes. Thank you, Joe, for the question. So, on the University of Zurich, no, we do not hold any fees or sub-royalties for ensovibep, because the base patent expired last fall. So, we don’t owe them anything. However, maybe also in the 20-F, we paid CHF1.5 million to the University of Utrecht, because they supported us a lot on this project and that engagement for that, we paid the CHF1.5 million that was paid also last year. So, that is on that question. The other one on ensovibep, yes, it’s a pure royalty play this year. We do not expect any further costs on our side. Actually it’s – on the contrary, we were able to recharge Novartis CHF13 million out of the CHF20 million investment we made into commercial supply. So, that is a partial recharge that is still – that will be paid very soon and we also can recharge the direct FTEs on our side working on the project. Obviously, this is going down now very fast, but we can recharge a direct FTE. So, it’s a pure royalty play.

Thank you very much.

Thank you.

[Operator Instructions] Our next question comes from Daina Graybosch with SVB Leerink. Your line is open.

Hi. Thank you for the questions. There has been a lot of good discussion already, so perhaps two on ensovibep for me. One I think you mentioned Lilly’s recent approval of beb – not approval, emergency use authorization for bebtelovimab. And I am wondering if you could talk about the data package they had holistically compared to ensovibep. Any similarities and are there any differences that could make it different – ensovibep different than Lilly’s for the agency? And my second question is, I wonder how you are thinking about endemic COVID and whether you are working on additional follow-on DARPins that you maybe could pull out if a variant emerges that is resistant to ensovibep and sort of what that process looks like internally?

Hi. Thanks Daina. And I will keep it very top line on Lilly as I am not the expert. I don’t know exactly kind of all the data parts there. I would say kind of, let’s say, what is similar and what less. I think what is similar is that the Lilly antibody also binds can neutralize Omicron. And I think a deep understanding also by the agency that a next variant is likely going to also come from that variant. So, a need for us to have something that is active on Omicron and enso, it’s maybe even broader applicable than an antibody. So, I think it is not while speculate, but I would hope that the agency sees our lines through all the variants, while the Lilly antibody, yes, it works on Omicron, but I think antibodies now have a history of also losing activity on new variants. I think that’s the similarity. The exact data they had, I can’t speak to, I don’t know the data. I do know that the agency definitely was very open to speak with Lilly. And I think that is maybe a bit different that obviously, Lilly had a first antibody has a large database for that antibody and an active discussion. So, I would see that they could hit the street running with the agency and have more data to reference than us. And I think that is just the way it is and I think those are the obvious things. But let’s say, on the positive side, a clear need to be creative to get an emergency use authorization for a molecule that can be actually saving many lives if the next variant comes. And I think that’s exactly where we position ourselves. Your question to endemic COVID is a good one. I do think we are hopefully hitting endemic and just meaning that the cases don’t rise, but endemic it can be at a very high number and also new variants can at any point come, and just to remind you, new variants come from old variants. And the more virus load is out there in the globe, the higher the probability of a new variant coming up. So, I think we are at the highest risk ever for the next variant. We also now know that variants can break through vaccines. So, that’s definitely not a good thing. So, I personally am very glad that we have ensovibep ready for whatever to come. Now you also hinted towards, let’s call it, a variant that would shake off ensovibep. And yes, we don’t know what the next variant is, but we also do know from our internal work where the ensovibep could be. And yes, we already have a new variant for that. So, there is a candidate, let’s call it ensovibep 2.0, that would cover for some escape mutations that are and were known for ensovibep also published that we have ready to move forward. And obviously, also kind of making the molecule also a bit more stable and developable, keep in mind ensovibep was selected in six weeks. So, we also just did an upgrade for the whole molecule.

Great. Thank you.

Thanks.

Thank you. And we have a question from Rupin [indiscernible] with SUW. Your line is open.

Thanks a lot for taking my questions. I am surprised your guidance for operating expenses of is a relatively low considering you have a lot of cash and your cash burn rate into ‘25 suggests that you are not planning to materially increase those expenses. In the middle of this year, you are going to present virology candidate or potential candidate – potential programs? Is it – is your planning that you give us now based on the assumption at ensovibep sales? And do you have a second planning in case of ensovibep is a success and then you will come up and say, okay, now we double all our expenses because we expect a lot of more cash?

Thanks Rupin for a very good question and one that we are also turning up and down here. I think you see – the honest answer is that our programs that we are investing in are still early. And even if we double the number of those, the cash impact is not that high as the expensive part comes later. And it would mean if we really want to change that we would heavily invest in 317 or in 310 ourselves. So, that’s why we could spend more money, but that’s also where we don’t think we can make a big difference. And we have to be strategic with where we invest our money. So, as much as we would like to turn up the spend and invest more, at this point in time, our pipeline is not built to do too much of that. And having said that, I do think if we would then get, let’s call it, massive funds more, we will have to really think hard how to invest that money going forward. And I don’t want to kind of start any speculations, but we will definitely also turn the stones internally and see what we can do, be it on the manufacturing side of DARPins and others, maybe to invest more in pandemic readiness, things like that are definitely something we are being approached by many and things like that. But I do think at this point in time, let’s call it, our conservative spend is not that conservative. It just more reflects the stages of the molecules we have. And if we would like to invest, I think it would almost mean that we acquire a molecule that is further ahead than ours.

Thanks.

Thank you. And there are no other questions in the queue. I would like to turn the call back to Patrick Amstutz for closing remarks.

Sure. I will kick off and then Seth can close the call. So hey, thanks, everyone, for joining the call. Also thanks to all our analysts for also these really good questions that allow us to kind of go a bit deeper, and we wanted to spend time on the questions. I think that’s where we can work together and build the understanding of where this company is and how it’s going forward. And I do want to thank all our collaborators, especially Novartis, for a great collaboration on ensovibep and then all my coworkers in Molecular Partners for an amazing year. So, hard work out there and just so much comradeship working through those moments that were not always easy and really delivering the value for patients, but then also shareholders over the last year. So, thanks for that.

Thanks Patrick. Thank you all for joining us today. Really appreciate it. Happy to follow-up with any questions that you still have, and we will make sure that we are available for that throughout the day and in the coming days from here. Look forward to updating you at future events coming up, including the Virology Day, which we discussed, we will be coming out with the actual date for that in the near future. But that will be occurring in the first half of this year. And please let us know if there is anything else we can help you with. Have a great day. Thanks everybody.

This concludes today’s conference call. Thank you for participating. You may now disconnect.