Q&A of the shareholder meeting after the general shareholders' meeting.
Dear Shareholders,
After the general shareholders' meeting of Genexine, Inc. on March 30th a roundtable meeting was held with management answering shareholder’s questions. We are providing a few of the key Q&As as part of our process for transparent communication to our shareholders.
Genexine IR team
1. Why has the stock price decreased significantly?
Over the past 2 years the entire global stock markets have decreased significantly including the Korean exchanges. Genexine’s share price has also been affected significantly by the global recession. Bioventure companies in Korea and the U.S. have been particularly hard hit. We have been focused on our plan to commercialize our late stage products and position ourselves globally to be able to be in a positive position when the markets recover. Our goal is to finalize our late stage clinical trials and submit several BLAs for our lead products in the coming 12-24 months.
We realize Genexine has had to alter its strategy over the past 2-3 years and we understand this may have also had some impact on the share price. This was done in response to a changing marketplace and landscape and we hope you understand the need to make these changes in order to adapt. We feel strongly that our new vision and direction should generate shareholder value as long as we stay focused on the execution of our development plans
2. It seems that certain clinical milestones have been delayed. What is the reason?
It was important to prioritize our pipeline to focus on those products that would add the most value to the company. We believe over the past few years we were developing too many products in our pipeline and as a result we were not able to advance our key products as rapidly as we expected. With our new CEO coming in, we have been able to prioritize our late stage products and develop a global development plan that will streamline our activities and should allow us to hit our development milestones going forward.
We are also holding our development partners more accountable for their deliverables and milestones and are making sure we work more collaboratively to deliver shareholder value.
As a result, GX-H9 and GX-E4 are on track to complete Phase 3 clinical trials and we should see submission of BLAs in the coming 12-24 months for each of those products. For GX-188E and GX-I7 we are now planning our global development plans and advancing our partnering discussions.
3. Are you having conversations with any company on license-out or partnering opportunities.
It is important for us to build relationships with multiple global pharma companies and we have a very strong network now. Mr. Warma, our new CEO, has strengthened our business development capabilities significantly and we have had multiple discussions over the past year. These include updates and discussions on several of our pipeline drugs. Licensing-out is an important goal for us if we wish to bring our products to market globally, so our efforts are intense in this area.
However, we do not comment publicly on the nature of the confidential discussions and do not provide timing on any such partnership or license-out.
4. When does Genexine expect a partnership or license-out?
We are having conversations with several potential partners regarding several of our commercially-focused (late-stage) products. However, we do not comment on the nature of the discussions and do not give guidance on timing or likelihood of such partnerships, as these are based on multiple factors.
5. What is the plan for GX-188E? Is Conditional Approval still a goal? It seems to have been delayed.
We remain enthusiastic about the potential of GX-188E in both cervical and head and neck cancers. While we are still pursuing CA in Korea and are planning to possibly submit later this year, we are more interested in the global market for this product. The global market for cervical cancer is expected to grow to over $4 Bn and for SCCHN over $5 Bn. Considering HPV is responsible for over 70% of cervical cancer and 30-40% of head and neck cancer, this represents an enormous opportunity. It is more important to try and capture more of the global market than only focus on the small Korean market. So, we are still pursuing CA in Korea, as this is our home market but this represents a fraction of the global value. In order to maximize value and attract a global partner, we need to have a global strategy. We have been working with global experts and KOLs these past few months to determine the best path forward, globally, and hope to be in a position to start our next trial later this year.
Additionally, Conditional Approval is a very difficult goal to achieve. There has never been a DNA-based vaccine that has been approved (with or without CA) by any health authority including US FDA in the past so it would be challenging for MFDS to be the first to grant such approval. There are several criteria that must be met including having very strong data, the current treatment landscape and unmet medical need in the country. Even then, the bar is very high.
We will continue with our conversations with MFDS assessing both CA and how that could fit into the global development plans.
6. Is the company planning any additional capital raises? How will the company secure additional cash in the future?
The company is not planning another capital raise at this time. We secured ~ 85 Bn KRW in the recent rights offering that will be used to advance several R&D programs. Our focus is on making sure every Korean won that is spent is adding value to the company.
The company is involved in several ongoing discussions with potential partners for possible license-out activities. This could be a possible source of future, non-dilutive capital.
Additionally, there could be other potential sources of capital such as through the selling our of investment assets, subject to market conditions.
7. You said you are cutting costs. What cost saving measures did you introduce?
We recently restructured the company with the goals of 1) reducing costs and 2) improving efficiency and results. Importantly, we merged our two operations groups into one, which will save costs and streamline the operations. It was important to create a lean organization with a focus on cost containment. We have also reduced headcount notably by reducing a few high salary executives.
On a more progressive front, we created a Discovery Team who are now focused on rebuilding our R&D engine. Over the past several years, we have gotten away from innovative R&D. Creating this lean group headed by a creative PhD scientist, we hope to be able to regain our leading edge in drug discovery. We also created teams focused on 1) Product Management, to drive commercial execution of our lead products, 2) Business development to drive our out and in-licensing efforts and 3) Alliance Management to ensure our partners deliver on their obligations.
8. Is entering the US market still a priority? How are you preparing to enter the US?
Our plan to expand beyond Korea into the US and other areas is still on track and remains an important part of our vision. We envision being able to expand and set up a branch office in the US will enable us to access talent, expertise, technology and capital and broaden our shareholder base. Our CEO has had numerous conversations and meetings with US based pharmaceutical companies, investors and analysts and the reception to a strong Korean-based biopharma company such as Genexine has been very strong. We envision continuing these discussions over the course of this year and possibly establishing an office in the US later this year.
9. How closely do you work with Toolgen?
Toolgen is a very exciting company developing cutting-edge gene editing technology. This is one of Genexine’s investment companies and we believe has a bright future. Toolgen has a strong science foundation with expertise in discovery and preclinical development. They are advancing closer to the clinic with their lead product, and we feel Genexine will be able to provide strong guidance and advice in the areas of clinical and commercial development and through our broad international network. We have a very productive and supportive relationship.