Initial Thoughts on Recent Events at Moberg.

Moberg recently announced that the no. of patients within a subset of patients who achieved clinical cure during the ongoing P3 were below the company's expectations.

Introduction

Moberg Pharma AB recently made an announcement concerning data from its ongoing second North American Phase 3 Clinical Trial of MOB-015.

The relevant press release is available here. An interview with Moberg’s CEO, Anna Ljung, following the press release is available here (scroll down until you see “Teleconference regarding press release”).

The purpose of this post is to share some of my initial thoughts on the press release and interview which I separately published on X.

Summary of Press Release & Interview Content

• Moberg received information regarding clinical cure in a subset of patients in the ongoing North American Phase 3 Clinical Trial.

• The number of patients within a subset of total patients who achieved *clinical cure* during the ongoing Phase 3 Clinical Trial was lower than expected.

• Anna did not specify the number of patients in the subset or what Moberg's expectations were for clinical cure. Moberg also does not know what percentage of patients in the subset received treatment as opposed to the placebo.

• Anna stated that the data set was sufficiently large for Moberg to be confident that the data was accurate and a press release was warranted.

• The primary purpose of this second phase 3 clinical trial is to meet the requirements for FDA approval - i.e., two studies demonstrating superiority to comparator.

• The study's primary endpoint is "complete cure". Complete cure is comprised of three parameters: "clinical cure", "negative fungal culture", and "negative microscopy".

• "Clinical Cure" is achieved when the patient's nail appears healthy without any abnormalities; it is an appearance based assessment performed by the physician.

• Negative fungal culture and negative microscopy are the two components of "mycological cure". They are objective, lab-based tests for the presence of fungus. Moberg has not received any data about any impact on mycological cure.

• A low clinical cure rate among the trial's patients would result in a low complete cure rate. A low complete cure rate in comparison to the vehicle would result in a failure of the trial.

• Hence, Moberg assesses that the risk of the study not meeting its primary endpoint has increased.

• Furthermore, the risk of not being able to commercialise MOB-015 in the US due to not being able to obtain FDA approval based on this study has also significantly increased.

• However, the approvals already obtained in 13 EU countries are not affected. Also, the European dossier is sufficient to file for approval in Canada.

• European launch will not be pulled forward. Moberg is awaiting approval of its second terbinafine supplier. Expected by year end.

• Market share in Sweden is now approximately 40%. Anna does not anticipate this PR/event affecting sales in Sweden.

Initial Thoughts on Press Release & Interview

So where does this leave us?

1. Blue sky scenario in US market is likely gone. Worst case scenario, phase 3 fails and FDA approval is not obtainable in the near term, delaying or entirely precluding US commercialisation. Anna would not disclose cost of US P3.

2. I am not presently sure whether it is possible to obtain FDA approval based on the already completed Phase 2 and Phase 3 clinical trials. I expect Anna will eventually provide guidance on this once she has determined how to move forward in light of this event.

3. If the P3 fails, it also seems likely that the additional patent will not be granted, since the basis of the application is the titrated dosing regimen and its purpose of curing the nail whitening issue. A shorter patent protection period significantly affects present value.

4. Furthermore, if the titrated dosing regimen doesn't work, then this also detracts from MOB-15's advantages relative to competitors. A shorter dosing regimen was an advantage relative to Jublia, which requires daily application.

5. However, we still have a product with the highest mycological cure rate of all available treatments. I.e., MOB-015 is the most effective treatment at eradicating fungus. Where it falls down is the appearance of the nail.

6. With a leading 40% market share in Sweden achieved in only a few months, it’s evident that MOB-015 can still sell well even with a daily dosing regimen and a low complete cure rate. Losing the US would still be a major blunder and a huge blow to the potential upside though.

7. Since onychomycosis is largely a cosmetic condition, the whitening issue may detract from MOB-015's appeal to patients. However, I can't see why prescribers would not prefer the more effective treatment (i.e., MOB-015), especially for people at risk of complications, such as diabetics. For these patients, what is most important is getting rid of the fungus, not the appearance of the nail.

8. We also still have approval in 13 EU countries and prospective approval in Canada is unaffected. I really don't think this development warranted a 60% evisceration of the market cap. Potential upside has been reduced. But this isn't going to zero.

9. I also think this event has reduced my confidence in management. Ultimately, it was their responsibility to design/approve a treatment protocol that resolved the nail whitening issue. Not saying that's easy. Just that it's their responsibility and they may have failed.

10. Ultimately, I think I would like to reduce my position once the price is more sensible on the basis that upside potential has been reduced and I've lost some confidence in management.