Cantargia AB

STO:CANTA

Earnings Call Transcript 2024-Q1

[Operator]

Welcome to the Cantargia Q1 2024 Report Presentation. [Operator Instructions]

Now I will hand the conference over to the speakers CEO Goran Forsberg and CFO, Patrik Renblad. Please go ahead.

[Goran Forsberg, executive]

Thanks a lot, and welcome to Cantargia Q1 report 2024. It's a pleasure to present the progress we've made with the company. And during first -- so it's been a very good period and a good start of the year for us. And during the first quarter, we presented the first clinical results in our CAN10 program and the results were good. So obviously, we showed good safety and we could also show receptor occupancy, similar to what we expected from a model. But on a broader scale here, it actually means that Cantargia now has two clinical projects with clinical results, and this is a major step forward for the company.

We also presented new clinical data on our lead program, nadunolimab and around a very exciting finding that nadunolimab not only can have antitumor activity or proposed [indiscernible] activity, but it can also reduce neuropathy, which is a very serious side effect of several chemotherapies and also ADCs and there is going to be a presentation around this at ASCO in two weeks from now. So we very much look forward to update you on that at a later time point.

Also with nadunolimab, we got regulatory approval to start the Phase IIb trial in pancreatic cancer. And after the period, we also had lots of new data or being presented in various journals and it was all related to the CAN10 program. Today, atherosclerosis was published -- very exciting data was presented in systemic through this in a very high impact journal and finally, we also got a paper on structure, function, relationships and CAN 10s mechanism of action being published in another high-quality journal.

And finally, just a few days ago, and we'll come back to this later on. We had, let's say, clearance of one of our remaining patent appeals or positions. So there has been an appeal around one of our -- not the core patents, but obviously important patent. But to the third party, we drove that appeal and that is obviously very good because now we can continue to focus on nadunolimab and moving our project forward.

So if we look into the status of our projects and look at our pipelines, nadunolimab is being developed quite broadly in cancer and the most mature data has been generated in pancreatic cancer, triple-negative breast cancer and non-small cell lung cancer. And we will come back to where we are in those programs. But CAN 10 program is also making progress now, it is still in clinical Phase I, but advancing quickly towards Phase II starting next year. And the lead indications here on myocarditis and systemic sclerosis.

And finally, we have our platform program, CANxx, which is consisting of a number of antibodies that can be moved forward in the future. So in 2024 and '25, there is lots of things happening. So we have data coming up from two clinical programs, both CAN 10 and nadunolimab and there are several other clinical milestones from the ongoing programs or the new trials to start during 2024 and '25. And there are publications and conferences coming up. So we made presentations at AACR with nadunolimab we're presenting at ASCO, and I'm sure it's going to be much more. And already with CAN10, we have had three publications and impactful journals and presentation upon conference. And again, I expect much, much more during the rest of the year and next year.

So now I would like to focus a little bit more on the CAN10 program to start with. It is a program where lots of things are happening both within the program, but also in the environment around, which really increases the attention of this program. And the main reason is that CAN10, it is a unique molecule because it's not only targeting specific cytokines, it's really targeting a whole family IL-1 family. And there are lots of evidence that IL-1 family, which is IL-1, IL-33, and IL-36 are driving inflammatory diseases by working in par or as a family, so there are lots of diseases, and we'll come back to that show that the CAN10 [indiscernible] and operate together.

And even more exactly, there are lots of data showing that, for instance, IL-1 beta blockade, IL-36 blockade, give some signal of activity or even works in diseases where these systems are highly upgraded. But in most cases, it's not really translated into strong clinical efficacy, and we -- there is more and more data being accumulating that it's because it's only blocking of [indiscernible] compounds being done, which leads to a signal of [ comp ] activity. But if you block them together, you will get some kind of additive or synergistic effect. And I think that's really triggering the interest around this compound.

So basically, what CAN10 is doing, if you look at this slide, is that it's binding to IL-1 rep, which is a core receptor for IL-1, IL-33 and IL-36 and it's blocking all of them by binding IL-1 rep, it blocks the binding of IL-1 receptor, IL-33 receptor or IL-36 receptor and thereby just down activity of this molecules completely.

And if you look down here on this slide, this is really trying to illustrate what we're trying to achieve. If we have a biological system where IL-1, IL-33 and IL-36 are all active and try to block one of the molecule [indiscernible] were trying to block IL-1 with [indiscernible] here in this example, IL-33 with the IL-33 receptor or IL-36 with IL- 36 blocker. They are not very effective. But if you look at the blue line, you have a very potent inhibition with CAN 10 and this is really illustrating what we're trying to do in these diseases.

And the first in human study is ongoing. We're doing a sad part, which means that we're doing a single dose, and it's going very well. We have not seen any safety signals, and we documented the receptor occupancy. During Q3, we expect to start with subcutaneous administration in [indiscernible] part. So that's multiple dosing. And here, we will now switch to psoriasis patients, where there is a strong rationale for blocking all of these cytokines. So if you look at to your right, you can see in psoriasis, which is a gray bar here, you have an up regulation of IL-1a, IL-1ß, IL-36. So obviously, blocking all of them at the same time could have a very interesting effect. And that's what you're trying to document. But clearly, psoriasis is an indication where -- which is not of choice for the initial Phase II.

There are very active agents out there, and it would be a major commitment to start there, but in the future, who knows. But we've done animal models as well to prove that we can have efficacy in psoriasis models, which has only picked up with CAN10 and not with, for instance, anti-IL-1 beta. And in that [indiscernible], we will do lots of biomarker analysis in addition to what's already done in the [ test. ]

And very quickly going through some of the preclinical data that was presented during the period, and this is in systemic sclerosis, where we've taken fibroblasts from patients. And what we can show here is that if we block the activity of these fibroblast, which is part of the disease is systemic sclerosis. We can do that very efficiently with CAN10 even if we block -- stimulate with [ TGF- ß ] or with IL-1ß, IL-33 and IL-36. So this is clearly a very strong signal that we are on the right track.

And we have previously presented animal models showing that, for instance, in this bleomycin model that we have an active compound when it comes to the skin fibrosis, which is on par with Nintedanib, which is used to some extent in systemic sclerosis, but to some extent, also limited by toxicity.

So then moving over to nadunolimab. And here, the news that we presented during the period was the neuropathy signal. And neuropathy, it is a very serious medical condition, which is unfortunately induced by several chemotherapies. And one central component in this chemotherapy-induced neuropathy relates to new reinflammation, which is driven by the IL-1 system. And we have previously presented that -- we had very low incidence of grade free neuropathies in these patients in our pancreatic cancer trial, where we studied Gem Abraxane combination with nadunolimab. So we had only 1% versus expected more than 10% from historical controls.

But the signals have now been taken forward. We can also see a signal in -- if you look at the lower grade neuropathy and that's something that will be presented at ASCO.

And we also done animal models and we present that work as well at ASCO. So I hope this will be something very exciting, which will be disclosed in the near future. And then just to put this in perspective, so the new data will show that we can get rid of or just minimize some very serious side effects of chemotherapy, but we've already previously shown that when we add the nadunolimab to chemotherapy that there is a signal of activity, both on survival and PFS. So a survival of 13.2 months, it's much, much better than you expect from historical controls, which is more in the 9 to 10 months.

And to further strengthen those data, we've also seen that the patients with the highest IL-1 RAP had the strongest activity signal. So here, the survival is more than 14 months. And this is very logical, given that we have an antibody therapy targeting IL-1 RAP. So the more IL-1 RAP [indiscernible] the more antibody can get in unbind and have activity.

In triple negative breast cancer, here, we have a randomized Phase II trial ongoing. It's going to be about 2x 50 patients in the trial. We started with a leading phase, which has been presented before. And again, we have good response rates, and we have promising PFS and survival. And we very much look forward to present randomized data late this year. So really to summarize, nadunolimab various lots of activities, and it would be -- so we have one randomized trial ongoing. We were two clinical trials starting this year. So we have pancreatic cancer Phase IIb, and we also have an investigator-sponsored trial in leukemia, which is also funded by a very prestigious grant from the U.S. Department of Defense and there is more to come.

So before going into the financials, I would just highlight that Cantargia has a very strong IP position. We have composition of matter patents on both nadunolimab, which is expiring 2035. We have CAN10 competition matter expiring 2041. And we also have patents around the targets, and those patents have been a subject of to several positions and appeals. But all of this oppositions have ended up in a very favorable way for Cantargia.

And the final appeal we had in front of us was relating to the solid tumor patent, but here, the third-party who filed the appeal decided to withdraw, which means that all these patents are now valid and remain in force. So this is obviously a very good step forward for Cantargia.

So by that, I would like to hand over to Patrik who can present a little bit around the finances.

[Patrik Renblad, executive]

Thank you, Goran, and good afternoon, everybody. So this morning, we reported an almost 50% reduction in our operating expenses in the first quarter of 2024 compared with the same period last year. And the main reason for this is explained by R&D, where we are dropping SEK 35 million from -- or to SEK 38 million in the quarter. The explanation to that is that we have two clinical studies actively recruiting in the period, and that's tried for all the triple-negative breast cancer study for nadunolimab and the first-in-human study for CAN 10 driving cost, and that is then compared to a full study program for nadunolimab one year ago.

Also worth noting is that in the first quarter of 2023, we recorded relatively high cost for production of drug substance for nadunolimab and we've had no such investments incurred or reported in the first quarter this year.

So our G&A expenses, we constantly challenge those and we have been able to reduce them by

a little more than SEK 1 million compared to Q1 2024, and that's -- we're very happy with that. But all in all, we reported loss in the period of SEK 37 million and that then also includes a positive impact from net financial items of SEK 5 million.

So we reported net available funds and we keep reiterating that, that is comprised of our cash and cash equivalents as well as what's defined as short-term investments, so net available funds were SEK 143 million in the end of the quarter following a net burn of SEK 52 million in the quarter. And we expect that, that liquidity will suffice to cover the ongoing activities for the next year.

With that, I hand over to you again, Goran.

[Goran Forsberg, executive]

Thank you so much. So I would just like to conclude that the year has started well for Cantargia. But clearly, we have very high expectations on the remaining part of 2024 with a rich news flow in pancreatic cancer, in triple negative breast cancer with the obvious value inflection point of start of the leukemia trial with lots of data in CAN10, so more Phase I data being presented during 2024 as we make material progress and also like to highlight that the whole plan is to start Phase II in 2025 and get the U.S. IND in place.

And we also have lots of other activities where we expect to present more data to give more clarity of where we're going. So by that, I really like to thank you for your attention. And if there are questions. I've been very happy to respond to them now.

[Operator]

[Operator Instructions] The next question comes from Richard Ramanius from Redeye.

[Richard Ramanius, analyst]

So I have a few. First one as you have a better runway now, will the readouts from TRIFOUR and CAN10 be covered during your financial plan.

[Goran Forsberg, executive]

So yes, the plan is definitely to have TNBC and CAN10 data being covered by this runway.

[Richard Ramanius, analyst]

Okay, that's perfect. A phrase in the Q1 report caught my attention. So I wonder if you could comment on this. Is the Board assays that the company has good prospects of securing future financing example for a licensing deal. I don't think I've seen that wording before. So how have your business development discussions progressed? Would you say since before?

[Goran Forsberg, executive]

So I cannot comment in detail on our commercial discussions. But what it says is that we believe that we will have good opportunities to continue to finance companies and the partnerships is one way of doing that.

[Richard Ramanius, analyst]

Okay. I was also wondering about what path forward you might take with CAN10, especially these interesting news in HS. And what do you think would be the indication for the Phase II study?

[Goran Forsberg, executive]

So you're absolutely right that there has been several reports in hidradenitis suppurativa, which is a very serious and quite common dermatological disease, both using blockade with IL-1a/IL-1ß, through lutikizumab and also from IL-36 blockade using spesolimab and clearly, if you combine those two data sets, it would really argue that CAN10 would be a very active molecule, so we are certainly incorporating that information into our development strategies.

And we have ongoing KOL discussions and upcoming advisory boards here during the summer to further investigate let's say, how a Phase II trial and development plan would look like in the lead indication, systemic sclerosis and myocarditis, but we're also including some other opportunities and HS is one of those.

[Operator]

The next question comes from Luisa Morgado from Van Lanschot Kempen.

[Luisa Morgado, analyst]

I have a couple. Maybe first to start off with the PANFOUR trial. Could you perhaps provide a bit more color on why the start was delayed?

[Goran Forsberg, executive]

Yes. So I think where several reasons why you tried to estimate the time lines to start and then getting everything in place. But we -- one very clear aspect is that the trial is not fully financed yet with our what we have cash on hand. And what we are very seriously trying to get the best possible financing for this trial, and we have a number of interesting discussions on the next step financing for the company. But we cannot start the trial until those have finished.

And unfortunately, I cannot go into more details around this at this point in time.

[Luisa Morgado, analyst]

Okay. That was very clear. And maybe moving on to CAN10. Is there anything that you can already advances in terms of the Phase II that you plan to start next year? And considering that I think you mentioned in the report that the enrollment of the psoriasis patients will start in Q3. Will we already see any data for this patient this year or only next year.

[Goran Forsberg, executive]

So let's start with the second question on psoriasis. So we will start the treatment phase during Q3? And depends a little bit how quickly all the biomarker and analysis takes before you can get that type of data, but you can clearly get the safety data during this year. So hopefully, if we find anything material to communicate, we will do that from this regardless if it's the [indiscernible] part and we have no reason to delay this type of communication.

And then the first question was around Phase II. So clearly, we are already now thinking ahead of starting a Phase II in one of the indications that I responded to previously. And we also want to start that trial as quickly as we possibly can after the MAD part. So we're targeting H2 2025, it will be tough to start already during H1. But as quickly as we have -- as soon as we have safety data from the final MAD cohort basically we go ahead and the finalized protocols and go ahead with the submission.

[Luisa Morgado, analyst]

Okay. Very clear. And maybe one final question in terms of operating expenses. How do you see this to develop throughout the rest of this year. Will we see a further decrease as we've seen this quarter? Or do you consider that this will stabilize from now on?

[Patrik Renblad, executive]

So it's Patrik here. And thank you for the question, Luisa. It's a very good one. So as Goran said, we are working actively on establishing financing for the company, which then will help us or enable the studies that we believe are important. So with that said, if and when that is secured, expenses will increase. What we have in the guiding for the runway is excluding those activities and in that brought more hypothetical scenario, you can expect that the costs and burn will go down?

So it's a little bit of a balanced response to your question. I hope it answers.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Unknown Attendee]

There are no further questions coming from the web either. So I hand over to you, Goran.

[Goran Forsberg, executive]

Yes. So I can only conclude by saying we are extremely satisfied with how we have let's say, the start of the year and the exciting data we have prepared. And we also very much look forward to continuing to deliver on all the opportunities we have at hand right now and upcoming milestones and value inflection points.

So look forward to a very interesting 2024 and second half of this year.