Cantargia AB

STO:CANTA

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Welcome to the Cantargia Q3 2023 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. It's been a very good period for Cantargia, and it's really a pleasure to present the progress we made in our projects at this Q3 report as well as the financial updates. So going directly into a story and what has happened. So obviously, we presented new data in pancreatic cancer, which is the lead indication for nadunolimab, and we've seen on coming back to that, but we've seen strong efficacy in general, but we also seen very strong effects in patients that have the highest levels of the target for our therapy IL1RAP. And we've dug deep further into is to see that, for instance, in IL1RAP is linked to KRAS mutations, which are associated with aggressive disease. So it gives us more and more confidence that the drug is really what's doing what it's supposed to do and that it can be a meaningful drug in the future to treat pancreatic cancer patients and especially those with the worst proposes. We also have seen in our status in collaborations with the world leading group in Switzerland, looking into immunotherapy in general and that we can use nadunolimab to improve immune therapy and, for instance, to tumor vaccines. We were awarded the ground from the U.S. Department of Defense, and this is a very, very important, let's say, both milestone as well as recognition of what we're doing. And this grant was awarded to do a Phase Ib/IIa trial in leukemia, which we really look forward to do together with our collaborators at MD Anderson. We have progress in the second program, CAN10. And we started a Phase I trial on our treating patients according to plan with it and hopefully might come in the future around that. But the Phase I trial started and we now have 2 clinical programs. We also got an orphan drug designation for CAN10 systemic sclerosis in the U.S., which is obviously strengthening the whole case around the story here. There has also been interesting movements around one of our patents. It's not one of the core patents. But as you may know, Cantargia has several patents, which are not only related to our drugs, but also to IL1RAP as a target. And several of those have been opposed lately. But so far, everything has been very successful for Cantargia. And during the summer, we had another opposition process at European patent office. It was basically decided that the patent would be more or less up. There were some updates in the patent scope. But in principle, a patent was deemed to be still valid. And we just were informed that this decision has been appealed by a third party. And it clearly shows that there is a commercial interest in the biology that we're investigating. We've also done presenting new data recently in nadunolimab in combination therapy in triple-negative breast cancer, which was presented at ESMO present more of that. And just recently, we did a directed share issue to raise approximately SEK 59 million, which prolongs our runway into 2025. So a very eventful period end October and hopefully more to come. But by this, I will hand over to Patrick to start with finances, and then we'll do a deep dive into the projects.

[Patrik Renblad, executive]

Thank you very much, Goran. And let me then first start with some key messages related to our P&L. So on the left-hand side here, on this slide, you can see the development of our operating expenses. And in the quarter, we reported OpEx of SEK 79 million, 6% higher than the same period 2022. The trend of lower cost from our clinical studies for nadunolimab continued, but they were offset by increased investments in implied by the initiation of the CAN10 clinical studies as well as production of investigational medicinal products for both our projects in the quarter. As you can see, Cantargia continues to invest the lion's share of our investment into R&D, 96%, and we operate thereby with a very lean G&A. We recognize currency gains on our hedging, which provides a positive net financial items of SEK 2 million in the period, reducing our reported loss to SEK 76 million. Right hand of the slide shows the year-to-date development. And there, we have decreased OpEx in the first 9 months compared to 2022 to SEK 219 million, down by 25%. Mainly as a result of the focus that we have now been working on for a while, focusing the clinical program to fewer randomized trials. Net items in the quarter were SEK 8 million, and that reduced our operating loss to SEK 209 million for the period. Our available funds which consists both from the IFRS part, which is cash in the bank, but also the short-term investments that we have is developed as according to this graph here. It decreased by SEK 87 million in the quarter to SEK 200 million. And that, I should say, is excluding the recently conducted share issue of SEK 59 million as that occurred in the fourth quarter. With our existing plans, we expect that the available fund and the proceeds that we now have in our banks from the share issue will enable a runway into 2025. So the directed share issue was announced on October 30, just a few days or a week ago. And it means that we issued with a mandate from our Annual General Meeting, 10% of our shares or 16.7 million shares at a price of SEK 3.55, which was then the weighted average price of the day without any discount and that implied a total proceeds of approximately SEK 59 million, and that represents a dilution of 9.1% after the share issue. We have very strong support from our existing shareholders and they contributed into this issue, notably the Fourth Swedish National AP fund, the AP1 and also [Indiscernible] pension together with other institutional and private shareholders. We will use the proceeds from this issue to continue our preparations for the Phase IIb trial with nadinolumab that Goran will talk about more later as well as general purposes, which extends the cash runway into 2025. And as I already mentioned, the transaction has been closed, and we have received the proceeds into our accounts. And with that, I conclude my short financial update and hand over to Goran.

[Goran Forsberg, executive]

Thank you, Patrick. So to remind you all about our pipeline. So the lead program nadunolimab, it is being investigated in pancreatic cancer, triple negative breast cancer and in lung cancer. In pancreatic cancer, we have Phase II data and are now planning a Phase IIb trial in the first-line setting. In triple-negative breast cancer, we are currently doing a combination trial, which is randomized, combining nadunolimab with chemotherapy versus chemotherapy alone in first or second line setting. And in lung cancer, we completed recruitment earlier this year and are now evaluating the data before deciding on what potential next step might be, more to come around that next year. What's also very exciting is that our second program, CAN10, which is being developed in autoimmune inflammatory diseases is recruiting healthy volunteers right now in the Phase I setting, and the idea is to take this compound into Phase II in Myocarditis systemic sclerosis once that is ready. We also have CANxx platform program, which is much earlier to look into new opportunities within the IL1RAP space. So moving over to pancreatic cancer and very briefly. So we treated 73 patients in the first-line setting with combination with gemcitabine Abraxane, which is one of the standard therapies. And what we consistently see is a much better outcome and we would expect from historical controls. So response rates are better. And as you can see in the waterfall to the right, the tumor reductions are much more pronounced and a much more long lasting than he would expect from chemotherapy alone. It all translates into a very promising overall survival, which is above 13 months, and that's much better than what has been reported with gemcitabine/nab Abraxane alone, which is more in the 9 months region. So a 4-month difference here, obviously, versus historical control is still very, very encouraging and something that needs to be taken forward. What's new then is that we've seen that patients that have the highest levels of the target for our therapy, which is in a are doing better. So we can actually -- if we divide these patients according to IL1RAP levels, we can see that we have a 14.2% versus 10.6 months survival. And to the right, you can see that, again, the deep responses are found in the IL1RAP Group. So it clearly points us that the patients that should be the target for our therapy are also those that are responding to the best. So one further evidence that we're on the right track. Another evidence comes to patients that have received nadunolimab as a monotherapy in pancreatic cancer, and we have biopsies from 17 patients. And again, what we see here is that the patients with the high IL1RAP levels are those that are doing much better. So we now we're in the third line setting, so we have a much worse prognosis. But we can see progression-free survival, which is approximately twice as long as those promoted high versus low. And the survival is also more than twice long for patients with high IL1RAP. So a strong evidence that nadunolimab is still working especially in patients with high IL1RAP. We are -- just to say that we're now taking this forward into a Phase IIb trial, which we will obviously present much more about once it's starting. Currently, let's say, once we have a protocol approved, we can present more on the design. So in triple-negative breast cancer, we presented new data at ESMO in October. And again, what we see here is that in a different disease that when we add nadunolimab standard therapy, chemotherapy in this case, we again get much better results than you would expect from chemotherapy alone. And this relates to response levels, it's also to the tumor reductions, which you can see to the left here and the survival and progression-free survival, everything is longer than you would expect from chemotherapy alone. And this trial has already expanded into the Phase II part where we are looking at the combination therapy in one group and then the chemotherapy in the second group and much more to come around that during 2024. And then in a further indication, lung cancer, it's a similar story here. We've done combinations with chemotherapy, in patients that are either first line or second line after immunotherapy, and we consistently see a very, very potent effect here, including 2 patients with complete response. And just to point out that complete responses are very rare in lung cancer, even if we get immune therapy. So if you look at this slide here, up to the left, you can see the nature of these 2 complete responders. So one that was -- both have received immune therapy before and no longer responding to that. But up to the left, you can see that the tumors disappeared with treatment, it takes different time periods. But to the right, you can also see the CT scan. So you can see that the patient had a lot of tumors before and everything vanish with treatment. So something which is very exciting, but we're also trying to understand more what is really common between these patients so we can find a segment where we have a best chance of success, and that will be a very good starting point to take the program further in lung cancer. So the key message is around nadunolimab is that we treated almost 300 patients now. We see clear signals of efficacy, both as monotherapy as well as combination therapy. In 3 different cancers, which are all have that in common, but we have an immunosuppressive tumor microenvironment, or pancreatic cancer, non-small cell line as in triple-negative breast cancer, we all see that as very promising opportunities for further development. And in pancreatic cancer, we also see that the target patients with the highest target levels respond best. And it's obviously a very challenging disease. And if we can define patients with the best chance of success, it is going to make development both faster and, let's say, more likely to work out. So it is a derisking the whole development program. And we have controlled trial ongoing in triple-net breast cancer, and we're preparing it in pancreatic cancer will start early next year. So moving then over to CAN10. So CAN10 differs from nadunolimab, not only blocking or it's binding IL1RAP, but it's blocking not only IL-1 signals, but also IL-33 and IL-36. And that opens up lots of opportunities in the autoimmune inflammatory space. We're seeing effects in various mouse models of lots of diseases like Myocarditis systemic sclerosis. That's our lead indications, but also in psoriasis and other inflammatory diseases. And just a few words about Myocarditis the systemic grows. It is 2 diseases that are very severe, they can be level. They are not so common. But for instance, myocarditis is one of the leading causes for deaths in young people. And they are probably both orphan, and we have received orphan drug designation in systemic sclerosis. And we are very enthusiastic to move the program forward in this indication. What I like to point out, though, is that we have seen effects in psoriasis or in different forms of psoriasis and in models of psoriasis. And you can see here that for instance, up to the left, but the effects in the orange line here, it's pretty clear that we have an effect on disease development. But if you unblock IL-Ib, you don't see the same effect. So it is really an effect of blocking all these systems at the same time, and that is really a unique opportunity we have. But we are not planning to do psoriasis, but we are still in the Phase I, we will actually include healthy volunteers with mild to moderate psoriasis. So it gives us a very early opportunity to get some kind of proof of mechanistic concept here by taking skin biopsies from these patients and see if that can be correlated to what we've seen in these disease models. So we're extremely enthusiastic about this opportunity. And if you look at the product status. So we've done everything that was needed to start the study. We have a very good safety profile in the GLP Tox study. And we see strong effects in models, as I said, and the Phase I is ongoing and in Germany, and we will present data during 2024 probably in different portions. So to summarize everything before we get into the questions, I expect that we should have a very good news flow in the future. So not only that we had good news flow in 2023, it will continue. So in pancreatic cancer, obviously, the start of the trial and then Phase IIb top line data in 2025. It is what's on the plate. But there is also going to be much more information from the ongoing trials as we learn more. And lung cancer, there is a lot of data to be presented to really explain why the patients are benefiting from long-term efficacy and long-term biomarker studies. So perhaps later this year, but especially in 2024. And the triple-negative breast cancer data, obviously, that I know everyone is very excited to see once we have the top line data later in 2024. And CAN10 very results being presented continuously as we have something robust and meaningful to present during 2024. And then there are other trials, which were stopped earlier during development and the data are now maturing, and we will be in a position to start to present a little bit around that. So by that, I would like to thank everyone for your attention and very, very happy to take questions.

[Operator]

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

[Richard Ramanius, analyst]

I had some questions about costs and some about your studies. I'll start with the cost questions. I have 2 questions which are related. The first one is what proportion of the start-up costs do you -- or in relation to total costs that you have in your clinical studies that is and how much do you pay at the start and how much during the costs? And related to this, I expect costs will have to decrease operating costs will have to decrease in the coming quarters if your cash position is to last time into 2025.

[Patrik Renblad, executive]

So I start with the last one. Yes, you're absolutely right, Richard, and thank you for the questions. We expect our operating expenses and our net cash outflow to decrease quite significantly from 2024 and on and thereafter, assuming that we don't start the CAN04 trial, which we don't have in our current plans. But of course, we expect to do -- and then the plans will change. So yes, we definitely expect that we won't have, for example, production of GMP batches for both our programs that we had in the third quarter. So the first question, how much do we pay upfront and it varies from study to study. It's somewhere between 10 -- I think it would be wrong to give a general answer there, Richard.

[Richard Ramanius, analyst]

You have substantial upfront costs. I think is that correct to say?

[Patrik Renblad, executive]

Yes. I wouldn't say we have substantial upfront cost. But when we start a study, we need to pay prepayments to the CROs in order for them to have funds for their expenses. And that's the case for all those studies. And you see that also if you look at our balance sheet under prepaid expenses. So what we have now in the closing down session or the closing phase of our studies is that, that is then reconciled towards the closing costs.

[Richard Ramanius, analyst]

My second question is not really from the cost perspective, but perhaps you could might comment on the costs as well. That's what trials are still active and have patients on treatment. And I'm starting from CAN04 and forward, let's say, except for this last 2 TRIFOUR and CAN10, which obviously you're recruiting.

[Patrik Renblad, executive]

As you said, right now, it's only TRIFOUR and CAN10 Phase I trial that are recruiting. All the other studies have completed recruitment. We don't have any patients under active treatment in CIRIFOUR, CESTAFOUR, CAPAFOUR. We still have patients on the treatment in CAN04. The patients that used to be on treatment being transferred over to compassionate use programs.

[Richard Ramanius, analyst]

And then my last question. I guess, to Goran, could you say more about the next triggers for CIRIFOUR and CESTAFOUR. Or when will we get more information from those studies?

[Goran Forsberg, executive]

So for CIRIFOUR, which is the key to the combination, we presented the data at ASCO 1.5 year ago. We're now, let's say, closing and wrapping up the study and once we have, let's say, the database lock, we will communicate the results on that. I hope it's not going to be too far away. And it's the same for CESTAFOUR, which is, let's say, a trial where we investigated different combinations and the different diseases. We want to be transparent, but we also need to -- renewal format is correct and have a lot of database and then communicate based on that database. As you know, it's a relatively small trials. We didn't take them all the way through and should not be misleading. We want to make sure that we get the correct and final results directly.

[Operator]

The next question comes from Sebastiaan van der Schoot, from Van Lanschot Kempen.

[Sebastiaan van der Schoot, analyst]

The first one is on the CAN10 study. I'm wondering whether you will be able to enroll the psoriasis patients already within 2024? And what will drive the inclusion of patients with sclerosis or myocarditis. And then I have a follow-up question.

[Goran Forsberg, executive]

So the CAN10 study, it's designed as both single dosing and multiple dosing. And the multiple dosing will only include patients with psoriasis -- or yes, these patients while the SAD part will only include the healthy volunteers. And once we documented safety at a certain dose level with SAD the MAD will start, and that will definitely start during 2024.

[Sebastiaan van der Schoot, analyst]

And what will drive the inclusion of patients with sclerosis or myocarditis, do we first thing to see data on psoriasis patients or?

[Goran Forsberg, executive]

You're right. So this first CAN10 trial is not tend to include patients with myocarditis or systemic sclerosis. Instead, that will probably be done in 2025 when we have data from -- we need to have a full safety documentation before we can enter into these trials, but we definitely do it as quickly as possible. It may also be that will start one indication ahead of the other. So you should probably not expect them to start in parallel.

[Sebastiaan van der Schoot, analyst]

And then regarding the PDX study, the new Phase II randomized, can you maybe expand a little bit on the anticipated recruitment rate? How many sites will be role patients? And how does that compare to the CAN04 study?

[Goran Forsberg, executive]

So the feasibility is still ongoing, so I cannot comment on a number of sites, but it's obviously going to be much bigger than the CAN04 trial. So far, we have seen a very high interest from centers to participate with, let's say, very good recruitment numbers anticipated. I think we need to -- I will not be in a good position to communicate about always until we've had the regulatory approval of the Prototol.

[Operator]

The next question comes from Sten Westerberg, from Analysguiden.

[Sten Westerberg, analyst]

I wonder if you could expand a little bit on why you decided to move away from an interim analysis in the TRIFOUR study. Is there any specific reason for this decision?

[Goran Forsberg, executive]

I think the main reason is that when we designed this trial, we didn't know what efficacy would look like. So we've built in 2, let's say, some kind of safety guards here, but we will not continue to treat patients if we didn't see any signals. We think that the Phase I data are so strong that futility analysis, very early into the Phase II part won't tell anything to us. It's rather risking to be a little bit misleading because it's relatively few patients. And it's also, let's say, they will only be treated for a very short period of time. So we didn't see the reason to do a futility analysis, and we didn't really see that is comparing 2 x4 patients treated for a very short period of time would, let's say, generate anything that was robust enough to communicate.

[Sten Westerberg, analyst]

Last question then. Is it still your timeline to have a fully recruited study by the end of mid next year?

[Goran Forsberg, executive]

So you mean the triple-negative breast cancer trial.

[Sten Westerberg, analyst]

Yes, the TRIFOUR.

[Goran Forsberg, executive]

So our timeline, our plan is to generate top line data late 2024. And obviously, the trial should be fully recruited before that.

[Operator]

The next question comes from Sebastiaan van der Schoot, from Van Lanschot Kempen.

[Sebastiaan van der Schoot, analyst]

I just wanted to follow up on the question with the TRIFOUR and the futility analysis. You just mentioned that it didn't really make sense to disclose the data. I'm just wondering what the facility was based on? Was it solely based on safety? Or were there also necessary efficacy signal compared to the control arm necessary?

[Goran Forsberg, executive]

So there is an expectation that in mix of first- and second-line patients, you should have a 30% response rate in triple-negative breast cancer. So the futility analysis was based on that, you have to be better than 30%, response rate. But as you can see in the Phase I, we have a 60% response rate. Based on that, we realized that the response rate is not really giving any additional information here. We know that we have something which seems to be active and we need to continue.

[Operator]

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

[Patrik Renblad, executive]

There are a couple of questions coming in from the web. And the first one is, will you have a similar collaboration in the upcoming CIRIFOUR trials as you have for the TRI0 trial? And to what extent does GEICAM contribute to the capital expenses in the 34 study.

[Goran Forsberg, executive]

So the TRIFOUR study, it's -- so we're working together with the Spanish breast cancer group called GEICAM. GEICAM is obviously an organization which has an interest to advance new treatments in breast cancer and are by that very active and good partner in the CIRIFOUR, we do in pancreatic cancer. But that trial is only -- so the TRIFOUR trail only done in Spain, that’s why we're working together with Spanish group. The CIRIFOUR trial will be a global trial, both Europe and United States. And there is really no organization participating in a trial design like that. So that would be a much more traditional study design. And then GEICAM contribute to capital expenses. I would say, if you do a traditional study and you work with the CRO company, they are obviously a commercial organization, GEICAM is not the same type of commercial organizations. So whereby the per patient cost is much lower in the TRIFOUR trial than in a traditional global trial, but GEICAM is not really subsidizing the trial, but they are a much more cost-effective partner. And that was as far as I can see the only question on the web. So by that, I would like to finish off by thanking everyone for your attention. And I'm very much look forward to the next couple of months and presenting, if not before presenting the Q4 report in a few months' time, but you should expect more to happen before that.

[Goran Forsberg, executive]

Thank you very much.