Cantargia AB

STO:CANTA

Earnings Call Transcript 2024-Q3

[Operator]

Welcome to the Cantargia Q3 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. It's with the great pleasure we are here to present our Q3 report from Cantargia. It's been an exciting period with rich news flow. And if we quickly summarize the news flow during or after this period, we've seen that we made progress in both of our clinical programs, both in nadunolimab and the CAN10 program. And in the nadunolimab program, some of the material events has been that the FDA gave us clearance to start a leukemia study, which is also fully funded by a grant from the U.S. Ministry of Defense.

We got the first results in the randomized Phase II trial more clearly defined when to expect, and it's going to be in the first half of 2025. So obviously, something to look forward to later on. We presented new clinical data first at the ESMO Congress on nadunolimab combination therapy after relapse on PD1 inhibitor therapy. And that shows some very exciting data points, and we'll go through that in a second. And we also did a number of clinical trials that were started in 2021, but due to the changing market conditions, we changed strategy and did not go all the way through to those clinical trials. But now that the results are ready, we can see that we have clear support in our ongoing strategies from both trials.

The CAN10 program then is not in cancer. So now we're switching gear towards immunological or inflammatory diseases. And lots of focus has been on the Phase I clinical trials where we made progress. We -- for instance, safety analysis has looked very good and an independent committee, a recommended continuation to the multiple dosing which was then started in September. But we also had lots of positive results regarding biomarkers and pharmacodynamic effects in the Phase I clinical trial and again, something we'll go through and we presented more results on CAN10 skin diseases at the conference.

And then very importantly, obviously, based on all this progress, we are now committed to continue to develop both programs, and we are now announcing a rights issue, which obviously pending EGM approval but we will go through that in a second as well. So then to take you through our program. So the CAN10 program is -- it's a unique molecule, CAN10. It is designed to basically inhibit 3 different inflammatory and disease promoting cytokine systems at the same time. So it's the IL1, IL33 and IL36 systems. And the inhibition is very potent. It binds with picomolar affinity and has, as I said, shown very good effects on blocking of these cytokines, but also very good effects in various in vivo models of both inflammatory and fibrotic diseases.

And the lead indication we're going through right now is a skin disease called hidradenitis suppurativa, it is quite common. It affects about 1% of the Western population. And it starts as inflammation in the hair follicles, which is then further progressing into something called draining tunnels, which is on the inside of the skin and are causing severe problems and pain. And these patients are treated with antibiotics or steroids in the early stages. And once we not respond to those antibody therapy is used, but nevertheless, only 50% of patients respond to those therapies. And in the end of the day, they will stop responding and the disease will go into more serious stages.

So we believe that this is really a great opportunity for a compound like CAN10, and we are even more encouraged because there are clinical evidence suggesting that both IL1 blockade and IL36 blockade has an impact on the disease. So if we benchmark to IL36 receptor and blocking antibody, spesolimab from Boehringer Ingelheim, there has been a clear effect, as you can see up to the right on this slide on the draining tunnels, which is a severe problem of this disease. But also if you look down to the right corner, you can see that there is an antibiotic called lutikizumab from AbbVie, which is then targeting another part of disease-promoting cytokines in the IL1 system and that has a good effect on the inflammatory part of the disease.

So as CAN10 is blocking both IL36 and IL1, we believe that we have a really unique opportunity to design something which works much better. And to simplify this BI1 receptor blockade or BI1 cytokine blockade will block inflammation as proved by AbbVie and the IL36 receptor blockade will have a strong effect on the draining tunnels and potentially and a little bit more speculatively the IL-33 blockade, which we also have built into CAN10 will block the itch component, which is also a serious part of HS.

So we are super enthusiastic about taking this drug forward from Phase I and into Phase II in HS, and we believe that we're ready to do that during second half of next year. So then quickly on what we've seen so far. So the CAN10 results previously or presented to date is all from single-dose studies. And to summarize, we've seen a really, really good safety. So we have no safety signals, which is very encouraging. But we do see that the drug is biologically active. So if you look down to the left, you can see that the drug binds to 2 of the immune type -- of immune cells, which are driving a disease like HS both, monocytes and neutrophils.

So basically, the higher dose is, the higher number will be on the SAD cohort. And you can see that it's with increasing doses, we get increased binding. What's really interesting is that if you look to the right is that when we analyze these immune cells in whole blood after treatment with CAN10, we can see that they are no longer responding to cytokine like IL36. And again, it's dependent on the dosing. So the higher dose we give, the better effect we will have. So in the end of the day, we believe that we have a drug, which is basically turning off that the inflammatory properties of this disease-promoting cells and this is creating lots of interest.

So then moving into our second program, nadunolimab. So IL1RAP, which is a target for both CAN10 and nadunolimab is overexpressed in a large number of solid tumors. And therefore, we believe that we have a unique opportunity to treat cancer as well. And the IL1RAP is not only expressed on the cancer cells, but it's also found on immune cells or fiber blasts in the tumor microenvironment. And not going to do a deep dive into all the data we have. We treated more than 300 patients right now, and we present the data from more than 200. But some of the strongest data has been observed in pancreatic cancer.

And here, we treat patients in first. So basically patients that are newly diagnosed with pancreatic cancer, which has spread in the body. And these patients have a poor prognosis and are typically treated with chemotherapy like gemcitabine/Abraxane and what we do see is that in the total population, we have a very nice effect, but we've done a more sophisticated analysis to see if they have higher or lower levels of IL1RAP in the tumor tissue.

And interestingly, it's really the patients with the higher values or levels of IL1RAP, which is driving a response here, which you can see both to right in the waterfalls where, let's say, the best decreases in tumor size are observed in the IL1RAP high group. And also the left where you look at the survival, which is about 14.2 months versus 10.6 months in the high IL1RAP group versus the low group. And interestingly, IL1RAP is linked to worse prognosis and it's also linked to specific KRAS mutations, which are supposed to drive the disease.

So again, this is really, really important finding. And we're now going forward into randomized trials, and the exact design is not ready yet, but it's going to be a Phase II or Phase III trial, where we will include the diagnostic method to really select the patients with high IL1RAP to maximize chances of a positive result and minimize the risk. And the high IL1RAP group in first-line setting, we estimate it to be around 60% of the patients. So it's a significant group of patients where we can make a difference.

And then another exciting observation is about nadunolimab. So when you add something to chemotherapy, you have to be really cautious because chemotherapy is really on the border line of what the patient can cope with. And interestingly, we have seen when we add nadunolimab, that we actually increased tolerability. So 1 of its side effects is -- of chemotherapy is neuropathy. And we see that when we add nadunolimab, the patients have less neuropathy than you would expect from chemotherapy historical controls. And we also see that there is a dose response here.

So the higher dose levels of nadunolimab, the more pronounced this effect is, and you can see that to the right. And this fits extremely well with our mechanism of action where immune cells that accumulate in the nerves is contributing to this really, really horrible side effect. And we are very excited to continue to do this. And we also not only seen these effects with Abraxane in the study, but we've also seen it later on with oxaliplatin in the later trials that were recently presented, but also with the next-generation chemotherapy, which is antibody drug conjugates, we have good reasons to believe that we can have similar effects. So this is definitely a finding with very high potential future value.

And finally, the data in lung cancer. So this is obviously a busy slide, but the key point here is that patients that have been treated with the PD-1 inhibitor. So these are lung cancer patients treated with PD-1 inhibitors, which is really standard first-line therapy. They get changes in the tumor microenvironment that makes them more -- most likely more sensitive to nadunolimab. And you can see that to the right when you look at all these tumor tissues that these patients have much more IL1RAP containing immune cells in the tumor microenvironment, and they also have lots of other immune cells, which should react positively to nadunolimab treatment.

And the clinical results we then observed in this group is very encouraging with more than 90% response rate as well as 26 months overall survival in non-squamous second-line non-small cell lung cancer group. So clearly, in a result which is creating interest and gives us a way forward in the lung cancer area as well.

So in summary, in nadunolimab, so we treated more than 300 patients. We have a pretty solid data base with robust data. And we are starting to see more and more data that we can identify with subgroups, both in pancreatic cancer and lung cancer, which are really the key patients to target, and we are developing diagnostic tests to be used. And we've also seen that the safety is good and we actually counteract neuropathy. So with that, we're in a good position, but we're also generating more data, both in triple-negative breast cancer and leukemia through the ongoing and/or upcoming trials. So very exciting future for this program as well.

So by that, I'm finishing off with what you as an investor can expect from a milestone. So in pancreatic cancer, there is the upcoming trial in this high IL1RAP subgroup starting H2 next year. And in triple-negative breast cancer, we expect the first randomized data set with nadunolimab and top line data will be presented later on during H1 next year.

The leukemia trial, we hope to include the first patients during Q4 this year, and it's in collaboration with MD Anderson as we previously discussed. And then the CAN10 program, where recruitment is ongoing to the MAD phases we expect the Phase I data to come sequentially during H1 with final data during Q2 next year. And then starting with Phase II during the second half of 2025.

So by that, I covered where we are with the projects and what's in the near future. And I hand over to Patrik to go through the finances as well as the upcoming rights issue.

[Patrik Renblad, executive]

Thank you, Goran, for that. And I'm going to present a few highlights. You can see the most important numbers from our recently issued financial statements presented here. And I'm not going to read the numbers, you do that as well, good as I do. But I want to give you a few comments to what you see here in the numbers, and I'll focus on the year-to-date. And maybe just to repeat what we've said a few reports now continuously that we are at a lower level of activity and spend compared to previous years.

And you can see that in the year-to-date number for our R&D. We are more than 40% lower than previous period. And that is the result of having closed now also formally closed and reported CANFOUR, CIRIFOUR CESTAFOUR and CAPAFOUR and running actively recruiting, I wouldn't say only, but I'll say it anyway, so TRIFOUR and CAN10 Phase I, very important studies. But overall, the activity is lower in that area. And we're also, as we have reported previously, well supplied with drug substance. So we have not made any new investments in CMC in this year. So we are disciplined in the activities that we approve and start making sure that they are activities that drive the projects forward and generate value for the company and for the investors.

And the same discipline applies in G&A, and I -- we reported in a combination with OOI, OOE and just we can't ignore it, but OOI, OOE is basically things we can't impact such the currency fluctuations. But if we look at the G&A so our general and administrative expenses, we have reduced that by 5% year-on-year. And that is, again, as a result of scrutinizing what we do and making sure that we don't do anything necessary. Overall, our reported loss, just to mention 1 number, SEK 122 million for year-to-date. That was then positively impacted by financial items of north of SEK 5 million, and that is significantly less than last year, and that is because we have simply less capital to invest and earn interest from.

And that is also what we see here. We have a cash balance now end of September of approximately SEK60 million. And that is also the main reason why we have -- well, the Board has asked our shareholders to approve a rights issue. And if approved at the upcoming General Meeting on December 2, we expect that to run during December and proceeds should be available by the end of the year. We expect -- well, if fully subscribed, we expect to receive SEK 170 million in gross proceeds and SEK 120 million in case of subscription up to the guaranteed level. And that will suffice to do the activities that's needed to bring the projects forward until middle of or end of the first half of 2026 if fully subscribed, and a little bit into 2026, if subscribed in accordance with the guaranteed amount.

And that is all from me and us, and I believe we open up for questions.

[Operator]

[Operator Instructions]

The next question comes from Richard Ramanius from Redeye.

[Richard Ramanius, analyst]

I have a few questions, starting with TRIFOUR. Could you specify what data points you will disclose in H1? And what new data in H2 2025?

[Goran Forsberg, executive]

Yes, of course. So the plan -- so TRIFOUR, we expect the last patient in during Q1 next year. And the plan is to disclose response data after -- on all patients after 2 CT scans, which will be 3 months later. So the initial presentations will focus on response rates and safety in H1. And then obviously, we will be ready for PFS and potentially OS during H2. We will also be more ready to go into subgroup analysis as well during H2.

[Richard Ramanius, analyst]

Then I had some questions about second line lung cancer. Would you say that from your experience, IL1RAP is upregulated after first-line treatment with checkpoint inhibitor?

[Goran Forsberg, executive]

So the IL1RAP seems to be upregulated on immune cells in the tumor microenvironment after checkpoint inhibitors. And that's -- and the hypothesis here is that it's because when you get resistant to checkpoint inhibitors, that's 1 mechanism here is through the infiltration of myeloid-derived suppressor cells, which are known to overexpress IL1RAP.

[Richard Ramanius, analyst]

Okay, interesting. And another question on -- also on lung cancer. What is the unmet need for the second line after using checkpoint inhibitors in the first line?

[Goran Forsberg, executive]

Yes. What should I say? I think the second line -- so typically, the first-line treatment would be KEYTRUDA and platinum-based chemotherapy unless you do it sequentially. But for the majority of patients, that's a treatment. And in second line, there are very fewer treatment alternatives. I think often you will find docetaxel being used. Then there are some development of ADCS. There are some development of KRAS inhibitors in this space. It's going to be perhaps more fragmented but these patients have very few treatment alternatives and still, it's a huge group of patients.

[Richard Ramanius, analyst]

Yes, good. What can you say about the funding for the Phase II study of CAN10?

[Goran Forsberg, executive]

So the CAN10 trial is in Phase II is not -- so design is not ready. It will be designed in -- together with obviously, KOLs and based on regulatory advice from the FDA. But in this fund raising here, we have not included the Phase II costs. We are also in a number of ongoing discussions right now on, let's say, the next steps, both for nadunolimab and CAN10. And I think we need to go through all these discussions materialize or be more concrete before deciding on where to go.

[Richard Ramanius, analyst]

Last question. Would it be correct to characterize the diagnosis test you're developing as for nadunolimab, but you mentioned you could use it for CAN10 as well as a companion diagnostic?

[Goran Forsberg, executive]

So yes, I think in the end of the day, we'll probably go that way towards some kind of companion diagnostic. But there are several aspects that I think this type of assay is being developed for pancreatic cancer, but we can most likely also adapt it for other types of diseases could be in the cancer field or it could be even perhaps in dermatological field and then be more used for CAN10, even though it's more speculative at this point in time, but we believe that this type of test will generate a huge value for the whole platform, both nadunolimab, CAN10 as well as potential CANxx programs coming in the future.

[Operator]

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

[Luisa Morgado, analyst]

Maybe the first one, in terms of the pancreatic cancer program, you mentioned that this might pursue under the former of a Phase II or Phase III. Could you elaborate a bit more on what this depends on? And when will we see the first results from this trial?

[Goran Forsberg, executive]

So what we're doing right -- so we're doing a number of sequential steps here. So the first 1 is to get the diagnostic test advanced a little bit further. So we're ready to have those discussions with regulatory authorities. And once we had those discussions and have their feedback, we are then ready to suggest a trial design, which could be Phase II or Phase III. And there are various pros and cons around this and also to take into the context Project Optimus here.

So we -- once we have advanced here in our discussions, both with KOLs and regulatory authorities, et cetera, we will disclose a little bit more on the design and that will have an effect on the time lines. But clearly, if we go for a smaller Phase II, you should expect results relatively quickly afterwards, let's say, a year or so. If we go for a more Phase III type of design, it obviously depends on what the endpoint for a Phase III trial might be. But if we're to talking about, let's say, fuller randomized Phase III trial, with survival endpoint, it's probably going to take 2.5 to 3 years to get results.

[Luisa Morgado, analyst]

Okay, makes sense. And in terms of -- so if you -- assuming that the rights issue is -- goes through, what does the new cash runway cover in terms of all the programs that you have now?

[Goran Forsberg, executive]

I don't know, Patrik, should you take that?

[Patrik Renblad, executive]

Yes. So it's basically the whole idea is to make sure that we are ready to start Phase II program in HS, not having the clinical trial funded but be ready. So it will cover those preparations to do that to get there. And it covers basically the activities that you just discussed about the PDAC and the diagnostic and getting that validated and ready to be used and keep the company running. In the case of full subscription, we expect to keep business financed until the middle of 2026. So -- did that answer your question, Luisa? Or do you want me to elaborate?

[Luisa Morgado, analyst]

Yes, yes, yes. No, no, no. It does answer. And maybe a follow-up question for you, Patrik. In terms of the expenses for the remainder of the year and also next year, what can we expect here?

[Patrik Renblad, executive]

We are -- the burn that we are at now is probably what we will be at. But exactly how it will fluctuate quarter by quarter it's nothing that we disclose. So -- but basically, we are at a burn level that you can expect.

[Operator]

[Operator Instructions]

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

[Unknown Executive]

The first written question is how important is the newly announced biomarker strategy for getting specialist or partner on board? And what do you expect will happen when that strategy is implemented in terms of these discussions?

[Goran Forsberg, executive]

So clearly -- so I think everything within cancer treatment that can be narrowed down into patients that are most likely to respond. Will be valued very highly regardless if it's potential partners, if it's investors or clinicians or patients. And cancer, in general, it is very heterogeneous disease. So even if you have pancreatic cancer, one pancreatic cancer is not the same as the second one. So having this type of diagnostic tool, it's going to be very, very valuable and very much appreciated. And then if we can adapt it to work in several different cancer forms or even outside, it's going to be even more of strategic value. So I think it's what you should say really important in our ongoing discussions.

[Unknown Executive]

Thank you. And the next question is regarding when you think that the company will transition into a commercial phase.

[Goran Forsberg, executive]

Yes, it's a great question. And I -- so if we assume that pancreatic cancer is the most advanced opportunity. And if we are in a position to start a Phase III trial as 1 of the opportunities would be for second half of next year in this type of subgroup. We will have results in perhaps 2.5 to 3 years. And then obviously, we hope to get to the commercial activities starting as soon as possible afterwards. So we're talking somewhere 2028 unless there is a way to get some kind of accelerated approval before that if the data are really, really good in a Phase III trial.

[Unknown Executive]

Thank you. And the next question is regarding PDAC. And what percentage of KRAS G12D patients are upregulated IL1RAP?

[Goran Forsberg, executive]

So we don't have the exact numbers. So what we know is that in all-comers, pancreatic cancer or at least for first-line metastatic, 60% overexpressed or have a high IL1RAP group. We've done lots of analysis on the RNA level to see if there are correlations between G12D or other KRAS mutations and high IL1RAP. And we can clearly see that there is this type of correlation. So my answer is that it's going to be much higher than 60%, but the exact number is not known yet, but we're working on it.

[Unknown Executive]

Thank you. And another question is what happened to your participation in the PanCAN Precision Promise study?

[Goran Forsberg, executive]

Yes. So the original plan for pancreatic cancer development was to work with the U.S. group called the Pancreatic Cancer Action Network or PanCAN, who had a trial up and running already straight Phase II/III registration trial in pancreatic cancer. And -- but during that trial, there has also been other, let's say, new regulatory guidelines around dose selection, and it was not possible to adapt the new guidelines with its already approved protocol for us. So we had to go a different route here, which in a way is sad, but also has become an opportunity because it has given us the time to do this development of diagnostic tests and increase the likelihood of success here by selecting the best responders to nadunolimab.

[Unknown Executive]

Thank you. Another question is, why do you think that nadunolimab is not talked about as a bispecific killer cell engager?.

[Goran Forsberg, executive]

Yes, I have no good answer why we're not talking about as a BiKE here, but we probably could, yes.

[Unknown Executive]

Thank you. And getting back to the CAN10 project, can you elaborate a bit more on the readout time line for that project?

[Goran Forsberg, executive]

So the Phase I trial in -- is going to have a final readout during H1, but I assume the question relates to Phase II. So starting a Phase II trial in HS during second half of '25, a little bit dependent on which patients we include and what -- how many patients we're recruiting and exactly when the primary analysis is made. We're probably talking late '26 or early '27 for the final readout. If we go for other indications, and we -- it would be great to do smaller trials as well outside HS, we may get some kind of Phase IIa results earlier during 2026. But that remains to be seen. The highest priority is the HS trial.

[Unknown Executive]

Thank you. And can you elaborate a bit on how the diagnostic test will work practically?

[Goran Forsberg, executive]

So in the case of pancreatic cancer, if you're newly diagnosed with pancreatic cancer, you would have a biopsy available where the diagnosis has been made. So basically, you would use that biopsy to also determine how much IL1RAP varies in the tumor. So basically by some kind of staining. And similarly, if you would have a skin disease, you can do a skin biopsy and do a similar type of staining analysis to see if there is higher or lower levels of IL1RAP if that becomes an important biomarker for patient selection.

[Unknown Executive]

Thank you. And do you risk running into the same limitations as for the PDAC-PanCAN study for the other studies related to the Optimus dose selection?

[Goran Forsberg, executive]

So Project Optimus is designed for oncology. In this inflammatory diseases, you typically build in the dose finding part already during Phase II. And that's probably what's going to be standard in oncology as well in the future. So we don't see that risk. It's something we will address directly instead of having to face it when the guidelines -- sorry, new guidelines are implemented.

[Unknown Executive]

Yes, a specification of that question. No, I mean oncology team for the triple-negative breast cancer and for lung cancer.

[Goran Forsberg, executive]

Okay. So I think this is going to be a discussion between us and the regulatory authorities exactly on what type of doses are needed. But in lung cancer, I will definitely see that the next step is probably a Phase II trial, and you will most likely start with 2 different dose levels to address Project Optimus upfront. In triple negative breast cancer, obviously, it depends on the randomized Phase II results and the strength of them before you can decide exactly where to go.

[Unknown Executive]

Thank you. Those were all the questions coming in from the web.

[Goran Forsberg, executive]

Okay. So thanks a lot. So I'd like to thank you for your attention and for the interest in Cantargia. We are as a team in Cantargia, we're very excited about where we have taken the company to now, and we are certainly looking forward to rest of the year and to 2025 because there is so much value in our projects, and we are also realizing that we are getting to a maturity level where external interest is becoming more and more significant.