Ascelia Pharma AB (publ) (ACE) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Ascelia Pharma Audio Cost with Teleconference Q2 2021. Today, I am pleased to present CEO, Magnus Corfitzen; CFO, Kristian Borbos; CMO, Carl Bjartmar; and CCO, Julie Waras Brogren. [Operator Instructions] Speakers, please begin.

Thank you. Welcome, everyone, to the webcast for Ascelia Pharma Q2 report in 2021. We have the management team here with me, and we look forward to updating you on our progress. Now please turn to Page #2. We will be making certain forward-looking statements on this call, so please pay attention to this. Now please turn to Page #3. Ascelia Pharma is focused on improving the life of people with rare oncology-related conditions by developing novel drugs to address unmet medical needs. We have 2 drugs in clinical development. Orviglance, formerly known as Mangoral in an ongoing Phase III clinical trial. It will be the only product targeting an addressable market of $500 million to $600 million annually. Oncoral is being prepared for Phase II in the treatment of gastric cancer based on encouraging results in Phase I. We expect to start the clinical study later this year. We have a strong and experienced team headquartered in Malmö, Sweden with a strong track record in late-stage drug development and commercialization. We have a solid financial position to reach important lifestyles. Now please turn to Page #4. Ascelia Pharma is in a transformative phase as we're moving from late-stage development into commercial stage. Our lead program, Orviglance, is expected to be launched in the U.S. in the second half of 2023, and the preparations are on going. In the same time frame, we expect that the Phase II for Oncoral will be near completion. As part of our strategy, we might expand our portfolio with additional drugs that fit our orphan oncology strategy and where we can make significant benefit for patients. This is an exciting time for Ascelia Pharma, and we see tremendous value creation potential as we progress. Now please turn to Page #5. In Q2, we continued to make progress. In April, we held an extraordinary general assembly to improve the share issuance to raise SEK 200 million to strengthen our balance sheet. The activities in the quarter were very operational. So despite a thin flow of press release, significant progress was made in many areas. In August, after the close of Q2, we had several news releases, which I'll go through in the next slides. Now please turn to Slide #6. On August 10, we announced the conditional approval of the brand name Orviglance for our oral manganese product candidate, formerly known as Mangoral. This includes -- the approval is a lengthy process involving a surprising amount of documentation, including risk of interchangeability with other product names. The brand name is approved by both the FDA for U.S. and EMA for Europe. We will use Orviglance going forward, which is particularly important when building the brand and awareness in the broader medical community. Now please turn to Page #7. On August 13, we announced the acceptance of our old paper presentation at the RSNA 2021 in Chicago, the largest radiology conference in the world. The top line results were presented in December 2020 and includes a head-to-head comparison between Orviglance and the liver-specific gadolinium agent Multihance. Top line results already announced showed that Orviglance was as effective for visualization of focal liver lesions as Multihance. With 2 out of 3 readers having higher scores Orviglance. It also showed Orviglance provide improved efficacy compared to unenhanced MRI, using the same endpoint as is being used in SPARKLE. This demonstrates the value of Orviglance and will support our interaction and communication towards patients, health care professionals, regulatory authorities and payers. Now please turn to Page #8. Yesterday, we sent out a press release relating to SPARKLE completion time line. As everyone knows, COVID-19 continues to affect societies and in particular, health care systems. This applies also to most clinical trials and also to SPARKLE. We see a clear effect on enrollment in a given country when the infection rates are high. As previously communicated, we have taken measures. We have increased the number of sites as well as operational measures such as home and nurse home visits or safety protocol. We're making good progress with the enrollment curves. But nevertheless, we continue to see an effect of COVID-19. After reviewing the enrollment curves together with the Board of Directors, we have decided that it's more likely that the enrollment will be completed in first half of 2022 and hence send out the press release. We're disappointed with this change. And I can assure you that the entire team is working as hard and as creatively as we can to complete the study as fast as possible. Now please turn to Page #9. Now we'll go into more depth on our pipeline. I'd like to hand the word over to our Chief Medical Officer, Carl Bjartmar.

Thank you, Magnus. Let's go to the next slide. Yes. So Orviglance is a novel oral contrast agent for liver MRI which addresses a very specific unmet medical need. So the contrast agents available today are all based on gadolinium, a heavy metal. Gadolinium should not be given to patients with poor kidney function, since it is excreted through the kidneys and slow elimination can cause serious side effects. In the future, this unmet need can be met by Orviglance. This specific target population is approximately 4% of all patients requiring a liver MRI, which corresponds to an addressable market of USD 500 million to USD 600 million annual in the major markets. The right side of the slide shows how Orviglance works in a patient with colorectal cancer. So the left picture shows an unenhanced MRI scan without the contrast agent, standard procedure today in our target population. The right scan shows the same patient after administration of Orviglance. The liver has taken up Orviglance and appears bright. There is one dark area highlighted that's only visible as per Orviglance enhancement. This is on metastasis, which would not have been detected without contrast agent. And this illustrates the importance of a contrast agent. In this case, since detected and localized, the metastasis may be removed with significantly improved prognosis for the patient. And we are making good progress despite the extended time lines caused by the COVID-19 pandemic that was mentioned earlier. And we should also mention that the development is validated and aided by an orphan drug designation from the FDA. Over to the next slide, 11. So our ongoing registration study is SPARKLE investigated efficacy and safety of Orviglance in the target population with focal liver lesions and poor kidney function. As shown on the left, there's a strong clinical proof of concept through 6 individual Phase I or Phase II studies with very consistent results. And these data were confirmed by an independent reanalysis by blinded reader, which showed highly significant effect on endpoints that are also used in SPARKLE. So the primary endpoint is lesion visualization based on the co-primary permitted lesion delineation, a lesion contrast compared to background which were both highly significant in the Phase II program. Existing data also contains a direct comparison to gadolinium-based liver contrast agent, which demonstrated similar effect on lesion visualization. As mentioned, these results have been selected to be presented at RSNA in November. On the right side of the slide shows the Phase III design. It's a study, which is a global study with 200 patients, has been agreed with FDA and EMA. The strategy is to repeat and confirm the Phase II results using the same endpoints. And since there is no available contrast agent for patients with impaired renal function, the comparator will be unenhanced MRI, which is currently the solid procedure in these patients. It should also be mentioned here that the follow-up for each patient is very short compared to most clinical studies. And this simplifies operational procedures, and we will also have defined data relatively sooner than a typical Phase III study. Thank you. And I will now turn to my colleague Julie.

Thank you, Carl. On Slide 12, highlights from our commercial opportunity and preparations for launch. We estimate that the value of the addressable market for Orviglance to be between $500 million and $600 million in our key markets, that is the U.S., Europe and Japan is estimated driven by product market research into both the volume potential, i.e., patients and procedures for patients and the pricing potential based on expenses inputs for market access and pricing experts. Secondly, our market research shows that decision-makers understand the make need for our target patient population. And they understand the value of that macro and provider. Our preparations for launch progress as planned. For example, with the recent traditional approval of our brand name Orviglance. And we continue to see a strong case for building our own commercial operations in the U.S. In March this year, we opened our U.S. legal entity and office in New Jersey, which marks an important effect in our launch preparation. Last year, in December, a patent was granted in the U.S. for our second-generation product, which provides protection until government force. On Slide 13. For the U.S., the attractiveness and clear path to market provides a strong case for commercializing Orviglance on our own, building U.S. commercial operations. The type of patient population for Orviglance held multiple result complications, suspected liver metastasis and poor kidney function. This means that decision-makers for its use are centered around 2,000 radiologists who can be found at 400 hospitals. This means that a sales team of around 20 FTEs can reach priority decision makers at launch. We now have our U.S. office established, which represents an important step to engage more closely with key partners and the clinical community on the journey to make Orviglance available to physicians and patients in the U.S. We already have strong relationships with leading radiologists among our Phase III clinical study. It is partly investigators. We also have partnered with specialists and organizations in manufacturing and in radiology in the U.S. Building our own commercial team in the U.S. allows us to create an attractive top line and retain president value in Ascelia Pharma. For other markets, the EU and Japan represent the most attractive opportunities in size and value. In these markets, our strategy is to maximize value of Orviglance by working with partners with existing local expertise and relationships with decision-makers. With this, I'll turn it to Carl and Slide 14.

Thank you. So now we switch to our second asset in clinical development, which is Oncoral. Please move to the next Slide 15. So the active substance of Oncoral is irinotecan, a established chemotherapy with well-documented anticancer effects. It is currently used in several solid cancer indication, and it is approved for colorectal cancer and pancreatic cancer. And in Japan, it's also approved for gastric cancer. And today, the administration is intravenous bolus infusion, typically every third week and typically high dose. So Oncoral is a novel oral formulation irinotecan, is a tablet for daily dosing that could offer a valuable treatment option for cancer patients in the future tomorrow. And there are several potential advantages with an oral daily dosing, most important, efficacy. It's well known that many cancer types have a suboptimal treatment outcome today. And an oral daily dosing may improve efficacy through favorable pharmacokinetic and pharmacodynamic profile based on a more constant therapeutic plasma levels of the active substance. And they are both nonclinical and clinical data supporting this concept, and I'll come back to that. Then there is tolerability or safety intravenous dosing of chemotherapy is frequently associated with severe side effects, typically gastrointestinal and hematological. An oral daily dosing has the potential for improved tolerability by avoiding high plasma levels and by offering dosing flexibility. And in addition, there is convenience and cost. It's more convenient and cost effective to take tablet at home than going into the hospital and prepare for an intravenous administration. Now on to Slide 16, please. So the concept of frequent low dose administration is called metronomic dosing and the figure to the left illustrates the simulation model comparing levels of the active substance, SN-38 after irinotecan IV dosing every third week, as a gray line and oral oncorotos daily as a orange line. And over a 3-week cycle the exposure or area under the curve is comparable, although the plasma peaks associated with toxicity are avoided by daily dosing. And approximately 1/3 of the side effects observed after intravenous dosing are reported as severe or even life threatening as Grade 3 or 4. The genomic dosing may not only reduce the peak related toxicity, but also bring the possibility to adjust the dosing quickly if adverse events should occur. And our Oncoral Phase I results show that Oncoral was well tolerated overall. And importantly, the haematological toxicities from mild to moderate Grade 1 or Grade 2. We think that's very encouraging. And in addition, Phase I data with Oncoral indicated activity or stable disease even in patients that previously progressed or at worse on irinotecan given intravenously. We move to next slide, 17. And this is an example of improved outcome in this case, overall survival with a more frequent dosing. These are patients with metastatic breast cancer where overall survival was improved from 20% with the dosing every third week, high dose to 32% with weekly dosing with a slightly lower dose. So this is, if you will, a proof of principle. We'll move to next slide, 18. So we are now preparing the Phase II objective of the Phase II study are several. First, to establish clinical proof-of-concept in metastatic gastric cancer. And gastric cancer is chosen partly because of strategic reasons. There is a potential for an orphan drug designation in gastric cancer and the clinical guidelines, clinical data support efficacy of irinotecan in gastric cancer. And subsequently, there is potential for label expansion into other solid tumor indications as well. Other objectives is to generate comparing Phase II data for the development potentially with a partner. The study is randomized, controlled, multicenter, multinational study comparing Oncoral on top for standard of care with standard of care alone. The primary end part is typical for Phase II study in oncology, progressive-free survival and then we have the usual battery of secondary endpoints, response rate, PK, Safety and Overall Survival. And this will include approximately 100 patients, and we anticipate the study to start second half of this year, '21 and continue into 2024. So we can go to the next slide. And here, I'll turn it over to my colleague Julie.

Thank you, Carl. Ascelia Pharma is today a $3 billion market. Every year, more than 1 million people are diagnosed with gastric cancer. In the U.S. and Europe, gastric cancer is an orphan disease with around 110,000 patients diagnosed every year. Around 60,000 of these received drug treatment and progress to advanced stage in gastric cancer is more commonization populations where more than 0.5 million patients are diagnosed every year. We can move to Slide 20. We see opportunities for expansion into other indications where a daily tablet formulations can demonstrate an attractive efficacy and safety profile. Irinotecan in an IV formulation is already approved in colorectal and pancreatic cancer. In addition, irinotecan is clinically demonstrated in many other common cancer types. And it's recognized in the NCCN guidelines for many cancer types. We will assess these opportunities for other indications as our Phase II study progresses and as part of our ongoing strategic plans for Oncoral. With this, we can move to Slide 21.

Thank you, Julie. And please now switch to Page 22. The development in earnings for the quarter as well as for H1 competitive corresponding periods last year is the same as we discussed on recent calls. The increased loss year-over-year is as expected and reflects the increased R&D activity related to the Phase III clinical program, Orviglance as well as the Phase II preparations for Oncoral. We now turn to Page 23. So the key message on the liquid position is that we stand with a solid cash balance, which was amplified by the capital raise within the industry. So with SEK 319 million in the bank, we have financing well into 2023. The cash position will primarily be used for Orviglance ongoing Phase III study as well as pre-commercial activities and also for Oncoral Phase II clinical study, which is about to start. With that, I'll leave the word over to Magnus.

Yes. Thank you, Kristian. Please move to Slide #24. So I'd like to end this quarterly update with the focus on the rest of the year. Obviously, the clinical development of Orviglance is our key priority despite COVID-19 impact. We have continued to make successful progress and are working with investigators to make the study a success. And we are adapting to the circumstances to ensure that patients, medical staff, employees and everybody else are safe. We expect to complete enrollment, as previously communicated in first half next year. We continue our preparation for organic commercialization and have many activities ongoing to enable us to detail and implement the value maximizing strategy. The launch is now planned for the second half 2023. Another important activity is our preparations for the Oncoral Phase II program, which we expect to start later this year. This was our final slide, and we'd be happy to take any questions.

[Operator Instructions] Our first question comes from the line of Sten Westerberg from Aktie Analysis.

Yes. First of all, given the situation in clinical research. Are you taking any particular measures to secure the quality of the clinical data that is generated in the SPARKLE study. And I also wonder given the time line that you're now providing us, it appears to me that it will take more than 2 years to recruit the 200 patients to the SPARKLE study. Is that a good reflection of the general situation in clinical research? Or are there any particular features of your study, which may further complicate the recruitment to this study?

Okay. Thank you, Sten. So I'll start with the first part -- or sorry, the second part of your question. I think you alluded to the 2-year recruitment time. And I think, yes, this is something -- this is pandemic situation, which is a very challenging effect not only our program, but all clinical research in general for various reasons and that is easy to imagine. And then -- so this is a general thing. And then your question is if our -- if there are some specific issues with our study, our population. And I mean there's 1 thing that we could mention here and that's our patient population, which have known suspected liver lesions typically cancer diagnosis or cancer diagnosis. And in addition to that, severely reduced kidney function. They are sometimes more vulnerable than other patients in clinical research. And that could make them more hesitant to come to the hospital for clinical visits because they are simply afraid of getting infected. And we've seen examples of that. Now what we -- so that's something that we have identified and we've seen that. But what we're doing to mitigate that particular one is -- and I think was mentioned by Magnus earlier also that we are in implementing home care services and visits. So in other words, to try to reduce the required visits at the hospital. So we come to them instead of the other way around. So we are trying to work around these specific issues, but that's sort of one is that we have identified. And then your second -- so your first part of the question, so I didn't really understand that it was something about quality of clinical data. So can you please just elaborate on that? So I'll clarify the question.

Yes. I've seen some reports about possible impact on the quality of clinical research, given the current difficulties with the COVID infection. So my question specifically to you is, have you taken any specific measures to guarantee the quality of the clinical data, which is generated in the SPARKLE study in light of the COVID-19 situation?

Right. So I think that could have, say to typical clinical studies where you follow patients over a long time and they are not able to come to the regular visits. So they will be sort of missing data. We don't have that problem with our study. And that's because it's an imaging study. So basically -- and it's a very short follow-up as we mentioned. As you know, the sort of patient basically comes in and you do the imaging procedures and the data contrast agents within 1 visit and then we have the follow-up visits. So -- and we have a very thorough quality controls and quality criteria. And so that part, I'm not really concerned of. And we do -- for the patients we have recruited and treated so far. We have an ongoing quality control system. So we haven't identified anything on that part.

And also, let me just add a comment here. So for the primary endpoint, that is based on the images that are being taken when the patient is in the hospital at the visit, right? So they are sent to a central database. So if you say the risk of missing follow-up is to the extent it applies, then that is related to safety. And again, we don't see that as a particular concern.

It's a fair question though, but I don't think it's applies to this time.

Yes. And just to add in terms of also the press release we sent out, as you all know, we started the study last year and especially last spring was a very volatile period of time. We saw -- and they're getting new sites on board and finalizing the cost with the hospitals it took a lot longer because they basically put them on the back burner. We expected that, but maybe it took a little longer for the administrative part of that processes got going that we had hoped for. So now we see things are operating better and also in terms of -- if you look at various new sources, unfortunately, one of the other consequences of COVID is that the rates of cancer diagnoses are going down. It ought to be sort of a positive season news. But most likely, it's related to the fact that the patients are not being diagnosed as well as they should be and as they are to normal times. So that's also a factor. But again, we see things improving quite significantly, even in areas with COVID societies and health care systems are learning to cope with the fact that COVID is here to stay purple.