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

Ladies and gentlemen, welcome to the Ascelia Pharma Third Quarter 2021 Report. Today, I am pleased to present CEO, Magnus Corfitzen; CFO, Kristian Borbos; CMO, Carl Bjartmar; and CCO, Julie Waras Brogren. [Operator Instructions] Dear speakers, please begin.

Yes. Thank you, operator, and welcome, everyone, to the Q3 2021 report for Ascelia Pharma. We look forward to updating you on the progress that we've made and have sent out this quarterly report and we will provide the webcast now. So now, please turn to Page #2. We will be making certain forward-looking statements on this call, so please pay attention to this before moving to Page #3. Ascelia Pharma is dedicated to improve the life of people living with cancer by offering better treatment options. In particular, we focus on rare cancer conditions. Our business model is to identify, develop and commercialize novel drugs that address unmet medical needs within the orphan oncology space. We have 2 products in clinical development. Orviglance, which formerly known as Mangoral, is in ongoing Phase III clinical study. Oncoral is therapeutic for gastric cancer heading into Phase II later this year. We're based in Malmo, Sweden, have a subsidiary set up in Woodbridge, New Jersey, and are listed on Nasdaq Stockholm. We have a strong balance sheet and a well funded -- funded well into 2023, including completion of the Orviglance Phase III clinical program. Now please turn to Page 4. Ascelia Pharma is in a transformative phase as we're moving from late-stage development into commercial stage. In a few years from now, we will start to generate revenue from our commercial operations in the U.S. when Orviglance has been launched. As part of our strategy, we expect to have expanded our portfolio by acquiring or in-licensing an additional drug that fits our orphan oncology strategy and where we can make a significant benefit for patients. In 2025, we expect to have established Orviglance as the market leader in its market, Orviglance to be in Phase III development and having 1 or 2 more clinical stage assets in the pipeline through acquisition line license. 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 Q3, we continued to make progress. In August, several things happened. The FDA conditionally accepted Orviglance as the brand name for our oral manganese compound, which was previously known under the product name Mangoral. Going forward, we will use Orviglance. We were also informed that we have -- that we will have an oral paper presentation at the RSNA, the largest radiology conference in the world, about an earlier phase study that we have conducted in patients with normal kidney function where we compared Orviglance with a liver-specific gadolinium product. Due to the continued impact from COVID-19, we also had to adjust our expectation on the completion date of the SPARKLE. We are working as hard as we can to enroll the patients as fast as possible and have -- during the conduct of the study, taking several steps to mitigate the effect of COVID-19, and we continue to do so. In September, we announced a clinical collaboration agreement with Taiho Oncology for the Phase II study of Oncoral in combination with LONSURF. And in October, after the end of the quarter, we announced that the Food Effect Study of Orviglance has been completed with the last patient, last visit. Now please turn to Page #6. The clinical collaboration announced with Taiho Oncology is an important milestone for Ascelia Pharma. Taiho Oncology is the U.S. entity in the Otsuka Group, which is a Japanese headquartered global pharmaceutical company. Taiho Oncology is specialized in oral cancer medicine and have developed and are commercializing LONSURF, which is an oral cancer therapy. In the Phase II trial, we will evaluate the combination of Oncoral and LONSURF, which is an oral tablet combination therapy. And as part of this collaboration, Taiho Oncology will supply LONSURF product and provide their advice for optimizing the Phase II study, which has been very helpful for us. This demonstrates the potential of combining these 2 drugs, and importantly to note, Ascelia Pharma retains all development and commercial rights to Oncoral. Please move to Page #7. In the Food Effect Study, the Last Patient Last Visit has been completed now, and the data is being analyzed. This is important as the data from this study will be part of the regulatory filings for market authorization of Orviglance. In this study, we evaluated 24 healthy subjects and studied the effect of food intake prior to administering Orviglance. Today and until now, patients have been fasting before taking Orviglance, and here, we tested the effect on absorption of manganese if they had eaten a light meal or snack as well as the effect if they had had a full meal. The preliminary results indicate that Orviglance was well tolerated, and we expect the results of the study to be available later this year or in early '22. Depending on the results, this will determine whether patients are required to be fasting before taking Orviglance in clinical practice. Now please turn to Page #8. Now we are going to into more depths on our pipeline, and I'd like to hand the word over to our Chief Medical Officer, Carl Bjartmar.

Thank you, Magnus. So please turn to Page 9. So Orviglance is a novel oral contrast agent for liver MRI, which, this is very specific unmet medical need. 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's 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 $500 million to $600 million annually in the major markets. The right side of the slide shows how Orviglance works in a patient with colorectal cancer. The left picture shows an unenhanced MRI scan without a 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 is only visible after Orviglance enhancement, this is metastasis, which should not have been detected without contrast agent. And this illustrates the importance of contrast agent. In this case, since detected and localized, the metastasis may be removed with significantly improved prognosis for the patient. And we have made good progress. This thorough Phase I and Phase II program has been completed with strong data, providing clinical proof of concept, and we are currently in Phase III. We should also mention that the development is validated and aided by an Orphan Drug Designation from the FDA. So please turn to next page, Slide 10. So as mentioned, there is a strong clinical proof of concept through 6 individual Phase I or II studies with very consistent results. These data were confirmed by an independent reanalysis by blinded reader, which showed highly significant effect on endpoints that are also used in the ongoing Phase III study. The primary Phase III endpoint with lesion visualization based on the co-primary parameters, lesion delineation and lesion contrast compared to background. As seen on the slide, both these were highly significant in the Phase II program. It was also noted that 33% more metastasis were detected with Orviglance compared to unenhanced MRI. The existing data also compared through direct comparison to gadolinium-based liver contrast agents, which demonstrates similar effect on lesion visualization, and these results have been selected to be presented at RSNA, as mentioned, the largest global radiology conference in early December. So please turn to next Slide 11. Our ongoing registration studies SPARKLE investigates the efficacy and safety of Orviglance in the target population with focal liver lesions and poor kidney function. The study, which is a global study with 200 patients, currently have more than 40 sites opened in U.S., Europe and Latin America. Since there is no available contrast agent for patients with impaired renal function, the comparator will be unenhanced MRI, which is currently the standard procedure in these patients. The study size has been agreed with FDA and EMA, and the strategy is to repeat and confirm the Phase II results using the same endpoints, lesion border delineation and conspicuity. It should also be mentioned that the follow-up for each patient is very short compared to most clinical studies. This simplifies the operational procedure, and we will also have the final data relatively sooner than a typical Phase III study. So please turn to the next slide, and I hand over to Julie.

Thank you, Carl. On Slide 12, the addressable market for Orviglance is estimated to represent $500 million to $600 million annually in our key markets, the U.S., Europe and Japan. This estimate is driven by solid market research and real-world data on the volume potentials with patients and procedures per patient per year and research on the pricing potential with extensive input from market access and pricing experts. With these, we have tested different price levels, and we have discussed the evidence that will support access and reimbursement decisions. Building our own commercial team in the U.S. allows us to create an attractive top line and retain profit and value in [indiscernible] For other markets, starting with Europe and Japan, our strategy is to maximize the value of Orviglance by working with partners with existing local expertise and relationships with decision makers. Please turn to Slide 13. For the U.S., the attractiveness and clear path to market provides a strong case for commercializing Orviglance on our own, building a U.S. affiliate. The target patient population for Orviglance has multiple health complications. They have suspected liver metastases or liver cancer and poor kidney functions. This means that decision makers [ for its use ] are centered around 2,000 radiologists who can be found at around 400 hospitals. Therefore, an Ascelia team of around 40 FTEs with fields and support colleagues can reach priority decision makers at launch. We now have our U.S. office established. This represents an important step to engage more closely with key partners in the clinical community on the journey to make Orviglance available to physicians [ absorbed ] in New Jersey. We are gradually building our footprint and relationships with key stakeholders as part of our preparations for launch. This includes a number of leading radiologists that are among our Phase III clinical study investigators. Please move to Slide 14.

Okay. Thank you, Julie. So I will now provide some more details on the development of our second compounding clinical development Oncoral. Please go to next Slide 15. So the active substance of Oncoral is irinotecan, which is an established chemotherapy with well-documented anti-cancer effect. It's currently used in several solid cancer indications, and it is approved for colorectal cancer and pancreatic cancer. In Japan, it's also approved for gastric cancer. Today, the administration is intravenous bolus infusion, typically every third week and typically high dose. Oncoral is a novel oral formulation of irinotecan. The tablet formulation enables more frequent daily dosing that could offer several potential advantages, most importantly, efficacy. It is well known that many cancer types have suboptimal treatment outcomes today. An oral daily dosing may improve efficacy through a favorable pharmacokinetic and pharmacodynamic profile based on more constant therapeutic plasma levels of the active substance, and there are both nonclinical and clinical data supporting this concept. And 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. In addition, there is convenience and cost. It is more convenient and cost effective to take a tablet at home than going into the hospital and prepare for intravenous administration. Please turn to the next Slide 16. The concept of frequent low dose administration is called metronomic dosing. The figure to the left illustrates a simulation model, comparing levels of the active substance, SN-38 after irinotecan IV dosing, intravenous dosing, every third week, that's the gray line, and oral Oncoral dose daily, that's the orange line. Over a 3-week cycle, the exposure or area on the curve is comparable, although the plasma peaks associated with toxicity are avoided by daily dosing by Oncoral. Approximately 1/3 of the side effects observed after intravenous dosing are reported as severe or even life threatening, it's Grade 3 or 4. Metronomic dosing may not only reduce the peak related toxicity, but also brings the possibility to adjust the dosing quickly if adverse effects should occur. Our own Phase I results with Oncoral show that Oncoral was well-tolerated overall. And importantly, the hematological toxicities were mild to moderate, Grade 1 or 2. In addition, our Phase I data with Oncoral indicated activity or stable disease even in patients that have previously progressed or getting worse on irinotecan given intravenously. Please turn to the next Slide 17. So now we are preparing for Phase II, and the objective of Phase II study is to generate the clinical proof of efficacy in metastatic gastric cancer, and the strategic reasons to choose gastric cancer are several. First, the simple guidelines and clinical data support efficacy of irinotecan in gastric cancer. Second, gastric cancer is a severe cancer form with a high unmet need and the potential for an Orphan Drug Designation. Subsequently, there's potential for label expansion into other solid tumors indication, which is also important. Finally, as shown in the figure, there is data from gastric cancer animal models supporting synergistic effect of irinotecan if combined with LONSURF. So LONSURF is another oral chemotherapy, which was approved for metastatic gastric cancer in 2019. So this all-oral combination could potentially provide a more potent treatment alternative for these patients. The study is, therefore, a randomized controlled multicenter, multinational study comparing Oncoral on top of LONSURF with LONSURF alone. The primary endpoint is typical for a Phase II study in oncology, progression free survival patients, and we anticipate the study to start this year and continue into 2024. Next slide, please, 18.

Thank you, Carl. Gastric cancer 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 110,000 patients diagnosed every year. Many are diagnosed quite late, and around 60,000 patients receive drug treatment and progress to advanced stage. This is the target patient population for Oncoral. Gastric cancer is more common in Asian populations where more than 0.5 million patients are diagnosed every year. Please move to Slide 19. We see opportunities for expansion of Oncoral development into other indications, where a daily dosing tablet formulation can demonstrate an attractive efficacy and safety profile. Irinotecan in the IV formulation is already approved in colorectal and pancreatic cancer. In addition, irinotecan is clinically demonstrated and recognized in the NCCN guidelines for many other solid tumor cancer types. We are assessing these different opportunities as our Phase III study progresses and as part of our ongoing strategic plan for Oncoral. Please move to Slide 20.

Thank you, Julie. And let's turn to Slide 21 now. So the key message here is that we continue to stand with a solid cash balance. With SEK 291 million in the bank, we have financing well into 2023. This cash position would primarily be used for Orviglance's ongoing Phase III study and the commercial preparations, as well as for the upcoming Oncoral Phase II study. Please turn to Page 22. There was a big development in earnings. The key takeaway for the quarter as well as for the first 9 months compared to the corresponding period last year is the same as we have discussed on recent calls. We see an increased loss year-over-year, which is as expected and reflects the increased R&D activity related to the Phase III clinical program for Orviglance as well as the Phase II preparations for Oncoral. With that, I'll leave the word over to Magnus.

Yes. Thank you, Kristian. I'd like to end this quarterly update with our focus on our key milestones. As mentioned, we expect to start the Oncoral Phase II study soon. In addition, the clinical development of Orviglance is our key priority. Despite COVID-19 impact, we continue to work with investigators and consultants to make the study a success and are adapting to the circumstances to ensure that patients, medical staff, employees and everybody else are safe. We expect to complete enrollment in the first half of 2022. We also continue our prelaunch activities for Orviglance and have many activities ongoing to enable us to detail and implement the value maximizing strategy. This was our final slide, and we'd be happy to take any questions.

[Operator Instructions] There are no questions at this time. Dear speakers, back to you.

Yes. No. So we received some e-mails here -- an e-mail here with some questions. And the first one here is for -- on who the Oncoral Phase II start, how many progression events will be needed for the first readout of the Oncoral study? Carl, will you provide some light on that in as much as you can?

Yes. So we don't disclose how many progression events that are needed at this point, but I think I can say that we have a pretty good benchmark of what is expected from LONSURF on -- from their huge Phase III study types that were completed recently in the same patient population. And then our anticipation is, of course, to add on, its big time to those numbers, but we don't disclose the absolute numbers at this time, but --

But we are going just to underline what Carl said. I mean, the collaboration with Taiho Oncology, who've just done a Phase III study in this population with all the data, it has been very helpful for us to design the study and having robust assumptions and advance for that. The other question that we've received is which -- and that's related to the SPARKLE study, is which geographical region are currently [indiscernible] slowly and well in the SPARKLE study, and which trends we're seeing. So Carl, obviously, -- Can you -- so there is a limits to what we can say, but Carl, can you share some feedback on this and some financials to this?

Yes. It is a good question. And the feedback I can share is that this has -- for the past year when we had a very extreme situation, of course, because of the pandemic. This has fluctuated, I could say, over the vertical areas. So for some time, in certain amounts you have one area that's more affected and then in another area, it is less affected and it switches around and [ the way it ] comes and goes. And then so -- and that's the reason also we have spread out the study site geographically. We are -- we have Russia, we have Europe, we have U.S., and we have even Latam, southern part of the equator in order to take [indiscernible] to this. Currently, I would say that it's kind of an equal situation, so there's no region that currently today are performing significantly better or worse than other areas. I hope that answered your question.

We have no further questions from the phone.

Okay. So thank you, everyone, for listening in, and we are happy to have given you this update, and we're working hard on meeting the milestones and [indiscernible] to bring our products to the patients who need it in the future. So thank you, everyone. Have a good day.