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

Welcome to Ascelia Pharma's Q2 presentation for 2022. This conference call is being recorded and will be posted on Ascelia Pharma's and Financial Hearings web pages. [Operator Instructions] Today, I am pleased to present CEO, Magnus Corfitzen, CFO; Kristian Borbos; CMO, Carl Bjartmar; and CCO, Julie Waras Brogren. With that, I will hand over to speakers. Go ahead.

Thank you, and welcome, everyone, to the webcast for Ascelia Pharma's Q2 report in 2022. [indiscernible] the management team, we're pleased and looking forward to updating you on the results and the progress in the quarter. Now please turn to Page #2. In this presentation, we will be making certain forward-looking statements. So please pay attention to this page before turning 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 orphan oncology. We have two drugs in clinical development. Orviglance is in an ongoing Phase III clinical study. Once it gets to market, it will be the only product targeting an addressable market of opportunity of $500 million to $600 million annually. Oncoral is ready to start Phase II in the treatment of gastric cancer based on encouraging results in Phase I. We're based in London and Sweden listed on Nasdaq Stockholm. We have a strong balance sheet and are funded into the second half of next year, including completion of the ongoing Phase III 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. We're advancing Orviglance and Oncoral. And furthermore, as part of our strategy, we expect to have expanded our portfolio over the next few years by acquiring in-licensing additional drugs that fit our orphan oncology strategy and where we can make a significant benefit to patients. In 2025, we expect to establish Orviglance as the market leader in this market, Oncoral in Phase III development and having 1 or 2 [indiscernible] in the pipeline through [indiscernible]. This is an exciting time for Ascelia Pharma and we see tremendous value for [indiscernible]. We had a number of different news items and the third one in May, we reported results from the Food Effect Study. This is where we studied Orviglance, taking both on the fasting -- on the fasting status and after receiving fruit before the administration. Importantly, in this study, we demonstrated that patients have strong liver enhancement with Orviglance, especially patients who may have difficulties fasting because of underlying disease. We also received a notice of allowance for a second Oncoral patent in the U.S. This will further strengthen our intellectual property on this asset. At ESGAR, the major European Gastrointestinal Radiology Conference, we presented results from the rerelease of our previously conducted clinical study at Karolinska Hospital in Sweden. We used [indiscernible]. And the results demonstrated strong data for Orviglance. In June, we announced that the [indiscernible] start in September. After the close of the quarter, we announced in August that the results on the [indiscernible] at the RSNA Conference as a major U.S. radiology conference, which is taking place in late November this year. Now please turn to Page #6. Now we're going into more depth on our pipeline. And I'd like to hand the [indiscernible] over to our Chief Medical Officer, Carl Bjartmar.

Thank you, Magnus. We can go to Slide 7. So Orviglance is a novel oral contrast agent for liver MRI, which addresses a very specific unmet medical need. Liver metastasis are common in oncology since many cancer types tend to develop metastasis in the liver over time and many times of the cause of mortality. The contrast agents available today are all based on gadolinium [indiscernible]. Gadolinium should not be given to patients with poor kidney functions 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. The right side of the slide shows how Orviglance works in a patient with colorectal cancer. The left picture shows an un-enhanced MRI scan without contrast agent, standard procedure today for our target population. The right scan shows the same patient after administration of Orviglance. The liver is taking up Orviglance and appears bright. This one dark area highlighted that's only disabled after Orviglance enhancement. This is a metastasis, which would not have been detected without the contrast agent. So this illustrates the importance of a contrast agent. In this case, since detected and localized, the metastasis may be remote with significantly improved prognosis for the patient. And we have made good progress. The early phase 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. Please go to Slide 8. As mentioned, the strong clinical proof of concept through six individual Phase I or II studies with very consistent results. These data were confirmed by an independent reanalysis by a blinded reader, which showed highly significant effect on the endpoints that are also used in the ongoing Phase III study. The Phase III primary endpoint is 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 to Orviglance compared to un-enhanced MRI. So these results clearly justify our [indiscernible] Phase III and also provides a valuable guidance when it comes to the sign of the Phase III studies. Please move to Slide 9. Our ongoing registration study -- investigates the efficacy of safety overall in the target population with focal liver lesions and poor kidney function. The study, which is a global study with 200 patients, involved some 50 sites in the U.S., Europe and in America. Since there is no available contrast agent for patients with impaired renal function, the comparison will be un-enhanced MRI, which is currently a standard procedure for these patients. This study design has been agreed with FDA and EMA. The strategy is to repeat and confirm the Phase II results using the same endpoints [indiscernible] both delineation and positivity. 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 will also mean that we have the final data relatively sooner than typical Phase III studies. So please move to Slide 10. As mentioned, Orviglance program also contains two supporting studies. The Food Effect Study addresses the effect of food intake on absorption and signal intensity of Orviglance in healthy volunteers in a crossover study design. In May, we announced the results, which showed that intake of a light meal prior to Orviglance administration, provides a similar MRI enhancement compared to a fasting condition. This finding could further improve the convenience and ease of Orviglance administration in clinical practice. And in line with previous studies that data also confirmed a robust Orviglance liver enhancement compared to MRI image without [indiscernible]. The hepatic study evaluates how patients with different degrees of hepatic impairment tolerate Orviglance. [indiscernible] interest since Orviglance is selectively taking up and excreted by the liver. The study was performed at Texas Liver Institute in the U.S. in patients with mild, moderate and severe hepatic impairment, respectively. Each severity group had six volunteers, which was matched with the controlled growth in normal hepatic function. Preliminary data indicate good tolerability with no reported serious adverse events. The final results in this study are expected to show up late in Q3 '22. Both of these studies will be included in the Orviglance submission package for marketing approval to the health authorities, including FDA and EMA. So please turn to Slide 11, and I hand over to my colleague, Julie.

Thank you, Carl. The addressable market for Orviglance represents USD 500 million to USD 600 million annual in key markets, the U.S., Europe and Japan. This potential is based on the volume of liver MRI procedures to cancer patients with severely impaired kidney function, i.e., patients falling under the [indiscernible] for gadolinium -- contrast agents. Our data includes real-world data on realized procedures for these patients. We have also extensive input from market access and pricing experts where we have tested different price levels and collected insights on the evidence needed to support access and reimbursement. Building our own U.S. commercial team allows us to create an effective top line and retain profit and value [indiscernible]. For other markets, starting with Europe and Japan, our strategy is to maximize the value of Orviglance working with partners. Please move to Slide 12. In March this year, we announced the results of our recent market research with 270 U.S. health care professionals. The market research explores the current clinical practice and unmet need for the target patient population of Orviglance with answers from radiologists, nephrologists and oncologists. The results support the unmet need for Orviglance in the target patient population and are consistent with previous market research. This slide shows one of the key findings and confirms that for patients with severely impaired kidney function or through kidney injury, around 80% of health care professionals prefer today to perform an MRI without a contrast agent or sometimes with a partial dose of a gadolinium contrast agent. Please move to Slide 13. At the end of the market research survey, respondents were presented with the product profile of Orviglance. As a response, 84% answers that they are likely or definitely will use Orviglance for the target patient population at launch. The results of the market research confirmed the commercial potential for Orviglance and help us prepare an ambitious and focused launch. Please move to Slide 14. For the U.S., the attractiveness and clear path to market provide a strong pace for commercializing Orviglance on our own, i.e., building a U.S. commercial affiliate. The target patient population for Orviglance help multiple health populations, prospective liver metastasis of cancer in the liver and poor kidney function. This means that decision-makers for using Orviglance are centered around 2,000 radiologists, most of whom can be found at around 400 hospitals. Therefore, a focused team and an affiliate of around [indiscernible] can reach priority decision makers at launch. We have our U.S. office established Ascelia Pharma Inc., which represents an important step to engage more closely with key partners and the clinical community in the U.S. on our journey to make Orviglance available to physicians and patients in this important market. Our global manufacturing partner, [indiscernible], is also [indiscernible]. We are gradually building our footprint and relationships with key stakeholders in the U.S. as part of our preparations for launch. This includes a number of leading radiologists, of which some are among our Phase III clinical study patent investigators. Please move to Slide 15.

Okay. Thank you, Julie. So I will now switch to our second asset in clinical development, Oncoral. We can move to Slide 16. So the active substance of Oncoral is irinotecan, an established chemotherapy with well-documented anticancer effect. It's currently used in several cancer indications and 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 important efficacy. It's well known that many cancer types have suboptimal treatment outcomes today. An oral daily dosing may improve efficacy through favorable pharmacokinetic and pharmacodynamic profile based on more consistent therapeutic plasma levels of the active substance. And they are both non-clinical and clinical data supporting this concept. Better 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's more convenient and cost-effective to take a tablet at home than going into the hospital and prepare for intravenous administration. So now to the next slide, 17. The concept of frequent low-dose administration is called metronomic dosing. The figure to the left illustrates a simulation model comparing levels of active substance SN-38 after irinotecan IV dosing every third week, that's the gray line, and oral Oncoral dosed daily, the orange line. Over 3-week cycle, the exposure, or area of the curve, is comparable, although the plasma peaks associated with toxicity are avoided by daily dosing. Approximately 1/3 of the side effects observed after intravenous dosing are reported as severe or even life-threatening, grade 3 or 4. Metronomic dosing may not only reduce the peak-related toxicity, but also brings the possibility to adjust dosing quickly if adverse events should occur. Our own Oncoral Phase I results showed that Oncoral was well tolerated overall. And importantly, the hematological toxicities were mild to moderate, grade 1 or grade 2. In addition, our Phase I data with Oncoral indicated activity or stable disease even in patients that previously progressed on irinotecan given intravenously. Please move to next slide, 18. This is an example of improved outcome, in this case, overall survival with more frequent dosing. So these are patients with metastatic breast cancer where overall survival was improved from 20% with dosing every third week, high dose to 32% with weekly dosing with a slightly lower dose. This is, if you will, a proof of principle. Please move to Slide 19. So now we are preparing for Phase II. And the objective of the Phase II study is to generate the clinical proof of efficacy in metastatic gastric cancer. And the strategic reason to choose gastric cancer are several. First, the clinical guidance or guidelines and clinical data support efficacy of irinotecan in gastric cancer. Second, gastric cancer is a severe cancer form with a high unmet medical need and the potential for orphan drug designation. Subsequently, there's potential for label expansion into other solid tumor indications. And finally, as shown in the figure, there's data from gastric cancer animal models supporting a 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. Next slide, please, 20. So 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, progressive-free survival and then there's a battery of secondary endpoints, response rate, pharmacokinetics, safety and overall survival. This will include approximately 100 patients and involves a clinical collaboration with Taiho Oncology, a manufacturer of LONSURF. We are enthusiastic to eventually start the study and the necessary regulatory approvals are obtained. However, for strategic reasons in order to focus all our internal resources on the lead program, Orviglance, we are postponing the study start from now. As soon as internal bandwidth are secured and ensuring the safety study conduct, the study will kick off, and we look forward to that. So I will now hand over to Julie again, Slide 21.

Thank you, Carl. We will start Orviglance development -- I'm sorry, Oncoral development in gastric cancer, which is today a $3 billion market. For these patients, there is a higher unmet need for improving outcomes and the opportunity for an orphan drug designation. We also see opportunities for developing Oncoral in other solid tumor indications, whereas daily dosing tablet formulations can demonstrate an attractive efficacy and safety profile. Irinotecan as an IV formulation is already approved in colorectal cancer and pancreatic cancer. It is also clinically demonstrated and recognized in the NCTN guidelines for many other cancer types. We are assessing these opportunities as part of our ongoing strategic plans for Oncoral. With this, I will pass over to Kristian.

Thank you. We can now turn to Page 23 and liquidity. So the key message is that we continue to stand with a solid cash balance. We have $209 million set in the bank, and that takes us into the second half of 2023. The cash position will primarily be used for the ongoing Phase III program for Orviglance as well as pre-commercial activities for Orviglance. If we now turn to Page 24. In the second quarter, we saw a largely unchanged operating loss year-over-year, and the same pattern also goes for the first half with an operating result at the same level as the first half last year. So roughly the same pattern as to last year. With that, I'll leave the word over to Magnus.

Yes. Thank you, Kristian. Please move to Slide #25. I'd like to end this quarterly update with our focus on the key milestones that we have. Clinical development of Orviglance is our key priority. We expect to complete enrollment in SPARKLE this year. We also continue our preparations for Orviglance's commercialization and have many activities ongoing to prepare for a successful launch of Orviglance's for the benefit of patients. As mentioned earlier, [indiscernible], will join as our new CFO in the beginning of September. This also means this will be Kristian Borbos' last quarterly call as CFO for Ascelia Pharma. And I would like to thank him for his contributions to Ascelia Pharma over the last 5 years. It's been a pleasure working with him, and we wish him success in his new role. With that, that was last from our side, and we'd be happy to open up for any questions.

[Operator Instructions] Our first question comes from Sten Westerberg from Analysguiden.