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

Thank you, and welcome, everyone, to the webcast for Ascelia Pharma's Q3 report in 2022. So we look forward to updating you on our progress in the quarterly report. So now please turn to Page #2. During this presentation, we will be making certain forward-looking statements, so please pay attention to this before moving to Slide #3. Ascelia Pharma is dedicated to improve the life of people living with the 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 drugs in clinical development. Orviglance, our lead program is in an ongoing Phase III clinical study. It will be the only product targeting an addressable market opportunity of $500 million to $600 million annually in the key markets. Oncoral is ready to start Phase II in the treatment of gastric cancer based on encouraging results in Phase I and a high level of unmet medical need. Our company is based in Malmo, Sweden and we are listed on Nasdaq Stockholm. We have a strong balance sheet and are funded into Q4 2023, including completion of the Orviglance Phase III program. Now please turn to Page 4. Ascelia Pharma is in a transformative phase as we are moving from late-stage development into commercial stage. We will be advancing all demands on our growth. And furthermore as part of our strategy, we expect to have expanded our portfolio by acquiring or in-licensing an additional drug that fit 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. Oncoral is in Phase II clinical development and having 1 or 2 more clinical stage assets in the pipeline through acquisition and licensing. This is truly an exciting time for our Ascelia Pharma, and we see tremendous value creation potential as we progress. Now please turn to Page #5. In the third quarter of 2022, we continue to make progress. In August, we announced the results of the Orviglance Food Effect Study have been accepted as an oral presentation at the RSNA conference, which is being held in late November, early December this year. RSNA is the largest radiology conference in the world. In September, we presented final results from the Hepatic Impairment Study of Orviglance. This is the second study out of 3 in the Phase III program for Orviglance, and Andreas will share a bit more light on the results. After the close of the quarter, we announced the expansion of the leadership team to 7 members in Ascelia Pharma. This is a logical step in ensuring the organization is best positioned to scale up and increase complexity that we have ahead of us with the important milestones and bringing Orviglance to the heart. Now please turn to Page #6. Now we'll go into more depth on our pipeline, and I'd like to hand over the word to our Chief Scientific Officer, Andreas Norlin.

Thank you, Magnus. Please move to Slide 7. Now Orviglance is a novel oral contrast agent for liver MRI, which addresses a very specific unmet medical need. Liver metastasis are common in patients with cancer since many cancer types tend to develop metastasis in the liver over time. And many times are the primary course of mortality. The contrast agents available today are all based on a heavy metal, gadolinium. The gadolinium should not be given to patients with poor kidney function due to this -- since it is excreted through the kidneys and slow excretion 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 unenhanced MRI scan without a contrast agent, standard procedure today for our target population. The right scan shows the same patients after administration of Orviglance. The liver has taken up Orviglance and appears bright. There is 1 dark area highlighted that it's only visible at the Orviglance enhancement. This is a matestesis, which will not have been detected without a contrast agent. 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. 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. And we are now on Slide 8. As mentioned, there is a strong clinical proof of concept through 6 individual Phase I or II studies with very consistent results. This data were confirmed by an independent-read analysis by a blinded reader, which showed highly significant effects on 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 of 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. So these results clearly justified entering Phase III, and we also provide valuable guidance on the design of the study. But I also want to take the opportunity to mention again that the study of Orviglance in patients with liver impairment was completed successfully in early Q3. And importantly, no new safety concerns were identified and it was concluded, Orviglance is well tolerated in this group of patients. Only observations of mild to moderate, transient gastrointestinal adverse effects such as nausea were made. And the data confirmed there was no renal excretion of Orviglance. So these results adds to our overall knowledge and demonstrated the potential utility of Orviglance as MRI contrast also in patients with hepatic impairment. So I will now hand over to Julie, our deputy CEO and CCO.

Thank you, Andreas. On Slide 9, the addressable market for Orviglance represents $500 million to $600 million annually in our key markets, the U.S., Europe and Japan. This potential is based on the volume of liver MRI procedures for cancer patients with severe kidney disease, i.e., the patients following under the regulatory black box warning for gadolinium based contrast agents. Our data to support this estimate includes real-world data on realized liver imaging procedures for this patient population. We also have extensive input from market experts and pricing experts while have tested different price levels and have collected the insights on the evidence needed to support access and the investment. Building our own commercial team in the U.S. allows us to create an attractive top line and retain profit and value in this area. For other markets, starting with Europe and Japan, our strategy is to maximize the value of Orviglance by working with partners. Please move to Slide 10. This year, in March, we announced the results of our market research with 270 U.S. health care professionals. The market research explores the current clinical practice and the unmet need for our target patient population for 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 our previous market research. This chart shows one of the key findings and confirms that for patients with severely impaired kidney function or acute kidney injuries, around 80% of health care professionals preferred today to perform an MRI without a contrast agent or sometimes with a partial dose of gadolinium contrast agent. Please move to Slide 11. At the end of the survey, respondents were presented with the product profile of Orviglance. As a response, 84% answered that they are likely to -- or definitely will use Orviglance for the target patient population at launch. The results of the market research confirmed the commercial potential of Orviglance and help us prepare an ambitious and focused launch. Please move to Slide 12. 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. commercial affiliate. The target patient population for Orviglance has multiple health complications, suspected liver metals and poor kidney function, which means that physician [ make it ] use are centered around 2,000 radiologists, most of whom can be found at around 400 hospital groups. Therefore, a focused team in an affiliate of around 40 FTEs can reach priority decision makers at launch. We now 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 to patients in this key market. Our global manufacturing partner Cambrex is also in New Jersey. We're 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 SPARKLE investigators. Please move to Slide 13, and back to Andreas.

Thank you, Julie, and we will now move on and talk about Oncoral and other assets. Please move ahead to Slide 14. The active substance of Oncoral is irinotecan in established chemotherapy with well-documented anticancer effects. It's currently approved for colorectal cancer and pancreatic cancer. In Japan, it is also approved for gastric cancer. Today, the administration is intravenous bolus infusion, typically every third week and typically at a high dose. Oncoral is a novel oral formulation of irinotecan, a 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 are both nonclinical and clinical data supporting this concept. Then there is tolerability or safety, Intravenous dosing of chemotherapy is frequently associated with severe side effects, typically gastrointestinal and hematologic. An oral daily dosing has the potential for improved tolerability by avoiding high plasma levels and by offering dosing flexibility. Please move to Slide 15. 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 every third week, the gray line and oral Oncoral dose daily, orange line. Over 3-week cycle exposure or area under the curve is comparable. Although the high plasma concentration peaks associated with toxicity are avoided by daily dosing. Approximately 1/3 of the side effects observed after intravenous dosing are reported at severe or even life threatening Grade 3 or 4. The 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 from mild to moderate, Grade 1 or 2. In addition, our Phase I data with Oncoral indicated activity or stable disease even in patients previously progressed on irinotecan given intravenously. So next slide, Slide 16, please. This is an example of improved outcome in this case, overall survival with more frequent dosing. These are patients with metastatic breast cancer, where overall survival was improved from 20% with dosing every third week, high dose to 32%, weekly dosing with a slightly lower dose. This is, if you will, a proof of principle. So please move to the next slide, 17. We are preparing for Phase II. The objective of the Phase II study is to generate a clinical proof of efficacy in metastatic gastric cancer. The strategic reasons to choose gastric cancer are several: first, the clinical 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 orphan drug designation. Subsequently, there is potential for label expansion into other solid tumor indications. Finally, as shown in the figure, there is data from gastric cancer animal models suggesting a synergistic effect of irinotecan if combined with LONSURF. 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. We will now move to Slide 18. This study is, therefore, a randomized controlled multi-central multinational study comparing Oncoral on top of LONSURF with the LONSURF alone. Final end point is typical for Phase II studies in oncology, progression free survival and then a battery of secondary endpoints, response rates, PK, safety and overall survival. This will include approximately 100 patients and involves a clinical collaboration with Taiho Oncology, the manufacturer of LONSURF. The necessary regulatory approvals are obtained, and we are enthusiastic to eventually start the study. However, for strategic reasons in order to focus all our internal resources on the lead program, Orviglance, we are waiting when the study starts for now. But as soon as internal bandwidth is secured and showing effective study conduct, the study will kick off, and we look forward to that. So with that, I hand over to Julie again.

Thank you, Andreas. On Slide 19. We will start Oncoral development in gastric cancer as Andreas explained. This is today a $3 billion market. For these patients, there's a high medical unmet need for improving outcomes and there's an opportunity for an orphan indication. We also see opportunities for developing Oncoral in other solid tumor indications where a daily dosing formulation can demonstrate an attractive efficacy and safety profile. Irinotecan as an IV formulation is already approved in colorectal and pancreatic cancer. In addition, irinotecan is clinically demonstrated and recognized in, for example, the NCCN guidelines for many other cancer types. We are assessing these opportunities as part of our ongoing strategic plans for Oncoral. With this, I will hand it over to our CFO, Despina.

Thank you, Julie. Now please turn to Page 21. The key message on the liquidity position is that we continue to stay with a solid cash balance in -- with SEK 180 million in bag, we are financing into Q4 of 2023. The cash position will primarily be used for overground ongoing clinical Phase III study as well as pre-commercial activities. If we now turn to Page 22. In the third quarter, we saw a decrease in the operating loss compared to the same period in 2021. The decrease primarily reflects the positive effects for our U.S. currency holding, lower cost Oncoral Phase III preparation and reduced accrued costs for incentive program '23. The same pattern goes through the year-to-date operating loss. The reduced costs also reflects the timing effect with lower R&D costs in Q1 2022, which was partly counterbalanced by higher commercial preparation costs. With that, I leave over the word to Magnus.

Thank you. And please move to Slide #23. And I turn this call to update with our focus on our key milestones. The clinical development of Orviglance is our key priority. We expect to complete enrollment in start of this year that will allow us to make a readout of the study. We continue our preparations for Orviglance commercialization and have many activities ongoing to prepare for a successful launch. This was our final slide, and we'd be happy to take any questions.

[Operator Instructions] And our first question comes from the line of Ludvig Svensson of Erik Penser.

So thank you for the presentation. So you had a solid cap position, obviously. And you mentioned that you have a cash runway to Q4 2023. Have you then included costs related to starting up with Phase II trial with Oncoral or is it Orviglance only?

It depends on the -- it's a good question, and thank you, Ludvig. We don't have funding to complete the Oncoral Phase II study with the current cash and then also with starting the study sometime next year would not cover that period.

And our next question comes from the line of Sten Westerberg of Analysguiden.

I wonder if you can give us some more granularity on the studies that you have performed with Oncoral. For example, do you see the same adverse event in the Food Effect Study as you deal in the renal -- Hepatic Impairment Study? And I'm also curious to hear what are your plans for orphan drug designation outside of the U.S.?

Yes. Thank you, Sten, for the questions. So what we see across the studies is a very consistent side effect profile. So the patients who are fasting who are drinking with Orviglance. The most common side effect is some mild nausea, mostly mild and even big amount transient nausea and diarrhea. So this is not to be taken in combination, and that is consistent across all studies. So the other question again?

Yes. Which are your plans for an orphan drug designation outside the U.S.?

Yes. I mean we're looking into orphan designation in other geographies as well. Our key focus is on the U.S. market, and that's where we have the most emphasis and then we have the orphan drug designation in U.S. as you know. One is also orphan drug designation is important in U.S. It's also good to have it in other geographies. But in Europe, we have a much more extensive data exclusivity, which will give us -- we expect to have 10 to 11 years of exclusivity, where a generic competitor cannot be launched in Europe. So that is also providing a strong protection of the commercial opportunity.

May I just follow up. So have you applied for orphan drug designation in the EU region?

We have not communicated anything on that corresponds with the EMEA or other regulatory institutes.

Okay. Final follow-up on the Orviglance studies. You mentioned nausea as an observation in the Hepatic Impairment Study, is it possible to provide some kind of granularity on this observation, which portion, which percentage of patients are experiencing nausea.

You're right that we have not sort of specifically mentioned how you can say -- how frequent and nausea was. We expect to do that, hopefully at some scientific conference in the coming period. So we would rather not, I would say, compromise that presentation opportunity by sharing it at this point. So what we can say is that we see something that is very consistent with other studies.

And as there are no further questions from the phones at this time, I'll hand the floor back to our speakers.

Yes. Thank you, everyone, for listening in to our Q3 presentation. And hearing about the progress we've made, and we continue to work hard to complete the Phase III trial to generate a readout. So hopefully, we can bring this Orviglance to patients who are badly in need of this product. So thank you. Have a good day.