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

And today's event is with Magnus Corfitzen, the CEO of Ascelia Pharma. And the topic today is actually the Q1 report that the company released this morning. I would like to welcome the audience as well. [Operator Instructions]. So with that said, welcome, everybody, and welcome to you, Magnus. Please go ahead.

Yes. Thank you, Claus, and great to be back and give you all of you an update here on the Q1 report for 2023. So as mentioned, we released it earlier this morning. We also had a webcast that you can access on our website, which is a sort of more extensive update. But what I've done here for this conversation here is that I've sort of taken some of the key slides from the Q1 presentation, and we'll go through here. So as mentioned, I will be making a number of forward-looking statements. So pay attention to this. Just to remind everybody and then also welcoming those that are new to there, what we're doing in the Ascelia Pharma. Our vision is to improve the life of people living with cancer by offering better treatment options. And our business model, how to do that is to identify, develop and commercialize novel drugs, novel pharmaceuticals that address unmet medical needs in rare cancer conditions. So patient populations where the curing drugs that are out there are just not doing the job well enough. What we have in the pipeline today is 2 drugs. We have Orviglance, which is our lead program, which is what we will discuss mostly today. We have completed the Phase III enrollment as all the patients are in the study. Now we are evaluating the images. We have some external experts that are doing that. And we will report the result of the study sometime during the middle of this year. The product has what is known as an orphan drug designation from the FDA, meaning that it addresses a small population, a rapid condition and also that it's a serious condition for these patients. That orphan designation grants us market exclusivity and a number of other benefits. We also have Oncoral, which is a tablet formulation, patent tablet formulation of irinotecan, which is a well-known widely used and very potent chemotherapeutic agent. We have formulated it in tablets and have a number of patents for that. And we think giving daily doses will be improved sort of the safety and the efficacy of that molecule. So we're very excited about that as well. But it's less development. Our company is based in Southern Sweden. We have an office in New Jersey, and we traded on Nasdaq Stock Exchange in Stockholm. So highlights for the quarter was a very eventful quarter. We had finally the completion of patient enrollment. So we had an enrollment target of 80 patients. We completed 80 patients end of February. And then we decided to sort of wind down the patient enrollment. And 5 additional patients were kind of in the flow in promised to participate in the study. So we obviously included them. So you would say early March, we concluded that 85% patients had completed the study. All of these patients or their images will be evaluated in the study and both for safety and efficacy and everything. So following the patient completion, which has taken longer than expected due to COVID and other reasons, but we have provided an update on the commercial insights. In parallel with the clinical study, we have worked on launch preparations, and we have learned even more about the market and the commercial opportunity. And some of that we shared with everyone on the, I think, March 14, the Investor Update Day. Later in March, we got the third patent for Oncoral, our tablet [indiscernible] so that was good to either strengthen -- further strengthen the intellectual property there. And then a very, I would say, eventful quarter and unfortunately, also with the tragic and unexpected passing of René Spogárd, who was on our Board for 6 years. So -- and since you could say the closing of the quarter until now, there's been no significant events there. So again, a major milestone with achieving the last patient enrolled. Now we are on the way to get the headline results sometime during the summer. So just to give -- and before we embark on the Q&A, but just on the finance of the Q1, we continue to, you would say, prioritize our capital expenditures in a disciplined manner, ending the quarter with SEK 111 million. That will allow us to, with planned budgeted spending that we have allows into a runway into Q4. If we cut back on some activities, we can extend the runway until the second quarter of 2024. So I mean, obviously, always good to have more cash as opposed to least, but we are in a comfortable situation, especially considering that we will have the headline results from the Phase III study in the middle of the year. When we look at the Q1 expenses, I mean, the vast majority of our expenses are -- this is R&D related to also, in particular, the Phase III study and the activity level was a bit higher this quarter compared to a year ago. So setting the scene for this year, we had 3 key objectives, right? The first one was to complete the patient enrollment. We did that in Q1. The next one is getting the results from the trial, seeing whether began work as we hope and expect. And that -- we will have the results and be able to communicate that sometime during the middle of the year. And then it's sort of an ongoing but gradually increasing in intensity and activity level is preparing the launch. And preparing the launch is, if you say, everything from supply chain activities, distribution, practical parts of that and as well as engaging with the radiology community nephrology community, patient community, payers, everything that is related to making a very successful launch. And we have a very experienced team on board to meet those activities. So those are the priorities for this year and you say the -- what we are super excited about, almost here in the company is that we have Orviglance. Orviglance will be a first-in-class product, [indiscernible] status for an addressable market opportunity of $800 million. So a very, very sizable opportunity for us. We have the results in the middle of the year, as mentioned. And one of the additional reasons we went into -- in more detail on the Q1 call webcast earlier today, but in a 20-patient study, Phase II study, we evaluated with 3 independent radiologists in the same way, same scales, everything. And in 20 patients, we met the endpoint, so with 85%, but we should have a very good chance of being successful as well. And in addition to Orviglance, we have Oncoral where we continue to be very excited about that potential. And -- but I have prioritized Orviglance development in terms of make sure we do that well before embarking a lot of resources Oncoral right now. So for that, that was kind of the executive summary of our Q1 report. Happy to take any questions.

By that, thanks a lot, Magnus, for giving us a quick update on what happened in Q1, a very this quarter. Let's start out with Orviglance for obvious reasons. There's a question here from Steven if you could be more precise when you talk about the middle of the year, if you could elaborate a little on that back.

Yes. No, so it's a good and fair question and say as soon as possible, but it is a -- the -- when we provided the update in December last year, I said we want to deliver the results in the middle of the year, want to complete patient enrollment and then work on the data. So I mean, we are on track for delivering some time. We cannot unfortunately be more specific. So it is, you would say, you should not necessarily sort of set the alarm clock lineup for July 1. It is with some plus/minus if you will, right? So as with other, you could say, other objectives, we guide on a in a quarter or a half year basis. I mean, so there is some kind of flexibility around that. But we're on track, we're doing in steps and it's -- I can assure all that I'm in the more impatient part of the people that are waiting for the data, right? So the team, very experienced team that we have is working with the CROs. We have set up with the radiologists for doing the emulations and all the steps there to comply with the FDA guidelines and EMA guidelines for how to look at the industry. So we do it as fast as we can, but we don't want to compromise on quality or creating risk in the evaluation process.

You mentioned before that you're already in March finished more or less 2/3 of the readings. And you also mentioned our talk in the beginning, that is a blinded study. So we well, you're close to target, but as you mentioned here, whether it's the 13 June or the 7 of July is, of course, right now, hard to say. Do you know -- that's probably a stupid question, but there's a question here. Do you know how far they are in the last batch, but you don't do that due to the binder.

Yes. So I mean I don't know how far they are in that. We have an overall time line where we have -- the key steps is that we have the 3 independent radiologists where 2 or 3 need to be -- have a statistically significant improvement of Oncoral. So we can have on the radiologist being an outlier. So they're working on that better according to the time line. Once they have reported all their levers with scores and comments and ratings and what have you, then we will actually have a fourth radiologist sort of linking the different lesions and evaluations between the radiologists, their internal readings to make sure that we are comparing apples to apples. So for instance, if one patient has 3 lesions, 3 black spots and the numbering is 1, 2, 3. Maybe next time they start in the other direction and they would like 3, 2, 1. And then we need to make sure that obviously the what is #1, which is physiologically identity comes or the #3 and the second read is compared to each other. And that also takes a lot of time. So for each, so we communicated that we had roughly 2/3 had already been completed or read by the -- in March because we did that certainly say, on an ongoing basis. So the last 1/3 are being evaluated now. But for each reader, they need to look at both of on enhance. They need to look at the [indiscernible] enhanced and then they need to look at the combined information with one and overlaid on go. So they have 3 data reading -- data points. And that needs to be at least a 2-week interval between reading from the first data series to the next data series and then 2 weeks in between that. So it does unfortunately take a bit of time. So it's -- and the fourth reader who will sort of link the lesions, we'll do that for all the 3 readers. So it's also a lot of MRI, which is that, that person needs to go through. Yes. So it's progressing as planned, and we are making sure that even as we're approaching summer time that everything is ready, set up people and all our on vacation, which will constantly. But we're doing it as fast as we can.

Thanks a lot for sharing some light on the process of Magnus. Well, just another question regarding the start here. And you mentioned that just before Christmas 2022 that you changed the approach, the way you look at the images, you explained that for me once before the data model. Could you shed a little light on this because you needed less patients in this new approach?

Yes. So it's -- I mean, the approach and the evaluation is exactly the same as from the beginning. So we have 3 independent radiologists evaluating the same parameters in the same scale in the same way. So that is completely unchanged. When we started Sparkle, we had a number of data from the Phase III studies but we would not have in any of those studies a setup where we use exactly the same metrics and the same scale of those metrics. And we didn't have 3 radiologists evaluating any of those studies. So it have been usually and that is what you often do in early-stage studies, you have the local radiologists looking at the image, but they have also a lot of background knowledge. And what we wanted to do is we took one of the Phase II studies where patients had normal kidney function and looked at the comparison with gadolinium, and we have announced that and presented at conferences that we looked, you would say, at least comparable to liver-specific line, which is very positive. But in that study, we also saw a statistically significant improvement over in only 20 patients. And when we see that result, if we got that level of significance in the Phase III, we would consider it very successful. And with 200 patients and then on top of that, having the study to go with a rare patient condition, it took way longer to other we anticipated. We utilize that information. So if we have that information from the very beginning, we would never have decided a 200 patient study. So basically, this is new information, important new information that became available during the course of [indiscernible] that's why we had the dialogue with the FDA. I said we think 200 is overpowering the study. We think the smaller sample size is a lot more prudent because we cannot, you can say, unduly delay approval of this product and access for patients to this product when they are in need and options as approved. Based on the FDA feedback, then we decided to reduce the calls to 80 patients, and now we have 85. So it's not -- we're not changing anything in what we measure. If we have a successful outcome here, we strongly believe that this is sufficient for approval. But it's simply that this 3 reader evaluation with -- on the -- in the exact same manner that data was not able to be started.

Then let's dive a little into the future. So if we assume that you get a faster readout how does the time line looks for all the -- sorry, base. Could you elaborate a little on that market?

Yes. So we will come with a sort of more specific NDA time line which we have the data. We think that is the most prudent thing to do. But what we have said is that we expect sometime during the summer and in middle of the year, whatever we say, to have the headline results. We have also informed in -- I think it was in February or early March that we expect the full clinical study report to be available towards the end of the year. That full study report is kind of finalization of all the data, everything with the study, and that is needed to have the pre-submission meeting with the FDA. So before sending in this huge data file and database of all patients and so forth, it's very wise to have a meeting with the FDA to say, this is what we -- these are the results. This is how we are presenting in the NDA submission. This is how we've structured it and listen if they have any thoughts. So if they have any perspectives on that, then we can incorporate that into the submission and have a more streamlined approval process. So -- but we need -- obviously, to have the full results from Sparkle before we can have that dialogue with the FDA, of course. So -- and then hopefully, as soon as possible after that meeting with the FDA, we can have submit the file. Now you have prioritized and you mentioned that in some of your earlier interviews to focus 100% on all the plans. Now we're very close to get the readout. Could you shed some light on Oncoral and how you're going to prioritize that? Or is that still a little too early? Yes, I think it's a great question, and I'm eager to get going Oncoral. I really believe in that product. We want to make sure that we have, you would say, the appropriate funding to get that study started. So we will not even take jeopardize the runway, which also means that we need to have a different -- a stronger balance sheet before we initiate that study. Now we have in the process of completing, we're doing the reporting and all the finalization and study reports. So there's still a lot of work with Sparkle, even though we're not looking for more patients. But we will have the good deal of the staffing in place in the not-too-distant future in terms of getting the ACRO study going. So love to get that study going. And I think we have good interest from oncologists, and we have the clinical collaboration with Taiho Oncology, where we continue to be in dialogue with them. And yes, so I think it's a great opportunity as well.