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

Welcome to Ascelia Pharma Q1 2024 report presentation. [Operator Instructions]. Now, I will hand the conference over to CEO, Magnus Corfitzen; CSO, Andreas Norlin; and Deputy CEO, Julie Waras Brogren. Please go ahead.

Thank you, and welcome, everyone, to the Q1 report for 2024. On this call, we will be making forward-looking statements. On today's call, we will start with the semifinal highlights and recent key events. This will be followed by a portfolio update before moving to financials and priorities ahead. As mentioned, after the presentation, we will open up for questions. At the Ascelia Pharma, we identify, develop and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We have 2 drugs in our pipeline. Orviglance has now been advanced to the registration phase as we have successfully completed the pivotal Phase III clinical study. Orviglance has Orphan Drug Designation from the FDA and is targeting an addressable market opportunity of $800 million. 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. We are based in Malmo, Sweden and are listed in Nasdaq Stockholm since 2019. In Q1, we made solid progress, which has been followed by this period after the close of the quarter. In the first quarter, the Nomination Committee was appointed and the organic review article was published in investigative radiology. This is one of the highest impact radiology medical journals. In February, we announced a financing of up to SEK 35 million, which extend our financial runway to Q2 2025 is fully utilized. After the closing of the first quarter, we have announced a number of events. In the first half of April, we announced the completion of SPARKLE image reading by the independent readers and narrowing the time line for the results to the first half of May. We also drew the second and final SEK 50 million tranche of the former financing. On 2nd of May, we announced a strong headline result from the SPARKLE study, making this study highly successful. We will talk a lot more about this on this call. A few days after the results, we have the Annual General Meeting, which was followed by the investor update, bringing Orviglance to patients. Orviglance met the primary endpoint in space, making this study a success. It not only met the primary endpoint, admitted with a substantial margin. All 3 of our 3 readers met the endpoint. The success criteria was 2 out of 3. All 3 readers evaluated Oregon to be superior and to unenhanced MRI, and statistical test at P value is lower than 0.001 for all readers on the primary endpoint. This is much lower than the customer result for P-value success. The conclusions are solid and the variability levels were acceptable. This is the most significant milestone in Ascelia Pharma history and a huge step forward towards making Orviglance available to patients. Once again, I'd like to thank patients, investigators and everyone else who have contributed to making SPARKLE a success. We are very excited about Orviglance, and here is why. Orviglance is addressing a well-defined unmet medical needs for a subgroup of patients living with cancer. This is an $800 million global market opportunity and Orviglance's a perfect chance product to target this. We have strong data from 9 clinical studies and manufacturing has been upscale to commercial scale. With the strong Phase III data, Orviglance is has now been advanced to the regulatory pace. We focus on 3 key objectives to create even more value to shareholders. The first objective is the timely submission and approval of Orviglance with the optimal label. The key steps on the way are, completion of the SPARKLE clinical study report, which we expect in early Q4. It's also a key milestone with the conclusions from the pre-submission meeting that we plan to have with the FDA, and we expect to have the conclusion from the meeting in Q1 next year. The feedback from the FDA will be used to finalize the NDA submission and that is expected to be filed in the middle of next year. The second objective is to progress Orviglance for commercialization for patients in need. There are 2 key tracks. One is to continue to advance the launch readiness by ensuring manufacturing and supply chain incents ready to launch as well as working with medical experts, key opinion leaders, payers, patient advocacy groups and other key stakeholders. The other track here is entering into commercialization partnerships to make sure that there is an infrastructure in place following approval to make sure Orviglance can get to all patients. The third objective is to develop the potential in the pipeline. We're excited about Oncoral and the planned Phase II study where we will evaluate Oncoral in combination with LONSURF. In our pipeline, we also have a second-generation Orviglance program that we would like to advance. Very limited activities ongoing right now in our third track here, and we look forward to accelerating these activities once financing is available. All in all, there is tremendous potential in Ascelia to create value for shareholders. With this, I conclude the highlights and recent key events, and we will now move into the portfolio phase. We start the portfolio section with our presentation on Orviglance, and I'd like to hand over to Andreas to continue the presentation.

Thank you, Magnus. Orviglance is a first-in-class liver MRI contrast agent, which addresses a very specific unmet medical need where there are no good alternatives available today. Cancer in the liver is a major problem in cancer treatment. And most cancers in the liver are metastasis where the tumor originates in another organ and spreads to the liver. Contrast-enhanced MRI is the gold standard procedure for examination of patients with suspected or known liver lesions, including metastases. The most used contrast agents available are all based on the heavy metal gadolinium. In patients with severe kidney impairment, use of gadolinium-based contrast agents has been associated with an increased risk of a very severe side effect called nephrogenic systemic fibrosis, which even may have lethal outcome. Both the European and U.S. regulatory authorities have for that reason issued warnings for the use of gadolinium-based contrast agents in this group of patients. The consequence is that patients with impaired kidney function typically will get an unenhanced MRI, which will result in liver images of suboptimal quality with the risk for that the cancer is not managed in the best possible way. We envision that Orviglance, which is based on manganese, will address this unmet medical need in the future and become an efficacious non-gadolinium contrast agents for cancer patients with impaired kidney function. We have now obtained highly encouraging headline data from the SPARKLE Phase III study, clearly demonstrating strong superior enhancement of visualization of focal liver lesions with Orviglance compared to unenhanced MRI, as evidenced by p values lower than 0.001. The strength of the data is emphasized by the fact that all 3 independent readers who evaluated the efficacy in the study confirms superiority of Orviglance. For the study to be successful, at least 2 of those 3 readers needed to observe a statistically significant improvement. With this in mind, the unanimous reporting of a highly significant effect makes the conclusion that Orviglance MRI is superior to unenhanced MRI, very strong. Importantly, in the light of the issues with the intra-reader variability reported last year, the analysis of the data also showed an acceptable level of variability for all readers, making the analysis strong and conclusive. Common adverse events primarily mild to moderate nausea were in line with previous Phase I and II studies with Orviglance and no serious adverse drug reactions were observed. With SPARKLE, we have a comprehensive package of clinical studies with consistent positive efficacy and safety data that will be used for the submission of the new drug application, NDA filed for regulatory approval by the U.S. FDA. A total of 286 patients and had the volunteers in 9 clinical studies will be included in the NDA file. We are aiming to submit a high-quality NDA to the FDA as soon as possible. Our goal is to secure approval for an optimal label, offering a new choice for patients who can't use gadolinium-based contrast agents for liver imaging today. With our comprehensive data package in hand, which includes the clinical data as well as nonclinical and chemistry and manufacturing data, we are now intensifying our preparations of the NDA file. Focus is to ensure that every aspect of Orviglance is thoroughly documented and presented, reflecting our anticipation of successful review by the U.S. FDA. We are on track to submit NDA for Orviglance by mid-2025. And following the submission, we anticipate a standard 10-month review process by the FDA. On the way towards the NDA submission, we are looking forward to key milestones, such as the delivery of the full study SPARKLE report in early Q4 of this year and the completion of the pre-NDA meeting with FDA by Q1 2025. The pre-NDA meeting is a critical project in its own right with the purpose to lay out the groundwork for the NDA submission. This ensures that we are on the same page as the FDA and will facilitate a seamless review process when we filed the NDA. To wrap it up, with the strong headline data from SPARKLE, demonstrating superior imaging with Orviglance compared to unenhanced MRI, we are now advancing Orviglance into the registration phase. With that, I will hand over to Julie.

Thank you, Andreas. So, the addressable market for Orviglance has a global value of $800 million annually. The U.S. represents almost half of this. This market opportunity for Orviglance addresses the unmet need for a well-defined patient population. Cancer patients who need liver imaging and who also have severely impaired kidney function. Our strategy for commercialization is to launch through partners. This strategy supports our ambition to secure the optimal balance between future revenues and investment required. And it allows us to leverage commercial capabilities already established by our partner. Our focus on business launch strategy and plans built on advanced market insights, and these are in place to support this partnering strategy and to support the launch. As mentioned, U.S. is the largest commercial opportunity. In the U.S. alone, our real-world data, i.e., data from realized procedures in our target patient population show that every year, 100,000 abdominal imaging procedures are performed in 50,000 patients that fall under the black box warning for gadolinium contrast agents. This is about 4% of cancer patients that undergo abdominal imaging. The well-defined patient population with a clear unmet need also drives an attractive pricing opportunity. and we have extensive input from market access and pricing experts with whom we've tested different price levels and collected insights on the evidence needed to support access and reimbursement at launch. And we have also investigated pricing and access benchmarks for other innovative diagnostic drugs in the U.S. 90% of health care professionals are concerned with the issues related to gadolinium contrast agents, including nephrogenic systemic fibrosis, or NSF, as Andreas has mentioned. In fact, 16% of providers have experienced gadolinium induced NSF. These insights come from market research with 270 U.S. health care professionals and answers from radiologists, nephrologists and oncologists. And these insights confirm the concerns with gadolinium in clinical practice and the unmet need for Orviglance. When speaking to experts, whether in radiology or nephrology, they also confirm that an alternative to gadolinium for our target patient population would address concerns of today, supporting the potential for Orviglance to become a valuable addition to their clinical practice. In clinical practice, the unmet need for our target patient population is also well recognized. Physicians tell us that patients who need liver imaging and fall under the black box warning for gadolinium today receive MRIs that balance the trade-off between, on the one hand, being without a contrast agent, i.e., an inferior image quality or by being a half dose gadolinium. These are around 80% of the patients in total. All by being with the full gadolinium dose with the awareness that gadolinium is not recommended for these patients due to the black box warning. All of these patients are potential Orviglance patients. Beyond the risk of NSF in kidney impaired patients, gadolinium is well known to be retained in the brain and other tissues in all patients. And scrutiny over the possible safety effects is a key concern of regulators and medical bodies. It is also well known that gadolinium is excreted via the kidneys in urine because it's difficult to remove in our sewage systems. This is discharged into the environment even into our drinking water. So, there is an urgency from regulators and medical bodies to find a viable alternative to the growing use of toxic gadolinium. An alternative that is not associated with these potential safety and environmental concerns for patients and for the environment with gadolinium. So, in short, the momentum for an alternative to gadolinium is getting better and better. And the industry is responding to this. Recent developments from the large gadolinium manufacturers are focused on smaller doses of gadolinium and there's even an early-stage injectable manganese-based contrast agent, which is not like Orviglance because it's not liver-specific. So, we are excited that we have a head start and that Orviglance is expected to be a first-in-class to lead a future with less gadolinium and improved outcomes for our target patients. The go-to-market strategy for Orviglance is to launch with commercialization partners. This supports our objective to secure the optimal balance between future revenues and investment required. And as mentioned, it also allows us to leverage the commercial capabilities already established by our partner. So, the focus of Ascelia is to continue the dialogue with potential partners and to ensure that Orviglance and the partners are ready to launch at upon approval. So, we are both excited and optimistic about our launch preparations and our partnering opportunities and also because almost all physicians tell us that they would like to use Orviglance when it is available on the market. So, in summary, Orviglance addresses a well-defined unmet need, and it represents an attractive commercial opportunity. Our focus is to ensure that Orviglance is ready for launch with a partner, and all our efforts to help patients and to launch Orviglance are well recognized by experts and partners in the industry. With this, I will hand over to Andreas to talk about Oncoral.

Thank you, Julie. Yes, let's move on to Oncoral. So, Oncoral is a daily tablet formulation of irinotecan, a well-established intravenous chemotherapy. A daily tablet formulation enables a frequent low-dose dosing regimen that could offer potential advantages on both efficacy and safety compared to the infrequent high-dose intravenous administration news today. We have completed a Phase I study, which demonstrated a promising safety profile and desired uptake of the drug after oral dosing consistent with the daily dosing concept. We are now planning for taking Oncoral into clinical Phase II. The objective is to generate clinical proof of efficacy data in metastatic gastric cancer in combination with LONSURF, another oral cancer treatment approved for gastric cancer. Animal data has demonstrated a synergistic effect of irinotecan when combined with LONSURF, which makes this combination very interesting. The planned Phase II study is designed to study Oncoral plus LONSURF against LONSURF alone, and the standard will randomize approximately 100 patients and involves a clinical collaboration with Taiho Oncology, who will provide clinical advice on LONSURF for the study. We will initiate the Oncoral clinical work as soon as we have the financial resources to do so. Irinotecan is a well-established chemotherapy with recognized antitumor effect in solid tumors. Our strategy is to start Oncoral development in gastric cancer, which is today a $3 billion market. For these patients, there is a high unmet medical need for improving outcomes and there is an opportunity for an Orphan indication. We also see opportunities for developing Oncoral in other solid tumor indications where a daily dosing tablet 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 guidelines for other cancer types. So, we are assessing these opportunities as part of our ongoing strategic planning for Oncoral. So, with that, back to Julie, again.

Yes. Thank you. And lastly, go to the financials and outlook. In Q1, our operating results was a loss, i.e., cost of SEK 16.7 million. This is a slightly increased loss compared to Q4 2023 and was driven by the completion of the SPARKLE reevaluation as well as NDA preparation activities. At the end of March 2024, we had SEK 27 million in the bank. This includes the first tranche of the formal loan financing announced in February. In April, we drew the remaining SEK 15 million of this loan financing. With the full financing in place, we have a cash runway into Q2 2025, covering the completion of time-critical activities for the NDA. To wrap up our update today, we have substantial value creation opportunities ahead for Ascelia Pharma and for both of our often oncology assets and clinical development. We focus on 3 key objectives to create even more value to shareholders. With Orviglance, we're bringing to market a first-in-class diagnostic drug addressing an $800 million market for patients with a high unmet need. The first objective for Orviglance is a timely submission and approval with the optimal label. The key steps underway are to complete the SPARKLE clinical study report in early Q4 to reach conclusions from the pre submission meeting with the FDA in Q1 next year and to submit the NDA in the middle of next year. The second objective is to progress Orviglance for commercialization for patients in need. The key activities are to continue advancing launch readiness by ensuring that Orviglance manufacturing and supply chain is ready for launch and by working with medical experts, KOLs, payers and patient groups and other stakeholders who are instrumental for the adoption of Orviglance at launch. Our other track is to continue the dialogue and to enter into commercialization partnerships for Orviglance. The third objective is to develop the potential in the pipeline. We're excited about Oncoral and the planned Phase II study where we will evaluate it in combination with LONSURF. In our pipeline, we also have a second-generation Orviglance program that we would like to advance. Very limited activities and resources are allocated to these pipeline opportunities, and we look forward to accelerating these once financing is available. All in all, the strong headline results from SPARKLE announced earlier this month, marked the completion of the clinical development Orviglance, a reinsurer of confidence in the regulatory and commercial path ahead for Orviglance. We look very much forward to executing on the opportunities ahead for Orviglance and for Ascelia Pharma in 2024 and beyond. This concludes our update today. So, back to you, operator.

[Operator Instructions] There are no phone questions at this time. So, I hand the conference back to the speakers for any written questions and closing comments.

Thank you, everyone. We have received some questions here, and you are invited also to ask questions here on this portal here. So, the first question is, has the company been approached by any parties expressing interest in making a bid for the entire company or specifically for Orviglance? I think briefly speaking, we cannot really comment on that. What we have said is that our strategy is to find commercialization partners. And obviously, at the point in time where there is any firm announcement that are material, then we will make those an option. So, we cannot comment on the activity level of the dialog level at any point in time. Another question is GE Healthcare potential partner for taking Orviglance to the market? Maybe, Julie, you can comment on a specific company, but obviously, it's general comments we can make.

Yes, I agree. We wouldn't comment on a specific company, but, of course, the actors in radiology diagnostic drugs, the gadolinium manufacturers are, of course, partners that potentially could see value adding Orviglance to the portfolio among other potential profile of companies here.