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

Welcome, everyone, to the webcast for Ascelia Pharma's Q4 report for 2024. We will be making a number of forward-looking statements on this call. On today's call, we will start with recent key events and then head into our portfolio update before moving to financials and priorities ahead. After the presentation, we will open up for questions. I'm Magnus Corfitzen, CEO of Ascelia Pharma. And with me today, I have Julie Brogren, Deputy CEO. Andreas Norlin, our Chief Scientific Officer, is unable to join us today, and he will join us at our next quarterly call. At Ascelia Pharma, we identify, develop and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We have two drugs in our pipeline. Orviglance is in the registration phase as we have successfully completed the pivotal Phase III clinical study, SPARKLE, and we're preparing an NDA submission to the FDA. Orviglance has orphan drug designation from the FDA and is targeting a global 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. Ascelia is based in Malmo in Sweden, and we are listed on NASDAQ Stockholm. The fourth quarter of '24 was busy with a lot of announcement that followed the successful outcome of the SPARKLE clinical study earlier in 2024. I'd like to briefly mention some of the key highlights: The interest in the scientific and medical community to learn about the SPARKLE result has been significant and data was presented at the RSNA in December 2024. We have also announced an additional 5 accepted abstracts here are 3 oral presentations at SAR, Society of Abdominal Radiology and at ESGAR, European Society of Gastrointestinal Radiology (sic) [ European Society of Gastrointestinal and Abdominal Radiology ]. We are proud of this high level of interest in Orviglance. The full study report from the SPARKLE study was also completed in Q4. And I was very pleased with the data, which reinforces the positive outcome of the study. In the fourth quarter, Marianne Kock was also elected to the Board of Directors of Ascelia Pharma. Marianne has a long experience from pharma, including global expertise in drug development, regulatory affairs and commercialization, and she is already adding significant value to Ascelia. We are very excited about Orviglance, and here's why. Orviglance is addressing a well-defined unmet medical need for a subgroup of people living with cancer. This is an $800 million global market opportunity, and Orviglance is a first-in-class product to target this and has orphan drug designation from the FDA. We have strong data from 9 clinical studies and manufacturing has been upscaled to commercial scale. With a strong Phase III data, Orviglance has now been advanced to regulatory phase, and we are preparing for an NDA submission. We're pursuing some important value creation opportunities with Orviglance. The first objective is a timely submission and approval of Orviglance with the optimal label. The key steps to achieving this is completion of the SPARKLE clinical study report, which was done in early Q4. The next milestone is the conclusion from the pre-submission interaction with the FDA in Q1, and we are on track to deliver on this. Next milestone in line is the submission of the NDA to the FDA, which is in the middle of this year, where we're also on track for delivering on that. The second objective is to progress Orviglance for commercialization. The key activities are: continue to advance launch readiness by ensuring manufacturing and supply chain is ready for launch as well as working with medical experts and key opinion leaders, payers, patient advocacy groups and other key stakeholders. In addition to this, as we have announced, we're pursuing a partnership for commercialization, and we continue to make progress here as well. I'm very happy with the progress we are making in Ascelia Pharma and the efforts made by our team to ensure we will meet our objectives and create value for shareholders. We will now start the portfolio section of our presentation with Orviglance. And as Andreas is not here, I will continue. Orviglance is a first-in-class liver MRI contrast agent, which addresses a very specific unmet medical need for which there are no good alternative today. Treatment of primary liver cancer and liver metastasis is an important challenge within oncology. Good visualization of cancer in the liver is critical for making the right treatment decisions. Gadolinium-based contrast agents are the gold standard procedure for examining -- examination of patients with suspected or known tumors or metastases as they improve the information from the imaging procedure. 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 NSF, nephrogenic systemic fibrosis. This may have even fatal side effects. And therefore, both the European and U.S. regulatory authorities have issued warnings for the use of gadolinium-based contrast agents in this group of patients. The consequence is that patients with impaired kidney function will often have an MRI without contrast, which will result in liver images of suboptimal quality with a risk for that, that the cancer is not managed in the best possible way. Our ambition is to make Orviglance, which is based on manganese, the product of choice for this patient population in need of liver imaging where use of gadolinium may be medically inadvisable. The FDA has granted an orphan drug designation for Orviglance for use in this population. In May, we shared positive results from the SPARKLE Phase III study. We found that Orviglance enhanced liver MRI were superior to unenhanced MRI. As a quick reminder, I'd like to share the key highlights from the study: The primary statistical evaluation compared visualization of focal liver lesions when reviewers had access to both the enhanced and unenhanced MRI images versus the unenhanced images alone. The primary endpoint is the mean pair differences. That means the difference on the same patient, along with their 95% confidence intervals, and this is presented in the graph to the right. Notably, all mean paired differences are positive, showing that the combined Orviglance MRI is superior in visualizing focal level lesions compared to unenhanced. The analysis yielded a p-value of less than 0.001 for both visualization variables across all readers. To further validate our findings, subgroup analysis were conducted and in every subgroup, combined MRI was preferred over unenhanced MR. The results from secondary endpoints consistently demonstrate the superiority of Orviglance over unenhanced MR with no analysis favoring on enhanced MR. The safety analysis indicated that no serious adverse drug reactions were observed. More than 80% of reported reactions were mild and short-lived, primarily related to the gastrointestinal tract, including nausea, diarrhea and vomiting. The safety results from this vulnerable patient population were consistent with previous studies. With the completion of the SPARKLE Phase III clinical studies, we have completed the clinical development. The comprehensive clinical program includes a total of 286 patients and healthy volunteers in 9 clinical studies. Taken together, these studies have consistently demonstrated positive efficacy and safety of Orviglance. With the Phase III study confirming the superior visualization of focal liver lesions in the target population of patients with severe renal impairment and an adverse event profile consistent with what we were observed in the other studies, we are excited to move forward with the submission for marketing authorization to the NDA -- to the FDA. We are on track to submit the NDA for Orviglance in the middle of this year. Having completed the full study report, we are now focusing on finalizing our pre-NDA interaction with the FDA here in the first quarter. This step is crucial for finalizing our NDA submission to ensure alignment with the FDA to facilitate a smooth review process. In summary, the strong results from the SPARKLE study show that Orviglance provides superior imaging compared to unenhanced MR, and allows us to move forward towards market authorization. We're excited about this opportunity to provide a better option for patients in need of liver imaging, where use of gadolinium may be medically inadvisable. Now I'd like to hand over to Julie, so she can talk about the commercial opportunity for Orviglance.

Thank you, Magnus. 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 the investment required. We have a focused, ambitious launch strategy and plans built on advanced market insights in place, and these will support this partnering strategy and the launch. As mentioned, the U.S. is the largest commercial opportunity for Orviglance. 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 around 50,000 patients that fall under the Black Box warning for gadolinium contrast agents. So this is about 4% of people with cancer that undergo abdominal imaging. The well-defined patient population with this clear unmet need also drives an attractive pricing opportunity. 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. And we have investigated pricing and access benchmarks of other innovative diagnostic drugs in the U.S. 90% of healthcare professionals are concerned with the issues related to gadolinium contrast agents. This includes the severe side effect associated with our target patient population, NSF. In fact, 16% of providers have experienced cases of NSF in patients exposed to gadolinium. These insights come from market research with 270 U.S. healthcare professionals, and the answers from radiologists, nephrologists and oncologists. And the insights confirm the concerns with gadolinium in clinical practice and the unmet need for Orviglance. Beyond the risk of NSF in kidney impaired patients, gadolinium is well known to be retained in the brain and other tissue in all patients. And the scrutiny over the possible safety effects is a key concern of regulatory and medical bodies. It's also well known that gadolinium is excreted via the kidneys in urine. Because it's difficult to remove in our surge system, it's discharged into the environment and into our drinking water. There's an urgency from regulators and medical bodies to find a viable alternative to the growing use of this 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 is getting better and better, and the industry is responding. Recent developments from the large manufacturers of gadolinium are focused on smaller doses of gadolinium and there's even an early-stage injectable manganese contrast agent, which is not liver-specific like Orviglance. 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 patients. The go-to-market strategy for Orviglance is to launch with commercialization partners, and our dialogue with such partners is progressing. This supports our objective to secure the optimal balance between future revenues and the investment required. This strategy also allows us to leverage the commercial capabilities already established by a partner. So our dialogue with these potential partners for the successful commercialization of Orviglance is progressing. We are also working in parallel to ensure that Orviglance and the partner is ready to launch upon FDA approval. For example, that manufacturing is ready for the first product to be available in the U.S. We are very excited to see the successful acceptances of SPARKLE data for presentation at major scientific conferences. Early October, we announced the acceptance of the primary results from SPARKLE as an oral presentation in the Cutting-Edge Research at the Annual Conference of the Radiology Society of North America, the RSNA. This is the largest radiology conference, globally. Later in October, we announced the acceptance of an abstract on SPARKLE data as part of the Late-Breaking Science session at the American Society of Nephrology's Kidney Week Conference. Other key scientific conferences have subsequently also welcomed the presentation of SPARKLE data. This includes the Society of Abdominal Radiology and the European Society of Gastrointestinal and Abdominal Radiology. In total, 4 oral presentations and 3 abstract presentations have been accepted at major conferences thus far. This underscores the interest in Orviglance within the medical and scientific community. I will now move to talk a little bit about Oncoral, the other asset in our development portfolio. Oncoral is a daily tablet formulation of irinotecan, a well-established intravenous chemotherapeutic agent. A daily tablet formulation enables a frequent low-dose regimen that could offer advantages on both efficacy and on safety, compared to the infrequent high-dose intravenous administration used today. We have completed a Phase I study, which demonstrated a promising safety profile and an uptake of the drug after all dosing consistent with the daily dosing concept. We are now ready for taking Oncoral into clinical Phase II. The objective in Phase II is to generate clinical proof of efficacy data in metastatic gastric cancer in combination with LONSURF. LONSURF is another oral cancer treatment approved for gastric cancer. Animal data has demonstrated a synergistic effect of irinotecan as IV formulation when combined with LONSURF. This makes this all-oral combination very interesting. The planned Phase II study is designed to study Oncoral plus LONSURF against LONSURF alone. The study will randomize approximately 100 patients and involves a clinical collaboration with Taiho Oncology, the manufacturer of LONSURF. Taiho Oncology will provide clinical advice and supply of LONSURF for the study. 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's a high unmet medical 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 tablet formulation can demonstrate an attractive efficacy and safety profile. Irinotecan as an IV formulation is already approved in colorectal and pancreatic cancer. And in addition, it's 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. I will now move to the update on our financials and priorities ahead. In Q4, our operating result was a loss, i.e., cost of SEK 21.9 million. This is a slightly increased cost level compared to Q3 in 2004 (sic) [ 2024 ], driven by our cost for the NDA preparations. At the end of December, 2024, we had SEK 75 million in the bank. With the fully subscribed rights issue of SEK 105 million in Q3 2024, we have a cash runway to late 2025, well beyond the NDA submission. This cash runway excludes the repayment of the remaining SEK 27.5 million loans to Fenja, but it can be extended significantly with financing from partnering and from warrants. The proceeds from the issued TO 1 series warrants alone can provide up to SEK 70 million in April. To wrap up, we have substantial value creation opportunities ahead for Orviglance and for Ascelia Pharma. 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. We have two key objectives. One is a timely submission and approval of Orviglance with an optimal label. The key steps on the way are: the completion of the SPARKLE clinical study report, a milestone we achieved early November last year, and which reinforced the successful study outcomes of the SPARKLE Phase III study's primary and secondary endpoints, and which supports the NDA process. We are on track to share conclusions from a meeting with the FDA in Q1 2025. And we plan to submit the NDA in the middle of this year. Our other objective is to progress Orviglance for commercialization for partners -- for patients in need by entering into a partnering agreement for the launch in the U.S., and by securing that a partner and Orviglance is ready for launch by approval. All in all, the strong headline results from SPARKLE marked the completion of clinical development for Orviglance and reinforce our confidence in the regulatory and commercial path ahead for Orviglance. We look very much forward to executing on these priorities ahead for Orviglance and for Ascelia Pharma in 2025 and beyond. So this was the end of our presentation part, and we are ready to take your questions. So back to the moderator.

[Operator Instructions] The next question comes from Ludvig Svensson from Carnegie.

So I just have one question for you today. Did you have your pre-NDA meeting with the FDA yet?

So we will not talk specifically. What we'll say is that we have the conclusion from the meeting in Q1, and we are on track for that. And as you know, there is a -- when you have the meeting, then you could say the final minutes from the meeting will be sent by the FDA no later than 30 days after the meeting has been held. And that is the time when you can conclude on the outcome of the meeting. And we expect to communicate on the outcome of the meeting in Q1.

The next question comes from Johan Unnerus from Redeye.

I have a few follow-up or clarification then. Judged by the previous question, it seems like you are likely to be in this process given that it's a 30-day period and you expect to receive the minutes then by the -- by Q1. So out of clarification then when you receive the minute, that's when this pre-FDA process is completed?

Yes. So you could say you're right. So when we receive the minutes, then of course, we will carefully review them as quickly as absolutely possible and then be able to conclude if that has any implications on the plan that we already have in place or if there are any sort of edits that have a material impact. So what we will do is that we will do that, of course, as swiftly as possible, and then we will share that information with everyone.

Great. So the minutes as such will not be published, but you will sort of publish the conclusion or the fact that you receive them, of course, as well?

Yes. So we will do like as everyone else, these minutes are, you would say, highly confidential because it's the -- you would say, confidential dialogue we have with the FDA. And I'm not aware of any companies that have ever shared that communication. So we will, of course, share the information in terms of what does it have any impact to the plan that we have. We are very well on track for submitting in the middle of this year. And yes, we have the information, and we've been listening to FDA feedback. So I think that is the scenario. So we are looking into this process and looking forward to receiving the minutes at some point and communicating the results.

Excellent. And also, there is a potential that you will -- could benefit from a faster review process. And that decision and clarification could that come then sometime after submission?

Yes. So the way it works for the Priority Review is that at the time of submission, you ask for a Priority Review by the FDA. And then the FDA will make a decision on whether they will grant it or not. And that's how the process works.

And time-wise, presuming that you will sort of complete by mid -- submit by mid-'25. When could that clarification come sort of?

Yes. So I don't -- it's probably somewhere on the FDA web page in terms of how quickly they will respond. But it's in the initial part of the review process.

It's often as part of the comments you receive after around 3 months calendar time. But they have variations in when they respond to this, but that's not uncommon.

Yes. We've seen that before that, well, there is some flexibility and they could respond faster sometimes and a bit later other times. Yes. Another question, if you could share some dynamics on the partner conversations and also the related aspect of you've been rather successful in sort of featuring your candidate at conferences, international conferences. Presumably, that's an important arena to expand the network and KOLs and perhaps even add new partner conversations?

Yes. I mean this dialogue is ongoing and progressing. And so as you said, it's really great to see that the results from SPARKLE are -- get interest in the medical and scientific community. Of course, that also means something to a partner. So it's all part of that kind of due diligence, you can say, both the clinical data from Phase III and the full study report and this recognition in the community, as you say, also by key opinion leaders and which includes the ones presenting our data and then, of course, FDA process and so forth. So it's going -- it's moving forward, and yes.

And finally, could you perhaps share something about the benefits and differences of Orviglance 2.0, so to speak, you -- that subject in China, Asia, I suppose?

Yes. So you are referring to the granting of a patent in China for our second-generation Orviglance. And the second-generation Orviglance is an effervescent tablet formulation of also a manganese, so also oral agent for liver imaging. So in that sense, we see it really as a life cycle management opportunity for the Orviglance franchise. We think it's an opportunity to sort of extend the total life cycle of the asset. And since there are markets such as Asian markets where you will always be required to have some local clinical data, perhaps it's a good opportunity to combine that with the development of the second-generation asset that there could be some synergies in that. So we, of course, expect that it's at least as good as Orviglance. That's the indication we have so far.

Interesting. And presumably, that would be sort of an investment decision that you would take once a partner is established?

Yes, we think a partner would also be interested in clarifying what the roles are for this second-generation asset, but also, of course, geographically and so forth. So it's part of those conversations, whether it's drugs or geographies that you put in the plans, yes.

[Operator Instructions]

So we have some additional questions put in here. So one is a question relating to our announcement about an extraordinary general assembly in February instead of our regular annual general meeting in May. So the Board proposed this extraordinary general assembly to ensure as they write in the invite that there is a, you could say, a valuable incentive program to ensure, you could say, retention and motivation of all employees who are working on important milestones. And as is also described, the current value of all the combined incentive programs are -- is expected to be maximum 400,000 Matching Shares, which is a very small overall value. And that's why they have decided to implement it now and make hopefully sure that there is no retention risk or/and everybody is aligned on the objectives, which is also of great value to the shareholders. So that's why the implementation is now. It's also very comparable to the previous option program that has been implemented, which expired end of last year. So there's another question, whether we would have preferred either one or several partners splitting geographies, et cetera. Julie, do you want to comment on that?

Yes. Well, I think this is a high-value, very focused launch for a small but well-defined patient population. So there are a lot of synergies in the work around the medical community, the key opinion leaders and also the payers. So it makes good sense for -- to focus around geographies. So I think it makes good sense to have one fully dedicated partner to key geographies. So if someone wants to take more than the U.S., of course, that's on the table. It could also be that someone else sees a higher -- would provide higher value for us if it's another partner for Europe and other geographies. So it could be more than one if we look at the global landscape. But within a country, there's higher value for a partner and for us, likely if it's only one.

There's also a question here on whether we would sort of promote the Ascelia sort of in a broader context. And I'm assuming that is related to investor communication and so forth. So we are having our quarterly calls. We are participating in conferences and working through various, you could say, communication channels and spending some -- a good deal of time and money on that. We are always looking into how we can do this in the best possible way. And if any of you have some good ideas about how we could do that even more effectively, we are very [indiscernible]. I don't see any more questions here in the feed. So if there are no further questions, thank you all for joining our Q4 2024 call. We are very excited about the progress we made in '24 and looking forward to continuing successfully meeting the milestones here in 2025. Thank you, and have a great day.