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

Hi, everyone, and welcome to the webcast for Ascelia Pharma Q3 Financial Report 2025. On this call, we will be making forward-looking statements. 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 as usual. At Ascelia Pharma, we identify, develop and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We're based in Malmö, Sweden and are listed on Nasdaq Stockholm. We have 2 drugs in our pipeline. Orviglance is in the registration phase as we have successfully completed the pivotal Phase III clinical study SPARKLE and have submitted the new drug application to the FDA. The FDA is currently reviewing the application. Orviglance has orphan drug designation from the FDA and is targeting an addressable market opportunity of $800 million. Our other asset, Oncoral, is a patented tablet formulation of irinotecan with encouraging results in Phase I and potential to treat a range of solid tumors. We have a clinical collaboration with Taiho Oncology and are initially targeting treatment of gastric cancer. The key milestone in the third quarter was our submission to the -- of the Orviglance NDA to the FDA, which took place in early September. Also in September, Fenja Capital converted their SEK 7.5 million convertible. And at the end of September, we completed a directed share issue of SEK 30 million before cost based on inbound investor interest. With these financing events, we now have a clean balance sheet and a stronger cash balance. On Monday this week, we announced the appointment of Anton Hansson as our new Chief Financial Officer. Anton has a background in corporate finance and most recently worked with KPMG. In conjunction with the appointment of Anton, we made some changes to the management team to prepare our organization for the next phase of growth for Ascelia Pharma. We are focused on some key value-creation opportunities, in particular with Orviglance. The first objective is a timely submission and approval of Orviglance with the optimal label. The key milestones to read this objective are: first, the submission of the Orviglance NDA, which was done on the 3rd of September. This means we expect to receive a PDUFA date from the FDA, and this is likely to be shared with us in the middle of November. The approval of the Orviglance NDA is expected after a standard 10-month review by the FDA. As we submitted in early September, that would imply a time line around early July. In parallel, and the second objective is to progress Orviglance for commercialization. The key activities are to continue to advance our 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. Another important part of that is entering into a commercialization partnership. I'm very happy with the progress we're making in Ascelia Pharma and the efforts made by our team to ensure we will meet our objectives and create value for our shareholders. Now we will move into the portfolio section of our presentation, and we'll start with Orviglance. We are very excited about Orviglance and here is 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 it has an orphan drug designation from the FDA. We have commercial scale manufacturing in place, and we have strong data from 9 different clinical studies, including compelling Phase III data. As mentioned, the Orviglance new drug application has been submitted to the FDA and the review is ongoing. Now we go further into the Orviglance opportunity, and I'd like to hand the word over to Julie. Please go ahead.

Thank you, Magnus. Orviglance is a first-in-class MRI contrast agent. It addresses an unmet need for cancer patients for whom there are no good alternatives available today. Liver metastases are common in many cancer types and adequate visualization of liver tumors and metastases is critical for making timely and appropriate treatment decisions and for following up on the effect of treatment. Contrast-enhanced MRI is the gold standard procedure for examination of patients with suspected unknown tumors or metastases. And the most used contrast agents are based on the toxic heavy metal, gadolinium. In patients with severe renal impairment, the use of gadolinium-based contrast agents has been associated with an increased risk of a very severe side effect called NSF, nephrogenic systemic fibrosis, which may even have a lethal outcome. Both the European and U.S. regulatory authorities issued warnings for the use of gadolinium-based contrast agents in this group of patients. Patients with impaired kidney function will therefore, typically receive an MRI without contrast, which can result in liver images of suboptimal quality, risking that their cancer is not managed in the best possible way. We envision that Orviglance, which is based on manganese, not gadolinium, will address this unmet medical need and in the future, become an efficacious non-gadolinium liver imaging contrast agent for cancer patients with impaired kidney function. The addressable market for Orviglance has a global value of USD 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, the cancer patients who need imaging of their liver 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. Our focused ambitious launch strategy and the plans are built on advanced market insights, and they are ready and in place to support this partnering strategy and the launch of Orviglance. As mentioned, the 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 around 50,000 patients, patients that fall under the black box warning for gadolinium contrast agents. And this is about 4% of people with cancer undergoing 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 pricing levels and collected insights on the evidence needed to support access and reimbursement. And we have investigated pricing and access benchmarks of other innovative diagnostics in the U.S. And 90% of health care professionals are concerned with issues related to gadolinium contrast agents, including 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. health care professionals and the insights confirm the concerns with gadolinium in clinical practice and the unmet need for Orviglance. When speaking with experts, whether in radiology or nephrology, they confirm that an attractive alternative to gadolinium for our target patient population would address concerns of today with the potential to become a valuable addition to their clinical practice. The momentum for options for patients without gadolinium is strong. 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 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. And because it's difficult to remove in our sewage 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 toxic gadolinium, an alternative that's not associated with these potential safety and environmental concerns for patients and for the environment with gadolinium. And the industry is responding. Gadolinium -- or Orviglance will be the first-in-class liver MRI contrast agent for a future with less gadolinium and improved outcomes for our target patient population. Recent developments from large gadolinium manufacturers are focused on an early-stage injectable manganese contrast agent, which is not liver-specific like Orviglance or focused on smaller doses of gadolinium. And we are excited that we have a head start with the upcoming approval and launch of Orviglance. The go-to-market strategy for Orviglance is to launch with commercialization partners. This strategy supports our objective to maximize the value of Orviglance. Orviglance is an attractive partnering opportunity. With clinical development completed, we offer a derisked asset in the process of FDA approval. There's a clear unmet need with a focused launch, with synergies from many types of commercial stage companies working with hospital decision-makers. And our dialogue with potential partners for the successful commercialization of Orviglance is progressing. In summary, we are excited about the opportunity to bring Orviglance to approval and to market with a partner, a market representing USD 800 million annually in an addressable market for an unmet need for very vulnerable patients. We've come a long way with the successful completion of clinical development and our data supporting efficacy and safety of Orviglance is well received by the medical community. With this, I will hand over to Andreas to talk about our NDA submission and the review process ahead with the FDA.

Thank you, Julie. We submitted the NDA, the marketing approval application to the FDA on the 3rd of September. And as explained by Magnus and Julie, the aim is to obtain an approval for the use of Orviglance as liver contrast agent in patients where gadolinium contrast may be medically inadvisable, including those patients who have severely impaired kidney function. We have completed a comprehensive clinical development program, including a total of 286 patients and healthy volunteers across 9 clinical studies. And these studies have shown an improved visualization of focal liver lesions and the safety assessment has demonstrated that the most common adverse reactions relate to the GI tract and are generally mild and transient in nature. Together, the data shows a positive risk-benefit profile. The Phase III study, SPARKLE, very clearly demonstrated that visualization of focal liver lesions measured by the co-primary efficacy variables, border delineation and lesion contrast were improved with Orviglance compared to unenhanced imaging, with a very high degree of statistical significance. We could also see that more lesions could be detected in the liver with Orviglance than without. In summary, the NDA for Orviglance was submitted to the FDA in early September with a very strong data package. We expect to pass the important day 74 milestone by mid-November and then continue with a standard FDA process with a time line to completion of the review at around 10 months from submission. While still prioritizing our resources for a successful approval and partnering of Orviglance, we also have Oncoral in our portfolio. Oncoral is a tablet formulation of irinotecan, a well-established intravenous chemotherapeutic agent. A tablet formulation enables a frequent daily, low-dose dosing regimen that could offer potential advantages on both efficacy and safety compared to the infrequent high-dose intravenous administration used today. The opportunity of improving efficacy and safety by administration of daily and low doses, also called metronomic dosing, has been demonstrated for irinotecan and other chemotherapeutic agents. In our Phase I studies with Oncoral, we've seen encouraging results that suggest that oral daily administration of irinotecan could offer meaningful benefits to patients. Importantly, the Oncoral studies have demonstrated an acceptable safety profile and that the uptake of the drug after oral administration is well suited for a metronomic dosing regimen. This supports the potential and the continued development of Oncoral as a daily oral formulation of irinotecan. Our plan is to bring Oncoral into clinical Phase II in gastric cancer. Animal data has demonstrated a synergistic effect of irinotecan when combined with LONSURF, another oral cancer treatment already approved for gastric cancer, which makes this combination very interesting for us. The planned Phase II study is designed to demonstrate clinical proof of concept for the combination of Oncoral and LONSURF in gastric cancer. So our strategy is to start Oncoral development in gastric cancer, which is today a $3 billion market. Irinotecan is a well-established chemotherapy with recognized antitumor effects in many types of solid cancers or tumors. Therefore, we see opportunities for developing Oncoral in other indications, too, where daily dosing could positively impact the efficacy and safety outcomes for the patients. We are assessing these opportunities as part of our ongoing strategic planning for Oncoral. So with that, back to Julie again.

Thank you, Andreas. So I will now move to the update on our financials and priorities ahead. In Q3, our operating result was a loss, i.e., cost of SEK 15 million. The costs are lower than in Q2 this year due to the finalization of the NDA. At the end of September, we had SEK 72 million in liquid assets. This quarter, we considerably strengthened our balance sheet. In September, Fenja converted all outstanding convertibles of SEK 7.5 million. And later in the month, we successfully completed a directed share issue, raising SEK 30 million before costs. With this fundraise, we broaden and anchor our investor base. We now have a cash runway into Q4 2026 well beyond the expected FDA approval date of Orviglance. So to wrap up our call today, we have substantial value creation opportunities ahead for Orviglance and Ascelia Pharma. With Orviglance, we are bringing to market a first-in-class diagnostic drug addressing an $800 million market for patients with a high unmet need. We have 2 key objectives. One is the timely approval of Orviglance with the optimal label. We submitted the NDA early September. Mid-November, we expect communication from the FDA regarding the expected review completion and approval date. And with a standard 10-month review, we can expect an approval early July 2026. Our other objective is to progress Orviglance for commercialization for patients in need by entering into a partnering agreement for the launch and by securing that a partner and Orviglance is ready for launch by approval. These efforts continue to progress. All in all, we progressed well in Q3 with the Orviglance NDA submission and the strengthening of our balance sheet. We're excited to advance Orviglance through the FDA review process and to advance the partnering process for the launch of Orviglance. We look forward to continuing our journey with opportunities for growing Ascelia Pharma into 2026 and beyond. So that was the end of our presentation.

Thank you, everyone, for listening. We'd be happy to take any questions now.

[Operator Instructions] The next question comes from Maria Karlsson Osipova from DNB Carnegie.

Maria here from DNB Carnegie. I wanted to take the first one on the cost profile. You've mentioned no commercial preparation costs in the report that you've posted now this morning. When do you expect those costs to start appearing in the P&L? And basically, in general, how should we think about the cost picture going forward?

Yes. Thank you for your question. So since our strategy is to launch with a partner, we don't expect any significant launch preparation cost for Ascelia. Our focus in terms of preparing launch is to make sure the manufacturing is ready for a partner. And there are some costs, of course, associated with that, but not significant. In terms of the cost picture going forward, I mean, we have SEK 72 million end of the quarter in cash, and we've communicated that our cash runway is into Q4 next year. And that, of course, is towards the approval date mid next year. So that is our current business plan and then you can sort of project the expected costs based on that. But of course, costs have gone down now after the submission of the NDA, and that's a typical pattern we can expect also going forward. I mean, I say not going much further down, but yes.

All right. And to keep us on the FDA track, you -- that's the most imminent and interesting trigger upcoming, of course, and you expect a standard 10-month review time line. How confident are you in that the data set is submitted and fully meets their expectations, maybe based on your pre-NDA meetings. Are there any -- could there any pitfalls here? Any other outstanding clarifications that may come? Could you shed some light on that?

Yes. Thank you for that question. We are confident that we have submitted a very strong data package. Nothing has changed in the period from the submission until now. And that's a normal process. FDA have asked a few clarifying questions, but nothing that is indicating of any concerns. It's more to make sure that they are preparing themselves to complete the review in an adequate way.

Yes. And so you don't see any scenarios where the date for the PDUFA communication can be delayed as of now? We've talked about this before, I think, but just...

No, nothing has changed in our assessment of this application.

[Operator Instructions] The next question comes from Maria Karlsson Osipova from DNB Carnegie.

All right. Then I'll continue with another one. You've mentioned the dose-reduction trend in gadolinium that's out there. And so on that topic, when you are out there and talking about your product's competitive edge and are you hearing any objections from KOLs because we hear a lot of positive things, obviously, but do you hear any like feedback on objections that might come regarding the potential of your products in this context?

Thank you for asking that question. I think the dynamic has actually changed over the last years towards a discussion around -- an increased discussion around the safety of gadolinium even from those big manufacturers. So going from the black box warnings where gadolinium manufacturers were saying, "Well, we are not too concerned. These are very few patients." Now what is happening with those half-dose launches is that they are also bringing into the discussion at conferences and advisory board and so forth, where we don't really know does the risk is still there. We should be careful about using gadolinium. So we think it's definitely also to our advantage that the safety around gadolinium is a topic for all players in the industry. So it can help us. So we don't think it's a concern for Orviglance. And also there's no data supporting that risk of gadolinium is dependent -- risk of NSF is dependent on the dose of gadolinium. We think it's good for patients and for Orviglance that the safety is a discussion topic for all of us.