Cantargia AB (publ) (CANTA) Earnings Call Transcript & Summary

Thank you so much. It's a pleasure to be here and to present our new suggested financing. And while doing that, I will give you a background to Cantargia, and background to why we're doing this financing now and what are trying to achieve. So for those of you who don't know Cantargia, we are an IL1RAP antibody company, and we have 2 clinical programs right now, 1 in cancer and 1 in autoimmunity, inflammatory diseases. And we have made good progress in both programs. nadunolimab, where we have treated more than 300 patients with cancer, and we have interesting data, which we'll come back to. And we also have a randomized Phase II trial ongoing in triple-native breast cancer. And in CAN10, we are still in Phase I, but we are generating lots of interest from the outside world since this is really in a very, very interesting area of where the focus for drug development is right now, and we'll come into that one as well. And with this rights issue, we will extend our runway, and we'll come back to that later on as well. I would also like to point out that we have a very good IP on our programs with the cancer program, nadunolimab, having composition of matter patents until 2035, unless you get extensions with extended market exclusivity and the corresponding content that is valid until at least 2041. So the pipeline looks like this. Nadunolimab, we have most of the data in pancreatic cancer in non-small cell lung cancer, solid Phase II data, and the triple-negative breast cancer is ongoing. And in the near future, we also expect to start a fully financed trial in leukemia. In CAN10, the lead indications would be hidradenitis suppurativa, which is quite common dermatological disease, and also a more orphan type of disease like systemic sclerosis, and we're making progress in preparations for Phase II. And finally, the CANxx program, it is a number of new antibodies that can be used either as diagnostics, relevance for what we're doing right now, but also for novel follow-up concepts like antibody drug conjugates or bispecific antibodies. So if we start with CAN10 program then in autoimmune inflammatory diseases, CAN10 is a unique antibody because it's blocking 3 different disease promoting cytokines at the same time, IL-1, IL-33 and IL-36, and CAN10 has been designed to do that by binding on to a specific part of IL-1 wrapped, which is connecting to the receptors for cytokines and whereby the interactions are blocked and the inflammatory signals are blocked. And we've seen very potent effects in several animal models of the large number of diseases. So we're very confident that we have a potent drug, which will create lots of interest. If we then go into HS, hidradenitis suppurativa, it is -- this switch is more common than most people think it's affecting about 1% in the Western world. And it starts with an inflammation in higher follicles, which at that early stage can be treated with antibiotic paste or steroids. But once it gets more advanced, this inflamed hair follicles developed into something called draining tunnels, which are on the inside of the skin. And at that point in time, you will start systemic treatment with antibodies like Humira or recently, with anti-IL-17s. But the important message here is that even though these biological treatments are good, they still only get about 50% of patients to respond to these therapies, and there is a huge medical need and especially in the later-stage populations. And what has increase the interest for Cantargia here is 2 independent clinical trials, 1 from Boehringer Ingelheim, using the IL-36 blocking antibody, Spesolimab, which has shown efficacy, especially on the draining tunnels, which is one very important part of the disease. And the second drug, which has shown a great effect is an IL-1 blocker, lutikizumab from AbbVie, which have shown effects on the more inflammatory part of the disease, and good data on what's called the HiSCR of 50 and HiSCR 75. And you can see the results to the right in this slide, Spesolimab has a clear effect on the draining tunnels and let's say, a composite score called IHS4. While the velutikizumab has really strong data on the HiSCR 50 and the HiSCR 75. So to put this into context, IL-1 wrap is a cover sector for both IL-1 and IL-36946 and CAN10 blocks this [indiscernible] potently. So we believe that we have a unique opportunity here to attack 2 different parts of the disease, both the inflammatory part as well as the draining tunnels and thereby will be highly competitive to the other 2 drugs, which are based on the positive data are taken forward in clinical development in HS by AbbVie and Boehringer Ingelheim. So we are really excited to go forward here. And to quickly comment on where we are. So CAN10, we have completed the single dose as part of in health volunteers using CAN10, and we have not observed any safety signals, which is obviously the purpose of this type of Phase I trial. But another very positive thing is that we have documented a very clear dose-dependent receptor occupancy. So the higher doses we treat with the more CAN10 antibody will bind 2 disease-promoting immune cells, both monocytes as well as neutrophils. And as you can see down to the left, as we clearly get full receptor occupancy even at the doses that are lower than we intend in upcoming clinical trials. And if you look to the right, we have taken whole blood from these individuals, we have stimulated the whole blood with IL-36 and then measure our responsive, the cells are. And what you can see is that both day 1, but actually, also day 8, these cells are unsensitive to IL-6 once we have been stimulated with -- or exposed to CAN10 in the patients. So again, a great result. And so we believe that would really squeeze out as much as we possibly could hope for in this sad part. And we're now doing multiple dosing in patients with psoriasis, and we expect to present data from those trials as they mature during first half of next year and most likely in sequentially. So when the cancer program. So I wrap is also overexpressed on a large number of solid tumor types, which is really interesting. So you can say that somewhere, 70% to 90% of patients have some kind of overexpression of IL-1 rep. And it's our expression both on the cancer cells, but also in the tumor stroma typically on immune cells or fibroblasts. And this is a relevance to the work we're doing both in pancreatic cancer and lung cancer, and I will show you a little bit more of that in a second. So as most of you know, we have positive data in pancreatic cancer. We have treated newly diagnosed patients with metastatic pancreatic cancer as a combination therapy. Typically, these patients would very quickly start therapy with chemotherapy like gemcitabine, Abraxane. And we have added nadunolimab to this and studied 73 patients in several European countries and approximately 15 different hospitals. So clearly a mix of patients. But we consistently see good results. And if you look to the left, you can see that the patients had a median survival of 13.2 months. This is somewhere 3 to 4 months longer than you would expect from gemcitabine abraxane. So it is clearly associated with survival benefit compared to what you would expect from historical controls in this trial. But what we also see is that which you can see to the right, is that if you measure the tumor size on these patients, before and then during therapy, quite a few patients have a 50% or more tumor reduction, and this is a much better result than you would expect from chemotherapy alone. So the patients are clearly doing well when we add nadunulumab to these patients. What is also really interesting is that since we have a targeted therapy, we have measured how much IL1RAP there is on the tumor cells, and then try to see if there is a correlation here between high IL1RAP levels and low IL1RAP levels. And there is a clear correlation. So the patients that had the highest level of IL1RAP on the cancer cells are really the ones that are the strongest driver of this efficacy signal. And this is really positive from 2 aspects. So the first one is that if our drug works, you probably should expect these patients to do better. But it's even better than that. If you have a high IL1RAP level, that's often correlated with some very aggressive tumor mutations called KRAS mutations. And these patients have a worse prognosis when both with low IL1RAP. So in fact, you can say that patients with worse prognosis are one that is really benefiting the most in this trial. And this is clearly creating interest, and we will come back to how we're going to deliver on this. And then a second thing we discovered in this trial, which is further increasing the interest is that chemotherapy is also stimulating immune cells that are in the nerve cells. And so the chemotherapy will -- by stimulating these immune cells in use something called neuropathy. And what we've seen is that since we have nadunolimab is an IL-1 blocker, we can see that the higher doses we get of nadunolimab, the more pronounced the effect is on neuropathy, you can see that to the right. So the dose levels that we intend to use in the clinical trials are clearly delaying the onset of neuropathy, and it's also causing less patients to actually suffer from neuropathy. So this is really a great result. If you combine is in pancreatic cancer, you see that you both increase the life expectancy and you also reduced some serious side effects of chemotherapy. So a result which is clearly highly interesting in a very difficult-to-treat patient group. And then moving into non-small cell lung cancer. So what we see here is that, again, there is a subgroup of patients that are doing tremendously well, and that's what's called the non-squamous non-small cell lung cancer. What -- and that's the majority of non-small cell lung cancer patients. So what we also see is that in this group of patients, we are doing tremendously well in patients that are second line to immune therapy like [ PD1s ] And 1 reason why we're getting such good effects in this patient population can be seen up to the right. It may be difficult to see. But what we've done is that we sustained the tumors even from patients that have not received immunotherapy or patients that have received immunotherapy. And what we see is that once we stop responding to immune therapy, there has been an increase in IL1RAP positive immune cells in the tumor area. And that can most likely be linked to the unresponsiveness of the immune therapy. So our hypothesis is that once the drug is getting into a tumor, it interacts with these immune cells, which is then getting our own immune system back on track. And this is also a result which is creating lots of interest, but also it's a highly competitive area. And for both the, let's say, the pancreatic cancer opportunity as well as the non-small cell lung cancer opportunity, we have been out talking to various interested parties. So it could be a specialist physicians. It can be investors. It can be pharma companies. And I think the signal we're getting is that we have highly interesting data in both these indications, but we also live in a very competitive world. And to, let's say, remain competitive, there is a clear need to work with the patients that are most likely to respond. And to do that, we need a robust diagnostic tests, and we have made initial progress in the development of these diagnostic tests, and we still have some validation work to be done. But we clearly believe that once we are ready, we will be in a much stronger position to go into late step development in both of these indications. So I think we will have very interesting discussions during 2025 now that we can deliver on this very important aspect of the program. And so the good safety and the reduction of neuropathy is driving the interest here as well. And as an investor, obviously, we would like to see more data and there is data being generated in additional cancers in the future, both crippling into breast cancer and leukemia. So I think this program is highly relevant, and we're strengthening now by having methods to select the patients most likely to respond. So again, to look at what type of milestones do we have in front of us. So we have redesigned or are in the process of redesigning a pancreatic cancer trial. We will have new discussions with the FDA once we have advanced or a little bit further on the diagnostic methods and to be ready to start robust and solid clinical trials during H2 next year. In triple-negative breast cancer, the randomized Phase II trial is ongoing. We expect the top line data late H1 this year. And in leukemia, we are very proud that we got highly prestigious grant from the U.S. Department of Defense to work with MD Anderson Hospital in -- a cancer center in Houston. And that trial, it's being prepared, but we hope to get the first patients in during this year. And CAN10, we presented lots of positive data during 2024, and I don't see any reason why we shouldn't continue to do that. So we will continue to present data on the [indiscernible] during H1, and we will conclude the [indiscernible] during H1 to be ready to start Phase II during H2 next year. And again, for CAN10 program, we've also been out talking to KOLs and to investors and pharma companies. The program is generating lots of interest. It's still a bit early. And -- but once we are getting closer to start of Phase II, I think will be in some very interesting discussions here. And we also have got a very valuable feedback on let's say, where to go and how to position the drug in the best possible way. So by that, we're now coming into a rationale why we're doing this rights issue. So we have had a number of discussions and I can say we hope to have -- to be in a position to present some kind of partnership or other type of solutions, but all of these discussions have taken longer time than expected or has ended up in various type of proposals that which we not think is in the interest of Cantargia's shareholders. And then we order to keep the momentum and continue to intensify the development, we're not doing this rights issue. And I think we're doing it really from a position of strength with promising data in 3 cancer patients with CAN10 being halfway into Phase I with very interesting data. And the use of proceeds, it is obviously what we have ongoing clinical trials, and we have ongoing engagements, but 1 really, really important piece here is to develop this diagnostic method, which has to be robust enough to measure expression of IL-1 wrap, so it can be used to select patients. And an interesting aspect here as well is that such and I say, is not only important in pancreatic cancer. It may be adapted and may be a super important tool in non-small cell lung cancer. And as we advance CAN10, I'm sure that these type of questions will come here as well, if we should preselect patients with higher levels of IL1RAP in, for instance, skin in various diseases or other types of tissues. And again, having this assay in place would be highly competitive advantage. And in content, we are also doing a number of activities to strengthen ourselves ahead of Phase II and to be attractive for continued commercial discussions. And there is a number of aspects here. So we have toxicity studies, what we need to do to get more patient tissue to do more functional translational studies. For instance, in the skin from patients with HS, it's really going to build value ahead of Phase II trial. The project is also in a phase where we need to do more CMC development and production, which is, obviously, a big part of this fundraising. And we're also planning to be in a strong position once we submit the application for an IND in the U.S., which is planned for first half next year. So by that, I would like to hand over to Patrick to go through more the details around this rights issue, and then we're very happy to take questions.

Thank you, Goran, and good morning, everybody. So during the process that Goran alluded to, we have been close contact with our major shareholders, and they've been supporting all the discussions, and discussions and the plans that we've had. And in those discussions, we've also made sure that they are on board in securing the rights issue, and we're happy about that. So they are definitely supporting us here. The terms of the rights issue as announced yesterday evening is that the Board proposes that each shareholder holding 2 shares will be given the right to subscribe for 1 new. That will lead to the issuing of approximately 92 million new shares. That's a price of SEK 1.85 per share, leading to a gross proceeds of approximately SEK 170 million. The rights issue is secured through subscriptions commitments from the major shareholders, as I alluded to in the beginning, intention to subscribe from Board and management and a guarantee consortium up to SEK 120 million or approximately 70%. And I should say that this is a proposal made by the Board, and it's subject to approval by an extraordinary general meeting that will be held on the second of December. And obviously, in accordance with all the regulations, prospectus needs to be filed and approved by the Swedish financing [indiscernible]. We are now today on the 6th of November. We'll announce our interim reports in a week's time. While we're doing that in this period to the extraordinary general meeting is sticking. It will be held on the 2nd of December. Shortly thereafter, we will disclose a prospectus on our web page, and that will be the record date for the rights issue and subscription starting shortly thereafter, targeted for December 6, and running through to the 20th of December, which means that we are currently estimating to announce the outcome of the rights issue shortly before Christmas and receive the proceeds around the end of the year or potentially, early in January. So with that, I conclude my overall presentation of the rights issue and the time lines, and I'll hand back to question and answers.

[Operator Instructions] The next question comes from Stan Westerberg from Analysguiden.

Good morning. Okay. I guess curious to understand your historical method for measuring IL-1 expression has guided you so far in [indiscernible] patients. How -- from this method will not serve any longer in the later-stage clinical trial?

Yes, that's -- it's a technical question, but the original method was based on a polyclonal antibody is set, which we validated. But for commercial assay, we need a monoclonal antibody that can be produced reproducibly. And therefore, we are -- have made a number of such monoclonal antibodies that work in paraffin tissue, and that are giving the same results as the regional polyclonal test. [indiscernible] test cannot be produced in a reproducible way and will not be, let's say, in accordance with guidelines.

Okay. Fair enough. So could you please expand a little bit on how this diagnosis will be done in the future? Will you still be relying on histological biopsies? Or will there be any blood plasma test available?

No, it's a great question. We will -- so this first diagnostic test will certainly be developed for biopsies, which, for instance, in the case of pancreatic cancer is not too complicated as these patients are newly diagnosed from a biopsy. And also in other cancer forms, so obviously, there has to be an opportunity to take a biopsy. And then as we expanded far into skin diseases, it will be based on a skin biopsy. But I agree having a blood test, which can be developed, let's say, in parallel and become a second-generation test in the future, that will be highly interesting.

One final question, if I may. So are you prioritizing any indication in this future pivotal study to come late in 2025? Or are you still pondering on which indication you will look for?

I think we are definitely most -- at the most advanced stage in pancreatic cancer, where we have a pretty good idea of what trial design would look like in a number of patients, but we need to discuss that and get an agreement with the FDA before we disclose the numbers, but in walk a number of patients. But [indiscernible]

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

Yes, there's a couple of questions coming from the web. And the first one is, how is this new [indiscernible] issue beneficial to existing shareholders if they want to by additional shares by subscribing rather than buying them on the open market?

Yes. I don't know if Patrik or I should -- I can start and then you can fill in, Patrik. But obviously, we're just in the starting point here. And the rights let's say, the period hasn't even started. So my hope is that we will see lots of interest now in the company as this is a really great opportunity to get on board. And that will let's see how the share price will react on such the pressure

Yes. I think it's difficult to predict what the share price is going to be. That's not for me and Goran to do, but I think we can only say that we are fully taking our share or subscribing to our allotted shares in this issue and so is the entire Board and management.

Then a couple of questions relating to the PDAC study. While aren't you able to start that until the second half of 2025 and what are the costs related to that study. And when this -- the proceeds from this right [indiscernible] should be enough to start that study?

So the study design is still to be discussed and agreed with the FDA. All I can assure you is that given that we're now working in a subgroup of patients that are most likely to respond, the cost and the trial size will be smaller than if you would go for all comers. And if we manage to get an interest for a Phase III trial, obviously, it's not funded by this rights issue, but all the preparatory work and also all the discussions we've had makes us very enthusiastic and also very optimistic that we can deliver something interesting here in the future.

And relating to the biomarker route, what has been done already and what is tend to be developed in the future? And are you partnering up with someone to accomplish this?

Yes. So we have -- so first of all, and I think it relates a little bit to the previous question. So we had what can be called some kind of research reagent to build the assay upon. And it was a really good rate, but it's not fulfilling the what you need to see in the commercial preparations. So we have made new monoclonal antibodies that seem to be highly specific and reproducible and also giving similar results as we did from the research grade antibody and -- but we need to do additional validations in accordance with regulatory guidelines, which are quite labor-intensive work to be done, and we are working together with one of let's say, we established the diagnostic players in this field, but it takes time.

Yes. And are you thinking about developing your own ADCs targeting the IL1RAP in the future?

Yes, absolutely. So as you -- I think this is a great question and it's a great opportunity for Cantargia. So Cantargia has been to making our own ADCs targeting IL1RAP. This is a really hot area and an area of interest. And something you probably be talking more about next year. But once we are -- have more mature data, and we also need to secure IP before presenting it. But it is clearly a great opportunity, and an opportunity which is also of input for other parties.

Thank you. And a couple of questions related to departing discussions. Why do you think they didn't end up in a timely manner? And what do you think about the sort of rate of success in the future, continuing these discussions.

So all I can say is that we had a number of discussions both with specialist investors as well as pharma companies as well as more specialized companies looking into certain disease areas. It is very difficult to say why things take longer time, it probably depends on what priorities the other parties may have and what type of opportunities we are looking for in parallel. So all I can say is that we are very -- we have lots of interesting discussions ongoing -- very -- for some reason, we have not been able to deliver, but it's not that we are dead in any way. It just took longer time and didn't give the offers we were looking for, and I think we have to be, let's say, take our shareholders' interest into account and make sure that the company is well financed and that's what we're doing right now.

And a couple of questions relating to costs. Are you still reviewing opportunities to further cost reductions? And is there any possibility to recover any costs from the PanCan cooperation?

So obviously, we try to be as cost efficient as we possibly can. Most of our costs are in -- since we're a small virtual company most of our costs is related to outsourcing of clinical trials and production and other research agreements. But clearly, we'll we're not investing in anything which we don't believe is value adding to the company or necessary from a development perspective. And when it comes to PanCan, we did not invest an immaterial amount of money into collaboration as it ended before we started a clinical trial.

Maybe I can add. I mean, we are, of course, always looking into sources of non-dilutive funding, such as if we can apply for grants or on studies and collaboration manner, such as we are doing now with the MD Anderson Cancer Center in Houston, funded by or sponsored by [indiscernible]. So that's not really cost cutting, if that's the question, but it's more alternative ways of funding important activities. And that's all we're always looking to.

And what I can probably add here is that there is also a large number of, let's say, more organizations driven by such grants that have approached us to do future clinical trials. We have nothing concrete set in stone, but it is also great opportunity to advance our programs.

Thank you. And by that, we have covered all the written questions. There are no more questions from the telco.

Yes. So by that, I'd like to thank you for your attention, and I can assure you that we are see lots of interesting events happening in Cantargia in 2025. There is interest from the outside world in what we're doing. We get lots of support from various experts in the medical fields we're working with really think we're on the right track. I think the publication of of the pancreatic cancer data in clinical cancer research is clearly a recognition of that. So I look forward to continue this journey. It's we're sitting on some really interesting golden budgets that we just need to make sure that we continue to deliver on in the best.