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

Welcome to the Cantargia Q4 2024 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Damian Marron; CFO, Patrik Renblad; and Chairman, Magnus Persson. Please go ahead.

Thank you, and welcome. My name is Magnus Persson. I'm the Chairman of the Board of the company. By background, I'm a medical doctor and a scientist, and I have more than 3 decades of professional life science investing experience. You're not used to see me at these calls. And I'm here since I would like to shed a little bit of light on the recent transition of management. The Board decided after careful consideration that it was time to introduce new energy to the company and to find a manager with more transactional, commercial and international experience. Damian Marron is a Board member and thus knows the company very well and is generally well suited for the job, and he has volunteered to step in as our CEO. We -- I and the Board wish to thank Goran Forsberg for his 11 years as CEO of Cantargia and to stress that there was nothing untoward behind our decision to transition management. So with that, I would like to leave the word to Damian, and I will -- so Damian, the floor is yours.

Thank you very much, Magnus. Thank you. I am very excited to be leading Cantargia at this time. We've got a number of very interesting opportunities in our portfolio. And my intention during my tenure here is to drive and to accelerate the value creation for all of our stakeholders on the back of these opportunities. Just to give you a brief introduction to myself, I've actually been 40 years now in the pharma and biotech industry. I'm a scientist by training, a pharmacologist and cell biologist. I did about 10 years in big pharma R&D, most of that in clinical development. I then had a couple of business roles and was Head of Business Development for 3M Healthcare in Europe for 5 years, moved into the biotech industry in 2002, a company called NicOx in the South of France, which was publicly listed. I helped raise there over EUR 250 million and did deals with Merck and with Pfizer and with some biotechs and moved into CEO in 2008. I subsequently CEO-ed 4 companies, 2 of which were acquired, one by Roche for a rather nice sum of money, another by another biotech. I IPO-ed one of my companies on the Euronext in Paris and unfortunately, also had to close one down because we couldn't see a way forward for the company. I moved into having a portfolio of Board positions about 8 years ago, and I also do advisory work with a boutique healthcare transaction advisory firm. So here we are today. Let's have a look at the events of the fourth quarter and since that date. So we reported positive new results on biomarkers and on safety from the ongoing clinical Phase I study with CAN10, our immune and inflammatory asset. Looking at nadunolimab, we had new results from the clinical studies, CESTAFOUR and CAPAFOUR, where we tested nadunolimab in combination with chemo, chemotherapy in several cancers. We saw positive signals of effect, particularly in non-small cell lung cancer and in gastrointestinal cancers. Going back to CAN10, we expanded the study to explore higher doses of the antibody based on the positive results we saw and the very good tolerability. Finally, in Q4, we carried out a rights issue, which generated proceeds of SEK 120 million before the deduction of the issuing expenses. And obviously, as Magnus has just spoken about, since the reporting period, Goran Forsberg has stepped down as CEO, and I am now leading the company forward. So first of all, I'm going to spend a few minutes on CAN10, our antibody in autoimmune inflammatory disease. This is going to be generating results in the next few weeks, starting in the next few weeks from the multiple ascending dose part of the study. So that's why I'm focusing on this first. Just first of all, the design of that study, that first-in-human study. So we have already completed that single ascending dose portion of the study and reported interesting first results. Eventually, we did 10 dose cohorts. As I have just mentioned, we increased the number of cohorts based on the results we saw. We are now in the multiple ascending dose portion of the study where we will give 4 doses, 2 weeks apart, either to healthy volunteers or to groups of patients with plaque psoriasis. There will be 2 dose cohorts for the volunteers and 2 dose cohorts for plaque psoriasis are planned. The healthy volunteers allows us to look at higher doses and prepare for our Phase II study that I will tell you more about in just a moment. And the plaque psoriasis patients will enable us to look at mechanistic studies and biomarkers in an immune inflammatory skin disease. So if we take a look at some of those results that we saw in the single ascending dose part of the study. So as in the multiple ascending dose the cohorts were blinded and placebo controlled. So in each dose cohort, we had 6 subjects on CAN10 and 2 subjects on placebo. We have reported 9 dose groups from 100 milligrams to 400 milligrams so far. In terms of safety, which is always clearly a very important parameter in a first-in-human study, we have seen no safety signals of any significance whatsoever, which is clearly very comforting. We have been able to demonstrate, as you see in the bottom right -- bottom left, excuse me, in the bottom left of the slide, you can see that we get full receptor occupancy documented at [ Cmax ] starting from about the middle of the dose cohort range from, say, cohort 5 and on and upwards. And you can see that we have that occupancy in monocytes and in neutrophils. We have also shown potent pharmacodynamic effects on IL-1 and IL-36, 2 of the key cytokines, inflammatory cytokines we aim to block with CAN10, both at Cmax on the day of dosing, so the maximum concentration that the drug reaches in the blood, but also 8 days later from that single dose on day 1. And so you see on the right-hand side, you see, first of all, the day 1 results where you can see a complete abrogation of the activity of IL-36. It can no longer induce IL-6 release, which is what we are measuring. And that you see again really significantly from dose 5 onwards, Cohort 5 onwards. And you see at day 8, perhaps even more impressive results that you really see the abrogation starting again from around dose Cohort 5, but very strongly. And that I remind you is from a dose given 8 days previously. So after this successful SAD, we have moved into the MAD part of the study. We are building towards a study in hidradenitis suppurativa or HS. That's going to be our initial indication for a Phase II study with CAN10. So HS is a severe chronic inflammatory skin disease, as you can see from the pictures on the right-hand side of the slide. You can see varying degrees of severity of the disease in those pictures. Patients get nodules, get scars and eventually, they get what I'll call draining tunnels in the skin, which are very unpleasant and very painful indeed. You can see underneath a graphic of how the different stages affect the skin layer, causing more and more destruction and inflammation. It is a disease with several inflammatory components involved in the pathology, and this is one of the reasons we believe, obviously, that CAN10 can be very helpful given that it affects multiple cytokines in the IL-1 family. It has an estimated prevalence of 0.7% to 1.2%. So there are a lot of patients with this disease, even if it's not particularly well known in the way that, say atopic dermatitis or psoriasis are. There are current treatments, but they are somewhat inadequate so up until recently, antibiotic steroids. Then we have Humira, the anti-TNF antibody. Recently, we have antibodies against the cytokine IL-17. They are Cosentyx and Bimzelx. And with those products, about 50% of patients respond in trials, which, of course, means 50% don't. And what small patients can become refractory to those treatments. So there is a very, very large medical need in this area. And just talking to you about why CAN10 is particularly well suited to this indication. We affect through our interaction with the IL1RAP, the IL-1 Receptor Accessory Protein. We affect the production of -- or the activity of IL-1 alpha and IL-1 beta, the IL-1 cytokines, but also IL-33 through its ST2 receptor and also the IL-36 receptor complex affecting IL-36 alpha, beta and gamma. Why are these important? Because they are associated with different facets of this disease. The IL-1 drives inflammation, IL-33 drives itch and IL-36 we've seen us being quite responsible for the development of the draining tunnels. Interestingly and very importantly, we have clinical proof of concept for at least the IL-1 and the IL-36 approach. So there are antibodies in development, one targeting IL-1, which has shown some efficacy in HS, that's called lutikizumab. And one targeting IL-36 called spesolimab, which has been shown to have effect on the draining tunnels. We know that we block all 3 of these cytokines. So we expect in one treatment to be able to combine the treatment effect of both lutikizumab and spesolimab and add extra efficacy on top of that. So we are going to be moving forward with that program through the year. Now moving to nadunolimab. So for nadunolimab, we have published results in PDAC, Pancreatic Ductal Adenocarcinoma, showing a very strong benefit in patients, particularly those who enter the study with a high level of IL1RAP. And in fact, as well as those patients entry with a high level, it's also known it's been demonstrated that having a IL1RAP is a very poor prognostic factor in pancreatic cancer. Because we saw these very interesting results, we have a diagnostic test in development to be able to have a companion diagnostic to nadunolimab that will identify these IL1RAP patients who benefit particularly well from the treatment with nadunolimab. This will enable our continued development in the IL1RAP subgroup. And during this year, we're planning for regulatory interactions about the diagnostic test and the further development of nadunolimab in pancreatic cancer. We also reported results from CESTAFOUR and CAPAFOUR with positive signals of efficacy in both NSCLC lung cancer and gastrointestinal cancers. Importantly, we are estimating that we will be able to release the initial results from our first randomized controlled Phase II study of nadunolimab, the study called TRIFOUR, which is in triple-negative breast cancer or TNBC -- TNBC, and we expect to release those around mid-2025. Also, as we have spoken about previously, we have an acute myeloid leukemia study in the final steps of preparation, a study sponsored by the U.S. Department of Defense and which will be conducted at the University of Texas, MD Anderson Cancer Center. So just to summarize there, overall now, we have over 300 patients treated with nadunolimab. And clearly, there are multiple opportunities here to take nadunolimab forward and make a significant difference to the treatment of patients with these cancers. Just as a reminder, you have seen this data before, but just as a reminder of the efficacy of nadunolimab in PDAC and the differential effect according to IL1RAP. So you can see here on these 2 graphics, the one on the left is the overall survival by IL1RAP subgroup. And you can see here that we saw a considerably higher survival rate in the IL1RAP high subgroup. And in fact, the OS in IL-1 high RAP group was 14.2 months versus 10.6 months for the IL1RAP low patients, and that was statistically significant difference. And you can see on the right what has driven this. You can see the IL1RAP high group on the left, you can see where the lines go down, that's where there's a response to treatment. And you can see we had many more and larger responses to nadunolimab in the IL1RAP patients versus the IL1RAP low. These responses were deeper and more durable with over 11 patients having a 50% or more tumor size reduction. So this really is what drives the interest to move nadunolimab forward into the next stage of development in PDAC. Just finally here, I'm going to say a few words about the milestones we have coming up during 2024 -- 2025 even, excuse me. So for nadunolimab with PDAC, we are developing, as we said, the CDx, we expect to have news and regulatory update around Q2. For TNBC, we expect shortly that the recruitment for the TRIFOUR study will be completed. And as I mentioned, we will have those initial results in midyear. And we expect reasonably soon to be able to announce the start of the AML study that I spoke about a moment ago. With CAN10, as I mentioned, we will start to bring out the initial MAD results in Q1 and the complete results in Q2. And we're planning towards the start, hopefully, of a Phase II study in HS towards the end of the year. We also have our [indiscernible] platform, and we may have new results from that and also of the preclinical and translational results from nadunolimab and CAN10. So I hope you'll agree that's an extensive news flow that we have during 2025. With that, I will hand over to Patrik to talk about the financial results.

Thank you very much, Damian, and I am happy to present to you the -- why is this not working? There we go. So the financial highlights are here on the screen in front of you as reported this morning. And I'd like to say that we see, in general, on the cost side, a reduction both on R&D expenses and on general and administration, both in the quarter and obviously in the full year numbers. So that we ended the year with operating expenses of -- or the quarter, sorry, of 40.7%. That was a total reduction of 43%. And if we look at the full year, our operating expenses were at SEK 168.6 million, a total reduction of 42%. And then our net reported loss a little bit lower due to positive impact from our net financial items. But -- so overall, the message that we have been sharing across the year is sort of continued in the quarter, and we -- the reduction of our clinical activity, mainly on nadunolimab and less production cost than in the previous period comparison period is what's driving this reduction. Now over to our cash position; we had a net outflow in the quarter of about SEK 26 million. We reported available funds of SEK 33 million. But I would like to -- for the purpose of this call and for answering some questions, I would say that we have virtually SEK 140 million on our available funds. There were SEK 107 million at an issuing institute by the end of the year that we received in early January from the completed rights issue. But obviously, for accounting reasons, we are reporting SEK 33 million, but virtually SEK 140 million. With that, I hand back over to questions and answers.

Thanks, Patrik. So thank you all for your attention to this. So as you've seen, we do have a number of high potential opportunities here. And I just want to say in my closing remarks here that my focus is absolutely to prioritize and capitalize on these opportunities in the coming months. So I am absolutely dedicated to that on your behalf of shareholders, and I thank you for your support for the company. With that, we are now available for your questions. Thank you.

[Operator Instructions] The next question comes from Richard Ramanius from Redeye.

I have 2 series of questions. The first one is about the CEO change and also this ties in I guess, with transaction and business development. So my question is, is the CEO change related to what I see as the need to close at least one transaction with one of your projects -- one of your programs, CAN10 or CAN04 in this year? And as a follow-up to that, where do you see the most interest in oncology or immunology? And how important will the triple negative breast cancer results with CAN04 be for potential licensing discussions?

Thank you, Richard. I'll let Magnus say a few words first, and then I will answer the rest of your question. Magnus?

Yes. Thanks, and thanks for the question. And is it -- was it specifically one item of those you mentioned that we -- that the Board considered when we decided to change CEO. It was -- as I mentioned, it was sort of the energy level and the characteristics that we thought the company needed at this present time. So in a way, the answer is yes. But in a way, the answer is also much broader than that the organization, the development programs, our outreach to various stakeholders needed a new level of energy, we can say. So that's -- and I think maybe, Damian, you answered the latter part of the question. Was that a sufficient answer for you?

Yes. Yes.

So Richard, yes, just to answer the rest of your question. Yes, we are focused on, as I said, capitalizing on the opportunities, which you can take to me in a transaction that could be many different structures to transactions, which could be very helpful in moving Cantargia forward. Clearly, we have 2 very interesting lead candidates here nadunolimab with quite a bit of clinical data now and a strong indication of activity in a PDAC in a cancer of very high need. So obviously, that is an interesting project, and we are talking to people about that. And in CAN10, we have a project, A, which is perfectly by its mechanism of action, perfectly suited to the treatment of a disease like HS, but also many others in immune inflammatory disease, both dermatological and wider. And in the way things go in our industry, immune and inflammatory diseases is a particular focus of both the industry and investors at this time. So although that project is much earlier, there is also the potential to do some transaction around that. So we are exploring all of those and the intention is to drive forward and look to concretize the transaction this year.

Understand. My next series of questions regard indication HS. And I have 2 questions on that, just to understand a bit better the market size. You mentioned around 50% anti-IL-17 and Humira. So what -- how should we interpret that to mean in terms of total patients that do not respond? Is that -- would that be like 50% respond to Humira and you got 50% -- 50% respond to anti-IL-17, does that mean around 25% of the market remains or I guess it's more than that?

Yes, of course. I mean that is what -- how people respond to the products that are currently on the market. And this is the kind of response rate we're seeing to the anti-IL-1 and the anti-IL-36 currently in clinical development as well. So yes, HS is a very big market and patients who don't respond to the current drugs or who become refractory that is a very large part of the market. The treatment in severe patients is particularly underserved and severe patients interestingly in this disease form over half the population. It's about 60%. But we can also and would expect to be very effective in patients who have not received any prior biologic treatment. So those are discussions we've been having with key opinion leader boards and are informing the design of the Phase II study, which we have not divulged at this point. But it is -- we expect it to be a study that can look at all the subtypes of those patients, if you like. And so therefore, eventually bring all of those patients into being available for treatment with CAN10.

I think you almost answered my last question. You mentioned Stage 3, but would you -- does that mean you would also enroll Stage 1 patients?

Sorry, can you say that again? I just missed what you said. Beg your pardon.

Would you treat patients in just Stage 1 HS?

No, no, not just in Stage 1. No, no, no, absolutely not.

I mean Stage 1 through Stage 3?

Potentially, yes. We need to make final decisions. I don't want to preempt. We're still discussing with KOLs. We -- again, we will have discussions with regulators. But the message I want is to put across is that CAN10 will not -- should not be restricted to one particular portion of that patient population. Obviously, biologic treatments tend to be used in more severe patients. That is a very common aspect of immune and inflammatory diseases across the whole spectrum.

The next question comes from Luisa Morgado from Van Lanschot Kempen.

And of course, congrats, Damian, for the new role. Maybe just to start out, as you mentioned, you will now be a bit more focused in regards to being able to achieve any kind of structure like the transaction this year. Could you elaborate a bit in terms of if anything is changing in the strategy and also prioritizing other -- in terms of prioritizing stuff in the pipeline?

That's a great question. Thank you very much. I would say that there's a natural somewhat change in prioritization, not an abrupt change in prioritization. But clearly, as CAN10 has entered the clinic. And as I say, it's a project that is receiving a lot of attention then -- we naturally are moving towards a balance of priorities around those 2 projects. Nadunolimab has been our driver for a long time. But CAN10 is bringing very much a second leg to this. And again, we will be -- as we go forward, we'll be looking very closely at where we allocate our resources to -- it's going to be on the opportunities that are going to maximize the value to the stakeholders.

That's quite clear. And in terms of the AML study, could you elaborate a bit more on the timelines, but also if you already have any, of course, aspects in trial design that you can advance?

No. Nothing that I can give you right at this moment. But what I can say is we are in the very final stages of preparation. And of course, we will announce once that study is underway, and there will be some further details of the study design in that announcement.

Okay. And maybe just one final question, maybe for Patrik. What can we expect in terms of expenses for this year? Will the level be maintained or will we see, of course, an increase with the Phase II start with CAN10 and of course, also dependent on CAN04 eventually potentially starting?

Yes. No, I think we should -- our guidance on runway is towards the end of the year or early 2026, if we stretch it. But that is excluding any start of clinical studies, such start -- well, of the 2 you mentioned, not the AML, that's starting anyway. But starting Phase II in HS or the next study, clinical study with nadunolimab in PDAC would require that we have -- that we've executed on a transaction, as Damian has mentioned. But excluding that, the runway is towards the end of the year or early 2026. Was that clear, Luisa?

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

There's a couple of written questions. The first one being, you spoke in the introduction about your backgrounds in the venture business. How will you leverage that to create value for Cantargia?

Magnus, I think that's on for you.

Is that a question for me, Magnus?

You have the venture background, Magnus?

I mean I've been -- having worked in the sort of financial side of life science entrepreneurship, I have brought several companies from sort of lab environment to a public environment and on to acquisitions by pharma or bigger biotechs. So I think I have a pretty good sense of sort of value building, building organizations in this sector and identifying and prioritizing between programs and sort of being prudent on the budgeting side because having -- being a financier myself. So I think many years of developing medicinal products is a good starting point. And I've been sharing private and public companies, both here in Sweden, in many jurisdictions in Europe and in the U.S. as well. So pretty decent sort of roaster of experience that I think can become -- can be handy to Cantargia, of course. And ultimately, it's the Nomination Committee and the Annual General Meeting who decides who sits on the Board and who Chairs it. So it's not my decision. I'm elected.

Thank you. And the next question is regarding the AML study. Do you see any risk of that being affected by the new administration in the U.S.?

Thank you. That's an excellent question. Unfortunately, I think I have no more visibility into the decisions of the administration in the U.S. than many -- much more educated commentators than I on that sort of subject. We can only work with what we know. And at the moment, we have had no news to the contrary. As I say, we are in touch with the University of Texas, MD Anderson Center. And for the moment, the study is moving forward. That's all I can say.

Thank you. And could you clarify the plans and the outlook for nadunolimab in PDAC in during the next -- or during this year?

Yes. Of course, yes, certainly. The main activity focus during this year is actually the development of the companion diagnostic that will allow us to be able to identify those IL1RAP patients with the poor prognosis, but who actually respond better to the treatment than the patients with the better prognosis, but the low IL1RAP level when they enter the study. So that is a step we have to go through before we can start the next clinical study focused on that high IL1RAP group. Of course, in parallel, we look at preparations, making sure we have the drug ready. And of course, most importantly, that we have the clinical design hammered out. We are discussing. We -- as I said earlier, we'll discuss with regulators. That will be about both the study design and about the companion diagnostic. But that is going to be the main focus as we move forward through 2025.

Thank you. And the Swedish AP fund, AP4 has announced that they have been selling shares in the company. Do you have any insights on what is happening from their side?

I do. But I think probably the best place to explain the circumstances of that is Patrik.

Yes. Thank you. And yes, we -- usually, we don't comment on changes of shareholdings or the share price. But in this case, we will make an exception. AP4 remains our biggest shareholder. AP4 held 9.9% of the votes and the shares in the company before the rights issue, and they will hold 9.9% of the shares after the issue as of today. There was a technical -- for a technical reason, they ended up above the threshold of 10% and therefore, had to announce that both as a flagging, both when they went up and when that was then corrected subsequently. So I understand the question, and it's resolved and that is my -- our answer to that question.

Thank you. That were all the questions coming in from the web.

Thank you. Thank you, Magnus. Thank you, Patrik. Thank you for all the shareholders and our analysts who attended the call and asked such good questions. Thanks to our shareholders for your continued support. And as I've said a couple of times already on this call, be assured that my focus is on creating greater stakeholder value and accelerating the creation of that value. And I look forward to communicating with you as we move through 2025. Thank you very much, everybody.

Thank you.