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

Welcome to the Cantargia Q2 Report 2025 presentation. [Operator Instructions] Now I will hand the conference over to the speakers. CEO, Damian Marron; CFO, Patrik Renblad and CBO Ton Berkien, please go ahead.

Hello, everybody, and welcome to this presentation today of our 2Q and first half interim report 2025. Moving straight on. We have our safe harbor statement. We are, of course, a listed company on Nasdaq Stockholm Exchange. And as has just been mentioned, you have 3 speakers here today, myself, Interim CEO; Ton Berkien, our Chief Business Officer; and Patrik Renblad, our Chief Financial Officer. So moving to the events of the second quarter and the events since the end of that period as well. In the second quarter, we appointed Morten Lind Jensen as our Chief Medical Officer. We then moved on to select treatment-resistant atopic dermatitis as the second indication for our CAN10 phase 2 program, CAN10 being our anti-IL1RAP antibody for immune inflammatory disorders. We also announced that the pharmacokinetic modeling of the -- of CAN10 confirmed the choice of every 4-week dosing in phase 2 coming from our first-in-human study that has been running for some time and is now nearing its end. Also importantly, during the quarter, the U.S. FDA awarded to nadunolimab, our most advanced product in oncology. A fast track designation for the treatment of patients expressing high levels of IL1RAP in combination with chemotherapy to treat patients with PDAC pancreatic ductal adenocarcinoma. Finally, we signed a loan facility of SEK 50 million, not to provide us with extra flexibility as we held deal discussions, which I'm sure everybody now knows about. And in fact, the first significant event after the reporting period was indeed that we announced that Otsuka Pharmaceutical had acquired CAN10 for an upfront of $33 million, plus an additional $580 million in potential milestone payments and earnouts on future sales. That deal is expected to close in Q3 2025, and Tom will give you further details as we go through the presentation. We also announced preliminary results from the TRIFOUR phase 2 study in TNBC. They showed that we did not demonstrate in the second part of the study, a difference in the overall response rate between nadunolimab in combination with chemotherapy and the reference group on chemotherapy alone. That study continues on, and we will have overall survival data around the end of this year. And I will say a few more words about that as well as we go further into the presentation. And finally, we announced on Monday evening this week that we had appointed Dr. Hilde Steineger as our new CEO, effective from September 1, 2025. So indeed, this will be my last results call with you. And you -- in the future, you will be hearing from Hilde and the team, and we're absolutely delighted to have Hilde on board, it has to be said, and I will give you a bit more on Hilde's background later in the presentation. Moving down to just a few words on CAN10 and why CAN10 is such an interesting product became the subject of our transaction with Otsuka. So CAN10 provides really a unique opportunity to block IL-1 superfamily signaling across multiple diseases and multiple therapy areas. The IL-1 family of ligands and receptors is associated with acute and chronic inflammation. And there's very strong evidence of IL-1 family cytokines that's IL-1, alpha and beta, IL-33 and IL-36 alpha and beta and gamma driving multiple different inflammatory diseases. What's been seen in the clinic to date is that individual blockade of these IL-1 family members has resulted in a degree of efficacy, but probably not the sort of efficacy that you really want to see across. so there really is a huge potential for this mechanism and for CAN10. As I mentioned a few moments ago, we've been conducting a first in-human study for some time, single ascending dose and that multiple ascending dose. We completed a single ascending dose a while ago, 10 different cohorts, and we moved on into the multiple ascending dose where we have performed 2 dose cohorts in healthy volunteers controlled by placebo, where we gave subcutaneous doses on day 1 and 7, then every 14 days. This study is the study that will allow us to move into phase 2. I say us to move into phase 2 as it now is, it will be, of course, Otsuka, who will be handling that following the transaction with them. What we have shown is that we can achieve full IL1RAP occupancy on different immune cells and that we have complete blockade of IL-1 family cytokines. We also, of course, very importantly have seen no safety concerns. And as I mentioned, our pharmacokinetic results should support for weekly dosing. We have a linear PK profile with high bioavailability and the simulations performed on all patients we have treated show that we can stay above the minimum level that we need to occupy all the receptors and block those cytokines over a period of 4 weeks. So that leads us to the transaction of Otsuka. And I'll hand you over here to our CBO, Ton Berkien, to tell you more about that. Over to you, Ton.

Thank you, Damian. Obviously, very happy to tell you a little bit about super deal. Obviously, and as mentioned, we are very pleased of having this agreement signed with Otsuka on our CAN10 program. And I think it's fair to say that the team of Cantargia has done a great job to get this over the finish line. In an environment which is actually quite challenging with respect to deal making. For some context for the ones who are not very familiar of Otsuka is Ostuka is a Japanese well-established pharmaceutical company mainly active in CNS and oncology, but where the company has, in particular, immunology, strongly earmarked as a growth area. And as you will see, Otsuka has been on a strong growth trajectory over the last couple of years to focus on the growth in immunology. So as for the transaction, as we communicated, mid-July, the transaction is structured as an asset transaction, which includes the rights to CAN10, which is our phase 1 program and a preclinical backup. Otsuka will have the rights, obviously, but also the obligations to develop, to register and commercialize the programs. And as Damian already alluded to the financials, including $33 million upfront, complemented with $580 million in milestone payments, making the total deal value of SEK 630 million. The earn-out payments are, of course, on top of that, and they will end up as tiered up to double-digit payments. As mentioned, also, of course, touching upon the deal rationale beyond the established franchises as oncology and CNS, Otsuka has strongly commercialization and BT focused on immunology and connective tissue disorders for which they have products on the market or very close to commercialization. So indications you can think of interest can include, of course, large indications, such as rheumatoid arthritis or atopic dermatitis, but also smaller specialty indications such as systemic sclerosis or lupus, for instance. And besides the short-term revenue generations generated that Otsuka has, Otsuka has also building an early and mid-stage clinical pipeline of growth programs. And as you can see, of course, on the slide as well, the latter is mainly driven by a various number of BD activities over the last couple of years where the company has acquired a number of companies to build up antibody platform competencies from 2018 on as well as know-how, of course, and have acquired a number of antibody programs, including CAN10, of course, to fill the pipeline -- the early-stage pipeline to move that towards commercialization. And we believe that Otsuka has interest in looking maybe further into follow-up programs. And that's why we have a potential option in the agreement where Otsuka can follow Cantargia's efforts and potentially have the rights to maybe additional programs, which, of course, for Cantargia brings perspective also for the near-term future. So for Cantargia, it was of essence to have a partner with the ambitions to develop CAN10 as broad as possible as the indications that you could see on the previous slide, which we believe, of course, supports our mechanism of action. So with that brief growth strategy overview and explaining high level, the deal rationale. I will hand over and hand back to Damian for further updates.

Many thanks, Ton. And let me second your thanks to our team and yourself for really bringing this deal through and against a very challenging background, as you said. That really is a fantastic achievement, and we're really all looking forward to working with Otsuka to take content forward. But of course, we do have the rest of our portfolio. And I'm going to say a few words now about news on nadunolimab in the last quarter. Talking first about the TRIFOUR preliminary results. First and very important thing to say in this first controlled data set that we've generated with nadunolimab is that we see no signal of added toxicity when adding nadunolimab to chemotherapy. So that's a very important and positive finding for us. We saw a very similar ORR, overall response rate, that is. And both the arm of nadunolimab and in the reference chemotherapy only arms. Both arms report slightly higher than historical benchmark for these types of patients. But this is data that we have to live with. We have subgroup analyses ongoing. And obviously, we made the overall survival data, and it's important to say that in triple-negative breast cancer, which obviously is what the TRIFOUR study was in. Overall response rates are not necessarily indicative of what you will see in overall survival. This is the case in many cancer indications and it's definitely the case here. So we do await these overall survival data with great interest. And in the meantime, we're cautious not to over interpret these top line data. And finally, I should say that the safety data I mentioned is supportive of our development across indications such as, of course, PDAC, which is our lead indication of nadunolimab, but also in other indications, particularly other indications particularly like PDAC are very sensitive to IL1RAP. What we also achieved in Q2 was a fast track designation in PDAC, so this was granted by the FDA on the basis of the data that we have generated to date and granted for the treatment of patients with metastatic PDAC who have IL1RAP expression levels and for the treatment of those patients with nadunolimab in combination with chemotherapy. This reflects a very high unmet medical need in metastatic PDAC, where there have not been any new product approvals for long time. And it also reflects, we believe, the strength and interest of the data that we've generated to date. Importantly, it also facilitates further development in nadunolimab with more frequent interactions with the FDA and eligibility for accelerated approval and priority review as we go forward. We also have, of course, our platform, CANxx. And during the quarter, we also released some very interesting data from the platform. So CANxx as a platform overall, offers multiple development opportunities to create products such as antibody drug conjugates, ADCs and bispecific compound antibodies as well. And that is both for immunology and for oncology. We have a library of over 200 anti-IL1RAP antibodies within this platform that can serve as a source of new drug candidates, and we're very excited about the potential to do so. In terms of looking at oncology both chemotherapy and existing ADCs induced IL-1 in tumors, which can lead to chemoresistance and blocking IL-1 pathways as we know that our anti-IL1RAP antibodies can do. Therefore, means we could get better efficacy of chemotherapy agents and ADCs. And we have published this data showing an IL-1 rap targeting antibody drug conjugate. It targets both the tumor cells and the microenvironment around the tumor. And what we were able to see was that conjugating the drug the chemotherapeutic toxin to our IL1RAP antibody did not reduce our binding to IL1RAP, so that's very important. And we saw very good efficacy in different in vivo models here. So this is clearly something which can be of great interest as we go forward. We also have in the platform antibodies that have full blocking activity like content that we have just transacted around with Otsuka as you've heard. But also antibodies that can block only certain parts of the IL1RAP mediated pathway if we want, which means we can generate antibodies that deepen or widen the IL1 family blocking and inflammation. So we have lots of exciting opportunities here to continue to build our inflammatory and oncology platform as we move forward. Now to the appointment of our new CEO. So we're absolutely delighted that we have been able to appoint Dr. Hilde Steineger as our new CEO. That's going to be effective from September 1. Hilde has great experience as a biotech executive, but also a proven track record across financial analysis in the life sciences involved in the founding and running of a life science venture capital firm and also in business development. Hilde is a 2-time CEO. She joins Cantargia from NorthSea Therapeutics, where she has been the Co-Founder and Chief Operating Officer since 2017, as well at the same time, being the CEO of Staten Biotechnology during that same period. And there Hilde led a $480 million deal with Novo Nordisk. So Hilde will be our CEO to lead us on from the Otsuka transaction and to continue to build value with nadunolimab and with our platform. I have had the most wonderful time in the last 7 months as the CEO of Cantargia's, the interim CEO. But it was always intended that I would step down and move back to the board, and that is what is now going to happen, and I'm really looking forward to supporting Hilde and our dedicated and talented team as they take Cantargia forward. So now let's take a quick look at our milestones. So in Q3, we already in this year, we've had a lot of milestones already achieved the initial phase 1 MAD results. We have phase 2 MAD results as well around content and the closing of the Otsuka transaction will be in Q3. We achieved the PDAC Fast Track designation. We've obviously spoken about TRIFOUR. And we also started a study with the MD Anderson Cancer Center in Texas, U.S. around AML. And we will have other new preclinical and translational results coming through during the rest of this year. So we will continue to have an extensive news flow right through 2025. Now I'll hand you over to Patrik Renblad our CFO, to take you through the financial results. Patrik?

Thank you, Damian. So in the second quarter, we, of course, had a lot of focus on the Otsuka transaction and preparing and getting ready for that. But in parallel or in -- while doing that, our teams were focused on continuing the development of CAN10 and nadunolimab and the preclinical portfolio. And you can see that as there is not really a change in activity between the second quarter this year and the previous comparison period, just a 10% reduction in our overall operating expenses, slightly below also for R&D. The quarter's increase in admin expenses is a result of the activities around the Otsuka transaction. The same applies when we look at the first 6 months, basically, no change. No surprises happening there, with a slightly increase in our administrative expenses, as I alluded to for the Otsuka transaction and the organizations that we have had on the staff of the company. We have -- we had SEK 82 million of cash by the end of the second quarter after a cash outflow of SEK 44 million. We, of course, are looking forward to actually the first time in the company's history to recognize revenue and receive non-dilutive funding here in the third quarter. And when we do that, we intend to repay the short-term loan that we obtained as Damian alluded to, to secure the short-term operations and our negotiation with Otsuka. So we intend to repay that and be on a very much more stable financial position that we were -- than we were before. With that, I hand back over to you, Damian.

Thank you, Patrik. So as you've seen, we've had a very busy Q2 and a major period just after Q2. Momentous time for the company with the Otsuka transaction with the appointment of Hilde Steineger as our new permanent CEO to lead the company forward. So with that, I will say thank you to everybody, and we are now open for questions.

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

I have a few questions, starting where you left off in your presentation. Could you comment on the possibility of generating income from the CAN10 deal through clinical milestones. And could you say approximately when such a milestone, the first of such milestones could be received.

Thanks, Richard, for your question. Unfortunately, no, we cannot divulge that information. We have agreed with Otsuka when we released the details when the transaction was signed that we would release the level of detail that we did at that time, and we would give no further details on that. So unfortunately, I can't give you any timing on when we're likely to receive a development milestone.

Sure. Sure. I get it. What about the remaining costs for the phase 1 study? Who will pay for that? And when exactly does Ostuka tick over CAN10?

I'll ask perhaps Ton and Patrik to comment on that one.

Yes, sure. I can do that. Well, obviously, we are in a period that we work towards the finalization of the transaction. Obviously, we signed it on the 15th of July. So from that point, Otsuka will take overall the cost of progressing the program. With respect to the timing of how they pursue the studies further, that's obviously in Otsuka's hands. We cannot state anything on that irrespective whether we knew it or not. Again, we are finalizing this project and of course maintained to be in contact with Otsuka on practicalities around the deal, of course, and support them where we are needed. And that is what we also have agreed in the agreement.

Yes. And it's Patrik here. I think, Richard, that we -- the deal overall is that the Otsuka takes over the responsibility and the cost from closing. So from Q4, basically, we shouldn't have any cost for CAN10.

Okay. I understand. My last question. How will the TRIFOUR results affect the plans for nadunolimab and maybe I should add, do you have to wait for the full readout before you really decide the next step with nadunolimab?

Thanks, Richard. Yes, indeed, we will wait for the full results, not before deciding the next steps in nadunolimab, but certainly before deciding the next steps of what we might do in TNBC. As I mentioned, the safety data is very strong and that actually encourages us to move forward. And those other indications have PDAC particularly where we see this very strong association between IL1RAP nadunolimab treatment and benefit to patients. And indeed, patients whose prognosis is normally worse when they have -- when they express IL1RAP. So to that extent, the data from TRIFOUR has no instance on our thinking other than we're very happy that the safety data makes us believe that nadunolimab will be a very well tolerated product, and we expect to be active in PDAC.

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