Morning, welcome to our first quarter 2026 business update and financial results. I'm Namir Hassan, the CEO of Zelluna, and I'm delighted to be joined by Geir Christian, our CFO. Can I have the next slide, please? Today, on the agenda, we will cover our key events in the first quarter of 2026, the TCR-NK technology and pipeline, our first in-human clinical trial, a financial update, and then end with a summary and outlook before we get onto questions and answers. The next slide, please. I'm delighted to share that we have had continued strong progress through Q1, 2026. We announced in February the approval of our clinical trial application from the U.K. MHRA regulatory authorities, and ethics. We appointed Medpace as our clinical CRO, deeply experienced in oncology and cell therapies.
We also announced a collaboration with Etcembly that involves artificial intelligence engineering of T-cell receptors in the expansion of our pipeline. That was specifically for a program targeting an antigen called KK-LC-1, which provides us with increased breadth of potential patient treatment across complementary indications to our lead. We also completed a capital markets update post period on April 14th. Excitingly, yesterday, we announced the activation of our first clinical site, The Christie. This is where our lead investigator, Professor Fiona Thistlethwaite, is. We are entering now into the clinical execution phase. We remain on track for initial clinical data to emerge from mid-2026. If I can have the next slide, please.
If we just spend a moment on the announcement yesterday where we communicated that we have activated our first site. What that means is that the site at The Christie is now active, and it marks the transition from clinical preparation to active trial execution. The site now is ready to initiate patient screening, to seek those patients that may be eligible for treatment with our ZI-MA4-1 cell therapy. Once we identify those patients that are suitable, they will move into a treatment phase. This is a key step forward, of course, for us to enable continued progress towards generating human data where we expect that to emerge from mid-2026. We're also expecting our second site.
As we communicated previously, we're working with another specialist site and with an investigator that has deep experience in this space, Dr. Andrew Furness, at The Royal Marsden, and we're expecting activation of that second site in the near term. If I can have the next slide and take a step back and really consider the context. Once again, as you may have heard previously, this is to summarize that we are operating in a space, the cell therapy space, where we have seen multiple approvals over the years. What those approvals have shown and demonstrated is that cell therapies are able to be approved based on relatively few patients. Here are examples of those that have been approved on less than 100 patients. That's the first thing.
It's a valid approach, and it's approach whereby therapies can be approved on relatively few patients. Secondly and importantly, what we have seen also over the years is that it's a commercially viable approach when considering the annual sales of some examples here. CARVYKTI, as shown there, $1.9 billion annual sales, or BREYANZI, $1.4 billion annual sales. So the two messages really from this slide are that cell therapies are a validated modality based on multiple approvals over the years and also commercially viable. Now, the next stage really for cell therapies is to build on this and really to generate and develop cell therapies that are scalable and also optimized for solid tumors.
The majority of these approvals are for liquid cancers, the unmet need, the highest unmet need is in solid tumors, and that's exactly what we're aiming for. That's one axis of consideration. The second axis of consideration when thinking about cell therapies is when considering the transactions that we have seen in this space and how value is assessed. Some examples of transactions over the last 18 months or so for these next generation platforms that are aiming to build from the original success, but provide platforms that allow a better scalability of cell therapies and easier access, so-called off-the-shelf cell therapies. You can see some of those deals on the right-hand side of this slide.
What's important when looking at these deals is to really understand how value is created in the field. What we have seen in these deals and the pattern that's been repeated is that the therapies and the platforms that have either been acquired or partnered have shown data on relatively few patients. In those patients, what they have shown importantly is a level of manageable safety. The second is some initial signs of efficacy. Some signs that the science is translating into the clinic. There is a proof of mechanism in patients where the hypothesis that has been born experimentally translates into the clinic. Some initial signs of that in patients. On the back of that, we have seen major acquisitions and partnerships.
Zelluna, as we continue to make strong progress, we're heading towards generating human data. We've activated now our clinical site, our lead site, and we'll move to activating the second. We're now in a position to seek patients, and once we identify eligible patients, begin to treat those patients and generate that all-important human data, which we expect to emerge from mid-2026. We believe we're months away from really key value drivers in this field. Yeah, if I can have the next slide, please, just to summarize on the execution and, you know, incredible efforts by the team, awe-inspiring efforts.
Really, we have gone through major milestones over 2025, and now in 2026, really strong progress where we have had approval of the CTA, and really preparing for site study start, and activated now our first clinical site, and really accelerating and moving toward patient treatment. That's for the lead. For the pipeline, we continue to develop the platform and really be selective in how and where we invest in order to really focus our resources. We have focused that effort on a second program, KK-LC-1, where we have partnered to generate a candidate and develop the package around that program, aiming to do that in Q4.
As we move the lead and advance the lead, what you can see here illustrated is that we begin to move into what we have seen to be a potential deal zone with early clinical data. We expect continued momentum in business development activities as we move through patient treatment and generate that data. That's a glossary and summary, and now I will move on to a more depth into the TCR-NK technology and pipeline. If I can have the next slide, please. What we believe right now is that it's really an opportune moment and the right moment. We believe we have a game-changing platform. It's a novel platform.
Whilst it's novel, it's built on validated biology, and I'll come on to talk through that in a moment. What we're aiming for, and what the platform is really optimized for is to treat solid cancer patients. We know solid cancers are the largest cancer burden globally, over 9 million deaths a year. Over 80% of late-stage cancer patients unfortunately die of the disease. It's a huge unmet medical need. What we also believe we have is a really unprecedented position when it comes to protection of the platform that really protects the entire therapeutic space. If we're able to demonstrate that the science translates into the clinic, then we believe that unlocks huge value, as it would validate the entire platform, not just the lead.
We are moving towards, as mentioned, really a value-informing inflection as we get closer and closer to treating patients. As mentioned, we had the approval of the CTA, we assigned Medpace as our clinical CRO, and we have now activated our first clinical site and expect the second one to be activated in the near term. We're on track for initial data to emerge from mid-2026. All of this operating in the context, as mentioned, of cell therapies, where relatively few patients really drive high values, whether it comes to approvals or whether it comes to real sort of catalyzing transactions and business development opportunities. If I can have the next slide, please.
I've talked through this previously, but I think this really warrants again, some time and repetition. That is really the major problem that we're seeing in solid tumors. Why do treatments stop working? We have clearly seen over the last decades improvements in the treatments of solid cancer. Virtually all patients, or most patients unfortunately will relapse, particularly in late stage disease. Why are treatments not able to provide durable responses? That is because solid tumors are made up of different cancer cells. They're not all the same, and that's shown in this diagram with the three colors of cancer cells there. While some patients initially respond, where invariably, and in most cases, therapies will go after a single target.
In this case, for example, the antigen-positive red cancer cells and may kill those cancer cells, destroy them, eliminate them, and then you have shrinkage of the tumor. You have parts of the tumor that either lose that target or did not have that target in the first place, enriched and then thrive, and the cancer comes back and then grows further and then becomes then untreatable with that particular treatment. As most treatments will target just one feature on the tumor, and cancers will have many features and parts of the cancer may not have the feature targeted by that single targeting agent, we lose the ability to treat those patients.
What we believe and what the field believes are needed are therapies that are both targeted and broad. They're able to get into the tumor, but they recognize the various patterns of cancer, in this case, the red, the blue, and the green cancer cells, and that's what we have been developing at Zelluna. In the next slide, you can see what that is. It's a T cell receptor NK platform. It's a differentiated approach, highly novel, but it's built on validated biology. What do I mean by that? Well, it's two components. There's the T cell receptor, which is you could consider as a homing device. This is the targeting agent. It exists in nature, but we optimize it further, we engineer it further, and our lead contains an artificial intelligence optimized T cell receptor.
It's a validated method of targeting solid tumors. It's a validated guidance system. There are two approvals with T-cell receptor based therapies, both in solid tumors. We know this scaffold, this guidance system is able to target solid tumors. We bring that together with a cell type called Natural Killer cells, which by definition, we have in our bodies, and again, by definition, they are probably the most efficient killers in our body, and this acts as the cancer killing engine.
Again, this is a validated cell type in that there have been multiple clinical development programs that have used natural killer cells that have shown that they can kill potently and that they can be used safely and in an off-the-shelf manner, meaning that a batch of material can be produced upfront and used to treat different patients. We bring those two things together, and that's why we describe it as components that are with clinically validated biology. When we bring them together, that's the novelty. That combines validated tumor targeting and cell killing. It's designed to reduce tumor escape. The way it's designed to reduce tumor escape is that the guidance system targets solid tumors, as we've seen it does it before, the T-cell receptor, so that drags the NK cell into tumors.
NK cells, as shown by these sticks on that cell, can recognize cancers in multiple ways. That's where the breadth of activity comes in. They're able to recognize different patterns on cancer, and we believe that that would allow the cells to stand a chance to avoid cancers escaping. That's the TCR NK platform. On the next slide, I talked about the scalability, and this is very important. All current cell therapies are limited in scale, meaning that a single batch of treatment is used to treat one patient. Every time patient needs to be treated, the product needs to be manufactured each time. It becomes costly and cumbersome, and difficult to scale.
This off-the-shelf product, as we have it, is one where we produce, and we have produced a single batch that then generates hundreds of doses at a lower cost of goods, as shown in this illustration here. We have, as communicated previously, a clinical batch of material that's been manufactured, and it's available now for the first phase of the clinical study. In the last period, we were also notified from our manufacturer that they were closing their European site. We have been working and reviewing other manufacturers to transfer the process to and identify then have initiated another manufacturer. We've locked down the process as we've communicated previously, so that's a case of transferring that lockdown process to the other manufacturer.
It also provides us with an opportunity to further scale out the process and a potential to further reduce cost of goods as we've seen when reviewing other manufacturers. We've initiated now work with another manufacturer for the continued supply beyond the first phase. If I can have the next slide, please. I talked about what I believe is quite an unprecedented patent position, this is just to try to visualize what that could mean. Of course, with each product and what is common practice, one would protect individual products. Beyond that, we have a granted patent that captures the entire therapeutic space, any T-cell receptor for any cancer type in any natural killer cell.
The analogy as we sometimes present is if one was to have a patent for the entire CAR T space. These are CAR Ts, some of which have been approved, as you can see here, which would be really enormous aggregate value when thinking of the revenues that those products are generating. If we're able to demonstrate in human data that we can translate the science into patients for the lead, we then think that we can read through into the validity of the entire platform, and with this patent position, we think that could really unlock immense value. If I can have the next slide just to give a snapshot of our pipeline. Our lead program targets the antigen MAGE-A4, which is applicable across various indications.
We're going after four indications, as shown on this slide. Behind that we have KK-LC-1, which we're advancing through AI-enabled TCR engineering to get to that candidate stage and develop the package around that. Behind that in an earlier stage, we have a PRAME targeting TCR. The strategy here in thinking and building on our pipeline is really a blend of clinically validated targets such as MAGE-A4 and PRAME, and then other targets such as KK-LC-1 that have also a degree of validation that demonstrate their potential, but also a level of novelty that brings some excitement around that target.
I'll spend a few slides on our lead and a bit of context on it and where we are in the next steps and what to expect. Here you can see the information around supporting the lead program and its target, which targets MAGE-A4. This is arguably the most validated T cell receptor target out there. A number of programs are targeting MAGE-A4. They're all based on T cells. We're the only company that is developing a program targeting MAGE-A4 with natural killer cells, and we believe that's where the advantage is. It's expressed across multiple cancer indications, anywhere between 25% approximately to 70%, representing really high unmet medical need. We and others have estimated that there are over 50,000 potentially treatable patients across these various solid cancers.
What we have seen in the clinical development programs for those programs that target MAGE-A4 with T cells is that the therapies have demonstrated responses across multiple indications. We know it's a valid target. We know you can get tumor shrinkages with T cells against that target. There's one approval for a MAGE-A4 TCR T cell, which is approved in synovial sarcoma type of solid cancer. What we're doing is we're building on that. We're going after a highly valid target with a novel approach, with an NK approach. I've talked earlier about the benefits of the NK approach, in that it has the ability of being used off the shelf, scalable, and can recognize different patterns on cancer, unlike T cells.
If I can have the next slide, again, a summary of where we are. The science is really strong. We published on that, credit to the preclinical team at the end of last year. We've demonstrated that the TCR-NK cells, the lead, can kill diverse tumors, which is fundamentally the premise really behind the science. We've had the CTA approved. We've also had interactions with the FDA in the U.S., and that's been supportive previously, so that provides an opportunity to expand in the U.S. when the time is right. From a clinical perspective, we have four indications that we are going after: lung, ovarian, sarcoma, head and neck cancers.
We've engaged two really specialist, world-renowned U.K. sites, the Christie, which has now been activated, and the Royal Marsden, which we expecting to activate in the near term. If I can have the next slide, please. I'll spend a few slides on our first-in-human study. This is a very exciting phase. It's a first-in-class program. Of course, investigators are extremely engaged and very excited. We're privileged to be working with a couple of lead sites, the Christie, as I mentioned, with Professor Thistlethwaite, who is our lead investigator, one of Europe's leading cancer centers, extensive experience in early-phase oncology trials, and really specialist expertise in cell and immunotherapy trials. Alongside we have the Royal Marsden with Dr. Andrew Furness, again, globally recognized cancer center, pioneer in early-phase clinical development, a strong track record in novel immunotherapies and cell therapies.
We're really going after high unmet medical need indications, as I mentioned previously. Maybe if we can move on to the next slide with the study design. This is a first-in-human study design, and it's really designed to establish safety and understand whether we can pick up some early clinical signals. When it comes to the design itself, it's a standard 3+ 3 design, which means that three patients are treated at each dose level, and we've defined three- dose levels, which may not mean we will go through all of those, but we've defined three- dose levels. We believe the starting dose is biologically relevant. This is important. With late-stage cancer patients, it's important to potentially treat them with doses that can potentially have effect. These are very late-stage patients.
These will be patients that unfortunately may not have a long survival time. It's important when thinking about the risk benefit to start with what may be a biologically relevant dose. We believe we're starting with something that could be biologically relevant. These are patients with advanced solid tumors, and I talked and mentioned the tumor types. Just to spend a moment, there will be patients that will be screened for the target MAGE-A4, so their biopsies will be tested whether they have MAGE-A4, which is the target for the lead, and HLA-A2, which is also a requirement for the target.
We will have a phase where we will seek out patients, what we call the pre-screening phase, to identify those patients that have both of those features, HLA-A2 and MAGE-A4. Then there'll be other eligibility criteria that they will need to go through before being treated. These will also be heavily pre-treated patients that have come out of treatment because they haven't responded for standard of care treatment, so other treatments that have been approved, and really no other options at that point. We'll be dosing patients, injecting with our lead product on days one, four, and eight, and we'll be monitoring the patients continuously.
That will be also governed by an independent data monitoring committee, which we have established of highly experienced specialists and individuals that are really excited to be a part of this first-in-class treatment. Initial clinical readouts expected to emerge from mid 2026. The early data will be focused on principally safety. It's the first time we test such a product. We'll be seeking as the data develops, potential proof of mechanism. Of course, the timing of data emerging will always depend on the recruitment pace and the safety review timelines. Really the study is designed to establish safety and enable early assessment of tumor targeting in patients.
In the next slide, I think it's useful to pause for a moment on safety and we're seeing that safety is a key differentiator in the next generation of cell therapies. What we have seen in the first generation of cell therapies, dominated by CAR-T therapies, is that they've been associated with severe toxicities including cytokine release syndrome and neurotoxicity, which has required hospitalization and intensive monitoring. That has, of course, limited the broader patient access and scalability. Beyond the limited scalability as a consequence of the practical limitation, which is generating one batch, one for each patient, the toxicities have also been something that have been in some cases quite intense.
We're also seeing, interestingly from the in vivo CAR-T approaches, where we have seen a flurry of deals recently. It's an emerging space. As that's emerging, we're also seeing, some of the toxicities that have been experienced with the traditional autologous CAR-Ts also emerging in the in vivo CAR-T. There was a report recently, demonstrating that. What is becoming differentiating, beyond scalability is the ability to treat patients safely with these off-the-shelf technologies. The NK-based cell therapies have that advantage. The innate biology supports a favorable safety profile. We have seen with multiple NK programs that they can be delivered safe, in some cases are delivered in an outpatient setting, so patients come in, get treatment, and go back home.
This supports the broader access and improved patient experience. What we're really keen to see if our therapy as other NK therapies is also safe and manageable when treating patients, and that will be a potential key differentiator. In the next slide, we have an illustration of what our expected mechanism would be. You can imagine, and we had and sat with the site at The Christie, and we talked through the infusion into patients with the actual syringes.
Once you infuse, the product into patients, what we then expect is on account of the T cell receptor, the guidance system, that system that allows you to, target MAGE-A4, in this case, those that are shown in red, will then, traffic the NK cells into the tumor to target MAGE-A4. Once targeted, the T cell receptor also is functional, so it activates to cause killing of those cancer cells. At the same time, since the NK cells have been brought into the tumor, they will recognize, naturally other patterns on the cancers, that will capture other features, in this case, for example, the blue cancer cells and the green cancer cells, and also then broadly kill, the tumor as a consequence of that.
It's precise targeting into the tumor to ensure that it's safe, activation with the T cell receptor too, but also activation with the other mechanisms that the natural killer cells naturally have to really cause a broad killing of those tumors. In the next slide, what we've tried to illustrate is what is it that we may be looking for from those first patients? As I mentioned, these are heavily pre-treated patients, late-stage patients. Principally we'll be initially looking for the safety of those patients once treated, and that's foundational for a first-in-class therapy. Again, this will be something that's platform validating. Safety is key, and it could be again as described in the two slides prior, a differentiating feature compared to other platforms that are emerging.
The second of course is proof of mechanism. Are we seeing natural killer cells trafficking to tumors because they have this guidance system, the T-cell receptor, which is the novelty of our platform? We'll be looking for that in various ways. We'll be taking biopsies from the tumors to understand whether the NK cells have made it to the tumor. We'll be looking systemically blood samples to see if there are clues there. Of course, in the third bullet here, we'll be looking for scans, radiological scans to see ultimately if there is an effect on tumors and if the tumors have shrunk.
It's important to note here that this is a dose escalation study, so it may be that we might need to escalate the dose in order really to see the strongest clinical responses. You can imagine this is really an investigative approach. We'll be re-probing patients. We'll be looking for the clues. It will be something that will happen over the course of time, and we'll be putting those pieces of evidence together to try to paint a picture to understand exactly what's happening in patients. We'll start from the first dose level and continue that investigative exercise through the dose levels. There will be, you know, some time really needed to paint a complete picture on patients as they are treated and as we analyze and assess them.
Those are the elements and parameters we will be looking for in those first patients, and we're very excited to be at this phase. If I can have the next slide, please. I'd like to now hand over to Geir Christian to take us through our financial updates. Thanks, Geir.
Many thanks, Namir. I'm happy to take us through the financials. As on the operations side, I'm happy to say that we are progressing as planned. In terms of cash, we are close to NOK 50 million at the end of the quarter as planned, and our cash runway remains as previously guided into Q1 2027. In terms of the earnings before interest and taxes, it was about NOK 20 million negative. Also the profit before tax is similar, NOK 20 million minus. I will take you through some of the details in the profit and loss accounts. Our payroll and payroll-related expenses, excluding share options effects, were somewhat lower in the first quarter compared to last year. This is due to a lower number of employees.
At the end of the first quarter this year, we had 15 employees compared to 27 last year. While that's a quite a difference, the average number, however, in the first quarter was higher than the 15 and quite similar to the average last year. The total expenses, payroll expenses were higher in 2026 compared to last year. That's primarily due to these share option expenses. On the R&D side, last year we had quite substantial CMC cost. Those are much lower this year. This year it also includes startup costs for the clinical program. Other operating expenses, lower this year. Last year we had quite substantial business combination related costs. All in all, a reduction from NOK 28 million in loss last year to NOK 20 million this year.
On the cash side, we had -NOK 28 or 29 million this year, ending up with a NOK 49 million in cash position. Here you see the comparison of the P&L on a quarterly basis. I will not take you through those, but just for illustration purposes, you see that our profit, no loss, I mean, is decreasing generally. You can also see this on the operating cash flow side. The negative cash flow in the first quarter was about NOK 29 million , that was influenced by working capital elements of about - NOK 11, which is primarily due to provisions at the year-end. I'm happy to hand the word back to you, Namir, for a summary and outlook.
Thank you, Geir. Just to summarize then, if I can have the next slide, please. Thanks. I hope what we have shown is that we have a differentiated platform with a potential near-term catalyst. It's a platform whilst very novel, built on validated biology. It's in a validated cell therapy space. It combines two validated components, the TCR, T-cell receptor, which has been shown to target solid tumors, a couple of TCR-based therapies to date, and NK cells have demonstrated strong safety and potency in clinical studies. We've seen also across the field that major deals have been driven by early clinical data, and often that's small human data sets. There's an increasing shift, an appetite for scalable off-the-shelf approaches.
This is to build on the first wave of cell therapies and the limitations of those. We're entering into a clinical stage, now we've entered into a clinical execution on the back of the announcement of the activation of The Christie, and we're expecting to generate human data and for that to emerge from mid 2026. A platform built on clinically validated biology with a potential near-term clinical data catalyst. I'd like to end the presentation there. Thank you for your attention, and we can move on to the questions and answers.
Thanks, Namir. We have received a couple of questions here. The first one is, "How do you explain financial runway into 2027?
Sure. Do you want to start with that one, Geir?
I'm happy to do that. Thank you. Yes. First, I think it's important to say that we internally, we run a detailed forecast model, so we are, of course, closely following the costs. And we, on a regular basis, we update the forecast in accordance with how we are progressing as a company. It's also important to say that the costs are not linear throughout the year, neither the cash consumption either. As I alluded to, at the year-end, we had some provisions that come in in the first quarter, especially in the beginning of the year in January. We are more at difference than in the working capital with some costs being paid in the early part of the year.
We also had some startup costs, like some startup costs related to the clinical trial in the first quarter. Throughout, we also alluded to the personnel costs. We had fewer employees at the end of the Q1 than the beginning of the quarter. That is also a development that will influence the coming quarters. Also one example of not a linear trend throughout the year is this special tax refund that will come in the third quarter. That's also an important part of our forecast. Maybe you would like to supplement, Namir, on that part.
No, that's brilliant. I think that summarizes it very well. Thanks, Geir Christian.
We have another question related to the clinical trial. The Christie has been activated, and maybe you can elaborate a little bit more about the next Sorry, the question is, "Can you elaborate on the next steps related to The Christie and the clinical trial?
Yes, very good question. Now that we have activated the Christie, they are actively seeking for patients that may be eligible and appropriate to be treated with the therapy. I touched on this earlier. We have a what's called a pre-screening phase. Patients that potentially could be eligible across those four indications will be looked at when it comes to their biopsy to establish whether they have the target in the biopsies, and that is both HLA-A2 and MAGE-A4. That forms the pre-screening phase, and we have an established system to do that.
Once those patients have been identified, they then move to what's called a screening phase to further assess various blood markers and the functions of their organs and so on, to establish if they are suitable to then be treated. If they get through that phase, then they'll move to be treated and move to the treatment phase. In the treatment phase, just to maybe touch on that, in the treatment phase, we have a period of a month where patients are treated with those three injections I mentioned earlier, so days one, four, and eight. The safety review, intense safety review takes place over a period of a month. That's fairly standard for this type of therapy.
Once you're out of that month, you have a reasonable assessment of the safety of the therapeutic. That gives a sense of the horizon. We have pre-screening phase, we have a screening phase, and then a treatment phase. In that treatment phase, one month is a marker to establish and understand safety.
Thank you. We have not received any further questions as far as I can see. Thank you for that. I think we then can conclude this first quarter update.
Thanks, Geir Christian. Thank you all for your time. We look forward to further updating the market.