Welcome to Ascelia Pharma Q2 2024 Report Presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Magnus Corfitzen, CSO Andreas Norlin, and Deputy CEO Julie Waras Brogren. Please go ahead.
Welcome, everyone, to the webcast for Ascelia Pharma's Q2 report for 2024. We will be making forward-looking statements. On today's call, we will start with Ascelia Pharma highlights and recent key events. This is followed by a portfolio update before moving to financials and priorities ahead. After the presentation, we will open up for questions. At Ascelia Pharma, we identify, develop, and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We have two drugs in our pipeline. Orviglance has now been advanced to registration phase, as we have completed the pivotal Phase 3 clinical study. Orviglance has Orphan Drug Designation from the FDA and is targeting an addressable market opportunity of $800 million annually.
Oncoral is ready to start Phase 2 in the treatment of gastric cancer, based on encouraging results in Phase 1 and a high level of unmet medical need. We're based in Malmö, Sweden, and are listed on Nasdaq Stockholm. Q2 was a remarkable quarter, where we met the most significant milestone in the history of Ascelia Pharma. We started the quarter by announcing completion of the image reading phase by the independent readers of SPARKLE, and we're able to narrow the guidance for announcing the results to the first half of May. In April, we also drew SEK 15 million on the loan facility that we established in February with Formue Nord, which is now known as Fenja Capital. On May 2nd, we announced strong headline results from SPARKLE, a highly successful outcome of our registration-enabling Phase 3 clinical study.
A few days after the announcement of the results, we had an investor update to go through the data and the plans ahead. After the close of the second quarter, we announced rights issue. This will allow our shareholders to participate in the value-creating milestones ahead of us. The extraordinary general meeting was held yesterday on August 14, and all attending shareholders voted to proceed with the financing as planned. The strong Phase 3 data sets Orviglance on the path for approval and provides a solid position for entering into an attractive partnership for commercialization. To finance our major value inflection points ahead, a rights issue has been put in place to raise up to SEK 105 million, of which SEK 70 million is guaranteed by subscription commitment from board and management, as well as external grantors.
As mentioned, the rights issue was approved at the extraordinary general meeting yesterday, and the timetable is on the right-hand side of this slide and has also been communicated in our press releases. A particular note is that the subscription period runs from August 20 to September 3, and the final outcome will be announced on September 5. We do this, because we are very excited about Orviglance, and here's why: Orviglance is addressing a well-defined, unmet medical need for a subgroup of people living with cancer. This is a $800 million global market opportunity, and Orviglance is a first-in-class product to target this and has Orphan Drug Designation from the FDA. We have strong data from nine clinical studies, and manufacturing has been upscaled to commercial scale.
With the strong Phase 3 data, Orviglance has now been advanced to the regulatory phase, and in parallel with the NDA activities, we are working to establish commercialization partnerships. We focus on three objectives to create value to shareholders. The first objective is a timely submission and approval of Orviglance with the optimal label. The key steps on the way are completion of the SPARKLE clinical study report in early Q4, conclusions from the pre-submission meeting with the FDA, which is expected to be in Q1, and submission of the NDA in the middle of next year. The second key objective is to progress Orviglance for commercialization to patients in need.
The key activities are continuing to advance our launch readiness by ensuring manufacturing and supply chain is ready for launch, as well as working with medical experts, including key opinion leaders, payers, patient advocacy groups, and other key stakeholders. The other part of this is, as mentioned, entering into commercialization partnerships. The third objective is to develop the potential in the pipeline. We're excited about Oncoral and the planned Phase 2 study, where we'll be evaluated in combination with lanreotide. In our pipeline, we also have a second-generation Orviglance program that we would like to advance as well. Our proceeds from the rights issue will be prioritized on Orviglance activities, and very limited activities are ongoing in our third objective here.
We look forward to accelerating those opportunities at a later stage. All in all, there is tremendous potential in Ascelia to create value for shareholders as we move forward. This concludes the highlights and key events, and now we will move into the portfolio. So as we move into the portfolio, part of our presentation with Orviglance, I'd like to hand over to Andreas to continue the presentation.
Thank you, Magnus. So we will start with Orviglance. Orviglance is a first-in-class lead MRI contrast agent, which addresses a very specific unmet medical need, for which there are no good alternatives available today. Treatment of liver cancer and liver metastasis is an important challenge within oncology. An adequate visualization of liver tumors and metastasis is critical for making the right treatment decisions. Contrast-enhanced MRI is the gold standard procedure for examination of patients with suspected or known tumors or metastasis. The most used contrast agents are all based on a heavy metal gadolinium, and in patients with severe kidney impairment, use of gadolinium-based contrast agents has been associated with an increased risk of a very severe side effect called NSF, Nephrogenic Systemic Fibrosis, which may even have lethal outcome.
Both the European and the U.S. regulatory authorities have, for that reason, issued warnings for the use of gadolinium-based contrast agents in this group of patients. The consequence is that patients with impaired kidney function typically will get an MRI without contrast, which will result in liver images of suboptimal quality, with a risk that the cancer is not managed in the best possible way. We envision that Orviglance, which is based on manganese, will address this unmet medical need, and in the future, become an efficacious non-gadolinium contrast agent for liver cancer patients with impaired kidney function. In early May, we announced the highly encouraging headline data from the SPARKLE Phase 3 study. The study clearly demonstrated strong, superior enhancement of the visualization of focal liver lesions with Orviglance compared to unenhanced MRI.
The strength of the data is emphasized by the fact that all three independent readers who evaluated the figures in the study confirmed superiority of Orviglance, with p-values for the statistical test lower than 0.001. Furthermore, the study, for the study to be successful, at least two of the three readers needed to observe a statistically significant improvement. The unanimous reporting of a highly significant effect with acceptable levels of variability make the conclusion that Orviglance-enhanced MRI is superior to unenhanced MRI, very strong. Common adverse events in the study were primarily mild to moderate nausea and in line with the previous Phase 1 and 2 studies with Orviglance. No serious adverse drug reactions were observed in the study. With the SPARKLE, we have completed the clinical development.
The comprehensive clinical program includes a total of 286 patients and healthy volunteers in nine clinical studies. Taken together, these studies have consistently demonstrated positive efficacy and safety of Orviglance. With the Phase 3 SPARKLE study confirming the superior visualization of focal liver lesions in a target population of patients with severe kidney impairment, and an adverse event profile consistent with what we observed in the other studies, we are moving ahead with the submission of the marketing approval application for Orviglance. Our primary goal now is to secure approval of Orviglance with an optimal label in the U.S.A., offering a new choice for patients who can't use gadolinium-based contrast agents for liver imaging today. We are on track to submit an NDA for Orviglance by mid-2025.
Following the submission, we anticipate a standard ten-month review process by the FDA. On the way towards the submission, we are looking forward to key milestones, such as the delivery of the full study report for SPARKLE in early Q4 this year, and the completion of the pre-NDA meeting with FDA by Q1 2025. The pre-NDA meeting is a critical project in its own right, because with a purpose to lay out the groundwork for the NDA submission and review. And this ensures that we are on the same page as the FDA, and will facilitate a seamless review process when we file the NDA. To wrap it up, with the strong headline data from SPARKLE demonstrating superior imaging with Orviglance compared to unenhanced MRI, we are now advancing Orviglance into the registration phase.
With that, I would like to hand over to Julie.
Thank you, Andreas. The addressable market for Orviglance has a global value of $800 million annually. The U.S. represents almost half of this. This market opportunity for Orviglance addresses the unmet need for a well-defined patient population, cancer patients who need liver imaging and who also have severely impaired kidney function. Our strategy for commercialization is to launch through partners. This strategy supports our ambition to secure the optimal balance between future revenues and the investment required. Our focused, ambitious launch plan and the strategy built on advanced market insights are in place to support this partnering strategy and to support the launch. As mentioned, the U.S. is the largest commercial opportunity.
In the U.S. alone, our real-world data, i.e., data from realized procedures in our target patient population, show that every year, 100,000 abdominal imaging procedures are performed in 50,000 patients that fall under the black box warning for gadolinium contrast agents. This is about 4% of people with cancer undergoing abdominal imaging. The well-defined patient population with a clear unmet need also drives an attractive pricing opportunity. We have extensive input from market access and pricing experts, with whom we've tested different pricing levels and collected insights on the evidence needed to support access and reimbursement. We have investigated pricing benchmarks of other innovative diagnostics in the U.S. 90% of healthcare professionals are concerned with issues related to gadolinium contrast agents, including the severe side effect for our target patient population, nephrogenic systemic fibrosis or NSF.
In fact, 16% of providers have experienced cases of NSF in patients exposed to gadolinium. These insights come from market research with 270 U.S. healthcare professionals, and answers from radiologists, nephrologists, and oncologists. The insights confirm the concerns with gadolinium in clinical practice and the unmet need for Orviglance. When speaking with, In clinical practice, the unmet need for our target patient population is also well-recognized. Physicians tell us that patients who need liver imaging and fall under the black box warning for gadolinium, today receive MRIs that balance the trade-offs between being either without a contrast agent, i.e., an inferior image quality, or by being, for example, half-dose gadolinium.
These are around 80% of the patients, and sometimes with a full dose of gadolinium, with the awareness that gadolinium is not recommended for these patients due to the black box warning. In addition, we're both excited and optimistic that almost all physicians tell us that they would like to use Orviglance when it is available on the market. Beyond the risk of NSF in kidney-impaired patients, gadolinium is well known to be retained in the brain and other tissue in all patients, and scrutiny over the possible safety effects is a key concern of regulatory and medical bodies. It's also well known that gadolinium is excreted via the kidneys in urine, and because it's difficult to remove in our sewage systems, it is discharged into the environment and into our drinking water.
There's an urgency from regulators and medical bodies to find a viable alternative to the growing use of gadolinium. An alternative that is not associated with these potential safety and environmental concerns for patients, and for the environment with gadolinium. In short, the momentum for an alternative to gadolinium is getting better and better, and the industry is responding. Recent developments from the large gadolinium manufacturers are focused on smaller doses of gadolinium, and there's even an early-stage injectable manganese-based agent, which is not liver specific, like Orviglance. We're excited that we have a head start and that Orviglance is expected to be the first in class to lead a future with less gadolinium and improved outcomes for patients. The go-to-market strategy for Orviglance is to launch with commercialization partners. This supports our objective to secure the optimal balance between future revenues and the investment required.
The strategy also allows us to leverage commercial capabilities already established by a partner. The focus of Ascelia Pharma is to continue the dialogue with potential partners and reach an attractive agreement for the commercialization of Orviglance. We will also ensure that Orviglance and the partner is ready to launch upon approval. In summary, Orviglance addresses a well-defined unmet need and represents an attractive commercial opportunity. Our focus is to ensure that Orviglance is ready, and our efforts to help patients and to launch Orviglance are already well recognized by experts and partners in the industry. With this, I will hand over to Andreas to talk about Oncoral.
Thank you, Julie. Yeah, so let's talk about Oncoral, the other asset in our development portfolio. Oncoral is a daily tablet formulation of irinotecan, a well-established intravenous chemotherapeutic agent. Daily tablet formulation enables a frequent low-dose dosing regimen that could offer potential advantages on both efficacy and safety, compared to the infrequent high-dose intravenous administration used today. We have completed a Phase 1 study, which demonstrated a promising safety profile and an uptake of the drug after oral dosing, dosing consistent with a daily dosing concept. We are now planning for taking Oncoral into clinical Phase 2. The objective is to generate clinical proof of efficacy data in the metastatic gastric cancer in combination with Lonsurf, another oral cancer treatment approved for gastric cancer. Animal data has demonstrated a synergistic effect of irinotecan when combined with Lonsurf, which makes this combination very interesting.
The planned Phase 2 study is designed to study Oncoral plus Lonsurf against Lonsurf alone, and the study will randomize approximately 100 patients, and involves a clinical collaboration with Taiho Oncology, the developer and marketer of Lonsurf, who will provide clinical advice and Lonsurf for the study. Irinotecan is a well-established chemotherapy with recognized anti-tumor effect in solid tumors. Our strategy is to start Oncoral development in gastric cancer, which is today a $3 billion market. For these patients, there is a high unmet medical need for improving outcomes, and there is an opportunity for an orphan indication. We also see opportunities for developing Oncoral in other solid tumor indications, where a daily dosing tablet formulation can demonstrate an attractive efficacy and safety profile.
Irinotecan, as an IV formulation, is already approved in colorectal and pancreatic cancer, and in addition, irinotecan is clinically demonstrated and recognized in guidelines for other cancer types. We are assessing these opportunities as part of our ongoing strategic planning for Oncoral. With that, back to Julie again.
Thank you, Andreas. I will now move to the update on our financials and summary of priorities ahead. As Magnus mentioned, in July, we announced a rights issue financing. With this rights issue, we aim to raise up to SEK 105 million before cost, of which a minimum of SEK 70 million has been secured through investment commitments and guarantees. The rights issue is in units, where 1 unit consists of 3 shares and 1 warrant. The price of 1 unit is set to SEK 5.07. The financing secures resources for completing our NDA submission to the FDA mid-next year, including the key milestones on the way, such as the conclusions from a pre-submission meeting in Q1 2025.
The proceeds will also be used to obtain a partnering agreement for the commercialization of Orviglance, and to secure that Orviglance is ready for launch by approval. As part of the terms, the proceeds will also finance an amortization of SEK 7.5 million of the existing convertible loan with Fenja, previously Formue Nord. In Q2, our operating result was a loss, i.e., cost of SEK 11.3 million. This is a slightly decreased loss, i.e., less cost compared to Q1 2024, driven by the completion of the SPARKLE reevaluation. At the end of June 2024, we had SEK 30 million in the bank. This includes the fully drawn loan and convertibles financing from Fenja. With the minimum proceeds from the ongoing rights issue financing, we have a runway beyond the NDA submission mid-2025.
To wrap up, we have substantial value creation opportunities ahead for Ascelia Pharma and for both of our orphan oncology assets in development. With Orviglance, we're bringing to market a first-in-class diagnostic drug, addressing an $800 million market for patients with a high unmet need. We focus on three objectives to create value to shareholders. The first objective is a timely submission and approval of Orviglance with the optimal label. The key next steps on the way are the completion of the SPARKLE clinical study report in early Q4 this year, conclusions from the pre-submission meeting with the FDA in Q1 next year, and the submission in the middle of next year, 2025.
The second objective is to progress Orviglance for commercialization for patients in need by entering into a partnering agreement for the launch and by securing that a partner is ready for a launch. While our current focus is on bringing Orviglance to market, we also see important value creation opportunities in our other pipeline products. We're excited about Oncoral and the planned Phase 2 study, where we will evaluate it in combination with Lonsurf. In our pipeline, we also have a second-generation Orviglance program that we are ready to advance. Very limited activities are ongoing for these assets at the moment, and we look forward to accelerating this once resources and financing allows. All in all, the strong headline results from SPARKLE mark the completion of clinical development for Orviglance, and reinforce our confidence in the regulatory and commercial path ahead for Orviglance.
We look very much forward to executing on these opportunities ahead for Orviglance and for Ascelia Pharma in 2024 and beyond. Thank you. I will give it back to the moderator for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
If there are no questions from the phone, we have a couple of questions in the web chat format.
Yeah. So, we will start with the questions here. The first question is, please provide more details regarding the critical steps towards submission, any risk and delays relating to the clinical protocol, or delays and questions/changes as a result of the pre-submission meeting.
Is that for me?
Yeah.
Yeah. Thank you. Well, the critical steps are, as we have said, we need to have the full report from the pivotal study. And that forms the basis for the continued conversation with FDA in the pre-submission meeting. And the pre-submission meeting is important, as I mentioned, to agree with FDA on the content of the application and the anticipated and proposed label for the drug. And of course, FDA can come with some feedback in that meeting. That's the purpose of the meeting, so that we can adjust. But with the timelines we have, we see the risk for any significant delays as low. And...
But I think that is the most important step on the way, where we can potentially foresee a change of the plans. And we have of course had a conversation with the FDA along or during the development, and so we know quite well what they have said before, and we have adhered to their recommendations from before. So that would reduce the risk of any surprising feedback at a later stage.
Thank you, Andreas. Another question is, and there are several along these lines, what is the, you know, status of the, the partnering discussions?
Yeah.
Julie, do you wanna give an update on that?
The partnering discussions are ongoing. With the Phase 3 results, we now have also reduced the risk further, so that is helps us in these dialogues. And of course, the rights issue financing, as we've communicated, is also important to be in a strong position to negotiate a partnering agreement. So, that's progressing. Yeah.
Yeah. Of course, as if and when a partnership materialize, we will announce immediately.
Mm-hmm.
Another question for you, Andreas. It's the issue with intra-reader variability during the first readout process last year. Is that a potential issue in discussions with partners or in the FDA process? But maybe you can take the FDA question and then,
Yeah. I think we had a very well-founded, solid rationale for doing the new re-evaluation because the data quality was not up to standards. So I would say no. Generally speaking, this is not an issue going forward within the FDA process. As I said, we have a good argument and rationale for doing the re-evaluation.
Mm-hmm. Yeah, I think, and from a partner perspective, it's the same answer. I think it's also important to note that these intra-reader variability issues are not uncommon in the industry. So, anyone working with diagnostic drugs, where you have readers of this type, are familiar with this type of issues, unfortunately. So we're not the first ones to experience this, and the industry, there are a lot of learnings that have also helped us in this process. So, we don't see that as an issue in the partnering discussions.
We have another question here, which says: With the share price decline of 92% in three years, how are you working to regain the confidence from your shareholders? And you would say we fully understand the frustration, and we also share the pain. Management and the board and employees have also invested their, you know, after-tax money into buying shares in Ascelia throughout the years. We have had the delays, we have had challenges due to COVID and other reasons. We have now overcome those challenges. We have completed the study. We have gotten very, very successful Phase 3 data. We also noted that the share price actually fell after these highly successful Phase 3 data, and so it's difficult for us to predict how the market reacts.
What we are focused on is ensuring we get strong operational and strategic results, and they have been defined as moving forward in the NDA process and securing commercialization partnerships. We think both of those activities are major value drivers for Ascelia, and that's what we are focusing on. But we are, you know, painfully aware of the share price developments, but our focus is on building the company and meeting our strategic objectives to drive value for all shareholders. So a question here, if the management will participate in the rights issue? What was put out in the press release was that there are subscription commitments from management and board members. So yes, management will participate in the rights issue.
There will be details in the prospectus, which is going to be published very soon, within the next few days.
Yeah.
Another question here, what sort of partner deal structures is to be expected? At this very late stage, it could be realistic to expect a relatively high level of royalties and a more modest level of upfront milestones, possibly also a royalty step up relating to sales volume.
Yes, a typical deal structure in the industry, we agree, is a combination of an upfront payment and royalties in the future, typically linked to different milestones, perhaps also linked to the sales, and how sales progress. But we're not in a position to comment on the details of the balance between the two. Our interest is to have the best possible agreement that will serve Ascelia, and of course, create value for shareholders.
Yeah. A key reason for doing this financing is to ensure that we have a balance sheet that allows us to make investments into the NDA process, so we continue to create value in the asset, as well as having a balance sheet that allows us to have more negotiation leverage towards the potential partnership opportunities that we are considering.
Yeah.
There is a question on when we expect partnering news. I think that's difficult to say. We would say we cannot provide a timeline. We, as Julie said earlier, we are in the process. We're having dialogues, and then when and how that pans out is always difficult to tell.
Mm-hmm.
Yeah. I think-
Okay. Mm-hmm.
I think those were the questions. So thank you, everyone.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you. So, thank you for joining our Q2 call. We're super excited about the opportunity ahead with the strong data from SPARKLE Phase 3, moving forward into the NDA submission process, and finding one or more partners for Orviglance. I think there are very exciting activities ahead of us. Thank you for joining, and thank you for the questions, and we look forward to updating you on our further progress later.