Welcome to the Ascelia Pharma audiocast for teleconference Q3 2022. For the first part of the call, all participants are in listen-only mode, so there's no need to mute your own individual lines. Afterwards, there'll be a question and answer session. Today, I am pleased to present CEO, Magnus Corfitzen; CFO, Déspina Georgiadou Hedin; CSO, Andreas Norlin; and Deputy CEO and CCO, Julie Waras Brogren. Speakers, please begin.
Thank you. Welcome everyone to the webcast for Ascelia Pharma's Q3 report in 2022. We look forward to updating you on our progress in the quarter report. Now please turn to page number two. During this presentation, we will be making certain forward-looking statements, so please pay attention to this before moving to slide number three. Ascelia Pharma is dedicated to improve the life of people living with cancer by offering better treatment options. In particular, we focus on rare cancer conditions. Our business model is to identify, develop, and commercialize novel drugs that address unmet medical needs within the orphan oncology space. We have two drugs in clinical development. Orviglance, our leading program, is in an ongoing phase II clinical study. It will be the only product targeting an addressable market opportunity of $500 million-$600 million annually in the key markets.
Oncoral is ready to start phase II in the treatment of gastric cancer based on encouraging results in phase I and a high level of unmet medical need. Our company is based in Malmö, Sweden, and we are listed on Nasdaq Stockholm. We have a strong balance sheet and finally entered Q4 2023, including completion of the Orviglance phase III program. Now please turn to page four. Ascelia Pharma is in a transformative phase as we are moving from late-stage development into commercial stage. We will be advancing Orviglance and Oncoral, and furthermore, as part of our strategy, we expect to have expanded our portfolio by acquiring or in-licensing an additional drug that fit our orphan oncology strategy and where we can make significant benefit to patients. In 2025, we expect to have established Orviglance as the market leader in its market.
Oncoral in phase II clinical development, and having one or two more clinical-stage assets in the pipeline through acquisition and licensing. This is truly an exciting time for Ascelia Pharma, and we see tremendous value creation potential as we progress. Now please turn to page five. In the third quarter of 2022, we continued to make progress. In August, we announced that the results of the Orviglance food effect study have been accepted as an oral presentation at the RSNA conference, which is being held in late November, early December this year. RSNA is the largest radiology conference in the world. In September, we presented final results from the hepatic impairment study of Orviglance. This is the second study out of three in the phase III program for Orviglance, and Andreas will shed a bit more light on the results.
After the close of the quarter, we announced the expansion of the leadership team to seven members in Ascelia Pharma. This is a logical step in ensuring the organization is best positioned to scale up and increase complexity that we have ahead of us with the important milestones and bringing Orviglance to the market. Now please turn to page number six. Now we'll go into more depth on our pipeline, and I'd like to hand over the word to our Chief Scientific Officer, Andreas Norlin.
Thank you, Magnus. Please move to slide seven. Orviglance is a novel oral contrast agent for liver MRI, which addresses a very specific unmet medical need. Liver metastases are common in patients with cancer, since many cancer types tend to develop metastases in the liver over time, and many times are the primary cause of mortality. The contrast agents available today are all based on a heavy metal gadolinium. The gadolinium should not be given to patients with poor kidney function, since it is excreted through the kidneys, and slow excretion can cause serious side effects. In the future, this unmet need can be met by Orviglance. The right side of this slide shows how Orviglance works in a patient with colorectal cancer. The left picture shows an unenhanced MRI scan without the contrast agent, standard procedure today for our target population.
The right scan shows the same patient after administration of Orviglance. The liver has taken up Orviglance and appears bright. There is one dark area highlighted that is only visible after Orviglance enhancement. This is a metastasis, which would not have been detected without a contrast agent. This illustrates the importance of a contrast agent. In this case, since detected and localized, the metastasis may be removed with significantly improved prognosis for the patient. We have made good progress. The early phase program has been completed with strong data providing clinical proof of concept, and we are currently in phase III. We should also mention that the development is validated and aided by an Orphan Drug Designation from the FDA. We are now on slide eight. As mentioned, there is a strong clinical proof of concept through six individual phase I or II studies with very consistent results.
These data were confirmed by an independent reanalysis by a blinded reader, which showed highly significant effects on endpoints that are also used in the ongoing phase III study. The phase III primary endpoint is lesion visualization based on the co-primary parameters lesion delineation and lesion contrast compared to background. As seen on the slide, both these were highly significant in the phase II program. It was also noted that 33% more metastases were detected with Orviglance compared to unenhanced MRI. These results clearly justified entering phase III, and they also provide valuable guidance on the design of the study. I also want to take the opportunity to mention again, that the study of Orviglance in patients with liver impairment was completed successfully in early Q3. Importantly, no new safety concerns were identified, and it was concluded Orviglance is well-tolerated in this group of patients.
Only observations of mild to moderate transient gastrointestinal adverse effects, such as nausea were made. The data confirmed there was no renal excretion of Orviglance. These results add to our overall knowledge and demonstrated the potential utility of Orviglance as MRI contrast also in patients with hepatic impairment. I will now hand over to Julie, our Deputy CEO and CCO.
Thank you, Andreas. On slide nine, the addressable market for Orviglance represents $500 million-$600 million annually in our key markets, the U.S., Europe and Japan. This potential is based on the volume of liver MRI procedures for cancer patients with severe kidney disease, i.e., the patients falling under the regulatory black box warning for gadolinium-based contrast agents. Our data to support this estimate includes real-world data on realized liver imaging procedures for this patient population. We also have extensive input from market access and pricing experts, where they have tested different price levels and have collected the insights on the evidence needed to support access and reimbursement. Building our own commercial team in the U.S. allows us to create an attractive top line and retain profit and value in Ascelia.
For other markets, starting with Europe and Japan, our strategy is to maximize the value of Orviglance by working with partners. Please move to slide 10. This year in March, we announced the results of our market research with 270 U.S. healthcare professionals. The market research explored the current clinical practice and the unmet need for our target patient population for Orviglance, with answers from radiologists, nephrologists, and oncologists. The results support the unmet need for Orviglance in the target patient population and are consistent with our previous market research. This chart shows one of the key findings and confirms that for patients with severely impaired kidney function or acute kidney injury, around 80% of healthcare professionals prefer today to perform an MRI without a contrast agent or sometimes with a partial dose of a gadolinium contrast agent. Please move to slide 11.
At the end of the survey, respondents were presented with a product profile of Orviglance. As a response, 84% answered that they are likely to or definitely will use Orviglance for the target patient population at launch. The results of the market research confirm the commercial potential of Orviglance and help us prepare an ambitious and focused launch. Please move to slide 12. For the U.S., the attractiveness and clear path to market provides a strong case for commercializing Orviglance on our own, building a U.S. commercial affiliate. The target patient population for Orviglance has multiple health complications, suspected liver metastases and poor kidney function, which means that decision-makers for its use are centered around 2,000 radiologists, most of whom can be found at around 400 hospital groups. Therefore, a focused team and an affiliate of around 40 FTEs can reach priority decision-makers at launch.
We now have our U.S. office established, Ascelia Pharma Inc., which represents an important step to engage more closely with key partners and the clinical community in the U.S. on our journey to make Orviglance available to physicians and to patients in this key market. Our global manufacturing partner, Cambrex, is also in New Jersey. We're gradually building our footprint and relationships with key stakeholders in the U.S. as part of our preparations for launch. This includes a number of leading radiologists, of which some are among our phase III clinical study SPARKLE investigators. Please move to slide 13. Back to Andreas.
Thank you, Julie. We will now move on and talk about Oncoral, our other assets. Please move ahead to slide 14. The active substance of Oncoral is irinotecan, an established chemotherapy with well-documented anti-cancer effects. It's currently approved for colorectal cancer and pancreatic cancer. In Japan, it is also approved for gastric cancer. Today, the administration is intravenous bolus infusion, typically every third week and typically at a high dose. Oncoral is a novel oral formulation of irinotecan. A tablet formulation enables more frequent daily dosing that could offer several potential advantages. Most importantly, efficacy. It is well known that many cancer types have suboptimal treatment outcomes today. An oral daily dosing may improve efficacy through a favorable pharmacokinetic and pharmacodynamic profile based on more constant therapeutic plasma levels of the active substance, and there are both non-clinical and clinical data supporting this concept.
There is tolerability or safety. Intravenous dosing of chemotherapy is frequently associated with severe side effects, typically gastrointestinal and hematological. An oral daily dosing has the potential for improved tolerability by avoiding high plasma levels and by offering dosing flexibility. Please move to slide 15. The concept of frequent low-dose administration is called metronomic dosing. The figure to the left illustrates a simulation model comparing levels of the active substance, SN-38, after the irinotecan IV dosing every third week, the gray line, and oral Oncoral dose daily, orange line. Over a three-week cycle, the exposure or area under the curve is comparable, although the high plasma concentration peaks associated with toxicity are avoided by daily dosing. Approximately 1/3 of the side effects observed after intravenous dosing are reported as severe or even life-threatening, Grade 3 or 4.
Metronomic dosing may not only reduce the peak-related toxicity but also brings the possibility to adjust dosing quickly if adverse events should occur. Our own Oncoral phase I results showed that Oncoral was well-tolerated overall, and importantly, the hematological toxicities were mild to moderate, Grade 1 or 2. In addition, our phase I data with Oncoral indicated anti-cancer activity or stable disease even in patients that previously progressed on the irinotecan given intravenously. Next slide 16, please. This is an example of improved outcome, in this case, overall survival with more frequent dosing. These are patients with metastatic breast cancer, where overall survival was improved from 20% with dosing every third week, high dose, to 32% with weekly dosing with a slightly lower dose. This is, if you will, a proof of principle. Please move to the next slide, 17.
We are preparing for phase II. The objective of the phase II study is to generate a clinical proof of efficacy in metastatic gastric cancer. The strategic reasons to choose gastric cancer are several. First, the clinical guidelines and clinical data support efficacy of irinotecan in gastric cancer. Second, gastric cancer is a severe cancer form with a high unmet need and a potential for Orphan Drug Designation. Subsequently, there is potential for label expansion into other solid tumor indications. Finally, as shown in the figure, there is data from gastric cancer animal models suggesting a synergistic effect of irinotecan if combined with LONSURF. LONSURF is another oral chemotherapy which was approved for metastatic gastric cancer in 2019. This all oral combination could potentially provide a more potent treatment alternative for these patients. We will now move to slide 18.
The study is therefore a randomized controlled multicenter multinational study comparing Oncoral on top of LONSURF with LONSURF alone. Primary endpoint is typical for phase II studies in oncology, progression-free survival, and then a battery of secondary endpoints, response rates, PK, safety, and overall survival. This will include approximately 100 patients and involves a clinical collaboration with Taiho Oncology, the manufacturer of LONSURF. The necessary regulatory approvals are obtained, and we are enthusiastic to eventually start the study. However, for strategic reasons, in order to focus all our internal resources on the lead program, Orviglance, we are waiting with the study starts for now. But as soon as internal bandwidth is secured, ensuring effective study conduct, the study will kick off, and we look forward to that. With that, I hand over to Julie again, please.
Thank you, Andreas. On slide 19. We will start Oncoral development in gastric cancer, as Andreas explained. This is today a $3 billion market. For these patients, there's a high medical unmet need for improving outcomes, and there's an opportunity for an open indication. We also see opportunities for developing Oncoral in other solid tumor indications, where a daily dosing formulation can demonstrate an attractive efficacy and safety profile. Irinotecan as an IV formulation is already approved in colorectal and pancreatic cancer. In addition, irinotecan is clinically demonstrated and recognized in, for example, the NCCN guidelines for many other cancer types. We are assessing these opportunities as part of our ongoing strategic plans for Oncoral. With this, I will hand it over to our CFO, Déspina.
Thank you, Julie. Now please turn to page 21. The key message on the liquidity position is that we continue to stay with a solid cash balance. With SEK 708 million in the bank, we have finally entered Q4 of 2023. The cash position will finally be used for ongoing clinical phase III study, as well as pre-commercial activities. If we now turn to page 22. In the third quarter, we saw a decrease in the operating loss compared to the same period in 2022. The decrease primarily reflects the positive effects for our U.S. currency holdings, lower cost on growth-based free preparations, and reduced equity costs for incentive programs for employees. The same pattern goes for the year-to-date operating loss.
The reduced cost also reflects the timing effect with lower R&D costs in Q1 2022, which was partly counterbalanced by higher commercial preparation costs. With that, I hand over the word to Magnus.
Thank you. Please move to slide number 23. I'd like to end this quarterly update with our focus on key milestones. The clinical development of Orviglance is our key priority. We expect to complete enrollment in SPARKLE this year. That will allow us to make a readout from the study. We continue our preparations for Orviglance commercialization and have many activities ongoing to prepare for a successful launch. This was our final slide, and we'd be happy to take any questions.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question is answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Ludvig Svensson of Erik Penser Bank. Please go ahead. Your line is open.
Thank you for the presentation. You had a solid cash position, obviously, and you mentioned that you have a cash runway into Q4 2023. Have you then included costs related to starting up this phase II trial with Oncoral, or is it Orviglance only? Thank you.
It's a good question, and thank you, Ludvig. We don't have funding to complete the Oncoral phase II study with the current cash. With starting the study sometime next year would not cover that period.
Oh, okay. Thank you for that. That was everything from me. Thank you.
Yeah. Thank you, Ludvig.
Thank you. Our next question comes from the line of Sten Gustafsson of ABG Sundal Collier . Please go ahead. Your line is open.
Yes. Thank you for taking my questions. I wonder if you can give us some more granularity on the studies that you have performed with Oncoral. For example, do you see the same adverse events in the food effect study as you do in the renal impairment or hepatic impairment study? I'm also curious to hear what are your plans for Orphan Drug Designation outside of the U.S.. Thank you.
Yeah. Thank you, Sten, for the questions. What we see across the studies is a very consistent side effect profile. The patients who are fasting, who are drinking water with Orviglance, the most common side effect is some mild, mostly mild and even a bit moderate, but transient nausea and diarrhea. This is not, you could say, a clinical concern. That is consistent across all studies. The other question again?
Yes. What are your plans for an Orphan Drug Designation outside the U.S.?
Yeah. I mean, we're looking Orphan Drug Designation in other geographies as well. Our key focus is on the U.S. market, and that's where we have the most emphasis. We have the Orphan Drug Designation in U.S., as you know. Orphan Drug Designation is important in the U.S., it's also good to have it in other geographies. In Europe, we have a much more extensive data exclusivity, which will give us 10-11. We expect to have 10-11 years of data exclusivity, where a generic competitor cannot be launched in Europe. That is also providing a strong protection of the commercial opportunity.
May I just follow up? Have you applied for Orphan Drug Designation in the EU region?
We have not communicated anything on that correspondence with the EMA or other regulatory agencies.
Okay. Final follow-up on the Orviglance studies. You mentioned nausea as an observation in the hepatic impairment study. Is it possible to provide some kind of granularity on this observation, which portion, which percentage of patients are experiencing nausea?
You're right that we have not sort of specifically mentioned how you could say how frequent nausea was. We expect to do that hopefully at some scientific conference in the coming period. We would rather not, you would say, compromise that presentation opportunity by sharing it at this point. But what we can say is that we see something that is very consistent with other studies.
Oh, great. Thank you so much. That concludes my questions.
Yeah. Thank you, Sten.
Thank you. As there are no further questions from the phones at this time, I'll hand the floor back to our speakers.
Yeah. Thank you everyone for listening in to our Q3 presentation and hearing about the progress we've made. We continue to work hard to complete the phase III trial to generate a readout. Hopefully we can bring this Orviglance to patients who are badly in need of this product. Thank you. Have a good day.