Q4 18/19

Aug 22, 2019

Welcome everyone to the webcast for Ascelia Pharma's Q4 report for the fiscal year 2018/2019, which covers the last quarter's period from April to June 2019 due to our skewed fiscal year. We look forward to updating you on our progress here in the quarterly report. Please move to the next slide. We will be making certain forward-looking statements on this call, so pay your attention to this slide before moving on to the next slide, please. Ascelia Pharma is an orphan oncology drug development company, and we are focused on developing novel drugs to address unmet medical needs for patients which are not adequately served by currently available drugs. We focus on drugs where we understand the mechanism of action, and in combination with a well-defined way to the market, we believe the likelihood of successful development of our drug candidates are higher than industry averages. Our two programs are Mangoral, our lead asset, which is a novel imaging drug for liver MRI, and it is heading into phase III later this year and will serve a patient population with no safe and effective drug today. Mangoral will be the only product targeting these patients, and the market potential is up to $350 million-$500 million annually in U.S., Europe, and Japan. Our other program is Oncoral. It is a novel patented tablet formulation of a chemotherapeutic drug, irinotecan, and it has completed phase I development. It is being developed for use in treating patients with advanced gastric cancer who face a poor prognosis after being diagnosed today, so a significant unmet medical need. Please move on to slide number 4. Ascelia Pharma has made significant and important progress in the last quarter. Importantly, we met with the European Medicines Agency, EMA, and discussed the Mangoral phase III program. Based on the discussions, we believe the planned phase III program, if successful, and together with the existing data, can be sufficient to obtain approval in Europe. The other important milestone was the article with the encouraging results from the phase I study with Oncoral. In this part of the study, Oncoral was given to patients together with capecitabine, which is an approved chemo drug, in an oral tablet chemo combination. The result was published in a peer-reviewed journal, Cancer Chemotherapy and Pharmacology. These encouraging results are very important and critical next step in planning the drug regimen combination that will be attracted to patients, and we can move into phase II. During the quarter, we also announced that we have filed a patent application for a next generation version of Mangoral. This will make Mangoral even more patient-friendly, and if the patent is granted, will provide patent protection until 2040. Finally, we also issued shares from the greenshoe in connection with the IPO we did in March, resulting in an additional 22 million SEK before cost. All in all, this was a very successful first quarter as a publicly traded company, and we are very happy with that. Please move on to slide number 5. Looking ahead, our key priority is to start enrollment in the phase III study of Mangoral, which we expect to enroll the first patient in the second half of 2019, as previously guided. We expect enrollment to be completed in about a year, and the results of the study shortly hereafter. That means we will have the headline results of the study at the end of 2020 or early 2021. For Oncoral, we now have the full data set from the phase I study, and we will continue our work in the coming period on designing a strong phase II study for this agent. We expect to initiate enrollment of patients in the phase II study in 2020. Moving on to the next slide. To summarize our highly attractive drug pipeline. Mangoral, it is a novel imaging drug for liver MRI and has orphan drug designation from the FDA for use in patients with severe kidney dysfunction. It is targeting an addressable market of $350 million-$500 million, for which there are no products today, and significant upside potential. Mangoral has completed six clinical studies, and we will start enrolling patients in the phase III clinical study in the second half of this year and expect to announce results around year end next year. Given the strong clinical data from Mangoral and the phase III endpoint we have discussed with FDA and EMA, we believe the likelihood of success in phase III is quite good. Our other drug candidate is Oncoral, a novel patented tablet formulation of a chemotherapy which is only available as infusion product today. The data presented from our phase I encourages us to move into phase II in advanced gastric cancer, where there is a significant unmet medical need and a substantial market potential. Next slide, please. Now we will go into more depth on Mangoral, and I would like to hand over the word to our Chief Medical Officer, Carl Bjartmar. Thank you, Magnus. What is illustrated on this slide, and we are still on slide number seven, it is a bit hidden behind the text box, but that is a patient in a magnetic resonance scanner or MR scanner. Magnetic resonance imaging or MRI is the recommended and most sensitive method to detect liver lesions, and typically metastasis, but also primary tumors. Especially liver metastasis are a major challenge within oncology. The reason is that many different types of cancers tend to develop metastasis in the liver over time, which are potentially fatal, deadly. Most commonly colon cancer. The aim is to detect and localize metastasis as early and as small as possible in order to decide on appropriate treatment. In order to get a good quality image, a contrast agent, also called imaging drug if needed, and that is where Mangoral comes in. Please go to the next slide, eight. Contrast agents available today are all based on gadolinium, a heavy metal which is dosed intravenously. In most patients, gadolinium is a useful contrast agent. The problem is that gadolinium-based imaging drugs are not safe in all patients. Specifically, they should not be used in patients with poor kidney function. Since gadolinium is excreted through the kidneys, accumulation can cause serious side effects. For that reason, regulatory authorities, for example, FDA in the U.S. and European regulators, have implemented restrictions for patients with impaired renal function. In this patient group, the standard management is MRI without an imaging drug with reduced information value. In other words, these cancer patients do not have an MRI contrast agent today. That is a very specific unmet medical need, and this is illustrated on this slide. Today, patients with normal kidney function, and that is most patients, can receive gadolinium-based imaging drugs. However, patients with severely reduced kidney function lack an imaging drug today. In the future, this unmet need can be met by Mangoral. This specific target population is approximately 4% of all patients requiring liver MRI, and that is approximately 280,000 patients per year in the major markets. That is U.S., Europe, and Japan. And that meets the criteria for an orphan indication. Please go to the next slide nine. This slide summarizes the characteristics of Mangoral. First of all, Mangoral is an oral, liver-specific contrast agent. It is based on manganese, which is a natural trace element that is present in food, and it is needed for normal biological cellular functions. We have an orphan drug designation, which qualifies Mangoral for certain advantages or incentives during clinical development. For example, easier access to the FDA. And I will show how it works on the next slide. The side effect profile of Mangoral, as seen in our phase I and phase II studies, is very good. In contrast to gadolinium, it is taken orally, excreted directly from the liver through the bile, and the systemic exposure is minimal. Nephrogenic systemic fibrosis, which is the most serious risk with gadolinium-based contrast agents, it is not associated with Mangoral. Importantly, Mangoral is the only liver-specific contrast agent in clinical development, so we are way ahead of any competition. As shown on the right, there is a strong clinical proof of concept through six individual phase I or phase II studies, and the results have been very consistent. These data were confirmed by an independent reanalysis by a blinded reader, which showed highly significant effects on parameters that will also be used in our upcoming phase III study. Please go to the next slide 10. This slide illustrates how Mangoral works. This is from a real patient with colorectal cancer from one of our phase II studies. The left picture shows an unenhanced MRI scan without contrast agent, where the liver is seen on the left side of the body. The right scan shows the same patient after administration of Mangoral, a contrast-enhanced scan. The liver has taken up Mangoral and appears bright. Some darker structures can be seen on both left and the right scan, and they are vessels or bile ducts. There is one dark area that is only visible after Mangoral enhancement, highlighted in the red ring on the right scan. That's a metastasis which would have not been detected without the contrast agent. This illustrates the importance of the contrast agent. In this case, since detected and localized, the metastasis may be removed, with a significantly improved prognosis for this patient. Please go to the next slide 11. This slide illustrates the phase III design, which has been approved by the FDA and EMA. The strategy here is to repeat and confirm the phase II results using similar endpoints. This will be a global study conducted in the U.S., Europe, and South Korea, and include 200 patients. Since there is no available contrast agent for patients with impaired renal function today, the comparator will be unenhanced MRI, which is currently the standard of procedure in these patients. There's therefore no randomization, but each patient will serve as its own control. That's a design which has advantages on sample size and statistics, for example. Finally, the follow-up for each patient is very short compared to most clinical studies, only a few days. We will therefore have the finalized study results relatively sooner than a typical study of a similar size. Now I'd like to hand over to Magnus again. I believe it's the next slide, 12. Thank you, Carl. Mangoral has a very attractive commercial opportunity. It will be the only product targeting a market of up to $350 million-$500 million annually. In the key markets, which we consider to be U.S., Europe, and Japan, there are 280,000 patients annually who need Mangoral to undergo an accurate liver MRI procedure, diagnosis of cancer in the liver, planning for surgery procedures, or monitor response to drug therapy. We have had extensive payer interactions to understand their perspectives on Mangoral and the value it brings to them and the healthcare system. These more than 25 payers we've talked to are both in the U.S. and in Europe, and they represent both public and private systems. We believe that the consistent encouraging feedback we got from the payers underscores the value of Mangoral, both to patients but also to healthcare systems, so they can provide better patient care and more cost-effective patient management. The overall cost of these patients to the healthcare systems are tremendous, and we are based on our market research, believing that a price per dose of Mangoral is between $1,600-$3,000 per dose, leading us to an addressable market of $350 million-$500 million annually. Please move to next slide. As previously mentioned, Mangoral has strong commercial protection in the form of orphan exclusivity or data exclusivity in the key markets. Mangoral is a good and patient-friendly product. However, with the formulation work we have done, we believe we can generate a next-generation Mangoral product that will be even more attractive to patients. If this patent application is granted, the next-generation Mangoral product will have patent protection until 2040. Please go to slide 14. We expect Mangoral to be ready for launch in 2022 and have already started doing some of the work to prepare commercialization. As previously informed during the IPO workshop, we will ramp up these activities in parallel with the phase III study. Based on our current understanding of the market, we believe a small, highly targeted sales force of 10 to 20 sales reps would allow us to penetrate the majority of the U.S. market. The reason is that these patients are suffering from both kidney disease and cancer and are therefore most often treated at the large hospitals, which we will access. We will, during the phase III, strengthen our commercial team with a Chief Commercial Officer or similar profile to lead the commercial preparation activities. As mentioned, we will continue our pre-commercial activities and provide updates to the market whenever relevant. Please move to the next slide. Now we are moving to Oncoral, our other clinical development candidate, and I'd like to hand the word over to you again, Carl. Thank you, Magnus. We can move to slide 16. In the same way as we have a strong clinical proof of concept for Mangoral, there's also a strong clinical proof of concept for irinotecan, which is the active ingredient of Oncoral. Irinotecan is a well-established chemotherapy which is currently given intravenously. As a novel oral formulation, Oncoral has several potential advantages. First, the convenience of an oral administration. The drug can be taken at home instead of intravenously in the hospital. Secondly, the well-known side effects associated with intravenous bolus dosing and high plasma levels, for example, nausea, can be avoided. The daily oral dosing of Oncoral permits a lower but still therapeutic plasma level of the drug. Third, cancer therapy is often a combination of drugs, and Oncoral provides the possibility for an all-tablet, all-oral chemotherapy combination together with another established chemotherapy, capecitabine or Xeloda. Next slide, please, 17. This slide shows how Oncoral will differentiate from the intravenous irinotecan products shown on the lower left corner of the slide. Their indications are colorectal cancer and pancreatic cancer, although both are also used for gastric cancer in the clinical label. For Oncoral, the intended indication is gastric cancer, the severe cancer form with significant unmet need as mentioned. Gastric cancer is a rare orphan indication which provides several potential advantages from a drug development perspective. Once approved on the market, label expansion can be considered. It can also be mentioned that irinotecan is already approved for gastric cancer in Japan, but not in the U.S. and not in Europe. In addition, there is a strong interest from the oncologists in the field for an oral formulation of irinotecan. They see the potential advantages of Oncoral. Next slide, please, 18. The phase I program for Oncoral is now completed, and these two phase I studies have both been published in the medical journal Cancer Chemotherapy and Pharmacology. The first study was also presented at the major International Oncology Congress, ESMO, last October. Briefly what these studies show is that exposure and variability of the active substance of this new oral formulation is comparable to the intravenous formulation, and that is important information moving forward. Also, Oncoral appears well-tolerated, and in particular, the hematological side effects, such as cytopenia, which are often associated with chemotherapy, there were few and all mild to moderate. The second study to the right also showed a good safety profile in combination with oral capecitabine, Xeloda. To conclude, these are results as good as we could hope for, and we are now ready to move this compound into phase II. Next slide, please, 19. With that, I would like to hand over the word to Kristian to address the financials. Yes, if now turn to slide 20. If we look at the operating results for both the current quarter and the full year, we have an increased operating loss compared to last year. This is as expected and logic, and reflects an overall higher level of R&D activities. The increased R&D activities have been driven by the development of the lead candidate, Mangoral. In the current and preceding quarters this fiscal year, we have prepared for the phase III program, which has included establishing of the study protocol, selecting clinical study sites, and upscaling of the manufacturing capacity. This has meant higher R&D cost compared to last year. As I said, this is logic and reflects the overall higher activity level in the R&D activities this year compared to last year. If we now turn to page 21. The key message here is that we stand with a very strong liquidity position with 225 million SEK in cash and also marketable securities at the end of June 2019. Increased liquidity compared to last year reflects the proceed that we raised in the IPO. With the solid liquidity situation we have, as already mentioned, we have a fully financed phase III program for Mangoral, which is very comforting. With that, I'll leave the word over to Magnus. Please turn now to page 23. Yeah. Thank you, Kristian. Now I'd like to update you on the timeline and the activities ahead of us. Please move to slide 23. This is how we believe the clinical development activities will progress, and it is consistent with our previous communication, so no changes from last quarter. As mentioned initially, in the second half of this year, we will enroll patients into the Mangoral phase III study, and we expect to have the last patient enrolled at the end of next year. The top-line results will be available shortly hereafter, and we expect that will be the end of 2020 or early 2021. As soon as the study report has been finalized, we will submit the dossier for registration and expect regulatory approval in the first half of 2022. For Oncoral, the results of the extension of the phase I study was published in April, and we are now preparing for the phase II study. We will expect enrollment here in the second half of 2020 of that study beginning in Nancy. The milestone for first half of 2019, which were the EMA meeting with Mangoral and the results of the Oncoral combination study with Oncoral and capecitabine, have already been met, and our operational activities are on track. Next slide, please. We have substantial value creation potential in Ascelia Pharma. Our lead asset, Mangoral, is heading towards the market. We have a phase III program with a primary endpoint, which is strongly supported by our phase II data, and the program has been discussed with both the FDA and the EMA. We believe there's a good likelihood of success in the phase III program, and our extensive commercial analysis validates a very attractive market opportunity of $350 million-$500 million in U.S., Europe, and Japan, which would make Mangoral one of the top-selling medical imaging drugs. Oncoral has now completed phase I and will be heading into phase II in gastric cancer. As Carl mentioned previously, there's good reason to believe Oncoral will be effective in this disease in combination with our drugs approved already in this indication. This will create tremendous value increase, as we have seen from transactions in this field previously. Furthermore, we will acquire or in-license additional drug candidates within orphan oncology that fit the same profile as Mangoral and Oncoral. We will do so once we have developed Mangoral and Oncoral a bit more and have the financial and operational bandwidth to create value on those molecules, as we have already done and will continue to do on Mangoral and Oncoral. This was our final slide, and we would be happy to take any questions. Thank you. Ladies and gentlemen, if you have a question for the speakers, then please press 01 on your telephone keypad and you enter a queue. After you are announced, please ask your question. Our first question comes from the line of Niklas Elmhammer from Carlsquare. Please go ahead, your line is now open. Yes, hello. Good morning. Thank you for taking my questions. Regarding Mangoral, I was curious for maybe a bit more color on the new formulation, if possible. Specifically, what further developments do you see required in terms of technical as well as clinical development? Also, to clarify, do you have the full rights to the new formulation, or is there any co-development partners involved? Yeah. Thank you, Niklas. No, very relevant question. First of all, on the new formulation. On the rights, we have full rights. We are working with some formulation experts that are helping us finalize the second-generation version. But all rights are with Ascelia Pharma, so no royalty obligation. You would say on the development side, right now we have not finalized. We are working on finalizing the formulation that we will then take into development. The way patenting works is that you file a patent application, and we then have the opportunity to add additional data to the patent application to strengthen the patent application within the 12 months after filing. For competitive reasons, we will not put so much light on the content of the patent until it will be published 12 months from filing. But we believe that, as mentioned, that it has some significant advantages over the current formulation, which is in itself quite good. But the new product will be even better. Once we have finalized the formulation, we will share more information about that with the market, and also in relation to the development path for the product. Okay, thank you. That's helpful. Also regarding Oncoral, to clarify, are you still considering adding the targeted therapy for the clinical development to Oncoral and Xeloda? Yeah. We're still working on, together with top KOLs in this field, on doing the design of the phase II. Yeah. Carl, you want to add? Yeah, I can add to that. We have initiated the planning for the clinical development program for the continuous development program for Oncoral, and that includes the overall program, but also specifically the design of the phase II studies. There's always several options there, and there's possibility to add on more targeted compounds. But we're not decided on that. That discussion is ongoing, so I can't be more specific. Okay. Thank you very much. I'll move back into the queue. Thank you. Thank you. Thank you. Just as a reminder, if you would like to ask a question, then please press 01 on your telephone keypad. Our next question comes to the line of Lars Hevreng from Pareto Securities. Please go ahead. Your line is now open. Yes, thanks. Do you have today a better sense for, or a strong sense for how many sites are going to be involved in the pivotal trial with Mangoral? Since, I guess it is pretty soon that you will announce the first patient enrolled. That is one question. The other question regarding the study in hepatically injured patients or poor hepatic function. Anything about the details about the timelines for that? And just a reminder about the size of that trial and also number of sites involved. Okay. Thank you, Lars. I will take that one. The first question was number of sites in the phase III study. I think what we have communicated is around 30 sites globally, and that is still what we are working towards. It is going to be in that ballpark 30, 35 sites, roughly. That was your first question, right? The second question was about the hepatic study, and that is going to be a single center study. And that is also proceeding according to timelines. The study is going to start later this year or early next year. Does that answer the question, Lars? Yes. Thank you. Thank you. As there are no further questions registered at the moment, I will return the word to the speakers for any closing comments. Please go ahead. Yeah. Thank you. Thank you everybody for joining our Q4 fiscal year update. We have been working very hard on moving forward with all the operational activities, and as you can see, we are on track as we have communicated earlier. Thank you very much and have a very good day.