Ladies and gentlemen, welcome to the Ascelia Pharma Q1 report for 2020. Today, I'm pleased to present the CEO, Magnus Corfitzen, the CFO, Kristian Borbos, the CMO, Carl Bjartmar, and the CCO, Julie Waras Brogren. For the first part of this call, all participants will be in listen-only mode. Afterwards, there will be a question and answer session. Speakers, please begin.
Thank you, operator. Welcome everybody to the webcast for Ascelia Pharma's Q1 report in 2020. As just introduced, we have the executive management team here, and we look forward to updating you on our progress from this quarterly report. Now please turn to page number two. As you will see here, we will be making certain forward-looking statements on this call, so please pay attention to the information on this slide. Now please turn to slide number three. In Ascelia Pharma, we aim to improve the life expectancy and quality of life for people living with cancer. We do this by developing novel drugs targeting orphan oncology indications that can address unmet medical needs for patients who 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 average. We have a very exciting clinical pipeline. Our lead program, Mangoral, is a novel diagnostic drug. It's in a registration-enabling phase III global development program and has FDA orphan drug designation. It's targeting an addressable market of $350 million-$500 million and has completed six clinical studies in phase I and II. The other program is Oncoral. It's a novel patented tablet formulation of a chemotherapeutic drug, irinotecan. It's being developed for the treatment of patients with advanced gastric cancer. It's completed phase I-A, phase I-B development with very encouraging data. We will get more into this later in the presentation. Please turn to slide number four.
This is the first quarterly report for 2020, but we have already met several very important milestones for the year. In February, we announced the first patient had been enrolled in SPARKLE, our registration-enabling global phase III study for Mangoral. In February, we were also awarded the Best Life Science Company in Malmö, which is where our company is based. We are very proud of this recognition, and it shows of our significant progress and value that we have created in our company. After the close of the quarter, we announced the enrollment of the first patient in the hepatic impairment study and also approval of the Oncoral patent in Japan. In Japan, there are unfortunately many people suffering from gastric cancer, so this is a very important milestone for us. Now please turn to page number five.
2020 has not been all positive for Ascelia Pharma nor the rest of the world. In 2020, the COVID-19 virus has rapidly spread around the world with devastating consequences for human life and economic development. At Ascelia Pharma, we've taken steps to minimize risk for our patients, our healthcare professionals that we work with, our employees and their families, as well as our communities. In the context of that, we are in a relatively strong position with SEK 169 million in liquid assets at the end of this quarter, Q1, and we have a low and flexible cost base. The opportunity addressed by our drug candidates, Mangoral and Oncoral, are unchanged. Based on our current analysis and feedback from the clinical community of the COVID-19, we're not changing our timelines at this point.
In this context, we see it as a positive that we have been able to enroll the first patient in the hepatic study, and the full team are very dedicated to moving this company successfully through this period of time. Now please move to slide number six. Now we'll go into more detail on Mangoral. I'd like to hand the word over to our Chief Medical Officer, Carl Bjartmar. Carl, please take over.
Thank you, Magnus. In oncology or cancer medicine, liver lesions are common, either as metastasis from primary tumors elsewhere, for example, colon or lung cancer, or as primary liver cancer. Magnetic resonance imaging or MRI is the recommended and most sensitive method to detect liver lesions. Clinically, the aim is to detect and localize metastasis as early and as small as possible in order to decide on appropriate treatment. To get a good quality image, a contrast agent, also called imaging drug, is needed, and this is where Mangoral comes in. Go to the next slide, please. Seven, right. Contrast agents are available today, and those are all based on gadolinium, a heavy metal which is dosed intravenously. In most patients, gadolinium can be used, and 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 and a slow elimination can cause serious side effects. Regulatory authorities, for example, FDA in the U.S. and European regulators, have implemented restrictions for patients with impaired renal function. That is a very specific unmet medical need, and that's what's illustrated on this slide. Today, patients with normal kidney function, and that's most patients, they 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, and this specific target population is approximately 4% of all patients requiring an MRI. That's approximately 280,000 patients per year in the major markets, and that's U.S., Europe, and Japan. It meets the criteria for an orphan indication.
Go to next slide eight, please. To complete our clinical program before regulatory filing, three studies are now either ongoing or will start shortly. Important to note here is that Mangoral is the only liver-specific contrast agent in clinical development. We are way ahead of any competition. First, the pivotal phase III study, SPARKLE, investigates the efficacy and safety of Mangoral in the target population with focal liver lesions and poor kidney function. The study is expected to be completed next year. I will provide some more details on a subsequent slide on this study. The second study, the hepatic impairment study, is investigating safety and efficacy in patients with various degree of liver impairment since these patients are not included in the phase III SPARKLE study.
This study is conducted at the specialized liver institute in Texas, as mentioned, is currently ongoing, enrolling, and we are expecting to have the final data later this year. Finally, since Mangoral is an oral drug, we are interested in the effects of food intake on absorption of the drug. This is addressed in a specific food effects study, which will start very shortly. For example, then we provide useful information if, for example, this testing is required or not before intake of Mangoral. This study is also planned to be completed in 2020. These studies, together with the already completed phase I and phase II studies, will then constitute a comprehensive data package, which will be filed to regulatory agencies for market approvals. Can we go to the next one, please? Slide 9.
This slide provides some more background on the pivotal phase III study, SPARKLE. Shown on the left, and as mentioned, there's a strong clinical proof of concept through six individual phase I and phase II studies with very consistent results. This data were confirmed in an independent re-analysis by a blinded reader, which showed highly significant effects on parameters that will also be used in our pivotal phase III study. You can see this on the right side of the slide, which illustrates the phase III design. The study, which is a global study with 200 patients, has been agreed with both FDA and EMA, and that's very important before you start the study. The strategy here is to repeat and confirm the strong phase II results using similar endpoints.
The primary endpoint is lesion visualization based on the co-primary parameters lesion delineation and lesion contrast compared to background. Since there's no available contrast agents for these patients with impaired renal function, the comparator will be unenhanced MRI, an MRI without contrast agent, which is currently the standard procedure for these patients. For that reason, there's no randomization, but each patient serves as its own control. This is a design that has advantages on sample size and statistics. Finally, the follow-up of each patient is short compared to most clinical studies, and we will therefore have the final study relatively sooner than typically in a study with a similar size. With that, I want to hand over to our Chief Commercial Officer, Julie.
Yes. Thank you, Carl. We are on page 10. Thank you. As our clinical operations progress, we continue to prepare the commercialization of Mangoral, projected to take place in 2022. As previously presented, the initial target patient population represents 280,000 people in key markets. With our current target pricing assumptions, this represents $350 million-$500 million. A significant aspect of the market potential for Mangoral is that physicians confirm the need for Mangoral. They recognize the unmet need for a safe and effective diagnosis of liver lesions and metastases for these patients with poor kidney function. This is shown on the left side, where 85% of physicians in a survey confirm that they are likely or extremely likely to use Mangoral upon launch. The benefits to payers and physicians match this unmet need in the market. This will drive reimbursement and adoption.
On the right side, Mangoral is presented as the only contrast agent for the target patient population. Secondly, we have scientifically demonstrated an improved visualization of focal liver lesions and metastases compared to unenhanced MRI. We'll have more data to support this from our phase III program presented by our Chief Medical Officer. Thirdly, the value of early diagnosis is recognized, i.e., early diagnosis has a significant impact on patient outcomes and survival rates in cancer therapy. If we now turn to page 11. We've mapped out our journey for commercialization and the preparations we need to go through for a strong launch in 2022. This year, in 2020, we need to continue the phase III program, which drives our overall timelines. We need to detail our pricing and market access strategy. In turn, this will help us to find market priorities and projections.
We need to detail our pre-launch and launch plan and confirm the case and blueprint for building our own U.S. commercialization and partnering in other markets. In parallel, we need to expand our key opinion leader network and the understanding of unmet needs for this patient population. In 2022, the key focus will be on completing our phase III program and preparing the regulatory filing. With the phase III program in hand, we'll be able to initiate discussions with payers and policymakers, and to kick off mobilizing our operations. In 2022, the focus will be on regulatory approvals, launch readiness, and a cross-functional launch execution. I look forward to sharing more about our progress and preparations for launch as we move ahead. With this, I will turn it back to Carl. Please turn to page 12.
Okay. Thank you, Julie. Now we are moving into Oncoral. We could go to the next slide, 13, please. In the same way as we have a strong clinical proof of concept with Mangoral, there's also strong clinical proof of concept for irinotecan, which is the active ingredient in 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 at 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 with Oncoral permits lower but still therapeutic plasma levels of the drug.
Third, cancer therapy is often a combination of drugs, Oncoral provides the possibility for an all-tablet, all-oral chemotherapy combination together with other established oral chemotherapies. For example, capecitabine or TAS-102. For Oncoral, the intended indication is gastric cancer, and that's a severe cancer form with significant unmet need. Gastric cancer is rare, an orphan indication, which provides then several potential advantages from a drug development perspective. Once approved and on the market, a label extension can be considered. Here we are now currently preparing the phase II study based on very promising and solid phase I results. With that, I'd like to hand over the word to Kristian for the financials.
Thank you. Please turn to page 15. If we look at the operating results for the current quarter, January to March, we have an increased operating loss compared to the same quarter last year. This is in line with our expectations and mainly reflects an overall higher level of R&D activities. The increased R&D costs have been driven by Mangoral. In the current quarter, we have, as already described, opened clinical study sites and started the patient enrollment for the phase III study for Mangoral. We have also ramped up our manufacturing preparations and incurred costs for commercial preparations. This has meant higher costs for R&D and commercial preparations in the current quarter compared to last year, but again, fully as expected. If we now turn to page 16. The key message here is that we continue to stand with a strong liquidity position.
By the end of March, we had SEK 169 million in cash and marketable securities. This solid liquidity position will be used to finance our ongoing clinical development for Mangoral and also the pre-commercial activities. With that, I'll leave the word over to Magnus, please.
Thank you. Now please turn to slide number 17. I'd like to end this quarterly update with our priorities for the year 2020. We have already enrolled the first patient in both the SPARKLE and the hepatic clinical study, and we continue to work with the clinicians to continue enrollment of patients in our studies so we can demonstrate the value of Mangoral. As Julie mentioned, we are also preparing for commercialization. We have many activities ongoing to enable us to design the value-maximizing strategy and execute it. A lot of work is going on in this area. Finally, a very important activity this year is to complete the design of the Oncoral phase II study, and we will share that later in the year with you and begin the preparations for starting enrolling patients in the study in 2021.
This was our final slide, and we'd be happy to take any questions.
Thank you. If you have a question for the speakers, please press zero one on your telephone keypads. Our first question comes on the line of Ludvig Svensson of Redeye. Please go ahead. Your line is now open.
Thank you guys for the presentation. It's nice to see that everything is going according to plan despite the COVID pandemic. My first question is regarding Mangoral. I wonder what stage you are in in the preparations for the phase II trial, and when you expect that trial to be initiated, and how many patients that you expect to enroll in this study?
Yeah. Carl, do you want to take that?
Sure. Thank you, Ludvig. Very good question. Where we are, so we now have established a very seasoned advisory board with very high-profile experts, and with them, and internally, we are drafting the study protocol. We don't have a final protocol, but we have a draft synopsis. We have a very good idea on what the study will look like. I think your second question was when do we plan to start the study? I would say, in a year's time, less than a year, that timeframe. Late this year or early 2021 would be my estimate. I think your question was the size of the study.
This is a phase II study, and I can't give you an exact number, but it would be in the ballpark of, depending on the endpoints and some other aspects, but roughly 100 patients, give or take. Does that answer your question, Ludvig?
Yeah, absolutely. Thank you, Carl. Another question regarding Mangoral. I wonder how the customer base, how large is it in the U.S., and how many sales reps do you expect to enroll here to work in this market?
We have made our projections, and we are asking shy of 100,000 patients addressable market in the U.S. Julie, maybe you want to comment.
Yeah. Thank you. In terms of our customer base and sales force sizing, as Magnus said, we're doing a study now to collect in-market data for the U.S. The preliminary indications we have from previous research and desktop research is that the target audience is somewhere between 3,500 and maybe 4,500 physicians. Again, we need to confirm this. This indicates, if you look at a sales force sizing exercise, that the previously communicated sort of 10-12 field reps is a good assumption to work on until we've confirmed the numbers. It still looks like an attractive case.
All right.
Does this answer your question? Mm-hmm.
Yeah, absolutely. I have a final question, and that is about a partner for the European and Japan market for Mangoral. What is your dream partner? What kind of player are you looking for?
That's a very good question. I think what we're doing now is maximizing the value. We've done important regulatory work in clarifying the regulatory path forward in the key geographies and making sure we can have a strong partnering package. Julie is also doing quite some work as we have the stronger negotiation position we have. I think for me, what is important for a partner is it's somebody that is very committed to the product, that will really work hard to make this successful, and where there's a good fit to their business strategy. I think that's the most important rather than you would say necessarily the huge size. I think this is an orphan product.
I don't think necessarily we will have one of the biggest companies in the world partnering this because this would be too small of a P&L impact on them if they are talking on billions and billions of dollars. The ideal partner would be somebody that would consider Mangoral an important product in their product portfolio.
Yes. All right. Thank you, guys. That was everything from me.
Yeah. Thanks, Ludvig. Good questions.
Just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypad. We'll now have a further pause while any questions are being registered.
We have been very happy to update you on the first quarter of 2020. We have made good progress despite the, you could say the global situation, but we are very optimistic about a very successful year, both 2020 but also in the years beyond. We look forward to updating you on our progress going forward, and have a nice day.