Welcome to today's event, where we have the pleasure to present Ascelia Pharma. Today's presentation, of course, the Q2 result and the regular, but maybe with more focus on the regulatory process surrounding Orviglance. As always, there's a box down below where you can ask questions during the presentation. We will take the Q&A in the end. Of course, we are joined by CEO Magnus Corfitzen to take us through the results and the process and standpoints from the company sides. With that introduction, I think I will hand the call over to you, Magnus.
Yeah. Thanks a lot, Michael. Great to be here and talk about our Q2 report. During my talk, I will be making a number of forward-looking statements. First, in Ascelia, we're focused on identifying, developing, and commercializing novel drugs, addressing unmet medical needs within the oncology space. Our company is based in Malmö in Sweden, and we're traded on the main market on Nasdaq Stockholm. Our pipeline consists of primarily two clinical stage assets. Our lead program, Orviglance, is a diagnostic drug for use of imaging of the liver, MRI of the liver. We have completed the clinical development. The product has Orphan Drug Designation from the FDA, and we have submitted a New Drug Application to obtain approval.
Unfortunately, we received a Complete Response Letter early July, and we have a meeting scheduled on September 9 with the FDA to discuss the issues that they have identified and agree on an efficient path forward to bring the product to patients in need. We're going to spend the most of the presentation today talking about Orviglance, but we also have Oncoral, which is an important asset, an interesting asset. It's a tablet-based irinotecan product that has significant potential in various solid tumors. Q2 was busy. In April, we raised SEK 20 million in a directed share issue. We had our annual general meeting early May. We presented data, or a radiologist presented data on Orviglance at the ESGAR Conference, the European Society of Gastrointestinal and Abdominal Radiology, the key gastrointestinal radiology conference in Europe.
We further expanded our IP portfolio for Orviglance by filing of a new patent application end of June related to packaging and manufacturing. After the end of the period, as mentioned, we received a Complete Response Letter. We also announced that there were some organizational changes, and cost reduction to extend our financial runway. We recently announced that the Type A meeting has been scheduled for the 9th of September. First I'll talk about Orviglance, and let me start with why we are very excited about Orviglance. It's a well-defined unmet medical need. It's a first-in-class product targeting liver imaging in patients with severely impaired kidney function. The global addressable market opportunity is $800 million, with no good solutions today. We have commercial-scale manufacturing set up and well-functioning, completed nine different clinical studies, and we have strong results from phase III.
As mentioned, we have the Type A meeting to clarify what is needed to get the positive outcome from the review process. We have a clearly stated strategy that we will commercialize with a partner. Let me start by saying, we were very surprised when we received the Complete Response Letter. Based on the process, the review process, the prior meetings with the FDA, and the communication, the audits, everything, we were expecting an approval. Obviously, we need to understand why the FDA has come to this conclusion and agree with the FDA on a path forward, and that is what we expect to achieve on September 9.
After reviewing, we continue to be of the opinion that Orviglance has a strong data package in terms of efficacy and safety in manufacturing, that it provides attractive risk-benefit profile for the intended patient population, and all the data that we have should support an approval. We will work with the FDA to find an efficient path forward. Let me go into a little bit about the, you could say, the concerns, the issues the FDA puts into the Complete Response Letter. There are basically two categories of issues. One is the clinical statistical, and where they raise issues around the justification of the re-read. They also state that there may have been bias in the training of the new readers, and then they talk about that we should demonstrate clinical utility for evaluating only T1 images, and that's a little technical.
I'll come to that in a minute. There were also some issues related to specifications of the product, on the product quality, related to, you could say, manufacturing in the Complete Response Letter. We acknowledge that the FDA has a different opinion than we have, and we need to understand that and bridge that gap. In our meeting request to obtain the meeting in September 9, we've gone through taking a deep dive and understanding of the issues highlighted by the FDA, the data we have, and you would say our position is that, as we stated previously, there was a significant systematic bias in the initial read back in 2023 where two of the three readers had a very significant bias, changing the way they scored over time, which invalidated the results of the study, and therefore a new read was warranted.
We also gone through, very granularly, the training of the new readers in the reread. We think we've done that in a thorough and professional manner with no significant reasons to introduce bias. When we think about the T1 enhancing, let me expand a little bit on that. When you do a liver MRI examination, you do different sequences, different kind of images, different kinds of enhancement patterns of the liver. There are three broad categories: T1 enhancement, T2 enhancement, and diffusion-weighted enhancement. Orviglance has an effect on T1, like gadolinium has an effect on T1 as well. There's no effect on T2, there's no effect on diffusion-weighted. You would not expect to see any differences on that, and we've not and have never claimed that because the biological effect of manganese is on T1.
What we have done is that we have evaluated the T1, and we say we improve T1, and better T1 is important, because you could say T1 is useful in a number of clinical settings. We do not improve T2. We have never claimed that, and we do not think that should be in a claim for the product. That is what we will be discussing with the FDA. It is clear that if you have better T1 images, that is an advantage in a number of scenarios. If unenhanced is superior because you only need T2, then you should never use a contrast agent. I think that is where we are coming from. On the product quality, we have aligned with the FDA recommendation, which means that we have implemented the changes that they have requested. We believe the product quality issues should be in order.
Obviously, we want to confirm that at the meeting as well. When we take one step back, obviously massively disappointed about this conclusion, and we will work constructively with the FDA to turn around this, and provide the information they need to make an approval. We can also conclude from this that the FDA inspections conducted under the review were completed without critical findings for the NDA. The product quality issues we have addressed, which means that we believe we should not have any issues going forward on this area. The key issue here is the interpretation of the medical imaging, clinical imaging data of the pictures. It is not the conduct of the phase III trial, it is not data collection or anything related to that. We do not see any safety issues as well.
That is what we need to discuss with the FDA, that is on how we bridge the gap on the clinical interpretation of the clinical imaging data. We are of the opinion that the data should support an approval, but obviously need to align with the FDA. When we think about what is ahead for Orviglance, we have the Type A meeting. That is an important milestone. The minutes will be available no later than 30 days after the meeting. Once we have that information, we will communicate to the market about the outcome of the meeting. The commercial opportunity is unchanged. There continues to be an unmet medical need, and a global addressable market of $800 million, with almost half of that being in the U.S.
We expect to have the seven years of exclusivity for the Orphan Drug Designation in the U.S., and we have also filed several patent applications related to the food effect together with Orviglance and manufacturing patents in recent years. It is providing a long exclusivity opportunity for the asset. We have a clear strategy and continue to have a clear strategy that we will commercialize with a partner. We have an ongoing partnering process, that was running in parallel with the review process. Obviously the Complete Response Letter is a bump on the road in that dialogue. We have confirmed continued interest from potential partners following the Complete Response Letter. We continue to engage, and obviously getting clarity on what the FDA wants is important for those discussions.
To summarize on Orviglance, we continue to be very optimistic and excited about the product, but obviously need clarification from the FDA on what is needed to get the approval. Let me switch gears and talk about Oncoral, which is the other clinical-stage asset that we have. Oncoral is, we take irinotecan which is a very potent chemotherapeutic agent used widely in clinical practice today. Today, it is given every third week in very high doses. We believe that we can transform the utility of this molecule by giving daily doses, and let me expand a bit on this. When you give smaller daily doses, you get a completely different, you could say, exposure profile, which means that the antitumor effects will be on a constant level throughout a longer period of time, as opposed to very high peak concentrations that will disappear after a few days.
What is interesting, and there is growing evidence in the literature that this more constant exposure of antitumor activity not only utilizes the mechanism of action of irinotecan, that is topoisomerase I inhibition. There is also data supporting an anti-angiogenic effect of this constant exposure, including immune modulation and remodeling of the tumor microenvironment, which is a really interesting mechanism that are worth exploring further. It is not just, you could say, a convenience dosing advantage, but it is really a mechanistic difference between the two different dosing schedules. We also see it with lower doses, daily doses, that leads to development of potential advantages of tolerability and safety. So, getting a lot more out of a molecule that is well-proven to improve tumor treatment. From our phase I data, we have shown that it was well-tolerated and no unexpected side effects, and generally less intense safety signals from that.
An important element is also the recent guidance from the FDA called Project Optimus, where they look into the paradigm of dosing a chemotherapeutic agent or anti-cancer agents to the maximum tolerated dose, to the level just below where the side effects become unbearable, and guidance on how to optimize dosing, which we think is particularly well-suited for Oncoral. Our initial focus is on gastric cancer in combination with LONSURF, which is an approved tablet therapy for gastric cancer and colorectal cancer. As you can see to the left, there is a synergistic effect between LONSURF and irinotecan. That is obviously, you could say, an interesting compound tool to combine with Oncoral. But gastric cancer is the initial indication. There are other indications, a number of other indications where irinotecan could play a very important role, and the overall potential of the Oncoral asset is quite significant.
Let me round up with the financials and the outlook ahead. Q2 2026, we had a deficit of SEK 12 million, so lower cost than previous quarters. You could say that is related to when we compared to a year ago, we are not finalizing the NDA application. We expect, you could say, having. Well, it is difficult to project. The future cost would be based on the outcome from the FDA meeting, but we have significantly reduced some costs in the organization. Furthermore, we have on the liquidity side, we have SEK 38 million at the end of the quarter. With the cost projections that we see, then it will have cash runway onto Q2, obviously depending on whether we need to initiate some activities, but we expect financial runway into Q2 next year.
Let me conclude the presentation with the outlook ahead, the milestones, and where we see the company going. We have the Type A meeting with the FDA, and we will get minutes within 30 days. That is going to be a very important milestone for us. The partnering interest remains intact, and clarity on the regulatory meeting is important for those activities as well. Our cost reductions extend our cash runway into Q2 of next year, providing us time and an opportunity to move forward on the regulatory process. With that, I would like to open up for questions.
Let us jump into it. I think you already went ahead and asked a lot of the question who was coming in. What would you regard as a good outcome on 9th of September?
We have, obviously, some scenarios lined up and prepared that in, you could say, as part of our meeting package and kind of scenarios and where we want to lead the discussion. I think the most important thing is that we align with the FDA on the need of the, you could say, the reread, that that was necessary. We see some clear data demonstrating that the initial read was flawed by two of the three readers, and therefore you cannot conclude anything.
If you know that they are not using the scale properly and consistently throughout the study, then it is invalid and you need to redo it, which has happened in a number of cases both in the oncology and other diseases, but certainly also in the contrast agent or diagnostic drug space, where there are examples of numerous other products that has been approved by the FDA, where a reread has been part of the efficacy package. It is not that we are asking for something extraordinary. It needs to be well-documented and data-driven. We think in this case, based on the data we have and shared with the FDA, that this is warranted in this scenario. I think that is an important win that we need to get at the meeting.
Yeah. Perfect. Will you communicate anything immediately after the meeting or wait for the minutes? I think you kind of asked that, you will
Yeah
Await the minutes, I guess.
Absolutely. I think there is the minutes is the outcome of the meeting. It is not, you could say, our personal impression after the meeting. That could be, in my experience, significant differences between what you feel when you leave the meeting and what is in the final minutes. It can be in either direction. Minutes can be better for the company, or it could be worse. So I think it is not wise to communicate after the meeting because you may have miscommunicated in case the minutes turn out to be different.
Yeah. Perfect. I think you also touched upon then, what are you most uncertain about this year that you are going to get clarified on the September 9 meeting? I think you already spoke a lot about it, but if you could put a few words on it.
Yeah. I think we really want to understand why the FDA has come to the conclusion that they came to. I think that's important for us because otherwise, we can't really address the issues that they highlight. Obviously, they named the re-read. They say there may have been bias in the training. We'd like to understand where and how that potential bias, where they see that coming from. We also, on the T1, when we are evaluating a T1 enhancing agent, measuring on T1 seems like a reasonable thing to do because we know that if you have better T1 images, then that's better for the, you could say, interpretation of the images of the patient. So, we want to go through these three issues that they bring up and understand and align with them, how can we bridge the gap that they see at this point?
Check. When I first heard this, with the T1 and the T2, could there be a narrow label? I know it's not a medicine, pharma product. Could there be a narrow label and narrow market, where it specifies T1 and not T2? If you understand what I mean. If they have some worries about is it valid in a clinical setting, could there be a narrow, because it's an unmet need, right? There is patients that either get worse treated or don't get treated or get poisoned by this because of this. Could there be any narrower definition of a patient group or something like that? Would that be a possibility, or is that not a possibility in this case?
We need to see what the FDA says.
Yeah.
But you are right in the sense that it could impact the label, right? If we say clearly that Orviglance is a manganese agent and enhances T1, and we put that in, let's say, the indication, that the indication is that we improve T1 images because that's what it does. All radiologists know that we enhance T1.
Yeah.
They do not expect it to enhance T2 or diffusion weight. Like gadolinium is only enhancing T1. I think that could potentially be part of the solution that we say, okay, but the data we have shows that we enhance T1. Let us put that in the label and that is then-
Check
then we can kind of I do not see that as having any impact on the-
On the market size. That was-
On the market size.
Kind of could, yeah.
It's essentially what we do, and that's what we have demonstrated in the study.
Then there's a little bit about, assuming a positive meeting, what determines whether a resubmission falls into a two-month or six-month review class? I don't know whether you want to be that specific. Of course, everybody's trying to figure out a timeline in a positive outcome also.
Yeah. No, I can't give you a straight answer. Obviously, I'd be more interested in a two-month review time than six-month, but I think the most important thing is to understand what are the issues, how do we bridge the gap, and how quickly can we do that. Then obviously the review time, shorter is better than longer, but I think the most important thing is getting the bridging back. I think the timeline would also depend on what is needed to bridge.
Yeah.
If it's a very significant amount of information that we need to add, then I'm pretty sure it's not going to be a two months. I think those, without being an expert
Yeah. Without having the meeting, then it's hard to answer.
Yeah.
I understand. I think you also have answered this. Do your runway include any cost of any of the scenarios FDA may require after 9/9?
Our runway includes the meeting, the follow-up, and a resubmission based on minimal, nothing major needed to do the resubmission. Of course, if we need to do a re-read, or a new study for that matter, if we were in those scenarios, that's not included in the runway.
I guess it's premature to speculate on this one. The Oncoral, could that be an asset that has a value to be sold off to finance something or, I guess you don't want to speculate on that part before you know your way forward.
We're super excited about Oncoral and we've been doing, increasing a little bit of work whenever we had time here, not much, but some work during the review process. The data is very compelling. I think really we can get I think Oncoral could be sort of a catalyst for unlocking increased clinical value of the irinotecan molecule by giving daily doses, and I think that value is quite significant. So would love to get some significant development ongoing with Oncoral. Having said that, we always look at all options whenever they are there and if there are some interesting opportunities, we could pursue those.
Then the final question. Is there any technical issue in the way data was collected that hinders a re-read again? I think you also alluded to that by pointing to-
No. No.
Your data quality.
All the data is there in the database. We collected all the sequences that we need and there have been no issues raised by the FDA in relation to the conduct of the clinical study. It is only about the reading process, the three blinded readers, how they score the images and adhering to the scoring scale. That was an issue in the initial read, but not in the second read. That is where we have kind of confined the issue. That is what we need to agree with the FDA. The study in itself, the enrollment of the patients and collection of the data we think is, there have been no issues raised. We think it all looks good based on the work we have done and the review process.
That is also why we do not think a new study is warranted because we have collected, the patient have participated, and we should utilize those images, that clinical data.
Perfect. That was the last question. Thank you to you, Magnus, for taking us through your results and this process and your standpoints that you are going into this meeting with and what backs it up, I think may be more important. Thank you to you, Magnus, for that, sharing that information, and thank you for the audience listening in. May everybody have a nice weekend.
Yeah. Thanks. Always great to be here.