Ladies, and gentlemen, welcome to the Oasmia Pharmaceutical Podcast with Teleconference Q4 2021. For the first part of the call, all participants will be in listen-only mode, and afterwards there will be a question- and- answer session. Today, I am pleased to present CEO François Martelet and CFO Fredrik Järrsten. Dear speakers, please go ahead.
Thank you, and good morning, everyone. I'm François Martelet, Oasmia CEO, and I'm joined today by our CFO, Fredrik Järrsten. Thank you very much for joining us to review our Q4 and year-end results. We indeed look forward to getting your questions at the end of this presentation. Let's move to slide one, which is the forward-looking statement that, of course, we would ask you to read carefully. Still important legal information. Slide two. I mean, certainly we've done a lot over the last year in the transformation process of the company. We have listed here key steps, and that includes where the design, the articulation, the implementation of a new strategy in order to become a Nordic oncology powerhouse in the long run.
This strategy is very well differentiated from other companies in the same sector and rather unique in the Nordic area. Bringing in talented management and board members with strong industry expertise to support this new strategy has been the focus. In licensing the promising late-stage program Cantrixil from Kazia Therapeutics and announcing positive phase I results at AACR in a peer-reviewed journal Cancer is certainly an achievement. We've been also initiating a research collaboration with Sweden renowned Karolinska Institutet to explore further the full biological potential of our drug delivery platform. We've been starting a phase I-B trial for Docetaxel micellar in Switzerland. We've been settling outstanding legal issues inherited from the previous board and management, reducing therefore risk and freeing up to look forward rather than looking backwards.
We've been initiating through our partners, Elevar and Inceptua, pre-launch activities on Apealea in a few major markets in Europe. Of course, most recently, we've made several important announcements that show our trajectory. One is progress with our next generation XR-18 drug delivery platform. Two, the rights issue to help deliver our strategy and unlock the potential in our pipeline. Three, and finally, a new company identity, Vivesto, that demonstrates our confidence in the future. It also marks a new step in the direction of the company. Slide three. As you know, Apealea, of course, is our lead program for advanced ovarian cancer. It is partnered with Elevar, and Elevar has in turn sub-licensed to global partners, including Inceptua in Europe. Our immediate focus is on Europe, where Inceptua is well advanced in the preparation of launching the product.
As you can see from this slide, Inceptua is an experienced international specialty care and rare disease pharma company focused on Europe and in the Middle East. They've got some more than 25 years of experience specializing in high unmet medical need pharmaceutical products. That will give us a lot of confidence in their ability to optimize the launch and rollout of Apealea in Europe. I may also add that there are around 100 employees, and they have around EUR 150 million in sales last year. Next slide, please. Slide four. Inceptua is therefore planning to launch Apealea in one of the first two major largest European markets, in the U.K. and Germany, in the first half of this year. Follow-on European markets for launch are under planning and evaluation.
There is an important point that I would like to make here, is that with any pharmaceutical drug market launch, Inceptua is following, and rightly so, a launch sequence designed specifically for Apealea, taking into consideration the timing effects and influence of pricing and reimbursement assessments. Also potential negotiations required with budget holders and healthcare systems and the impact of international price referencing. Because of this, anticipated launch timings in other markets may potentially change. Pricing decisions are the responsibility of Elevar and Inceptua, as Inceptua is the marketing authorization holder. They have a clear go-to-market strategy in these key markets like patient access, publication planning, and engagement with the medical community. You may understand that for competitive reasons, we cannot disclose more information on these launches. Slide five. Another highlight for me in 2021 was the implementation of our sustainability agenda for the company.
We are absolutely committed to building a sustainable company and business over the long run. As a board and management, we take our commitment to environmental and business sustainability, integrity, and equality very seriously. Our goal, and my goal in particular, is to excel in corporate governance. We've put in place a number of key initiatives to ensure that we meet and exceed best practices for our industry. Those key initiatives include implementation of a comprehensive code of conduct for all employees, clear policies and education in areas such as whistleblowing, ensuring quality, equality of treatment for all employees and partners. Even more importantly, managing our environmental responsibilities, including in areas such as safe handling of chemicals and waste, careful energy usage among others, and many others. As you all know that we have a lab in in Uppsala. Slide six. Cantrixil is an important asset for us.
A very key moment in 2021 was the presentation of the positive phase I-B result at the American Association of Cancer Research annual meeting. I can tell you that it is certainly a key achievement. The study met its primary endpoints, establishing clinical proof of concept. The data confirmed Cantrixil may induce ovarian cancer stem cell death, and therefore sensitize cancer cells to standard chemotherapy. As you can see here, there were promising objective response rate of 19% and a disease control rate of 56%. This is very encouraging. Why? Because those patients are usually extremely sick. This is really an encouraging signal of efficacy seen with patients with platinum-refractory ovarian cancer. These data reinforced our confidence in Cantrixil as the first in-licensing of our String of Pearls strategy. Slide seven, please.
We have ambitious plan for Cantrixil over the next year as we prepare to go into phase II. The preparation include interaction with our experts of the scientific advisory board, made up of key opinion leaders from Europe, Australia, and also the U.S., for guidance on the design of the next step, which means phase II. We also plan to hold talks with regulators to discuss endpoints and appropriate data for filing. These interactions with the regulators are absolutely vital and will help to de-risk the program. Cantrixil is a complex drug to make, does involve up to three manufacturers, which is, of course, on the other hand, high barriers to entry. We are currently working on finalizing the sourcing contract manufacturing supplies for the phase II clinical study, as well as working on tech transfer and scale-up. Slide eight.
Docetaxel micellar, which is another promising in-house project for the company, which targets this time advanced prostate cancer. This is an intravenous formulation of the widely used cancer drug called Taxotere that you may know another brand name of Taxotere itself. By using our XR-17 delivery technology, we eliminate the need for solubility enhancers, potentially improving the side effect profile and eliminating the need for additional drugs for many patients, such as steroids. Our Swiss partner, SAKK, is running a phase I-B study at three major hospitals in Switzerland with the aim of getting on board 18 chemotherapy-naive patients. The target of SAKK is to complete the trial by the end of 2022. We're also working on expanding the IP, docetaxel micellar, and we are evaluating the formulation using our improved drug delivery platform, XR-18. Slide nine.
A few more words about the status of the study. You know, the SAKK trial is progressing very well with the recruitment on track. We announced this week, earlier this week, that the first patient has now fully completed the study in this investigator-initiated phase I-B trial of docetaxel micellar. Furthermore, the first of the three dosing groups in the trial has been successfully recruited, and the first patients have started in the second dose group. SAKK is also aiming at accelerating the recruitment by adding more study sites in Switzerland for a completion date by the end of this year. Let's move to slide 10, XR-17, XR-18. Last year, in 2021, we initiated a collaboration with the Karolinska Institutet here in Stockholm to explore the biological interactions of XR-17 with cellular systems in vitro.
Planning for the full research project has been completed now, and we look forward to working on the next steps in-house and with additional partners as well. With regard to XR-18, our scientists have identified a first of several promising novel formulation candidates for the platform. These formulations are intended to convey additional features and benefits to the platform and are being tested in combination with a widely used oncology compound. I'm sure you would understand that we cannot disclose more information about this compound at this stage for commercial and development reasons. Now let's turn to slide 11. Fredrik, please. The floor is yours.
Thank you, François. Yeah, page 11, some key numbers from Q4 report. We had net sales in the quarter of SEK 9.6 million. That is mainly relating to drug products to Elevar from our inventory. We have continued to decrease our inventory during the quarter. At the end of the year, we now have inventory of SEK 9.8 million. Operating costs totaled SEK 31.4 million. With that, we can conclude for the full year that we have cost savings amounting to SEK 110 million, which is well above the target we set out of achieving SEK 100 million in cost savings compared to 2020. We're very pleased with that as well. Operating loss of SEK -2.1 million.
That is a significant reduction since Q4 2020, where the loss was SEK -59 million . That is due to reduced costs. Most of all, it's an effect of the one-time non-recurring positive earnings effect from settlement of litigations. That positive earnings effect was SEK 33 million. Operating cash flow SEK -44.6 million . If we adjust for the non-recurring payment in relation to that settlement of SEK 25 million, the operating cash flow was SEK -19.6 million . Cash and cash equivalents at year-end, SEK 97 million.
Now, if we look at the change in cash balance compared to Q3 and adjust for that non-recurring payment of SEK 25 million, the so-called cash burn would be approximately SEK 9 million per month, which is then also below our target range of SEK 10 million-SEK 12 million. Happy to conclude that with the settlement, we have settled debts. In fact, we have no more borrowings, no more interest-bearing debt as of December 31st. That implies that we have a net liability of SEK -97 million, which is the net cash position, obviously. With that, I can turn to the next page 12. We would like to again take the opportunity to talk about the rights issue at hand.
After having completed a turnaround, we now need to strengthen our financial position in order to enable us to achieve strategic objectives. The board decided on the 19th of January for the rights issue of approximately SEK 150 million, and that was approved by the EGM on the 21st of February. The money will be used to finance our ongoing business activities, as well as develop our two clinical-stage assets, Cantrixil and docetaxel micellar, and also finance the Oasmia technology platform further. We can turn to page 13, which is the terms of the rights issue and the process. We have announced that for each share you get subscription rights and offering one new share for every five existing shares.
That is at subscription price of SEK 1.68, which gives us total proceeds approximately SEK 151 million. Now this is also secured 100% with a few guarantors and that we really consider a strength in this market. In terms of timelines, the prospectus will be launched next week on the 3rd of March, and subscription period will start on the 8th of March and go on to 22nd of March with making the final outcome of the right issue public on the 25th of March. With that, I hand over to you again, François.
Thank you, Fredrik. Well, on slide 14, I'm very pleased to disclose our new identity. Vivesto. Vivesto was chosen following a thorough process working with the Brand Institute in London. Vivesto comes from Vivo, be alive in Spanish, and encompass our commitment to helping patients lead better lives and hope for the future. This brand name, Vivesto, has done very well in market research with the physicians, patients, and investors as well. The inspiration for the logo is an icon, as you could see from the slide, using an abstract human form with a crescent moon to express innovation and life. Vivesto reflects our optimism and confidence for the future, our commitment to improving survival and quality of life for patients with hard-to-treat and late-stage cancer through R&D and innovation.
The full implementation of this brand name will be done when we'll be closing the rights issue by the end of March, as we didn't want to confuse our shareholders, investors, because we are in the middle of the rights issue. Slide 15. You know, we just would like to remind all of you that we have a very clear vision for the business. Our goal is to create a Nordic oncology powerhouse focused on hard-to-treat and late-stage cancer. As I said earlier, this vision is supported by our management team, our boards, and so many of you as well that I have been talking to the past few weeks and months, investors, shareholders. Let's move to the slide 16. The String of Pearls strategy.
Since I joined this company two years ago now, I have been focusing my efforts on building our proven capabilities to make us a more attractive partner for innovative assets. Our core capabilities do include product and clinical development, business development, and regulatory affairs. Ultimately, we are aiming at building a new pipeline with late-stage oncology assets, starting from phase I up to phase III, using different modes of action to spread the risk and therefore derisk the portfolio, which is usually an obsession of every single CEO in oncology, R&D. Once we have completed the development process, we always have the option to commercialize the product through our clinical collaboration, or in some cases to undertake direct commercialization ourselves for certain niche oncology products, mainly in Europe. Slide 17. In summary, it's a very exciting time to be and to work at Oasmia.
We have multiple upcoming catalysts to drive growth. We have the opportunity to create a Nordic oncology powerhouse focused on hard-to-treat cancer. We have the capabilities in place to build a diversified pipeline of programs for those cancers by executing our String of Pearls strategy through in-licensing and M&A. This ultimate goal to develop a pipeline with a diversified mechanism of action is the goal. The overarching goal is to create multiple shots on goal. This is, I believe, the only way, given my experience in the industry over the last 25 years, to build a sustainable business in oncology. Over the last 18 months, we have been creating a strong platform to attract innovative partners. In the very near future, we'll also be looking at attracting international institutions, specialist investors to help supporting our growth. This concludes our initial presentation.
Many thanks for listening. We will now be pleased to answer any questions you have. Operator, I think it's back to you.
Thank you. Ladies, and gentlemen, we will now start our question- and- answer session. If you wish to ask a question, please press zero one on your telephone keypad. Our first question comes from Sean Conway, Edison Group. Sir, please go ahead.
Morning both, and thank you for taking my questions. First is just on the upcoming launch of Apealea in Europe, and whether you can provide any more guidance on what discussions have been had around pricing and reimbursement with Germany and U.K. payers. Presumably these are the last sort of major steps that are needed before Inceptua launches. And then just to follow on, a different point, a point of clarification. You've guided the rights issue will provide financing for general operations for 18-24 months. Does that factor in or exclude any plans for business development or M&A?
Okay, thank you for your question. I will answer the first one. We are not part of any pricing and discussions as Oasmia. This is in the hands of Inceptua. You know, for obvious reason, as I mentioned earlier in my presentation, it is important that the launch of the U.K. and Germany will be first. You know, for competitive reasons, I cannot disclose anything further, unfortunately. Be sure that we will be informing the market when the first patient will get Apealea in Europe. For the rights issue, Fredrik, you want to make any comments?
No, thank you, Sean. It's obvious that the rights issue at hand, and as we have also made clear, that is to finance our ongoing operations as well as the indications that we have. Now, that means that any upcoming potential M&A activities, or other transaction, that will be looked upon as separate items that we need to look at financing alternatives for. That is the answer.
Excellent. Thank you for that. Congratulations on the results and the name change.
Thank you.
Thank you. Ladies, and gentlemen, as a reminder, if you wish to ask a question, please press one on the telephone keypad. Our next question is from Joseph Hedden, Rx Securities. Sir, please go ahead.
Good morning, and thanks for taking my questions. First one on Docetaxel micellar. Great news on the progress there. I was just wondering if you could give us any kind of metrics that you deem to warrant a successful study. Other than safety, are you targeting any specific response rate or disease control rate? What would you consider successful outcome?
Yes. This is an IIT, you know. It is not a regulatory study by itself. However, certainly, you know, endpoints do include signals of efficacy and not only safety and tolerability, as you said. This is a phase I-B. Basically, we are working on establishing a sound clinical proof of concept with this study.
Okay. Perhaps if I could ask you just on Apealea. Is there any update on Elevar's U.S. development plan, or have you any kind of indication from them on the timeline that they are looking to disclose what their plan for path to market in the U.S. might be?
On Apealea in the U.S., I mean, this is clearly in the hands of Elevar. Elevar will communicate at the right time some progress with regard to their interaction with the FDA, with regard to the clinical design of the study that needs to be performed. I cannot give you any precise comments on this one. What I can tell you is that this is certainly something which is very on the radar screen of Elevar.
Okay. Okay, thanks. Just on Cantrixil.
Yeah.
I realize that you're still looking to secure supply there. Is it still your expectation that you might start a study by the end of this year?
Yeah. Cantrixil is, you know, have a different perspective from a manufacturing standpoint. It is not a straightforward process. We need to involve three manufacturers and some late-stage process in the manufacturing side of it includes synthesis, which is rather specific. We are working on securing the manufacturing, you know, supply chain of Cantrixil first and foremost this year, as well as designing a proper clinical study that would meet FDA and European standards. End of this year would not be the case. We will be ready. I would say that we are working on the state of full readiness of Cantrixil this year to be started next year.
Okay. With that in mind, the proceeds from your recent fundraise, how far would you expect they to take you down the road with that, with Cantrixil? Would they get presumably then they wouldn't if you've got anything from [inaudible].
As Fredrik said, you know. I mean, this rights issue is absolutely geared towards our development of our emerging pipeline. You know, namely Cantrixil and Docetaxel micellar for the next 18-24 months. We certainly will be able to initiate the study in this timeframe.
Okay. All right. Thank you, François.
You're welcome.
Ladies, and gentlemen, as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. Thank you for holding. We have no further audio questions. Okay, speakers, back to you.
Thank you, Operator. In a nutshell, you know, I'm very pleased to kick off by the end of March the name our new identity, Vivesto. It's a new company with very sound fundamentals. We have no liability at all. We have an emerging pipeline that we want to further develop. We have this, I would say, quite unique String of Pearls strategy that is in place, and we want to make it a reality in 2022. Thank you, investors. Thank you, shareholders, and we look forward to updating you at the next telecon late April, if I remember correctly. Thank you very much. Have a great day.
Thank you. Ladies, and gentlemen, this concludes today's conference call. Thank you all for attending. You may now disconnect.