Ascelia Pharma AB (publ) (ACE) Earnings Call Transcript

And welcome, everyone, to the webcast for Ascelia Pharma's Q2 report for 2025. On this call, we will be making a number of forward-looking statements. On today's call, we will start with recent key events and then head into our portfolio update before we move to financials and priorities ahead. After the presentation, we will open up for questions as usual. At Ascelia Pharma, we identify, develop and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We have 2 drugs in our pipeline, Orviglance is in the registration phase as we have successfully completed the pivotal Phase III clinical study known as SPARKLE, and we're preparing the NDA submission, which will come in -- will be submitted soon. Orviglance has orphan drug designation from the FDA and is targeting an addressable market opportunity of $800 million. Oncoral is ready to stock Phase II clinical development for the treatment of gastric cancer based on encouraging results in Phase I and a high level of unmet medical need. Our company is headquartered in Malmo in Sweden and we're listed on NASDAQ Stockholm. The second quarter of 2025 was focused on finalizing the Orviglance NDA submission following our meeting with the FDA in Q1. I'd like to briefly mention some of the key highlights. The interest in Orviglance in the scientific and medical community continues. And in April, we announced acceptance of a poster presentation at the ISPOR conference about the burden of disease for the Orviglance target patient population. We also announced an Orviglance publication in Investigative Radiology. This publication is a Phase II clinical study where we have used a reader revolution setup similar to the 1 we used in our Phase III study, where Orviglance is evaluated along side unenhanced and gadolinium-based contrast agents. In connection with the rights issue we did last year, we issued the TO 1 warrant. The exercise period was in the first half of April this year, and there was strong interest and 96% of the warrants were utilized and the gross proceeds for the company was approximately SEK 43 million. Furthermore, we held the annual meeting in May as usual, and the bulletin has been communicated. Last week, we announced that the FDA submission file is essentially complete, and the final electronic configuration known as Publishing is expected to be completed in a few weeks, after which the NDA will be submitted to the FDA. So we're pursuing some important value-creating opportunities with Orviglance. One part is the timely submission and approval of Orviglance for the optimal label. We've met milestones here in terms of completing the Orviglance clinical restarting report in early Q4 last year. We also had a meeting with the FDA in Q1, and we are submitting the NDA for filing for approval in a few weeks. The second objective is to progress Orviglance for commercialization. And the activities is to continue to advance our launch readiness activities, including manufacturing and supply chain, things and working with the medical community. The other part is entering into a commercial monetization partnership and that activity is ongoing. I'm happy with the progress we're making in Ascelia Pharma and the efforts made by our team to ensure we will meet our objectives and create value to shareholders. Now we will be moving into the portfolio section of our presentation. We'll start with Orviglance. We're very excited about Orviglance and here's why. Orviglance is addressing a well-defined unmet medical need for a subgroup of people living with cancer. This is an $800 million global market opportunity and Orviglance is a first-in-class product to target this, and it has orphan drug designation from the FDA. We have strong data from 9 clinical studies, including strong Phase III data and the manufacturing has been upscaled to commercial scale. As mentioned, we have a few weeks from submitting the Orviglance new drug application to the FDA and look forward to the process towards approval. Now we'll go further into the Orviglance opportunity, and I'd like to hand over to Andreas.

Thank you, Magnus. Yes. So Orviglance is a first-in-class liver MRI contrast agent, which addresses a very specific unmet medical need for which there are no good alternatives available today. Adequate visualization of liver tumors and metastasis is critical for making the right treatment decisions and contrast-enhanced MRI is the gold standard procedure for examination of patients with suspected unknown tumors or metastasis. The most used contrast agents are all based on the heavy metal gadolinium. In patients with severe kidney impairment, use of gadolinium-based contrast agents has been associated with an increased risk of a very severe side effect called NSF, nephrogenic systemic fibrosis, which may even have lethal outcome. Both the European and U.S. regulatory authorities have for that reason, issued warning for the use of gadolinium-based contrast agents in this group of patients. And the consequence is that patients with impaired kidney function typically will get an MRI without contrast, which will result in liver images of suboptimal quality with the risk for that their cancer is not managed in the best possible way. We envision that Orviglance, which is based on manganese, will address this unmet medical need and in the future, become an efficacious non-gadolinium contrast agents for liver cancer patients with impaired kidney action. We have completed a comprehensive clinical program, including a total of 286 patients and healthy volunteers across 9 clinical studies, which consistently have demonstrated positive efficacy and safety of Orviglance. The pivotal study in the development program, the Phase III SPARKLE study clearly demonstrated the superior visualization of focal liver lesions in the target population of patients with severe kidney impairment and an adverse event profile consistent with what we observed in the other studies. In summary, we are now going to submit the NDA for Orviglance to the FDA. When they file, which in addition to the clinical data I just mentioned, also includes nonclinical and CMC and chemistry and manufacturing data has been completed. And after the final step in making the file ready for submission, we are looking very much forward to the submission in early September. So with that, I will hand it over to Julie.

Thank you, Andreas. About the commercial potential for Orviglance. The addressable market for Orviglance has a global value of USD 800 million annually. The U.S. represents almost half of this. This market opportunity for Orviglance addresses the unmet need for a well-defined patient population. Cancer patients who need imaging of their liver and who also have severely impaired kidney function. Our strategy for commercialization is to launch through partners. This strategy supports our ambition to secure the optimal balance between future revenues and the investment required. Our focused ambitious loan strategy and plans are built on advanced market insights. And I'm pleased to support this partnering strategy and support the launch. As mentioned, the U.S. is the largest commercial opportunity for Orviglance. In the U.S. alone, our real-world data, i.e., data from realized procedures in our target patient population show that every year, 100,000 abdominal imaging procedures are performed in around 50,000 patients that fall under the black box warning for gadolinium contrast agents, this is about 4% of people with cancer undergoing abdominal imaging. The well-defined patient population with a clear unmet need also drives an attractive pricing opportunity. And we have extensive input for market access and pricing experts, with whom we tested different pricing levels and collected insights on the evidence needed to support access and reimbursement. And we've investigated pricing and access benchmarks of other innovative diagnostic drugs in the U.S. 90% of health care professionals are concerned about issues with gadolinium contrast agents. This includes the severe side effect associated with our target patient population, NSF. In fact, 16% of providers have experienced cases of NSF in patients exposed to gadolinium. These insights come from market research with 270 U.S. health care professionals and answers from radiologists, nephrologists and oncologists. And these insights confirm the concerns with gadolinium in clinical practice and the unmet need for Orviglance. When speaking to experts, whether in radiology or nephrology, they confirm that an alternative to gadolinium for our target patient population would address concerns of today with the potential to become a very valuable addition to their clinical practice. And beyond the risk of NSF in kidney impair patients, gadolinium is well known to be retained in the brain and other tissue in all patients, and scrutiny over the possible safety effect is a key concern of regulatory and medical bodies. It's also well known that gadolinium is excreted via the kidneys in urine, because it's difficult to remove in our sewage system, it's discharged into the environment and into our drinking water. Does an urgency to find a viable alternative to the growing use of toxic gadolinium, an alternative that is not associated with these potential safety, concerns for patients and for the environment. And the industry is responding recent developments from the large gadolinium manufacturers are focused on smaller doses of gadolinium and there's even an early-stage injectable manganese contrast agent, which is not liver-specific like Orviglance. So in short, the momentum for an alternative to gadolinium is getting better and better. And we are excited that we have a head start and that gadolinium is expected to be a first-in-class to lead a future with less gadolinium and improved outcomes for our target patients. The go-to-market strategy for Orviglance is to launch with commercialization partners. And our dialogue with potential partners continue to progress. This supports our objective to secure the optimal balance between future revenues and the investment required. This strategy also allows us to leverage commercial capabilities already established by a partner. And our dialogue with these potential partners for successful launch of Orviglance is ongoing and continues to progress. We're also working in parallel to ensure that Orviglance and the partner is ready to launch on approval. For example, we want to ensure that manufacturing is ready for the first product launch. We're excited to see the successful acceptances of SPARKLE data for presentation at major scientific conferences. In total, 4 oral presentations and 5 abstract presentations have been accepted at major conferences this far, underscoring the interest in Orviglance in the medical and scientific community. As Magnus mentioned, we also announced the publication of a scientific article in Investigative Radiology. This publication presents the outcomes of a Phase II study previously conducted at Karolinska Institute utilizing the same independent methodology and approach as our Phase III study with Orviglance. The results are consistent with our other studies and show superior visualization and a greater number of detected focal liver lesions with Orviglance compared to unenhanced. It also shows that Orviglance and the gadolinium agent used in the study performed similarly in the visualization and detection of lesions. So with this, I will pass it over to Andreas to talk about Oncoral.

Thank you, Julie. Yes, let's talk about Oncoral, the other assets in our development portfolio. Oncoral is a daily tablet formulation of irinotecan, a well-established intravenous chemotherapeutic agent. And a daily tablet formulation enables a frequent low-dose dosing regimen that could offer potential advantages on both efficacy and safety compared to the infrequent high-dose intravenous administration used today. We have completed a Phase I study, which demonstrated a promising safety profile and an uptake of the drug after oral dosing consistent with a daily dosing concept. We are now planning to -- for taking Oncoral into clinical Phase II. And the objective is to generate clinical proof of efficacy data in metastatic gastric cancer in combination with Lonsurf, another oral cancer treatment approved for gastric cancer. And animal data has demonstrated a synergistic effect of irinotecan when combined with Lonsurf, which makes this combination very interesting. The planned Phase II study is designed to study Oncoral plus Lonsurf against Lonsurf alone, and the study will randomize approximately 100 patients and involves a clinical collaboration with Taiho Oncology, the developer and market share of Lonsurf who will provide clinical device and Lonsurf for the study. Irinotecan is a well-established chemotherapy with recognized antitumor effect in solid tumors. Our strategy is to start on grow development in gastric cancer, which is today a $3 billion market. For these patients, there is a high unmet medical need for improving outcomes and there is an opportunity for an orphan indication. We also see opportunities for developing Oncoral in other solid tumor indications where a daily dosing tablet formulation can demonstrate an attractive efficacy and safety profile and irinotecan as an IV formulation is already approved in colorectal and pancreatic cancer. And in addition, irinotecan is clinically demonstrated and recognized in guidelines for other cancer types. So we are assessing these opportunities as part of our ongoing strategic planning for Oncoral. So back to Julie again.

Thank you, Andreas. So to round off today financials and outlook before your questions. In Q2, our operating result was a loss, i.e., cost of SEK 23 million. These costs are at a similar level compared to Q1 2025 with a continuous focus on the NDA submission preparations. At the end of June 2025, we had SEK 60 million in the bank and we are very pleased, of course, with the successful TO 1 warrants exercise in April, which brought in SEK 43 million in additional financing before cost at a subscription rate of approximately 96%. So after this warrant exercised, we repaid the SEK 20 million loan from Fenja and our cash run rate now is to at least the end of 2025. And that includes a reserve for potential repayment of this remaining SEK 7.5 million convertible loan with Fenja end of this year. This financial runway excludes any financing from partnering. To wrap up, we have substantial value creation opportunities ahead for Orviglance and for Ascelia Pharma. With Orviglance, we are bringing to market a first-in-class diagnostic drug addressing an $800 million market for patients with a high unmet need. And we have 2 objectives. One is a timely submission and approval of Orviglance with optimal labor. The key steps underway, the completion of the spinal clinical study report, a milestone we achieved early November last year, which reinforced the successful study outcomes of the Phase III studies, primary and secondary inputs and support the NDA process. In March this year, we communicated positive outcomes from our meeting with the FDA in advance of our NDA submission, and we plan to submit the NDA by early September. Our other objective is to progress Orviglance for commercialization for patients in need by entering into a partnering agreement for the launch and by securing that a partner and Orviglance is ready for launch by approval. All in all, we have progressed well in the Q2 2025, with the continued preparation of the NDA submission for Orviglance, and we continue to progress discussions with potential partners for the commercialization of Orviglance. And we look very much over to executing on the opportunities ahead for Orviglance and for Ascelia Pharma in 2025 and beyond. And with this, we have completed our presentation. We are ready to take questions.

[Operator Instructions] The next question comes from Johan Unnerus from Redeye.

Yes, it's Johannes from Redeye. The first one, could you provide perhaps a little bit more detail around the completion of the submission process, the electronic part of the -- what does that involve?

Yes, absolutely. Thank you. Thanks for the question. Yes. So the final step of the preparation of an NDA is to make sure that all the documents are in place where they should be. It's quite a complex set of documentation and FDA needs to find the right document where they are supposed to find it. So that is what we call the publishing procedure to make sure that everything is in place. It's a quite technical and to be honest, a bit boring thing, but very, very important.

And you are obviously confident regarding the framework for the timing in the final stage to 3 weeks?

Yes. We are.

Very good. And perhaps also you can clarify what the next step in the FDA process, there will be sort of a submission preliminary review of the filing, I suppose, sort of some 60 days?

Yes. So the process is the normal process by the FDA. So they will get the file and they will check it in, make sure it's all in good order. And then there is this initial step where they review. And then there will be this day 74 communication, where they say, yes, we will continue the review or not. So that's...

And -- yes. And the next step would be the substantial review once that's clear. And have you considered applying for priority review?

We have not communicated anything about that, and that is part of the submission, if you want to do that or not. But we haven't communicated anything.

So it will be that, that period will be sort of 6 to 10 months typically depending on...

Yes.

Yes. And also, of course, it's very important with the partner discussions that could be related to the filing process, of course. And is it possible to give any flavor if these discussions has sort of intensified now as you're approaching the finishing line?

No, we can't really comment on that. I mean as we're saying, dialogues are progressing and we are happy with the situation that we have. So I think we cannot really elaborate more than that.

Okay. And the admin cost to move over to the cost side seems to be very stable and under control. And perhaps you could provide a bit more of flavor on the R&D side because at this stage, could involve some external sources and some quarterly and monthly variation, I suppose?

Yes. As for your question, I mean, we are not commenting on spend moving ahead, only on the runway, as you know. But you're right, of course, you can see that there's a big part of the cost in this year so far that our R&D costs, and these are, of course, mainly related to the NDA preparations. Now of course, there is still some preparation of answers and so forth. But yes, there are external costs associated with the NDA preparation.

And presumably, that's the main reason for sort of temporary variation at this stage?

Yes.

The level of external results required.

Yes.

The next question comes from Maria Karlsson Osipova from DNB Carnegie.

It's a very bad thing to go second because Johan was very good with asking many of the things that I was wondering. But I was -- if we talk a little bit about Oncoral instead because so much focus is on Orviglance, which is obvious. But looking ahead, how fast can you start with the preparations for that project once you do it? It's -- are we talking months? Are we talking half the year or years? What are we talking about for Oncoral?

We haven't really -- it's a good question, and thank you for that. We haven't really communicated exactly how quickly we could get a study started. I think there will be some -- and we mentioned that -- hinted that earlier, there is some work to get the study, you could say, back in full action. So a couple of years ago, we -- because we were seeing extended time lines for Orviglance completion, we sort of paused or halted the initiation of the clinical study for Oncoral. And I think that's kind of like a restart of the study in some way form. So we haven't commented on that. It's not something that we can do in a few months after pushing the go button. It's longer than that for sure.