CANFOUR interim Phase I presented at ESMO

Cantargia 30 October 2018 Update
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Cantargia

CANFOUR interim Phase I presented at ESMO

R&D update

Pharma & biotech

30 October 2018

Price

SEK18.10

Market cap

SEK1198m

US$:SEK9.05

Net cash (SEKm) at end Q218

213

Shares in issue

66.2m

Free float

90%

Code

CANT

Primary exchange

Nasdaq Stockholm

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(20.3)

(6.2)

104.3

Rel (local)

(11.6)

1.3

120.3

52-week high/low

SEK23.3

SEK6.4

Business description

Cantargia is a clinical stage biotechnology company based in Sweden, established in 2009 and listed on Nasdaq Stockholm main market. It is developing two antibodies against IL1RAP, nidanilimab (CAN04) and CANxx. Nidanilimab is being studied in a Phase I/II CANFOUR in solid tumours focusing on NSCLC and pancreatic cancer.

Next events

Final cohort results from Phase I of CANFOUR

Q418

Start of Phase IIa CANFOUR

Q418

Q318 results

15 November 2018

Preclinical data

H218

Analysts

Jonas Peciulis

+44 (0)20 3077 5728

Alice Nettleton

+44 (0)20 3077 5700

Cantargia is a research client of Edison Investment Research Limited

On 20 October 2018, Cantargia presented interim data from part I of its Phase I/IIa CANFOUR trial with nidanilimab (IL1RAP antibody) at the ESMO congress in Munich, Germany, demonstrating a good safety/tolerability profile so far. The maximum tolerated dose has not been reached and so a final dose (10mg/kg) cohort is being recruited. The Phase IIa part of the study is expected to start in Q418 as planned. Meanwhile, on 25 September Cantargia’s shares were up-listed to the Nasdaq Stockholm main market, which will expose the company to a wider investment community. Our valuation is virtually unchanged at SEK1.80bn or SEK27.2/share with the success probability rate subject to revision once the final Phase I data are published in Q418.

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/16

0.0

(47.5)

(2.72)

0.0

N/A

N/A

12/17

0.0

(60.3)

(1.86)

0.0

N/A

N/A

12/18e

0.0

(83.3)

(1.47)

0.0

N/A

N/A

12/19e

0.0

(93.5)

(1.41)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Nidanilimab well tolerated so far

Phase I of the CANFOUR trial is testing nidanilimab in patients with solid cancers: non-small cell lung (NSCL), pancreatic, colorectal or triple negative breast cancers. Phase I was designed to establish the recommended dose for Phase IIa and to assess initial safety and tolerability (Exhibit 1). The data reported at ESMO were gathered from 16 patients. The patients received weekly infusions of between 1mg/kg and 6mg/kg and, in general, tolerated nidanilimab well with no treatment discontinuations or grade 4 or 5 adverse events. Infusion-related reactions were the most common adverse event (44%), as is often seen with other biologicals. The safety profile looks beneficial so far, in our view. Data from the higher dose cohort are expected in Q418, which is when the recommended dose will be selected.

Early efficacy insights

Although Phase I of the trial was not designed for efficacy, initial clinical findings were also presented at ESMO. Of the 16 patients, five had stable disease by immune-related response criteria at eight weeks follow up, eight patients had progressive disease and three could not be evaluated. One patient with NSCLC had stable disease at six months. These patients received an average of 3.9 lines of treatment before receiving nidanilimab, so even though no conclusions about efficacy can be made at this early stage, the fact that clinical response was seen in such heavily pre-treated patients is welcomed.

Valuation: SEK1.80bn or SEK27.2/share

We value Cantargia at SEK1.80bn (SEK213m in cash at end-H118) or SEK27.2/share, marginally higher than our previous SEK1.79bn or SEK27.1/share due to rolling forward our model. Cantargia is enrolling the last cohort in Phase I with the highest dose and still plans to initiate the Phase IIa part of the study in Q418. As previously, results from Phase IIa are expected in early 2020.

Phase I/IIa CANFOUR design

Exhibit 1: Phase I/IIa CANFOUR design, total n=65

Trial

Stage

Trial status, design and upcoming events

CANFOUR

Phase I

Study ongoing (started September 2017)

Patients with relapsed or refractory NSCLC, pancreatic cancer, breast cancer or colorectal cancer

Design – open label, non-randomised, dose escalation followed by dose expansion, safety and tolerability study. Dose escalation: patients receiving intravenous nidanilimab once weekly in cohorts of three

Well tolerated by the first 16 patients; findings from the highest dose cohort (10mg/kg) in Q418

Phase IIa

Patients with advanced NSCLC or pancreatic cancer

Design – open label, non-randomised, three treatment arms: monotherapy; combinations in NSCLC; and pancreatic cancer

Results early 2020

Primary endpoint – safety and tolerability as monotherapy or in combination with standard chemotherapy regimen

Secondary end points – pharmacokinetic parameters, preliminary signs of efficacy (tumour response, health-related quality of life)

Study sites in EU

Source: Edison Investment Research, Cantargia, clinicaltrials.gov.

Exhibit 2: Phase I/IIa

Source: Cantargia. Note: RP2D – recommended dose for Phase II; PDAC - pancreatic ductal adenocarcinoma.

The 16 patients that have been evaluated so far received weekly infusions of between 1mg/kg and 6mg/kg. There were three grade 3 adverse events in the higher dose cohorts, and no grade 4 or 5 adverse events. The most common treatment-related adverse event was an infusion-related reaction (44% of patients) during the first infusion, which resolved within a few hours. Only one patient experienced an infusion-related reaction during the second administration. One patient from the cohort receiving the highest dose at the time of analysis (6mg/kg, cohort 4) showed a dose-limiting toxicity leukopenia/neutropenia, which was reversible. Overall, nidanilimab appears to be well tolerated at dose 6mg/kg. The infusion-related reactions are common with antibody therapies and accepted as part of the treatment, as long as these are manageable.

Next steps

Since the maximum tolerated dose has not been reached, patients are being enrolled at present into cohort 5 to assess a 10mg/kg dose. As previously, Cantargia expects to start the Phase IIa part of the CANFOUR trial by the end of 2018. By then the safety/tolerability findings from all the cohorts and recommended dose should be known. Cantargia will also report mature pharmacokinetics data and biomarker analysis, which may provide further insights. For example, at the ESMO congress the company reported that after two doses of nidanilimab a decrease in IL-6 in 11 of 14 patients (versus baseline, p=0.06) and a decrease in CRP in nine of 11 patients (p=0.04) were observed, which is consistent with the nidanilimab’s mode of action and indicates target engagement.

The Phase IIa part of the CANFOUR trial will evaluate nidanilimab as monotherapy as well as in combination with standard of care therapy in the target indications NSCLC (first line and second line) and pancreatic cancer (first line) (Exhibit 2). As previously, the results are expected in early 2020. We leave our assumptions in our model unchanged, as described in our initiation report. We will review our success probability for nidanilimab once the recommended dose has been established successfully.

Exhibit 3: Financial summary

SEK'000s

2016

2017

2018e

2019e

December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

0

0

0

0

Cost of Sales

0

0

0

0

Gross Profit

0

0

0

0

Research and development

(35,493)

(44,819)

(65,219)

(77,699)

EBITDA

 

 

(47,557)

(60,010)

(85,845)

(93,815)

Operating Profit (before amort. and except.)

 

 

(47,557)

(60,010)

(85,845)

(93,815)

Intangible Amortisation

0

0

0

0

Exceptionals

0

0

0

0

Other

0

0

0

0

Operating Profit

(47,557)

(60,010)

(85,845)

(93,815)

Net Interest

67

(243)

2,500

360

Profit Before Tax (norm)

 

 

(47,490)

(60,253)

(83,345)

(93,455)

Profit Before Tax (reported)

 

 

(47,490)

(60,253)

(83,345)

(93,455)

Tax

0

0

0

0

Profit After Tax (norm)

(47,490)

(60,253)

(83,345)

(93,455)

Profit After Tax (reported)

(47,490)

(60,253)

(83,345)

(93,455)

Average Number of Shares Outstanding (m)

17.5

32.4

56.6

66.2

EPS - normalised (ore)

 

 

(2.72)

(1.86)

(1.47)

(1.41)

EPS - normalised fully diluted (ore)

 

 

(2.72)

(1.86)

(1.47)

(1.41)

EPS - reported (SEK)

 

 

(2.72)

(1.86)

(1.47)

(1.41)

Dividend per share (ore)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

N/A

N/A

N/A

EBITDA Margin (%)

N/A

N/A

N/A

N/A

Operating Margin (before GW and except.) (%)

N/A

N/A

N/A

N/A

BALANCE SHEET

Fixed Assets

 

 

2,662

2,957

2,957

2,957

Intangible Assets

0

0

0

0

Tangible Assets

0

0

0

0

Investments

2,662

2,957

2,957

2,957

Current Assets

 

 

35,636

271,126

173,196

79,741

Stocks

0

0

0

0

Debtors

0

0

0

0

Cash

25,904

149,781

61,496

78,041

Other*

9,732

121,345

111,700

1,700

Current Liabilities

 

 

(9,494)

(27,957)

(14,600)

(14,600)

Creditors

(9,494)

(27,957)

(14,600)

(14,600)

Short term borrowings

0

0

0

0

Long Term Liabilities

 

 

0

0

0

0

Long term borrowings

0

0

0

0

Other long term liabilities

0

0

0

0

Net Assets

 

 

28,804

246,126

161,553

68,098

CASH FLOW

Operating Cash Flow

 

 

(42,405)

(40,860)

(100,787)

(93,815)

Net Interest

67

(243)

2,500

360

Tax

0

0

0

0

Capex

0

0

0

0

Acquisitions/disposals

0

0

0

0

Financing

56,225

304,479

0

0

Other

2,376

(139,499)

10,002

110,000

Dividends

0

0

0

0

Net Cash Flow

16,263

123,877

(88,285)

16,545

Opening net debt/(cash)

 

 

(9,641)

(25,904)

(149,781)

(61,496)

HP finance leases initiated

0

0

0

0

Other

0

0

0

(0)

Closing net debt/(cash)

 

 

(25,904)

(149,781)

(61,496)

(78,041)

Source: Cantargia’s accounts, Edison Investment Research. Note: *Mainly short-term investments.

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Cantargia and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Cantargia and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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