The Q1 report was somewhat uneventful. The cost reduction is important, as it can allow the company to fund operations past the readout in TRIFOUR in H2 2024, the first controlled trial of nadunolimab, with potential of demonstrating better response rates and survival over the control group. This can be a huge value inflection point, as analysts, investors and pharma companies typically value biotech companies with a clear efficacy advantage over placebo higher than companies at an earlier stage, as such data de-risks a project and is easily understandable. The phase IIb results in pancreatic cancer would be an even greater catalyst, but the funding is not yet in place, so there will be some delay to the start (which was planned for mid-2024).

CAN10 approaches a safety phase I readout in 2024. The single ascending and multiple ascending dose parts is recruiting 64 healthy volunteers treated with the IV version. The treatment of the 16 psoriasis patients will begin in Q3 2024 with safety data available within the year from the subcutaneous formulation, which is very useful for further development in autoimmune diseases. Biomarker data will also be communicated, potentially in 2024. We believe there is an opportunity in HS, a disease that has figured in Cantargia's news flow recently and which looks like it could be the next major autoimmune indication.

We believe it could make sense to position CAN10 for HS. There is limited competition as of now.There are only two approved drugs, the main one being Humira, versus 12 for psoriasis, which has a similar prevalence. There is probably space for many more drugs. The disease is likely severely underdiagnosed with an estimated 2% global prevalence, with 2 million treated patients in the US. MoonLake (which develops sonelokimab) sees a USD10bn+ market opportunity by 2035.

Several recent developments have occurred in this indication. MoonLake’s sonelokimab and Incyte’s povorcitininb have shown superiority over placebo in phase II studies in 2023-2024, while bimekizumab is on the path towards an FDA approval in 2024 after positive phase III data in 2023. These are IL-17 or JAK1 inhibitors. There has also been recent news in the IL-1 space.

Abbvie’s lutikizumab reported promising results compared to placebo in a phase IIb trial in early 2024. Lutikizumab is a dual variable domain antibody that neutralises both IL-1α and IL-1β . In March, Avalo Therapeutics acquired AVTX-009 for USD15m in stock, USD7.5m in cash, and milestones of up to USD22.5m. The candidate, which neutralises IL-1β, is phase II ready, with topline results from a planned phase II trial in HS expected by 2026. CAN10 (which blocks IL-1, IL-33 and IL-36) should most likely give at least as good results as these in HS, and could consequently be worth more in a deal, assuming the ongoing phase I study concludes successfully.

HS is clearly an up-and-coming indication in which several companies are positioning themselves. It would likely be an attractive space for CAN10, even if it comes some years late to the scene. CAN10 also has potential in psoriasis, systemic sclerosis, atherosclerosis, myocarditis, and many more diseases, too many for Cantargia to develop on its own. This leads us to believe that a licensing deal would have to reflect this potential with large milestones.  

Cantargia had no income except financial income of SEK5m. Costs were much lower than the previous quarter at SEK-42m (SEK-71m in Q4), as previously communicated by management. This is due to the closing of previously open studies with nadunuolimab, leaving mainly TRIFOUR and CAN10's phase I as cost drivers. The operating cash flower was somewhat lower at SEK-55m due to a negative effect from changes in working capital. The liquidity position is SEK143m (SEK195m). The report mentions good prospects of securing financing through e.g. a licensing deal or a share issue.

We have removed two indications/programmes from the valuation – CAPAFOUR (FOLFIRINOX in PDAC) and CESTAFOUR (chemotherapy in various indications). Cantargia will prioritise pancreatic cancer, so the further development of these programmes is unlikely in the medium term. They might still provide valuable readouts this year, but we believe it will make sense to let these readouts reflect on the likelihood of approval or peak sales in the main indications (pancreas, lung and breast) rather than maintaining these small indications with an uncertain future. However, we do not change the total assumed deal value (USD1000m). We have also made some changes to cost forecasts, including lower taxes due to lower peak sales, with a positive result on the base case. Our bull case is SEK27 while our bear case is SEK6.