Vitrolife

Hansa Biopharma

Xvivo Perfusion

Moberg Pharma

Egetis Therapeutics

CellaVision

Cantargia

* Pre-revenue status with no profits and negative cash flow, requiring significant capital investment for drug development.
* High dependence on capital markets for funding, increasing vulnerability to market fluctuations and investor sentiment.
* Potential for binary outcomes in clinical trials, presenting a risk of core business failure if lead candidate nadunolimab is unsuccessful.
* Limited revenue diversification, with future dependence on partners for commercialization and revenue generation.
* Highly regulated industry environment, exposing the company to potential regulatory challenges and compliance costs.

* Strong potential for growth in oncology market, particularly in pancreatic cancer, supported by aging population trends and limited competition in the pipeline.
* Robust intellectual property protection through patents and proprietary clinical data, providing a competitive advantage for 10-15 years post-approval.
* Commitment to environmental sustainability and ethical practices, including energy reduction and waste management initiatives.
* Close collaboration with hospitals, research networks, and key opinion leaders in product development, ensuring alignment with customer needs.
* High employee satisfaction and low turnover, indicating a positive work environment and potential for talent retention.

* Lack of profitability: The company shows no positive gross profit margin, operating margin, or return on equity/assets.
* Weak historical growth: No evidence of consistent revenue or earnings growth above industry averages or historical rates.
* Poor financial health: Current assets do not sufficiently cover liabilities, and debt levels appear high relative to cash flow.
* Low earnings quality: The company fails to meet benchmarks for inventory management, accounts receivable, and cash flow conversion.
* No dividend power: The company does not demonstrate any positive indicators related to dividend yield, growth, or sustainability.

* Cantargia is not burdened by dividend obligations, allowing it to reinvest all available capital into research and development.
* The company's lack of debt-related metrics indicates it may have a clean balance sheet, potentially providing financial flexibility.

* Inconsistent delivery on promises, evidenced by delays in pancreatic cancer studies and early cancellation of three programs.
* Suboptimal capital allocation, as seen in the cancellation of three programs and inability to generate returns due to pre-revenue status.
* Weak insider ownership, with management and board members holding insignificant stakes in the company.
* Lack of gender diversity in leadership, with less than a third of board members being female.
* Absence of sustainability-related performance incentives in executive compensation plans.

* Strong founder mentality with CEO's long-term vision and deep industry knowledge, driving innovative drug development based on IL1RAP.
* Lean organization with a virtual business model, promoting self-direction and accountability.
* Transparent and timely communication, focusing on long-term business value and consistently presenting the same story and key metrics.
* Reasonable executive compensation structure with evenly distributed pay and sensible exit packages.
* Independent board with diverse expertise aligning with business strategy, capable of challenging management without adverse consequences.

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<p>During the quarter, Cantargia made further progress across its now broad pipeline, in particular with nadunolimab (CAN04) which has six planned and ongoing clinical trials, but also with CAN10. The most important event is still in front of us: ASCO 2022 from 3<sup>rd</sup> to 7<sup>th</sup> June. This can be an important catalyst for the share. Cantargia will present three posters about trials with nadunolimab:</p>
<p>CANFOUR (PDAC) – update with 70 patients (previously 33).</p>
<p>CANFOUR (NSCLC) – update with more mature data.</p>
<p>CIRIFOUR – this is a combination trial with pembrolizumab with 15 patients. Updated safety data and new efficacy data will be provided.</p>
<p>We will return with a comment after the abstracts have been published.</p>
<h3>Financials</h3>
<p>The operating income was SEK -122m, while the result was SEK -117m thanks to income from interest and similar items. Cash flow from operating activities was SEK -121m. Operating costs increased somewhat compared to previous periods, as is shown in the graph below. They are mainly related to the expansion of the clinical programme with CAN04/nadunolimab; significant investments were also made in production development (CMC), and some costs pertain to the CAN10 program. The majority of expenses, or SEK 102m, are related to projects.</p>
<p><img class="alignnone size-full wp-image-843073" src="https://res.cloudinary.com/redeye/w_513,h_381,c_fill,dpr_2.0/cms/app/uploads/2022/05/picture15.png" alt="" width="513" height="381" /></p>
<p>The liquidity position was SEK 443m. According to Cantargia, this should last until H2 2023, so we expect spending to decrease somewhat compared to Q1’2022 going forward. In the conference call, CFO Bengt Jöndell mentioned that Cantargia has the flexibility to stretch the runway significantly if needed. We believe that this would mean a hold on certain programs.  For example, CAPAFOUR, CESTAFOUR and TRIFOUR will be evaluated in autumn after sufficient data is available together with analyses of the market opportunities to prioritize among them.</p>
<h3>Valuation</h3>
<p>Our Base case is SEK 36. We do not make any changes based on the Q1 report.</p>
