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>On May 26, Cantargia published new results from three studies: the PDAC arm in CANFOUR, the NSCLC arm in CANFOUR and CIRIFOUR. In particular, the PDAC arm now includes an additional 40 patients. In this note, we review the three related abstracts published at ASCO 2022.</p>
<h3>CANFOUR (PDAC)</h3>
<p>In this study, patients with unresectable advanced stage III or stage IV (metastatic) pancreatic ductal carcinoma were recruited. The average age was 63. Three doses were administered, 1 (n=20) 2.5 (n=20), 5 (n=28) or 7.5 mg/kg (n=8) mg/ml together with standard gemcitabine and nab-paclitaxel.</p>
<p>Adverse events of grade 3 or higher were reported in 72 percent of cases. The most common side-effect was neutropenia (decrease of neutrophils, a type of immune cell). It could be managed through G-CSF prophylaxis. However, the highest dose of 7.5 mg was above the maximum tolerated dose due to neutropenia. We, therefore, judge that 5 mg will be the dose chosen for future trials.</p>
<p>&nbsp;</p>
<p>The survival figures improved slightly compared to the previous cohort. The one-year survival was 59 percent, up from 55 percent. The other important survival figures are summarized below:</p>
<p><img loading="lazy" class="alignnone size-full wp-image-843949" src="https://res.cloudinary.com/redeye/w_880,h_226,c_fill,dpr_2.0/cms/app/uploads/2022/05/skarmklipp3.jpg" alt="" width="880" height="226" /></p>
<p>The data from the phase III registration trial with FOLFIRINOX is also shown for comparison. It is more effective, but also much more toxic. It is used for younger and more fit patients.</p>
<p>The objective response rate was 27 percent in the first cohort with 33 patients, while the pseudo-responses were 15 percent. Pseudo-responses are delayed responses, which are not expected with chemotherapy alone. We would argue for adding this figure to the ORR for better comparability, as pseudo-responses are associated with a good prognosis. In other words, the ORR adjusted for pseudo-progression was 42 percent. The number of pseudo-progressions in the larger cohort with NADUNOLIMAB was not disclosed in the 2022 ASCO abstract.</p>
<p>Some caution is advised when comparing the results, as there was no placebo group in the nadunolimab trial. However, they give us an idea of orders of magnitude. The mOS is 55 percent better with NADUNOLIMAB, and the ORR is 44 percent better compared with the historical benchmark – if these figures can be maintained in the upcoming phase II/III trial (Precision Promise), we judge it very likely that nadunolimab will receive an approval.</p>
<p>The new data based on 76 enrolled patients cement the previous results. It makes up a more substantial dataset for interpreting safety and biomarkers across various doses. Efficacy data are supportive of further development. In addition to informing the design of the upcoming phase II/III trial (Precision Promise), we believe that this extended data package will also aid Cantargia in partnering discussions.</p>
<p>&nbsp;</p>
<h3>CANFOUR (NSCLC)</h3>
<p>This is a trial with 33 patients with unresectable advanced stage III or stage IV (82%) who are given nadunolimab with cisplatin+gemcitabine. The median age was 64. 45 percent received previous pembrolizumab monotherapy. Patients received 1 (n =17), 2.5 (n = 3) or 5 mg/kg (n= 13). Adverse events of grade 3 or higher were reported in 73 percent of cases, the majority of which was neutropenia, similar to the PDAC group. Neutropenia could be managed through G-CSF prophylaxis.</p>
<p><img loading="lazy" class="alignnone size-full wp-image-843950" src="https://res.cloudinary.com/redeye/w_891,h_208,c_fill,dpr_2.0/cms/app/uploads/2022/05/skarmklipp4.jpg" alt="" width="891" height="208" /></p>
<p>&nbsp;</p>
<p>The ORR was 53 percent (46 percent in squamous, and 56 percent in non-squamous), while the median PFS was 6.7 months and median OS 13.7 months. The ORR was improved, while the mPFS was slightly worse compared with the previous readout based on 27 patients. As a comparison, a phase III study with cisplatin plus gemcitabine in first-line NSCLC demonstrated an OS of 10.3 months and PFS of 5.1 months (Scagliotti et al, J Clin Oncol 2008; 26:3543–3551). Historical response rates have been 22-28 percent (idem.,  Schiller et al, N Engl J Med 2002; 346:92–98). The comparisons are not perfect, as CANFOUR uses first-line and second-line patients, while the control uses first-line patients. Half of the CANFOUR patients received the lowest dose of 1 mg/kg. However, there does seem to be an overall improvement compared to the benchmark. In particular, the ORR is substantially better than expected.</p>
<h3>CIRIFOUR</h3>
<p>This is a combination trial with mainly pembrolizumab, the most common check-point inhibitor (one patient received nivolumab). It recruited 15 patients in “metastatic NSCLC (n = 5), head and neck squamous cancer (n = 9) or malignant melanoma (n = 1), progressed on prior anti-PD-(L)1 therapy of ≥12 weeks”. The average number of previous lines of treatment was 2.3. The nadunolimab dose used was 5 mg/kg. The safety profile was considered good.  Only two grade three adverse events were reported.</p>
<p>Regarding efficacy, there were no objective responses. There was, however, 1 unconfirmed partial response and 8 patients had stable disease. Five patients were still receiving treatment, two of which had received treatment for over 31 weeks, and another two for over 49 weeks. It is impossible to draw any definite conclusions about efficacy at this point, as it essentially is a third-line treatment with a small number of resistant patients with different cancer types. But we can say that the treatment does seem to have some effect, as it seems to be slowing down disease progression.</p>
<h3>Valuation</h3>
<p>The main new results presented at ASCO 2022 that affect our valuation were those from the expanded PDAC group. The efficacy results are slightly improved, while the larger sample size reduces randomness effects. We believe that this translates into a better chance of getting the drug approved in this indication. We raise the likelihood of approval (LOA) to 36 percent (32) in PDAC. Concerning NSCLC and nadunolimab with PD-1 inhibitors, we do not make any changes based on the updated readouts. They do, however, confirm our previous assumptions and make us more confident in them. Our updated base case is SEK 38 (36). We may make further adjustments as we gain access to more data form these studies.</p>
