INTERIM REPORT FOR KANCERA AB (PUBL) Q4 2016. January 1st – December  31st 2016

2017-02-21

THE PERIOD JANUARY - DECEMBER 2016 IN BRIEF

· R&D expenses for the period amounted to SEK 19,1M (SEK 20,4M) of which the fourth quarter constituted SEK 5.8M (SEK 8,3M).
· Operating income for the period amounted to SEK -22,3M (SEK -19.7M) of which the fourth quarter constituted SEK -6.5M (SEK -5,9M).
· Income after financial items for the period amounted to SEK -22,3M (SEK -19,6M) of which the fourth quarter constituted SEK -6.4m (SEK -5.9m).
· Earnings per share for the period were SEK -0.19 (SEK -0.19) of which the fourth quarter constituted SEK -0.05 (SEK -0.06).
· Cash flow from operating activities for the period amounted to SEK -23.1M (SEK -20,7M) of which the fourth quarter constituted SEK -5,7M (SEK -4.5M).
· Equity as of December 31, 2016 amounted to SEK 59,5M (SEK 21,9M) or SEK 0.45 (SEK 0.21) per share.
· The equity/assets ratio as of December 31, 2016 was 82 percent (80 percent). Cash and cash equivalents as of December 31, 2016 amounted to SEK 57,8M (SEK 15,6M).

SIGNIFICANT EVENTS DURING THE FOURTH QUARTER

· In the Fractalkine project, the procurement process has begun of a CRO that will conduct the first clinical study, as well as of a company for the development and manufacture of the formulation of KAND567, formerly KAN0440567, to be used in this study.
· In the HDAC6 project Kancera substances have been shown to have the ability to down-regulate the immunological “braking” protein found in cancer cells, which may help cancer cells escape the patient's immune system. Furthermore, the project has developed a crystal structure that shows how Kancera substances bind to "Target 2", which provides information on how HDAC6/Target 2 inhibitory drugs can be further optimized.
· Kancera has reported progress in the ROR project on possible broadened use of ROR inhibitors against lymphoma disease "Richter's syndrome," according to analysis of tumor samples. The disease affects approximately 15% of patients with chronic lymphocytic leukemia (CLL) and there is a lack of effective treatment.
· The production method for KAN0439834 has been developed to allow straightforward and efficient implementation in a way that the company believes paves the way for the further preclinical and clinical development of the compound.

SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD

Kancera AB (publ) has presented new information showing

· how the company’s Fractalkine blocker prevents immune cells (monocytes) to infiltrate the nerves and spinal cord, which prevents nerve damage and enhanced pain sensitivity associated with cancer treatment.
· that the effect of a new ROR inhibitor is maintained throughout the day, which opens up for more indications.
· achieved milestones for the HDAC6 project.
· how PFKFB3 inhibitors seems more effective in cells being transformed to cancer cells
· success in the development of drugs against Chagas (parasitic) disease.
· Furthermore, Kancera has announced that an agreement in the form of a "Letter of Intent" has been concluded with a company for the implementation of a Phase I clinical study of KAND567.

STATEMENT FROM THE CEO
Kancera has recently selected a contract research company for the upcoming clinical study in the Fractalkine project following a competitive selection process. In the next step the final negotiations of the agreement with that company are to be concluded, and in parallel the application to the relevant Medical Products Agency and the ethics committee for permission to start a clinical Phase I study is to be submitted. Thus, the Fractalkine project proceeds in accordance with the plans presented in the prospectus for the rights issue in May, 2016.

Furthermore, we have been able to show that the company’s Fractalkine antagonist KAND567 (formerly KAN0440567) effectively counteract pain caused by vincristine which is used to treat several forms of both hematological and solid tumors. The goal for the KAND567 treatment is to enable effective cancer treatment without dose-limiting pain as well as to prevent permanent nerve- and pain-complications after a successful treatment. Today there is no effective treatment for this type of nerve damage.

We have also been able to show that treatment with KAND567 prevents immune cell (monocyte) infiltration of nerves and spinal cord, which in turn prevents nerve damage and enhanced pain sensitivity. This effect pattern reflects the neuro-protective effect previously shown for KAND567 in a disease model for the autoimmune disease multiple sclerosis.

Overall, the findings suggest that KAND567 has the potential to significantly improve the treatment of cancer as well as autoimmune diseases.

We also see progress in other parts of the project portfolio exemplified by a new ROR inhibitor whose effect is maintained throughout the day opening up the possibility of more indications, that milestones for the Vinnova-supported HDAC6 project have been achieved, and that PFKFB3 inhibitors become more effective against cells upon activation of RAS which is one of the cancer driving genes most difficult to inhibit.

Moreover, in the final phase of the EU-funded anti-parasite project we can note that Kancera’s newly developed compounds, directed against the parasite's genome, show promising efficacy against infection caused by the parasite Trypanosoma cruzi. The parasite causes Chagas disease which affects approximately 8 million people today. With these results, Kancera reached the ambitious goals of the EU-project to develop a new class of compounds active in an animal model of one of the most difficult parasitic diseases affecting man.

February 2017
Thomas Olin
CEO Kancera AB (publ) 

THIS IS KANCERA
Kancera develops the basis for new therapeutics, starting with new treatment concepts and ending with the sale of a drug candidate to international pharmaceutical companies. Kancera is currently developing drugs for the treatment of leukemia and solid tumors, based on blocking survival signals in the cancer cell and on addressing cancer metabolism. Kancera’s operations are based in the Karolinska Institutet Science Park in Stockholm and the company employs around 15 people. Kancera shares are traded on NASDAQ First North and the number of shareholders were more than 7700 as of January 13th, 2017. FNCA is Kancera’s Certified Adviser. Professor Carl-Henrik Heldin, Professor Håkan Mellstedt, and MD PhD Charlotte Edenius are board members and Kancera´s scientific advisers.

 HISTORY
In 2006, Pharmacia’s and Biovitrum’s unit for the development of drug candidates was spun-out to create iNovacia AB. In 2008, iNovacia started drug development in collaboration with the Karolinska Institute. In May 2010, Kancera AB was formed by scientists from Cancer Center Karolinska, iNovacia AB and a group of private investors through capital contributions and two drug projects focusing on cancer. NASDAQ OMX approved Kancera’s listing on First North with the first day of trading being February 25, 2011. In March 2013 Kancera acquired a complete drug development laboratory from its former subsidiary iNovacia AB and the drug development is since then performed within Kancera AB at the Karolinska Institutet Science Park, Stockholm.


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