Full Year Report 2012 for Kancera AB (publ) January 1 – December 31, 2012


All figures relate to the Kancera Group unless otherwise specified. The 2011 comparison figures for operating income and income after financial items were affected by the release of negative goodwill of SEK 7m that arose in connection with the acquisition of iNovacia, the entire amount of which was recognized as revenue during Q1 2011. In addition, comparison figures for 2011 were affected by the fact that Kancera acquired iNovacia on February 17 and accordingly, iNovacia’s sales and earnings only include 10.5 months of the comparison period January to December 2011.

January – December and Q4 2012 in brief

  • R&D expenses for the period totaled SEK 28.9m (SEK 23.0m), of which Q4 expenses accounted for SEK 9.3m (SEK 5.0m). Write-down of instruments and chemical library amounted to SEK 2,9m during Q4.
  • Net sales of external contract research for the period totaled SEK 3.5m (SEK 7.1m), of which the Q4 sales accounted for SEK 1.4m (SEK 3.2m).
  • Operating income for the period totaled SEK -33.3m (SEK ‑18.4m after release of negative goodwill of SEK 7.0m), of which Q4 income accounted for SEK -10.5 (SEK ‑5.2m).
  • Income after financial items for the period totaled SEK -33.5m (SEK -18.4m after release of negative goodwill of SEK 7.0m), of which Q4 income accounted for SEK -10.7 (SEK -5.0m). Q4 income included write-down of instruments and chemical library to an amount of SEK 2,9m.
  • Earnings per share for the period were SEK -2.02 (SEK -1.35), and for Q4 were SEK -0.60 (SEK -0.33).
  • Cash flow from operating activities for the period totaled SEK -26.9m (SEK -23.2m), of which Q4 accounted for SEK -3.4m (SEK -3.3m).
  • Equity as of December 31, 2012 totaled SEK 5.5m (SEK 25.9m) or SEK 0.29 (SEK 1.71) per share. The equity/assets ratio on the reporting date was 30 percent (65 percent).
  • Cash and cash equivalents totaled SEK 6.8m (SEK 20.8m) on December 31, 2012 and SEK 5.1m (SEK 14.6m) for the Parent Company.
  • In deciding on the restructuring of the subsidiary, iNovacia AB, a lump sum of SEK 0,17 m was charged on income in Q4

Significant events during the period

  • In collaboration with Professor Matthias Löhr of the Karolinska Institute, Kancera demonstrated that its ROR inhibitors are effective at killing cells in a challenging human pancreatic cancer model. Efficacy is significantly superior to that of gemcitabine, today’s standard treatment. Kancera presented these results at Bio Europe Spring in Amsterdam.
  • Kancera presented its structure-based design of active compounds targeting cancer metabolism at the World Cancer Metabolism Summit in Washington.
  • Kancera presented results from its ROR project which demonstrate that the company’s active compounds are significantly more specific than four competing kinase inhibitors that are being developed to target chronic lymphocytic leukemia. The results were achieved in collaboration with Professor Håkan Mellstedt and his research team at the Cancer Center Karolinska.
  • Kancera filed a patent application for a chemical series of small molecular ROR inhibitors with pharmaceutical properties.
  • iNovacia AB reported that it had entered into a collaboration with Boston-based Agios Pharmaceuticals relating to the identification of chemical starting points for a project using iNovacia’s high-speed screening and chemical library.
  • Kancera announced that its ROR inhibitors have the capacity to kill leukemia cells from 50 percent of patients who are no longer benefiting from the current drugs for chronic lymphocytic leukemia, opening the way for a possible breakthrough in the treatment of the most common form of chronic leukemia. The studies were carried out in collaboration with Professor Håkan Mellstedt and his research team at the Cancer Center Karolinska.
    Kancera announced that, in cooperation with Professor Håkan Mellstedt and his research team at the Karolinska Institute, it had developed antibodies that allow the development of a diagnostic tool for the identification of patients and for follow-up of individual patient response to treatment with ROR inhibitors.
  • Kancera’s cancer projects were presented at a seminar on “Lead Generation and Structure-Based Drug Design in Cancer Research” at the Cambridge Innovation Center in Boston, USA, in April 2012.
  • On June 8 Kancera AB completed a new share issue with preferential rights for existing shareholders. The issue was 95 percent subscribed and involved the issue of 3,608,208 shares at an issue price of SEK 2.30 per share, which raised SEK 8.3m for Kancera AB before issue costs and represents dilution of 19.2 percent based on a total of 18,756,208 shares.
  • On May 28, 2012 the Annual General Meeting approved the Board’s proposal that the Board be authorized to decide to issue new shares on one or more occasions during the period up to the next Annual General Meeting against payment in cash and/or in kind or by set-off. The total number of shares which may be issued under this authority shall not exceed 20 percent of the total number of shares.
  • Kancera announced that Professor Carl-Henrik Heldin had been appointed to the Board of Kancera. Professor Heldin has been director of the Ludwig Institute for Cancer Research in Uppsala since 1986 and a professor of molecular cell biology at Uppsala University since 1992. Professor Heldin has a solid reputation and an extensive network from assignments as advisor to several academic institutions and among successful biotech entrepreneurs, and thus brings an international view of how Kancera´s projects are valued scientifically and industrially.
  • Professor Håkan Mellstedt presented Kancera’s ROR project under the title “Effect of ROR1 targeting small molecules on chronic lymphocytic leukemia cells” at the American Society of Clinical Oncology (ASCO) in Chicago, USA, in June 2012.
  • In June 2012, Kancera presented the company’s cancer projects at the BIO International Convention in Boston, USA, a conference which attracted corporate leaders and business developers from more than 2,500 companies.
  • Kancera announced that it had strengthened its patent rights for biological drugs targeting ROR-1 through the acquisition of BioInvent’s share of patent application WO 2011/079902. The acquisition is based on an agreement that imposes no financial burden on Kancera until revenue is generated. Through the company’s co-founder, Professor Håkan Mellstedt, Kancera already had an interest in patent application WO 2011/079902 covering therapeutic antibodies targeting ROR for treatment of cancer. This patent application was developed in collaboration with BioInvent and other members of the research team at the Cancer Center Karolinska. Kancera aims to develop these ROR antibodies in partnership with a company specializing in biological drugs.
  • Kancera announced that its PFKFB3 inhibitors targeting cancer are now entering preclinical efficacy studies in animals. This first generation of Kancera PFKFB3 inhibitors has been selected following two animal studies that have shown satisfactory distribution and tolerance. Following the Board’s decision on October 16 (see press release summarized below), no further significant investments will be made in the PFKFB3 project, which will be the subject of more detailed assessment at a later date.
  • Kancera announced that its wholly-owned subsidiary iNovacia AB had entered into an agreement with Intellect Neurosciences New York, USA, for contract research services. The agreement relates to the evaluation of preclinical compounds for the optimization of Intellect’s antibody drug conjugate.
  • On October 16, 2012 Kancera announced that the company intends to issue new shares, has modified its business model and is focusing on one drug project. Kancera subsequently announced that:
    –  As part of the current modification of the company, on November 27, 2012 restructuring of iNovacia AB was initiated. In Kancera’s new organization available resources are focused on the delivery of a drug candidate in the ROR project during 2013.
    –  A new share issue was completed on December 21, 2012. In total 13,511,466 shares were subscribed for, of which 7,069,249 with preferential rights (supported by warrants) and 6,442,217 without preferential rights. The new share issue was thus approximately 72  percent subscribed. The new share issue injected around SEK 9.3m into Kancera before issue costs.
    –  The business model is being changed so as to run the business with a limited organization and a significant reduction in fixed costs. In parallel with this, opportunities to restructure iNovacia are being investigated. If this cannot be done, iNovacia will be sold or wound up.
    –  Kancera’s Board has judged that the company’s limited financial and human resources require it to focus the business on one project, and has decided to continue investments focusing on the ROR project.
  • Kancera announced that the company’s first generation of PFKFB3 inhibitors slows down the growth of pancreatic cancer in preclinical efficacy studies in animals. The slowdown effect of Kancera’s first generation PFKFB inhibitors was around 20 percent better than placebo treatment. Pancreatic cancer affects more than 100,000 patients annually in Europe and the US. The survival rate among these patients five years after diagnosis is less than two percent, which underlines the fact that there is a great need for new drugs to treat pancreatic cancer. However, Kancera is standing by its previously announced decision to prioritize the company’s ROR project, and consequently further development of the PFKFB project will only be resumed once adequate financing has been secured.
  • Kancera announced that the company’s project portfolio was presented at the conference of the European Cancer Cluster in Hamburg and also at BioEurope 2012, which likewise took place in Hamburg, Germany.
  • Kancera reported results showing that pancreatic cancer cells cannot exist without a functioning ROR-1 protein. The results that support this were generated in collaboration with Professor Håkan Mellstedt and his research team at the Karolinska Institute. The results provide increased support for Kancera’s ROR project, which aims to develop an effective drug to treat this serious form of cancer.

Significant events after the end of the reporting period

  • In an update on its project portfolio Kancera reported that:
    –  Publications under the American Society for Hematology (ASH) in Atlanta, USA, from Kancera, its co-founder Professor Håkan Mellstedt of the Karolinska Institute, and researchers at the University of California, San Diego, have demonstrated the significance of ROR for the development of new drugs to treat the most common chronic (CLL) and the most common acute (AML) forms of leukemia.
    –  Further investments have been made in patent protection within the ROR project by registering an international patent application (PCT/EP2013/051772) in January 2013 and through the acquisition of exclusive rights to a patent application concerning human monoclonal antibodies (WO 2012/076727).
    –  Supplementary analyses of Kancera’s results have shown that the level of inhibition of the PFKFB3 protein inside the cancer cell correlates well with the growth inhibition noted in both individual cancer cells and in a complete tumor. This further strengthens PFKFB3 as a target for the treatment of cancer.
  • In an update on its organization and laboratory capacity, Kancera reported that the following agreements have been signed to allow access to high performance labs for the company’s new down-sized organization:
    –  Humlegården Fastigheter AB concerning rent of more cost-effective laboratories fitted to the needs of the ROR project.
    –  Sobi AB concerning takeover of Sobi ABs claim against iNovacia of SEK 5m that is secured by a floating charge on assets including iNovacia laboratory equipment and instruments. Claim is taken over for a payment of SEK 2 m to Sobi AB.
  • On October 16, 2012 Kancera AB announced an action plan to give the company more flexibility in terms of both capacity and costs. As part of this action plan, reconstruction of the subsidiary iNovacia AB was initiated on November 27, 2012.On February 21, the decision was made to abandon the reconstruction of iNovacia due to the remaining uncertainty in terms external income that would enable continued operation. For this reason, iNovacia has filed for bankruptcy. Kancera has not provided financial guarantees for iNovacia.

Om Kancera AB (publ)

Kancera bedriver utveckling av läkemedel som tar sin start i nya behandlingskoncept och avslutas med en läkemedelskandidat. Kancera utvecklar idag läkemedel för behandling av leukemi och solida tumörer genom att dels stoppa överlevnadssignaler i cancercellen och dels strypa cancerns ämnesomsättning. Kancera utvecklar även stamcells-baserade effektmodeller för att kunna studera om cancerläkemedel fungerar före tester i människa. Kancera bedriver sin verksamhet i Stockholm och sysselsätter cirka 12 personer. Aktien handlas på NASDAQ OMX First North och antalet aktieägare uppgår till cirka 1200. Remium Nordic AB är Kanceras Certified Adviser.

För ytterligare information, kontakta gärna,

Thomas Olin, VD: 0735-20 40 01

Kancera AB (publ)

Karolinska Institutet Science Park
Banvaktsvägen 22
SE 171 48 Solna

Besök gärna bolagets hemsida http://www.kancera.se/