INTERIM REPORT FOR KANCERA  AB (publ) 1st January – 30th September 2018

PERIOD JAN – SEPTEMBER 2018, AND THIRD QUARTER IN BRIEF

• Net sales for the period (January to September) amounted to SEK 0.1 million (SEK 0.1 million) of which the third quarter amounted to SEK 0.1 million (SEK 0.0 million).

• R&D expenses for the period amounted to SEK 31.3 million (SEK 39.8 million), of which Q3 amounted to SEK 10.5 million (SEK 14.7 million).

• Operating profit for the period amounted to SEK -33.5 million (SEK -44.2 million), of which third quarter amounted to SEK -10.6 million (SEK -16.6 million).

• Profit after financial items for the period amounted to SEK -33.8 million (SEK -44.2 million), of which third quarter amounted to SEK -10.7 million (SEK -16.5 million).

• Earnings per share for the period amounted to SEK -0.21 (-0.31), of which third quarter amounted to -0.06 SEK (-0.12).

• Cash flow from operating activities for the period amounted to SEK -31.2 million (-34.9 million), of which third quarter amounted to SEK -17.8 million (SEK -9.3 million).

• Shareholders’ equity amounted to SEK 45.5 million (SEK 44.8 million) as of 30 September 2018, or SEK 0.24 (0.3) per share.

• The equity ratio at September 30th, 2018 was 77 percent (65 percent). Liquid funds amounted to SEK 34.8 million (SEK 46.1 million) on September 30th, 2018

SIGNIFICANT EVENTS DURING THE THIRD QUARTER

• Kancera AB (publ) announced that unique blockers of the Fractal System have been patented. From the patented blockers, Kancera intends to further develop a new drug candidate, which is estimated to take about 12 months.

• Kancera provided an operational update for the Fractalkine project as follows •Research results show that blockade of the Fractal system can be expected to protect both heart and kidney function in inflammation

• Clinical studies focusing on cardiovascular inflammation of myocardial infarction are expected to start in the first half of 2019

• Kancera’s research in cancer continues with a focus on lymphoma (biomarker study scheduled for completion in the fourth quarter of 2018) and ovarian cancer (EU-funded preclinical research), while the Vinnova-funded study of neuroblastoma has been reported and completed.

• Kancera announced that the company is reorganizing to focus on Fractalkine projects.

  • Kancera announced that results of cooperation with Karolinska Institutet were published in the journal Nature Communications under the title “Targeting PFKFB3 radiosensitizes cancer cells and suppresses homologous recombination”.

SIGNIFICANT EVENTS AFTER THE END OF THE THIRD QUARTER

• Kancera has reported that the company has registered a patent application (EP18205819.8) for a third series of novel substances that selectively inhibit the enzyme HDAC6 for the treatment of inflammation and cancer

.• In the framework of EU research program Horizon 2020, Kancera has been awarded a research grant of a total of approximately 250,000 Euro for funding a doctoral student in order to explore the role of the Fractalkine system in the development of pain in arthritis.

• Kancera has announced that terms have been developed for shareholders’ investment decisions in the company by Global Corporate Finance Inc. (GCF), New York. The investment, which covers a maximum of SEK 60 million over 30 months, is intended to take place in tranches (rounds) of which Kancera determines the timing.

• Kancera hereby provides a status update for the Fractalkine project:

• New effect study in animal model of myocardial infarction showed that lower doses than expected give a significant cardiovascular effectssww
• Preliminary results from the GLP toxicology study showed that the calculated effective dose of KAND567 was safe (final results from this study are expected in January).
• Phase 0 study in lymphoma patients will be completed in December and the analyzes are expected to be completed in January 2019

STATEMENT FROM THE CEO

In the Fractalkine project, we have strengthened our patent protection against competition and conducted a series of studies aimed at both preparing for Phase IIa cardiovascular patients and evaluating the possibility of an effect on blood cancer (lymphoma).

The protection has been further strengthened after our patenting of a new series of Fractalkine blockers that allow for the development of several independent products within the project.

Prior to the cardiac study in humans, the choice of intravenous dosing with KAND567 has been evaluated for efficacy and safety. The effect has been evaluated in a disease model of myocardial infarction and safety in a toxicological GLP study. The efficacy study showed that lower doses than expected provide a significant heart-protecting effect. Preliminary results from the toxicology study provide evidence pointing towards the safety of the calculated effective dose of KAND567 (final results from this study are expected in January). The next step in the preparation is the start of manufacturing KAND567 for intravenous treatment in clinical trials, which will occur within a few weeks. This means that the application for authorization for implementation of Fas Ib is planned to be submitted to the Medical Products Agency during the first quarter and completed during the second quarter of 2019 and that the corresponding Phase IIa application is scheduled for submission during the second quarter.

In May, we started a biomarker study (Phase 0) in lymphoma patients together with partners at Karolinska Hospital and the Institute. The aim of the study is to investigate whether there are groups of lymphoma patients in which the Fractalkine system is activated and possibly pervasive in the disease. Recruitment of patients has proceeded at a high rate in parallel with immunological analysis of blood samples. This means that sample collection can be completed in December and be analyzed in January. The results will determine whether continued evaluation of the role of the Fractalkine system in cancer continues toward lymphoma or focuses on the EU-funded solid tumor research project.

Interest in how Fractalkine affects various diseases in humans increases with continuous research progress, in the field of dementia and nerve pain amongst others. This has resulted in an invitation to participate in a further EU-funded research project with European research groups and pharmaceutical companies with the above focus. Kancera has participated in the application for this now approved EU project, starting in the spring of 2019.

The fact that Kancera is developing in the right direction we believe also forms the basis for the interest from the family-owned company GC Finance to invest in the company. The intention is to use capital injection from GC F (to be decided by an extraordinary general meeting) to expand to evaluate additional indications for the portfolio of Fractalkine blockers, expand clinical studies and for operations.

Thomas Olin

CEO Kancera AB (publ)