Interim Report for Kancera AB (publ)

January – June and Q2 2011 in brief                             

• Net sales for the period totaled SEK 2.3m, of which Q2 accounted for SEK 1.7m.
• R&D expenses for the period totaled SEK 13.2m, of which Q2 accounted for SEK 8.3m.
• Operating income for the period totaled SEK -7.9m, of which Q2 accounted for SEK -8.8m.
• Income after net financial items for the period totaled SEK -8.2m, of which Q2 accounted for SEK -8.9m.
• Operating income and income after net financial items were affected by the release of negative goodwill of SEK 7m in connection with the acquisition of iNovacia. The entire amount was recognized as revenue during the period.
• Earnings per share were SEK -0.66, of which Q2 accounted for SEK -0.67.
• Cash flow from operating activities for the period totaled SEK -12.6m, of which Q2 accounted for SEK -7.6m.
• Equity as of June 30, 2011 totaled SEK 29.2m or SEK 2.36 per share. The equity/assets ratio on the reporting date was 60 percent.
• Cash and cash equivalents on June 30, 2011 totaled SEK 26.8m and SEK 17.6m for the Parent Company.

Significant events during the period

• Kancera’s public new share issue was completed and raised SEK 25.2m for the company. Expenses relating to the share issue amounted to SEK 2.1m for 2010 and SEK 1.0m for 2011.
• Kancera exercised its option to acquire iNovacia AB on February 17 for SEK 2.3m.
• Before Kancera acquired iNovacia, iNovacia sold its shareholding in Kancera for SEK 6m (SEK 7 per share). The sale consisted of existing shares and resulted in no dilution, but the acquisition injected liquidity into the company.
• NASDAQ OMX First North approved Kancera’s listing on First North. The first day of trading was February 25, 2011.
• Results from Kancera’s leukemia drug project show that the company’s active compounds may also have the potential to be of relevance in the development of therapeutics against eight other blood malignancies. Mechanisms of action for Kancera’s active compounds have also been documented. These results indicate a cancer-specific effect, which will facilitate the further development and marketing of the leukemia project.
• Kancera has demonstrated that the company’s compounds targeting the energy metabolism of cancer increase the effectiveness of chemotherapy in a cell model in cancer of the stomach. New compounds targeted at the energy metabolism of cancer were registered by Kancera in an international patent application in June 2011.
• Kancera has established a collaboration agreement with Professor Mary Hendrix of Northwestern University Feinberg School of Medicine, Chicago, USA, to develop products to combat aggressive cancers. Professor Hendrix, who is an advisor to the National Cancer Institute (NCI) and the National Institutes of Health (NIH), is contributing expertise and models to identify or attack metastasizing cancer at an early stage of the disease.
• The Annual general meeting resolved to implement an incentive scheme to the employees of the group and persons with corresponding positions. The incentive scheme includes the issuance of not more than 400,000 warrants. If all warrants are exercised the dilution of the share capital will amount to approximately 2.9 per cent.
• A new lease agreement was signed for specialized laboratories within the Karolinska Institutet Science Park for move-in in September 2011.

Significant events after the end of the reporting period

• Due to the success of Kancera’s ROR technology, Kancera has also initiated the development of drug candidates to attack solid tumors, such as in pancreatic and prostate cancer.
• A rights issue of new shares as authorized by the Annual General Meeting has raised SEK 7.6m before issue costs. The issue price was SEK 4 and 1,900,000 shares were issued, making an increase in the number of shares of 14.3 percent. The capital raised is to be used first and foremost for further development of Kancera’s ROR technology.