Interim Report for Kancera AB (publ) Q2 2015, January 1 – June 30, 2015
The period January to June 2014 and the second quarter 2015 in brief
R&D expenses for the period amounted to SEK 8.8m (SEK 6.9m) of which the second quarter constituted SEK 4.6m (SEK 3.4m).
Operating income for the period amounted to SEK -10.3m (SEK -8.0m) of which the second quarter constituted SEK -5.5m (SEK -3.9m).
Income after financial items for the period amounted to SEK -10.3m (SEK -7.9m) of which the second quarter constituted SEK -5.4m (SEK -3.8m).
Earnings per share for the period were SEK -0.10 (SEK -0.10) of which the second quarter constituted SEK -0.05 (SEK -0.05).
Cash flow from operating activities for the period amounted to SEK -10.9m (SEK -7.2m) of which the second quarter constituted SEK -5.8m (SEK -4.0m).
Equity as of June 30, 2015 amounted to SEK 31.2m (SEK 33.8m) or SEK 0.30 (SEK 0.44) per share. The equity/assets ratio as of June 30, 2015 was 76 percent (77 percent).
Significant events during the period
Kancera reported that a second efficacy study of the drug candidate KAN0439834 has been completed in an animal model of an advanced stage of chronic lymphocytic leukemia characterized by a genetic change which makes the disease more difficult to treat. The results show that KAN0439834 reduces the number of ROR expressing leukemia cells in the lymphatic system (spleen) after 14 days of treatment. Further, Kancera reported that a second patent application EP15153394.0 has been filed covering small-molecule ROR inhibitors, including the drug candidate KAN0439834.
Kancera reports that the patent WO 2011/079902 concerning monoclonal antibodies against ROR1 has been approved in China. Kancera has acquired partial rights to this patent from Bioinvent under an agreement that does not involve any financial burden for Kancera (except patent expenses) before revenues are generated. Kancera through the company's co-founder Professor Håkan Mellstedt has been involved in the development of these antibodies. These antibodies have mainly been used to identify and validate new indications for a future ROR-inhibiting drug. Any further development of the ROR-targeted monoclonal antibodies for therapeutic purposes will only be done in a partnership that provides funding and access to expertise in development of antibody-based drugs.
Kancera reported an operational update of the cancer projects ROR, PFKFB3, and HDAC6.
The ROR project reported that that Kancera’s candidate drug KAN0439834 is effective against both leukemic cells circulating in the blood and leukemic cells that have invaded the lymph nodes in humans.
Recent studies of clinical samples from leukemia patients underscore that ROR inhibitors mainly target the white blood cells causing cancer while the healthy white blood cells, including T cells, are spared. These results are of significance for the possibility to combine ROR inhibitors with the new generation of immuno-stimulating cancer drugs that have been developed since the effect of those requires functional T-cells.
A new generation of ROR inhibitors is being developed against solid tumors.
The PFKFB3 project reported a new discovery showing that Kancera’s PFKFB3 inhibitor KAN0438757 kills cancer cells by preventing them to repair their DNA. The discovery indicates that KAN0438757 could be an efficient complement to radiation for the treatment of advanced cancer.
The HDAC6 project reported that Kancera’s HDAC6 inhibitors counteract the migration of cancer-associated fibroblast cells and that an international patent application has been filed in May.
Kancera’s Annual General Meeting on May 28, 2015 decided to re-elect the current Board of Directors and auditor (Ernst & Young). The General Meeting also decided to authorize the Board, on one or more occasions until the next Annual General Meeting, to issue new shares. A new share issue may be made with or without preferential rights and against cash payment and / or in kind or set-off. The purpose of the authorization and the reason for the deviation from shareholders' preferential rights is to enable the acquisition of capital for corporate acquisitions and the company's operation. If the share issue is made against cash payment and without preferential rights for the shareholders, the number of shares issued may not exceed ten percent of the total number of shares outstanding at the time the authorization is exercised.
Kancera announced that a new share issue, with the authorization of the Annual General Meeting in 2014, was closed on May 27, 2015. The issue comprised a maximum of 4,927,386 shares. In total 25,926,793 shares were signed, of which 4,644,304 with preferential rights (with the support of subscription rights) and 21,282,489 without preferential rights. The share issue was thus oversubscribed to about 500 percent. This issue raised Kancera AB approximately SEK 12.3m before issue costs.
Kancera announced that the first subscription period for the exercise of the employee warrants was closed in June 2015. In total 450,246 new shares were signed giving Kancera SEK 1.7m before issue costs. There remain 2,349,754 warrants, of which 560,000 are held by Kancera to cover social security costs that are part of the employee warrants program.
Kancera announced that the company’s HDAC6 project has been awarded a grant totaling SEK 2m from the Swedish innovation agency VINNOVA. The grant is directed to projects that can develop into new strong innovations in a range of common diseases, including cancer. The grant is paid on four occasions during the two-year project. The project will be implemented in collaboration with the Cancer Center Karolinska (CCK), and is also planned to involve Swedish companies such as SARomics Biostructures, MetaSafe and Adlego Biomedical.
Significant events after the end of the reporting period
No significant news have been reported after the end of the period.
Statement from the CEO
In May, Kancera reported progress in the ROR, HDAC6 and PFKFB3 projects in an operational update showing that we have taken significant steps toward our main objectives during the period. The objectives include to demonstrate efficacy of ROR inhibitors against solid cancers, improve the pharmaceutical properties of the HDAC6 inhibitors and to investigate how PFKFB3 inhibitors are best combined with existing cancer therapies. However, several steps remain before we reach our objectives. Kancera’s projects were presented at two international scientific conferences in June yielding a good scientific response. Kancera’s unique small-molecule ROR project was presented at the annual meeting of the American Society of Clinical Oncology (ASCO) and the exciting discovery that Kancera’s PFKFB3 inhibitors prevent DNA repair in irradiated cancer cells was presented at the Tomas Lindahl Conference on DNA repair in Oslo.
American research groups have progressed the development of biological drugs directed against ROR during the last 12 months such as the MD Anderson Cancer Center in Texas (genetically modified T cells that express ROR receptors on the cell surface) and the University of Southern California in San Diego (monoclonal antibodies) while Kancera remains in the forefront when it comes to development of small-molecule drugs against ROR. The development of biological drugs against ROR we consider as positive since these can contribute to the understanding of how a ROR-targeted drug works in different patient groups and provide information on what is required of a small molecule drug against ROR to be competitive.
During May and June, Kancera’s working capital was strengthened through a fully subscribed share issue and also through the exercise of employee warrants which together brought in SEK 14m before issue costs. In addition, Vinnova announced that its strategic innovation program for common diseases (SWElife) allocates SEK 2m to Kancera’s HDAC6 project over a two year period. The interest in HDAC6 as a drug target remains strong, which e.g. is reflected in the “Discovery on Target" conference in Boston in September where attention is paid to the contribution of HDAC6 to control the immune system's ability to attack cancer. In July, Kancera conducted a screening campaign as part of the EU-funded anti-parasite project which means that the company has delivered according to plan up to the midterm report. This report constitutes the basis for a possible approval of an additional payment of about € 285,000 from the European Union in the fourth quarter.
The focus of the autumn’s product development is the continued development of ROR inhibitors for the treatment of solid tumors, and enhancement of the pharmaceutical properties of the already highly potent HDAC6 inhibitors.