Interim report for the third quarter 2020, January 1st – September 30th, 2020

Third quarter in brief as well as the period 1 January – 30 September 2020

• Net sales for the period (January to September) amounted to SEK 0,09 million (3,3 million), of which the third quarter contributed SEK 0,05 million (0,20 million).
• R&D costs for the period amounted to SEK 28,1 million (27,5 million), of which the third quarter contributed SEK 8,8 million (7,2 million).
• Operating profit for the period amounted to SEK -33,6million (-28,1 million), of which the third quarter contributed SEK -9,3 million (-7,5 million).
• Profit after financial items for the period amounted to SEK -34,8 million (-28,4 million), of which the third quarter contributed SEK -9,4 million (-7,6 million).
• Earnings per share for the period amounted to SEK -0,11 (-0,14 kr), of which the third quarter contributed – SEK 0,02 kr (-0,04 kr).
• Cash flow from operating activities for the period amounted to SEK -35,0 million (-32,6 million), of which the third quarter contributed SEK -10,9 million (-11,6 million).
• Equity amounted on 30 September 2020 to SEK 85,0 million (23,6 million) or SEK 0,19 (0,11 kr) per share.
• The equity/assets ratio amounted on 30 September 2020 to 88 percent (65 percent).
• Cash and cash equivalents amounted on 30 September 2020 to SEK 47,6 million (3,9 million).

Significant events during the third quarter

• Kancera announced that the Phase II clinical trial of KAND567 has started. The study, which is carried out in collaboration with Capio St. Göran’s Hospital and Petter Brodin’s research group at SciLifeLab, aims to study the effect of KAND567 on the immune system, lung function and rehabilitation. Results from the study will be analyzed and communicated on two occasions, the first after all patients have undergone sampling after day 7 and the second after day 90.

• Kancera announced that independent researchers have published results that show that the Fractalkine system is activated in COVID-19 and that increased levels of Fractalkine are linked to more severe disease. The results mean that the probability increases that the company’s drug candidate KAND567 will be able to counteract serious complications as a result of COVID-19.

• Kancera announced that within the collaboration with Grünenthal, a new supplemented patent application has been filed that covers a series of HDAC inhibitors that are intended to be developed for the treatment of neuritis and pain.

Important events after the end of the third quarter

• Kancera has announced that the conversion of TO4 during 2020 provided Kancera with a total of approximately SEK 38.6 million. which the board believes provides a good basis for an accelerated development of the company’s drug projects aimed at COVID-19 and myocardial infarction, including the drug candidates KAND567 and KAND145.

• Kancera has announced that a new capsule product of KAND567 has been developed to meet reproducibility requirements in large-scale production and clinical use. The expected properties of the product will be verified in a small clinical study in healthy subjects which will be carried out for about a week in November. The first patient study for the new capsule will be the Phase IIa study of KAND567 in cardiac patients with a planned start in early 2021.

• Kancera has started a collaboration with SciLifeLab, which gives Kancera the opportunity to identify new starting points for drug development if necessary, and has transferred a chemical library to Karolinska Institutet (KI) in order to support national development of new drugs and to study disease biology.

• The Board has assessed that the covid-19 pandemic may have a negative effect on the company’s operations in 2020, but that the Board cannot currently assess how large that effect may be. However, up to the date of publication of this report, no significant adverse effect of the covid-19 pandemic has been noted.

CEO statement

Kancera has begun the phase II-study in COVID-19

At the end of September, more than 1,300 people participated in Kancera’s digital market meeting. International experts in infectious and cardiovascular diseases described how hyperinflammation exacerbates the disease at heart attack, but also causes severe complications of COVID-19, and how Kancera’s innovations can contribute to new drugs that can normalize the lives of these seriously ill patients.

In September, we started a phase II study using the drug candidate KAND567 in acute COVID-19 at Capio St Göran’s Hospital. The study, which includes 40 patients, aims to evaluate the treatment effect of KAND567 on lung function and the immune system, both during and after the acute phase of the disease. In collaboration with research groups at SciLifeLab and Linköping University, we are mapping the immunological regulation at the cell and gene level. This survey can give us the opportunity to fine-tune the treatment with KAND567 and at the same time open the door to the treatment of other diseases where hyperinflammation is a risk factor for progression to severe disease.

In November, we also began a collaboration with SciLifeLab and Karolinska Hospital in Stockholm, Solna, to study the link between hyperinflammation and long-term complications after COVID-19. In addition to investigating whether an overactive immune system is causing these complications, the study will also provide information on whether the Fractalkine system plays a role in the course of the disease and thus whether Kancera’s drug candidates could counteract complications after COVID-19. Today, there is no effective treatment for this large group of patients – in Sweden alone, tens of thousands of people are estimated to be affected.

In parallel with the clinical studies, we continue to work to optimize the drug formulation of KAND567. Next, a clinical study will follow to test a new capsule formulation on healthy subjects. The results are expected in December and will be included in the regulatory application for the Phase II study in cardiac patients, to be performed at the University Hospital of Newcastle, UK.

The conversion in our warrant program (TO4) that was finalized in September added an additional total amount of SEK 38.6 million to Kancera. Thus, we have secured financial resources for the two clinical phase II studies of KAND567 in COVID-19 and myocardial infarction, respectively. The capital injection also gives us space to carry out a first regulatory toxicology study of our drug candidate KAND145, an important milestone on the way to the first clinical studies.

With our clinical development projects and collaborations with leading scientific institutions, we continue to work to provide innovative, effective and safe drugs that block hyperinflammation. All with the goal of being able to help the seriously ill to a normal life.

Solna, 20 November 2020
Kancera AB
Thomas Olin, CEO