Interim report third quarter, January 1 – September 30, 2022, Kancera ab (publ.), org.nr. 556806-8851

Third quarter in brief

As well as the period 1 January to 30 September 2022

July – September

Financial summary for the third quarter

• Net sales amounted to SEK 0 million (SEK 0.0 million).
• R&D costs amounted to SEK 8,7 million (10,9 million).
• Operating profit for the third quarter amounted to SEK -10,7 million (-10,9 million).
• Profit after financial items for the third quarter amounted to SEK -10,9 million (-11,0 million).
• Earnings per share, before and after dilution, for the third quarter amounted to SEK -0,19 kr (-0,20 kr).
• Cash flow from operating activities for the third quarter amounted to SEK -14,1 million (-12,0 million).
• Equity as of September 30, 2022 amounted to SEK 84,1 million (133,3 million) or 1,5 kr (2,38 kr) per share.
• The equity / assets ratio as of September 30, 2022 was 89 percent (91 percent).
• Cash and cash equivalents on September 30, 2022 amounted to SEK 68,2 million (118,7 million).

January – September

Financial summary for the entire period

• Net sales amounted to SEK 0 million (SEK 0.0 million).
• R&D costs amounted to SEK 34,0 million (29,7 million).
• Operating profit for the period amounted to SEK -38,0 million (-32,5 million).
• Profit after financial items for the period amounted to SEK -38,5 million (-32,7 million).
• Earnings per share, before and after dilution, for the period amounted to SEK -0,69 kr (-0,59 kr).
• Cash flow from operating activities for the period amounted to SEK -38,3 million (-29,5 million).
• Equity as of September 30, 2022 amounted to SEK 84,1 million (133,3 million) or 1,5 kr (2,38 kr) per share.
• The equity / assets ratio as of September 30, 2022 was 89 percent (91 percent).
• Cash and cash equivalents on September 30, 2022 amounted to SEK 68,2 million (118,7 million).

Significant events during the third quarter

• Kancera reported convincing preclinical results and decision to initiate clinical studies of KAND567 in ovarian cancer
• Kancera reported that the recruitment to the ongoing phase IIa study of KAND567 in myocardial infarction is progressing well and that a decision has been made to enable the recruitment of an additional 10 patients, which should provide a sufficient number of evaluable patients to be able to report the study’s primary objectives.

Significant events after the end of the third quarter

• Kancera announces a decision on a rights issue of approximately SEK 90 million with the aim of increasing efforts and investments in clinical development for the treatment of ovarian cancer as well as the manufacture of additional study drug for upcoming clinical trials. With the support of authorization from the annual general meeting on May 25, 2022, the board has decided on a new issue of units consisting of shares and warrants for a maximum of approximately SEK 90 million with preferential rights for Kancera’s shareholders. In the event of full subscription in the rights issue, the Company will receive approximately SEK 90 million before transaction costs.
• Kancera reports new research results that show that the company’s Fractalkine blocker KAND145 works effectively against B-cell lymphoma by neutralizing cancer-associated monocytes and macrophages, and that the company therefore sees great potential for treatment with KAND145 against B-cell lymphoma such as chronic lymphocytic leukemia (CLL).
• Peter Selin takes over responsibility for the company’s financial reporting with the new title of Executive Vice President Corporate Development and Finance. Former CFO Hans Richter remains as an advisor to the company

CEO statement

Continued strong recruitment of myocardial infarction patients to the FRACTAL study being conducted in England. Decision on and funding of the KANDOVA study – clinical development against ovarian cancer.

New issue increases the pace towards commercialization through partnerships

Despite the current climate in the capital market, we believe that the timing of this capital injection to Kancera is critical for conducting a combined phase Ib/IIa study and demonstrate efficacy of Kancera’s Fractalkine blocker against ovarian cancer in human. Positive clinical results from phase IIa mean that a strong foundation is being laid for entering into a partnership and with this plan we can deliver results within the next 24 months. We have support from leading clinicians in gynecological oncology in the Nordics and feel a strong momentum for the study. It gives us good prerequisites for carrying out the study with the leading university hospitals, which ensures speed and quality. The capital acquisition will thus contribute to Kancera’s project portfolio growing in strength at a faster pace and generating products that both meet significiant medical needs and our business goals.

The FRACTAL study with myocardial infarction patients is progressing according to plan

In the fourth quarter of 2021, Kancera initiated the phase IIa clinical study FRACTAL, which aims to document the safety and cardioprotective effect of the Fractalkine blocker KAND567 in patients who have suffered an infarction in the anterior wall of the heart chamber. The study is run in collaboration with the NHS Foundation at the two prominent university hospitals Freeman Hospital and James Cook Hospital in Great Britain.

The FRACTAL study continues strongly, which allows for increasing the size of the study by 10 patients (70 patients in total) within current financial means and time frames, thereby strengthening the chances of reaching the study’s goals with high quality.

Cardiovascular diseases are the most common cause of premature death in the world today and, amongst these, heart attacks dominate. Annually, approximately 500,000 individuals suffer from a large heart attack in the USA and Europe, with approximately 25% of those affected having a serious complication or death within five years. The need for adequate and effective treatments is therefore extensive.

Convincing research results and decision to start clinical development against ovarian cancer

Kancera’s preclinical research has shown that the company’s Fractalkine blockers KAND567/145 in combination with platinum-based chemotherapy reduces tumor volume, even in very aggressive tumors. The effect can be linked to the inhibition of the cancer cell’s DNA repair and blocking of specific immune cells in the tumor microenvironment that protect the tumor against chemotherapy. Together with clinical experts at the leading university hospitals in the Nordics, Kancera is now working to design the study protocol and prepare the regulatory application to start a combined phase Ib/IIa study in early 2023. Kancera already has funding to conduct the phase Ib study and with the announced rights issue, financing is secured for the subsequent phase IIa..With a combined phase Ib-IIa study, the company estimates that the lead time to phase IIa results is shortened by approximately one year and can be done at a lower total cost.

Kancera strengthens the clinical portfolio with a second-generation Fractalkine blocker, KAND145

Kancera has developed KAND145, which is a second-generation Fractalkine axis blocker with improved product properties that make it particularly suitable for the treatment of diseases where higher doses are required. The required degree of inventiveness has been confirmed by approval of Kancera’s patent protection for KAND145 in the USA, which represents the largest market for pharmaceuticals. We are now starting a phase Ia clinical study which will open the door to a strengthened competitive situation in the area of cancer and other specialist indications.

The third quarter of the year has meant significant progress for Kancera’s clinical development of Fractalkine blockers against inflammatory heart conditions as well as ovarian cancer. Commercialization of the Fractalkine project through partnerships is based on results from these studies that are scheduled to be reported in 2023-2024. Overall, Kancera is in a position with strong clinical projects and funding that enables us to achieve our business goals.

Thomas Olin
Solna, 26 October 2022
Kancera AB

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