INTERIM REPORT FOR KANCERA  AB (publ) 1st January – 31st March 2018

PERIOD 1 JAN – 31 MARCH 2018 IN BRIEF

• Net sales amounted to SEK 0 million (0 million)

• R & D expenses amounted to SEK 11.8 million (8.3 M)

• Operating profit amounted to SEK -12.5 million (-9.7 million)

• Profit after financial items amounted to SEK -12.5 million (-9.7 million)

• Earnings per share amounted to SEK -0.08 (-0.08)

• Cash flow from operating activities amounted to SEK -9.8 million (-9.4 million)

• Shareholders’ equity amounted to SEK 26.3 million (SEK 50.0 million as of March 31, 2018, or SEK 0.17 (0.38) per share

• The equity ratio at 31st March 2018 was 65 percent (78 percent). Liquid funds amounted to SEK 18.0 million (48.3 million) on March 31, 2018.

SIGNIFICANT EVENTS DURING THE FIRST QUARTER

• Kancera AB reported results from a Phase I study in healthy subjects with the immunoregulating drug candidate KAND567. The study showed that KAND567 is safe and well tolerated up to plasma concentrations that were five to ten times higher than the calculated effective level for therapeutic effect in humans. Upon further increase of the dose, a reversible increase in markers for liver effect was noted. The results also showed that KAND567 blocks the fractalkine system in humans.

• Kancera reported results from three preclinical disease models showing cardiovascular protection properties of KAND567

• The company announced that it is now evaluating the conditions for continued clinical development of KAND567 against cancer and inflammatory heart and cardiovascular damage, e.g. in connection with infarction.

SIGNIFICANT EVENTS AFTER THE END OF THE FIRST QUARTER

• Kancera AB has announced that the scientific article “First-in-class oral small molecule inhibitor of the tyrosine kinase ROR1 (KAN0439834) induced significant apoptosis of chronic lymphocytic leukemia cells” has been published in the journal Leukemia (Nature Publications)

• Kancera has reported that the company’s HDAC6 inhibitor and ROR inhibitor are effectively absorbed in the brain and bone marrow, which provides the opportunity to develop these substances against new clinical applications, and that the European Patent Office has given Kancera’s HDAC6 inhibitors the opportunity for rapid approval process due to the level of inventiveness.

• Kancera AB has announced that the Extraordinary General Meeting of April 20th decided in accordance with the Board’s proposal for a new share issue with preferential rights for the shareholders, which, on full subscription, adds approximately SEK 60 million to Kancera before issue costs. In addition, the Board has an option to increase the issue amount by no more than 15 MSEK. Subscription period is 4th to 22th of May. • •Kancera’s Nomination Committee proposed to the Annual General Meeting on May 30th, 2018 to elect Anders Gabrielsen as new Board member.

STATEMENT FROM THE CEO

During the start of 2018, good project results have been reported and funding has been completed that provides us with the opportunity to take further steps towards the goal of developing effective and safe drugs for cancer and inflammatory diseases. The clinical Phase I study of our immunoassay drug candidate KAND567 showed that it is well tolerated in doses up to 5-10 times the estimated effective dose and, as desired, blocks the fractalkine system.

The next step in this work is the preparation of a Phase IIa study of KAND567 directed against either inflammatory processes in the cardiovascular system or cancer. In the field of inflammation, evidence from preclinical disease models shows that KAND567 reduces cardiac damage after infarction, which may reduce the risk of chronic heart disease. In lymphoma (blood cancer), several research groups have reported that the fractalkine system is activated and correlated to rapid disease development. For this reason we started a clinical biomarker study in May to evaluate whether it is possible to identify certain groups of lymphoma patients with greater potential to benefit from KAND567 treatment.

As part of the preparation for the continued clinical development program, prototypes of KAND567 products have been developed for both acute and chronic treatment. In addition, we reported in May that a new patent application was submitted with the aim of further increasing product protection for KAND567.

Within the ROR project, our most important results have been published in the magazine “Leukemia”, which is one of the three highest ranked journals in the field of blood cancer. Furthermore, we have shown that the ROR inhibitor KAN0441571 effectively reaches the bone marrow where many blood cancers originate.

During 2018, we have also shown that the HDAC6 inhibitor KAN0440262 penetrates the blood-brain barrier and then remains in the brain, at significantly higher concentrations and for longer periods than in the blood. This combination of properties of KAN0440262 allows us to test the substance against multiple disorders that have their origin in the brain, such as brain tumor (glioblastoma) and neuropathic pain.

With the capital injection from the recently completed share issue, we can now take Kancera’s next major step in the development of drugs against inflammation-driven diseases which arise as complications after myocardial infarction and cancer. Next, we are fully committed to preparing and conducting the clinical Phase IIa study of the Fractalkine project’s drug candidate KAND567.

Thomas Olin
CEO Kancera AB (publ)