Ascelia Pharma AB (publ)

So welcome everyone to the webcast for Aselia Farmer's Q2 report for 2024. So we will be making forward-looking statements. On today's call, we will start with Aselia Farmer highlights and recent key events. This is followed by a portfolio update before moving to financials and priorities ahead. After the presentation, we will open up for questions. At Aselia Farmer, we identify, develop and commercialize novel drugs that address unmet medical needs within rare cancer conditions. We have two drugs in our pipeline. Orviglans has now been advanced to registration phase as we have completed the pivotal phase 3 clinical study. Orviglans has orphaned drug designation from the FDA and is targeting an addressable market opportunity of $800 million annually. Uncrawl is ready to start phase 2 in the treatment of gastric cancer based on encouraging results in phase 1 and a high level of unmet medical need. We are based in Malmö, Sweden and are listed on NASDAQ Stockholm. Q2 was a remarkable quarter where we met the most significant milestone in the history of Aselia Farmer. We started the quarter by announcing completion of the image reading phase by the independent readers of SPACO and were able to narrow the guidance for announcing the results to the first half of May. In April, we also drew the $15 million on the loan facility that we established in February with Formonore, which is now known as Fenier Capital. On May 2nd, we announced strong headline results from SPACO, a highly successful outcome of our registration enabling phase 3 clinical study. A few days after the announcement of the results, we had an investor update to go through the data and the plans ahead. After the close of the second quarter, we announced the rights issue. This will allow our shareholders to participate in the value-cruising milestones ahead of us. The extraordinary general meeting was held yesterday on August 14th and all attending shareholders voted to proceed with the financing as planned. The strong phase 3 data sets all the glands on the path for approval and provides a solid position for entering into an attractive partnership for commercialization. To finance our major value inflexion points ahead, a rights issue has been put in place to raise up to $105 million Swedish kronor, of which $70 million is guaranteed by subscription commitment from board and management as well as external garangers. As mentioned, the rights issue was approved at the extraordinary general meeting yesterday and the timetable is on the right hand side of this slide and has also been communicated in our press releases. A particular note is that the subscription period runs from August 20 to September 3rd and the final outcome will be announced on September 5th. We do this because we are very excited about OrviGlance and here's why. OrviGlance is addressing a well-defined unmet medical need for a subgroup of people living with cancer. This is an $800 million global market opportunity and OrviGlance is the first in class product to target this and has orphan drug designation from the FDA. We have strong data from nine clinical studies and manufacturing has been upscaled to commercial scale. With the strong phase 3 data, OrviGlance has now been advanced to the regulatory phase and in parallel with the NDA activities, we are working to establish commercialization partnerships. We focus on three objectives to create value to shareholders. The first objective is a timely submission and approval of OrviGlance with the optimal label. The key steps underway are completion of the SPACA clinical study report in early Q4, conclusions from the pre-submission meeting with the FDA, which is expected to be in Q1, and submission of the NDA in the middle of next year. The second key objective is to progress OrviGlance for commercialization to patients in need. The key activities are continuing to advance our launch readiness by ensuring manufacturing and supply chain is ready for launch, as well as working with medical experts including key opinion leaders, payers, patient advocacy groups, and other key stakeholders. The other part of this is, as mentioned, entering into commercialization partnerships. The third objective is to develop the potential in the pipeline. We are excited about ONCRAAL and the planned phase 2 study, where we will evaluate it in combination with Launcher. In our pipeline, we also have a second generation OrviGlance program that we would like to advance as well. Our proceeds from the rights issue will be prioritized on OrviGlance activities, and very limited activities are ongoing in our third objective here. We look forward to accelerating those opportunities at a later stage. All in all, there is tremendous potential in the CEDA to create value for shareholders as we move forward. This concludes the highlights and key events, and now we will move into the portfolio. So as we move into the portfolio part of our presentation with OrviGlance, I'd like to hand over to Andreas to continue the presentation. Thank you, Magnus.

So we will start with OrviGlance. OrviGlance is a first in class liver MRI contrast agent, which addresses a very specific unmet medical need, for which there are no good alternatives available today. Treatment of liver cancer and liver metastasis is an important challenge within oncology. Adequate visualization of liver tumors and metastasis is critical for making the right treatment decisions. Contrast enhanced MRI is the gold standard procedure for examination of patients with suspected or known tumors or metastasis. The most used contrast agents are all based on a heavy metal gadolinium. And in patients with severe kidney impairment, use of gadolinium based contrast agents has been associated with an increased risk of a very severe side effect called NSF, nephrogenic systemic fibrosis, which may even have lethal outcomes. Both the European and US regulatory authorities have for that reason issued warnings for the use of gadolinium based contrast agents in this group of patients. And the consequence is that patients with impaired kidney function typically will get an MRI without contrast, which will result in liver images of suboptimal quality with a risk for the, that the cancer is not managed in the best possible way. We envision that OrbeGlance, which is based on manganese, will address this unmet medical need and in the future become an efficacious non-gadolinium contrast agent for liver cancer patients with impaired kidney function. In early May, we announced the highly encouraging headline data from the SPARC-FH3 study. The study clearly demonstrated strong superior enhancement of the visualization of focal level lesions with OrbeGlance compared to unenhanced MRI. The strength of the data is emphasized by the fact that all three independent readers who evaluated the efficacy in the study confirmed superiority of OrbeGlance with p-values for the statistical test lower than 0.001. Furthermore, for the study to be successful, at least two of the three readers needed to observe a statistically significant improvement. And the unanimous reporting of a highly significant effect with acceptable levels of variability made the conclusion that OrbeGlance enhanced MRI is superior to unenhanced MRI very strong. Common adverse events in the study were primarily mild to moderate nausea and in line with the previous phase I and II studies with OrbeGlance. And no serious adverse drug reactions were observed in the study. With SPARC-FH3, we have completed the clinical development. The comprehensive clinical program includes a total of 286 patients and healthy volunteers in nine clinical studies. Taken together, these studies have consistently demonstrated positive efficacy and safety of OrbeGlance. So with the SPARC-FH3 study confirming the superior visualization of focal level lesions in the target population of patients with severe kidney impairment and an adverse event profile consistent with what we observed in the other studies, we are moving ahead with the submission of the marketing approval application for OrbeGlance. Our primary goal now is to secure approval of OrbeGlance with an optimal label in the USA, offering a new choice of patients who can't use gadolinium-based contrast agents for liver imaging today. And we are on track to submit the NDA for OrbeGlance by mid-2025. Following the submission, we anticipate a standard 10-month review process by the FDA. On the way towards the submission, we are looking forward to key milestones such as the delivery of the full study report for SPARC-FH3 in early Q4 this year, and the completion of the pre-NDA meeting with FDA by Q1 2025. The pre-NDA meeting is a critical project in its own right, with the purpose to lay out the groundwork for the NDA submission and review. This ensures that we are on the same page as the FDA and will facilitate a seamless review process when we file the NDA. To wrap it up, with the strong headline data from SPARC-FH3 demonstrating superior imaging with OrbeGlance prepared to unenhouse MRI, we are now advancing OrbeGlance into the registration phase. So with that, I would like to hand over to Julie.

Thank you Andreas. The addressable market for OrbeGlance has a global value of 800 million US dollars annually. The US represents almost half of this. This market opportunity for OrbeGlance addresses the unmet need for well-defined patient populations, cancer patients who need liver imaging, and who also have severely impaired kidney functions. Our strategy for commercialization is to launch through partners. The strategy supports our ambition to secure the optimal balance between future revenues and the investment required. Our focused, ambitious launch plan and the strategy, built on advanced market insights, are in place to support this partnering strategy and to support the launch. As mentioned, the US is the largest commercial opportunity. In the US alone, our real-world data, i.e. data from realized procedures in our target patient populations, show that every year 100,000 abdominal imaging procedures are performed in 50,000 patients that fall under the black box warning for gadolinium contrast agents. This is about 4% of people with cancer undergoing abdominal imaging. The well-defined patient population with a clear unmet need also drives an attractive pricing opportunity. And we have extensive input from market access and pricing experts, with whom we've tested different pricing levels and collected insights on the evidence needed to support access and reimbursement. And we have investigated pricing benchmarks of other innovative diagnostics in the US. 90% of healthcare professionals are concerned with issues related to gadolinium contrast agents, including the severe side effect for our target patient population, nephrogenic systemic fibrosis, or NSF. In fact, 16% of providers have experienced cases of NSF in patients exposed to gadolinium. These insights come from market research with 270 US healthcare professionals and answers from radiologists, nephrologists, and oncologists. And the insights confirm the concerns with gadolinium in clinical practice and the unmet need for overglance. When speaking with in clinical practice, the unmet need for our target patient population is also well recognized. Physicians tell us that patients who need liver imaging and fall under the black box warning for gadolinium today receive MRIs that balance the trade-offs between being either without a contrast agent, i.e. an inferior image quality, or by being, for example, half dose gadolinium. These are around 80% of the patients. And sometimes with a full dose of gadolinium, with the awareness that gadolinium is not recommended for these patients due to the black box warning. In addition, we're both excited and optimistic that almost all physicians tell us that they would like to use overglance when it is available on the market. Beyond the risk of NSF in kidney impaired patients, gadolinium is well known to be retained in the brain and other tissue in all patients. And scrutiny over the possible safety effects is a key concern of regulatory and medical bodies. It's also well known that gadolinium is excreted by the kidneys in urine, and because it's difficult to remove in our syringe systems, it is discharged into the environment and into our drinking water. There's an urgency from regulators and medical bodies to find a viable alternative to the growing use of gadolinium. An alternative that is not associated with these potential safety and environmental concerns for patients and for the environment with gadolinium. In short, the momentum for an alternative to gadolinium is getting better and better. And the industry is responding. Recent developments from the large gadolinium manufacturers are focused on smaller doses of gadolinium and there's even an early stage injectable manganese based agent, which is not liver specific like overglance. We're excited that we have a head start and that overglance is expected to be the first in class to lead a future with less gadolinium and improved outcomes for patients. The go to market strategy for overglance is to launch with commercialization partners. This supports our objectives to secure the optimal balance between future revenues and the investment required. The strategy also allows us to leverage commercial capabilities already established by a partner. The focus of Aselia Farmer is to continue the dialogue with potential partners and reach an attractive agreement for the commercialization of overglance. We will also ensure that overglance and a partner is ready to launch upon approval. In summary, overglance addresses a well defined unmet need and represents an attractive commercial opportunity. Our focus is to ensure that overglance is ready and our efforts to help patients and to launch overglance are already well recognized by experts and partners in the industry. With this, I will hand over to Andreas to talk about Encore.

Thank you Julie. Yes, so let's talk about Encore, the other asset in our development portfolio. Encore is a daily tablet formulation of Irino-Tekin, a well established intravenous chemotherapeutic agent. A daily tablet formulation enables a frequent low dose dosing regimen that could offer potential advantages on both efficacy and safety compared to the infrequent high dose intravenous administration used today. We have completed a phase one study which demonstrated a promising safety profile and an uptake of the drug after oral dosing consistent with the daily dosing concept. We are now planning for taking Encore into clinical phase two. The objective is to generate clinical proof of efficacy data in metastatic gastric cancer in combination with Lonserv, another oral cancer treatment approved for gastric cancer. Animal data has demonstrated a synergistic effect of Irino-Tekin when combined with Lonserv, which makes this combination very interesting. The planned phase two study is designed to study Encore plus Lonserv against Lonserv alone. The study will randomise approximately 100 patients and involves a clinical collaboration with Taiho Oncology, the developer and marketeer of Lonserv, who will provide clinical advice and Lonserv for the study. Irino-Tekin is a well established chemotherapy with recognised antitumor effect in solid tumours. The strategy is to start Encore development in gastric cancer, which is today a three billion dollar market. For these patients there is a high medical need for improving outcomes and there is an opportunity for an orphan indication. We also see opportunities for developing Encore in other solid tumour indications, where a daily dosing tablet formulation can demonstrate an attractive efficacy and safety profile. Irino-Tekin as an IV formulation is already approved in colorectal and pancreatic cancer. And in addition, Irino-Tekin is clinically demonstrated and recognised in guidelines for other cancer types. We are assessing these opportunities as part of our ongoing strategy planning for Encore. So with that, back to Julie again.

Thank you, Andreas. I will now move to the update on our financials and summary of priorities ahead. As Manus mentioned, in July we announced a rights issue financing. With this rights issue, we aim to raise up to 105 million Swedish kronor before cost, of which a minimum of 70 million has been secured through investment commitments and guarantees. The rights issue is in units, where one unit consists of three shares and one warrant. The price of one unit is set to 5.07 Swedish kronor. The financing secures resources for completing our NDA submission to the FDA mid-next year, including the key milestones on the way, such as the conclusions from a pre-submission meeting in Q1 2025. The proceeds will also be used to obtain a partnering agreement for the commercialisation of Overglens and to secure that Overglens is ready for launch by approval. As part of the terms, the proceeds will also finance an amortization of 7.5 million Swedish kronor of the existing convertible loan with Fenja previously for MoNor. In Q2, our operating result was a loss, i.e. cost, of 11.3 million kronor. This is a slightly decreased loss, i.e. less cost, compared to Q1 2024, driven by the completion of the Sparkly re-evaluation. At the end of June 2024, we had 30 million kronor in the bank. This includes the fully drawn loan and convertible financing from Fenja. With the minimum proceeds from the ongoing rights issue financing, we have a runway beyond the NDA submission mid-2025. To wrap up, we have substantial value creation opportunities ahead for Zylja Farmer and for both of our orphan oncology assets in development. With Overglens, we are bringing to market a -in-class diagnostic drug addressing an 800 million dollar market for patients with a high-onlet need. We focus on three objectives to create value to shareholders. The first objective is a timely submission and approval of Overglens with the optimal label. The key next steps on the way are the completion of the Sparkle clinical study report in early Q4 this year, conclusions from the pre-submission meeting with the FDA in Q1 next year, and the submission in the middle of next year 2025. The second objective is to progress Overglens for commercialization for patients in need by entering into a partnering agreement for the launch and by securing that a partner is ready for a launch. While our current focus is on bringing Overglens to market, we also see important value creation opportunities in our other pipeline products. We are excited about Oncoral and the Plan Phase 2 study where we will evaluate it in combination with Lumsurf. In our pipeline, we also have a second generation Overglens program that we are all ready to advance. Very limited activities are ongoing for these assets at the moment and we look forward to accelerating this once resources and financing allows. All in all, the strong headline results from Sparkle mark the completion of clinical development for Overglens and we enforce our confidence in the regulatory and commercial path ahead for Overglens. We look very much forward to executing on these opportunities ahead for Overglens and for Aselia Pharma in 2024 and beyond. Thank you. I will give it back to the moderator for questions.

As a reminder, if you wish to ask a question, please do so. If you have any questions, please dial the pound key 5 on your telephone keypad.

If there are no questions from the phone, we have a couple of questions in the web chat format.

We will start with the questions here. The first question is, please provide more details regarding the critical steps towards submissions. Any risk and delays relating to the clinical protocol or delays and questions slash changes as a result of the pre-submission meeting.

Is that for me? Yeah. Thank you. The critical steps are, as we have said, we need to have the full report from the pivoted study. That forms the basis for the continued conversation with the FDA in the pre-submission meeting. The pre-submission meeting is important, as I mentioned, to agree with the FDA on the content of the application and the anticipated and proposed label for the drug. Of course, FDA can come with some feedback in that meeting. That's the purpose of the meeting, so that we can adjust. But with the time we have, we see the risk for any significant delays as low. But I think that is the most important step on the way where we can potentially foresee a change of the plan. We have, of course, had a conversation with the FDA during their development. We know quite well what they have said before and we have adhered to their recommendations from before. That would reduce the risk of any surprising feedback at a later stage.

Thank you Andreas. Another question is, and there are several along these lines, what is the status of the partnering discussions?

Yeah.

Do you want to give an update on that?

The partnering discussions are ongoing. With the Phase 3 results, we now have also reduced the risk further. That helps us in these dialogues. And of course, the rights issue of financing, as we have communicated, is also important to be in a strong position to negotiate a partnering agreement. So that's progressing.

And of course, if and when things partnership materialize, we will announce immediately. Another question for you Andreas. It's the issue with intra-reader variability during the first readout process last year. Is that a potential issue in discussions with partners or in the FDA process? But maybe you can take the FDA question and then... Yeah,

I think we had a very well-founded solid rationale for doing the new re-evaluation because the data quality was not up to standards. So I would say no, generally speaking, this is not an issue going forward in the FDA process. As I said, we have a good argument and rationale for doing the re-evaluation.

And from a partner perspective, it's the same answer. I think it's also important to note that these intra-reader variability issues are not uncommon in the industry. So anyone working with diagnostic drugs where you have readers of this type are familiar with this type of issues, unfortunately. So we're not the first ones to experience this. And the industry, there are a lot of learnings that have also helped us in this process. So we don't see that as an issue in the partnering discussions.

We have another question here, which says, with the share price decline of 92% in three years, how are you working to regain the confidence from your shareholders? And you would say we fully understand the frustration and we also share the pain. The board and employees have also invested their after-tax money into buying shares in Asilio throughout the years. We have had the delays. We have had challenges due to COVID and other reasons. We have now overcome those challenges. We have completed the study. We have gotten very, very successful -to-face data. We also noted that the share price actually fell after these highly successful -to-face data. And so it's difficult for us to predict how the market reacts. What we have focused on is ensuring we get strong operational and strategic results. And they have been defined as moving forward in the NDA process and securing commercialization partnerships. We think both of those activities are major value drivers for Asilio. And that's what we are focusing on. But we are painfully aware of the share price developments. But our focus is on building the company and meeting our strategic objectives to drive value for all shareholders. So a question here if the management will participate in the rights issue. What was put out in the press release was that there are subscription commitments from management and board members. So yes, management will participate in the rights issue. There will be details in the prospectus which is going to be published very soon. Within the next few days. So another question here. What sort of part of deal structures is to be expected? At this very late stage it could be realistic to expect a relatively high level of royalties and a more modest level of upfront milestones. Possibly also a royalty step up relating to sales volume.

Yes, a typical deal structure in the industry we agree is a combination of an upfront payment and royalties in the future typically linked to different milestones. Perhaps also linked to the sales and how sales progress. But we are not in a position to comment on the detail of the balance between the two. So our interest is to have the best possible agreement that will serve the affiliate and of course create value for shareholders.

And a key reason for doing this financing is to ensure that we have a balance sheet that allows us to make investments into the ADA process. So we continue to create value in the asset as well as having a balance sheet that allows us to have more negotiation leverage towards the potential partnership. We say opportunities that we are considering.

So

there is a question on when we expect partnering news. I think that is difficult to say. We cannot provide a timeline. As Julie said earlier we are in the process. We are having dialogues and then when and how that ends up is always difficult to tell. I think those were the questions. So thank you everyone. Thank you. So thank you for joining our Q2 call. We are super excited about the opportunity ahead with the strong data from Sparkle Phase 3. Moving forward into the NDA submission process and finding one or more partners for all the GLAMs. I think there are very exciting activities ahead of us. Thank you for joining and thank you for the questions and we look forward to updating you on our further progress later.