Cantargia Q4 2022: Progress in Triple-Negative Breast Cancer
Research Update
2023-02-24
07:00
In the fourth quarter, Cantargia continued with its ongoing programs and strategy. The share price reached a historical low but has begun to recuperate since early January 2023. In February, after the end of Q4, solid efficacy results were presented from the phase I part of TRIFOUR in triple-negative breast cancer.
RR
Richard Ramanius
Contents
Investment thesis
Quality Rating
Discussion of the TRIFOUR results
Precision Promise
New treatment in PDAC - NALIRIFOX
Upcoming triggers
Financial results
Valuation
Financials
Rating definitions
The team
Download article
On February 23, the first efficacy results from TRIFOUR were presented. Out of twelve patients evaluated, one had a complete response and five a partial response for an objective response rate (ORR) of 50%. Furthermore, four patients had stable disease, for a disease control rate of 83%. The historical control referred to by CAntargia had an ORR of 30%. The safety profile was similar to previous studies. A randomized phase II study will now follow. The results are very positive considering triple-negative breast cancer is a type that is more aggressive and more difficult to treat than other breast cancers.
Preclinical toxicity results for CAN10, Cantargia’s antibody for inflammatory diseases, were published in Q4. It was dosed at up to 50mg/kg intravenously for six weeks without negative effects. This is a considerably higher dose than what Cantargia plans to use clinically. 5 mg/kg of CAN injected subcutaneously was also tolerated. A phase I study in healthy volunteers will follow, potentially in H1 2023.
We make some changes to our valuation, including lowering the likelihood of approval (LOA) of CIRIFOUR to 12%(14%) and of CAPAFOUR to 12% (15%), while we raise the LOA of TRIFOUR to 14% (8%) and CESTAFOUR to 9% (8%). Our new Base Case is SEK 26 (24).
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Revenues | 0.00 | 0.00 | 0.00 | 0.00 | 925.0 |
Revenue Growth | nm. | nm. | nm. | nm. | nm. |
EBITDA | -173.9 | -370.3 | -369.6 | -297.0 | 703.5 |
EBIT | -170.7 | -370.3 | -369.6 | -297.0 | 703.5 |
EBIT Margin | nm. | nm. | nm. | nm. | 76.1% |
Net Income | -169.8 | -366.5 | -359.9 | -297.0 | 703.5 |
EV/Revenue | nm. | nm. | nm. | nm. | 0.2 |
EV/EBIT | -26.0 | -2.6 | -0.3 | -3.0 | 0.2 |
Case
Cantargia is approaching a stage when finding a partner is logical
Evidence
Cantargia has demonstrated excellent results in CANFOUR in pancreatic and lung cancer
Challenge
The main risks for Cantargia are negative clinical outcomes...
Challenge
Additional funding may be needed
Valuation
Nadunolimab constitutes most of the value
People: 3
Business: 3
Financials: 0
Fifteen patients have been recruited for TRIFOUR. Patients are treated with nadunolimab and gemcitabine plus carboplatin, which are chemotherapies. Twelve were available for an efficacy readout with the results mentioned above. Several doses were tested. The 2.5mg/kg dose will be used for the phase II part. The waterfall plot of change in tumour size shown below is interesting. It is quite similar to the one for nadunolimab in pancreatic cancer shown further below, which has a larger number of patients (73). Cantargia did in fact choose these cancers based on similar criteria, among other things a high expression of IL1RAP and an inflamed and immunosuppressed tumour microenvironment.
The effects in terms of tumour shrinking are similar. Both suggest that the addition of nadunolimab to the base chemotherapy treatments led to an increased effect. Waterfall plots with chemotherapies alone in these indications are typically shifted more to the left.
Although early, the new results from TRIFOUR taken together with those in pancreatic and lung cancer suggest that nadunolimab may have synergies with certain chemotherapies across various cancer types. The results from CAPAFOUR (pancreatic cancer) and CESTAFOUR (various cancers), which also combine nadunolimab with chemotherapies, will further contribute to our understanding and add to the overall puzzle.
The historical control with an ORR of 30% that Cantargia refers to in its press release is summarized in the paper “Phase III study of iniparib plus gemcitabine and carboplatin versus gemcitabine and carboplatin in patients with metastatic triple-negative breast cancer”. Iniparib did not meet the prespecified criteria for progression-free survival and overall survival in this study. Overall survival in the gemcitabine plus carboplatin arm was 11.1 months while progression-free survival was 4.1 months. These numbers are comparable to those in metastatic pancreatic cancer treated with chemotherapy, which might explain the similarity in the waterfall diagrams. These are relevant benchmarks for the full phase I readout of TRIFOUR expected in H2 2023.
In the conference call, the changing treatment landscape of triple-negative breast cancer was discussed. Among other things, checkpoint inhibitors, PARP inhibitors and a antibody-drug conjugate are now approved. The treatment paradigm might change in the future when nadunolimab might reach the market. However, when one considers that only a minority of patients respond to all of these recently approved therapies, it seems clear to us that chemotherapy treatment will most likely remain in the future, even if used as treatment in later lines, though its market share in terms of volume might potentially decrease.
There has been some delay in the planned Precision Promise trial because of new requirements under Project Optimus, which relates to dose optimization in pivotal trials. Cantargia is conducting discussions together with its partner PanCAN in order to resolve all details before submitting the approval to start the trial. It will likely result in the trial beginning with two dose levels, one of which will be selected after a certain period. The trial will likely start in H2 rather than H1 due to this, assuming that the dosing issue can be resolved through a modification of the trial design.
Results from the pivotal trial NAPOLI-3 were presented at ASCO in January 2023. It is a pivotal study that compared the new regimen NALIRIFOX (liposomal irinotecan + 5-fluorouracil/leucovorin + oxaliplatin) against the current standard treatment nab-paclitaxel + gemcitabine in metastatic pancreatic cancer (PDAC). The NALIRIFOX regimen showed superior efficacy, with a median overall survival of 11.1 months versus 9.2 months in the control group. Progression-free survival and objective response rates were also improved. The safety profile of the two treatments was described as similar in severity but different in symptoms. NALIRIFOX had more diarrhoea, nausea and hypokalaemia while nab-paclitaxel + gemcitabine had worse anaemia and neutropenia. In our opinion, the profile of NALIRIFOX seems worse for the patient. Ipsen will file for approval of the treatment with the FDA. Liposomal irinotecan (ONYVIDE) is already approved in a different combination as a second-line treatment in PDAC. While NALIRIFOX might become a new first-line treatment besides nab-paclitaxel + gemcitabine and FOLFIRINOX impacting sales of nab-paclitaxel + gemcitabine, it remains to be seen by how much, assuming approval. However, we believe that NALIRIFOX would rather compete with FOLFIRINOX than with paclitaxel + gemcitabine.
It is enlightening to compare the results with those from CANFOUR. Nadunolimab (CAN04) + nab-paclitaxel + gemcitabine has demonstrated a median overall survival of 12.7 months. This is a higher figure than that achieved with NALIRIFOX in NAPOLI-3. As a further comparison, nab-paclitaxel + gemcitabine, in its pivotal trial, demonstrated a median overall survival of 8.5 months. As always when making these comparisons, one needs to consider that patient characteristics in each trial may differ, so there will be some error if one uses them as placebo comparison groups.
Cantargia has now decided not do interim readouts with CAPAFOUR and CESTAFOUR. It will wait for the data to mature and then present full read-outs. Whether this occurs towards the middle of 2023 or towards autumn is too early to tell. Other triggers include:
· CANFOUR: new update with more long-term data from both the pancreatic and lung-cancer arm, expected in Q2, together with new biomarker data.
· CIRIFOUR – more complete results from the phase I trial in combination with pembrolizumab presented at ASCO, expected in H1.
· TRIFOUR – full readout from phase I in H2; interim readout from the phase IIa part of the study in Q4 2022.
Operating expenses in the fourth quarter increased sequentially to SEK91m, up from SEK74m in the third quarter. However, they have decreased compared to Q4 last year. The change in cash was SEK-69m (due to a positive effect from changes in working capital, which should reverse in the next quarter) and the cash position amounted to SEK 427m at the end of Q4. It will finance Cantargia until mid-2024.
We have made some adjustments to our valuation assumptions. We have reduced the likelihood of approval of nadunolimab in combination with PD-1 inhibitors to 12% (14%) due to the delay and prioritisation of other indications. Similarly, we have decreased the LOA of nadunolimab in CAPAFOUR to 11% (15%) due to the de-prioritisation of the program. We increased the LOA of TRIFOUR to 14% (8%) and of CESTAFOUR to 9% (8%). We have slightly increased the peak sales of CAN10 to USD700m (USD600m). We have made some adjustments to the timing of milestone payments and increased the USD/SEK exchange rate to 10 (9.9). Combined, these changes render a new Base Case of SEK 26 (24). Our Bear Case is SEK11 while our Bull Case is SEK43.
Income statement | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Revenues | 0.00 | 0.00 | 0.00 | 0.00 | 925.0 |
Cost of Revenue | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Operating Expenses | 173.9 | 370.3 | 369.6 | 297.0 | 221.5 |
EBITDA | -173.9 | -370.3 | -369.6 | -297.0 | 703.5 |
Depreciation | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Amortizations | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
EBIT | -170.7 | -370.3 | -369.6 | -297.0 | 703.5 |
Shares in Associates | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Interest Expenses | 0.46 | 0.00 | 1.5 | 0.00 | 0.00 |
Net Financial Items | 0.86 | 3.8 | 9.7 | 0.00 | 0.00 |
EBT | -169.8 | -366.5 | -359.9 | -297.0 | 703.5 |
Income Tax Expenses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Net Income | -169.8 | -366.5 | -359.9 | -297.0 | 703.5 |
Balance sheet | |||||
Assets | |||||
Non-current assets | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Property, Plant and Equipment (Net) | 5.3 | 3.1 | 10.2 | 10.2 | 10.2 |
Goodwill | 0.02 | 0.00 | 0.00 | -0.04 | 0.04 |
Intangible Assets | 7.4 | 6.5 | 6.5 | 6.5 | 6.5 |
Right-of-Use Assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Other Non-Current Assets | 0.00 | 0.00 | 0.00 | 17.4 | 0.00 |
Total Non-Current Assets | 12.6 | 9.6 | 16.7 | 34.0 | 16.7 |
Current assets | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Inventories | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Accounts Receivable | 2.7 | 4.6 | 2.5 | 0.00 | 74.0 |
Other Current Assets | 6.8 | 26.7 | 32.7 | 0.00 | 18.5 |
Cash Equivalents | 903.4 | 559.4 | 417.3 | 116.5 | 857.0 |
Total Current Assets | 912.9 | 590.7 | 452.5 | 116.5 | 949.5 |
Total Assets | 925.5 | 600.2 | 469.1 | 150.5 | 966.2 |
Equity and Liabilities | |||||
Equity | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Non Controlling Interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Shareholder's Equity | 891.9 | 532.7 | 396.8 | 99.8 | 803.3 |
Non-current liabilities | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Long Term Debt | 3.1 | 0.00 | 0.00 | 0.00 | 0.00 |
Long Term Lease Liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Other Non-Current Lease Liabilities | 0.00 | 0.89 | -2.0 | -2.0 | -2.0 |
Total Non-Current Liabilities | 3.1 | 0.89 | -2.0 | -2.0 | -2.0 |
Current liabilities | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Short Term Debt | 0.00 | 0.57 | 0.57 | 0.57 | 0.57 |
Short Term Lease Liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.04 |
Accounts Payable | 10.7 | 34.5 | 37.9 | 37.9 | 111.0 |
Other Current Liabilities | 19.8 | 31.5 | 45.1 | 23.6 | 62.6 |
Total Current Liabilities | 30.5 | 66.6 | 83.6 | 62.0 | 174.2 |
Total Liabilities and Equity | 925.5 | 600.2 | 478.4 | 159.8 | 975.5 |
Cash flow | |||||
SEKm | 2020 | 2021 | 2022 | 2023e | 2024e |
Operating Cash Flow | -156.4 | -346.4 | -358.9 | -300.8 | 740.5 |
Investing Cash Flow | -9.0 | -0.31 | -7.1 | 0.00 | 0.00 |
Financing Cash Flow | 918.5 | 0.00 | 223.9 | 0.00 | 0.00 |
Disclosures and disclaimers
Contents
Investment thesis
Quality Rating
Discussion of the TRIFOUR results
Precision Promise
New treatment in PDAC - NALIRIFOX
Upcoming triggers
Financial results
Valuation
Financials
Rating definitions
The team
Download article