We are encouraged by the first results from CAN10’s phase I study with healthy volunteers. Due to its similarity with nadunolimab, we believe it should be safe. The main differences with nadunolimab are the different binding profile (it blocks IL-1, IL33 and IL36) and the manipulation of the antibody's FC-region (the “tail”) so it does not interact with the immune system. This latter feature should mean CAN10 is safer than nadunolimab. However, drugs always need to be tested in humans as there may be unexpected interactions etc. So far, no such issues have been seen. Cantargia will test both an intravenous and a subcutaneous version. The intravenous version will be used for the single ascending dose part and the subcutaneous version for the multiple ascending dose part, which will begin in Q3. A subcutaneous version is obviously much more convenient and suitable for autoimmune diseases, such as psoriasis, while the IV version might be better for acute problems including myocarditis (heart inflammation).

In February, Cantargia announced it had new findings relating to neuropathy after treatment with nadunolimab and chemotherapy. It has previously disclosed unusually low numbers of neuropathy of grade 3 or above (only 1% when one would have expected around 17%). Now, it has found it is lower in grades 1-2 as well. It has demonstrated a protective effect from nadunolimab in preclinical models. Cantargia also showed that IL-1 is upregulated after antibody-drug conjugate treatment. Since this is perhaps the hottest area in oncology right now, this feature might be used to better position nadunuolimab in partnering discussions. The new research will be presented at an upcoming conference. We recorded and interview about this (in Swedish).

Also in February, Cantargia received approval from the FDA to start a phase IIb study in pancreatic cancer (PANFOUR) in combination with gemcitabine + nab-paclitaxel in the US and Europe. It will recruit 150 patients in two dose groups (80mg and 200mg, corresponding to 1 mg/kg and 2 mg/kg) and one placebo group. The plan is to begin in mid-2024, although the trial needs funding before this. A cancer trial of this size would likely have a cost per patient in the range of SEK1-2m. A rights issue to fund the trial would thus be very dilutive, but there may be other funding options, such as partner funding or third-party sponsoring (e.g. from PanCan network, as in Precision Promise). It might also be possible to fund the trial in tranches, beginning with the first 60 patients and raising the rest of the money after the interim readout with these patients around Q1 2025. Cantargia expects a topline readout late in 2025, assuming recruitment is quick, which should be the case as there is a large unmet need for new treatments in pancreatic cancer and not too many other clinical programs compete for patients. Importantly, the IL1RAP biomarker will be integrated into the study. The study design is shown in the picture below (n=150).

We expect more data from CIRIFOUR, CAPAFOUR and CESTAFOUR during the year. We also expect biomarker data from lung cancer patients in CANFOUR. Together with the already published results and expected results in breast cancer, the complete data package for nadunolimab will be quite extensive by the end of the year, which should be of help in partnering discussions. If results from the breast cancer study are significant, the main difficulty could be finding a partner with matching commercial focus, i.e. gastrointestinal or breast cancer. Lately, large pharmaceutical companies have mainly been interested in late-stage assets. This means nadunolimab will become more attractive if it is phase III ready, which it should be toward the end of the year. If the phase IIb trial in pancreatic cancer can lead to an accelerated approval, it will also make nadunolimab an attractive target. This potential should be clarified in the interim readout around Q1 2025.

In Q4, a competitor appealed the decision of the European Patent Office to uphold a Cantargia's patent covering IL1RAP-binding antibodies with specific functional properties. The appeal was subsequently withdrawn. This demonstrates there is interest in IL1RAP and there is value in Cantargia's patents. If the competition goes ahead with its projects, it will have to come to an agreement with Cantargia upon launch.

Cantargia had no income, as expected. Costs were in line with the previous quarters of 2023 at SEK-71m. The share issue in Q4 netted SEK55m. The operating cash flow was SEK-66m, with a positive effect from changes in working capital of SEK9m and a negative effect due the exchange rate of SEK-4m, resulting in a new cash position of SEK195m (including short-term investments - the previous cash position as of Q3 was SEK200m). Cantargia has guided that this will cover expensed in 2024, which suggests the quarterly cash burn will have to decline to SEK50m per quarter. This will be achieved since previously open studies with nadunuolimab were terminated in 2023, leaving mainly TRIFOUR and CAN10's phase I as cost drivers in 2024 (excluding PANFOUR). We have assumed Cantargia will raise net SEK175m in 2024.

We have lowered the likelihood of success of phase II in pancreatic cancer to 80% (100%), which we believe makes sense considering a phase III study will have to follow, and the way to an accelerated approval is not yet defined. Furthermore, there might be some more competition after the recent approval of the third new first-line treatment regimen NALIRIFOX, which is similar to FOLFIRINOX. (Cantargia combines nadunolimab with with gemcitabine + nab-paclitaxel, also a first-line treatment option, but it should probably work with NALIRIFOX and FOLFIRINOX as well.) We have increased the probability of success of phase III to 50% (45%). The resulting likelihood of approval of 36% (41%) is still a large number for nadunolimab’s current phase, reflecting the strong biomarker data from CANFOUR. These changes lead to a minor decrease in the undiluted base case (to SEK21). We also assume more dilution due to the lower share price, which results in a fully diluted base case of SEK15 (SEK18).

Our bull case is SEK28 while our bear case is SEK6.