Commissioned Research: Cantargia

Immuno-oncology is a rapidly evolving field and has recently experienced a flurry of partnership deals.

Cantargia has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company.

First part of CANFOUR is nearing completion – Updated 16 May 2018

Decent cost control during Q1

Cantargia reported Q1 EBIT of SEK -15.3m, compared with our estimate of SEK -19.6m and SEK -18.4m in Q1 2017. The better result was attributable to lower R&D spending in the quarter y/y and versus our estimates.

Continued M&A activity in the immuno-oncology space

So far in 2018, there have been multiple M&A deals in the immunooncology field, indicating the potential for attractive product candidates in the space. For example, Eli-Lilly recently announced an all-cash USD 1.6bn acquisition of ARMO BioSciences. Its lead product candidate, AM0010 (pegilodecakin, PEGylated interleukin-10), has shown clinical benefits as a single agent as well as in combination with chemotherapy and checkpoint inhibitors across several tumour types. It is being investigated in a ph III trial in pancreatic cancer, as well as earlier-phase trials in lung cancer and other solid tumours.

Phase 1 results of the CANFOUR study forthcoming  

We expect Cantargia to reveal preliminary ph I results during the summer, followed by immediate progress into ph IIa. We believe the study will yield positive results and a solid safety profile for CAN04, as no serious adverse events have been reported yet. We expect the complete CANFOUR study to be finalised at the end of 2019, which could spark partnership discussions.

Read the full report here.

Innovative antibody with combination potential – Updated 9 May 2018

Promising future for next generation antibodies

Immuno-oncology is a rapidly evolving field and has recently experienced a flurry of partnership deals. In the last five years, the segment accounted for 32 of the 35 multi-billion dollar oncology licensing deals. Cantargia’s lead candidate is the antibody CAN04, which has a dual mechanism of action, as it fights cancer by activating the immune system and by blocking signals that lead to tumour growth. It is currently undergoing a phase I/IIa trial within NSCLC and pancreatic cancer.

External validation for the IL-1 pathway

The scientific case for CAN04 was recently strengthened when Novartis’ extensive CANTOS trial externally validated its IL-1 pathway. The study was primarily designed to investigate cardiovascular events, but an additional clinical benefit was the striking reductions in lung cancer incidence and death of 67% and 77%, respectively. The results were promising enough for Novartis to commission three additional phase III studies. We believe CAN04 could plausibly have a higher potential in cancer, as it exhibits a broader mechanism of action.

Multiple inflection points ahead

We expect Cantargia to reveal preliminary phase I during the summer, followed by an immediate step into phase IIa. We expect the study to be finalised at the end of 2019, which could trigger partnership discussions. A potential partnership could then provide funding to explore interesting fields outside cancer, such as expanding into the treatment of autoimmune/inflammatory diseases. Based on our fundamental DCF approach, and assuming a WACC of between 10%-12%, we derive an equity value per share of SEK 15 to SEK 17.4.

Read the full report here.

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Conflict of interest

Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Issuer review

This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report. Completion date: 16 May 2018, 07:05 CET

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