Ascelia Pharma: Back on the track
Ascelia Pharma: Back on the track.
Ascelia Pharma had an eventful third quarter 2023 as the company announced the requirement in early August to re-evaluate the imaging data collected to finalize the pivotal phase 3 SPARKLE study. The set back came as a big negative surprise for the management as well as investors who responded with a share price drop of more than 60 percent.
The company gave an update mid-September and with the release of its 3rd quarter report on Wednesday and the participation of CEO Magnus Corfitzen in yesterdays event hosted by HCA, it is time to take stock of the situation in Ascelia Pharma.
The report highlighted three key points:
Re-evaluation of SPARKLE data: The re-evaluation requires Ascelia Pharma to appoint and train three new radiologists to assess the already collected imaging data in the SPARKLE study, as two out of the three previously appointed radiologists had shown too high inter-reader variability. This process to appoint and train radiologists is on track as stated by CEO Magnus Corfitzen at the HCA event.
Also, the CEO remain confident that the SPARKLE study will confirm that Orviglance is at least as effective as the gadolinium-based contrast agents that are the only ones currently available in the market to conduct MRI imaging to detect liver cancer. At the event CEO Magnus Corfitzen once again highlighted that this optimism for Orviglance to potentially be approved to address a global market of USD 800 million on an annual basis was based on the fact that eight different studies have so far documented the efficacy, safety and convenience of using Orviglance, leaving only the final ninth SPARKLE study to confirm this.
Cost cutting measures: Looking at the numbers, the 3rd Quarter report showed that the company as expected continues to burn cash following an operating result of SEK -21,4 million (-29,6 million in Q222) comprised of SG&A costs of SEK 7,4 million and R&D costs of SEK 14 million. Importantly, the cash position by September 30th was SEK 39 million, and as Ascelia Pharma has taken drastic cost cutting measures the company expects cost levels to be significantly lower going forward.
Sufficient funding: Based on the lower cost level, CEO Magnus Corfitzen expects the company will have sufficient funding to complete the re-evaluation of the SPARKLE data expected by May 2024 and take the company into (but not through) the 3rd. quarter of 2024. Importantly, the company has also revised its commercialization strategy in US as it now includes the consideration of using a partner instead of Ascelia Pharma building its own sales organization. This could have positive financial implications as it potentially reduces the urgency of raising capital for Ascelia Pharma.
To summarize, although the requirement to re-evaluate the SPARKLE data was a huge disappointment, based on the 3rd. quarter report and comments from CEO Magnus Corfitzen at the HCA event, Ascelia Pharma seem to be back on track suggesting that investors are most likely merely looking at a delay of an expected a successfully completed SPARKLE study. If this is indeed the case, the latest HCA One-Pager on Ascelia Pharma suggest that the share price drop is a huge overreaction when measured against the potential value of Orviglance based on company guided assumptions. The One-Pager suggests that the market currently implicitly assess there is less than 10 percent likelihood Orviglance will be successfully approved and launched which is far below comparable approval rates of diagnostic products in the industry.
Listen to the interview here: Ascelia Pharma Q3 (in Danish)
Disclaimer: HC Andersen Capital receives payment from Ascelia Pharma for a Digital IR/Corporate Visibility subscription agreement. /Claus Thestrup 4:40 PM 10-11-2023.
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Ascelia Pharma
Ascelia Pharma is a Swedish biotech company with a focus on orphan oncology treatments. They develop and commercialize novel drugs that address unmet medical needs and have a clear development and market pathway. Currently, Ascelia pharma has two pipeline products, namely Orviglance and Oncoral. Orviglance is a novel contrast agent for MR-Imaging developed to improve the detecting and visualization of focal liver lesions (Including liver metastases – and primary tumors) in patients with reduced kidney function. Oncoral is a daily tablet with an established potent anti-tumor effect – even in difficult to treat cancers with the potential to offer better patient outcomes with improved safety following a daily tablet treatment compared to intravenous high-dose infusions at the hospital. Ascelia Pharma is listed on Nasdaq Small Cap Stockholm with ticker ACE.
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