Interim report for fourth quarter 2021, 1 January – 31 December 2021 Kancera AB (publ.), org.nr. 556806-8851

The year in brief

October – December
Financial summary for the fourth quarter

• Net sales amounted to SEK 0 million (0,0 million).
• R&D costs amounted to SEK 12,9 million (11,2 million).
• Operating profit for the fourth quarter amounted to SEK -12,7 million (-12,9 million).
• Profit after financial items for the fourth quarter amounted to SEK -13,0 million (-12,7 million).
• Earnings per share for the fourth quarter, before and after dilution, amounted to -0,23 kr (-0,29 kr).
• Cash flow from operating activities for the fourth quarter amounted to SEK -14,6 million (-11,1 million).
• Equity on 31 December 2021 amounted to SEK 122,7 million (72,3 million) or 2,19 kr (1,52 kr) per share.
• The equity/assets ratio on 31 December 2021 amounted to 92 percent (87 percent).
• Cash and cash equivalents on 31 December 2021 amounted to SEK 106,5 million (55,0 million).

January – December
Financial summary for the entire period

• Net sales amounted to SEK 0 million (0,1 million).
• R&D costs amounted to SEK 42,6 million (39,3 million).
• Operating profit for the period amounted to SEK -45,3 million (-39,5 million).
• Profit after financial items for the period amounted to SEK -45,7 million (-40,5 million).
• Earnings per share for the period, before and after dilution, amounted to -0,82 kr (-1,12 kr).
• Cash flow from operating activities for the period amounted to till SEK -44,1 million (-39,0 million).
• Equity on 31 December 2021 amounted to SEK 122,7 million (72,3 million) or 2,19 kr (1,52 kr) per share.
• The equity/assets ratio on 31 December 2021 amounted to 92 percent (87 percent).
• Cash and cash equivalents on 31 December 2021 amounted to SEK 106,5 million (55,0 million).
• The Board intends to propose to the Annual General Meeting that no dividend be paid to shareholders for the period.
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Significant events during the fourth quarter

• Kancera announced that the Phase IIa clinical trial of KAND567 in patients with myocardial infarction has started.
• Kancera announced start of toxicological studies of KAND145.
• Warrant 5 (TO5) provided the company with approximately SEK 3.6 million.
• Kancera reported top-line results from the Phase IIa clinical trial with KAND567 in patients with acute COVID-19. The results show favorable safety and "proof of principle" for the desired pharmacological effect on inflammatory cells.
• Kancera appointed Peter Selin Executive Vice President Corporate Development and Vice President.

Significant events after the end of the fourth quarter

• Kancera has announced that the recruitment of heart patients at Freeman Hospital is going well and notes that all patients are expected to be included in the study during 2022.
• Kancera has announced that good results from 14-day toxicology mean that clinic-preparatory 28-day studies will start as planned during first quarter 2022.
• Kancera has presented a strategy for the most time-efficient start of clinical cancer studies, in which a study with the drug candidate KAND567 begins, and after which a transfer to KAND145 takes place.

Significant events during the period January to December 2021

• Kancera carried out a merger of shares in accordance with a resolution from the 2020 Annual General Meeting. The merger means that ten (10) shares are combined into one (1) share.
• Kancera reported preclinical research results, which show that the company's Fractalkine blockers have the potential to disrupt cancer cells' resistance to chemotherapy and thereby significantly improve the treatment of advanced cancer such as ovarian cancer.
• With the support of authorization from the Annual General Meeting of Kancera on May 28, 2020, the Board carried out a private placement, and a rights issue on the same terms, which provided Kancera with a total of SEK 87.4 million after deduction of issue costs of SEK 13.9 million.
• Kancera announced that the Annual General Meeting elected Petter Brodin as a new Board member as well as re-electing former Board members and Chairman of the Board.
• Kancera announced that the Phase IIa clinical trial of KAND567 in patients with myocardial infarction has started.
• Kancera announced the start of pre-clinical toxicological studies of KAND145.
• Kancera reported top-line results from the Phase IIa clinical trial with KAND567 in patients with acute COVID-19. The results show favorable safety and "proof of principle" for the desired pharmacological effect on inflammatory cells.
• Kancera appointed Peter Selin Executive Vice President Corporate Development and Vice President.

CEO statement

Start of cardiac study and new steps towards
clinical study against ovarian cancer

The FRACTAL study of KAND567 in patients with myocardial infarction: First patients recruited
Kancera is developing a new class of small molecule drug candidates for inflammation and cancer. During the year we made significant progress in both the development program against inflammation-driven injuries in heart attacks and in the program aimed at cancer. The recruitment of patients for the Phase IIa clinical trial of KAND567 in myocardial infarction patients is proceeding according to plan. With the current recruitment rate of four to six patients per month, we look to be able to complete patient recruitment during the fourth quarter of 2022. The study is conducted at Freeman Hospital and James Cook Hospital in the UK and is focused on evaluating the safety profile and cardioprotective effect of KAND567 in a total of 60 patients with a major myocardial infarction in the anterior wall of the heart muscle (STEMI). The drug candidate is administered for three days and patients are followed up 90 days after the first dose. During the study, markers for heart protection effect, inflammation and general health are evaluated. Top-line data are expected four to six months after the last patient is treated, around the turn of the year 2023.

COVID-19: Results from Phase II clinical study of KAND567
Medical expertise pointed out early in the pandemic that hyper-inflammation could be a major contributor to the severe symptoms that afflicted some patients. This motivated Kancera to carry out a less targeted phase IIa study of KAND567 in COVID-19 with the primary goal to show safety and secondary goals to show lung protective effect and pharmacological effect on the immune system. We reached the primary objective of the study with results showing that the chosen dosage resulted in a desired concentration of KAND567 in the blood and that this dose was well tolerated in this population of patients with an acute and severe inflammatory onset. A lung protection effect could not be evaluated, partly due to the limited size of the study, while the extensive molecular profiling shows that KAND567 had a pharmacological effect on the immune system. Taken together, these results strengthen the continued development of KAND567 against harmful inflammation.

Several established and widely used anti-inflammatory drugs have already been shown to help with COVID-19. Against this background, Kancera has chosen to continue to focus on the company's main tracks, i.e. inflammatory conditions where the trigger for initiating treatment is clear and where broad-spectrum anti-inflammatory drugs do not help. These disease states include inflammation associated with acute myocardial infarction and recurrent relapses of autoimmune disease. Kancera's direction and focus is exemplified by the ongoing study of KAND567 in myocardial infarction patients at Freeman Hospital in the UK.

Cancer: an efficient path to the first patient study
The KAND145 development project has reached several important milestones during the fourth quarter. A recent preclinical study shows that KAND145 in combination with chemotherapy effectively reduces the tumor size in chemotherapy-resistant ovarian cancer. In parallel, we have conducted 14-day toxicological studies that have been successful. This means that during the first quarter we can continue with 28-day toxicological studies in preparation for clinical studies. With the overall preclinical data, we then intend to define a safe and effective dose for future clinical studies. Provided we achieve good results, we plan to submit an application for permission during the second quarter of 2022 to conduct a clinical study in patients.

Compared to its sister molecule KAND567, KAND145 has several properties that make it more effective and easier for the cancer patient to take orally and it is better adapted for intravenous treatment.

To gain time in the clinical development of KAND145, we plan to take advantage of clinical data for our most advanced drug candidate KAND567, which is made possible by the similarity of the substances and the amount of existing clinical data for KAND567. We plan to achieve the time saving by conducting two clinical studies in parallel. Firstly, a clinical phase I study of KAND145 to document the drug candidate's pharmacokinetic properties and tolerability in healthy individuals. Secondly through a clinical phase Ib study with KAND567 in which we intend to evaluate the tolerability of combination treatment with chemotherapy and the effect on markers that reflect the treatment's effect on the cancer disease.

With these two parallel studies as a foundation, a subsequent more comprehensive clinical study of KAND145 against ovarian cancer can start in 2023 and deliver results approximately 6–12 months earlier than in a scenario where only KAND145 is used for these studies. Results from this study approach could also provide early and significant support for a new treatment principle with Fractalkine blockers against ovarian cancer.

New addition to the management team
Our portfolio of unique small molecule blockers of the Fractalkine system has been shown to control both the immune system and the sensitivity of cancer cells in chemotherapy and we look forward to future steps in the clinical development in each area. As the projects develop, our commercial focus increases, and in December 2021, Peter Selin was therefore recruited to a position as Executive Vice President Corporate Development and Vice President with responsibility for business development, strategic partnerships and out-licensing. Peter has previously held senior positions in both business development and operations at Oasmia Pharmaceuticals, Inceptua Group and Sobi and is a welcome addition to the company's management when he takes office on or before May 1.

Solna, February 18, 2022
Kancera AB
Thomas Olin, CEO