London, UK, 7 June 2018

Edison issues initiation on Cantargia (CANT)

With its IL1-RAP inhibitor technology, Cantargia tackles tumour-promoting inflammation by targeting IL-1 signalling pathway. Moreover, lead asset CAN04, a fully humanized antibody, causes cancer cell death by an established mechanism ADCC. This dual mechanism action and the potential ability to harness the immunes system to fight cancer makes Cantargia an interesting immunoncology play, in our view. Recent Novartis data publication from its six-year Phase III cardiovascular outcomes study in heart attack patients with canakinumab (direct IL-1 β inhibitor) provides some validation to Cantargia's plans, as it unexpectedly showed that the drug reduced lung cancer incidence and mortality. Our valuation of Cantargia is SEK1.64bn or SEK24.8/share.

We value Cantargia at SEK1.64bn or SEK24.8/share based on an rNPV using a 12.5% discount rate, including SEK200m net cash estimated at end Q218. We include CAN04 in the two lead indications - NSCLC and pancreatic cancer. CAN04 for other indications and second lead asset CANxx are still in preclinical stages and we will revisit the potential once these projects progress. Near-term triggers involve results from the Phase I part of the CANFOUR trial and a listing change in H218.

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