Ascelia Pharma recently announced its maiden interim financial results as a public company. Q319 operational expenditure and net loss has increased versus Q318 due to the Phase III study preparation and IPO costs. It is interesting to see a company with a clinical pipeline appear on the public market. Ascelia’s first product is Phase III ready with a sophisticated regulatory strategy.
The maiden financial report of a newly listed company is largely cosmetic and an update of the recent prospectus. In Ascelia’s case, the Q319 results announcement noted an increased operating loss of SEK11.7m (SEK4.4m in Q318) due to the preparations for the Phase III study and the IPO costs. R&D and administrative costs comprised virtually all the SEK11.6m loss for Q319, excluding the R&D tax rebate. Ascelia reported a robust Q319 SEK219m cash position (SEK55m at the end of Q318) after raising SEK180m at the IPO at SEK25 per share. The Mangoral Phase III study is now fully funded with results expected around the end of 2020.
At a point in the market where US life science IPOs are often preclinical, it is refreshing to see a European emerging specialty pharma oncology company come to the public markets with a mature clinical pipeline. The lead product – the imaging agent Mangoral – is being studied in the detection of liver tumours. Phase III for Mangoral has a primary endpoint of the detection of lesions by MRI (with and without Mangoral) and the study only has a 72-hour safety follow up. This means that Mangoral could have a label that includes both primary and secondary liver cancer detection. The Phase III study is not dependent on a long follow up (which would be costly) or a liver biopsy to confirm the cancer, which tends to restrict recruitment in drug studies in other liver indications. Outside oncology, nonalcoholic steatohepatitis is a potentially large market that is being restrained by its definitive diagnosis. If Mangoral can detect both fibrotic and cancerous liver lesions, it will be a significant advance.
Recent IPOs may not be efficiently valued. However, with an enterprise value of only SEK244m, one Phase III-ready imaging product and one Phase II-ready oral oncology drug (Oncoral for gastric cancer) and a market capitalisation that is half cash, this appears to be a very low pipeline valuation. The average EV for three recent preclinical US IPOs is SEK1.82bn ($184m), which highlights the valuation disparity between US and European life science companies.