CEO letter

November 18, 2021 (Q3 2021)

Transforming a business requires sustained effort and focus. Since I joined Oasmia in March 2020 we have set out a clear path to future growth as a sustainable global oncology business.

We’ve done this by:

  • rightsizing the Company and terminating commercial drug production
  • putting our finances in order by eliminating unnecessary operating expenditure
  • building our in-house capabilities to make us an attractive partner for innovative assets and companies
  • reducing business risks, such as resolving inherited legal issues, eliminating these potential liabilities

Creating these solid foundations means we are now well placed to deliver on our string of pearls strategy, putting in place a diversified portfolio of innovative cancer therapies through in-licensing and M&A. Our ambition is to build a pipeline focused on hard-to-treat and late-stage cancers using different approaches and mechanisms of action which offer us multiple shots on goal, de-risking our portfolio significantly and therefore increasing our chances of success. During the third quarter we made steady progress towards achieving this vision.

Resolving outstanding legal disputes

Post period end, we announced the global settlement of all outstanding legal disputes with MGC Capital, former Board Members of Oasmia and members of former management. The settlement will result in a negative cashflow of MSEK 24.5 but will result in a positive earnings effect of MSEK 32.5. Reported debt in relation to the MGC litigation of MSEK 80, as well as a receivable of MSEK 40, is settled as a result of the agreement, strengthening our financial position and eliminating borrowings on the balance sheet. This is excellent news and enables us to look forward rather than back.

Progressing our in-licensed and wholly-owned development-stage oncology assets

Cantrixil is the first product of our string of pearls strategy, in-licensed from Kazia Therapeutics in March. It targets a wide spectrum of cancer cells, including chemotherapy-resistant tumor-initiating cells thought to be responsible for disease relapse. Patients with chemotherapy-resistant ovarian cancer have a very poor prognosis, and Cantrixil could offer a much-needed new therapeutic option. Positive Phase 1 results were presented at AACR earlier this year and Phase 2 study preparations in advanced ovarian cancer are well underway. In September, our Scientific Advisory Board, composed of key opinion leaders in oncology, met in Stockholm for the first time. The Board is offering invaluable guidance on the design of the Cantrixil Phase 2 trial and the longer-term clinical and regulatory path. Securing drug product for the Phase 2 trial through manufacturing agreements with multiple parties is a complex process and initiation of the trial will be later than originally envisaged. We will communicate further on the proposed timetable for the Phase 2 study when we have clarity on the supply situation.

A Phase 1b trial of our second clinical-stage program, docetaxel micellar, in development for advanced prostate cancer, continued to recruit patients in Switzerland under the leadership of the Swiss Group for Clinical Cancer Research (SAKK). SAKK has made excellent progress, with three centers open and enrolment is still expected to be completed by the end of 2022.

Exploring the full potential of our technologies

We recently provided an update on our collaboration with the Karolinska Institutet in Sweden to explore the full potential of our XR-17™ drug solubilization technology platform. Work on our line extension for XR-17, which we have named XR-18, is progressing well and is intended to offer expanded utility. We are also preparing to evaluate formulations of XR-17/18 with our licensed product candidate, Cantrixil.

Our recent research into XR-19, our dual encapsulation technology designed to encapsulate two active pharmaceutical ingredients (APIs) in one micelle, has yielded encouraging proof-of-concept data. However, we have assessed the commercial utility of this approach to be limited and have therefore decided not to develop new product candidates with this technology, focusing our resources on other development opportunities.

Organizational update

Having the right scientific, regulatory, development and commercial skills to make Oasmia an attractive business partner for oncology drugs and companies around the world is critical to our success. Over the past 18 months, we’ve built a first-class team in all these areas, and in August I was pleased to announce the appointments of Kia Bengtsson as Head of Clinical Development and Johanna Röstin as Head of Regulatory Affairs. Kia and Johanna significantly strengthen Oasmia’s internal drug development expertise, supporting our ability to move products through to commercialization and to evaluate new opportunities. Peter Selin has decided to step down as Chief Business Officer and the search for a replacement has been initiated. Peter will remain in his current role during his notice period.

Maximizing the potential from out-licensed products

Maximizing the potential of our partnered ovarian cancer therapy Apealea® has been another important focus. In September, we signed a license agreement with the Swiss-based FarmaMondo Group for the commercialization of Apealea® in Russia and the Commonwealth of Independent States, where it is known under the brand name Paclical®. This agreement marks the completion of the out-licensing of Apealea® globally and we anticipate the first royalties from partnerships during 2022.

Elevar has informed Oasmia that it is reviewing the clinical and regulatory pathway for Apealea in the US in order to maximize the product’s commercial potential. This may impact the clinical development timelines for Apealea in the US and Oasmia will update investors when firm information has been provided by Elevar.

Building the business through in-licensing and M&A

As well as driving our existing portfolio in Q3, we’ve made further progress in making Oasmia a more attractive partner for innovative therapies and companies, positioning ourselves to add value in the sweet spot of early-to-mid-stage product development, demonstrated by the in-licensing of Cantrixil.

I’m pleased to report that our continuing transformation and new capabilities has attracted interest from a number of parties and that we are currently evaluating several promising opportunities. I look forward to updating you on progress in due course.

I’d like to thank you all for your continued support at this exciting time for the business as we look ahead to completing our transition to become a global oncology business.

Dr. Francois Martelet, M.D., CEO of Oasmia