Interim Report 1 January 2019 – 30 September 2019

14 November, 2019

The Board and Chief Executive Officer of Cereno Scientific AB here with present the interim report for the third quarter 2019.

Summary of the interim report

Nine months (1 January 2019 – 30 September 2019)

  • Net sales were SEK 0 (0).
  • Loss after financial items was SEK -11,576,217 (-7,777,300).
  • Loss per share was SEK -0.29 (-0.60) before dilution and SEK -0.27*
    (-0.47) after dilution.
  • The equity/assets ratio was 96.0% (71.7%).

Three months (1 July 2019 – 30 September 2019)

  • Net sales were SEK 0 (0).
  • Loss after financial items was SEK -2,990,667 (-2,868,304).
  • Loss per share was SEK -0.07 (-0.22) before dilution and SEK -0.07*
    (-0.17) after dilution.

Amounts in parentheses: Prior year comparative period.
Equity/assets ratio: Shareholders’ equity divided by total assets.
Earnings per share: Profit/loss for the period divided by 40,219,312 shares as of 30 September 2019 and 13,067,387 shares as of 30 September 2018.
*Diluted earnings per share: Profit/loss for the period divided by shares outstanding and warrants as of the balance sheet date, 30 September 2019 and 30 September 2018 respectively. 

The “company” or “Cereno Scientific” refers to Cereno Scientific AB, Corporate Registration Number 556890-4071.

 

Significant events during the third quarter of 2019

  • On 5 July 2019, Cereno Scientific announced the registration of the rights issue and over-allotment issue, which provided the company SEK 60,6 million before issue costs. At the beginning of the quarter, a directed issue to the underwriters of the Rights Issue who have chosen to receive their underwriting remuneration in the form of shares was carried out and registered. In total, 132,571 shares of series B were issued to the underwriters.
  • On 11 July, Cereno Scientific announced that the company recently participated at ISTH in Melbourne, Australia. The company’s co-founder Pia Larsson, PhD presented Cereno’s positive phase I results in the form of a poster, which received the award “Top Poster Winner”.
  • On 29 July, Cereno Scientific announced the publication of the company’s article “A First in Class Treatment for Thrombosis Prevention. A Phase I Study With CS1, a New Controlled Release Formulation of Sodium Valproate” in the Journal of Cardiology and Vascular Medicine.
  • On 28 August, the company announced that the Extraordinary General Meeting resolved unanimously on the proposal of the Board to issue at most 650,000 warrants to key persons, executive Board members and deputy Board members. Each warrant bears the right to a new subscription of 1 Class B share in the company during the period from 1 April 2023 to 31 October 2023. The subscription price is SEK 15.26 per share.
  • On 6 September, the Board of Directors of Cereno Scientific resolved to issue at most 300,000 warrants to members of the company’s Scientific Advisory Board. Each warrant bears the right to a new subscription of 1 Class B share in the company during the period from 1 April 2023 to 31 October 2023. The subscription price is SEK 15.26 per share.
  • On 26 September, Cereno Scientific announced that the authorities in Russia have issued approval regarding the company’s application to initiate a Phase II clinical trial with the drug candidate CS1. The company intends to start the study the first half of 2020 with the intention of demonstrating CS1’s preventative effect against the formation of blood clots after orthopedic surgery.

Significant events after the end of the period

  • No significant events have occurred after the end of the period.

CEO Sten R. Sörensen comments

The number of important milestones the company has achieved this year is very gratifying: A patent approval, acquisition of a new compound, establishment of a Scientific Advisory Board, a broader research focus, submission of a phase II trial application for our drug candidate CS1 in Bulgaria and Russia, an oversubscribed share issue to raise capital, and approval to initiate a phase II trial in Russia. We also expanded our international presence significantly and participated in several international conferences that are relevant to us.

Strengthened finances
We conducted a successful share issue that was completed in June. The share issue was oversubscribed and generated proceeds of MSEK 60.6 for the company before issue expenses. The injection of capital will primarily be used to prepare for our phase II trial with CS1.

Phase II trial approved in Russia
At the end of May, we applied for authorisation to perform our planned phase II trial to evaluate CS1 as thromboprophylaxis in orthopaedic surgery in Russia and Bulgaria. In September, we achieved our most important milestone to date when the initiation of our phase II trial with CS1 was approved by both ethical and regulatory authorities in Russia. We are also expecting to receive approval from the Bulgarian authorities very soon and to complete the scale-up of our clinical trial material production before the trial commences, which is estimated to be mid-year 2020.

Advancement across a broader front
Although our primary focus is the development of our drug candidate CS1, we have also worked actively with our strategic ambition to broaden our pipeline during the year. A direct result of this strategy was our acquisition of a new compound from Emeriti Bio in March this year. In connection with the acquisition, we lodged a patent application for the compound under the name of CS014, which is currently being evaluated in a preclinical programme.

In line with our strategic ambition to broaden our pipeline and expand our international expertise, we established a Scientific Advisory Board (SAB) during the spring – a team of five world-class researchers in the field of cardiovascular disease. A direct result of our efforts to establish the SAB was that the company broadened its focus to also include diseases characterised by the development of fibrosis. This focus presents a very exciting opportunity to develop our pipeline platform, which is based on epigenetic modulation, where there is potential in rare diseases as well as considerable cardiovascular indications with elements of fibrosis, inflammation and thrombosis.

Broadened international activities
Alongside of our clinical development, we are continuing to attract attention and working consciously to expand our network of researchers and potential finance/industry partners by taking an active role and becoming more visible in the international arena.

We took part in the European Heart Failure Conference in Athens during the spring, and the International Society on Thrombosis and Haemostasis 2019 Congress in Melbourne, Australia, in July. This congress gathers thousands of experts in the field of thrombosis and our co-founder Pia Larsson (PhD) presented our abstract A New Treatment for Thrombosis Prevention? in the form of a poster, which, to our satisfaction, received the ‘Top Poster Winner’ award.

During the autumn, we attended the LSX Nordic Congress in Stockholm, Nordic Life Science Days in Malmö, the European Society of Cardiology Congress in Paris, the LSX World Congress and BioPharm America event in Boston in the US, and the BioStock Life Science Summit in Lund. We have also been invited to attend two important scientific conferences later this year: the 3rd Annual Anti-Fibrotic Drug Development Summit in Boston in November, and the prestigious Global CardioVascular Clinical Trialists Forum in Washington, DC, in December. At both of these events, we will be presenting our development concept based on epigenetic modulation and possible treatment options for diseases related to fibrosis, inflammation and thrombosis that have been identified together with our SAB. The treatment options are relevant in terms of both rare diseases and considerable cardiovascular indications. In December, we will also be attending and presenting at the Nordic-American Life Science Conference in New York.

Global concept – global company

We are now pursuing our concept and development on an international basis with an international Scientific Advisory Board. Preparations for the phase II trial with CS1 are also taking place internationally with our CRO partner, OCT Group, and the upcoming implementation of the trial in Russia and Bulgaria is expected to increase international awareness in the US, Europe and Asia/China.

Scaling up networks and presenting the company at a range of global conferences is increasing the company’s international exposure, both scientifically and commercially, and broadening connections with potential investors and global or regional business partners in the pharmaceutical industry.

Gothenburg, 14 November 2019
Sten R. Sörensen, CEO Cereno Scientific AB

About Cereno Scientific

  • Thrombosis – causes the most deaths globally

Thrombosis-related disease (blocking blood clots) is the leading cause of illness and death worldwide. Myocardial infarction and stroke, which in most cases are caused by thrombosis, cause great suffering for the individual and high costs for society.

  • Current treatments are inadequate – high risk of bleeding and suboptimal preventive effect

Blood-thinning medications are widely used today to prevent blood clots. They act by inhibiting coagulation or blood platelets. This treatment is associated with a relatively high risk for serious bleeding complications, resulting in insufficient prevention effect with current drugs, since the most effective doses cannot be used, or in some cases, treatment must be discontinued due to the risk of bleeding. This entails a high risk of new blood clots.

  • Cereno Scientific works with the body’s own intelligent blood clot-busting system to improve the preventive treatment of blood clots with reduced risk of bleeding side effects

Cereno Scientific’s unique concept is to develop a drug (CS1) based on the body’s own intelligent defence systems against blood clots. Cereno Scientific considers that the company’s concept is unique because there are currently no clinical therapies that optimise the body’s clot dissolving system (the fibrinolytic system) that is triggered when blood clotting (coagulation) begins after a vascular injury has occurred.

CS1 is expected to provide an opportunity for effective preventive treatment of blood clots and a lower risk of bleeding than is the case with today’s treatments with blood-thinning drugs.

  • Documented effect on risk markers for blood clots and proven preventive effect

Documentation of the effect on risk markers can be found in experimental studies, early human studies and clinical studies. Preventive effect against thrombosis has also been demonstrated in in vivo studies in animals. Indication of clinical preventive effect against heart attacks and stroke has been shown in several large independent epidemiological studies. The first clinical study with CS1 showed positive results regarding safety, desirable pharmacokinetic properties and effect on a biomarker for the risk of thrombosis. Data shows that treatment with CS1 significantly lowers PAI-1 levels. PAI-1 is the factor that inhibits t-PA, which is the substance the body itself uses to dissolve blood clots.

  • Expanded indication targets for CS1

Cereno Scientific has recently expanded CS1’s future plans by expanding its potential target indicators. In addition to the ability to prevent thrombosis, opportunities for CS1 have been identified to inhibit – or even reduce already established – fibrosis development. It opens up for additional disease benefits in cardiovascular indications such as atrial fibrillation, heart failure, chronic kidney damage and a number of rare thrombosis diseases with significant fibrosis development.

  • Known substance that has been used for over 40 years in large patient populations indicates low development risk

CS1 is a new innovative formulation of a known substance that minimises the risk for unwanted side effects and indicates a relatively low development risk.

  • Relatively short time to market and possible collaboration agreement with major pharmaceutical company

The company intends to seek collaboration agreements with major pharmaceutical companies for further development towards larger thrombosis prevention indications such as heart attack and stroke. In conjunction with the Phase II program, contacts with potential partners are expected to increase.

  • Large market potential

CS1 has an intelligent mechanism with a possible broad indication window towards large blood clot-related diseases, with long treatment times (preventive treatment) and therefore a large value and market potential. The company has an approved patent in the US and Australia for use of CS1. The approved patent provides Cereno Scientific with a platform for a significant market potential in the US, the world’s largest drug market — a market that, for drug-related treatment of thrombosis alone, has estimated sales of approximately USD 10 billion annually and continues to grow.

  • Expanded pipeline

In March 2019, Cereno Scientific acquired CS014 (previously EB014) from Emeriti Bio AB, a compound that Cereno Scientific will continue to develop jointly with Emeriti Bio. This acquisition means Cereno Scientific now has a portfolio of drug candidates with potential for several indications in cardiovascular diseases.

Operations

Cereno Scientific is developing preventive medicines to treat thrombosis-related disease, based on the body’s own intelligent clot-busting system, which will be used in the global market for the treatment of thrombosis-related cardiovascular diseases. Current therapies are connected to an increased risk of major bleeding complications and, as a result, low effectiveness due to lower dosing levels — leading to a high risk of new blood clots.

CS1 is expected to provide an opportunity for effective preventive treatment of blood clots and a lower risk of serious bleeding complications than is the case with today’s treatments blood-thinning drugs. CS1 is an innovative formulation of a known compound and, as such, is expected to have a relatively short development time. Our treatment concept is based on many years of research, and its effectiveness has been documented in experimental animal studies, clinical studies and epidemiological studies, the latter have seen a reduced risk of both heart attack and stroke. CS1 has a unique mechanism of action, a potentially wide range of indication opportunities connected to major thrombosis-related diseases and, consequently, a large market potential. Furthermore, Cereno Scientific has recently expanded its future plans for CS1 by increasing its potential target indications. In addition to the ability to prevent thrombosis, opportunities have been identified for CS1 to inhibit – or even reduce already established – fibrosis development. In parallel with the development of CS1, Cereno Scientific is developing CS014, a preclinical phase compound in cardiovascular diseases. The Gothenburg-based company is located in AstraZeneca’s BioVenture Hub and is supported by GU Ventures. For more information, see www.cerenoscientific.se.

Company structure and shareholding

Cereno Scientific does not have any subsidiaries and is not included in any group. Furthermore, the company does not have any shareholdings.

Company share

Cereno Scientific’s B shares were listed on Spotlight Stock Market on 22 June 2016. Spotlight Stock Market is an affiliate of ATS Finance AB, which is a securities company under the supervision of Finansinspektionen, the Swedish financial supervisory authority. Spotlight Stock Market operates a multilateral trading facility (MTF), which is not a regulated market. On 30 September 2019, share capital was divided across 40,219,312 shares. The company has two classes of shares (of which 722,248 Class A shares). The Class A share carries the right to ten (10) votes per share. Each Class B share carries the right to one (1) vote per share. Each share gives equal rights to the company’s assets and earnings. The quote value (share capital divided by number of shares) amounts to SEK 0.10.

Warrants of series 2016/2019

At the Annual General Meeting on 29 January 2016, it was resolved to issue 325,289 warrants (series 2016/2019) through a private placement, thus entitling to a subscription of 325,289 Class B shares. During the third quarter of 2017, the company repurchased 65,058 warrants at the issue price. The repurchased warrants have been cancelled; of the original 325,289 warrants, 260,231 now remain. After the completed preferential issue, the restated number of shares that the options give entitlement to is 275,736 and the restated subscription price is SEK 5.66. The warrants can be used for subscribing Class B shares during the period 1 March 2019 – 1 December 2020. For information regarding holders of warrants, refer to the Listing Memorandum.

Warrants of convertible loans

The financing agreement concluded with the European High Growth Opportunities Securitization Fund on 1 March 2019 consisted of convertible loans and associated warrants. The company no longer has any outstanding convertible loans. The number of warrants outstanding at the balance sheet date, 30 September 2019, was 2,247,569. After the completed preferential issue, the restated number of shares that the options give entitlement to is 2,270,044. Of the warrants, 1,142,306 have a maturity of five years from the respective registration dates, with subscription prices between SEK 3.60 and 8.40. The 1,105,263 warrants issued on 1 March 2019 have a subscription price of SEK 1.90 and a maturity of six years, with a lock-up period during the first year in which the options may not be sold or utilised.

Warrants of series OP 2018/2022

The Extraordinary General Meeting on 23 October 2018 resolved to issue 647,256 warrants and/or employee warrants (series OP 2018/2022) entitled to subscription of 647,256 Class B shares. 323,628 warrants and/or employee warrants have a subscription price of SEK 15.00 per warrant, and 323,628 of the warrants and/or employee warrants have a subscription price of SEK 30.00 per warrant. 617,256 warrants were cancelled in the second quarter of 2019 at no cost to the company, after which 30,000 warrants are outstanding. After the completed preferential issue, the restated number of shares that the options give entitlement to is 31,787. Of the 30,000 warrants outstanding, 15,000 now have a restated subscription price of SEK 14.16 and 15,000 have a restated subscription price of SEK 28.31. The warrants can be used for subscribing Class B shares during the period 24 July 2022 – 23 October 2022.

Warrants of series 2019/2023 N01 and series 2019/2023 S01

The Extraordinary General Meeting on 28 August 2019 resolved to issue 650,000 warrants, of which 450,000 relate to key persons (series 2019/2023 N01) and 200,000 relate to operational Board members (series 2019/2023 S01), giving an entitlement to subscribe for a total of 650,000 class B shares. The warrants have a subscription price of SEK 15.26 per warrant, and can be used for subscribing for Class B shares during the period 1 April – 31 October 2023.

Warrants of series 2019/2023 SAB01

On 6 September 2019, the Board of Directors of Cereno Scientific resolved to issue at most 300,000 warrants to members of the company’s Scientific Advisory Board (series 2019/2023 SAB01). Each warrant bears the right to a new subscription of 1 Class B share in the company during the period from 1 April 2023 to 31 October 2023. The subscription price is SEK 15.26 per share.

Financial performance

During the third quarter, the company mainly invested in the development and production of clinical supplies. At the end of the third quarter, the company had a cash balance of approximately SEK 32.4 million and an equity/assets ratio of 96.0%.

Audit

The company’s auditor has not audited the Interim Report.

Principles of preparation for the Interim Report

The accounts in this Interim Report have been prepared in accordance with the Annual Accounts Act and the Swedish Accounting Standards Board BFNAR 2012:1 Annual Report and Consolidated Accounts (K3).

Upcoming financial reports

Year-end Report, 2019                                                                      27 February 2020

The Board of Directors and CEO certify that this Interim Report provides a true and fair view of the company’s operations.

Gothenburg, 14 November 2019

The Board and Chief Executive Officer of Cereno Scientific AB

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