Interim Report 2020-01-01 – 2020-06-3028 August, 2020
The Board and Chief Executive Officer of Cereno Scientific AB here with present the Interim Report for the second quarter 2020.
Summary of the Interim Report
Cereno Scientific Group
Six months (1 January 2020 – 30 June 2020)
- Net Sales were 0 SEK.
- Loss after financial items was SEK -7 774 588.
- Loss per share was SEK -0.19 before dilution and SEK -0,18
- The equity/assets ratio was 94,9 %.
Second quarter (1 April 2020 – 30 June 2020)
- Net Sales were 0 SEK.
- Loss after financial items was SEK -4 021 921.
- Loss per share was SEK -0.10 before dilution and SEK -0,09
Six months (1 January 2020 – 30 June 2020)
- Net sales were SEK 0 (0).
- Loss after financial items was SEK -7 772 530 (-8 585 511).
- Loss per share was SEK -0,19 (-0,30) before dilution and SEK -0,18
(-0,28) after dilution*.
- The equity/assets ratio was 94,9 % (94,7 %).
Three months (1 April 2020 – 30 June 2020)
- Net sales were SEK 0 (0).
- Loss after financial items was SEK -4 019 006 (-3 251 918).
- Loss per share was SEK -0,10 (-0,12) before dilution and SEK -0,09
(-0,11) 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 40 219 321 shares as of 30 June 2020 and 28 187 556 shares as of 30 June 2019.
*Diluted earnings per share: Profit/loss for the period divided by shares outstanding and warrants as of the balance sheet date, 30 June 2020 and 30 June 2019, respectively.
The “company” or “Cereno Scientific” refers to Cereno Scientific AB, Corporate Registration Number 556890-4071.
Significant events during the second quarter of 2020
- On 2 April, Cereno Scientific announced that the company is strengthening its clinical expertise by recruiting Dr. Raymond L. Benza, Professor of Medicine and Director, Division of Cardiovascular Medicine, at the Ohio State University Wexner Medical Center in Columbus, USA, as Scientific Advisor to the company.
- On 13 May, Cereno Scientific announced that the company has expanded its global footprint by establishing a subsidiary with new office space located in Kendall Square at the Cambridge Innovation Center (CIC), Cambridge, Boston, Massachusetts.
- On 9 June, Cereno Scientific announced that the company enters a collaboration agreement with the University of Michigan in Ann Arbor, USA. On behalf of Cereno Scientific, Dr. Michael Holinstat, who is active at the University, is to initiate preclinical studies with compounds from Cereno’s HDACi development program.
Significant events after the end of the period
- On 27 August 2020, Cereno Scientific convened an Extraordinary General Meeting on Tuesday, 29 September 2020 at 11:00 in Gula Salongen in the University of Gothenburg’s premises at Universitetsplatsen 1 in Gothenburg.
CEO Sten R. Sörensen comments
The first half of 2020 has been eventful, despite the challenges during the global spread of COVID-19.
Granted orphan drug status for CS1
In March, we proudly announced that the U.S. Food and Drug Administration (FDA) had granted orphan drug status (ODD) for our lead compound, CS1, for the treatment of Pulmonary Arterial Hypertension (PAH). PAH affects the lives of around five to fifteen out of 100,000 people globally and is characterized by progressive abnormally high pulmonary arterial pressure and remodeling of the pulmonary vasculature resulting in right ventricular dysfunction and poor oxygenation culminating in ultimate right heart failure. The global PAH market was valued at $6.3 billion in 2019 and is expected to reach $9.8 billion in 2027.
The ODD status is intended to facilitate drug development for rare diseases and may provide certain benefits and incentives to drug developers, including seven years of market exclusivity when the drug is approved, FDA assistance in clinical trial design, and tax credits for qualified clinical trial costs.
Postponed Phase II clinical trial
In March, we announced that we had to postpone the planned Phase II clinical trial with CS1, as planned knee joint surgery is down prioritized in hospitals for the benefit of effective care to COVID-19 infected patients. The start of the study was previously planned for mid-year 2020. We are currently adjusting the planned activities to start by the end of the year, but are prepared for further adjustments if needed.
Strengthened clinical expertise
During the first half of 2020, we recruited a top international expert in Dr. Raymond L. Benza to expand our knowledge base in PAH. Dr. Benza is Professor of Medicine and Director, Division of Cardiovascular Medicine, at Ohio State University Wexner Medical Center in Columbus, USA. He will be a scientific advisor to the company and support the development of products in our focus areas, thrombosis and fibrosis-related rare cardiovascular diseases, in particular PAH.
In June, we entered into a collaboration agreement with the University of Michigan in Ann Arbor, USA, where Dr. Michael Holinstat conducts preclinical studies to determine anti-thrombotic properties with compounds from our HDACi development program. We have strong ties to the University of Michigan as the chairman of our Scientific Advisory Board, Dr. Bertram Pitt, is Professor Emeritus of Medicine at the University of Michigan School of Medicine.
Established US subsidiary in important biotech hub
To further strengthen our contacts and prepare for an expansion in the United States, the world’s largest pharmaceutical and financial market, we have established a US subsidiary. The office space is located at one of the industry’s most recognized biotechnology hubs, the Cambridge Innovation Center (CIC), in Cambridge, Boston, Massachusetts.
Our progress during the first half of 2020, and the establishment in the US, is in line with our long-term goals. It is with great excitement that I look forward to the second half of the year and the continuous development of our operations.
Gothenburg, 28 August 2020
Sten R. Sörensen, CEO Cereno Scientific AB
About Cereno Scientific
Thrombosis – causes the most deaths globally
Thrombosis-related disease (occluding 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 first drug candidate, CS1, is based on the body’s own intelligent defence systems against blood clots. Cereno Scientific is convinced 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
CS1 has documented effect on risk markers in experimental studies and early human studies. Preventive effect against thrombosis has 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
Cereno Scientific has expanded its future plans through a possible broadening of indications and is evaluating the potential for epigenetic modulation in rare diseases related to pulmonary fibrosis, thrombosis, inflammation and high blood pressure in the pulmonary circulation. Cereno Scientifics aim is to form a platform of drug candidates that affects the field of epigenetic modulation through “HDAC inhibition” (Histone DeACetylase inhibition).
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 thrombosis-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.
Orphan drug status for CS1
In March 2020, the U.S. Food and Drug Administration (FDA) granted orphan drug status (ODD) for the company’s lead compound, CS1, for the treatment of Pulmonary Arterial Hypertension (PAH). PAH affects the lives of around five to fifteen out of 100,000 people globally and is characterized by progressive abnormally high pulmonary arterial pressure and remodeling of the pulmonary vasculature resulting in right ventricular dysfunction and poor oxygenation culminating in ultimate right heart failure. The global PAH market was valued at $6.3 billion in 2019 and is expected to reach $9.8 billion in 2027.
HDAC inhibitor development program
Cereno Scientific has a preclinical HDAC inhibitor development program. In 2019, new compounds were acquired from Emeriti Bio AB Inorbit Therapeutics AB. The acquisitions mean that Cereno Scientific has a portfolio of drug candidates with the potential for more indications in cardiovascular diseases.
Cereno Scientific is developing a pipeline of preventive therapeutics that work through epigenetic modulation for cardiovascular diseases and rare diseases to meet significant unmet clinical needs. Cereno Scientifics aim is to form a platform of drug candidates that affects the field of epigenetic modulation through “HDAC inhibition” (Histone DeACetylase inhibition).
Cereno Scientific’s first drug candidate, CS1, is expected to provide an opportunity for effective preventive treatment of blood clots and a lower risk of serious bleeding complications than today’s treatments with blood-thinning drugs. CS1 is an innovative formulation of a known compound and, as such, is expected to have a relatively short development time. Cereno Scientific’s 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 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. It opens up for additional benefits in cardiovascular indications such as atrial fibrillation, heart failure, chronic kidney damage and a number of rare thrombosis diseases with significant development of fibrosis. The FDA has granted ODD for the indication Pulmonary Arterial Hypertension (PAH) to the company’s lead compund CS1. Cereno Scientific also has a preclinical HDAC inhibitor development program. The company is headquartered and operates in AstraZeneca’s BioVentureHub. For more information, see www.cerenoscientific.com.
Company structure and shareholding
On December 20, 2019, a US subsidiary, Cereno Scientific Inc. was formed. The company is a wholly owned subsidiary of Cereno Scientific AB.
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 June 2020, 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 in June 2019, 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 and 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 June 2020, was 2,247,569. After the completed preferential issue in June 2019, 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 in June 2019, 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.
During the second quarter, the company mainly invested in the development and production of clinical supplies. At the end of the second quarter, the company had a cash balance of approximately SEK 11,7 million and an equity/assets ratio of 94,9%.
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
Interim Report, Q3 2020 19 November 2020
Year-end Report 2020 25 February 2021
The Board of Directors and CEO certify that this Interim Report provides a true and fair view of the company’s operations.
Gothenburg, 28 August 2020
The Board and Chief Executive Officer of Cereno Scientific AB
About Cereno Scientific AB
Cereno Scientific is developing a pipeline of preventive therapeutics to treat cardiovascular and rare diseases by epigenetic modulation through histone deacetylase inhibition (HDACi). The company’s lead program, CS1, is a phase II dual-acting antithrombotic drug aimed at venous thrombosis and stroke prevention for atrial fibrillation. Cereno Scientific also evaluates the potential of epigenetic modulation for rare diseases related to pulmonary fibrosis, thrombosis, inflammation and high blood pressure in the pulmonary circulation system. The FDA has granted ODD for the indication Pulmonary Arterial Hypertension (PAH) to the company’s lead compund CS1. Cereno Scientific also has a preclinical HDAC inhibitor development program. The company is located in AstraZeneca’s BioVenture Hub. Cereno Scientific’s B share has been listed on Spotlight Stock market since June 2016 with the ticker CRNO B, ISIN SE0008241558.