CanBas Co.,Ltd. Q2 FY2025 earnings call

• Clinical Pipeline Progress: CBP501 (immunogenic fire anti-cancer candidate):

  • Completed Phase 2 trial that met its primary endpoint, with results published in peer-reviewed journal European Journal of Cancer and presented at major oncology conferences. The triple combination therapy of CBP501 + cisplatin + nivolumab showed clinically meaningful improvement in progression-free and overall survival for third-line metastatic pancreatic cancer with manageable safety, achieving a 30%+ objective response rate (2 responses in the 25mg CBP501 cohort, compared to a typical <5% response rate for this indication) with ~30% of patients surviving over 9 months.
  • The company obtained orphan drug designation for CBP501 from EMA in August 2024, and is currently preparing for a Phase 3 trial in Europe, with ongoing active regulatory interactions with EMA.
  • The company previously obtained FDA approval to start a Phase 2b trial in the U.S., but has paused this trial while retaining all preparatory work to allow rapid restart if needed.

• Other Clinical-Stage Pipeline:

  • CBS9106 (Felezonexor, reversible XPO1 inhibitor candidate): Phase 1 trial in the U.S. completed by partner Stemline in 2022, with Phase 2 trial planning ongoing. Preclinical/early data suggests it has a better safety profile than existing XPO1 inhibitor drugs.

• Preclinical/Discovery Pipeline:

  • CBT005 (ImmunoSwitch PDC immunotherapy candidate): Expanded and extended research collaboration with Nihon University, has obtained U.S. patent allowance, and started preparations for preclinical toxicology studies. It is designed to target phosphatidylserine on dying cancer cells to switch immune tolerance to immune activation against tumor neoantigens.
  • NEXT Project (immune-oncology candidate): AI-driven collaboration with AI drug discovery firm, after overcoming initial screening difficulties, has now obtained initial hit compounds, with full-scale development expanded.
  • Additional early projects include CBP-A08 and IDO/TDO inhibitors, plus ongoing work on an anti-cancer drug sensitivity prediction system.

• Financial and Capital Structure:

  • Cash and cash equivalents increased from the prior period end, driven by exercise of 19th and a portion of the 20th stock warrants in September 2024. Cumulative funding from the 2023 financing package is on track to reach 4 billion yen if all remaining 20th warrants are exercised at the lower strike price, with additional upside if warrants are exercised at higher prices.
  • Management states that current cash plus expected proceeds from remaining warrants is sufficient to start the Phase 3 trial with no immediate funding urgency, and expects that future funding needs for full Phase 3 development will be met via new financing or partnership arrangements.

Canvas is a pre-revenue clinical-stage biotech company focused on anti-cancer drug discovery and development. No product segments have generated revenue to date. Cumulative total operating expenses through the 2nd quarter were 468 million yen, broken down as: 116 million yen (24.8% of total expenses) for basic research, 206 million yen (44.0% of total expenses) for clinical development, and 145 million yen (31.0% of total expenses) for SG&A. Compared to the prior year period, basic research expenses increased slightly, SG&A remained flat, and clinical development expenses increased due to higher preparation costs for CBP501's European Phase 3 trial. The company reported an intermediate net loss of 480 million yen, an 86 million yen increase in loss from the prior year period.

• CBP501 European Phase 3 trial initiation is expected to occur in 2025, with trial drug supply available starting in early 2025, matching prior timelines.
• There has been no change to the original cost forecast for the European Phase 3 trial. The best-case scenario for potential approval and launch remains 2027, unchanged from prior guidance.
• Management is maintaining its priority focus of allocating all corporate resources to preparing for the European Phase 3 trial of CBP501.
• A shift to the U.S. Phase 2b path is not currently being considered, and there is no material probability of this shift occurring under current conditions.

• The timing of EMA approval to initiate the CBP501 Phase 3 trial is out of the company's control, with inherent uncertainty around approval timing. If European regulatory review is significantly delayed, the company would need to shift to the U.S. development path, which would cost 1.75 billion yen to 2 billion yen and extend the total timeline to approval substantially.
• The U.S. regulatory/political environment has increased uncertainty due to political factors, adding additional risk to any potential U.S. development path.
• Early clinical data for CBP501 is from a small patient population, and there is no guarantee that positive results will be replicated in the larger Phase 3 trial.
• Total expected funding requirement for full CBP501 Phase 3 development is 4.5 billion yen to 5 billion yen, which exceeds current available cash, requiring future funding activities.

Q: What is the current status of interactions between Canvas and EMA for the CBP501 Phase 3 trial application? Is the process still actively ongoing, waiting for a decision, or stuck on any issues? / A: The process follows the standard regulatory pattern: after Canvas submits application materials, EMA sends specific questions that Canvas responds to, followed by an extended review period by the agency. Currently, EMA has started asking substantive questions that require detailed protocol input, and Canvas has completed responses to all questions received to date. There are no indications of outright rejection at this stage, but any future regulatory requests could change the status. Management reports that the process is moving forward with tangible progress currently.

Q: Please explain the mechanism of action of CBT005 and confirm if it fits the targeted, localized immunostimulatory drug development trend. / A: CBT005 is a peptide-drug conjugate (PDC) that has four peptides that bind to phosphatidylserine on dying cancer cells, linked to a TLR agonist payload. It works by localizing the TLR agonist only to the tumor microenvironment, avoiding systemic TLR activation which has caused failure of most systemic TLR agonist candidates. Compared to an antibody-drug conjugate (ADC) format, using peptides avoids Fc receptor-mediated stimulation of vascular endothelial cells, and the smaller molecule size allows better penetration into solid tumors like pancreatic cancer, aligning with the current trend of targeted localized immunotherapy.

Q: What is the probability of switching development of CBP501 to the U.S. Phase 2b path, what is the time limit for this decision, and is the company committed to Europe unless full rejection occurs? / A: The primary decision criterion is total time to approval. A switch to the U.S. would require completing Phase 2b before advancing to Phase 3, which adds significant time and cost, so management would only switch if European development looks likely to take longer than the U.S. path. Even if EMA rejects a direct Phase 3, the company would still prefer to continue development in Europe rather than switching to the U.S. if the total timeline remains shorter. Current policy is to prioritize Europe, no switch is being considered, and the probability of switching is very low under current conditions, with no material indicators that a switch will be needed.