Cereno Scientific

Summary of the interim report for Q3 2023 (July 1 – September 30)

Cereno Scientific Group

• Result after financial items was SEK 11,076,974 (-7,248,364)
• Earnings per share was SEK -0.05 (-0.06) before dilution and SEK -0.05 (-0.04) after dilution
• The equity/assets ratio was 95.4% (93.2%)
• Cash and bank balance was SEK 68,455,542 SEK (36,569,272)

Parent company

• Result after financial items was SEK -11,076,973 (-7,215,192)
• Earnings per share was SEK -0.05 (-0.06) before dilution and SEK -0.05 (-0.04) after dilution
• The equity/assets ratio was 95.4% (93.2%)
• Cash and bank balance was SEK 68,381,544 (36,527,454)

Significant events during the third quarter

• In July, Cereno participated in the 8th Annual DrugDiscovery & Development Symposium arranged by the Pulmonary Vascular Research Institute (PVRI) on July 10-11, 2023. Raymond Benza, PI of the Phase II study of CS1 and member of Cereno’s scientific advisory board, co-chairs the event while Björn Dahlöf, Cereno’s Chief Medical Officer (CMO), presented the company and its HDAC-focused portfolio.
• On July 27, Sverker Jern, a co-founder of Cereno and board member, purchased a total of 366,828 shares on July 24, 2023, to a value of 0.65-0.659 per share on the Nasdaq First North Growth Market marketplace.
• Two abstracts on the preclinical drug candidates CS014 and CS585, respectively, were accepted as moderated ePoster presentations at the ESC Congress 2023 hosted by the European Society of Cardiology, in Amsterdam, Netherlands, on August 25-28, 2023.
• Eva Jagenheim joined the company as the Chief Financial Officer (CFO) on August 28, 2023. Jagenheim has broad experience in finance and the Swedish biotech sector.
• In August, Cereno announced that additional strategies have been activated in the Phase II study of CS1 in PAH due to slower patient recruitment than expected. Two new specialist clinics with large capacity are currently in the start-up phase to complete the recruitment of patients meeting the study criteria. Consequently, the study timeline is estimated so that top-line results will be reported during the first quarter of 2024.
• In August, Cereno launched a data quality control initiative for the CardioMEMS HF System in the Phase II study with CS1 in PAH, which also allows for the reporting of early efficacy data for CS1 during Q4 2023. The data quality control will support the possibility of a conclusive study result from this new CardioMEMS HF System technology in a new disease indication.
• On August 28, a scientific article about the drug candidate CS585 was published in the peer-reviewed medical journal Blood. The publication shows that CS585, a prostacyclin receptor agonist, is a very potent and selective substance that is administered both orally and intravenously and prevents thrombosis for up to 48 hours as observed in preclinical studies.
• On August 29, it was announced that Cereno Scientific's board and management had signed a lock-up agreement for their shares and/or other securities in the company until the publication of the report from the data quality control of CardioMEMS measurements, which took place on October 13, 2023.
• Cereno held a well-received capital market day on August 30, 2023, a recording of the event is available on the company's website at https://cerenoscientific.com/investors/cmd-2023/
• Sten R. Sörensen, CEO of Cereno, acquired 65,000 shares on August 31, 2023, at a value of 1.50 SEK per share on the Nasdaq First North Growth Market trading platform.
• The members of the Nomination Committee for the company's 2024 annual meeting were announced on September 12. More information is available on the company's website under Corporate Governance, https://cerenoscientific.com/corporate-governance/.
• An extraordinary general meeting was held on September 14, where it was decided to adopt proposals for a directed issue of warrants to employees and for a directed issue of warrants to certain board members.
• On September 20, it was announced that an agreement had been signed with the Contract Research Organization (CRO) Clinical Trial Consultants (CTC) to conduct the Phase I study of CS014. CTC will also provide support in the preparatory steps for Phase I, including the development of study protocols and the application process to start the study, which will be conducted in Sweden.
• On September 21, it was announced that a second season of the Insights video series will be released over the coming months. The Insights series is conducted as a series of interviews and conversations with internationally known scientific experts who share their knowledge and insights to convey a greater understanding of the company's development program. The video series is available on the company's website and YouTube.
• On September 29, it was announced that members of the company's board and management, as well as scientific advisors, have subscribed warrants within the framework of the incentive programs introduced at the extraordinary general meeting held on September 14, 2023.

Significant events after end of period

• On October 13, positive findings from the data quality control review initiative in the Phase II study of CS1 in rare disease pulmonary arterial hypertension (PAH) were reported. Efficacy findings show a clinically meaningful reduction of pulmonary pressure in several patients included in the data quality control already after 3 weeks of treatment with CS1, in line with the results from the previously communicated Patient Case. Cereno emphasizes that these reported initial findings of the DQCR may differ from the Phase II study’s final results.
• On October 26, the company was informed that the Swedish Economic Crime Authority (ECA) had initiated a preliminary investigation related to a suspected insider trade on the Swedish stock market. Cereno has currently no information on whether this investigation concerns the Cereno Scientific’s share or other shares traded on the stock market. Cereno Scientific is assisting the authorities in their investigation.
• Drug candidate CS1’s second patent family obtained a newly issued patent in Japan in October, strengthening and broadening the intellectual property rights (IPR) for Phase II drug candidate CS1.
• An extraordinary general meeting was held on November 7 where resolutions were made about the number of board members, remuneration to the board, election of the board including the new election of Jeppe Øvlesen as well as directed issue of warrants to new board member and adoption of an incentive program.
• Cereno’s drug candidate CS585 was highlighted by top-tier medical journal Blood as a promising novel anti-thrombotic strategy without risk of bleeding, which was announced on November 8. The recently published paper on CS585 in the top peer-reviewed medical journal Blood was selected to feature in the journal’s Blood Podcast as well as awarded a commentary titled “Targeting prostacyclin: all gain with no pain?” concluding that the discoveries reported by Stanger and colleagues mark a possible important milestone to improve anti-thrombotic strategies.
• On November 17, the company reported significant progress in the Phase II study of CS1 in PAH, however, a slower recruitment pace than estimated during the last months and a longer start-up phase for two new clinics have affected the study timeline. The updated study timeline now expects study completion and top-line results during Q2 2024.
• On November 17, the company reported entering a loan of 90 MSEK that extends the company’s financial runway into 2025 and strengthens partnering possibilities.
• On November 17, the company announced that a request for expanded access to investigational drug CS1 for use as a treatment outside of a clinical trial, sometimes called “compassionate use”, will be submitted. The initiative is prompted by a request from an investigator in the ongoing Phase II study of CS1. Cereno will submit a request to the FDA under the ‘Expanded Access to Investigational Drugs for Treatment Use’ requesting expanded access to CS1 which initially will be limited to patients who have completed the Phase II study in PAH.

CEO letter

The last few months have been a very progressive period for Cereno. Our achievements have ranged from supporting company growth, progress, and positive findings in our ongoing clinical Phase II study with CS1, recognition and progress in our preclinical programs as well as aligning operative incentives with shareholder value and building operational capacity for business development. We are particularly pleased to have secured a financial solution that will enable us to hold a strong position in upcoming partnering discussions. We entered autumn at full speed and we are looking forward to continuing to deliver on our development milestones and company growth to create shareholder value.

Lead program CS1 is progressing in Phase II study with expectations supported by remarkable patient case results, positive findings from DQCR initiative and “compassionate use” request

Although the study is currently ongoing, findings from the study suggesting a potential positive effect of drug candidate CS1 in patients with the severe rare disease PAH have been reported. First, a patient case study performed on the first patient having completed the study at a specific clinic showed remarkable efficacy data. In 12 weeks of treatment with CS1, the patient showed a 30% reduction in pulmonary pressure and a 20% increase in cardiac output. The patient’s overall functional status was changed from NYHA/WHO functional class II to I at the end of the treatment period, meaning that she had next to normal functional physical capacity with CS1. Secondly, we could in October 2023 share that the Data Quality Control Review (DQCR) performed was concluded with positive findings. The data quality of the CardioMEMS measurements was found satisfactory with adherence to study protocol and with timely data transfers from the patient's home to the clinic. Efficacy findings showed a clinically meaningful reduction of pulmonary pressure in several patients, included in the data quality control, of a similar or greater magnitude as in the Patient Case. The review included data obtained by the CardioMEMS HF System from the first 16 patients enrolled in the study and the reported findings can be read in full in a previous announcement.

We are seeing significant progress in the ongoing Phase II study, however, a slower recruitment pace than estimated during the last months and a longer start-up phase for two new clinics have affected the study timeline. The updated study timeline now expects study completion and top-line results during Q2 2024.

A last exciting update of CS1 and the Phase II study regards a request for expanded access to CS1 for use as a treatment outside of a clinical trial, sometimes called “compassionate use.” An investigator in the study has asked Cereno to investigate the possibility of requesting extended access to CS1 for a patient who has completed the trial, which, if authorized, would allow this patient to continue to be treated with CS1 for PAH.  This is of course a very positive signal to us at Cereno of the potential clinical benefit of CS1 for patients with this disease. For Cereno, an expanded access to CS1 for patients having completed the study would provide value for our development program with CS1 in PAH. “Compassionate use” would provide the ability for us to collect more data on the usage of our CS1 drug in this patient population over an extended period of time; data, which could add insight and value to our program for CS1 in its clinical development journey towards market approval. We are aiming to submit the request to the FDA as soon as we are possible during Q4 this year.

Novel HDACi program CS014 moving forward to being Phase I ready

Our novel HDACi CS014 has shown great potential in our preclinical studies as a novel approach to antithrombotic treatment without the associated increased risk of bleeding as seen with current antithrombotic drug therapies. Our preparations for starting the first-in-human clinical Phase I trial with drug candidate CS014 has progressed very well. I am pleased to see that our preclinical development program to fulfill the necessary requirements is on track. In addition, we have engaged Clinical Trial Consultants (CTC), to conduct the Phase I study of CS014. We plan to be able to initiate the study in Q2, 2024.

CS585 – Published in Blood - “…could be a significant milestone to improve anti-thrombotic treatment strategies without bleeding”

I am very pleased with the research and development efforts that have led to CS585 recently being published in the highly renowned medical journal Blood and the great recognition from the medical community following the publication. The fact that this paper also was selected to be featured in the journal's podcast and awarded a commentary says a lot about CS585’s promising preclinical data. The concluding statement from the podcast is a great testimony to the fact that we are on the right track “… [CS585] could be a significant milestone to improve anti-thrombotic treatment strategies without bleeding.”

Building our presence as a valuable player in the cardiovascular scientific, medical and industry community

Our prioritized strategy of establishing our research in the medical community with articles in journals and attendance at congresses is paying off as we continue to expand Cereno’s global footprint. In the recent quarter, we have been present at key cardiovascular events such as 8th Annual DrugDiscovery & Development Symposium arranged by the Pulmonary Vascular Research Institute (PVRI) in Washington D.C., The ESC Congress 2023 in Amsterdam, as well as been published in “Blood”, a top peer review medical journal.

We have a solid line-up of conference attendances, abstracts, and journal submissions ahead of us, hence continuing to continue to build our presence as a key player with innovative drug candidates that have the potential to significantly change the way cardiovascular disease is treated with the ultimate aim to provide improved quality of life and prognosis to patients in need of better care.

Communication with shareholders a priority

Cereno held an ambitious and well-received capital markets day on August 30, 2023. The management team was joined by a powerful lineup of significant external speakers Dr. Raymond Benza, System Director of Pulmonary Hypertension at Mount Sinai Icahn School of Medicine, New York City; Dr. Phil B. Adamson, Divisional Vice President and Chief Medical Officer, Heart Failure Division, Abbott; and Dr. Michael Holinstat, Prof. at University of Michigan Medical School; and Director Translation Research, Cereno. A recording of the event is available on Cereno’s website and provides good insight into the company's strategy as well as current clinical and preclinical progress of our three promising drug candidates.

I would also like to highlight the launch of a second season Insights Video Series where internationally renowned scientific experts share their knowledge and insights to provide a greater understanding of the company's intensified focus on further developing the product portfolio. We are delighted to be able to share the expertise of global thought leaders to provide insight into the inner workings of drug development at Cereno, insights normally not available publicly. The videos were recorded during the ESC Congress in August 2023 and are released during the autumn and winter on our website, LinkedIn and YouTube.

Strategic organizational growth and showcased confidence

In the past quarter, Cereno has welcomed Eva Jagenheim as our new Chief Financial Officer, who is bringing valuable experience in finance and the Swedish biotech sector. Demonstrating our commitment to the company's future, the management and Board of Directors entered lock-up agreements for their shares, a strong show of confidence in Cereno's portfolio. This period also saw insider share purchases and subscriptions of warrant programs by key management and Board members, signaling confidence in our strategic direction. Additionally, we were pleased to welcome Jeppe Øvlesen to our Board. His expertise in executive roles and business development in the Nordic biotech industry adds a significant skillset to our leadership, aligning with our growth and innovation objectives. These developments mark a pivotal stage in reinforcing Cereno's position as a key player in developing innovative drugs in common and rare cardiovascular disease.

Future outlook

We are approaching a pivotal point in the company’s growth journey. Our drug development programs have shown very promising results in their respective development stages, and while we do not have conclusive results yet, we are well on our way. The completion of the Phase II study of CS1 is in sight now that more than half of the participants have completed the study, and a solid plan is set to reach completion during the second quarter 2024. At this time next year, our CS014 program will have initiated a Phase I study for the evaluation as a treatment for thrombosis prevention and, our third program CS585 will have progressed well toward being Phase I ready as per our plans. Our innovative drug development portfolio positions Cereno as a key player in delivering new valuable drug candidates in the cardiovascular disease landscape, while at the same time creating shareholder value.

Having reached this point in the company’s development and our development programs showing great promise, we are now building our capacity to engage in business development activities with the aim to propel our drugs to the market and to the patients in need of new valuable therapies in the best way possible. 

As was recently announced, we are pleased to have entered a financing solution that give the company and the portfolio the best conditions for continued successful growth and development. We assess that with this loan of up to 90 MSEK, as well as the warrants of series 3 (TO3) which will be invoked in March 2024 (up to 77 MSEK), we have secured optimal conditions to be able to maintain a strong position in discussions and potential negotiations with partners. Furthermore, we look positively at being able to deliver shareholder value with a better return, as with a strengthened cash position we have now the opportunity to accelerate the development of all our three programs to the next value-increasing milestones for each program.

Thank you for your continued support of our exciting journey.

Sten R. Sörensen, CEO of Cereno Scientific

For further information, please contact:

Eva Jagenheim, CFO
Email: info@cerenoscientific.com
http://www.cerenoscientific.com/

About Cereno Scientific AB

Cereno Scientific develops innovative treatments for common and rare cardiovascular disease. The lead drug candidate, CS1, is a HDAC (histone deacetylase) inhibitor that acts as an epigenetic modulator with pressure-reducing, reverse-remodeling, anti-inflammatory, anti-fibrotic and anti-thrombotic properties. A Phase II study is ongoing to evaluate CS1’s safety, tolerability, and efficacy in patients with the rare disease pulmonary arterial hypertension (PAH). A collaboration agreement with global healthcare company Abbott allows Cereno to use their cutting-edge technology CardioMEMS HF System in the study. Two initiatives performed during the ongoing Phase II study have shown positive findings suggesting the potential clinical benefit of CS1 in PAH patients. These initial findings are, however, not a guarantee of the final study results that are expected in Q2 2024. Cereno also has two promising preclinical drug candidates in development through research collaborations with the University of Michigan. Investigational drug CS014 is a HDAC inhibitor in development as a treatment for arterial and venous thrombosis prevention. The innovative drug candidate represents a groundbreaking approach to antithrombotic treatment potentially without the associated increased risk of bleeding in humans. CS014 is a new chemical entity with a multi-fold mechanism of action as an epigenetic modulator – regulating platelet activity, fibrinolysis, and clot stability for the prevention of thrombosis without increased risk of bleeding as documented in preclinical studies. Drug candidate CS585 is a prostacyclin receptor agonist that has been documented in preclinical studies to target the IP receptor for prevention of thrombosis without increased risk of bleeding. The company is headquartered in Gothenburg, Sweden, and has a US subsidiary Cereno Scientific Inc. based in Kendall Square in Boston, Massachusetts, US. Cereno is listed on the Nasdaq First North (CRNO B). More information on www.cerenoscientific.com.