Year-end Report 2017

Read PDF

Strategic decisions, collaboration agreements and financing

Xintela took major steps forward in 2017 and there is every reason to be optimistic about the new year. Our unique stem cell technology and the decision to establish our own GMP facility for stem cell production have made us a player to reckon with in regenerative medicine. We strengthened our international presence by initiating a collaboration with the Japanese company CellSeed. Xintela’s development of the cancer project for glioblastoma treatment is also making good progress, and the cancer project has broadened our understanding of the potential that Xintela’s technology holds for cancer diagnostics and therapy. In December, it was particularly pleasing to announce an in-licensing agreement for human antibodies that bind to our markers, integrin α10β1 and integrin α11β1. We also secured financing of MSEK 17 to ensure that our projects maintain a fast pace.

Summary of the interim report

The “company” or “Xintela” refers to Xintela AB (publ), corporate registration number 556780-3480.

Twelve months (1 Jan 2017-31 Dec 2017)

• Income amounted to TSEK 2 (3).

• Loss before tax totalled TSEK 21,945 (loss: 18,060)

• Loss per share* was SEK 0.72 (loss: 0.73)

• At 31 December 2017, the equity/assets ratio** was 64% (87).

Fourth quarter (1 Oct 2017-31 Dec 2017)

• Income amounted to TSEK 0 (0).

• Loss before tax totalled TSEK 6,636 (loss: 5,581).

• Loss per share* was SEK 0.22 (loss: 0.22).

* Earnings/loss per share: Profit/loss for the period divided by 30,367,904 shares, which was the registered number of shares at 31 December 2017. In the year-earlier period, the company had 24,863,450 registered shares.

** Equity/assets ratio: Equity divided by total capital.

Amounts in parentheses: comparative period of the preceding year.

Significant events in 2017

First quarter

On 4 January 2017, the company published additional results from the equine trial conducted in 2016, showing that Xintela’s selected stem cells can protect the cartilage from continued degradation after an injury, and also prevent damage to the underlying bone. The results also showed indications of cartilage repair. The trial results will be compiled for publication in an international scientific journal.

On 20 January 2017, Xintela announced positive preclinical data in the cancer project. The company had identified a suitable antibody and used it to develop an antibody-drug conjugate (ADC), where a cell toxin is coupled to the antibody. The company also demonstrated that the ADC developed can bind to tumour cells and has a cytotoxic effect, in both cell studies and animal models.

In a press release on 20 January 2017, Xintela also announced to the market that preparations for a clinical equine trial had commenced. The trial will be conducted at Evidensia Specialisthästsjukhus (equine hospital) in Helsingborg in collaboration with Casper Lindegaard, Chief Veterinary Surgeon. The results from the equine trial are highly significant for obtaining regulatory approval to commence clinical trials on humans. Xintela has already identified an orthopaedic specialty clinic and the plan is to commence the clinical trial in 2018.

In the same press release, Xintela also announced that the company had successfully completed a validation of the XACT™ analytical test for quality assurance of cartilage cells in collaboration with a European company. The results show that XACT™, which consists of antibodies that bind to Xintela’s integrin α10β1 and integrin α11β1 markers, respectively, can assess cartilage cell quality before a cartilage cell implant and detect any contaminating cells in cartilage cell preparations. Discussions regarding continued collaboration are ongoing.

On 15 February, Xintela announced that a total of 2,127,825 of the company’s TO 1 warrants had been exercised, representing an exercise rate of 61%. Xintela has therefore raised proceeds of approximately MSEK 10 after issuance costs. Xintela’s insiders and major shareholders who owned the company’s warrants exercised their entire holdings.

In March 2017, Xintela announced that the company’s business development team had been strengthened by the recruitment of Thomas Areschoug to the position of Business Development Manager. At the same time, a reorganisation is taking place whereby Evy Lundgren-Åkerlund will assume responsibility for research and Greg Batcheller will increase his operational involvement in the company and become Executive Chairman.

Second quarter

At the Annual General Meeting on 18 May 2017, Keld Søndergaard was elected new Board member of Xintela. In addition, all existing Board members were re-elected, except for Anders Ermén who declined re-election.

On 22 May, Xintela announced that the company had signed a non-binding memorandum of understanding with the leading European cell therapy company CO.DON.

On 22 June, Xintela announced that the company had become a partner in a multi-million investment by the Swedish government to establish an international research centre for the efficient manufacture and development of advanced biologics in cellular and gene therapies.

Third quarter

On 17 July, Xintela announced that the company had been strengthened by the recruitment of Liselotte Theorell to the position of Director Product Development & Quality Management.

On 11 September, Xintela announced that the company had decided to bring forward the construction date of its facility for the manufacturing of advanced therapy medicinal products (ATMP) based on stem cells from horses and humans at Medicon Village in Lund, Sweden. The decision entails a later start for clinical trials.

Fourth quarter

On 17 October, Xintela announced that Keld Søndergaard had resigned from the company’s Board for personal reasons. Xintela’s major shareholders will form an informal Nomination Committee and consider potential replacements to propose to the next Annual General Meeting.

On 13 November, Xintela announced that a private placement of MSEK 10 and loans of MSEK 7 had strengthened the company’s finances by MSEK 17 prior to pre-clinical development and continued partnership discussions. The subscription price is SEK 3.12 per share, corresponding to an approximate discount of 10% compared with the volume-weighted average price over the 27 October-9 November 2017 period. The loan carries a monthly interest rate of 2%, with a term from 1 December 2017 until 31 December 2018.

On 1 December, Xintela announced the outcome of the employee share option scheme introduced in 2014. Under the scheme, 3,430 options were exercised, raising proceeds of SEK 514,500 for Xintela.

On 19 December, Xintela announced that the company had signed a collaboration agreement with the leading Japanese cell therapy company CellSeed. The aim of the collaboration is to conduct experimental analyses and examine conditions for a long-term collaboration and licensing of Xintela’s marker technology.

On 29 December, Xintela announced that the company had in-licensed antibody technology for the development of human antibodies in diagnostics and therapy.

Significant events after the end of the period

No significant events were announced by the company after the end of the period 

Statement from the CEO, Evy Lundgren-Åkerlund

As we put 2017 behind us, several important steps forward have given us every reason to be optimistic about the year ahead. We have taken major steps forward in our development projects in regenerative medicine and cancer, where we are focused on the degenerative joint disease osteoarthritis and the glioblastoma brain tumour. At the same time, we have strengthened company’s organisation and facilities to enable more efficient advancement of the projects, which includes GMP production of stem cells for clinical trials. Over the past year, the patent portfolio has been significantly expanded with new applications in our projects.

In regenerative medicine, we are following our plan and broadening our presence in Japan. We have now commenced collaboration with the company CellSeed to evaluate our markers for quality assurance of CellSeed’s cartilage cell product for a potential licensing of Xintela’s XACT analytical test. The collaboration agreement with CellSeed is a result of the partnering conferences we attended in 2017, which shows how important it is to be seen and heard in the international arena. Our active partnering efforts have raised awareness of Xintela’s unique technology and we have laid a solid foundation for future licensing discussions. Discussions have also continued with the German company CO.DON in regard to further collaboration around XACT and cell therapy for the treatment of osteoarthritis. A forthcoming joint publication will present the results we obtained from the initial collaboration on quality assurance of cartilage cells using Xintela’s marker technology.

An interesting indication that the stem cell market is rapidly advancing was received recently when Takeda Pharmaceuticals in Japan announced its intention to acquire the Belgian biopharmaceutical company TiGenix for an amount of MUSD 632. The high purchase price reflects the major interest in regenerative medicine and stem cell therapy, particularly in Japan. Xintela’s unique stem cell technology, our establishment of a GMP facility and our excellent results, particularly from the equine trial, mean that we can be optimistic about the future.

Xintela’s decision to build its own GMP facility for stem cell production was a key strategic step. It gives Xintela a strong and unique position in the field of stem cells and has already attracted a great deal of attention in discussions with potential partners. Efforts to complete the GMP facility are on track, and the premises and clean room will soon be ready to fill with bioreactors and other equipment critical to stem cell production. In conjunction with this, Xintela will be moving into new premises adjacent to the GMP facility. The GMP laboratory has been customised for the manufacture of cells for clinical trials but is also prepared for expansion to accommodate continued development and future commercial production.

Xintela’s development of the cancer project for treating glioblastoma, one of the deadliest forms of brain cancer, is also moving in a positive direction. We are now preparing to publish our results from the project to raise even more awareness of Xintela’s achievements in this field. We are very active in partnering meetings and have identified several potential partners. In December, it was particularly pleasing to announce an in-licensing agreement for human antibodies that bind to Xintela’s integrin α10β1 and integrin α11β1 markers that were developed under my leadership in a previous company. Since these antibodies have already been adapted for use in humans, a shorter pathway to clinical trials has now been enabled while also strengthening the cancer project and broadening Xintela’s cancer focus.

Finally, in November, we could announce that a private placement and loans had generated total financing of MSEK 17. This proved an advantageous solution because we were able to maintain the high pace of our projects without needing to focus on a protracted capital-raising process, while also protecting the company’s shareholders from dilution.

We can confirm that Xintela took important steps forward in 2017. We have now become a major player in regenerative medicine and increased our international presence. In addition, our work with the cancer project has broadened our understanding of the potential that Xintela’s technology holds for cancer diagnostics and therapy. As a result, Xintela is now looking forward to the year that has just begun with confidence.

Evy Lundgren-Åkerlund
CEO, Xintela AB  

Xintela AB

Xintela develops medical products in the fields of regenerative medicine and cancer based on the company’s patented marker technology, XINMARK®. Xintela uses the technology to identify, select and quality-assure mesenchymal stem cells for the treatment of cartilage damage and osteoarthritis. In a preclinical study on horses, the company has demonstrated that the stem cells are safe, and that they have a positive effect on the articular cartilage and underlying bone following injury. Xintela is now establishing its own GMP facility for stem cell production for equine and human clinical trials. XINMARK® is also used in the development of an Antibody Drug Conjugate (ADC) against glioblastoma, the most common and aggressive type of brain tumour among adults. Positive preclinical data from cell studies and an animal model have shown that the antibody has a killing effect on the glioblastoma cells, confirming that the concept is effective. Xintela has been listed on NASDAQ First North in Stockholm since 22 March 2016. Xintela’s Certified Adviser on Nasdaq First North is Erik Penser Bank AB, +46 (0)8-463 80 00.

Performance figures for 2017

Income

For the 2017 financial year, the company’s net sales amounted to TSEK 2 (3). For the fourth quarter, net sales amounted to TSEK 0 (0).

Earnings

The company’s operating loss for the financial year totalled TSEK 21,933 (loss: 17,097). The corresponding figures for the fourth quarter were a loss of TSEK 6,625 (loss: 4,618).

Research and development expenses, which account for the highest portion of the company’s costs, amounted to TSEK 16,216 (14,532) for the January-December period. The fourth-quarter figures were TSEK 5,142 (4,124).

Marketing and sales costs for the period amounted to TSEK 3,401 (2,869). The corresponding figures for the fourth quarter were TSEK 837 (278).

Administrative expenses for the financial year amounted to TSEK 2,318 (1,199). The corresponding figures for the fourth quarter were TSEK 645 (216).

The company’s loss before tax for 2017 was TSEK 21,945 (loss: 18,060). Loss before tax for the fourth quarter was TSEK 6,636 (loss: 5,581).

Financial position

On 31 December 2017, Xintela’s equity/assets ratio was 64% (87) and equity amounted to TSEK 18,415 (20,983). At 31 December 2017, the company’s cash and cash equivalents amounted to TSEK 21,910 (18,979). On the same date, the company’s total assets amounted to TSEK 28,585 (23,849).  The Board is continually working to secure the company’s financing requirements. The Management Team actively evaluates financing alternatives to secure the company’s long-term financing.

Cash flow and investments

Xintela’s cash flow for the financial year was TSEK 2,931 (13,456). Investments amounted to TSEK 2,074 (725), of which tangible assets accounted for TSEK 511 (332).

The share

Xintela AB (publ) began trading shares on Nasdaq First North in Stockholm on 22 March 2016 under the ticker symbol of “XINT.” First North is an alternative marketplace, operated by an exchange within the NASDAQ OMX Group. Companies on First North are not subject to the same rules as companies on the regulated main market. They are subject to a less regulated framework, adapted for small growth companies. A company listed on First North may therefore entail a higher investment risk than a company listed on the main market. All companies trading on First North have a Certified Adviser to oversee their compliance with the rules. The exchange assesses applications for admission to trading. Xintela’s Certified Adviser on Nasdaq First North is Erik Penser AB.

At 31 December 2017, the number of shares was 30,367,904. The company has only one class of shares. Each share carries identical rights to the company’s assets and earnings, and one vote at General Meetings.

Proposed allocation of Xintela’s profits

The Board of Directors and CEO recommend that no dividend be paid for the 2017 financial year, 1 January 2017-31 December 2017.

Financial statements in accordance with RFR2 (IFRS)

Xintela prepares its financial statements in accordance with RFR2 (IFRS). Historical financial information has been restated from 1 January 2014, which was the date of transition to IFRS.

Review by auditors

This interim report has not been reviewed by the company’s auditor.

2018 Annual General Meeting

The Annual General Meeting will be held on 29 May 2018 in Lund, Sweden. The Annual Report will be available on the company’s website from 30 April 2018.

Financial calendar

Interim report, Q1 2018 25 May 2018

Interim report, Q2 2018 29 August 2018

Interim report, Q3 2018 28 November 2018

Year-end report, 2018 27 February 2019

Employees

For the January-September period of 2017, the average number of employees at Xintela was 9 (8), of whom 6 (5) were women.

Risks and uncertainties

Limited resources

Xintela AB is a small company with limited resources in terms of management, administration and capital. The implementation of any major strategies requires optimisation of the company’s resource allocation. There is a risk that the company’s resources could be insufficient, and lead to financial and operational problems.

Dependence on key individuals and employees

Xintela AB’s success is based on the knowledge, experience and creativity of a few specific individuals. The company’s future is dependent on being able to recruit qualified employees. The company works hard to reduce this dependency by maintaining proper documentation of procedures and working methods.

Earning capacity and capital requirements

Drug development is both expensive and time-consuming. It may take longer than expected before the company can generate a positive cash flow. To cover these costs, Xintela AB may need to raise new capital. There is no guarantee that such capital can be obtained on terms that are favourable to shareholders. Failure to generate sufficient profits may impact the company’s market value.

Sales risk

There is no certainty that the products developed by the company gain the market acceptance reflected in this interim report. The quantity of products sold may be lower, and the period required for market establishment may be longer, than the company currently has reason to believe.

Disputes

Xintela is not involved in any ongoing disputes.

‍

For more information, contact:
Evy Lundgren-Åkerlund, CEO
Telephone: +46 (0)703 291 871
E-mail: evy@xintela.se
Website: www.xintela.se
Address: Medicon Village, SE-223 81 Lund, Sweden

Xintela has been listed on Nasdaq First North since 22 March 2016. Xintela’s Certified Adviser on Nasdaq First North is Erik Penser AB.

This information is such information that Xintela AB is required to publish under the EU Market Abuse Regulation.The information was issued for publication through the agency of the above contact person on 22 February 2018 at 8:30 a.m. CET.