Earnings call transcript: Zelluna ASA reports Q1 2025 financials, stock drops 6%

Zelluna ASA, recently listed on the Oslo Stock Exchange and currently valued at $3.62 million, reported its first-quarter 2025 financial performance, revealing a challenging period marked by continued operational losses. The company’s stock fell by 6.11% following the announcement, closing at 13.8 NOK. According to InvestingPro analysis, the company’s overall financial health score is rated as WEAK, with the stock down 28.29% year-to-date. Despite the downturn, Zelluna remains optimistic about its innovative TCR NK cell therapy platform, which targets solid tumors.

Key Takeaways

• Zelluna ASA’s stock dropped 6.11% post-earnings report.
• The company maintains a cash position of 135 million NOK, ensuring a financial runway through Q2 2026.
• Zelluna is advancing its lead asset, ZIm4.1, towards clinical submission.
• The firm completed a business combination and reverse share split in Q1 2025.

Company Performance

Zelluna ASA’s Q1 2025 financial results reflect a period of strategic restructuring and investment in its innovative therapies. The company reported an operating loss of 29 million NOK and a pre-tax loss of 28 million NOK, with InvestingPro data showing an EBITDA of -$9.35 million for the last twelve months. While the company maintains a healthy current ratio of 2.3, indicating strong short-term liquidity, Zelluna’s commitment to advancing its TCR NK cell therapy platform positions it uniquely in the competitive cell therapy market, which is experiencing significant deal-making activity.

Financial Highlights

• Cash Position: 135 million NOK
• Private Placement: 51.7 million NOK
• Operating Profit (EBIT): -29 million NOK
• Profit Before Tax: -28 million NOK

Outlook & Guidance

Zelluna aims to submit its clinical trial application for its lead asset, ZIm4.1, in the second half of 2025, with plans to generate initial clinical data by 2026. The company expects operational synergies from its recent business combination to reduce cash burn by 2025, extending its financial runway through Q2 2026.

Executive Commentary

"We believe we have a game-changing platform, a world-leading cell therapy platform, highly differentiated," stated CEO Namir Hassan, emphasizing the company’s unique approach in the cell therapy space. CFO Hans Vasqueray added, "We expect the cash burn level to come down significantly prior to the initiation of clinical trial activities."

Risks and Challenges

• Cash Burn: Despite a financial runway through Q2 2026, managing cash burn remains critical.
• Regulatory Approval: The uncertainty surrounding FDA approvals could impact timelines.
• Market Competition: The cell therapy market is highly competitive, with significant deal-making activities.
• Clinical Development: Successfully advancing through clinical trials is essential for future growth.

Zelluna ASA’s strategic focus on its TCR NK cell therapy platform and its robust cash position provide a foundation for potential future success, despite the immediate challenges reflected in its Q1 2025 financial performance. For deeper insights into Zelluna’s financial health, valuation metrics, and growth potential, explore the comprehensive analysis available on InvestingPro, including exclusive ProTips and detailed financial metrics that help investors make informed decisions.

Full transcript - Zelluna ASA (ZLNA) Q1 2025:

Namir Hassan, CEO, Zaluna: Good morning. My name is Namir Hassan, the CEO of Zaluna, and I’m delighted to present to you today our first quarter business update and financial results. Can I have the next slide, please? This is our disclaimer slide. Next slide, please.

So the contents of the presentation today is we’ll highlight the key events over the first quarter. We will go through the ZELUNA TCR NK technology and pipeline, provide a financial update, and then summarize at the end. Can I have the next slide, please? And the next slide, please. So I wanted to start with this, a symbolic and momentous occasion for the company, Zeluna being the first ever cell therapy company to be listed on the Oslo Stock Exchange with our bell ceremony on the March 4.

And this is symbolic for two reasons. This is a milestone in the development of our TCRNK technology and advancing this this technology to patients. And the second is, as you can see, that virtually, all of the company are represented here, a breadth of deep expertise, really, people that have walked, the path for similar therapies and have developed the insights, and bring that, to our journey, and helping to derisk our pathway towards patients. Can I have the next slide, please? And this was made possible by the successful transaction and business combination, which was completed on the March 3 together with a private placement.

And we have also successfully, over this period, integrated operationally the business with the two legal entities, ZELUNA ASA and ZELUNA immunotherapy. May I have the next slide, please? One of the major announcements that we had made over the course of this period is a significant milestone that’s been reached, and that’s around manufacturing. With any cell therapy, which is the type of therapy that we are developing, manufacturing represents the highest risk activity in the lead up to a clinical study. And so with this announcement, we have demonstrated a ability to successfully develop, scale, and automate our proprietary manufacturing process for our novel TCR NK therapies and therefore substantially derisked our path to the clinic.

Importantly, the proprietary manufacturing pro process is also applicable to any product emerging from the pipeline. So in essence, it serves the entire platform. We’ve also demonstrated very crucially that the process is able to deliver hundreds of doses from a single batch, And this is one of the areas that is hindering current approved cell therapies, notably the scaling of these therapies. And what we have shown here and demonstrated is that we are able to generate hundreds of doses from a single batch and therefore addressing one of the key limitations of current cell therapies. May I have the next slide, please?

Just to visually illustrate this, what we are intending to do is to take a donor, blood material from a healthy donor and produce through our manufacturing process, as you can see with this illustration, hundreds of cryopreserved doses that can then be deployed to clinical sites and frozen and used at the point of need for late stage cancer patients. And so what this demonstrates is the scaling out ability of such a therapeutic, which is incredibly important when aiming to address solid cancers since solid cancers represent the largest cancer burden in globally, and therefore, there is an enormously high unmet medical need, and hence scaling of a therapy for solid cancers becomes crucial. May I have the next slide, please? And so as we had presented, as we initially announced the combination with the milestones that we would be envisioning ahead. What you can see from this slide is that in 2025, we have been able to lock manufacturing.

And looking ahead, what we aim to do over the second half is really advance closer and closer to the clinic through completing preclinical, generating further batch of material to the standard of GMP that we then would use for a clinical trial and also submit a clinical trial application over that period. Looking ahead, our plan would then be to generate initial clinical data in 2026, which will be incredibly important and a potential value inflection catalyst, particularly for a cell therapy where human data becomes incredibly important and small datasets can really catalyze immense value. May I have the next slide, please? And just to illustrate that point, what we have also seen in this period is a real dynamic business activity within the space, the cell therapy space. Most recently, a deal announced, between a small organization, a company developing in vivo CAR T cell therapies, Eso Biotech, acquired by AstraZeneca.

And the deal was triggered on the basis of data from a single patient. The total deal value is approximately $1,000,000,000 with approximately half of that upfront and half of that in in downstream milestones. Now what this illustrates further illustrates is the real value of small human datasets with cell therapies. In this case, one patient triggering a substantial deal. Prior to that, in November, we had also seen Roche acquiring Poseidah, Poseidah being an early phase company developing off the shelf CAR Ts.

Again, early clinical phase one data with a total deal value of approximately 1,500,000,000.0, further illustrating the triggering of incredibly high value deals on the basis of small human patient datasets. And so Xeluna are leveraging these deals in dialogue and ongoing business development activities as we look to generating human data next year. Can I have the next slide, please? And so I’ll spend a bit of time now providing some further context and also going through the technology and the advances that we have made. So, again, put to put the, ZELLUNA platform, and our mission in context, the challenge as, we see it is that over nine million deaths occur globally from solid tumors, and that’s in globally, where we have seen immense burden there and a high unmet medical need.

Over eighty three percent of patients with late stage cancer page with late stage cancer, unfortunately, will die from their disease. So this is a huge challenge. Solid tumors represent a huge challenge. And the context is that there have been some successful treatments for certain types of solid cancers. But despite some initial responses where we have seen those treatments shrink tumors, most of the tumors return due to cancer escape.

And so that is one of the key challenges that the field is facing. What we bring as a differentiated approach is that we have built a platform that brings together clinically validated components. So it’s a novel platform, but it’s built on clinically validated components. So it’s a derisked concept and path, and it’s designed to overcome the challenges that we’re facing when treated solid cancers. Can I have the next slide, please?

And so we’re in the field of cell therapy because we believe that cell therapies and cell therapies have been proven to be the only types of of therapy that have cured cancer patients. We have nine approvals in this space, mainly in liquid cancer. And with those approvals, what has been demonstrated is the validity of the cell therapy approach, and that’s very exciting. Now despite that success, there remain two major challenges. The first is that solid cancers remain very difficult to treat.

And in the nine approvals that we have seen to date, the majority of those have been with blood cancers. The second major challenge, as I alluded to earlier, is that scaling the cell therapy treatments have been has been a limitation. All of the nine approvals involve a complex manufacturing process where a batch of material is manufactured for every single patient, therefore, limiting the scalability of this type of approach. At Zaluna, what we’ve been building over the last years and where we have got to today is a platform where we aim to take the curative potential of cell therapies to solid tumors at a global scale. Can I have the next slide, please?

And so we believe this is the right moment for Xeluna. We believe we have a game changing platform, a world leading cell therapy platform, highly differentiated. We’re virtually the only company that are adopting this approach. And while it’s novel and highly differentiated, we believe it’s derisked in its concept and path. It brings together validated components, and we have a highly experienced team that has walked the journey of these types of therapies before and therefore bring the insights to operational execution.

And we think, ultimately, the therapies will transform treatments of solid cancer at a global scale. The second thing is in an unprecedented fashion, we have a IP position that allows the potential opportunity to land grab the entire therapeutic space, and I’ll come back to this point, a highly important point that potentially has enormous value that can be unlocked at the moment that we demonstrate the platform can drive responses in patients, which we aim to do next year. The third is that we have a near term clinical inflection. Our lead program is advancing towards towards the clinic. We have a derisked pathway to clinical entry.

Our latest announcement around manufacturing, as I described earlier, we have regulatory feedback that further has derisked the pathway. And therefore, we expect a near term value inflection where we generate human data next year in the context of high value data from few patients. And the final point here to reemphasize the point I just made, small clinical datasets within the cell therapy space drive high value. This can be seen from the example of approvals where we have had approvals in this space with data from less than a hundred patients. This can also be seen from a business development perspective where we have had high value deals triggered on the basis of very few patients, in some cases, one single patient as we saw with the EZ Biotech AstraZeneca deal.

The last the the next slide, please. So as a reminder of the concept and our approach, there are two major components to the approach. The first is what’s called a T cell receptor. This is what we use to guide the cells that we engineer. The T cell receptor is a proven guidance system where we have seen that such a receptor or therapies based on such a receptor are able to effectively target solid cancers.

There are two T cell receptor based therapies approved for solid cancers, so it provides validity for using the T cell receptor as a targeting mechanisms to target solid cancers. So we insert that T cell receptor, the guidance system, into what are called natural killer cells. Natural killer cells occur naturally in the human body, and by definition, they are perhaps the most efficient killers that we have in our immune system. So we introduce the guidance system, T cell receptors, to natural killer cells. And the advantage of natural killer cells are a few.

The first is natural killer cells have multiple ways of recognizing cancer, so we bring this ability to our therapeutic. The second is that natural killer cells with over decades of clinical data have demonstrated to be safe. And the third is that natural killer cells can be used in an off the shelf fashion, meaning that a single batch of natural killer cells from a healthy donor can be used across multiple patients with multiple doses without causing any toxicity concerns. So we bring these two things together. Both are validated.

We’ve seen clinical data demonstrating the ability of both elements. We bring those together in our novel TCR NK format. So whilst it’s a highly differentiated, unique approach, it’s built on validated components, and we’re aiming at solid cancers. May I have the next slide, please? Now I wanted to come back to this point where we believe we have an unprecedented position, when it comes to IP.

One of the layers of IP, we have multiple layers. One of those, crucially, is our position where there is the potential to land grab the entire therapeutic space. So just to try to bring this into context or bring some granularity, to this, a comparison can be made with another type of approach, a cell therapy, so called CAR T therapy. CAR T therapy are another cellular therapy, which are based on T cells as shown on the right, guided by a CAR rather than a TCR. Now we have had numerous successes with this type of therapy predominantly in blood cancers, liquid cancers, and numerous approvals, as you can see in the product names on the right, across numerous companies.

And so there’s multibillion revenue being generated on the basis of CAR T therapy. Now one can then imagine if this approach was protected via a pioneering patent, then the aggregate value potential is enormous. We have multiple approvals, multiple products across multiple companies, and there are many other players in the field. Similarly, we have protection of the TCR NK approach. So one can then put into context the potential value that can be unlocked, particularly as we demonstrate the potential ability of our lead asset to drive responses in solid tumor, which we aim to do next year.

And by extension, if we do that, we then demonstrate the platform potential, which is protected via this pioneering patent, and can unlock immense, immense value, as compared to a CAR T approach. May I have the next slide, please? And so just to provide some data, where we have compared our TCR NK lead asset, which is shown on the right hand side, with a benchmark TCR T cell. So this is a T cell, that has a T cell receptor, both going after the same cancer, restricted target. And what we’re aiming to demonstrate these are videos, which I’ll play in a moment.

What we’re aiming to demonstrate is with our TCR NK approach, we’re able to eliminate diverse cancers. So diverse cancers, in this case, are represented by the red and the green cancer cells, so a variation of cancers. And this is what we would expect in patients, diversity in the tumors of patients, which represents one of the major challenges to completely eliminate those tumors. On the left hand side is the T cell, and what we should see over the video is with the T cell that recognize one of those cell types, the red cancer cells, can only eliminate parts of the tumor, whereas the TCR NK eliminate both cancer cells within this particular experiment demonstrating that TCR NK is able to address diversity of tumors, which we believe and has been demonstrated as being one of the major limitations to driving responses in solid tumors. So if I can ask both videos to be played, hopefully, what you will see is the killing occurring in both situations.

But on the right, with our lead assets, we’re eliminating both populations and also doing that at high speed since natural killer cells are perhaps the most efficient killers in the immune system and the human body. Maybe I’ll play that one more time just to demonstrate that again. You can see that on the left, we have part of the population, the red cancer population being killed, whereas on the right, we have both being killed and at very high speed. This is one of the major benefits, that we believe the TCR NK novel approach brings, which is the ability to address diverse cancers that exist in all solid tumor patients. Can I have the next slide, please?

And so, our pipeline consists of a lead asset, what we call ZI m a four one that’s advancing well, towards a clinical submission. We announced the manufacturing, a major milestone, which is a milestone not just for the program, but also for the entire platform since any program potentially can be plugged into that manufacturing platform. Behind that, we have a couple of other programs, again, targeting solid tumors. And through our programs, we’re able to potentially access a wide range of solid cancers. Many of them are ones with a high unmet medical need where there is a dire need for new therapies to be able to drive durable responses at scale, and that’s what we’re aiming to do.

Can I have the next slide, please? And so, outside of the TCRNK platform, which is our, focus, we also have been, looking at the multi click technology. As a reminder, this is a platform consisting of a flexible core molecule that can be selectively coupled to several modules, and we’re exploring the merits of the technology and its potential value. With respect to the wrapping up of the UV-one program, the remaining two trials, LungVac and DoVac, have completed enrollment, and top line results are expected sometime during 2025. And the next slide, please.

So I’d like to hand over now to Hans to provide the financial update.

Hans (Haldes Vasqueray), CFO, Zaluna: Thank you, David. Good morning. I’m Haldes Vasqueray, CFO of the Cellular Group. And we can move to the next slide. Let me see in a second.

Yes. When we look at the key financials for the first quarter, it’s important to note that when we made this business combination that was closed on March 3, a legal perspective, it was Celuna ASA, formerly named Ultimovax ASA, that was acquiring Celuna immunotherapy. From an accounting perspective, however, it’s it’s the subsidiary, Cellular Immunotherapy, that is now the main oper operational entity in the group that is defined as the acquiring entity. So the accounting perspective is different from the legal one. It’s a set of criteria that is behind such a consideration, and the most important being that the value of cellular immunotherapy was significantly higher than the acquirer and also that a majority of the share was received by the former shareholders of Celludo Immunotherapy.

Up until the time of the transaction, early March twenty twenty five, all numbers relate to cellular immunotherapy alone. From March 2025 and onwards, the full new cellular group is included in the numbers. Moving to the next slide, we can have a look at the key financials from the first quarter. By the end of the quarter, the cash position was 135,000,000 or corresponding to roughly USD 13,000,000, with the fully committed private placement of NOK 51,700,000.0 that was part of the closing of the business combination. The financial runaway is expected to last through the second quarter of twenty twenty six, thereby capturing the key R and D catalyst for the TCR Mk technology.

The EBIT, the operating profit for the first quarter was minus NOK 29,000,000. The profit before tax was more or less at the same level, minus NOK 28,000,000. Also following the business combination, we have completed a reverse share split, whereby 10 old shares are converted into the one view share. If we move to the next slide, we could take a look at a more detailed P and L breakdown. If we look at payroll expenses, we see that the regular payroll expenses were higher in the first quarter of twenty twenty five compared to the same quarter last year, and that is due to a higher number of employees in the group following the business combination.

And the personnel expenses for all employees in the New Zealand group were then included for one month from March and onwards. In the first quarter, we also had a different effect where the share option costs of certain terminated employees or former employees were reversed due to the termination of these the related options. So that was minus NOK 3,800,000,000.0 as an effect. So that’s important to note. Looking at the external R and D expenses, we saw lower R and D costs in the first quarter of twenty twenty five compared to the same period in previous year, 13,000,000 versus 2019.

And this is mainly driven by differences in the CMC activities. Looking at other operating expenses, these expenses were higher in the first quarter of twenty twenty five compared to first quarter of twenty twenty four, driven by the inclusion of the full serial number from March. And these numbers also include significant transaction costs related to the business combination. Moving on to the next slide. The operating cash flow in the first quarter of this year was approximately minus 36,000,000.

That’s different from the operating profit or EBIT, which was at minus 28,000,000. And this is primarily due to these share option expenses that I referred to that have no cash effect. The cash flow in the first quarter of twenty twenty five reflects then cellular immunotherapies cash flow plus the cash flow for the full group from March, just to be clear on that. Whereas when you compare, again, with the historical numbers, it’s only the subsidiary that are represented in the numbers. We expect the cash burn level to come down significantly prior to the initiation of clinical trial activities as realization of operational synergies start having effect during 2025.

So with that, I would like to give the word back to Namir.

Namir Hassan, CEO, Zaluna: Thank you very much, Hans. So just to summarize, if I can have the next slide, please. As that comes up, we believe we’re at a very exciting time, firmly focused on advancing our lead asset and looking ahead to preparations for a clinical study in order to test our lead in patients. And we’re really driven and fueled by four elements, as I had mentioned earlier. The first is our differentiated and unique platform built on clinically validated components.

The second is the real opportunity to land grab an entire therapeutic field by validating the technology through demonstrating the potential of the lead asset with human data next year, we believe we potentially can unlock immense value. Thirdly, that the approach that we’re taking is really driving, and the momentum that we’re building is really aimed at a near term inflection. And that is, as you can see here, generating human data next year. And finally, final fuel in our rocket as it were is we know that in this field, generating small amounts of human data can be incredibly transformative, transformative from the perspective of understanding the potential of the therapy and advancing to an approval and transformative from the perspective of really catalyzing high value deals in this space. So this is the moment.

This is the moment where we’re building the momentum, preparing for really understanding the potential of a platform that we have been building and developing for a number of years. With that, I hope we have relayed our passion and excitement and our substantial advances over the last quarter. And I’d like to finally acknowledge the incredible team at Zaluna without which, really, the advances wouldn’t be made possible. Highly experienced, walked the path before, and really efficient in operational execution. Thank you very much, and we can now take any questions.

Hans (Haldes Vasqueray), CFO, Zaluna: Thank you, Namir. We have at least a couple of questions. The first one being as follows. Due to the uncertainty of the future direction of the FDA, are you considering going for an approval or setting up trials in Europe instead?

Namir Hassan, CEO, Zaluna: That’s a very good question and a very important question. Our current plans involve a parallel track where we are moving towards both The US and Europe. We believe it’s important to be in a position to act on any potential barriers that may emerge in The US. And given the development there, we also have a parallel track in Europe, which we’re proceeding and advancing at the same pace. And so we have that track in order to derisk.

And so yes, we are also advancing outside of The U. S.

Hans (Haldes Vasqueray), CFO, Zaluna: Thank you, Lomi. Then we have a What is the expected cash burn for the company in 2025? I’m happy to respond to that. As we have said during the presentation, our current guidance is that the financial runway based on the current cash position is through the second quarter of twenty twenty six.

We’re not giving more specific guidance than that. I can repeat what I just said that we do expect the cash burn rate to come significantly down during 2025 before we initiate clinical trial activities. This will be as a consequence of capturing operational synergies. So this will sort of gradually come into effect. For the first quarter and the second quarter, the cost level will be higher, and then we expect it to come down, in particular, during the second half of this year.

Okay. It seems that we have no further questions today. So that’s it on the Q and A side. Nami?

Namir Hassan, CEO, Zaluna: Brilliant. Well then, with that, I’d like to close and thank you all for your attention.

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