Cantargia prepares intensified development strategy and capital raising

· Expands its initial clinical phase I/IIa study of CAN04 with combination
therapies
  · Makes additional investments in the production process of CAN04
  · Initiates a project to develop a new antibody within the IL1RAP platform

Cantargia AB today announced that the board has taken a decision on an enhanced
development strategy for the company and its product candidate CAN04, and is
initiating a project around a new antibody for the treatment of autoimmune and
inflammatory diseases. To accomplish this, the company plans to conduct a
capital raising of approximately MSEK 80, in addition to the capitalization of
up to MSEK 25 through the conversion of warrants in October 2016. The decision
is planned to be taken at an extraordinary general meeting estimated to be held
Q4 2016 / Q1 2017.
Inclusion of combination therapies in the initial clinical study of CAN04

"Cantargia’s decision to increase the level of ambition in the CAN04 project is
among the most important and the most intensified in the company's history. This
marks a major step to enhance the value of the CAN04 project and take greater
advantage of the potential around the target IL1RAP (Interleukin 1 Receptor
Associated Protein). I feel enthusiastic about the opportunities that open up
with our intensified development strategy", says Göran Forsberg, CEO of
Cantargia.

The decision has been taken in consultation with international key opinion
leaders in the field of solid tumors, and it represents a significantly
increased level of ambition in the initial stage of the clinical studies of
Cantargia’s product candidate CAN04 against non-small cell lung cancer (NSCLC)
and pancreatic cancer. By expanding the study to include combination therapies –
where CAN04 is combined with existing standard treatment – Cantargia will
receive significantly more data, which allows the company to accelerate the
overall development of CAN04. This improves the conditions for a partnership of
CAN04. Cancer treatment today is often some form of combination treatment, and
in view of the good safety and unique mechanism, CAN04 can potentially be a good
substance to combine with other treatments.

The clinical study protocol is still under development. It will be based on an
adaptive design which means increased flexibility during the trial. The protocol
will provide relevant data on combination therapy and significantly more
information than initially planned. During 2017 Cantargia plans to start
preclinical studies with different types of combination therapies to support the
clinical development.

The clinical study of CAN04 is now planned to start during the first half of
2017, and a presentation of the phase I data is planned about a year after the
start of the study. More data will be generated continuously, but based on the
first data set, the foundation is laid for Cantargia’s ambition to find a
partner who can take responsibility for the latter stages of clinical
development. When phase I data are reported, in addition to the current study,
the company also intends to finalize a protocol and start a clinical phase IIa
trial for leukemia.

The next step in the production development of CAN04

In June 2016, Cantargia decided to invest in the further optimization of its
production processes, which has resulted in a production process that can be
used to produce material for initial clinical trials. Because of the company's
development strategy, the production process needs, however, to be carried out
in a larger scale and at a higher cost than initially planned. Therefore, as
part of the more aggressive clinical development of CAN04, Cantargia plans to
invest in further process development of a production method that meets the
requirements in subsequent clinical studies. Like other antibody production
processes, substantial development activity and process optimization are needed
between early and late clinical phase in order to increase yields and ensure a
robust production. Through the investment in the production process, a better
opportunity to take advantage of the time savings made in the overall clinical
development is created.

Start of a new project against autoimmunity and inflammation

Cantargia intends to initiate the development of a new antibody against IL1RAP
with properties optimized for the treatment of autoimmune and inflammatory
diseases. IL1RAP mediates signals of both the cytokines IL-1 and IL-33, which
have a role in several severe autoimmune and inflammatory diseases. The project
is planned to start in 2017, and the goal is to select a clinical candidate that
can enter development at the end of 2018 or the beginning of 2019.

By starting a new project against a disease segment that complements CAN04 in
cancer treatment, the company gets a risk spreading that according to the board
of directors is considered very attractive. In addition, the knowledge and tools
developed within the CAN04 project gives a pronounced synergy between the two
projects.

"The goal is that within our existing or new antibody libraries identify and
optimize antibodies that inhibit both IL-1 and IL-33 activity to treat
autoimmune and inflammatory diseases", says Göran Forsberg.

Planned future capitalization process

In order to carry out the activities presented above, Cantargia’s board assess
that the company has an additional need of capital of about MSEK 80 until mid
2018, in addition to what has been previously announced. Further information on
the planned capitalization is planned to be published in Q4 2016 or Q1 2017. In
addition, the capitalization also includes the conversion of warrants of series
TO 2 and TO 4 in October 2016. If fully exercised, these warrants add a total of
about MSEK 25 before issue costs to Cantargia.

Cantargia’s board is expected to evaluate the opportunities and strategic
options available for the company's next development stage during mid 2018.

For more information, please contact:
Göran Forsberg, CEO
Phone: +46 46 275 62 60
E-mail: goran.forsberg@cantargia.com
Certified Adviser: Sedermera Fondkommission

This constitutes information that Cantargia is required to publish under the
EU’s Market Abuse Regulation. The information was submitted for publication
through the above contact person on 20 September 2016, at 8:00 am.