Alligator Bioscience AB (publ) (ATORX) Earnings Call Transcript & Summary

This is Per Norlén. So welcome to this conference call, which will focus on today's press release. Slide 2, as usual, forward-looking statements. There are some later in the presentation. Let's move to Slide 3. So we announced today that Alligator will increase our focus on clinical development. This is to ensure financing, and for this, we will make significant reductions regarding investments in nonclinical activities, including staff reductions. The measures will result in a cost reduction of more than SEK 80 million this year or USD 8 million. That will increase our run rate to more than 18 months, well into Q4 2021. So I would like to show you the planned cost savings in more detail and that is in the next slide, Slide 4. We will focus on our key value drivers, and that is, our clinical programs, and it's also our innovation capacity. And that means that we will push all costs that are not time critical such as manufacturing campaigns. We will also reduce preclinical activities that are not directly linked to clinical development that includes, for example, stop of early preclinical programs, such programs that were planned to enter preclinical development in the near future. The reduced activity will be associated with staff reductions of about 20%, impacting 12 positions at Alligator. We have initiated negotiations with the unions as of today. Another factor that will affect our cash balance is the COVID-19 pandemic and its effect on recruitment. So let's go to Slide 5. We did expect slower recruitment to our clinical trials, and that's a direct consequence to COVID-19. And basically, hospitals today have a shortage of intensive care beds. And access to such intensive care is a requirement for running of any first-in-human trial. So our studies are still active, but they are not recruiting at full speed. We are still treating patients. There is still recruitment ongoing at some sites, but it's at clearly reduced level. So for how long will this go on? We don't know. It may well impact our communicated timelines. But since recruitments were very successful before the corona pandemic, we are still in a position where we hope to be able to deliver on our timelines. And one more point, mitazalimab is an exception. It's not affected by this situation. We do not have any trials open for recruitment yet for mitazalimab. So with mita, we still plan to submit the application for Phase II clinical trial authorization in the autumn this year. And with that, we move to Slide 6. This is an overview of the pipeline. We have a competitive clinical pipeline with mitazalimab and ATOR-1015, closing in on Phase II; ATOR-1017 in Phase I dose escalation. And these 3 projects will be prioritized. In addition, we have 527, and here's what we are looking for a partner in order to start clinical Phase I. We also have rights to AC101, which is a program developed by Shanghai Henlius. Early preclinical programs like ATOR-1144 are stopped, however, at least for the time being. So we'll take a deeper look at mitazalimab, that's Slide 7. Mitazalimab, it's a CD40 agonist antibody. CD40, a key target for boosting antigen presentation. It's also a very interesting target for treatment of cold tumors. And that's tumors with few or inactive integrated immune cells. This is a fact supported by clinical data presented last year by one of the competitors on CD40 antibodies in pancreatic cancer, pancreatic cancer then being a typically cold tumor. And pancreatic cancer is, in fact, a very interesting indication for mitazalimab with potential for first-line therapy and estimated peak sales in the range of $1 billion. So Slide 8. Here is our clinical development plan. It's in pancreatic cancer. We will start Phase II in the autumn and efficacy readout plan for 2022. And again, mitazalimab is not affected by the corona pandemic, not yet anyway. Slide 9. ATOR-1015. That's our first-in-class tumor-localizing CTLA-4 antibody. It's in late clinical Phase I dose escalation, and we move to Slide 10 directly to take a look at the progress. We've communicated in February of the dosing of 400 milligram that's about 6 mg per kg, which, we think, is a clinically relevant dose level. The product appears still to be tolerated. The next step will be starting of a single-agent Phase Ib expansion study in the autumn in melanoma, but also safety readout from the ongoing Phase I trial slightly later in the autumn and then start Phase II combination study with anti-PD-1 in melanoma with a planned CTA later in the autumn and with efficacy readout in 2022. So we move to Slide 11. That's ATOR-1017, our monospecific 4-1BB antibody, an antibody with potential to become first-in-class and best-in-class within that target. Dose escalation in the clinical Phase I trial has been progressing well. But as mentioned before, we expect slower recruitment for a period due to the COVID-19 pandemic. So with that, I would like to finish off with a summary, and that's Slide 12, of the next important events. Mitazalimab has completed Phase I, showing great properties. We have clinical material at hand, and we're now planning for Phase II studies to show efficacy in combination with CD1, and that will be in pancreatic cancer as primary. ATOR-1015 is dosing today at potentially therapeutic dose levels. There will be start of Phase Ib followed by safety readout and followed by CTA application for Phase II, in this order of appearance, during the autumn. And then ATOR-1017 will continue to dose escalate throughout the year with a safety readout next year and, hopefully, 527 will also enter the clinic with a partner on board this year. So that was a summary of the events of Alligator. And with that, I will open up for questions. Thank you.

[Operator Instructions] First question is from the line of Joseph Hedden from Rx Securities.

Could you confirm if the cost-consolidation measures have had any impact on the planned trials of mitazalimab in 1015? Have you altered the design in any way? And then just on the point of manufacturing campaigns. Have you secured enough supply already of 1015 to carry out the remaining trial and also the Phase II PD-1 combo? Or does that -- the completion of that pend on restarting manufacturing at a later date?

Yes. So thank you, Joseph. No, that's a really good question. So we are keeping the designs of our clinical trials. And our intention is clearly to keep the value in those programs. What we are doing is pushing costs that are not time critical, and that includes manufacturing today. We do have a clinic material, both for mitazalimab 1015 and, in fact, 1017 to cover both the ongoing trial and the next clinical trial. Obviously, for a longer clinical development, if we were planning to run our own Phase III, we would initiate the campaigns for later studies. But that is something that we can postpone to a later phase. And the focus today is to run the clinical Phase II trials to demonstrate efficacy. And that will -- where we will channel the financing.

Next question is from the line of Niklas Elmhammer from Redeye.

I was just wondering regarding cost savings. If you please could provide a bit more detail on the breakdown of how SEK 80 million in cost savings will be achieved in terms of employee reduction, [ 0 ] costs, et cetera.

Yes, I can comment. The employee reduction is a minor part of this. Of course, there are activities associated with employees, but still, it's a minor part. So the majority of those costs are from pushing manufacturing costs. That's a very significant part. It's also of not starting manufacturing campaigns for preclinical programs. So we had another preclinical program which is not in the pipeline where we were planning to enter manufacturing and start preclinical development, and that will not occur in the near future. So those are the sort of the major bulk of those cost savings. So there will obviously be less activities in the preclinical space that will reduce our capacity to have new programs entering the clinic in, say, 2, 3 years. But we are maintaining our capacity for discovery and innovation. And there is very interesting concepts coming from behind that we will prioritize.

Okay. And also, are there any restructuring costs associated with the savings program?

Well, yes, there are clearly restructuring costs, but that's included in the prognosis. So that's covered by the savings -- that's still savings of SEK 80 million or more than SEK 80 million, I should say.

[Operator Instructions] And we have a question from the line of Patrik Ling from DNB Markets.

Just a few short questions. Could you just remind us about the timelines for these savings? When do you think that you will have full effect? And what would the burn rate for you be at that point?

Yes. We -- those savings will be in full effect by, say, September this year. And this year, we will reduce burn rate from, say, an expected 230 down to 100 -- between 140 and 150, I would say, below 150. So it's very significant cost savings.

Okay. Could you also maybe touch upon -- I mean we have discussed in the past that maybe you wouldn't like to try to out-license mitazalimab again to someone. Has the current situation made those discussions more difficult for you? Or maybe you can give us an update on what is happening there.

Yes. We do still have discussions. As you know, there's just been BIO-Europe conference. But as you, I'm sure, understand that those interactions now occur over the web. And it's fair to say that since the interactions are not face-to-face, it will take longer time. Also, there is a number of companies who basically just, to be on the safe side, will not make major investments in the -- just over the next few months. So we expect to see delay in those activities. But we still have discussions, and we still have great hopes to find a partner for that program.

Next question is a follow-up from the line of Niklas Elmhammer from Redeye.

Maybe I didn't hear correctly. Regarding ATOR-1015, could you please give us, if possible, an update regarding where you are now in terms of dosing?

Yes. So we haven't communicated since February, and we have no new communication today. I expect the next communication will be in the next quarterly report. And -- but the last communication was 400 milligram, which is 6 mg per kg.

And next question is from Samir Devani from Rx Securities.

I just wanted to clarify just on the Phase II combination study in pancreatic cancer for mitazalimab. Will that start with -- if you don't have a partner in place?

Yes. So this is one of our prioritized programs, obviously, and one of the programs which has a chance to achieve [ fixed ] data in the near term future. So we will initiate that clinical trial with or without a partner, and that is, within the budget we have been presenting. So that's part of the plans to [ finance that as well ].

And just to connect with Opdivo, the combo IO checkpoint inhibitor.

Well, that is one of the options. Clearly, yes, we are looking for combination partners. When it comes to, say, 1015, we would focus mainly on the PD-1s. But when it comes to mitazalimab, I think either PD-1 or PD-L1. So it's actually broader range of potential partners.

And there are currently no further questions registered. I'll hand the call back to the speakers. Please go ahead.

Okay. And we have actually received, let's say, some questions over the e-mail. The first one here is from Kempen. And the question is, when would you see as an opportunity to restart the development of the later-stage preclinical candidates like 1144? And I think that's basically down to the financing of the company. So we will focus on the clinical programs until we are in a new situation. If we make an out-licensing deal or getting clinically -- positive clinical data that would increase the share price and maybe give us an opportunity to raise external capital, if we get the better financing situation, then that's where we will bring in more preclinical development programs or, obviously, if we do find a partner who is willing to finance that. So we are looking in parallel to finance also the innovation part through partnerships and also the preclinical programs. So we are clearly looking for more partnerships at this moment in time. Right. Okay. So if there are no more questions, then thank you all of you for joining this call, and wish you a great Easter. Thanks so much.