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

Hello, and welcome to the Alligator Bioscience Q2 Report 2021. [Operator Instructions] Today, I'm pleased to present CEO, Søren Bregenholt; and CFO, Marie Svensson. Please go ahead with your meeting, sir.

Yes. Thank you. Thank you, and welcome to this Q2 report call. If we go to the slides, Slide #2, our forward-looking statement. So in Slide 3, I'll take you through the significant events in Q2. Most importantly, we at the ASCO meeting on June 4 presented new encouraging data from our 4-1BB agonistic antibody ATOR-1017, showing solid proof of mechanism data combined with strong safety data really giving our strong belief in the potential of this second-generation 4-1BB agonist in immuno-oncology. We also recently presented preclinical collaboration data or preclinical data from our collaboration with Scandion Oncology, combining our CD40 agonist mitazalimab with chemotherapy and the Scandion agent in chemo resistant tumors. From Alligator's point of view, the most important data coming out of that study was evident that mitazalimab also synergizes with chemotherapy even in chemotherapy-resistant tumor cell lines in this preclinical model. Continuing on mitazalimab, our CD40 agonistic antibodies. we presented 2 papers during the quarter. One, on preclinical data with the mitazalimab, again showing the synergy with other agents, again, demonstrating the excellent combination properties of CD40 and mitazalimab, and then a peer-reviewed review on the CD40 agonist class and its promise as a future immuno-oncology agent. On the business development side, we presented our collaboration with the U.S.-based MacroGenics, aimed at exploiting our Neo-X-Prime platform to develop a bispecific antibodies against 2, at this point in time, undisclosed targets, and that program is progressing according to plan. And during the quarter, we also presented and announced our research collaboration with BioArctic, aiming at discovering antibodies in neurodegenerative space. On the company side, I joined the company as CEO on June 1. And also on June 1, Alligator has its Annual General Meeting and established a new Board of Directors with Anders Ekblom as reelected and elected as Chairman, Hans-Peter Ostler elected to the Board as Vice Chairman, reelection of Graham Dixon and then election of Veronica Wallin and Eva Saers to the Board. Then moving to the next slide, Slide #4 in your deck. Let me just spend 2 minutes on introducing myself. My name is Søren Bregenholt. I'm Danish national, did my PhD at University of Copenhagen, did my post-doctoral training at the Pasteur Institute in Paris. And has then for the last more than 20 years, been holding various executive positions in international biotech and pharma, working in research management leadership, in business development, alliance management and strategy, most lately as CEO of U.K.-based Macrophage Pharma. And as I said, I joined the company at June 1. On Slide 5, you'll see an overview of our pipeline, and I thought it would be valuable just to reiterate that. As you can see, we are just on the brink of bringing our CD40 agonistic mitazalimab into Phase II clinical trials, the OPTIMIZE-1 trial which is expected to start any day now and definitely before the end of July. Second in line, we have 1017, our 4-1BB monoclonal agonistic antibody. As I said before, we are in the late part of the Phase I dose escalation study, and we presented data at ASCO on this molecule. The third molecule in the pipeline slide here is 527, which we are co-owning and codeveloping with the U.S.-based, Aptevo. This is a bispecific antibody, binding 4-1BB on 1 arm and 5T4 tumor-associated antigen at the second. And together with Aptevo, we are getting ready to bring this T-cell engager into Phase I clinical trials, and we are in the process of submitting the required regulatory documents. Then you will see an internal Neo-X-Prime molecule that we are taking forward. Neo-X-Prime is our third-generation proprietary immune therapy platform. Here, the concept is that we would, one, set off of the binding side's engaged CD40 on the dendritic cells and on the other antibody arm binds tumor-associated antigens in order to both stimulate the more alive function antigen-presenting function of dendritic cells in the tumor and the -- at the same time, bringing tumor-specific antigens to the immune machinery, thereby stimulating the immune system in a patient-specific way. The promise of this technology was validated in the quarter by the aforementioned collaboration agreement with MacroGenics, where we are moving ahead with a set of undisclosed targets. And the company is really seeing a huge potential in Neo-X-Prime, both in order to build our internal pipeline in the future, but also for out licensed or partnered programs. And latest, but not least, we have AC101, which is a HER2 specific monoclonal antibody that was originally out licensed to AbClon and is now being developed by Chinese, Henlius, And then we have a preclinical collaboration or out-license program with Biotheus in China, targeting undisclosed epitopes in a bispecific program. So now if we then shift to the next slide, slide #6. Mitazalimab, our CD40 agonist is our most advanced program. As I said, we expect to enter Phase II clinical trial in OPTIMIZE-1 later this month. OPTIMIZE-1 is going to assess the efficacy and safety of mitazalimab in combination with the standard of care chemotherapy for FOLFIRINOX in pancreatic cancer. The molecule, as you know, have been in Phase I clinical trials, showing signs of efficacy, have proved mechanism of action and also showed a very promising safety profile. And we are going to utilize that proactively in OPTIMIZE-1 design, being able to dose more frequently and also at higher doses in this indication compared to other CD40 agonists. As I said, the CTA is approved both in France and Belgium, and we expect the first patient in the study by the end of July this year, so this month. we are, at the same time, looking at -- to fine-tune the regulatory strategy for mitazalimab, and we are also in the process of assessing potential secondary or indications for the antibody to balance out the risk in the portfolio and also optimize the value of the molecule in the future. 1017, our 4-1BB agonist is again a very promising molecule. IO specific target on T cells and the [indiscernible] includes extended durability of T cell responses. The 4-1BB anti-agonistic antibodies have been marked by high or bad toxicity profiles. We believe with 1017, that we have found the right balance between efficacy and safety, allowing us to develop this as a very potent agonistic antibody either in combination with chemotherapy or more likely with PD-1 molecules. The promise of the molecule was reiterated by the data that we showed in -- at ASCO with very good tolerability and a favorable PK profile together with the biomarker data demonstrating the proof of mechanism through T cell activation as you would expect from a molecule like 1017. Dose escalation is continuing. The company is committed to find the highest possible dose for 1017 to go into Phase II clinical trials to really optimize the chance of success for the molecule in that Phase II trial. And as the slide says, Phase II preparations are ongoing. The next slide on Neo-X-Prime, let's just to reiterate that this is our third-generation innovative immune-therapy concept. We are developing our own internal program, as I just said, and we are moving ahead with our collaboration with MacroGenics, and that is progressing according to plan. And just to reiterate, we see a strong potential for building both a proprietary and partner pipeline. And with these words, I will give the word to you, Marie.

Okay. Thank you. So next slide, Slide #9 now. The net sales for the first 6 months amounted to SEK 4.4 million, which pertained primarily to the license agreement with Biotheus and the joint research agreement with BioArctic. Operating expenses during the first 6 months consist mainly of cost related to the ongoing Phase I clinical study with 1017 and start-up of the clinical Phase II study with mitazalimab in total around SEK 38 million. Personnel cost for the same period summarized to SEK 28 million. In total, operating loss for the quarter amounted to SEK 34.5 million and SEK 67 million for the first 2 quarters. Cash flow for the quarter amounted to negative SEK 34 million. But due to the right issue in January, we had a positive cash flow for the first 2 quarters at SEK 6.4 million. Slide #10. The investors that follow us might remember that during Q2 2020, Alligator took a strategic decision to focus company's resources on the projects that have the prospects of generating the greatest value, our clinical programs. The reduction in costs came into full effect in the third quarter 2020, which is reflected in the diagram to the left, showing total expenses rolling 12 months. At the end of June, Alligator's cash at hand amounted to SEK 110 million. It's our assessment that the financial resources are sufficient for the upcoming 12 months. In order to support the continued development of our key assets, the company is continuously working on opportunities for partnership, out-licensing deals and equity finances. Yes, that was my part.

Thank you, Marie. And before we'll open up the Q&A session, I'll just reiterate that the new management is assessing, of course, the company's strategy on especially how to advance in the most optimal way our clinical assets. And we are also in process of strengthening the organization to ensure the right operational capabilities in taking our molecules into Phase II clinical development. And with this, I think it's prudent to open the session for Q&A.

[Operator Instructions] We have one question from the line of [ Jacob ] from Kempen.

Are you able to hear me?

Absolutely.

Yes, okay. So is it possible for you to provide more granular guidance on your cash runway and expenses for H2?

Marie?

Yes. I'm sorry, can you repeat the question?

Yes, sure. So is it possible to provide more granular guidance on your expected cash runway and operating expenses for H2? Should we expect H2 to be in line with H1?

Do you say Phase I or in Phase II for, if it meet the...

[indiscernible].

Yes. I think you can expect the Q3 cash burn to be approximately as you have in Q2. Right, Marie?

Yes, yes, yes. It is. It depends on, of course, where we are in the clinical programs. And I would say that we don't put that much money in 1015 right now as we -- so that will lower the cost. But on the other hand, I think [indiscernible] will pick up a bit. So -- but in general, I would say, more or less the same. Then for longer term, it's up to where we -- where would we like to go with 1017 after the Phase I. So that will be for the next year to decide and then how to move forward. And what kind of expenses that will come with.

Okay. That's all clear. On 1017, actually, I'm just curious about your current thinking for the Phase II design. Have you given it some thoughts on what are you thinking to do?

Yes. I think that is a very good question. What I can tell you is that we are -- I mean, I've been now 42 days or something in the company. And one of the things that we have started to take a deeper dive in is the clinical regulatory strategy for each of our programs. So this work is ongoing. It's ongoing with key opinion leaders and external experts in the field, together with our internal team. And I think it would be better to have this discussion maybe in the beginning of September when the team have had a chance to look at all the data and look at the -- I mean, the plan is now to continue dosing in Phase I to give us a clue of the most -- sort of confirm the most optimal dose for Phase II and alongside with that, they're moving into the protocol for the Phase II study, including also the specific indication that we wish to target there. So I think we'll have to defer that discussion a month or so.

And the next question comes from the line of Patrik Ling from DNB Markets.

Guys, can hear me?

Yes.

Great. First question, regarding OPTIMIZE-1, you said that we could expect -- or you wrote that in the report that we could expect some interim data in the second half of this year. Could you just elaborate a little bit on what we could expect there? Whether will it be safety only? Or will you have some other data for us?

So that is an excellent question, yes. So the study is designed with safety running, testing 600 and 900 milligrams of mitazalimab on top of FOLFIRINOX. And once safety have been established, we will then move into the sort of the proper part of the Phase II study. So these are the data from the safety running that we expect to be able to present by the end of the year. So that will be safety. Pancreatic cancer is a nasty disease with pretty short survival rates. We may be able to, if I may put it like that, benefit from that in OPTIMIZE-1 by maybe having some early signs of efficacy by the end of the year. But I would probably keep just expecting safety data by the end of the year.

Okay. And just remind me about the design here. If both doses, both 600 and 900 milligrams looks good, will you proceed with a higher dose than in the rest of the Phase II?

That would -- if they are equal, that will always be my recommendation as we want to push as much efficacy on -- within the safety window that we have.

Okay. Great. Then my second question is maybe a little bit broader. I mean if you could give us some of the highlights from your point of view after your first 42 days now as the CEO. What has been sort of the positive surprises coming into Alligator? What has been maybe the not so positive? Are there things that you would like to change in the way that the company have operated before, processes, anything like that? Is there anything that you can give us some flavor on?

Yes, absolutely, absolutely. So first of all, I have been -- and I knew that before joining. I think mitazalimab is a promising program. It has what you can expect from a moral like agonist tested in a single agent study. It has signs of efficacy. It has a proven mechanism. It has a good tolerability profile and a relatively large safety database, which sort of gives us a good foundation to move that study into -- or that molecule into Phase II. 1017 has also been a pleasant surprise. I was sort of lucky to be able to announce the ASCO data after just 4 days in the seat. I think there's great promise there. Neo-X-Prime is really, really interesting. I think that now having a more alive engager rather than a T cell engager actually could add a new sort of perspective or a new angle to the IO toolbox in the years to come. I have been extremely sort of positively surprised by the spirit and the engagement of all the employees. So I would say all the basics, they are right. I think what my -- some of my answers to the previous questions about the clinical strategies and regulatory strategy, I think, Alligator, going forward needs to be focused on moving our prioritized assets faster through clinical development, getting us to efficacy readouts within sort of a more biotech like horizon. So we are working with that, and we need to be more engaged in our dialogues with regulators to allow us to navigate towards these efficacy points as good as possible. And I think one of the things that -- and you can say whether it's a criticism or whether it's just sort of reflection of the world that we live in and what we have seen from the pandemic is that Alligator will need to and is already working to expand our sort of talent base. We need to be able to recruit, attract and retain experts from outside the region, from outside Sweden and potentially also from outside Europe to be able to be on -- both on the technology forefront -- to remain on the technology forefront and also become at the forefront of IO drug development. So that was sort of a couple of perspectives there. And I mean, please feel free if you have the specifics that you want to interrogate here.

No. I was just curious because sometimes, I mean, I would assume that if you compare mitazalimab with ATOR-1017, given that mitazalimab has been in the hands of a big pharma company, you sometimes see that small companies are -- they are, I wouldn't say cutting corners, but they are maybe prioritizing in a different way than what a big pharma company does. So if you think that there are items that might be missing from the preclinical package or if there are items that have been done that might be not necessarily to be doing in the future?

But I think that you as a company, you have to be sort of finding the right balance between what resources and the time you have. And so what of the -- what can you say, the certainty by which you are moving forward. Having worked in both biotics like Symphogen and also in big companies like Novo Nordisk, I can see that there are big differences here between how you approach this. And I think we are going to find the right balance in Alligator. And going back to your comment about mitazalimab, having been in the hands of Johnson & Johnson, I definitely don't think that is a bad thing. I think mitazalimab has the virtues of an antibody that should be developed. It needs to be given the right chance in the right setting and we're doing that now in OPTIMIZE-1. And I think that molecule has great potential.

Okay. Great. Good to hear. And I didn't mean it as something negative rather the opposite that the drug will be in the hands of a big pharma company.

No worry, not at all.

And we have one more audio question from the line of Niklas Elmhammer from Redeye.

I have a question regarding 1017. You said that you're looking for the highest possible dose here. Is it possible to comment on what dose levels you're testing currently and sort of the timeline for completing the Phase I. You mentioned that...

Yes. So you can say we are currently dosing patients at 360 milligrams. The dose that we reported on -- at ASCO was 200. We are now -- have dosed all patients in 360. And if the safety committee or the Data Review Committee, allows us to continue, we will then initiate the 600-milligram dose and expect to start dosing patients in August on the 600-milligram dose. And then once we have the data, the safety -- once we have the safety data from that cohort, we will reassess our strategic opportunities, whether we see signs that this is the dose or whether we will have to continue to the next dose level. And I think going back to the previous question, this is an important point. For me, oncology drug development is about pushing as much efficacy out of the molecule for -- within sort of the limits of manageable safety. So stopping now at 360 and move fast into Phase II could have been a corner that you might -- that might be tempting to cut, but that's not a mistake that we are going to do in Alligator. We are going to dose at least to 600 and potentially also to 900. But that 900 dose will, of course, depend on what we see the 600 and 600 will depend on the Data Review Committee's recommendation, I guess, the last week of July.

Okay. Great. And regarding Neo-X-Prime and the collaboration with MacroGenics. If you could comment on sort of the activities right now -- what is the next development step that you see here?

So I mean it's still early days. I think the next year will be sort of the discovery type collaboration, combining -- I mean, finding the binders, identifying the binders, identifying the right combination of binders to get the right affinity, avidity of the bispecific and then start validating in vitro and maybe towards the end of the period, also early in vivo studies to validate a molecule. But it's early days.

Yes. Yes. Okay. I understand. And then finally, a little bit about striking the balance, you have a strong research team and also you're pushing ahead in the clinic so, are you happy with the balance in the organization and given sort of always limited resources or how you say...

That's a very important question. You can see, if you look at it from a scientific point of view, all the exciting stuff might be the one that is going on in discovery and you might have a natural tendency to sort of overload that with resources. I think that the Alligator needs is discovery. We need to focus on exploiting Neo-X-Prime, exploiting the biology that we can address by this platform. There are many tumor-associated antigens that will allow us to develop targeted therapies in the future. Having a platform is also very expensive. And I guess that's what you're alluding to. And the plan here is to, while we will likely to take proprietary molecules forward in the years to come, we are also in the process, in the continuous process of negotiating potential collaborations with companies like MacroGenics and others to sort of build a partnered and license pipeline for the future. But there are no plans to cut the discovery part of Alligator. I just want to reemphasize that.

And there are no further questions, I'll hand it back to the speakers.

Yes. So thank you. This concludes our Q2 report call. It's been a pleasure. Thank you for all the engaged, insightful and interesting questions. And I look forward to further interactions and our next call. So thank you, and have a good day and a good summer as -- yes, thank you.

Thank you. This concludes our conference call. Thank you all for attending. You may now disconnect your lines.