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

Hello, everyone, and welcome to the Alligator Bioscience Audiocast Teleconference for Q4 2021. Just to remind you, this conference call is being recorded. I will now turn over the call to Julie Silber, our Senior Director of Communications and Investor Relations.

Thank you, Simon. Hello, and welcome to Alligator Bioscience year-end 2021 call. This is Julie Silber, Senior Director of Communications and Investor Relations, and I will introduce today's call. On the call with me today is CEO, Soren Bregenholt; and CFO, Marie Svensson. After a brief company statement by management, we will open up the call for Q&A. Before we begin, I would like to share a quick reminder to our listeners that during today's call, management may make forward-looking statements that involve known and unknown risks, uncertainties and other important factors beyond the company's control that could cause the company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during today's call speak only as of today's date, and the company undertakes no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. This call is being webcast and will also be made available through our Investor Relations website. And with these formalities out of the way, I'd like to now turn the call over to Soren. You may begin.

Thank you, Julie, and good afternoon, and welcome to Alligator Bioscience year-end 2021 call. My name is Soren Bregenholt, and I'm the CEO of Alligator Bioscience. If we can go to Slide 3, please. Cancer touches all our lives, either directly or through its effect on family and loved ones. In 2021 alone, an estimated 90 million new cancer cases were diagnosed worldwide and roughly 1 in 4 people will receive a cancer diagnosis during their lifetime, making cancer one of the leading causes of mortality and morbidity, globally accounting for more than 20 million deaths on an annual basis. Among these cancers, it's well known that one of the hardest cancers to treat is pancreatic cancer. Pancreatic cancer has one of the lowest 5-year survival rates and therefore, a very poor prognosis. About 1 in 75 individuals will develop pancreatic cancer during their lifetime. Roughly 30 million, 40 million people in the U.S. and about 70 million people in the Europe will be diagnosed with pancreatic cancer each year. And of these, less than 20% will be treatable by surgery. And the treatment options for the remaining 80% consist largely of chemotherapy. Addressing this clear unmet medical need is at the heart of everything we do at Alligator Bioscience. Alligator Bioscience specializes in the development of tumor-directed immune therapy, in particular, agonistic monoclonal and bispecific antibodies aimed to stimulate the immune system and fight the patient's cancer cells. We develop these molecules for patient suffering from hard-to-treat cancers. During 2021, we continued to make great strides on our robust and diversified business pipeline of both preclinical and clinical stage drug candidate. On Slide 4 we see that 2021 was a year of refocusing at Alligator and we rounded out the year reaching several key milestones as we continued on our mission to bring innovative, more efficacious, more safe and complementary cancer therapies to patients suffering from hard-to-treat cancers. We began the fourth quarter announcing the first patient was dosed in a Phase II trial with the molecule AC101, a molecule that we have out-licensed to Shanghai Henlius Biotech in China. That was just one of the many key collaborating milestones that we announced during 2021. In November 2021, we announced initiation of an exploratory Phase I trial called REACtiVe-2. This is an investigator-initiated trial that evaluates our lead assay mitazalimab, a CD40 agonist in combination with the cancer we're seeing, in patients with pancreatic cancer. In December, we updated the market with positive readouts from the ongoing Phase I clinical trial with our best-in-class 4-1BB agonist 1017. During the quarter, we published scientific and clinical data on several of our portfolio assets, including posters on mitazalimab, 1017, ALG.APV-527 and Neo-X-Prime at the Society of Immunotherapy of Cancer or SITC's Annual Meeting in Washington. We also published a paper in Nature Communications, together with Aptevo and academic collaborators, providing further mechanistic insights to the efficacy of 4-1BB, targeting bispecific antibodies like aforementioned 527. Throughout the quarter, I, together with the entire team, worked diligently to raise funds to support the continued development of our potentially game-changing therapies and successfully closed out the year with an oversubscribed rights issue, raising approximately SEK 257 million, of course, before the deduction of transaction share costs. This will support our continued development of our pipeline. And now I would like to provide some details on these achievements. So if I could have Slide 5, please. First, I would like to provide more detail on the progress we have made with mitazalimab, our lead asset. Mitazalimab is a best-in-class CD40 agonist aiming at stimulating the immune system in cancer. At the end of third quarter, we announced a successful advancement of this molecule, dosing the first patient in OPTIMIZE-1, the first Phase I study in Alligator's history. This was a big step forward for Alligator and for our best-in-class antibody pipeline, of course. As previously announced, OPTIMIZE-1 is designed to assess the efficacy and safety of mitazalimab in combination of standard of care chemotherapy FOLFIRINOX, for the treatment of first-line metastatic pancreatic cancer. OPTIMIZE-1 is an open-label multicenter study that will enroll up to 67 patients at sites in Belgium and France. We most recently announced that all patients in the initial 450-milligram or microgram cohort of the study have been dosed and no dose-limiting adverse events were reported. The 900 micrograms per kilogram cohort is recruiting as planned, and we remain on track to report the full safety readout data in this Q1 with interim efficacy readouts planned for Q4 this year. Also, in the first quarter of this year, we announced the initiation of a sponsored research collaboration with Dr. Gregory Beatty at the University of Pennsylvania's Pancreatic Cancer Research Center. This collaboration will study the biomarker data from the OPTIMIZE-1 Phase II study. Moreover, this important collaboration will provide valuable insights into other clinical opportunities for mitazalimab. And we are, of course, thrilled to welcome Dr. Beatty as the scientific adviser to Alligator Bioscience. In November 2021, we announced the initiation of an investigator-initiated trial, REACtiVe-2, and that the first patient was dosed in this trial. As I mentioned earlier, this trial evaluates mitazalimab in combination with a cancer vaccine for patients with pancreatic cancer. This trial is led by investigators at the Erasmus University Medical Center, Rotterdam, Netherlands. And the study will provide further insights into the mechanism and efficacy of mitazalimab and potentially expand the clinical utility of the molecule. Could I have Slide 6, please. Our second clinical asset is ATOR-1017 or 1017, a monoclonal antibody against 4-1BB that is being developed as a stand-alone and combination therapy for metastatic cancers. Novel biomarker data confirming its proof of mechanism from the ongoing Phase I clinical trial were presented at ASCO and SITC annual meetings in June and November, respectively. In December, we announced additional readouts from the ongoing Phase I trial that corroborated and extended the previous data on biomarkers, safety and tolerability, and sustain the safety profile up to and including doses of 300 milligrams with no dose-limiting toxicities recorded. These encouraging results strengthen the case for 1017 as well as confirms the proof of mechanism. And we believe that 1017 remain a promising candidate for immune therapy with enormous potential for combination with standard of care across a number of indications. Slide 7, please. Next, I would like to highlight Neo-X-Prime, our innovative bispecific antibody platform. Neo-X-Prime is based on Alligators long-standing expertise in antibody discovery, bispecific antibody engineering and CD40 target molecule biology. We see great promise in the Neo-X-Prime platform to provide further growth of Alligator, both as a proprietary part of our pipeline, but also as a partner platform. In November 2021, we presented data at SITC that highlighted the efficacy and safety of novel -- the preclinical safety of a novel Neo-X-Prime molecule or bispecific antibody, targeting CD40 and the tumor-associated antigen CEA. The data shows that this molecule provides the delivery of neoantigen containing tumor vesicles to antigen-presenting cells, thereby stimulating tumor-specific T cell reservoirs resulting in potent antitumor efficacy. This was another important step forward in the development of our platform technology as these data reinforce robust potential of Neo-X-Prime and the derived assets. If I could have Slide 8, please. I will highlight some of the progress we have made with our partner programs during the fourth quarter of 2021. As already mentioned, in October, we were pleased to announce that the first patient was dosed in the Phase II clinical trial with AC101 or HLX2022 (sic) [ HLX22 ], as it's also called. Alligator out-licensed this molecule to Korean-based AbClon in 2016, and the molecule was subsequently sub-licensed for clinical development to Chinese-based Shanghai Henlius Biotech. Also, we presented together with Aptevo Therapeutics, the preclinical data on our collaborative molecule, ALG.APV-527 or 527, which is a potentially first-in-class bispecific antibody targeting both 4-1BB and the tumor associated antigen 5T4. This process highlighted the preclinical data set and gave an overview of the potential indication landscape, mechanism of action and safety profile of the molecule, which reported the molecules progression into Phase I clinical trial. Following that, we jointly announced the publication of a paper in the peer-reviewed journal, Nature Communications, together with Aptevo and a Spanish academic group. This publication details the mechanism of action of 4-1BB targeting bispecific molecules by 527. During Q3, we announced a research and licensing agreement with Orion Corporation based in Finland to discover up to 3 bispecific antibody drugs using Alligator's technology platform. This is a deal with a total value of up to EUR 469 million. The project is on track. And during Q4, we progressed the project as planned towards the internal milestones. Could I have Slide 9? We finished the year strong with an oversubscribed rights issues, raising approximately SEK 257 million. Use of proceeds from this rights issue will be allocated to expand and accelerate the Phase II program, mitazalimab, to support the preparation of Phase II for 1017 as well as for the development of other pipeline candidates, such as the Neo-X-Prime platform and assets. We are, of course, grateful for the continued support from existing shareholders and we welcome our new shareholders to the Alligator family. I would also like to share that another outcome of this rights issue, which is that Alligator now has welcomed a new cornerstone investor base in the U.S., an investor with a long-term knowledge of Alligator, who will support the company for the long term and provide stability as we continue to develop our best-in-class pipeline. And with this, let me turn things over to you Marie, Marie Svensson, our CFO, to review our financial results. Marie?

Thank you, Soren. I will begin with a review of -- I need to mention perhaps that we should start with the next slide. Yes, sorry. I will begin with a review of the fourth quarter 2021 financial results. Starting with net sales for the quarter amounted to SEK 5.2 million, up from SEK 0 million prior year. This is a result of the revenue from our collaboration and license agreement with Orion Corporation and the research agreement with BioArctic. Operating loss for the quarter resulted in SEK 36.9 million, an SEK 8.2 million decrease from SEK 34.1 million in the prior year period. This is mainly due to increased personnel costs and external costs connected to the ongoing clinical trials for mitazalimab and ATOR-1017. Cash flow for the quarter amounted to SEK 198.8 million, up from negative SEK 33.2 million in prior year period. It's, of course, due to the rights issue in November, bringing the SEK 267 million before transaction costs. Company expenses for the fourth quarter increased slightly as we now are running 2 clinical programs, mitazalimab Phase II and ATOR-1017 in Phase I. Alligator's cash at the end of the period amounted to SEK 278 million, up from SEK 103 million in the prior year. Now I will review the financials for the full year 2021. Net sales amounted to SEK 12.9 million and was up from SEK 4.4 million in the prior year. This is mainly due to the earlier mentioned agreements with Orion Corporation and BioArctic. Operating loss for the year was SEK 141.6 million, an increase from SEK 144.3 million in the prior year. Personnel costs for the year amounted to approximately SEK 68 million. Cash flow for the full year 2021 amounted to EUR 174.7 million compared to SEK 9.4 million in the prior year due to the rights issue in Q4 '21. Next slide, please. In 2020, Alligator took a strategic decision to focus the company's resources on the projects that have the prospect of generating greatest value, our clinical programs. The reduction in costs came into full effect in the third quarter 2020, but has, during '21, slightly gone up as the clinical activities has increased, which is reflected in the diagram to the left, showing total expenses on a rolling 12-month basis. In order to support the continued development of our key assets, the company is continuously working on opportunities for partnerships, outlicensing deals and equity financing. In the beginning of October, the company announced a fully guaranteed rights issue to be completed in November amounting to SEK 257 million, before transaction costs. With this rights issue, the company's financial resources are sufficient for our planned activities in the upcoming 12 months. And now over to you, Soren, again.

Thank you, Marie. And if I could have Slide 12. So I'll close out the meeting with a couple of slides here. So lastly, in the beginning of February this year, we announced the appointment of Dr. Sumeet Ambarkhane as Alligator's new Chief Medical Officer. I, together with the Board and the entire Alligator team are excited to welcome a professional like Sumeet's caliber into the Alligator family. Sumeet's in-depth expertise in medical science, clinical development and his experience from global regulatory submissions and importantly, product registrations will significantly strengthen our efforts to further advance our novel immuno-oncology pipeline and not the least mitazalimab. And if I could get Slide 13, please. When I joined Alligator as CEO in June 2021, we had 4 main priorities. The priorities was to strengthen Alligator's clinical organization. The second was to advance our lead asset, mitazalimab into Phase II clinical trials. The third one was to sign licensing agreements on our technologies. And lastly, to raise additional funds to support the development of our pipeline. In summary, I'm proud to say that during 2021, the entire team at Alligator made those priorities a reality. And the progress that was made in Q4 this year or last year 2021, was a great way to close out our year of refocusing. We are taking this momentum with us into 2022, and our goal remains the same, to develop meaningful therapies for patients with hard-to-treat cancers that will better people's life, create value for our stakeholders and shareholders. We remain on track with our clinical trials, and I look forward to keeping you updated on Alligator's development on this exciting journey. On behalf of myself, the Board of Directors, I would like to take this opportunity to extend our sincere thanks to the Alligator staff, for their achievements, their diligence and the loyalty. And we also wish to thank our valued shareholders, new and old, for your continued support and belief in our company. And with that, operator, please open the call for Q&A.

[Operator Instructions] Our first question comes from Richard Ramanius with Redeye.

I have a few questions. I just -- a few of them to start with. So the first question concerns mitazalimab. You're talking about starting a second Phase II trial. Are you thinking about any new combinations such as PD-1 same dose?

So it's a good question. Yes, we have been discussing publicly the plans to initiate a second Phase II trial with mitazalimab to increase, of course, the clinical utility of the molecule and also to balance the risk of the program by addressing another tumor type in pancreatic cancer. I'm not in a place to reveal exactly the indication now. A few have been in play. It looks like an indication where a combination with the PD-1 will be relevant and part of the clinical plans.

Okay. And concerning ATOR-1017, you're drawing closer to Phase II trial. Do you intend to sponsor this trial yourself? Or are you looking for a partner for Phase II?

Yes, another good question. Currently, we are keeping our strategic options open. It's clear that a company like Alligator, we have to assess whatever options we have, the availability of potential partners, the right clinical design and budget, and of course, also the availability of cash in the financial line. And right now, we are pursuing a dual strategy to explore opportunities ourselves, but also maintain dialogue with potential partners that can best leverage the value of 1017.

Excellent. That makes sense. And some financial questions. Marie mentioned that Orion reimbursed some costs. So will Orion reimburse all relevant costs, that is all research specific to them according to the deal?

Yes, I think I can answer that. Yes, in addition to upfronts and fees and milestones, Orion cover all costs incurred at Alligator and -- pending some.

And can you comment whether there are any upcoming milestones we should expect from all your agreements, all your present deals or agreements in 2022?

We can we restate the overall milestones for the company in Q1. Before the end of Q1, we expect to provide the full update and readout from the safety part of OPTIMIZE-1. And then in Q4, we expect to announce initial efficacy and the readout for OPTIMIZE-1. And also later in Q1 here, we expect to readout data from the 1017 Phase I clinical trial. With respect to our collaborations, we don't foresee any specific fee-bearing milestones on the current collaborations. Those are currently scheduled in 2023.

A short question, a financial question. You have had remarkably stable costs in 2020, 2021, more or less the same. How should we look at the quarterly costs going forward for 2022?

Marie, you want to take this one?

Yes. I would say that it would be quite stable because depending on what we will do with ATOR-1017, that's you know, flaming out and finalize the Phase I. On the other hand, we are preparing for starting the next Phase II trial with mitazalimab. So that will be moving up instead. So I think it will be quite stable.

[Operator Instructions] Our next question comes from Patrik Ling with DNB Markets.

Also actually a financial question. I mean, Marie, you say that your costs in 2022 will be relatively stable compared to '21, and we might see some uptick if the clinical trial programs are expanded a little bit. Could you elaborate a little bit more on what you said regarding the financial situation or specifically actually talk a little bit more about the actual runway. I think you said that you have cash enough, so it will last at least 12 months. But I suppose, given what you said about costs, that the runway is clearly longer than 12 months.

Yes. It's longer than 12 months with the current plan. But as we mentioned before, it depends on what kind of programs we would like to pursue, of course, so, but to run 2 clinical trials in parallel, then we will keep the same cost structure. If we would like to increase, then, of course, attract with similar increased cost. But you're quite right there. It's more than 12 months.

Okay. Great. And then my second question, really, if you are considering moving into, as you said, sir, in another indication, probably in connection with PD-1 inhibitor. Will it be still an indication that you have tested the drug before, i.e., either in your, trials, your first trial or in the Janssen trial?

That's a good question. You can say that the Janssen trial, which is probably the most relevant, as this was -- as the other trial was into tumor administration. So that first Janssen trial, which is the most relevant one was an all-comer best trial. There was a lot of different indications in there. I can confirm that the key or the top indication was included in that trial, and we also have preclinical data to support that indication selection on file in tandem.

Okay. Great. Because that's really what I wanted to hear, that you do have some patient data for that potential indication. And then lastly, I mean, the early trials were, to some extent, a little bit different dosing. When you look at data for old patients that are having that indication that you're considering, the dose that they received, is that in line with what we plan to give them today?

I think now we are probably getting close to the limit of what we can disclose, because these data have not been policy disclosed. But then we give you a broad statement that we, of course, when we design our trial, consider both available clinical and preclinical data on our own molecule and previous trials, as well as what our peers have made publicly available.

Our next question comes from Joseph Hedden with Rx Securities.

I'm sorry if you've already been asked because my line dropped for a bit. Just wanted to ask on the Phase I trial, in combination with the dendritic cell vaccine. Is there any data for that vaccine? Is a monotherapy available? [Technical Difficulty]

So Joseph, there was some background noise, but let me just see if I understood your question correctly. You are talking about the investigator-initiated led Phase I trial where we combined mitazalimab with this therapeutic cell vaccine in pancreatic cancer. And you asked whether there were single agent data on that vaccine available. Correct?

Yes. That's right.

Yes, there is that vaccine, if I recall it correct. And the name is in the press release from, I think, October. Yes, that vaccine is in Phase III clinical development as I recall. So there must be available single agent data on that vaccine.

Okay. Sorry, you said that, that vaccine is in Phase III?

As I recall it, yes.

But do you know what company is leading that trial?

Yes. But I can't -- why don't you drop Julie a line after the call, and we can get you that material.

Sure.

Yes. We are here to please.

At this time, we have no further questions. I will now hand back to Julie for a final remark.

Thank you from all of us at Alligator Bioscience for listening to today's call. This concludes today's call. Bye-bye.