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

Hello and welcome to the Alligator Bioscience Audiocast Teleconference Q1, 2022. [Operator Instructions] Today, I'm pleased to present CEO, Søren Bregenholt. Please begin your meeting.

Thank you, and welcome to this interim report call from Alligator Bioscience. My name is Søren Bregenholt, the CEO of Alligator Biosciences. And with me today, I have our Chief Financial Officer, Marie Svensson. Before we get into the actual call, if we could have the disclaimer, I want to remind you that during this call, there will be forward-looking statements both on the financial performance and the actual project performance of the company. If we go to Slide #3, I just wanted to highlight some of the milestones that Alligator achieved during 2021, allowing us to go into 2022 in a strong position. First of all, we initiated Phase II clinical development with our lead asset, mitazalimab in first line pancreatic cancer patients in combination with FOLFIRINOX chemotherapy. For Phase I asset 1017, we reported positive biomarker data and the intention to move – and safety data and the intention to move forward to Phase II. We presented several collaborations during the year including key collaborations with Microgenix and Orion Corporation from Finland. The company approximately raised SEK 340 million to advance both our clinical programs and our preclinical portfolio. And we were able to advance our technology platform, Neo-X-Prime. And during last year, we also recruited a new chief medical officer who started with Alligator on February 1. Let's get into the highlights for this first quarter of 2022. We have recently reported the successful completion of the Phase Ib safety cohorts in OPTIMIZE-1 with mitazalimab confirming the safety and tolerability of the molecule at the highest therapeutic dose 900 mcg/kg in combination with FOLFIRINOX, the most efficient chemotherapy currently used in pancreatic cancer patients. This has allowed us to continue the trial at 900 mcg/kg as the highest therapeutic dose in the Phase Ib and the Phase II program is now enrolling patients at 900 mcg/kg and we still expect to able to report into efficacy readout towards the end of the year. For 1017, we have completed the 500 mcg dose cohort into Phase I study during this quarter and with no significant safety concerns reported. And we have commenced the enrollment of patients at the highest claimed dose at 900 mg and expect to report the full data from the trial at ASCO later in the year. On the people side, we have the pleasure of welcoming professor Gregory Beatty from the University of Pennsylvania as a scientific advisor to Alligator. We have also initiated a sponsored research agreement with Dr. Beatty's laboratory to start and analyze biomarkers in OPTIMIZE-1 Phase II clinical trial. And as I said, as of February 1, we welcomed Sumeet Ambarkhane as our new Chief Medical Officer and Sumeet comes with in-depth experience in medical science and clinical development, regulatory submissions and project legislation, skills that will significantly enhance Alligator's ability to successfully develop mitazalimab and other preclinical and clinical assets. If we go to the next slide, as I just said, mitazalimab is initially being developed in pancreatic cancer, disease that will affect approximately one in every 75 individuals in the industrialized world. The 5-year survival rate is between 3% to 9% even in patients being treated with chemotherapy. And the disease is resistant to many standard therapies and therefore new therapies and approaches are greatly needed. There is, in other words, a significant medical need. Taking a closer look at mitazalimab, which is a CD40 agonist currently being developed in first line pancreatic cancer in combination with FOLFIRINOX. We completed 400 mcg/kg safety cohort in January, went straight on to fully recruit the 900 mcg/kg safety cohort, which we completed in March, leading the data review committee to deem 900 mcg as safe and tolerable and as the future Phase II dose of the study and we have initiated a dose in the first patient on that dose level during March. And we expect interim efficacy readout from the study in Q4 2022. And just to reiterate the point that our collaboration with Dr. Beatty is to study biomarkers in OPTIMIZE-1. Secondly, we are running a Phase I investigator initiated trial at University Medical Center of Rotterdam combining mitazalimab with the pancreatic cell vaccine. That study is recruiting as planned. Building further on our CD40 biology expertise and our internal capabilities to discover and develop the bispecific antibodies, I'm happy to announce that we have successfully advanced ATOR-4066, which is a Neo-X-Prime molecule that will target both CD40 and the tumor-associated antigen CA. The molecule is in late stage preclinical development. It has met all the design criteria that we set up for the molecule and we aspire to initiate [indiscernible] enabling preclinical development during the second part of the 2022 as the first Neo-X-Prime molecule heading towards development. As previously stated, we see a significant growth opportunity in the Neo-X-Prime platform building on our CD40 expertise and 4066 as the first lead molecule using this technology. The 1017 is another third generation agonistic antibody targeting the T-cell molecule for 1BB. The molecule is in late stage Phase I clinical development. We've reported the completion of the 600 mg dose cohort during this quarter. No safety concerns were reported. We so far have seen stable disease as the best reported tumor response. And we have commenced the enrollment at the 900 mg dose and expect to provide data from the study at ASCO in June later in this year. Also, I want to update you on our fourth pipeline asset ALG-APV 527 , which is a bispecific third generation 4-1BB antibody targeting both 4-1BB and the tumor-associated antigen 5T4. 527 is co-developed with US based Aptevo. We expect to file the application with the USFDA during this year. And we also expect to start phase one clinical trials in the last part of the year. Just to remind you the rest of the portfolio, we continue to make progress in our research and licensing collaboration with Orion Corporation from Finland on so far undisclosed bispecific programs. We also continue to make progress on our collaboration with US based Microgenix on our Neo-X-Prime molecule. We have 2 completely out licensed molecules, AC101 or HLX 2022 targeting number 2, which is in Phase II development with our partner Henlius and we have, so far undisclosed by bispecific program with US based [indiscernible]. And with these words, I will hand the word to you, Marie, to take us through the financials. We should now be on slide number 11.

Yes, that's correct. Thanks. I will give a review of our first quarter 2022 financial result. The net sales for the quarter amounted to SEK 5.4 million up from SEK 0.6 million in the prior year, which is the result of revenue from our collaboration and license agreement with Orion Corporation. Operating expenses during the first quarter consist mainly of external cost related to Phase I clinical study with ATOR-1017 and Phase II study with mitazalimab, 30.1 million, 7.7 million the prior year. The increase relates mainly to mitazalimab Phase II study optimized, where the external cost increased with SEK 11 million versus the same period last year from SEK 3.5 million to SEK 14.5 million for the quarter. The number of personnel and thereby the connected personnel cost went up from SEK 13.3 million in Q1 to SEK 15.4 million in Q1, 2022. In total, operating loss for the quarter resulted in SEK 43 million, a 30% decrease from SEK 32.5 million in the prior year period. This is mainly due to, as earlier mentioned, increased activity in the ongoing phase 2 study with mitazalimab and the external cost connected to that. Cash flow for the quarter amounted minus SEK 43.8 million down from SEK 40.4 million in the prior year period. Alligator's cash at the end of the period amounted SEK 234 million down from SEK 278 million at the year end. And then we take the next slide. 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 cost came into full effect in the third quarter 2020 but has during 2022 gone up as the clinical activity has increased, which is reflected in the diagram to the left showing total expenses on the rolling 12-month basis. In order to support a continued development of key assets, the company is continuously working on opportunities for partnerships, out-licensing deals and equity financing. In the end of 2021, the company completed the right issue amounting to SEK 257 million before transactional costs. With this right issue, the company financial resources are sufficient for our planned activities for the upcoming 12 months. And with that, I hand back to you, Søren. It is Q&A slide now.

I think we are ready for Q&A.

[Operator Instructions] We have a question from the line of Richard Ramanius from Redeye.

I had the first question concerning mitazalimab and the clinical study design. You said that you will probably first read-out in the fourth quarter. If I understood it correctly would be from a limited number of patients. So will you then make the decision whether to include the rest based on that data? So that would mean a de-risking of the program. And how do you put this in relation to the development in the secondary indication?

Thank you, Richard. That's good questions, both of them. So the interim analysis that we will perform in Q4, as you say, is likely on a limited number of patients or least fraction of the entire patient population. The analysis is also [indiscernible] as per the protocol and that futility statistic defines a number that we have to pass to continue the trial as futility exercise normally does. We'll of course continue. We'll not pause the study, we'll continue to recruit patients. If that futility point is reached, although the patients that we recruit in the 1 or 2 months after that futility analysis were not included in that and of course, the decision to continue the trial will depend on a positive outcome of the futility analysis. So that was to number one. And definitely, we have announced and we have the intention to initiate a second Phase II trial with mitazalimab. We have not lost the indication and will not do so today. OPTIMIZE-1 is in pancreatic cancer patients. These tumors are characterized by dense anatomy with relatively many pancreatic cells and relatively few T-cells, so called, cold tumor, which is a good place to start, starting with mitazalimab as mitazalimab's primary target is on pancreatic cells. We believe that in combination with chemotherapy, mitazalimab will be able to kickstart immunity [indiscernible] and lead to clinical response. To hedge that biological risk, we will start second Phase II study, but that will be in a more immune-prone or inflamed tumor type or so called hot tumor so that we mitigate that biological risk that is associated with pancreatic cancer.

Okay. That makes sense. And then I have a second question mainly relating to business development and I was thinking about your 4-1BB asset and 1017 and 527. So what's the prospect- can you share anything with us there?

I can share a strategic intent from the company. You're absolutely right. We have a number of assets [indiscernible] integrated part of the biotech companies that you license out a partner, part of your portfolio. And Alligator is in the process of and dialogue with certain companies to take a look at potential license of several molecules across the portfolio.

Could you say anything about an interest in Aptevo in buying out their part?

So in Aptevo buying out the half that we own or somebody, a third party buys out, so we have not been in discussions with Aptevo on acquiring the full rights to the molecule. As partners, we are committed to take the molecule into Phase I and as partners, we are committed to consider any realistic partner inquiry that is coming from third parties.

[Operator Instructions] And there seems to be no further questions. So I'll hand it back to the speakers.

Thank you. So thank you for your participation and thank you for the questions. So this will close the meeting. Thank you.

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