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

Hello, and welcome to the Alligator Bioscience Q3 Report for 2022. [Operator Instructions] Today, I am pleased to present the CEO, Søren Bregenholt; the CFO, Marie Svensson. But before that, a quick reminder from IR and Communications Management, Greta Eklund. Please go ahead.

Thank you. Next slide, please. During today's call, management may make forward-looking statements, which by their nature, 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 that 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. Reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this call speak only as of today's date, and the company undertakes no obligation to update them to reflect subsequent events or circumstances other to the extent required by law. This call is being webcast and will also be made available through the company's website. With the formalities out of the way, over to you, Søren.

Thank you, Greta. Good afternoon. My name is an Søren Bregenholt, and I'm the CEO of Alligator Bioscience. It's a pleasure having you here on this Q3 call. So Slide 3. Let's recap our '22 objectives and the achievements in the company so far. I'm pleased to say that the last 6 months have been extremely busy for Alligator and that we have achieved outstanding results, moving our pipeline forward. First of all, the recruitment of the mitazalimab Phase II study in first-line pancreatic cancer has accelerated dramatically over summer with a strong ramp-up in the interest on the medical community for this treatment and our decision to open new sites across Europe. This is the reason why we have updated the time line for the full Phase II readout to occur in Q1 2024, which is 9 months earlier than initially expected. Also, importantly, the interim data of the trial are still expected by the end of this year 2022. Our second clinical program, 1017, has also made impressive progress, completing Phase I at both 600 milligrams and 900 milligrams with safety confirms and some promising signs of efficacy and validation of the mechanism of action of this second-generation 4-1BB agonist. With the study being complete and with these data in hand, we have now initiated the continued search for our partner to take this great molecule forward into the Phase II clinic together with Alligator. 527, another 4-1BB molecule, which is partnered with Aptevo, also made huge progress during the quarter, especially with the IND clearance that we received from the U.S. FDA, allowing us to initiate clinical trials in solid tumors at sites in the U.S. in collaboration with Aptevo, our partner. The announcements that we have made over the last 9 months has also allowed us to increase our presence at medical conferences, and we are receiving increasing interest on the medical and scientific community and potential future partners from our assets. Last but not least, the team at Alligator has continued to expand with high-caliber additions. We have previously discussed our Chief Medical Officer, Sumeet Ambarkhane. And in addition to that, we have appointed 2 new Board members, Staffan Encrantz and Denise Goode, to the Board of Directors. On Slide 4, you can see the progress we have made with our pipeline with 3 assets in 4 indications expected by the clinic by end 2023. On Slide 5, we take a closer look at the OPTIMIZE-1 Phase II trial with mitazalimab, our lead asset. As previously mentioned, mitazalimab is in first-line pancreatic cancer in combination with chemotherapy. And we feel it is important to remind you of the key elements and step of this Phase II clinical trial. Following the successful dose-escalation phase which we communicated in Q1, we have moved to the dose expansion in our [ 260 ] patients. This phase includes a futility efficacy analysis in 23 patients, and we are on track to get these data by the end of the year. This interim data will provide us with a clear response as to whether what proportion of the treated patients with mitazalimab at 900 micrograms per kilogram in addition to chemotherapy, FOLFIRINOX, will respond to the therapy. And if we go to Slide 6, you will see that this interim is a very important event for the company as because of -- based on these data and the efficacy demonstrated by mitazalimab started [ could ] potentially be converted into a -- the basis of a potential approval of mitazalimab, which could dramatically accelerate the clinical development of that asset. Indeed, as highlighted here on Slide 6, we see 3 immediate scenarios. The worst-case scenario would be to demonstrate an objective response rate below 30%. We believe this is highly unlikely though since FOLFIRINOX has demonstrated an objective response rate of this magnitude in the past, and we see no reason why mitazalimab would make chemotherapy worse. The base-case scenario would be -- if we generate an ORR in the range of 30% to approximately 50%, we would continue the trial as is and reported data in Q1 2024, as previously discussed. However, should mitazalimab in combination with FOLFIRINOX demonstrate an objective response around 50% or more, then we could be in the very enviable situation of being able to discuss with the regulators and potentially expand the OPTIMIZE-1 study to becoming a trial to form the basis of an accelerated approval. This could potentially mean an approval of mita around 2026 or even as early as in the end of 2025, depending on the speed of recruitment and approval in that scenario. So if the base-case scenario materialize those, we are glad to report today that the recruitment has gone much faster than expected, and that we will be able to report top line data from OPTIMIZE-1 in Q1 2024, 9 months earlier than initially expected. I believe this is a strong dose will not only to the quality of the work conducted by the Alligator team, but also to the strong interest in mitazalimab that it generates among the clinical centers and the expert treating patients affected by pancreatic cancer. So without further ado, please let me hand over to Ms. Marie Svensson, our CFO, who will walk you through the financials. Marie, over to you.

Thanks, Søren. I will give a short review about the financial results for the first 9 months in 2022. For the 9-month period, January to September, net sales amounted to SEK 15.6 million and pertains primarily to the collaboration and license agreement with Orion Corporation. Operating loss for the 9 months resulted in SEK 140.3 million. Operating expenses during the first 9 months consist mainly of external costs related to finalized Phase I clinical study with 1017 and increased activity in our clinical Phase II study with mitazalimab, in total, SEK 100.3 million. Personnel costs for the same period amounted to SEK 49.7 million. In the figure down to the left, we show how expenses are distributed between our projects. And in total, 83% of our operating cost is invested in driving our R&D projects forward. Cash flow for the first 9 months amounted to negative SEK 131 million and relates mainly to the cost of our operating activities. Next slide, Slide 8. Expenses has increased as we have 2 programs running in clinical trials, and with that an increased number of patients enrolled which is reflected in the diagram to the left showing total expenses on a rolling 12-month basis. At the end of September '22, Alligator's cash at hand amounted to SEK 147.4 million. In order to support the continued development of our key assets, the company is continuously working on opportunities for partnerships, out-licensing deals and equity options. And with that, I turn back to Søren.

Thank you, Marie. So if we go to Slide 9, just a reminder of upcoming news flow over the next 24 months. Foreseeable [indiscernible] or at least what we expect our 527 program to initiate Phase I clinical development together with Aptevo towards the end of the year. Very importantly, as we already discussed, by the end of the year, we will read out futility data from OPTIMIZE-1 Phase II study in pancreatic cancer. And as discussed, that is a pivotal point for Alligator. We expect to start a second Phase II starting with mitazalimab in the second half of 2023. And by Q1 2024, we expect to read out top line data from mitazalimab in pancreatic cancer. So with this reminder of our upcoming news flow, I will thank you for listening and open the call for questions.

[Operator Instructions] Our first question comes from the line of Richard Ramanius of Redeye.

I want to start with the financial question. How long would you say that your run rate is with your current undertakings? Will -- if that -- should that be Q3 2023?

Did I hear right, [ you're asking on ] run rate with -- yes. Okay. Yes. Yes, we have -- you can see that in the report, we tell the market that we don't foresee that this cash would be sufficient for 12 months, but I would say something between 9 and 12 months.

Okay. And since you're seeing a faster recruitment rate in OPTIMIZE-1, when do you think you could have the full recruitment of the entire study, assuming that you've grown with the -- after the first interim readout to complete recruitment?