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

Hello, and welcome to Alligator Biosciences Second Quarter 2024 Interim Report Call. My name is Greta Eklund. I'm the Investor Relations and Communications Manager at Alligator and I will be introducing today's call. With me are our CEO, Søren Bregenholt; our CFO, Marie Svensson; and our CMO, Sumeet Ambarkhane. They will walk you through the latest developments from Q2 2024 and the upcoming news flow, after which they will be happy to answer any questions you may have. Now before we begin, I would like to share a quick reminder 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 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 than to the extent required by law. This call is being webcast and will also be made available through the Investor Relations section of our website. With the formalities out of the way, I would now like to turn the call over to Søren.

Thank you, Greta. I'm Søren Bregenholt. I'm the CEO of Alligator Bioscience. Welcome to our second quarterly earnings report of 2024. And if we go to the next slide, I'm pleased to go over some of the main achievements that Alligator has seen in the second quarter. First of all, the mitazalimab Phase II data in first-line pancreatic cancer continues to deliver new data, and we recently announced outstanding 18 months follow-up data for mitazalimab. Not only did median overall survival increased to 14.9 months, which is substantially better than the 11.1 months reported for FOLFIRINOX monotherapy, but importantly, we also reached 36% 18-month survival rate, meaning that 36% of the patients were alive at this important time point. This rate is almost double that of data reported for FOLFIRINOX monotherapy. And Sumeet, our CMO, will comment on the result in a greater detail shortly. The top line data from this Phase II study was published in The Lancet Oncology, the world's leading journal on clinical oncology, and this publication naturally validates the significance and the importance of the data and the entire Alligator team and our investigators are very proud to have been selected by this world-leading clinical oncology research journal to present our groundbreaking data. In addition to The Lancet Oncology, we also presented at several key conferences this quarter: AACR in April, ASCO in June, as well as the European Society of Medical Oncology on their GI related or Gastrointestinal Cancer Conference earlier -- or late June this year, all highlighting the further validation of mitazalimab Phase II data. Based on these Phase II data, Alligator has received a surge in the demand from physicians who want to conduct trials in mitazalimab in their own centers across a number of relevant indications. Recently, one such trial was initiated at the prestigious Moores Cancer Center in San Diego. This Phase I study in locally advanced pancreatic cancer is financed by the U.S. National Cancer Institute. We believe that these investigated initiated trials are a great way to generate additional data for mitazalimab at limited or no cost for Alligator and to raise the profile of mitazalimab and Alligator internationally, and we will continue to evaluate and engage in these trials as appropriate for the development of mitazalimab. On the partnering front, alligator announced that Orion Corporation, our long-term partner for Alligator, has selected the lead bispecific antibodies from the company's second development program, and that Orion was exercising its option to develop these molecules under the existing 2021 research collaboration and research agreement. The exercise of this development option is, of course, an important validation of alligators technology and our approach to generate bispecific antibodies and also triggered a milestone payment to Alligator. Further on financing, we conducted a capital raise of SEK 80 million, which extended our cash runway well into Q1 2024, allowing us to continue our investments in key strategic areas and enhancing our maneuverability in negotiating the best possible licensing deal for mitazalimab. Then we will go into the details later in today's call. And last but not least, we are also looking forward to welcoming Johan Giléus, who will join us as Chief Finance Officer starting August 12 this year. Johan brings valuable experience in leading financing strategy and operations across a number of companies, including overseeing a large Phase III clinical trial and out-licensing in Japan on the same molecule. [Audio Gap] continue to bring energy and strong knowledge and experience to the company. So those were the highlights for the second quarter. Next slide, please. So partnering our Phase III [Audio Gap] submitted our key priority, we are pursuing our partnering activities and discussions to find the optimal global partner. And I'm happy to announce that these dialogues with the global pharmaceutical companies are progressing very well. We are continuing to prepare mitazalimab for Phase III. And we stay laser focused on advancing mitazalimab to patients with pancreatic cancer as soon as possible. With that, I would now like to hand over to our Chief Medical Officer, Sumeet, for some more details around OPTIMIZE-1. Sumeet, over to you.

Thank you. Thanks, Søren. Next slide, please. Right. So most of you may be familiar with our ongoing OPTIMIZE-1 study, and the impressive tumor shrinkage we have reported in the trial with the mitazalimab plus modified FOLFIRINOX combination, which is exactly what we see in this waterfall plot. This is basically an indicator of how much was the reduction in the tumor for the individual patient during their trial treatment. Particularly important to note is the vast majority of the patients that benefited from this treatment, that their tumors shrunk. And also the number of patients who had an objective response, either a partial or a complete response, seen the green shades on this chart, as well as the 3 last patients where there was 100% disappearance of all of their tumor target lesions. This is really an impressive outcome for this very difficult-to-treat patient population and in a disease so aggressive as pancreatic cancer. Next slide. So I mean, I hope you have noted the most recent data that we released from the OPTIMIZE-1 study at the end of June, only a few days ago, that demonstrated substantial overall survival benefit and a truly unprecedented duration of response with mitazalimab and modified FOLFIRINOX combination as a first-line treatment for metastatic pancreatic cancer. These latest data are summarized on this slide also in the context with the standard of care therapies such as Gemcitabine plus albumin-bound paclitaxel, FOLFIRINOX as well as NALIRIFOX, the most recently approved treatment. And clearly, the results from the OPTIMIZE-1 study appear favorable compared to any of these other therapies, not just in terms of the objective response, but importantly, in terms of the substantially longer duration of response and its extension into overall survival, particularly notable at the 18-month time point, where we see that the percentage of surviving patients was doubled in the OPTIMIZE-1 study compared to the historically reported data from the FOLFIRINOX trial. This is an important point to note because the 18-month time point is unfortunately not the one which most of the patients with pancreatic cancer see. And therefore, this doubling of survival rate at this landmark is really an impressive outcome. These are also very mature data with the 18-month overall follow-up duration across the efficacy population and they also provide an additional validation of the potential that mitazalimab has in this very aggressive disease. And of course, they also form the basis for our planning for the randomized Phase III study. Next slide. So here, we have an overview of how our fully owned programs are progressing. This gives a very good sense of our robust immuno-oncology pipeline with substantial clinical as well as commercial potential. Our next-generation mono as well as bispecific antibodies address key immune activation pathways, such as CD40 and 4-1BB, and they're designed with features that make them complementary to existing anticancer treatments. We believe that this puts our antibodies in a unique position as a part of the combination therapies for future that can help patients with hard-to-treat cancers. If you look at the pipeline, there are several inflection points coming up. As already mentioned by Søren, we are stepping up our efforts to enter into an agreement with an optimum biopharmaceutical partner that is best suited to take mitazalimab through its confirmatory development and then onto the market as soon as possible. So we are foreseeing that the Phase III trial will start in the first half of '25. Next is our Neo-X-Prime first-in-class bispecific CD40 agonistic antibody, which we call ATOR-4066. This is a very exciting molecule that continues to demonstrate significant potential during its current preclinical phase of development, and that further supports Alligator's commitment to continue advancing this molecule towards the clinic. It also demonstrates that Alligator's pipeline and the CD40 program extends well beyond mitazalimab, so something really to look forward to. And last but not least, from our pipeline point of view, are our programs targeting 4-1BB. We are assessing options for taking the monospecific 4-1BB molecule, ATOR-1017, to Phase II development as a combination treatment. And we are also expecting for the other program, ALG.APV-527, which is a bispecific 4-1BB antibody, that the Phase I study will be completed in the coming months. This is a program that we are codeveloping with our partner company, Aptevo Therapeutics, and we are hoping that the data will be available in the second half of this year. So with that, let's turn to Marie Svensson to review our financial results for the quarter. Marie, over to you.

Thanks, Sumeet. Next slide, please. Going over the financial figures. Net sales for the second quarter '24 amounted to SEK 7.6 million, down from SEK 17.4 million in the prior year period and comprised primarily to the collaboration agreement with Orion Corporation. Operating expense mainly pertained the cost of the ongoing clinical trials for mitazalimab and 527 as well as Phase III enabling activities for mitazalimab. Operating loss for the quarter resulted in SEK 47.4 million, a decrease from SEK 63.7 million in prior year period, mainly due to lesser number of patients on treatment in the OPTIMIZE-1 study. The cash flow from operators amounted to minus SEK 46.9 million compared to minus SEK 61.1 million last year. Cash flow for financing activities amounted to SEK 75.6 million in the quarter, resulting in the total cash flow for the quarter amounting to SEK 37.4 million. The bridge loan from our main owners in Q1 was converted in the right issue in April. The right issue brought in SEK 107 million, the credit facility from Fenja Capital added additional SEK 50 million in the period before transaction costs. In the figure down to the right, you can see how expenses were distributed between our projects in Q2. And not surprisingly, still OPTIMIZE-1 is the major part of our efforts, 35% of the resources have been focused on the mitazalimab project. R&D collaborations amount to 19%, comprising of investments in 527 and to some extent, MacroGenics collaboration. 10% of our efforts invested in our next-generation CD40 agonist ATOR-4066, moving the candidate towards the clinic. Next slide, please. Regarding financing, we have extended our cash runway meaningfully but tried to keep the dilution of our shareholders to a minimum. This is why we secured a loan facility with a Danish asset manager, Fenja Capital. This agreement is divided into 2 tranches. The first tranche comprised of SEK 50 million, of which SEK 12 million is in convertible bonds, which represents the only potential dilutive portion of the financing and SEK 38 million in straight debt. The second tranche amounts to SEK 30 million in straight debt all of which providing financial and strategic flexibility and ensuring cash liquidity to the first quarter of '25. Next slide, please. If we look at the Alligator's operating cost on the rolling 12 months we note a slight decrease as the patient recruitment peak is behind us in OPTIMIZE-1 study as well as other expenses for Phase III enabling activities. On June 30, the cash position was SEK 78 million. In order to support the continued development of our key assets, the company is continuously working on opportunities for partnerships, collaborations, out-licensing deals, loans and equity financing to be able to bring our drug candidates forward, and through that, secure long-term financial benefits for the company and our shareholders. And with that, I will turn the call back to Søren.

Thank you, Marie. Next slide, please. So with the 18 months survival follow-up data that we have discussed today, we have formed the basis of a very, very strong quarter. It's also important to mention that we recently, i.e., earlier this week, completed or announced the completion of recruitment in the 450-microgram backfill cohort of the OPTIMIZE-1 study. As you may recall, this additional patient cohort was recruited as a request from the U.S. FDA to be able to make OPTIMIZE-1 a Phase III enabling study. And of course, this important milestone and it's very early completion reflects not only the dedication, but also the professionalism of the entire Alligator team. So a big thank you there. As you can see, we have other important milestones coming up in the second half of the year. We expect to announce top line data from the Phase I study with bispecific molecule called 527 that we are codeveloping with Aptevo. And then we are also engaging in continued dialogue with the regulatory authorities, both in the U.S. and in the European Union. And then, of course, we are working hard on, as I mentioned before, as Marie just mentioned and then Sumeet also emphasized, we are working hard on finding the right and optimal partner to take mitazalimab into Phase III and onto the market in first-line pancreatic cancer. And for that, we need to start a Phase III study and currently scheduled for the first half of 2025. And with that, if I could have the next slide. Let's just look at the long-term prospects for Alligator. We have worked hard in the last couple of years to exploit our platform in partnerships with Orion, MacroGenics, Aptevo, while at the same time being sure that we could bring mitazalimab to the data that we have discussed today and advance our next-generation CD40 bispecific molecule such as 4066. In 2025, we will initiate a Phase III study to be able to bring mitazalimab to first-line pancreatic cancer patients as soon as possible. We will go beyond CD40 and take our 4-1BB molecules, primarily 527, into the next stage of clinical development, and we will continue to deliver on partnerships, as just mentioned. Beyond 2025, we will continue to expand both our proprietary and our partnered pipeline to ensure that we can continue to deliver shareholder value and patient values in the years to come. And hopefully, in the period before 2030, we will see mitazalimab approved and on the market, generating the first positive cash flow -- sustainable cash flow in Alligator. With those words, I want to thank you for your attention and turn it over to the Q&A. If we could have the next slide, please.

So let me see if we have some questions here. The first question is from Richard Ramanius from Redeye. How important are the 18-month OS and 12 months PFS numbers for OPTIMIZE-1? Number one, that's for you Sumeet, and how do they impact the partnering discussion? So if you could just, from a medical perspective comment on the OS and 12-month PFS data?

Yes. These are extremely important data. First of all, because they indicate sort of a very mature data set. But equally important to note is they confirm and even further sort of strengthen the signal that we had observed in our primary analysis that was released in January. When we have been in discussion with experts in the field, the feedback that we got is the 18-month time point is often not even discussed because so far, none of the data points have been that encouraging, whereas this is the first time where we are able to report data that are very encouraging and we are reporting sort of a doubling of the survival rate at this 18-month time point. So very similar is the 12-month PFS rate, where the proportion of patients which are free of progression at the 12-month landmark is like 3x of what was reported with the data from a historically reported FOLFIRINOX trial. So these are very important data points and they will definitely have a role to play in our activities and everything that we will do.

Yes, Sumeet. And also to you following up. A follow-up question from Richard is, will these data influence the Phase III design as superiority in these measures should influence the likelihood of obtaining approval?

I would say, very much so. First of all, they further boost our sort of confidence in the drug and in this combination and highlight the immune contribution that comes from mitazalimab, which not only means that a lot of patients have been able to stay much longer on the treatment, but also that with the longer follow-up, you see more and more sort of differential outcome basically that we will need to treat these patients until progression, and it is going to be very important to observe and follow up for a sufficiently long period of time. That will enable demonstration of superiority in a randomized trial.

Thank you. And then Richard asked, and I'm going to collapse these questions into one, saying that how important are these data and the fact that mitazalimab is almost Phase III ready in partnering discussions/business development? It's clear, first and foremost, that the 18-month data that we released a couple of weeks ago have raised a few eyebrows, so to speak, both in the scientific community and clinical community, as Sumeet mentioned, but also with potential partners. Both partners that were already engaged in discussions and diligence with Alligator, but it has certainly also driven a couple of potential new partners into the discussion. So both of this is very important that the data holds true that they are truly differentiated from what has been seen before. And the fact that we have established a clear path to approval with the FDA, of course, takes away a significant uncertainty in the program, and therefore has positively influenced the dialogue with potential partners. And then a fourth question here from Richard. What more activities are needed before you can send in a Phase III application? So I think we are working on a number of activities preparing that. We are now at a place where the Phase III manufacturing process have been -- the development has been finalized. The next step for Alligator is to push the bottom for manufacturing that molecule. We are currently in dialogue with European and U.S. authorities about further CMC activities and what's needed there. We are talking to potential clinical research organizations to help with the trial. And Sumeet, you can probably allude a little bit to some of the activities that are ongoing to fine-tune the actual Phase III trial based on the input, not only from the FDA, but from a number of key opinion leaders that we've had recently.

Yes, absolutely. I mean -- so again, the 18-month data will contribute further before we finalize our sort of design and approach for the Phase III trial. We are getting excellent input from the experts in the field in terms of details, such as the patient population, the sort of assessments to be done in the context of a Phase III trial and the strategy of analysis for the trial to maximize the chances of success eventually. Additionally, we are obviously also undertaking several interactions with authorities worldwide. That will be not only sort of useful but also critical in terms of getting their buy-in to the design to the protocol before embarking on the operational execution of a Phase III trial. So we are -- I mean, we are undertaking everything that is typically done as a start-up part for a Phase III trial.