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

So hello, and welcome to Alligator Bioscience's Interim Report Call for the first quarter of 2025. My name is Greta Höög, IR and Communications Manager at Alligator, and I will be introducing today's call. With me today are our CEO, Søren Bregenholt and our CFO, Johan Gileus. They will walk you through the latest developments from the quarter 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 with you 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 timings 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 our Investor Relations section of the website. With the formalities out of the way, I would now like to turn the call over to Søren.

Thank you, Greta. And once again, welcome to Alligator Bioscience Q1 2025 call. If I could have the first slide, please. So Q1 has been another busy quarter for Alligator Bioscience. We have made significant progress with our lead candidate, mitazalimab in first-line metastatic pancreatic cancer. We have announced 24 months follow-up data, again, showing an encouraging survival rate for mitazalimab now at around 30% at 24 months, which is outstanding for this disease. In addition, in February, we announced also top line data from a backfill cohort that was done based on feedback or guidance from the FDA to further characterize the Phase III dose. And we are happy to be able to announce that all the data from this cohort is fully in support of 900 microgram as the recommended Phase III dose. During the first quarter and in the end of last quarter, the fourth quarter of '24, we've had a series of successful regulatory interactions, both on manufacturing, on clinical design that together minimize the program risk of mitazalimab and points towards a clear registrational approval for the drug in first-line metastatic pancreatic cancer. In February, we also completed a rights issue raising SEK 153 million in gross. And we are now coming up for an exercise period of our TO 12 warrant [indiscernible] that more towards the end of the webcast. As we'll talk about in the next slide, we have also conducted a cost reduction program that started in the fourth quarter last year, and we are happy to announce that we are ahead of plan with this program that will be concluded by Q2 2025, hence, positioning the company well to maintain low general OpEx in the coming quarters to pursue our strategic objectives. So if we have the next slide, please. Yes, talking about the current focus of Alligator going forward, the cost reduction program that we initiated in the fourth quarter last year will allow us to be laser-focused on getting mitazalimab towards our strategic objectives, namely starting a Phase III clinical program together with a strategic partner towards the end of this year and also invest limited in the follow-up candidate 4066. Our optimized cost structure allows us to pursue these goals following warrant programs that Johan will talk about towards the end of today's talk. Now let's move to the next slide, an overview -- sorry. I was ahead of myself here. So please let me take this opportunity now talking about a laser-focused organization to introduce and welcome our new Chief Medical Officer, Tom Moore to the company. Tom comes with a long-term experience from oncology drug development from pharma, including positions at Roche. Tom has been working with the company for quite a period in a consultancy role, and it was only natural that Tom stepped up to CMO when this position became vacant during Q1. So a warm welcome to Tom from Alligator's management and Board. Now let's move to the pipeline slide here. Just to reemphasize that our focus is on mitazalimab our Phase III ready asset in first-line metastatic pancreatic cancer and that we're developing 4066 as a follow-up candidate to this drug. We have a co-developed program with Aptevo in the U.S. I'm not going to spend so much time on this molecule today, just reemphasize the fact that we have concluded the dose escalation of the first-in-man study and that the companies are currently reevaluating our next development steps with this molecule. Furthermore, we have HLX22, which is out-licensed to Chinese company, Henlius there's been quite a number of progress and news surrounding this program in the Q1. As late as yesterday, we announced that Henlius have started the Phase II study in HER2-positive breast cancer patients. And earlier in the quarter, we announced that the company has initiated or at least been allowed to initiate a Phase III study in HER2-positive gastric cancers. And I want to remind all of us that this molecule is partly owned by Alligator through a sublicense via AbClon and that Alligator is eligible for 35% of future royalty income from this molecule. Now let's move to the next slide, and just remind ourselves about mitazalimab, our first-line metastatic pancreatic cancer drug. We started the Phase II clinical development of this molecule in the third quarter of 2021. Now almost 4 years later, we have 3.5 [indiscernible] announced 24 months follow-up data showing that mitazalimab in combination with first-line chemotherapy leads to a 24-month survival rate of approximately 30%, which is a tripling of what we can expect with the historical comparator FOLFIRINOX in its own and also significantly and nominally better than Ipsen's latestly approved drug, Onivyde, in the so-called NALIRIFOX combination. So combined with the very manageable safety profile of mitazalimab the strong overall survival data and these long-term survival data, we still maintain our view that mitazalimab is a potentially practice-changing drug in the first-line treatment of metastatic pancreatic cancer. And as I said in the beginning, the recent data from the 450-microgram cohort that we announced in February strongly support that 900 microgram is the recommended Phase III dose. These data, together with the regulatory progress that I will talk about in just a second and the therapeutic window of the molecule continues to drive big pharma interest in mitazalimab, and I'm sure that many of you listening in today are very much interested in how these discussions are progressing. We are going into more focused discussions with a set of global pharma companies and also a set of large global biotech companies. And we maintain our view that mitazalimab is -- or it's very, very likely -- it's very likely that we make an agreement with mitazalimab during 2025. One of the things that are, of course, worrying on a global scale is the current trade wars and financial uncertainty going on based on the U.S., current U.S. administration. So far, we have not seen this reflected in our discussions with potential partners. We believe that the underlying fundamentals of the pharmaceutical industry with a need to continue to replenish the late-stage pipeline are intact, and we believe that mitazalimab fits perfectly for a number of companies that have, what can we say, goals and needs in their Phase III pipelines together with a need and a wish to enter into solid tumors or even gastrointestinal tumors like the ones treated by mitazalimab. If I could have the next slide, Greta, I just want to reemphasize that we are moving forward with mitazalimab that we have agreed the Phase III protocol now both with FDA and the German authorities. We still have a formal discussion with the FDA scheduled for June this year. The trial is standard Phase III registrational trial, mitazalimab plus chemotherapy, randomized one to one versus chemotherapy in approximately 570 patients with an opportunity for an early readout based on an interim analysis approximately 2.5 years after initiation of the trial. As we have announced previously, we have initiated manufacturing of material for this trial based on positive outcome of our dialogues with both U.S. and European authorities around the manufacturing status of the molecule. And basically, there are, as I said, an EMA scientific advice planned for end of June and also Type B meeting with the FDA to formally approve 900-microgram as the recommended Phase III dose. And if I could have the next slide, I will hand over the word to Johan to take you through the financials and some background info on the upcoming warrants. Johan, the floor is yours.

Thank you, Søren. And let us start with a snapshot of our Q1 performance then. We have had still quite a lot of expenses in the quarter due to the fact that we are the ongoing clinical trial, the Phase II study with mitazalimab, patients are still treated. And of course, that incurred cost and the benefit of the patients, of course, is striking them with still on a trial. We also are producing IMP study material for the Phase III to be able to start the clinical trial towards the end of 2025. And that has also incurred cost during the quarter on top of the general OpEx and also the cost for the restructuring of the organization within Alligator. When it comes to the financial items, which is maybe not what we normally see has a huge impact on a company like Alligator, we do have interest cost, of course, due to the loans that we have had during the quarter, but also there is a financial income and now it becomes quite technical here. We have to record the TO 12 and TO 13 that we issued free of charge in connection with the rights issue in February at value and then we record the financial debt for that, and that is also revalued on a quarterly basis. This has then incurred quite a significant financial income at the end of the quarter, hence, we have a positive financial net. This last item that has a noncash impact. So it will not actually have an impact on our future cash flow. The cash flow will come from any exercise of the TO 12 and TO 13 going forward. Going back to the people then, as you can see in the bottom line, then we are still 33 people that was engaged by or employed by Alligator towards the end of the quarter. Many of them have already done their last working day, but due to notice period, et cetera, they may have days and weeks in the second quarter as well to incur salaries and et cetera. By the end of the quarter 2, then we will have the -- only have the remaining Alligator people within the company then around 15 people then. Next slide, please. What we then can see that we have a trading effect of lower expenses than as predicted, but also that it will become even more evident in the next quarter and the coming quarters. And as Søren mentioned before, we will have quite a low general OpEx in Q3 and onwards that when we have done more or less finalized the study with mita in Phase II, we have also concluded the manufacturing of IMP then actually, as we speak, they are doing the final steps for the IMP manufacturing and then it will go into stability phase then up until they can be used towards the end of 2025. We have liquidity funds of SEK 29 million at the end of the quarter, and we have, we are expecting then an outcome of the TO 12 and TO 13 that is in line with our plans that also then we can use them for our financial flexibility to deliver on our current objectives. And of course, as mentioned by Søren earlier that we are looking into other avenues for getting cash into the company through partnership, et cetera. Next slide, please. I'd like to take this opportunity just to remind everyone on the call about the TO 12 that will come in to be exercised in mid-May then. Next week then on the 28th, it will be the last day of the pricing period. And as you may recall, then the price will be set the VWAP, 70% of the VWAP for that particular period on 11th to 28th of April. We will announce that maybe after the close of the trading on 28th or early in the 29th morning and thereafter then. And then it will then be an exercise period then from the 5th of May throughout to the 19th of May. And please be aware that your bank may have different deadlines here, so make sure to reach out to your bank and to make sure that you can act on this either by subscribing or also trade if you want to buy or sell TO 12 then. Last day of trading is 15th of May then. And towards the end of May, then we will both announce the outcome and also have the proceeds to the company then. And there will be some time lag before these subscribed shares that also can be converted to actual shares then. At the bottom then, we have this reverse split that has made a little bit some complexity to understand what are the rights worth, et cetera, and how much will that trickle into new shares then. But if you take the easy one that if you have 1,000 warrants TO 12, that's equivalent to 1 new share at the subscription price or exercise price. And then this will then be what will be the cash inflow to the company. And if the 19.6 million equivalent shares that we can then maximize maximum issued in connection with TO 12. And if you just use a proxy then like SEK 4, then the maximum inflow to the company will be then SEK 80 million roughly. With that said, I think I will hand over to you, Søren and then for the final remarks before we go over to questions and answers.

Thank you, Johan. Some of your comments reminded me to just make a few additional comments to OPTIMIZE-1. Currently, as Johan said, we have, and I think it was in the slide, we have 5 patients that are still being treated on 900 micrograms per kilogram. These patients have been on treatment for more than 2 years. The longest of these patients have or will next week cross 3 years of active treatment with mitazalimab, which is also a reflection of the drug's efficacy and safety profile. Mitazalimab is life-saving medication for these patients. And the company is, of course, committed to maintain and continue to provide mitazalimab for these patients. But we are in the process, and this also goes for the 450-microgram cohort, where the 9 patients still on drug. We are in a process of reducing the readouts from these patients. So we drag down the overall cash burn in the OPTIMIZE-1 study. So if we look at the milestones that we foresee for 2025, which is this slide, as I already said, we have 2 important Phase III enabling regulatory meetings in Q2. All have been in the plans since last year, and we are on track with these meetings. And then we still believe that the trial or the program is still on track for Phase III initiation in this year. And it's clear that we are working hard with our discussions with potential partners to be able to start that trial during this year. As you know, we have other assets in the pipeline, 4066. We are not allocating cash to drive this molecule forward at any speed. That is something that we will do once we have nondilutive income for Mita deal and the same goes for the Phase I asset, 527. Here, we are not allocating any cash to that molecule in the coming quarters. So with that, could we have the final slide? Yes. We have now time for Q&A.

And I know that we have received a couple of questions here. And Johan, if you are ready, then the first one goes to you. This is from Kiara at Kempen, who would like to understand how far the cash runway is?

I will say it this way. With a prudent assumption for the TO 12 and TO 13 that will be upcoming now in May and September, we are expecting to have cash until the end of 2025.

And to achieve our strategic objectives? Yes.

That's right.

Yes. Then Kiara also has another question. I was curious to know about how partnership discussions for mitazalimab is going. And I think I'll take that one. We are discussing now focused with a number of, as I said, global pharma, big biotechs, and we expect that these discussions will continue to move forward in the coming weeks and months. We are encouraged about the feedback we hear, both on the molecule, mitazalimab, the data that we see in the trial, and also this is a little bit of an internal comment, but to the quality of the material in the data room. Then we have a series of questions from Richard from Redeye. And I think a couple of those are for me. Can you comment on the Phase III design with potential for accelerated approval? Yes. I already mentioned it's a one-to-one randomization of mita plus FOLFIRINOX versus FOLFIRINOX in, of course, a blinded study, but it's a non-placebo-controlled study. which is a good thing for Alligator and a partner as it reduces operational complexity. And yes, there is an opportunity for, I would not call it accelerated approval because it is the same endpoint, namely overall survival, but we have an early interim analysis that is event-driven that gives an opportunity for the drug to be approved as early as 2030. And the next question, have you updated the trial design? Not lately. But of course, we have assessed quite a number of various designs before addressing this with the regulators. Then Richard had a question on 527. What is the status? And are we still incurring costs? We still own half of the molecule together with Aptevo, the U.S.-based company that we are collaborating with. We are currently assessing the clinical data from the dose escalation study and are assessing next step for the molecule, including the opportunity to partner 527 with a third party. And right now, we are not allocating significant cost to this molecule. And then the last question from Richard here is when could HLX22 be on the market and start generating royalties? And I think that's an excellent question, but it's significantly difficult to answer. Henlius have just received the FDA IND approval for a Phase III study. Let's say that, that can start sometime this year, then we can add approximately 3, 4 years on that. So I think, again, we will probably talk about something 2030 or maybe a little bit later than that. And with that, there are no more incoming questions. So I think we will end the call here. And once again, thank you for your participation and your interest in Alligator. And have a good afternoon.

Thank you. Have a good afternoon.

Thank you.