Alligator Bioscience AB (publ)

Hello and welcome to Alligator Biosciences first quarter 2024 earnings call. My name is Greta Eklund and I am the Investor Relations and Communications Manager and I will be introducing today's call. With me are CEO Søren Reinholt and CFO Marie Svensson. They will walk you through the latest developments from Q1 2024 and the upcoming news flow, after which they will be happy to answer any questions that you might have. Before we begin, I would like to share a quick reminder with 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 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 Sara.

Thank you Greta. Good afternoon and good morning everyone and welcome to Alligator Bioscience first quarter 2024 earnings call. As Greta mentioned, I'm Søren Breinholt and I'm the CEO of Alligator Bioscience. I'm very pleased to share with you that Alligator continues to make strong progress on all fronts. We are bolstering our mid-stage clinical pipeline while we're also making progress on our earlier programs. Preparation for the phase 3 evaluation of our lead acid, metazolamab, in first-line metastatic pancreatic cancer are underway, and we are looking forward to building on the very positive results from Optimize-1. You remember the top-line results from the phase 2 study, which we reported January 29, demonstrated that metazolamab, in combination with standard-of-care chemotherapy, Folfirinox, provided significant survival benefits over standard-of-care alone. a fact that we are going to discuss in more detail during today's call. This quarter, we also reported positive interim phase one data from the dose escalation study with ALG-APV527 in solid tumors. This is a molecule we are co-developing with Aptivo out of Seattle. We received the first US patent for NeoXprime platform by specific antibody ATOR4066. And recently, our partner Orion selected the lead candidate in our second collaboration program and exercising their development option, which triggered a milestone payment to Alligator. On the financial front, we recently conducted a capital raise, extending our cash runway and applying or adding maneuverability in in our efforts to negotiate the best possible deal for me to sell them up we remain financially disciplined and which allow us to continue to invest in our key assets both proprietary and partner program next slide please So, on January 29, we announced positive top-line data from the OPTIMIZE-1 study, which is a Phase 2 study assessing the safety and efficacy of our CD40 monoclonal antibody, metacetamab, in combination with standard-of-care chemotherapy modified for ephirinox in first-line metastatic pancreatic cancer. First of all, the study achieved its primary endpoint with an objective response rate of 40.4% and an unconfirmed objective response rate well above 50% in the 57 evaluable patients. This compares very favorably with the objective response rate of around 30% reported in a similar patient population treated with the chemotherapy backbone alone, thus demonstrating the profound clinical benefits of metazolumab over standard of care. We also observed a highly durable response with immediate overall survival of 14.3 months with over 50% of the patients still being alive at the time of analysis and an unprecedented durability of response of 12.5 months together demonstrating the extended survival benefit over standard of care. Both the durability of response and the survival rate will mature further with the ongoing treatment and follow up. And we'll talk a little bit more about the time scale for that in a minute. So we are planning to report 18 months survival follow up from these patients, the full phase two population in the middle of this year. And we can see from the data read out already now that mitocelumab is well underway to potentially changing the treatment paradigm in first line pancreatic cancer. And we believe, as I said, based on the fact that more than half of the patients were alive at the last readout, that the survival data that will present mid-year will have improved significantly. Now go to the next slide. As we are laser-focused on advancing mitocelumab to the next stage of development, which is naturally, in alligators' view, a randomized pivotal phase III trial, we've had discussions with the US Food and Drug Administration to ensure the development path for mitocelumab. The FDA has confirmed that OPTIMIZE 1 is a phase 3 enabling studies which allow Alligator to move directly from OPTIMIZE 1 into a pivotal trial. In addition, the FDA has provided the guidance on the dose characterization in accordance with their Project Optimus and requested Alligator to add additionally 15 patients on the lower dose in OPTIMIZE 1. I'm happy to announce that we've already enrolled the first patients in this backfill cohort of OPTIMIZE1 and expect to have this cohort fully enrolled in the early parts of Q3. We are continuing our partnering activities, both with due diligence and with negotiations, in our effort to find the best possible global partner to take metazolumab through Phase III regulatory approval, bring it to the patients for their benefit and hopefully also for commercial success. And we are on track to initiate such a Phase III study in 2025 together with a partner. Could I have the next slide, please? So an important point to note about the planned phase three evaluation is whereas the primary endpoint in the phase two study, as you can see here on the left of the slide, was overall objective response rate, the agreed endpoint with the regulators on the phase three study will be overall survival. You can see the chart on the right that the 14.3-month overall survival reported so far compares very favorably with the 11.1-month obtained for both the classical Folfirinox and the new Nelnerinox chemotherapy in first-line metastatic pancreatic cancer. And maybe this is a good time to remind ourselves that Onivite, the novel component of the nirinox regime, was recently approved based on a 1.9 month difference in overall survival in comparison to gemcitabine-packaged taxel. Therefore, we believe that more than three months survival benefit that we've already now seen with mitocelumab is not only believed to be clinically meaningful, but also approvable by the regulators. And finally, when we look at this slide, we can see from the middle chart that the durability of response of 12.5 months compares extremely favorable with approximately seven or six or seven months that you see with a chemotherapy backbone and together with the data that we recently announced on the on the pharmacodynamic activity of mitosalumab these data will support the continued clinical development of mitosalumab in first-line metastatic pancreatic cancer Next slide please. So here we have a full overview over our prepared proprietary programs. Metazalumab, we just discussed in phase two and on its way into phase three in metastatic pancreatic cancer. Importantly, the next generation CD40 agonist based on our NeoXprime platform, the first of which is called 4066, in early preclinical development. We see this as a significant growth opportunity for the company as we go forward. And when we look at the 401 part of our portfolio, our collaboration with Aptivo recently resulted in solid interim or intermediate phase one data from the dose escalation trial in 5T4 positive solid tumors. And if we take the next slide, we can continue on 527. So in March, we announced the positive interim data from the study. So this is a third generation tumor directed for 1BB agonist. And we are evaluating the molecule in tumors that express 5T4. This acid was developed using Alligator's internal libraries combining with Aptivo's by a specific platform, and preclinical studies have highlighted that the differentiated design of this molecule minimizes systemic immune activation while maximizing intumor immune activation, thus allowing for highly efficacious tumor-specific responses as demonstrated by potent activity in a range of preclinical models. So the interim data from the phase one study showed that the treatment has been well tolerated. So far, the dose escalation is really reaching the top cohorts, the top dose levels, and biomarker analysis have indicated that the expression of both targets for 1Bb and 5T4 in the tumors, which underlines the potential of the molecule to treat multiple indications that are 5T4 specific. Of particular interest, we saw clinical signs of early activity in patients with heavily pretreated breast cancer. These patients demonstrated measurable levels of drug in circulation and reproducible elevation of serum pharmacodynamic markers, which together suggested that the drug is biologically active. Alligator and Aptivo have currently enrolled more than half of the patients and we are on track for the final readout of top line data from this study in the second half of the year. Now let's go to the next slide. So as I just mentioned a few slides ago, the third generation bispecific CD40 agonist is really what we believe will drive long-term value for Alligator. And we are, I'm happy to announce, continuing to make great progress with 4066. This quarter we strengthened the IP protection of the molecule with the first US patent for 4066, which of course is vital to the commercial development of any molecule. And we expect to strengthen the protection around the molecule with more patents, both in the US and in other regions of the world. At the end of the quarter, we presented the key preclinical data at the ACR meeting, suggesting an even more specific and efficacious activation of CD40, further opening the way for an even more targeted therapeutic approach with 4066 that really supports the continued development of the molecule in clinical trials, which we will continue to work towards. Now, can I have the next slide, please? We also announced good news on our collaboration with Orion. This collaboration is now running on its third year. The common aim here is to develop a specific antibody leveraging alligators, antibody cloning and screening technologies together with our proprietary bispecific Ruby format against the target of strategic interest for Orion. We have been working on two programs and now recently Orion exercised the development option for the second program triggering a milestone for Alligator. We will continue to work with Orion and support their efforts to bring these molecules further into human clinical trials and eventually to provide novel treatment opportunities for people with hard to treat cancers. And with these words, I will leave the word to Marie, our Chief Financial Officer. Marie, please take it away.

Mm-hmm. Thank you, Søren. Next slide, please. Going over the financial figures, we start with the net sales for the first quarter, 24, that amounted to 6.97 million SEK, down from 9.59 in the prior year period, and that comprised primarily to the collaboration agreement with Orion Corporation. Operating loss for the quarter resulted in negative 59.64 million and decrease from 62.19 million SEC in the prior year period. Cash flow for the quarter amounted to negative 26.2 million SEC compared to negative 52.2 million SEC in the prior year period. The cash flow in the quarter was positively affected by the company taking up a bridge loan amounting to 58.8 million SEK. Operating expenses mainly pertain to the cost of the ongoing clinical trials for Mitazalema, BEN 527, as well as phase three enabling activities for Mitazalema. In February, Alligator announced a restructuring plan to reduce cost and allow the company to prioritize its preclinical and early stage assets. Construction plan was completed in March and the 1.9 million was reserved in the quarter as the cost for related to the personnel reductions. In the figure down to the right, you can see how expenses were distributed between our projects in Q1. And not surprisingly, 48% of our resources have been focused on the Mita Salema project. An important point I would like to bring to your attention is the focus of financial resources behind our R&D efforts. While Alligator dedicated around 70% of its operational expense to R&D in 2020 and 21, this level was significantly increased in 2022, reaching 81%, and our efforts have continued, leading us to dedicate 83% as March 23. 31st of 24. Next slide, please. Through our professional rights issue conducted in the first quarter 2024, we extended our cash runway, receiving 107.1 million before deduction of costs, of which 59.5 million relates to the set-off against the outstanding bridge loan. This additional financing allows Alligator to continue pursuing our goals, including the continuation of the Phase 2 development of mitocellular MAP in pancreatic cancer, the continued 527 Phase 1 study, and the ongoing development of our other pipeline candidates, including 804-266. Next slide, please. If we look at alligator operating costs on a rolling 12-month basis, we note a slight decrease as the patient recruitment peak is behind us in OPTIMIZE 1 study. Expenses in our ongoing clinical trials are still high due to the number of patients staying on longer in OPTIMIZE 1, but also due to the ongoing investment in various Phase 3 enabling activities for beta-salimab. On March 31st, liquidity was 40 million SEK. The result of the rights issue was announced on April 9th, with around 70% of the total issued subscribed. 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 secure the financing of the operations. And with that, I will turn the call back to Søren.

Thank you, Marie. Could I have the next slide, please? So Q1 has has provided a strong start for Alligator on our various milestones. You can see we have already read out the top line data from Metasalumab and also the interim phase one data from 527, as we call it. This leads to a significant news flow in the rest of the year. We expect, as I've alluded to a couple of times, to provide the next survival update from the OPTIMIZE ONE study around the mid of the year. We expect that the recruitment of the additional patients on 450 micrograms per kilogram to align with the FDA's request for additional dose characterization will be completed in the first half of Q3. In Q4, we expect to deliver top-line data from the Phase 1 study with 527, and then throughout Q3, but ending in Q4, we will conduct further dialogues with the US and European regulators to get a clear agreement on the Phase 3 study for mesothelioma and first-line metastatic pancreatic cancer. which will then lead to phase three initiation in the first half of 2025. Next slide, please. So if we take a broader look on Alligator and our strategic intent for 2024, we have already provided data. We have raised additional cash and extended our cash runway. But it's clear that the current efforts we have with identifying and negotiating deals with a partner for metacetalimab is of crucial importance for the continued speedy development of that molecule. Next year, we expect to initiate phase three together with a partner. We expect to go beyond CD40 and bringing 527 into the second phase of clinical development following positive phase one data later this year. And then we will, of course, continue to deliver on our partnerships with Orion, Microgenics and others. And beyond 2025 and a metazalumab deal, we will broaden our proprietary and partnered clinical pipeline, and we will start to generate the first sustainable revenues and reaching operational profitability by an approval of metazalumab before at least 2030. The numbers here might be a little bit on the optimistic side. So with this, I thank you for your attention and take any questions that may have arisen from today's presentation. And we have a couple of questions here. We have one from Luisa from Kempten, and the question goes as such. You mentioned in today's report that preparations for a phase three study with META in pancreatic cancer is ongoing. And what do those preparations entail? That's a very important question. So these Preparations are basically threefold. Of course, we are engaging our key opinion leaders and other experts to get the right phase tree design in order. to be able to discuss it with the regulators in the second half of the year. We are finalizing the manufacturing process development for phase three, something that has sort of is at its final stages and some have taken significant costs for that previously that will sort of taper off during the next quarters. And of course, we are recruiting the last 15 patients in the low dose cohort in OPTIMIZE 1. Then we have a couple of questions here from Richard at Red Eye. And I think this one is also, to me, could further improve results in the mid-year readout from Optimize One, assist business development. Yes, I think any positive data will, of course, help advancing the discussions and the negotiations that are already ongoing. We expect those data to come out during the second half of June this year. There's another question here. Sorry that I'm reading it from my phone. What are the main takeaways from the AACR meeting this year? What is the interest in pancreatic cancer among practitioners and pharmaceutical companies? That's also a very good question. Obviously, with a very high unmet medical need in metastatic pancreatic cancer, practitioners are very... keen on testing new molecules like metazolumab in the appropriate clinical setting. For us, the clear message from practitioners and our key opinion leaders is that the next obvious step for metazolumab is a randomized pivotal trial. Companies are probably a little bit more hesitant for pancreatic cancer in general. It's a disease with a, as I said, high on medical need. It's also a disease where it's difficult to develop new drugs. But there is a number of incumbents already in the disease or in other gastrointestinal cancers that have shown a strong interest in mitosalumab. And we expect that we will be able to to further these talks in the months to come, leading to a partnership agreement for mitocelumab. We have another set of questions here. This is more about Orion. Will Orion take over the second biospecific antibody and do the development work from now on, meaning that will have no cost and no reimbursement from the program. And can we talk about the financials? Unfortunately, based on terms of the agreement, we cannot talk about the specific financials. But as Orion has exercised, the development milestone for the development option for the second program they will take over the molecule and lead the development from here on alligator will of course continue to to assist orion in in the areas where we have specific and unique competences and the last question from richard here What is the plan for 527? Do we want to out-license that and 1017 as a package individually or continue development in-house? For 1017, we have previously stated and will continue to state so that until we have either a partner or substantial free cash flow to support the development. We will not engage in further development of 1017. 527 is co-developed with Aptivo and we are leading discussions with potential partners while we are also exploring opportunities for continuing the molecules development in the current setup. There's a lot of questions here. Let's stay with questions here on mitocelumab. When will you report the data for the additional cohort of the 15 patients in OPTIMIZE 1? As I said, we expect to have recruited these patients by the beginning of Q3, hopefully, and we expect to be able to put out the first set of data from this study probably in the beginning of Q1 2025. We are primarily evaluating these patients for pharmacokinetic, pharmacodynamic and exposure response ratios and not necessarily for full survival parameters. but around Q1 next year. And we are still continuing both our dialogues with potential partners and our phase three preparations with the assumption that Optimize One is, or based on the agreement, that Optimize One is phase three enabling. So here is a question from another investor. The objective response rate for the first few patients increased meaningfully from the first interim to the second interim, but you did not provide an update on how this ORR evolved for these 23 initial patients. Could you provide us with an update on that? No, I cannot. We decided to not continue to follow this This particular cohort, when we did the full top line analysis in January, this was an analysis of the initial futility cohort that we thought was interesting to see whether the study would continue to provide mature data at that early point. We have not further analyzed that. But when we look at the data, we can see that some of these patients that were the early ones included are still alive in the study. And that is, of course, very encouraging. And we are looking very much forward to provide the 18-month follow-up data on mitocelumab during June. so marie you have been waiting patiently here is a couple of of questions for you how far does your current cash runway take you in in in your proprietary and partner programs well that's uh of course a difficult question depending on where we and how much we will invest in in certain areas so

As we mentioned before, we are diligent and take decisions on the way on what to invest in and what to hold back on. So, of course, if all cash would be at hand, we would go full speed ahead and invest in our upcoming assets as well. But that's not the case right now.

Thank you. And following on from that, and I think you already mentioned it a little bit about both CMC and Optimize One recruitment, but how do you anticipate operating expenses to involve for the remainder of the year?

Yeah, it's a bit of the same. If we get a partner, we could easily move even quicker with the investment in Mita Salima. and increase cost there, but that needs to be, you know, someone needs to be interested in that. Otherwise, I think we need to, you know, be a bit careful with the future investment until we see how much funds we can allocate to optimize and meet that.

Yeah, and then there's a question here that goes probably, and I think this is probably the last question of the day. There might actually be one more here, but this goes about meat and also about money. It says, what are your plans? Should the preparatory work for phase three be done by the end of the year? But alligator does not find a partner yet. Do you take the product into phase three? Does Alligator plan to spend more money on the asset or would limit its effort to finding a strategic partner for the asset? I think that's a very important question. And the key hypothesis here is, of course, to find a partner to develop mitosalomab in the best, fastest way to benefit patients as soon as possible. That will make sense for Alligator, and it will also make sense for our investors, as we believe that the full commercial potential of mitocelumab goes well beyond pancreatic cancer, and a global partner would be much better suited than Alligator to actually fulfill that potential of mitocelumab. And then we have a last question here. 527, could you provide us with an update as to where the recruitment stands and whether Apptivo are still on track for reporting data by the end of the year? If the phase one is positive, what would be the next step and of what timeline? First of all, we have recruited, as I said, more than 50% or well above 50% of the patients. And we are on track to report the top line data on the study by the end of the year. And as I said, we are engaging talks with potential partners. They, of course, await the finalization of the study, one would expect. And in parallel, we are discussing with Activo on potential ways forward co-developing the molecule between the two companies under the current agreement. And with this, there are no further questions. And I thank you all for participating, for your attention and for your very thoughtful and good questions. Have a good day. Thank you very much.