Alligator Bioscience AB (publ)

This is third quarter 2023 earnings call. I am Greta Eklund, Investor Relations and Communications Manager, and I will be introducing today's call. With me, I have our CEO, Søren Reinholt, and he will walk you through the latest developments during Q3 and the upcoming news flow. And after this, he will be happy to answer any questions you might have. Now, 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 obligations to update them to reflect the subsequent events or circumstances other than to the extent required by law. This call is being webcast and is also available through the Investor Relations website. And with these formalities over the way, I would like to turn the call over to Sara.

Thank you, Greta, and hello and welcome to Alligator's Bioscience Third Quarter Call 2023. And as Greta already said, I'm Søren Breinhardt and I'm the CEO of Alligator Bioscience. So if I could have the next slide, please. I would like to begin with taking a look at our broader strategic overview to give you a sense of what we see as the company's major aims and what we're trying to achieve. in particularly how we are balancing development risk through our portfolio of proprietary projects and partnerships. Firstly, to our proprietary pipeline, where we remain in a strong position with our lead acid metacetamol, this second-generation agonist continues to demonstrate highly encouraging and differentiated efficacy in our Optimize I Phase II study in first-line metastatic pancreatic cancer. The duration of response to treatment has shown to be very promising and we expect it to translate into survival benefits when we read out the top line data early Q1, which we're very much looking forward to. And we want to thank everybody for their hard work and their dedication in the alligator team. We want to thank the investigators and also the patients and their families. Investor interest has understandably been very much focused on the Metasalom app data in pancreatic cancer, but given our discovery capabilities, I'm convinced that there is much more to come from our proprietary platforms. Individually, and especially in combinations, these platforms have the ability to deliver compounds that are optimized for safety, efficacy, and potency, and also indication selectivity. They're starting to deliver new compounds, which we expect to provide significant optionality an opportunity for future value generation. We're very proud of the ability we have repeatedly shown across numerous projects and compounds to identify and develop high-quality therapeutic molecules in multiple formats, including monoclonals and bispecifics, all of which display optimal stability, excellent manufacturing potential, And in one particular example, our third generation CD40 agonist, which we'll talk more about later, a molecule we call 4066, where we've even shown the ability to remodel the tumor microenvironment while inducing strong anti-tumor responses in a wide range of tumors in preclinical studies. We will present these data at the CITC conference early November. The second pillar of our business development strategy seeks to build partnerships around our proprietary technologies and assets. This with international companies who share our goals and values of bringing innovative, safe and efficacious immunotherapies to patients with hard to treat cancers. And over the years, we have established a network of strategic partnership agreements under which Alligator is eligible for development approval and sales milestone payments in addition to royalties if the partner continues the development and commercialization of the product candidates that they are developing or we are developing together. These partnerships provide a strong validation of Alligator's technology platform. They risk the development of product candidates through the sharing of not only knowledge and resource, but also financials, and they facilitate rapid clinical development. They can also provide significant revenue streams, as I just alluded to, for the company with the potential to develop into distinct business ventures of their own. Now let's move on to the next slide and share some highlights from this third quarter. And we'll of course start with our lead acid metacelumab and the latest positive clinical data from OPTIMIZE-1, the study in first line metastatic pancreatic cancer. Our second interim analysis, which was conducted over a longer period than the first interim analysis, demonstrated importantly a deepening of tumor responses among the first cohort of 23 patients from the first analysis, with an objective response rate increasing well above the 50% mark. It has been fantastic to see how the overall response rate has been improving over time, And this is a strong indication that the treatment provides doable benefits to the patients. We also conducted an interim analysis on all the 57 available patients in the study, in which 25 patients responded to the treatment, resulting in an interim response rate of approximately 45%. While this figure is in itself highly encouraging, we believe that it might further improve by the time we reach the top line data readout in the beginning of next year. The recruitment of Optimize One was completed ahead of schedule in the end of Q1 this year, thereby eliminating operational risk in this important phase two study and placing us in an excellent position to deliver top line data as promised in the early parts of Q1 next year, which is much earlier than originally anticipated. It's clear from these advancements that we are continuing to make excellent progress with the clinical development of metazolamab and its route through pivotal development and market. I'm pleased to report that in addition, we received orphan designation from the European Medicine Agency for metazolamab in pancreatic cancer. The orphan designation confers significant regulatory and financial benefits, including 10 years marketing exclusivity in the European Union countries after product approval. The EMEA Award follows the decision back in May this year from the US FDA to grant metacetamol orphan drop designation in pancreatic cancer in the US and means that we now have secured stronger commercial protection for the molecule in two of the key markets, US and the EU. Building on that protection received a new patent from the European Patent Office covering metacetamol composition of matter until 2038. This is a significant addition to our overall patent portfolio and provides virtual future protection for our lead asset in Europe. This quarter, we also continue to release more data highlighting metacetamab's ability to activate the immune system and enhance antitumor responses in combination with chemotherapy. We present the data at the AACR Special Conference on Pancreatic Cancer, the International Cancer Immunotherapy Conference, and we also provided the data from the phase one study that was conducted earlier, which was published in the scientific journal CELLS. Together, these data reinforced metazelumab modes of action and provided yet more clear evidence to support its continued clinical development. And I'm pleased to say that we are continuing to view significant interest in metazelumab, both from the medical community and for potential partners as a combination therapy for pancreatic cancer, as well as beyond. We also saw the publication of an article in the Renewal Scientific Journal Cancer Immunology and Immune Therapy highlighting the preclinical data on our potential best-in-class monoclonal antibody 1017. These data demonstrated that 1017 strong safety profile and potential therapeutic anti-tumor effect in vivo, both as a monoclonal and importantly also in combination with PD-1 treatments, which gives us a significant therapeutic potential in advanced metastatic cancer. Our research, collaboration, and license agreement with Orion continues to go from strength to strength. The partnership aims to discover and develop new biospecific antibodies for cancer immune therapy, and we have now attained technical feasibility in the second of our two collaboration programs. This is an important achievement which triggered a new milestone pavement to Alligator and also further highlights the robust discovery and translation capabilities of our proprietary technology platforms, which I was referring to in the previous slide. Finally, this quarter, a successful warrant exercise was conducted, raising 13.8 million SEK. This corresponds to a utilization rate of around 68% and comes in addition to our preferential rights issue in May this year, which raised a total of 181 million. We're very grateful to the support of our investors, and we are even more grateful for the trust they continue to place in our company and our drug candidates. And I'm pleased to report on another substantial quarter for Alligator, in which we have continued to make highly encouraging progress in Metazelumab's clinical development, achieved another important milestone in our key collaboration with Orion, and further strengthened our solid financial foundation, all of which leaves us in a strong position as we enter the final quarter of the year. So now for the next slide, please. So if we look at the OPTIMIZE-1 trial and the treatment landscape in pancreatic cancer, we can first take a quick look at the challenges and unmet need in pancreatic cancer. And the first point to note are the lack of effective screening strategies, nonspecifically presenting symptoms, and the cancer's aggressive biology. All of this presents challenges when it comes to the effective diagnosing of the disease, meaning that 80% of patients are ultimately diagnosed with advanced, unresectable, and in most cases, metastatic disease. For those who have a resection and adjuvant therapy, up to 80% of these relapse and need secondary therapy. In addition, pancreatic cancer is a deliberating disease. due to its symptoms and the toxicities of the available treatments. It is already the fourth most fatal cancer in both men and women, and its incidence is increasing as the population ages, and there is no new potential developments in the pipeline. At the moment, we have a 10% five-year survival rate in the disease, and for metastatic pancreatic cancer, we are down to approximately 3% to 5% five-year survival rate. And there are no treatment in around metastasis and treatment for around three months. Next slide. In that context, let's recap how metastasalimab when added to chemotherapy has the potential to improve outcome for pancreatic cancer patients. These interim data from the OPTIMIZE I Phase II study in combination with standard of care chemotherapy for Ferenox in first-line metastatic cancer patients. If I can draw your attention to the chart on the left first, which shows the interim objective response rate for the entire 57 patient cohort, which is currently at 44%. You can see that that compares very strongly to the standard of care chemotherapy regimes of gemcitabine and fulferinox, which are down at approximately 23 and 32% respectively. I should also reiterate that the 44% ORR could increase by time, as we get the top line results from the study, as indeed was the case for our 23 patients originally assessed in the first cohort of the trial. These response rates are a strong indication of metazolamab combined with folferinox offer significant clinical benefit for pancreatic cancer patients over standard of care. Similarly, in the chart on the right, we can see that the median duration of response was 8.7 months, significantly longer than the 5.9 months reported for fulferinoxalome. This is important because this is an indication of the immune stimulatory effect of metazolamab and also points towards a potential increase in progression-free survival benefits and potentially also overall survival. which is, of course, the key outcomes and endpoints for a study like OPTIMIZE-2. In addition, I'd like to mention that 19 patients, that's around 33%, achieved stable disease, resulting in a 77% disease control rate, and which the saddle marks manageable safety and solubility profile in combination with ophirinox was confirmed once again. In addition to these hard facts, we are encouraged by the trial data that we see beyond this, and also importantly, the positive feedback we get from our investigators in the trial. At the AACR meeting last month, we were able to communicate that two of the patients in the trial saw complete resolution of their target metastatic lesions, which is truly a remarkable result in this patient population. Our encouragement of metazolamab's effect in this patient population is also reflected by the fact that a lot more patients stay longer on treatment than was originally anticipated when we designed the Optimize One trial. Now, if I can get the next slide. Now, looking ahead onto the key inflection point for metacelumab in the coming months, we are planning to initiate discussions with the regulators in the U.S. and in Europe in the final quarter of the year to discuss the optimal route to the market for metazolamab in pancreatic cancer. We also expected to complete our enabling toxicology work as part of our preparation for metazolamab phase three clinical evaluation in pancreatic cancer. This all sets us up perfectly for optimized one phase two top nine readout which we have mentioned is due in the early parts of Q1 2024, nine months ahead of the original schedule. Next slide, please. Now, having spent a significant amount of time on metazalomab, let me take this opportunity to reintroduce you to our NeoXprime platform, a bispecific concept that is reflecting the biology of metazalomab and then incorporating additional innovation, making it a more efficacious, even safer, more indication-specific class of molecules, as we see as the second or third generation coming after metazolamab. The front runner, 4066, which we have discussed briefly, is developed for indications like colorectal and gastric cancer and has already demonstrated the ability to positively modulate the immune system inside the tumors, leading to efficacious, broad and lasting tumor immunity. We see this next wave of innovation from alligators having the potential to be efficacious single agent treatment options for patients with the hard to treat cancers. And as I mentioned before, we're looking very much forward to present the latest data at the CITC conference in the US next month. So next slide, please. And here you can see an overview of our fully-owned internal programs, which gives a very good sense of the robust immune oncology pipeline that we have built and are continuing to develop with substantial clinical and commercial potential. Our antibodies address key immune activation pathways and are designed with features that make them complementary to existing cancer therapies. And as I just said, some of them can even be regarded as single treatment or single agent treatment opportunities. We believe this puts our antibodies in a unique position as part of tomorrow's combination therapies, helping patients with hard-to-treat cancers. There are a number of reflection points coming up, which are worth looking out for. In our CD4 program, we already mentioned optimized one top line data early in Q1 2024. And in our program targeting 401 , we're expecting an interim readout from our phase one study evaluating the molecule we call 527 which we are co-developing with uptivo at the beauty can we expect to see these first clinical data during the fourth quarter this year so with this let's turn to marie swenson who will review our financial results for the quarter marie thank you sir next slide please

Going over the financial figures, net sales for the third quarter amounted to 19.4 million SEC, up from 5.1 in the prior year period. Operating loss for the quarter resulted in 52.7 million, an increase from 51.2 million in the prior year period. Cash flow for the quarter amounted to negative 86.5 million SEC compared to negative 45.6 million SEC in the prior year. The increased cash flow out in the quarter is due to a 50 million SEK short-term investment in fixed interest placement. For the nine months period January to September, net sales amounted to 46.4 million SEK, up from 15.6 in the prior year period. Operating loss for the nine months period resulted in 178.6 million SEK, an increase from 140.1 million SEK in the prior year. Cash flow for the nine month period was negative 23.1 million compared to negative 131 million SEK for the same period last year. Revenue in the quarter and the nine-month period for 23 was a result of the research and license agreement with Orion. Operating expenses for both period were mainly due to the cost of the ongoing clinical trial for mitazalimab and ALGA-PV527, as well as phase three enabling activities for mitazalimab. In the figure down to the left, you can see how expenses are distributed between our projects in Q3. And not surprisingly, 55% of our resources have been focused on the Mitathalema project. An important point I would like to bring to your attention is the focus of our financial resources behind our R&D efforts. While Alligator dedicated around 70% of the operational expenses to R&D in 2020 and 2021, this level has significantly increased in 2022, reaching 81%. And our efforts have continued leading us to dedicate 87% as of September 30th, 2023. Next slide, please. If we look at alligators operating cost on a rolling 12 months basis, we note an increase due to the number of patients staying on longer in our ongoing clinical trial, as well as the ongoing investment in phase three enabling activities for mitazolamab. We received 13.8 million through the exercise of warrants in the quarter, and together with the right issue earlier in June, we have received 195 million in gross proceeds. Liquidity, including our short-term asset placed in an interest account, was 23.9 million at the end of September. In order to support the continued development of our key assets, the company is continuously working on opportunities for partnerships, outsourcing deals and equity financing. This includes both business development for new partnering agreements with an upfront payment upon signing, as well as other financial financing options. And that's... With that, I hand over to you. Thank you, Marie.

Thank you, Marie. Next slide, please. So looking ahead to the news flow over the next 12 months, we can see a number of important clinical and operational updates ahead. As I said, we are expecting a busy end to the year with the preliminary phase one readout on 527, our collaboration with Aptivo, and we also see the phase three enabling toxicity data for metazalumab to be used in in four quarter of the year then early in the fourth quarter next year our first quarter next year we have this that significant data readout which we are very much looking forward to the top line readout from optimize one study in first line metastatic pancreatic cancer Beyond that, we are potentially looking to initiate OPTIMIZE 2 in collaboration with a partner to evaluate mesosalumab in the indication of urothelial carcinoma during 2024. If I can have the next slide. So finally, I want to briefly touch on the development of Alligator Bioscience, our vision for the next few years and where we are heading as a company. Since our foundation in 2001, we have concentrated on immuno-oncology and the development of mitosalimab, which we then progressed through our partnerships with Janssen. As we have grown and strengthened our organization, we focused on mitosalimab in pancreatic cancer and have begun to leverage our proprietary platforms through a number of partnerships. For the next steps of our company, we have identified three areas of strategic focus. First, we are looking for a partner to license Metasalamab in order to maximize the value opportunity, both short and long term. Secondly, we will broaden our proprietary pipeline with up to three mid-stage clinical assets. primarily on the NeoX Prime platform, as previously discussed. And thirdly, we will add new partnerships with the aim of putting five partners' assets in the clinic by 2030. These goals speak to Alligator's core strength as a biotechnology company, and achieving them will give us the ability to maximize the number of indications we can target with our pipeline, extend our patient reach as far as possible, and secure long-term financial benefits for the companies and shareholders. And by then, could I have the last slide, please? And coming up in Q4 is Alligator's Capital Markets Day, where we will feature several presentations detailing the overview of the company strategy, our proprietary and partnered asset, and also our technology platforms. At the meeting, we will hear from key opinion leader Dr. Gregory Beattie from the University of Pennsylvania, one of the key pioneers in CD40 antibodies in pancreatic cancer. And Professor Beattie will explain in more detail the current treatment landscape for pancreatic cancer and the potential of metazolamab to change the treatment paradigm. The event will be a great opportunity for Alligator's executive management team to present our latest work in the development of tumor-directed immune therapies and for our participants to share their questions and views with us. And with this final slide, we will now continue to the Q&A. And I thank you for your attention. And we have a question coming in here. And Marie, that is for you. Do you expect the same cash flow or burn rate in the next two quarters as we have seen in this quarter? We cannot hear you, Marie.

Okay, sorry. Can you hear me?

Yes.

Yes. Yes, depending on, of course, how long the patient stays in the study, in the mitosalimab-optimized one study. But if they are staying on, the cash burn will be more or less the same.

And I think here, if I may add, it's also important to note that we are coming to some key decision points In our CMC program, where we are reaching data points, significantly de-risking the future manufacturing ability of mitosalimab, which will lower the burn rate slightly in the quarter, or the burn rate on manufacturing in the next two quarters. We have the next question here on a similar note. What are the income opportunities in the next two quarters? I think you can take that as well, Marie.

Yes, as I mentioned before, we are always working with BD activities, equity opportunities, working with partners as Orion, for example, that generate some type of revenue. I can't really say much more than that. We are continuously working with the funding of the company.

Good. Then we have two questions here that I will take. They are both about mitazolamab, not surprisingly. One question here is, do you still plan to find a partner before the end of Q2 for mitazolamab? I assume that is. Yes, we are in contact with a number of big global pharma companies and big global biotechs on mitazolamab. companies are performing due diligence on the molecule and others are following the publicly available data. And these dialogues have been further neutered by the data that we put out in June and also data that we presented during Q3 on the pharmacodynamic of the molecule. So yes, that is still the plan. And a similar question to what we just discussed, how important is the additional spending on toxicology, CMC, et cetera, in partnering discussions? And I can answer here that we believe that it is valuable to minimize risk, shorten timelines, and increase development optionality for Alligator and a potential partner in the way that we're running it to sell them up currently. Therefore, we have finalized the phase three enabling toxicology, the cost carrying part of the study, so we will not invest significantly more there. And CMC is, of course, also a point where you are often on the critical path. So investing balanced in that we believe is important in creating short, mid and long-term value for a partner. Then a third question directly on OPTIMIZE-1 and Mr. Salomon, are patients in OPTIMIZE-1 still receiving treatment longer than expected and should this translate into interesting PFS and progression-free survival and overall survival numbers? Yes, we have a significant number of, as you recall, we finalized enrollment by end of Q1 this year. So meaning that all patients on the study have now been there for more than seven months. We have a significant number of patients still receiving metazolamab in combination with with the Folfirinox, which is a positive and a strong indication for a positive outcome. As you also recall, probably from the data readout in June, and which was reiterated at ACR, we have a number of patients that have been on treatment for up to 18 months at that data readout. And we of course hope that these data translate into a positive median progression-free survival number. At the same time, we have a significant number of patients that have progressed, but are still in survival follow up. And we, of course, see this as a positive indication of a good readout on the overall survival when we get to early Q1. And straight following that, we have a similar question looking at the interim results. I assume that's from OptimizeOne. You mentioned that you expect improvement with longer time on treatment. What is your estimate for the top-line readout? We have a primary endpoint for objective response rate around 45, or it is 45. We hope that we can do better than that. I think also it's important to discuss that even though the objective response rate is definitely an important parameter, progression-free survival and overall survival, as we just discussed, are probably the key parameters that will be the endpoint in pivotal development of metasalimab. and therefore we have a strong focus on following these two top line readouts as well. And then we have another question here on mitocelumab and pancreatic cancer. What other drugs are being developed now for pancreatic cancer and where do you position mitocelumab among them? that there are several molecules in the pipeline for pancreatic cancer, both in phase three, in phase two. It's been a couple of decades since we had the last approval. I think the next approval will be the molecule owned by Ibsen and Servier-Onivite, which is a part of, or new, one of the component of Olferinox. And they showed with, with a Napoli tree trial that for the first time head-to-head comparison, comparing Folfirinox with Gemcitabine, that the Folfirinox or Nel-Nirinox component is a is a better and more efficacious treatment than gemcitabine. And what we've seen based on these data is that there is a change in the treatment and first-line treatment landscape in the US, seeing more and more patients of large and larger proportion of patients getting folferinox as the first choice in first-line metastatic pancreatic cancer. And therefore, we are significantly encouraged by the fact that mitosalomab seems to be not adding significant safety signals on top of folferinox and that we see these long treatment durations of patients in OPTIMIZE 1. Other than that, of course, there is a number of molecules being developed. I think the KRAS inhibitors, we will see what they will do in pancreatic cancer. But we believe that metazolamab is well positioned as the prime combination agent with folferinox or other iterations of these first line chemo reagents. And then the last question I can see on my screen here is when would be the next financing? Would you need to finance again before the top line readout? or in conjunction with that readout. And Marie, maybe you can answer that for us.

Yes, I would say in more likely in the conjunction with the readout, because it's, of course, of interest for everyone to understand where we are with mitocellumab at that point. So that type of data, I think all investors would like to have before we can talk about another investment round.

Thank you, Marie. And that was indeed the last question that we have received during today's call. I want to thank you all very much for your participation and interest in alligator bioscience. Thank you and have a lovely day.

Thank you.