Alligator Bioscience AB (publ)

So hello and welcome everybody to Alligator Biosciences 2024 year end reports call. My name is Keata Hög. I am the IR and communications manager at Alligator, and I will be introducing today's call. With me today, I have our CEO, Søren Reinholt, and our CFO, Johan Gileus. They will walk you through the latest developments during the previous quarter in 2024 and the upcoming news flow after which they will be happy to answer any questions you may have. Now, before we start, a quick disclaimer. So 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 recorded and webcast and will be made available through the investor relations section of our website. With the formalities out of the way, I would now like to turn it over to Sadam.

Thank you Greta and welcome to Alligators 2024 end of year call. It's a pleasure seeing so many here with us online. With me as Greta already said, I have Johan, our CFO and Johan will get ample opportunity to speak a little bit later in today's session. So let's get started with the next slide, which is basically a table of 2024 in review for Alligator. We have achieved a number of milestones that we have previously communicated that we would obtain and achieve. And we're actually pretty proud that we have delivered on all these promises. So if we start out very early in the year, we announced the top line data from the Optimize ONE study early in the quarter 2024. We followed up later in the first half with the first interim data from the phase one study of the molecule we call 527. Those who follow the company knows that that's a molecule we co-developed with the US based Apptivo. Just around the middle of the year, we announced the very encouraging 18 months survival data from the Optimize ONE study and we'll take a glance of those a little bit later. What also happened in the beginning of the year was that FDA had the advised Alligator to recruit additional patients in the Optimize ONE phase two study on a lower dose of mitosalumab, the 450 microgram dose. We started that recruitment during the first quarter of the year and very early already very early in the beginning of the third quarter, we were able to announce that we had now fulfilled the recruitment of that cohort really a testament to the organization's ability to turn around regulatory advice, turn it into actionable regulatory documents and getting the trial started and completed. Then in the beginning of this quarter, we announced more promising phase one data from 527, very interesting data at the last dose of the dose escalation trial. And then a couple of weeks ago, we announced the outcome of the first of a set of regulatory interactions with the US FDA and I'll talk more about that in just a second. So all in all, a very strong performance by Alligator bioscience during 2024. And if I could have the next slide, the outstanding phase two results from mitosalumab in first line metastatic pancreatic cancer justifies further investment in the molecule. The next step here is a randomized registrational trial or phase three trial, if you will, in metastatic pancreatic cancer. And we are definitely moving forward with that. And we'll talk even more about that in just a second. And we are definitely also engaged in a number of parallel partnering discussions. To continue or support the continued growth of the company, we earlier in December announced rights issue coming up here in February. And I'm sure that Johan will take you through a lot of the details there a little bit later. And if I can have the next slide, in connection with that rights issue, we also announced a significant cost reduction program in Alligator. We had to say goodbye to quite a number of employees, all employees concerned with the discovery and preclinical development of antibody drugs to laser focus the organization on our CD40 targeting antibodies and particularly mitosalumab and continue to building value into that program as we develop it towards phase three. It's of course important in such a transaction that you are such an undertaking that you with surgical precision, try to retain those essential resources that are needed to bring forward mitosalumab in this situation. And unfortunately we were able to do so. So the remaining Alligator organization is focused on mitosalumab, is solely focused on mitosalumab and is fully capable of continuing the path that we have started with the program towards phase three. Can I have the next slide please? If we look at the pipeline here, just to recapitulate a few messages here. So mitosalumab on the home straight of the phase two study, we expect to announce additional data during Q1. So the 24 month data from the 900 microgram cohort as well as the top line data from the 450 data that are important to be able to initiate phase three. 4066, which we see as the follow-up candidate to mitosalumab is currently in early preclinical development. And then if we look at other clinical programs, notably our co-development program 527 with Aptivo, we're currently, as I said, at the end of phase one, we are considering next steps and our strategic options together with Aptivo. And then finally, something that also happened recently is that the outlicense molecule called the HLX22 or AC101, if you wish, outlicense to HLX, now entered a phase three study in China. Hence this molecule is both in phase two and phase three clinical development. And I remind you that the alligator is eligible to approximately a third of the milestones and my milestones and royalty income from that molecule through our legacy agreement with South Korean Apto. So a laser focus on mitosalumab and then a couple of other molecules that are continuing to build the mid and long-term value for alligator. If we go to the next line, yeah, so this is just to remind ourselves that we recently announced some encouraging news from our dialogue on manufacturing, not only with the US FDA, but also with the German Paul Erlich Institute, which is one of the European, what can we say, benchmarking regulatory agencies, the leaders in antibody development. And normally companies like alligator don't speak too much about manufacturing. It's something that needs to be done. It's maybe not that engaging to talk about as clinical data, but if you don't have a phase three ready process, if you don't have the MP material from that phase three ready process, then you are basically not able to start your phase three study. And we have invested in this over the last couple of years. And during Q3 and Q4, we have engaged with first the German authorities and then the US authorities to get feedback on our manufacturing process, the status and the planned activities. And I can tell you that the very unanimous feedback from these agencies is that alligator is doing everything correctly. And that the process that we have established is phase three enabling and phase three ready. And hence we started manufacturing of the MP material late 2024, just before Christmas. And just again, once to remind ourselves that this is a significant risk reduction in the program. If we look at quite a substantial number of the so-called complete response letters that the FDA issues, so messages to the companies that their drug is not being approved. A large part of these are actually not based on the clinical data, but based on regulatory issues or manufacturing issues. So having this very clear feedback from two independent US and European authorities takes out a lot of the risk in MitoCellumab. So let's go further on the next slide. And just again, to remind ourselves that we have a very encouraging set of data from MitoCellumab in first-line metastatic pancreatic cancer. We are especially encouraged both by the durability of response. So how long do the individual patients have tumor control once they get MitoCellumab and chemotherapy? The overall survival, sort of the benefit we provide there. We previously talked about the number of patients that actually have sustained or long-term survival benefit from MitoCellumab in combination with chemotherapy, which reflects into a very significant increase in the so-called 18 months overall survival rates or how many of the patients are still alive after 18 months after diagnosis. And importantly, as we have discussed before, mid-February, late February, we expect to announce so-called 24 months follow-up data. So that means we will be able to look at how many patients were actually alive two years after diagnosis. This is not a set of data that is normally being announced in this indication, first-line metastatic pancreatic cancer, as most trials don't have a substantial number of patients surviving that long. So there is something to look forward to in February. And with that, I think I'll hand it over to you, Johan, to take us through the financials and I'll be back towards the end of the session.

So next slide. Yeah, next slide, please. So let's start with the Q4 numbers down there. The P&L, and we have reported quite significant net sales during the quarter. And as you have been informed through a press and agreement with Orion on the previous collaboration that we now have ended, we reported three and a half million euros than in net sales for that ending of the agreement. And there were also some other activities with Orion during the quarter. When it comes to the cost side, we have continued to have high cost on the phase three trial, but also the other phase three enabling activities such as CNC production, as Sören mentioned, and also the actual closure of the phase two study. On top of that, we see also some costs for the restructuring that we are doing. Most of that will come in the first quarter of 2025, but there are certain costs that we already now have been required to report. One of them is the cost for the lab facility that we were supposed to take over in December 2024. Unfortunately, with the restructure, we have no need for that. And as IFRS requires, we have written down the right of use for full amount. And hopefully we will get out of that contract as soon as possible than working together with the medical village, the landlord. And as you can see down to the right, we continue to have most of our costs with MitaSaleMab, and that will be even more clear in the coming quarters where we have MitaSaleMab and general expenses only then, and no other activities when it comes to discovery or preclinical, et cetera. Next slide, please. And as you can see down to the left, we have a downward trend when it comes to our cost level, and that will continue as I mentioned, and in 2025, we will have some costs for CMC and also for the phase two in the first half. But after that, we will really have more of the organizational costs, et cetera, and quite a low burn on a monthly basis in the second half. And our liquidity situation then end of the December 2024 is 64 million. That includes the bridge finding that we received in conjunction with the release of the rights issue that's upcoming, and we will have then have to repay the bridge financing with part of the proceeds from the rights issue. And of course, we will look at other things that could help us on the financing side, but now with the rights issue in place, with a prudent assumption around the warrants that we will also issue them for during 2025, subscription in 2025, we believe that we have the financing secured for the full year 2025. Next slide, please. So let's take time to reflect on the rights issue here and see what is upcoming then. The prospectus will be out in the next week, so you can read all of the details in the prospectus, but this is a little bit of a summary of that. It's a prevention rights issue of units, which include then of course, ordinary shares, but also the warrants that are labeled TU12 and TU13, there are two different subscription period for the two different warrants then. In total, the units are issued at in total 280 million, if it's fully subscribed. And if we have them before we launched is secured the level at 140. So we know that 140, which is very important for our financing on 2025, that is secured. Hopefully there are more shareholders that are interested to subscribe and then we can arrive closer to 280 then. The units rights will be subject to trading, which is customary. Also the TU12 and TU13 will subject to trading post the rights issue has been completed then. And for your shareholders, I think it's important to, you need to act here. You will get your units rights, that's clear, but you then have the either then subscribe for your allocated unit rights, sell unit rights that you don't want to utilize. So that's very important. Of course you can buy and if you want to be be more invested in alligator, that's fine as well of course. But there are a lot of information that you need to look into in the prospectus, but also there are information from your local bank that have other dates, may have other dates that you need to be really careful to them lose important values here then. A question that has already popped up and I think we all agree on that, that we need to conduct the reverse split. That is nothing that we can do overnight. So we'll take some time, but we will await the outcome of the rights issue before we then launch these reverse split. It's something that we will do more or less automatically for you guys, but something that will happen prior to the AGM to be able to come to a better and more reflecting share price, but also then the number of shares will be significantly lower. Next slide please. I have done this kind of simple example and to try to walk you through how this subscription will work then. And if you have the shareholder that owns 50,000 shares and they would like to them subscribe for their Prerata share, the 50,000 shares will then lead to .850,000 unit rights. You need 10 units rights to subscribe for units. You will then have 185,000 units and each unit cost 10 or 0.10 SIEC. And that will be an investment of 18,500 for you. What would that lead to? You will then have after that 1.9 million shares, you have 50 initially and you will receive 1.850 additional ones then. So you have 1.9 in total. You will on top of that free of charge, get .850,000 to 12 and 925,000 to 13 in addition to that, that you will be utilizing in May and September then. We will continue to provide additional information around this through different means then and happy to answer questions that may rise as well then. But I encourage you then to read the prospectus and also then reach out to your local bank so that you get the correct information from how to act on your holdings then. Let me see, I think I'm done and maybe that's over to you, Sairan again.

Thank you, Johan. So maybe the next slide would be prudent. So what can you expect from Alligator during 2025? If we focus on Mr. Salomar and key events, we already reported on the US and European regulatory interactions on CMC. We also in the near term engaging with the FDA again on a so-called interface two meeting and we expect to be able to announce the outcome of that sometimes during Q1 that depends of the time. Of course on FDA's internal timing. Then very importantly, and I have already talked about that, the 24 months follow up data from the Optimize 130 we expect to announce that during the later parts of February and in connection with that we will also provide the top line data from the 450 cohort. In addition to this, you can expect additional data from Mr. Salomar to be published during the first half of 2025. We don't have an exact date, we don't have an exact format of these publications. Some will be in what we can call conference proceedings or abstracts, some will be in scientific documents or scientific papers and we will of course announce those data as we go along. And then with a partner phase three initiation should be possible in the second half of the year. So in summary, a very strong performance operationally and scientifically in 2024, a rights issue and a cost saving program and reorganization program that has been executed here December and early January. There will be some runoff cost from that. And then some very essential regulatory interactions and key data readouts in the first quarter of next year. Okay, I think that was it for the presentation. If we can just take one more slide actually and what do we look at in terms of the key strategic of objectives, of course the rights issue this year to support our continued operation and value creation. Mitra Salomab phase three initiation during the year with a partner and then we still believe that Mitra Salomab is on a trajectory for an approval sometimes around 2030. And with that, I will go to the Q&A. Good, and we have a number of questions initially for you Johan, if you are for that. Yep, have a couple of questions here from Richard at Redeye who wonder if you could comment on our burn rate and the financial runway in 2025 in either the current 50% guarantee scenario or if 100% subscription.

Yeah, I was mentioning that in my presentation but the secured level together with the prudent assumption around the TU12 and TU13 will take us through 2025. We have a higher burn in the first half, lower burn in the second half. If we get full subscription, we will then use that money in a careful way, repay earlier and act on that. But we will have to come back on that but it's not in the cart for the time being that we have full subscription but we will be very glad to have that. Let's call it a problem that we have too much cash.

Just a comment here. I don't think too much cash is probably not a normally you in biotech companies. But thank you Johan. And I think this also answered a couple of questions from Louisa from Kempen. Another question here from Richard about the 40 million write down. I think you also mentioned that that's part of the facility lease.

That's correct. And IFRS require us to write down if we don't can use those assets and we are not taking that into position that we are moving to a much smaller facility than for the remaining workforce and try to sublet this or get out of the contract together with American Village. And of course it does happens. There will be an effect on the PNL as well but this is the prudent way to recognize this asset.

Thank you. And then Josh, again a question here from Louisa and I think you also already answered it but I think it can be repeated here. Can we assume that expenses in 25 will remain at the level of Q4-24?

Initially, yes, more or less but it will be lower and lower throughout the year then because we will be finalizing the CMC initiative. We will also then close out more sites and activities when it comes to the phase two study.

Thank you. And then I think we have a couple of questions for me. The most scientific part, there is a handful here on the Metasellum. We will start off with that. So a question here from Louisa, will you report more data from the additional lower dose, the 450 micrograms per kilogram cohort of the Optimize-1 trial and what kind of data? So we will initially announce the top line data in line with what we originally did for the phase two dose, the 900 microgram dose. And then as we remind ourselves, this cohort was originally included on a request from FDA to make a series of so-called exposure response studies. So at a given exposure, do you see a, how does the response to meter differ from what you see with 900? And again, we then have to hold that data up against the very strong both efficacy and safety data package on 900 and recommended those to FDA during the spring here. So that is exactly what we are doing here. FDA has not requested that we follow these patients up as long as we've done in the 900 microgram cohort. So we will most likely not follow these patients as long as we have done with the 900 microgram dose. If we take another Mr. Salomov question here from Richard, can you discuss what Mr. Salomov needs to become deal ready? What is the relative importance of CMC, the 400 microgram cohort dose, two year readout and other preparations? I think that sort of summarizes very well exactly what we are doing. CMC is expensive, it's complicated and burdensome, but it's something that you simply have to do to be able to do your phase three study. So that is very, very important that we have invested in that and we've gotten regulatory feedback and that we have invested in manufacturing the material that a partner needs to have on site to be able to start a phase three study. The 450 microgram cohort, as I just alluded to, is important in response to FDA's regulatory advice on dose characterization. The company is still of the standpoint that we believe that the 900 data is very, very strong. And the 450 microgram cohort data, as I just described, will be used to come up with that with a final dose recommendation for the phase three study. The year two, the 24 month readout for me is essentially really the data point now that shows and demonstrates the immune therapeutic effect of mitosalumab. That we see these very, very long and sustained survival benefits for a significant number of the patients really hammering home the value of mitosalumab and the relevance of this treatment over chemotherapy alone. And then of course, other preparations like getting biomarker data analyzed and published and getting our interface to meeting with the FDA conducted as I alluded to earlier. These are all points that sort of gets mitosalumab phase two wrapped up and ready for phase three and hence also deal ready. And we are on track with that. Then we have another question here about where are we with partnering discussions and did we go to J.P. Morgan? No, this year we prioritize not going to J.P. Morgan based on the feeling that we had a number of ongoing dialogues that would not really be advanced further by a 20 minute meeting in a hotel lobby in San Francisco. And also based on the fact that we have data coming out in February of the opinion based on my 25 years experience in the field that having dialogues with people based on data that is relatively well known and telling people that you'll have more data in eight weeks is not really valuable. So we decided to focus on the work here in Lund, saving the money and getting ready to reengage our current discussion partners and new potential partners when we have the data later in the quarter. Okay, then that wraps up Mr. Salomar. We have a couple of questions about the other programs about 527 on the ownership and the cost structure here. So 527 is co-developed and co-owned by Optivo, Seattle based listed biotech company. And when I say co-owned, I mean co-owned we own 50% each and we take decisions in unison and we also share the cost equally. And as I said, we are currently evaluating the data from the phase one dose escalation study that we believe is encouraging. And then we're looking at next steps and potential costs associated with that. But just to reiterate that Mr. Salomar is our primary, secondary and tertiary focus as we go into 2025. And I think that's also answers Richard's questions about 527 and then NeoX Prime or 4066, which we see as the next generation Mr. Salomar that will unfortunately be put a little bit on the back burner. We still believe it's a very interesting program either for a partner to meet her to have the follow-up candidate in-house as well, or as a alligator molecule to be developed and invested in once we have had transacted on Mr. Salomar. And I think, I basically think that that is the questions that we have received. I also always wanna encourage you to, if you have additional questions, write them to our investor relations mailbox at IR at alligatorbioscience.com. Then we will get back to you with your questions answers to your questions, comments or concerns. And with that, I wanna thank you for listening in today. Thank you for your interest in alligator bioscience and thank you for your loyalty and support as shareholders. Thank you. Thank you.