Alligator Bioscience AB (publ)

So hello and welcome to Alligator Biosciences interim report call for the second quarter of 2025. My name is Keita Hög. I'm the IR and Communications Manager at Alligator and I will be introducing today's call. With me today are our CEO, Søren Weinholt, and our CFO, Johan Gilius. 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 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 the investor relations section of our website. Now, with the formalities out of the way, I would like to turn the call over to you, Sara.

Thank you, Greta. And once again, welcome to Alligator's Q2 2025 earnings call. It's a pleasure being with you again. Could we have the first slide of the session, Greta, to sum up some of the key updates from the quarter? I think it's important to first and foremost mention that we have advanced Mr. Saldemar our lead acid according to plans. During the quarter, we have been granted a so-called pediatric waiver from EMA, the European Medicines Agency. And more importantly, the EMA has also, as part of our scientific advice process with the EMA, endorsed both the phase three protocol and the phase three dose. And likewise, in an interaction during Q2, FDA also confirmed 900 micrograms as the recommended Phase III dose. If we take a broader look at the regulatory advice that we have received on this assailant map, both in terms of Phase III protocol, Phase III dose, CMC and also the non-clinical Phase III readiness of mitocelumab. There is a very high degree of alignment between what we've heard from European agencies, EMA, Paul Ehrlich in Germany and FDA. And this, of course, forms the basis of a single global Phase III development program for mitocelumab, which is very important. To facilitate this, we have also manufactured GMP material with an updated process to support both the Phase III study, but also the commercial supply of the molecule. And that process is very nicely developed, been validated to its current use, and the drug supply for the Phase III study has been secured. Further, on mitosalumab, we've had the pleasure to discuss new biomarker data at ASCO, the American Society of Clinical Oncology Conference in Chicago, and also a couple of weeks ago in Barcelona at a European meeting. This biomarker data importantly supports future patient selection strategies. It validates the mechanism of action and immune activation of metazelumab, and this together with the clinical trial data that we have released earlier continues to strengthen the case of metazelumab as a relevant first-line medication in metastatic pancreatic cancer. Together, this data has also strengthened the academic interest in the molecule. And as we alluded to in the Q2 report, we have a number of proposals for so-called investigator-initiated clinical trials. that we are evaluating and we will engage in a number of selected trials during the second half of 2025 to explore further and strengthen further the mechanistic understanding of metacetamol, both in pancreatic cancer, but definitely also in an effort to increase the strength of the molecule in other indications. If we look at the more finance business development side of things, we raised 61 million SEK in our TO12, which is a clear sign of continued shareholder support. Our partnering discussions about Metasalomab and also a few of our other assets have continued both at ASCO and BIO and following that. And then importantly, in alignment with our cost reduction program, we have now reduced the burn rate substantially below what we have seen in previous years, where we have supported both OptimizeONE and the CMC development and manufacturing. And we are now expecting a burn rate in the range of 20 to 25 million SEG per quarter. And then, of course, our outlicensed product, HLX 2022, has received often designation in Europe and have also initiated a second phase two study in HER2-positive breast cancer. So all in all, a lot of positive developments in alligator during Q2 2025. So if we could have the next slide, Greta. So just to remind you that metazolamab is our phase three ready lead acid. So just discussed strong clinical data, strong safety data, strong biomarker data, and generally phase three ready. We're also developing ATOR4066, which is a second generation, or third generation actually, CD40 by specific antibody. And I'm pleased to share with you that the data from itazolamab has really generated the increased interest in this molecule and interest that led to a number of advanced discussions, both at ASCO and also at BIO. And then in the partner programs, we already discussed HLX 2022, which is now starting a global phase three study in gastric cancers. So still a pipeline focused on mitosalumab, but with a number of strategic options to provide and support long-term shareholder value in the company. So the next slide, please. This is really just to remind ourselves that metacelumab actually does make a significant change in first-line metastatic pancreatic cancer. Not only do we change or add approximately four months to the median overall survival in this very hard-to-treat cancer, but importantly, when we compare to folferinox, the chemotherapy backbone that these patients are treated with, we see significant increases in the survival rates at 18 and 24 months. So that if you get mitosalumab in combination with the chemotherapy, your chance of being alive 18 months after diagnosis is double that of chemo alone and up to three times at 24 months. So really strong data. And why do we believe that this translates into phase three success? I think this is also important to emphasize. We previously showed that this comes statistically significant by end-of-trial comparison. We published those data earlier in the year. Very importantly, the patient population that we use in this study is very, very similar, if not exactly similar, to what you can expect in a global phase III study. Median overall survival is going to be the primary endpoint in that phase III study, and we've shown significant a significant delta from chemotherapy there. And then you remember we have this treatment schedule where we give a primal dose of mesosalumab, and that is a treatment schedule that we are taking with us into phase three. Hence, all the parameters that I mentioned go well for a positive outcome of the phase three study. If we take the next slide, I just wanted to maybe talk a little bit about some of the biomarker data that we discussed at ASCO earlier in the summer here, early June. It's, of course, always important to find, first of all, markers that correlate or relate your mechanism of action and your clinical outcome very well. And then if you can even find biomarkers where you can start to preselect patients based on a certain, for instance, a gene signature. So, if we look at this slide here, if we just look at the middle, the way that mitosalumab works, and we discussed this at several quarterly calls, is threefold. First of all, Misacelumab starts to degrade the stroma in the tumor, making the tumor more permeable to chemotherapy, to subsequent the Misacelumab and also to T-cell infiltration. And then Misacelumab strengthens the immune system to activate and educate T-cells to eventually kill the tumor cells and and provide the patients with a clinical benefit. So one very important step in actually proving this hypothesis is to go back in the tumor of patients from the clinical study and do comparison in their tumors before treatment and after treatment. And some of the data that we presented at ASCO, you can see on the right side here, and without getting too technical, what this actually show is that in a number of patients that did respond to metazolamab had a durable clinical benefit. We could see that when you compared tumor biopsies before the start of treatment and around the time of response, that was very, very strong indication of a positive activation of both the dendritic cells, the macrophages, and also the T-cells. So this fits very, very well with that specific mechanism of mesothelioma to activate the molylite and T-cell mediated immune system. What we have on the left-hand side here is a piece of work that is very important, and we may be able to select patients on that in the future of metazolumab development, where we show that patients with a certain gene signature that is exactly associated with with the fibrosis of the connective tissues in the tumor that patients with a certain gene signature here respond significantly better than patients that do not have this gene signature. So that's the patient indicated by the green line here in this Kaplan-Meier plot versus the patients in red here that don't have the signature. So a very important piece of data that, again, confirms the mechanism of action of mitosalimab and also provide some sort of strategic guidance on a patient stratification strategy in the future. So very important two pieces of data here. And we have more biomarker data than we expect to be able to publish in scientific journals within the coming period. So, I will leave you with this piece of data, Mr. Saddam, and just remind you that we also at the ESMO meeting in Barcelona a couple of weeks ago presented the data showing a very clear dose ratio. relation between the 450 and the 900 microgram dose cohorts, showing that the 900 microgram was significantly better than the 450, hence leading to FDA and EMA's endorsement of 900 as the clinical dose or as the dose for phase three. But also importantly, this data underscores the fact that you have actually, when you have a dose effect of something, also like mitosalimab in this case, of course, also means that there is a direct contribution of the drug to the clinical results you see. So, a summary of the regulatory status on this slide, just to remind ourselves and repeat that during Q2, FDA endorsed the 900 microgram phase III dose and that EMEA importantly gave us input on the phase three protocol dose and the phase three readiness of metazolumab that was in line with what we've seen from FDA. And then we can remind ourselves that from the phase three started, we now have 900 microgram agreed as the Phase III dose. We have a study design protocol that is acceptable for Phase III and subsequent registrational applications in both agencies. And the non-clinical program is adequate also for Phase III and subsequent applications. And on CMC, we have agreement with analytical method specifications, comparability strategy, et cetera, for the Phase III material. and these data and this strategy is adequate for BLA and M&A submission when we get to that point. Okay, enough said today about mitosalimab. Let's just spend a little bit of time on HLX22. I understand that this is becoming hot topic discussing alligator. So the antibody itself is a monoclonal anti-HER2 monoclonal antibody that is differentiated from existing HER2 molecules based on its epitope. It's currently being developed by Shanghai Henios in a number of trials. The drug was originally developed by Aptlone in collaboration with Alligator. Hence, Alligator is entitled to 35% of Aptlone's revenue from their partnership with HLX22. There's been a lot of numbers floating around, estimates, especially by Apclone on what could the peak sales of HLX22 be. It's currently being developed in gastric cancers in phase three and also in HER2-positive breast cancer. Numbers have been as high as 10 billion US dollars has been mentioned. alligators without mentioning any numbers. Our estimations are a bit more conservative, but we think that this molecule provides or constitutes a potential significant long-term upside to the company. In terms of development timeline, as you understand, this is developed by Henlius and we have no reason to second guess development timelines that are being communicated by Henlius. Just to make that absolutely clear, in terms of our of our communication policy around this molecule. As I think I indicated several times, we are working this molecule, owning this molecule, access to this molecule at an arm's length. So we are going to report significant regulatory events such as often drug designations start of clinical trials so on and so forth but we are not going to communicate on or comment on on market estimates like the one you have on the screen here so let's go on with this i hand over the the word to your hand to take you through the q2 financials thank you sarin

Happy to be on this call. Focusing on the Q2 numbers, then we have incurred operational cost, more general operating cost, of course, but also then the clinical trial cost optimized one and the IMP production and for the phase three. All in all, that has incurred 34 million in cost for the Q2, but we have also then made a reversal of the the write-down relating to HLX22, hence why we're coming with operating profit of minus 22. I will come back to the HLX22 in the next slide. We have also another non-financial item, which is related to the TU12 and TU13, which were issued free of charge in connection with our units issue in February, and these are the revalued in particular the NTU 13 does still remain at the balance sheet end at fair market value and hence provide some non-cash financial items during the quarter. Also to be clear that we have, you know, as a part of the redundancy program that we launched in December, have now seen the remaining employees leaving the company during the Q2 and hence will also lower the cost going forward So please move over to the next slide, please Greta. So what you can see here on the graph that we all have a trailing effect on the operating cost going down, but as Søren mentioned before, we are aiming towards 20 to 25 per quarter in H2 2025 and onwards. And I think that is relating back to the optimized cost, optimized one, trial cost is wrapping up and the IMT has more or less been manufactured and there are some stability costs that will be during the second half then. We have a liquidity of around 24 million and we have then funds that we believe will come in from the TU13 together with the liquidity position that we have now that we have uh financial flexibility for the for the for the rest of the 2025 then and of course as we always say that we are looking into different venues then for financing including the tu13 but also other avenues of financing when it comes to hlx 2022 i think it's worth mentioning then that we have uh revalued the the asset and we have the done the reversal of the write-down And that has then come up to a number that with 12 million in, let's call it a write-up. This is also a limited bio, the fact what's the initial book value of the asset was. We believe there's more value to the asset on top of that, but that's according to the regulatory environment that we, under IFRS, et cetera, we are not allowed to do that, at least not as a first step here now. With that, let's move over to the next slide, please. So just as a starter then for TU13, this process will be very similar to the TU12. We will have a pricing period. In this case, we'll start at 14th of August and end 27th August. And we will then be able to communicate the price in around the 28th of August. And as also for the EU12 and link to the reversal of the share split that we did, we need to, you need to have 1,000 worries to sign up for one new share then. And that can then happen during the exercise period that starts 1st of September and ends around the 15th of September. And as noted here, there's a last day of trading if you want to buy or sell shares, or sorry, the TO13. And of course, some of the banks have different cutoff dates. So you please make sure that you're not are missing out on this opportunity. And we can hopefully then announce something around the 17th of September with the outcome of this exercise of the TO13. With that, I think I hand over to you, Søren. Yeah, thank you.

Yeah, basically, as I think we're moving forward with Mr. Salomap, so far we have We have completed all the milestones with the drug for 2025 as expected, including data readouts and regulatory interactions. Right now, what we are focusing on is, of course, getting the last bits and pieces for uh for for the phase three readiness in terms of cro discussions and what have you getting that ready and then the main focus is of course on partnering and business development discussions that are that are ongoing both with long-term interested partners and also with with new partners that have that have entered the the process just recently and just to reiterate that we are continuing several tracks of discussion, both a global partnership, but there might also be opportunities or solutions that that includes one or two regional partnerships for Mieters-Adelmark. And I'm sure that you will have some questions about that. So I think I'll save my voice for that and go directly to the questions. and we will do this as as we normally do we have received a number of of questions i will go through them i will try to group them a little bit as as as good as i can and answer some of them and and defer some of them to you johan so you better be you better be on your toes The first question here is from Philip Lindquist at Redeye directly on the question of business development and it goes like this. Can you comment on the current status of your business development discussions around Metasalamab and whether you see a licensing agreement or trade sale as the most likely path forward at this point? As I said, we are discussing with several potential partners, both global companies and also more regional companies, and we are, even as late as this week, welcoming new potential partners into our data room in a diligence effort. So that is progressing as we expected. These things, and I'm telling you from 25 years in the industry, these things are of course always progressing slower than you would like them to. But that is the name of the game here. Whether a licensing agreement or trade sale is the most likely outcome, that's impossible for me to comment on. First of all, because it could be either, and I can simply not tell you what is more likely. And secondly, I'm not going to stand here and reveal any potential negotiation tactics and put pressures on potential partners here. So I think we leave this part of the question sort of unanswered. Of course, the financial dynamics when you look at the intrinsic value of the program and the market cap of alligator might tilt you towards thinking that a trade sale might be the most likely. but that's from a pure financial angle. Then we go on with Philip here. You recently attended Bio International and SMOGI, yes, and before that ASCO. Could you share your main impressions or takeaway from these conferences, particularly in terms of partner interest and emerging trends relevant to alligator? And I think there's a few questions about that later on. But first of all, I think the data that we showed both at ASCO and at ESMO GI, and I reveal some of it here, and some of it has been discussed on the CDA as it's not yet been published. But I think we are now at a very, very fortunate, in the very fortunate situation that we can explain exactly the, link exactly the mechanism of action of mesothelioma. What we see in subsets of patients, and I showed you some of the data here, and the effect on clinical outcome in these patients. And being able to mechanistically make that connection is of course very convincing and something that is important for potential partners and is highly valued in their assessment of the drug. And I think there is a question from Kempen about why we stand out from other CD40s. And it's clear that none of the CD40 antibodies that has previously been tested in pancreatic cancer have shown such a manageable safety profile as mitosalomab. which is also something that has been again discussed at the scientific meetings, and nobody has really seen the long-term survival benefit with other CD40 antibodies as we have seen. Primarily because the patients have not tolerated the drugs for so long is my own assessment there. And now that you asked, Philip, let me also mention that Mr. Salomab and Optimize One were specifically mentioned at the keynote talk at SMOGI only last week, emphasizing the study as being a very sort of exemplary piece of work, taking preclinical evidence, combining that with a very good molecule, and then conducting a high-quality trial. So I think that's a kudos to the entire Mr. Salomar Alligator team. Now, let's move on here. Another question from Philip. From a CMC and regulatory perspective, would you consider Mr. Salomar Phase III ready today? Or are additional activities required before initiating a pivotal trial? Yes, we would definitely see metazolamab as phase three ready. Yet, there is still a few things that needs to be done. The drug product and the drug substance is in so-called stability studies. that needs to be completed during Q3 and Q4. And there's a few bits and pieces here that needs to be done. But all in all, we are ready to start a phase three trial once we have a partner on board. Then we have a couple of questions for you, Johan. Can you elaborate on the financial situation? How critical is the contribution from the TO13s to secure additional funding?

I think we stick with the previous guidance that we have said that we need some uptake, prudent assumptions around the TO13 to manage 2025.

Yeah. And also to you, how much of the loan to Fenja remains?

That's 23 million SEK in the loan as such. And then we have both prepaid certain additional costs and also some of the costs are deferred to the end of the loan period.

And a third one to you. Now we have you here, Johan. Could you give some more details on the condition under which the acquired participation in development projects have improved? I guess that's the write-up in the books, and that relates to HLX22, but maybe you can give an explanation here.

Yeah, exactly. I did some explanation during the slides, but in addition to that, I'll give some background that one of the key assumptions that has changed is that the molecule now is in phase three for gastric cancer, which of course then lower the risk and move everything forward. And secondly, they have now introduced a second indication in breast cancer, which also then added value to the value assumptions that we have provided.

Yeah. Absolutely. And then I think, and this is from Red Eye Richard here, a little bit of a long question. In the latest press release, Appclone mentions a peak sale potential of 10 billion US dollars for HLX 2022, which corresponds to 500 million US dollars. This implies a royalty rate of around 8% when factoring in alligators, 35%. Is this a reasonable interpretation? I think I'll give this a shot. First of all, as I said, the 10 billion, I think our assumption, our estimate is a little bit more conservative than 10 billion, although this is definitely a significant opportunity. uh i would say although we cannot comment on on any of the deals especially not those between of the financials of any of the deals especially about those between abclone and and and head news i think i think the The 500 million includes the 35% that needs to be paid to Alligator. And from there, you can make your own assumptions around the top royalty rate of that contract. Can you agree with that, Johan?

I fully agree. Then we...

go to a set of questions from the Kempten, or van Lanselot Kempten team. And I think we have already touched on this, but I will bring it up again. Can you please remind us of how Metasalimab safety and efficacy profile differs from other CD40 agonists and whether this has been a factor in your BD discussion? Yeah, again, we see mitosalumab with a very manageable safety profile, not adding any significant tolerability signals on top of folferinox. And this is at a pre-medication regime of only antihistamines and antilucutrins. So no corticosteroids. So first of all, a very benign, not benign, manageable safety profile, which really sets metaxelumab apart from both first and second, other first and second generation CD40 antibodies. And this has of course been a significant factor in our BD discussions because these side effects has really hindered the continued development of many of these CD40 antibodies. And in terms of efficacy, what we see there now is that we have patients that have been on drug for over three years. We have seen patients that have been on only metazolamab, no chemotherapy for a year and a half, up to two years. And together with the general efficacy data that we discussed today, this simply sets metazolamab apart from other CD40 agonists. Then there's another question here from Sebastian and team. In terms of the phase three design, to what extent has there been agreement on the final design with FDA? We have agreed the design with FDA, and we have also agreed that design with EMA. And I would say the feedback from the two agencies are very much aligned. Can you provide some insights to the number of patients that would be required from such study? Yeah, we are talking around 550 patients. So this is, of course, a significant trial, but still smaller than, for instance, what Ibsen did with their Napoli 3 study, which, as I recall, it was around 800 patients. The study is going to be, of course, randomized across two arms, but it's not going to be blinded, which is, of course, an operational benefit from Alligator and a partner. And a single study is sufficient for approval. The next question also from Sebastian and team here. Given the results of CD40 in PDAC, has there been any interest of a partner to take over the asset for development in other therapeutic areas? I think I'll answer this question in two parts. No, there has not been anybody interested in taking over metazalomab outside of PDAC as the primary driver. But there's definitely been significant discussions on what is the next set of potential indications where metazalomab would make sense. that's the first part of the answer the second part of the answer is that coming back to what i what i said before there's significant interest from from investigators physicians around the world to explore mitosalomab in in other indications and we are in dialogue with with a handful of these to select to select a set of trials that can do one or two things either give us more understanding of how metazolamab works in patients with pancreatic cancer, or secondly, and maybe more interesting in a global perspective, 5-meter salimath as an add-on to existing therapies in other indications that could be gastric cancer, that could be biliary tract cancer, that might even be breast cancer. So we are pursuing these opportunities and expect to have some news about this during the last two quarters of the year. Then a very important question here also from this insightful team here. Do you anticipate that the emerging data from K-RAS inhibitors in second line is likely to change treatment paradigm in first line PDAC? I think there is no doubt that the KRAS inhibitors will be approved in second line, and I think eventually they will also be approved in first line, of course, at a later time point than second line. This will be an add-on. I think we have to realize that the chemotherapies are always going to be the backbone. I'm sure that the KRAS will become add-ons to to chemotherapy in first line and add benefit to the patients. But I'm also pretty sure that if you are going to see the sustained clinical benefit that we see in OPTIMIZE 1, Then you need an agent added on to chemotherapy, chemotherapy, KRAS inhibitor that activates the immune system. So regardless of the advent of KRAS inhibitors in the second and first line, myostatic pancreatic cancer, I'm absolutely sure that there is an important role for me to set them up to play in these patients in the future. And that's why we're developing the drug. Then, Johan, there is a question for you. What would be the cash runway based on the current spending and expected subscription of the 2013 warrants?

I think we already answered that, but it's with the prudent assumption around the 2013 and the cash spent that we also then disclosed to 2025 per quarter, we think that we have the runway for end of 2025.

Good.

Then we have a couple of questions here in the Q&A webinar from the hat maker. Okay, yeah. The R&D is extremely well, but what is your plan B if no agreement is signed before 2013, as the proceeds from 2013 might just get you proceeds of 10 to 20 million based on the share price and probably high cost for any guarantors willing to undertake it? And a similar question, how much more from the same headmaker here? How much money do you think will come in from the TO13, Johan? I think those are for you.

Yeah, a little too early to say, but I think we have already started the work. And of course, we have a plan A that we're working on, but also then looking very prudently into different other scenarios. But let us come back to that. I think it's too early to say.

And then there are no more questions in today's call. So thank you, Johan. Thank you, Greta. And thank you, especially to all those of you who have followed the call. And we look forward to continue updating you with data from InVita Salomap and the rest of the portfolio. So thanks a lot and have a lovely summer.

Thank you. Happy summer.