Hello and welcome to Alligator Bioscience's interim report call for the first quarter of 2025. My name is Greta Höög. I am a Communications Manager at Alligator, and I will be introducing today's call. With me today are our CEO, Søren Bregenholt, and our CFO, Johan Giléus. They will walk you through the latest developments from the quarter and the upcoming news flow, after which they will be happy to answer any questions you may have. Now, before we begin, I would like to share a quick reminder with you that during today's call, management may make forward-looking statements that involve known and unknown risks, uncertainties, and other important factors beyond the company's control that could cause the company's actual results, performance, or achievements to be materially different from the expected results, performance, or achievements expressed or implied by such forward-looking statements.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timings predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this call speak only as of today's date, and the company undertakes no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. This call is being webcast and will also be made available through our investor relations section of the website. With the formalities out of the way, I would now like to turn the call over to Søren.
Thank you, Greta, and once again, welcome to Alligator Bioscience Q1 2025 call. If I could have the first slide, please. Q1 has been another busy quarter for Alligator Bioscience. We have made significant progress with our lead candidate, mitazalimab, in first-line metastatic pancreatic cancer. We have announced 24-month follow-up data, again showing an encouraging survival rate for mitazalimab now at around 30% at 24 months, which is outstanding for this disease. In addition, in February, we announced also top-line data from a backfill cohort that was done based on feedback or guidance from the FDA to further characterize the phase III dose. We are happy to be able to announce that all the data from this cohort is fully in support of 900 micrograms as the recommended phase III dose.
During the first quarter and in the end of last quarter, the fourth quarter of 2024, we've had a series of successful regulatory interactions, both on manufacturing and on clinical design, that together minimize the program risk of mitazalimab and point towards a clear administration approval for the drug in first-line metastatic pancreatic cancer. In February, we also completed a rights issue raising SEK 153 million in gross, and we are now coming up for an exercise period of our TO 12 warrant series that we will show more to towards the end of the webcast.
As we'll talk about in the next slide, we have also conducted a cost reduction program that started in the fourth quarter last year, and we are happy to announce that we are ahead of plan with this program that will be concluded by Q2 2025, hence positioning the company well to maintain a low general OpEx in the coming quarters to pursue our strategic objectives. If we have the next slide, please. Yeah, talking about the current focus of Alligator going forward, the cost reduction program that we initiated in the fourth quarter last year will allow us to be laser-focused on getting mitazalimab towards our strategic objectives, namely starting a phase III clinical program together with a strategic partner towards the end of this year and also invest limited in the follow-up candidate 4066.
Our optimized cost structure allows us to pursue these goals following warrant programs that Johan will talk about towards the end of today's talk. Now, let's move to the next slide, an overview over. Sorry, I was ahead of myself here, please let me take this opportunity now talking about a laser-focused organization to introduce and welcome our new Chief Medical Officer, Tom Moore. Tom comes with a long-term experience from oncology drug development from pharma, including positions at Roche. Tom has been working with the company for quite a period in a consultancy role, and it was only natural that Tom stepped up to CMO when this position became vacant during Q1. A warm welcome to Tom from Alligator's management and board.
Now, let's move to the pipeline slide here just to reemphasize that our focus is on mitazalimab, our phase III ready asset in first-line metastatic pancreatic cancer, and that we're developing 4066 as a follow-up candidate to this drug. We have a co-developed program with a team in the United States. I'm not going to spend so much time on this molecule today, just reemphasize the fact that we have concluded the dose escalation of the first-in-man study and that the companies are currently evaluating our next development steps with this molecule. Furthermore, we have HLX22, which is outlicensed to a Chinese company, Henlius. There's been quite a number of progress and news surrounding this program in Q1.
As late as yesterday, we announced that Henlius have started the phase II study in HER2-positive breast cancer patients, and earlier in the quarter, we announced that the company has initiated, or at least been allowed to initiate, a phase III study in HER2-positive gastric cancers. I want to remind all of us that this molecule is partly owned by Alligator through a sub-license via AppClone, and that Alligator is eligible for 35% of future royalty income from this molecule. Now, let's move to the next slide, Greta, and just remind ourselves about mitazalimab, our first-line metastatic pancreatic cancer drug. We started the phase II clinical development of this molecule in the third quarter of 2021.
Now, almost four years later, we have three and a half years now announced 24-month follow-up data showing that mitazalimab in combination with first-line chemotherapy leads to a 24-month survival rate of approximately 30%, which is a tripling of what we can expect with a historical comparator FOLFIRINOX on its own, and also significantly and nominally better than Ipsen's latest approved drug Onivyde in the so-called NALIRIFOX combination. Combined with the very manageable safety profile of mitazalimab, the strong overall survival data, and these long-term survival data, we still maintain our view that mitazalimab is a potentially practice-changing drug in the first-line treatment of metastatic pancreatic cancer. As I said in the beginning, the recent data from the 450 microgram cohort that we announced in February strongly support that 900 microgram is the recommended phase III dose.
These data, together with the regulatory progress that we'll talk about in just a second, and the therapeutic window of the molecule continues to drive big pharma interest in mitazalimab, and I'm sure that many of you listening in today are very much interested in how these discussions are progressing. We are going into more focused discussions with a set of global pharma companies and also a set of large global biotech companies. We maintain our view that mitazalimab is, or it's very, very likely, it's very likely that we make an agreement with mitazalimab during 2025. One of the things that are, of course, worrying on a global scale is the current trade wars and financial uncertainty going on based on the current U.S. administration. So far, we have not seen this reflected in our discussions with potential partners.
We believe that the underlying fundamentals of the pharmaceutical industry, with a need to continue to replenish the late-stage pipeline, are intact, and we believe that mitazalimab fits perfectly for a number of companies that have, what can we say, goals and needs in their phase III pipelines, together with a need and a wish to enter into solid tumors or even gastrointestinal tumors like the ones treated by mitazalimab. If I could have the next slide, Greta, I just want to reemphasize that we are moving forward with mitazalimab, that we have agreed the phase III protocol now, both with the FDA and the German authorities. We still have had a formal discussion with the FDA scheduled for June this year.
The trial is a standard phase III registration trial, methacillimab plus chemotherapy, randomized one-to-one versus chemotherapy in approximately 570 patients, with an opportunity for an early readout based on an interim analysis approximately two and a half years after initiation of the trial. As we have announced previously, we have initiated manufacturing of material for this trial based on positive outcome of our dialogues with both U.S. and European authorities around the manufacturing status of the molecule. Basically, there are, as I said, an email scientific advice planned for end of June and also a type D meeting with the FDA to formally approve 900 microgram as the recommended phase III dose. If I could have the next slide, I will hand over the word to Johan to take you through the financials and some background info on the upcoming warrants. Johan, the floor is yours.
Thank you, Søren. Let us start with a snapshot of our Q1 performance then. We have had still quite a lot of expenses in the quarter due to the fact that we have the ongoing clinical trial, the phase II study with mitazalimab. Patients are still treated, and of course, that incurred cost and the benefit of the patients, of course, is striking them with still on the trial. We also are producing IMP, study material for the phase III to be able to start the clinical trial towards the end of 2025, and that has also incurred cost during the quarter on top of the general opex and also the cost for the restructuring of the organization within Alligator.
When it comes to the financial items, which is maybe not what we normally see has a huge impact on a company like Alligator, we do have interest cost, of course, due to the loans that we have had during the quarter, but also there is a financial income, and now it becomes quite technical here. We have to record the TO 12 and TO 13 that we issued free of charge in connection with the rights issue in February at value then, and we record the financial debt for that, and that is also revalued on a quarterly basis. This has then incurred quite a significant financial income at the end of the quarter, hence we have a positive financial net. This last item that has a non-cash impact, so it will not actually have an impact on our future cash flow.
The cash flow will come from any exercise of the TO 12 and TO 13 going forward. Going back to the people then, as you can see in the bottom line then, we are still 33 people that were engaged by or employed by Alligator towards the end of the quarter. Many of them have already done their last working day, but due to notice period, etc., they may have days and weeks in their second quarter as well to incur salaries, etc. By the end of the quarter too, then we will only have the remaining Alligator people within the company then, around 15 people then. Next slide, please. What we then can see is that we have a trailing effect of lower expenses than as predicted, but also that it will become even more evident the next quarter and the coming quarters.
As I mentioned before, we will have quite a low general OpEx in Q3 and onwards. When we have then more or less finalized the study with Meta in phase II, we have also concluded the manufacturing of IMP. Actually, as we speak, they are doing the final steps for the IMP manufacturing, and then it will go into stability phase up until it can be used towards the end of 2025. We have liquidity funds of SEK 29 million at the end of the quarter, and we are expecting outcome of the TO 12 and TO 13 that is in line with our plans, that also then we can use them for our financial flexibility to deliver on our current strategic objectives. Of course, as mentioned by Søren earlier, we are looking into other avenues for getting cash into companies through partnership, etc.
Next slide, please. I'd like to take this opportunity just to remind everyone then on the call then about the TO 12s then that will come in to be exercised in mid-My then. Next week then, on the 28th, it will be the last day of the pricing period, and as you may recall then, the price will be set, the VWAP, 70% of the VWAP for that particular period, then 11th to 28th of April. We will announce that maybe after the close of the trading on the 28th or early in the 29th in the morning and thereafter then. It will then be an exercise period then from the 5th of May throughout to the 19th of May.
Please be aware that your bank may have different deadlines here, so make sure to reach out to your bank to make sure that you can act on this either by subscribing or also trade if you want to buy or sell TO 12s. Last day of trading is 15th of May. Towards the end of May, we will both announce the outcome and also have the proceeds to the company. There will be some time lag before these subscribed shares also can be converted to actual shares. At the bottom, we have this reverse bit that has made a little bit some complexity to understand what are the rights, worth, etc., and how much will that trickle into new shares.
If you take the easy one that if you have 1,000 warrants TO 12, that's equivalent to one new share at this subscription price or exercise price, and this will be the cash inflow to the company. If you take the 19.6 million equivalent shares that we can then maximum issue in connection with TO 12, and if you just use a proxy like for SEK, the maximum inflow to the company will be SEK 80 million roughly. With that said, I think I will hand over to you, Søren, for the final remarks before we go over to questions and answers.
Thank you, Johan. Some of your comments reminded me to just make a few additional comments to optimize one. Currently, as Johan said, we have, and I think it was in the slide, we have five patients that are still being treated on 900 micrograms per kilogram. These patients have been on treatment for now more than two years. The longest of these patients have, or will next week cross three years of active treatment with mitazalimab, which is also a reflection of the drug's efficacy and safety profile. Mitazalimab is lifesaving medication for these patients, and the company is, of course, committed to maintain and continue to provide mitazalimab for these patients. We are in the process, and this also goes for the 450 microgram cohort where there are nine patients still on drug.
We are in a process of reducing the readouts from these patients, so we drag down the overall cash burn in the optimized warm study. If we look at the milestones that we foresee for 2025, which is this slide, as I already said, we have two important phase III enabling regulatory meetings in Q2. All have been in the plans since last year, and we are on track with these meetings. We still believe that the trial or the program is still on track for phase III initiation in this year. It is clear that we are working hard with our discussions with potential partners to be able to start that trial during this year. As you know, we have other assets in the pipeline, 4066. We are not allocating cash to drive this molecule forward at any speed.
That is something that we will do once we have non-dilutive income for a meter deal. The same goes for the phase I asset, 527. Here, we are not allocating any cash to that molecule in the coming quarters. With that, could we have the final slide? Yeah. We have now time for Q&A, and I know that we have received a couple of questions here. Johan, if you are ready, then the first one goes to you. This is from Chiara at Kempen, who would like to understand how far the cash runway is.
I will say it this way. With the prudent assumption for the TO 12 and TO 13 that will be upcoming now in May and September, we are expecting to have cash until the end of 2025.
To achieve our strategic objectives.
That's right.
Yeah. Chiara also has another question. I was curious to know about how partnership discussions for methacillimab is going. I think I'll take that one. We are discussing our focus with a number of, as I said, global pharma, big biotechs, and we expect that these discussions will continue to move forward in the coming weeks and months. We are encouraged about the feedback we hear both on the molecule, methacillimab, the data that we see in the trial, and also, this is a little bit of an internal comment, but to the quality of the material in the data room. We have a series of questions from Richard from Redeye, and I think a couple of those are for me. Can you comment on the phase III design with potential for accelerated approval? Yeah.
I already mentioned it's a one-to-one randomization of FOLFIRINOX versus FOLFIRINOX in, of course, a blinded study, but it's a non-placebo-controlled study, which is a good thing for Alligator and a partner as it reduces operational complexity. Yes, there is an opportunity for, I would not call it accelerated approval, because it is the same endpoint, namely overall survival, but we have an early interim analysis that is event-driven that gives an opportunity for the drug to be approved as early as 2030. The next question, have you updated the trial design? Not lately, but of course, we have assessed quite a number of various designs before addressing this with the regulators. Richard has a question on 527. What is the status and are we still incurring costs?
We still own half of the molecule together with Aptivo, the U.S.-based company that we are collaborating with. We are currently assessing the clinical data from the dose escalation study and are assessing next step for the molecule, including the opportunity to partner 527 with a third party. Right now, we are not allocating significant cost to this molecule. The last question from Richard here is, when could HLX22 be on the market and start generating royalties? I think that's an excellent question, but it's significantly difficult to answer. Henlius has just received the FDA IND approval for a phase III study. Let's say that that can start sometime this year, we can add approximately three-four years on that. I think, again, we will probably talk about something 2030 or maybe a little bit later than that.
There are no more incoming questions. I think we will end the call here. Once again, thank you for your participation and your interest in Alligator. Have a good afternoon. Thank you.
Thank you. Have a good afternoon.
Thank you.