Hello and welcome to Alligator Bioscience's interim report call for the second quarter of 2025. My name is Greta Höög. I'm the IR and 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 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, Søren.
Thank you, Greta. 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 Mitazalimab, our lead asset, according to plans. During the quarter, we have been granted a so-called pediatric waiver from the European Medicines Agency . More importantly, the EMA has also, as part of our scientific advice process with the EMA, endorsed both the Phase III protocol and the Phase III dose. Likewise, in an interaction during Q2, the 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 Mitazalimab, both in terms of Phase III protocol, Phase III dose, CMC, and also the non-clinical Phase III readiness of Mitazalimab, there is a very high degree of alignment between what we've heard from European agencies, EMA, Paul Ehrlich in Germany, and FDA. This, of course, forms the basis of a single global Phase III development program for Mitazalimab, which is very important. To facilitate this, we have also manufactured GMP-grade drug supply with an updated process to support both the Phase III study and the commercial supply of the molecule. That process is very nicely developed, has been validated to its current use, and the drug supply for the Phase III study has been secured.
Further on Mitazalimab, 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 Mitazalimab. This, together with the clinical trial data that we have released earlier, continues to strengthen the case of Mitazalimab as a relevant first-line medication in metastatic pancreatic cancer. Together, this data has also strengthened the academic interest in the molecule. 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.
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 Mitazalimab, 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 SEK 61 million in our TO12, which is a clear sign of continued shareholder support. Our partnering discussions about Mitazalimab and also a few of our other assets have continued both at ASCO and Bio and following that. 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 Optimize 1 and the CMC development and manufacturing.
We are now expecting a burn rate in the range of SEK 20 to 25 million per quarter. Of course, our outlicensed product, HLX22, has received orphan designation in Europe and has also initiated a second Phase II study in HER2-positive breast cancer. All in all, a lot of positive developments in Alligator during Q2 2025. If we could have the next slide, Greta. Just to remind you that Mitazalimab is our Phase III-ready lead asset. Just discuss strong clinical data, strong safety data, strong biomarker data, and generally phase III-ready. We're also developing ATOR-4066, which is a second-generation or third-generation, actually, CD40 bispecific antibody. I'm pleased to share with you that the data from Mitazalimab has really generated increased interest in this molecule and interest that led to a number of advanced discussions, both at ASCO and also at Bio.
In the partnered programs, we already discussed HLX22, which is now starting a global phase III study in gastric cancers. Still a pipeline focused on Mitazalimab, but with a number of strategic options to provide and support long-term shareholder value in the company. The next slide, please. This is really to just remind ourselves that Mitazalimab 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 FOLFIRINOX, the chemotherapy backbone that these patients are treated with, we see significant increases in the survival rates at 18 and 24 months. If you get Mitazalimab 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.
Really strong data. Why do we believe that this translates into phase III success? I think this is also important to emphasize. We previously showed that this becomes statistically significant by inter-trial comparison. We published those data earlier in the year. Very importantly, the patient population that we've used 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 delta from chemotherapy there. You remember we have this treatment schedule where we give a primer dose of Mitazalimab, and that is a treatment schedule that we are taking with us into Phase III. Hence, all the parameters that I mentioned bode well for a positive outcome of the phase III 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 to your mechanism of action and your clinical outcome very well. If you can even find biomarkers where you can start to pre-select patients based on a certain, for instance, a gene signature. If we look at this slide here, if we just look at the middle, the way that Mitazalimab works, and we discussed this at several quarterly calls, is threefold. First of all, Mitazalimab starts to degrade the stroma in the tumor, making the tumor more permeable to chemotherapy, to subsequent Mitazalimab, and also to T-cell infiltration.
Mitazalimab strengthens the immune system to activate and educate T-cells to eventually kill the tumor cells and provide the patients with a clinical benefit. One very important step in actually proving this hypothesis is to go back in the tumor of patients from the clinical study and do a comparison in their tumors before treatment and after treatment. Some of the data that we presented at ASCO, you can see on the right side here. Without getting too technical, what this actually shows is that in a number of patients that did respond to Mitazalimab, 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, there was a very, very strong indication of a positive activation of both the dendritic cells, the macrophages, and also the T-cells.
This fits very, very well with that specific mechanism of Mitazalimab to activate the myeloid 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 Mitazalimab development, where we show that patients with a certain gene signature that is exactly associated 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. 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.
A very important piece of data that again confirms the mechanism of action of Mitazalimab and also provides some sort of strategic guidance on a patient's stratification strategy in the future. Very important two pieces of data here. We have more biomarker data that we expect to be able to publish in scientific journals within the coming period. I will leave you with this piece of data on Mitazalimab 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 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 endorsement of 900 as the clinical dose or as the dose for Phase III.
Also importantly, this data underscores the fact that you have actually, when you have a dose effect of something, also like Mitazalimab in this case, of course, also means that there is a direct contribution of the drug to the clinical results you see. 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 EMA, importantly, gave us input on the phase III protocol dose and the Phase III readiness of Mitazalimab that was in line with what we've seen from FDA. We can remind ourselves that from the phase III study, 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.
The non-clinical program is adequate also for phase III and subsequent applications. On CMC, we have agreement with the analytical methods, specifications, comparability strategy, etc., for the Phase III material. These data and this strategy is adequate for BLA and MAA submission when we get to that point. Enough said today about Mitazalimab. Let's just spend a little bit of time on HLX22. I understand that this is becoming a hot topic discussing Alligator. 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 Henlius in a number of trials. The drug was originally developed by Abclone in collaboration with Alligator. Hence, Alligator is entitled to 35% of Abclone's revenue from their partnership with HLX22.
There's been a lot of numbers floating around or estimates, especially by Abclone, on what could the peak sales of HLX22 be. It's currently being developed in gastric cancers in Phase III and also in HER2-positive breast cancer. Numbers have been as high as $10 billion has been mentioned. Alligator's, without mentioning any numbers, our estimation is 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 communication policy around this molecule, as I think I indicated several times, we are working this molecule, owning this molecule, or access to this molecule at an arm's length.
We are going to report significant regulatory events such as orphan drug designations, start of clinical trials, and so on and so forth. We are not going to communicate or comment on market estimates like the one you have on the screen here. Let's go on with this. I hand over the word to Johan to take you through the Q2 financials.
Thank you, Søren. Happy to be on this call. Focusing on the Q2 numbers, we have incurred operational cost, the more general operating cost, of course, but also the clinical trial cost of Optimize 1 and the IMP production for the phase III. All in all, that has incurred SEK 34 million in cost for Q2. We have also made a reversal of the write-down relating to HLX22, which is why we're coming in with an operating profit of - SEK 22 million.
I will come back to HLX22 in the next slide. We have another non-financial item, which is related to the TO12 and TO13 warrants, which were issued free of charge in connection with our units issued in February. These are revalued, in particular, the TO13 that still remain at the balance sheet end at fair market value and hence provide some non-cash financial items during the quarter. To be clear, as part of the redundancy program that we launched in December, we have now seen the remaining employees leaving the company during Q2, which will also lower the cost going forward. Please move over to the next slide, Greta. What you can see here on the graph is that we have a trailing effect on the operating cost going down. As Søren mentioned before, we are aiming towards SEK 20 million- 25 million per quarter in H2 2025 and onwards.
I think that is relating back to the Optimize 1 trial cost wrapping up. The IMP has more or less been manufactured, and there are some stability costs that will be during the second half. We have a liquidity of around SEK 24 million, and we believe that funds will come in from TO13 together with the liquidity position that we have now, so we have financial flexibility for the rest of 2025. As we always say, we are looking into different venues for financing, including the TO13, but also other avenues of financing. When it comes to HLX22, I think it's worth mentioning that we have revalued the asset, and we have done the reversal of the write-down. That has then come up to a number that with SEK 12 million in a, let's call it a write-up.
This is also limited by the fact what the initial book value of the asset was. We believe there is more value to the asset on top of that, but that's according to the regulatory environment that we under IFRS, etc., we are not allowed to do that, at least that's not as a first step here now. With that, let's move over to the next slide, please. Just as a starter then for TO13, this process will be very similar to the TO12. We will have a pricing period. In this case, we'll start at 14th of August and end 27th of August. We will then be able to communicate the price around the 28th of August then.
As also for the TO12 then, and linked to the reversal of the share split that we did, you need to have 1,000 voters to sign up for one new share then. That can then happen during the exercise period that starts 1st of September and ends around the 15th of September. As noted here, there is a last day of trading if you want to buy or sell shares or, sorry, the TO13. Of course, some of the banks have different cutoff dates. Please make sure that you're not missing out on this opportunity then. 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. Basically, as I think we are moving forward with Mitazalimab, so far, 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 the phase III readiness in terms of CRO discussions and what have you, getting that ready. The main focus is, of course, on partnering and business development discussions that are ongoing, both with long-term interested partners and also with new partners that have entered the process just recently. Just to reiterate that, we are continuing several tracks of discussion, both a global partnership, but there might also be opportunities or solutions that include one or two regional partnerships for Mitazalimab. I'm sure that you will have some questions about that.
I think I'll save my voice for that and go directly to the questions. We will do this as we normally do. We have received a number of questions. I will go through them. I will try to group them a little bit as good as I can and answer some of them and defer some of them to you, Johan. You better be on your toes. The first question here is from Philip Lindquist at Red Eye directly on the question of business development. It goes like this: Can you comment on the current status of your business development discussions around Mitazalimab and whether you see a licensing agreement or a 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.
We are, even as late as this week, welcoming new potential partners into our data room in a diligence effort. That is progressing as we expected. These things, and I'm telling you for 25 from 10 to 5 years in the industry, these things are, of course, always progressing slower than you would like them to. 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. Secondly, I'm not going to stand here and reveal any potential negotiation tactics and put pressures on potential partners here. I think we leave this part of the question sort of unanswered.
Of course, the financial dynamics in 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. That's from a pure financial angle. We go on with Philip here. You recently attended Bio International and ESMO GI, 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? I think there's a few questions about that later on. First of all, I think the data that we showed both at ASCO and at ESMO GI, and I've revealed some of it here, and some of it has been discussed under CDA as it's not yet been published.
I think we are now at a very, very fortunate situation that we can explain exactly the link, exactly the mechanism of action of Mitazalimab, what we see in subsets of patients. I showed you some of the data here and the effect on clinical outcome in these patients. Being able to mechanistically make that connection is, of course, very, very convincing and something that is important for potential partners and is highly valued in their assessment of the drug. I think there is a question from Kempen about why we stand out from other CD40s. It's clear that none of the CD40 antibodies that have previously been tested in pancreatic cancer have shown such a manageable safety profile as Mitazalimab, which is also something that has been, again, discussed at the scientific meetings.
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. Now that you asked, Philip, let me also mention that Mitazalimab and Optimize 1 were specifically mentioned at the keynote talk at ESMO GI 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. I think that's a kudos to the entire Alligator team. Let's move on here. Another question from Philip. From a CMC and regulatory perspective, would you consider Mitazalimab Phase III ready today, or are additional activities required before initiating a pivotal trial? Yes, we would definitely see Mitazalimab as Phase III ready.
Yet there are still a few things that need to be done. The drug product and the drug substance is on so-called stability studies that need to be completed during Q3 and Q4. There are a few bits and pieces here that need to be done. All in all, we are ready to start a phase III trial once we have a partner on board. 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, also to you, how much of the loan to Fenya remains?
That's stated SEK 23 million in the loan as such. We have both prepaid certain additional costs and also some of the costs that defer to the end of the loan period.
Okay. 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. Maybe you can give an explanation here.
Yeah, exactly. I did some explanation during the slides. 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 III for gastric cancer, which, of course, lowers the risk and moves everything forward. Secondly, they have now introduced a second indication in breast cancer, which also added value to the value assumptions that we have provided them.
Yeah. Absolutely. I think, and this is from Red Eye, Richard here, a little bit of a long question. In the latest press release, Abclone mentions a peak sale potential of $10 billion for HLX22, which corresponds to $500 million. This implies a royalty rate of around 8% when factoring in Alligator's 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 or our estimate is a little bit more conservative than $10 billion, although this is definitely a significant opportunity. I would say, although we cannot comment on any of the deals, especially not the financials of any of the deals, especially not those between Abclone and Shanghai Henlius Biotech Inc., I think the $500 million includes the 35% that needs to be paid to Alligator.
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.
We go to a set of questions from the Kempen or Finlandslot Kempen team. I think we have already touched on this, but I will bring it up again. Can you please remind us of how Mitazalimab safety and efficacy profile differs from other CD40 agonists and whether this has been a factor in your BD discussion? Yeah, again, we see Mitazalimab with a very manageable safety profile, not adding any significant tolerability signals on top of FOLFIRINOX. This is at a premedication regime of only antihistamines and anti-leukotrienes. No corticosteroids here. First of all, a very manageable safety profile, which really sets Mitazalimab apart from both first and second, other first and second-generation CD40 antibodies. This has, of course, been a significant factor in our BD discussions because these side effects have really hindered the continued development of many of these CD40 antibodies.
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 Mitazalimab, no chemotherapy for a year and a half up to two years. Together with the general efficacy data that we discussed today, this simply sets Mitazalimab apart from other CD40 agonists. There is another question here from Sebastian and team. In terms of the phase III 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. I would say the feedback from the two agencies is 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.
This is, of course, a significant trial, but still smaller than, for instance, what Ibsen did with their NEPO3 study, which, as I recall, was around 800 patients. The study is going to be randomized across two arms, but it's not going to be blinded, which is, of course, an operational benefit from Alligator and a partner. A single study is sufficient for approval. The next question, also from Sebastian and team here. Given the results of CD40 and 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's not been anybody interested in taking over Mitazalimab outside of PDAC as the primary driver. There's definitely been significant discussions on what is the next set of potential indications where Mitazalimab would make sense.
That's the first part of the answer. The second part of the answer is that, coming back to what I said before, there's significant interest from investigators, physicians around the world to explore Mitazalimab in other indications. We are in dialogue with a handful of these to select a set of trials that can do one or two things, either give us more understanding of how Mitazalimab works in patients with pancreatic cancer, or, maybe more interesting in a global perspective, buy Mitazalimab 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. We are pursuing these opportunities and expect to have some news about this during the last two quarters of the year.
A very important question here, also from this insightful team here: Do you anticipate that the emerging data from KRAS 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. 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. 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 chemotherapy in first line and add benefit to the patients. I'm also pretty sure that if you are going to see the sustained clinical benefit that we see in Optimize 1, you need an agent added on to chemotherapy, KRAS inhibitor that activates the immune system.
Regardless of the advent of KRAS inhibitors in second and first-line metastatic pancreatic cancer, I'm absolutely sure that there is an important role for Mitazalimab to play in these patients in the future. That's why we're developing the drug. Johan, there is a question for you. What would be the cash runway based on the current spending and expected subscription of the TO13 warrants?
I think we already answered that, but it's with the prudent assumption around the TO13 and the cash spend that we also then disclosed to SEK 20 million- 25 million per quarter, we think that we have the runway for the end of 2025.
Good. We have a couple of questions here in the Q&A webinar from the Hatmaker. Okay. The R&D is extremely well, but what is your plan B if no agreement is signed with 4 TO13 as the proceeds from TO13 might just get you proceeds of $10 million- $20 million based on the share price and probably high cost for any guarantors willing to undertake it? A similar question, how much more from the same Hatmaker here, how much money do you think will come in from the TO13, Johan? I think those are for you.
Yeah, it's too early to say. I think we have already started the work. Of course, we have a plan A that we're working on, also looking very prudently into different other scenarios. Let us come back to that. I think it's too early to say.
There are no more questions in today's call. Thank you, Johan. Thank you, Greta. Thank you especially to all those of you who have followed the call. We look forward to continue updating you with data from Mitazalimab and the rest of the portfolio. Thanks a lot and have a lovely summer.
Thank you. Happy summer.