Now, before we begin, I would like to share a quick reminder with our listeners, that during today's call, management may make forward-looking statements that involve known and unknown risks, uncertainties, and other important factors beyond the company's control, that could cause the company's actual results, performance, or achievements to be materially different from the expected results, performance, or achievements expressed or implied by such forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance.
Please note that these forward-looking statements made during this call speak only as of today's date, and the company undertakes no obligations to update them to reflect subsequent events or circumstances other than to the extent required by law. This call is being webcast and is also available through the investor relations website. With these formalities out of the way, I would like to turn the call over to Søren.
Thank you, Greta, and hello, and welcome to Alligator Bioscience Q3 call, 2023. As Greta already said, I'm Søren Bregenholt, and I'm the CEO of Alligator Bioscience. If I could have the next slide, please. I would like to begin with taking a look at our broader strategic overview to give you a sense of what we see as the company's major aims and what we're trying to achieve. In particular, how we are balancing development risk through our portfolio of proprietary projects and partnerships. First, to our proprietary pipeline, where we remain in a strong position with our lead asset, Mitazalimab. This second-generation agonist continues to demonstrate highly encouraging and differentiated efficacy in our OPTIMIZE-1 phase 2 study in first-line metastatic pancreatic cancer.
The duration of response to treatment has shown to be very promising, and we expect it to translate into survival benefits when we read out the top line data early Q1, which we are very much looking forward to. We want to thank everybody for their hard work and their dedication in the Alligator team. We want to thank the investigators and also the patients and their families. Investor interest has understandably been very much focused on the Mitazalimab data in pancreatic cancer, but given our discovery capabilities, I'm convinced that there is much more to come from our proprietary platforms. Individually and especially in combinations, these platforms have the ability to deliver compounds that are optimized for safety, efficacy, and potency, and also indication selectivity.
They're starting to deliver new compounds, which we expect to provide significant optionality and opportunity for future value generation. We're very proud of the ability we have repeatedly shown across numerous projects and compounds to identify and develop high quality therapeutic molecules in multiple formats, including monoclonals and bispecifics, all of which display optimal stability, excellent manufacturing potentially. In one particular example, our third generation CD40 agonist, which we'll talk more about later, and a molecule we call ATOR-4066, where we've even shown the ability to remodel the tumor microenvironment while inducing strong antitumor responses in a wide range of tumors in preclinical studies. We will present these data at the SITC conference, early November. The second pillar of our business development strategy seeks to build partnerships around our proprietary technologies and assets.
This, with international companies who share our goals and values of bringing innovative, safe and efficacious immune therapies to patients with hard to treat cancers. Over the years, we have established a network of strategic partnership agreements under which Alligator is eligible for development, approval, and sales milestone payments, in addition to royalties, if the partner continues the development and commercialization of the product candidates that they are developing or we are developing together. These partnerships provide a strong validation of Alligator's technology platform. They de-risk the development of product candidates through the sharing of not only knowledge and resource, but also, financials, and they facilitate rapid clinical development. They can also provide significant revenue streams, as I just alluded to, for the company with the potential to develop into distinct business ventures of their own.
Now, let's move on to the next slide and share some highlights from this Q3. We'll of course start with our lead asset, Mitazalimab, and the latest positive clinical data from OPTIMIZE-1, the study in first-line metastatic pancreatic cancer. Our second interim analysis, which was conducted over a longer period than the first interim analysis, demonstrated importantly a deepening of tumor responses among the first cohort of 23 patients from the first analysis, with an objective response rate increasing well above the 50% mark. It has been fantastic to see how the overall response rate has been improving over time, and this is a strong indication that the treatment provides durable benefits to the patients.
We also conducted an interim analysis on all the 57 evaluable patients in the study, in which 25%, and 25 patients responded to the treatment, resulting in an interim response rate of approximately 45%. While this figure is, in itself, highly encouraging, we believe that it might further improve by the time we reach the top-line data readout in the beginning of next year. The recruitment of OPTIMIZE-1 was completed ahead of schedule, in the end of Q1 this year, thereby eliminating operational risk in this important phase II study, and placing us in an excellent position to deliver top-line data as promised in the early parts of Q1 next year, which is much earlier than originally anticipated.
It's clear from these advancements that we are continuing to make excellent progress with the clinical development of Mitazalimab and its route, through pivotal development and market. I'm pleased to report that in addition, we received orphan designation from the European Medicines Agency for Mitazalimab in pancreatic cancer. The orphan designation confers significant regulatory and financial benefits, including 10 years marketing exclusivity in the period, in the European Union countries after product approval. The EMEA award follows the decision back in May this year from the U.S. FDA to grant Mitazalimab orphan drug designation in pancreatic cancer in the US, and means that we now have secured stronger commercial protection for the molecule in two of the key markets, US and the EU.
Building on that protection, received a new patent from the European Patent Office, covering Mitazalimab's composition of matter until 2038. This is a significant addition to our overall patent portfolio and provides valuable future protection for our lead asset in Europe. This quarter, we also continued to release more data highlighting Mitazalimab's ability to activate the immune system and enhance antitumor responses in combination with chemotherapy. We presented data at the AACR Special Conference on Pancreatic Cancer, the International Cancer Immunotherapy Conference, and we also provided the data from the phase I study that was conducted earlier, which was published in the scientific journal Cells. Together, these data reinforced Mitazalimab's mode of action and provided yet more clear evidence to support its continued clinical development.
I'm pleased to say that we are continuing to raise significant interest in Mitazalimab, both from the medical community and for potential partners as a combination therapy for pancreatic cancer, as well as beyond. We also saw the publication of an article in the renowned scientific journal, Cancer Immunology, Immunotherapy, highlighting the preclinical data on our potential best-in-class monoclonal antibody, ATOR-1017. These data demonstrated that ATOR-1017's strong safety profile and potential therapeutic antitumor effect in vivo, both as a monoclonal and importantly, also in combination with PD-1 treatments, which gives us a significant therapeutic potential in advanced metastatic cancer. Our research collaboration and license agreement with Orion continues to go from strength to strength. The partnership aims to discover and develop new bispecific antibodies for cancer immunotherapy, and we have now attained technical feasibility in the second of our two collaboration programs.
This is an important achievement, which triggered a new milestone payment to Alligator, and also further highlights the robust discovery, and translation capabilities of our proprietary technology platforms, which as I was referring to in the previous slide. Finally, this quarter, a successful warrant exercise was conducted, raising SEK 13.8 million. This corresponds to a utilization rate of around 68% and comes in addition to our preferential rights issue in May this year, which raised a total of SEK 181 million. We're very grateful to the support of our investors, and we are even more grateful for the trust they continue to place in our company and our drug candidates.
I'm pleased to report on another substantial quarter for Alligator, in which we have continued to make highly encouraging progress in Mitazalimab's clinical development, achieved another important milestone in our key collaboration with Orion, and further strengthened our solid financial foundation. All of which leaves us in a strong position as we enter the final quarter of the year. So now for the next slide, please. So if we look at the OPTIMIZE-1 trial and the treatment landscape in pancreatic cancer, we can first take a quick look at the challenges and unmet need in pancreatic cancer. The first point to note are the lack of active effective screening strategies, nonspecific presenting symptoms, and the cancer's aggressive biology.
All of this presents challenges when it comes to the effective diagnosing of the disease, meaning that 80% of patients are ultimately diagnosed with advanced, unresectable, and, in most cases, metastatic disease. For those who have a resection and adjuvant therapy, up to 80% of these relapse and need secondary therapy. In addition, pancreatic cancer is a debilitating disease due to its symptoms and the toxicities of the available treatments. It is already the fourth most fatal cancer in both men and women, and its incidence is increasing as the population ages, and there is no new potential developments in the pipeline. At the moment, we have a 10% five-year survival rate in the disease, and for metastatic pancreatic cancer, we are down to approximately 3%-5% five-year survival rate.
There are no treatments in advanced metastatic and treatment for around three months. Next slide. In that context, let's recap how Mitazalimab, when added to chemotherapy, has the potential to improve outcome for pancreatic cancer patients. These interim data from the OPTIMIZE-1 phase 2 study in combination with standard of care chemotherapy FOLFIRINOX in first-line metastatic cancer patients. If I can draw your attention to the chart on the left first, which shows the interim objective response rate for the entire 57 patient cohort, which is currently at 44%. You can see that that compares very strongly to the standard of care chemotherapy regimens of gemcitabine and FOLFIRINOX, which are down at approximately 23% and 32% respectively.
I should also reiterate that the 44% ORR could increase over time as we get the top-line results from the study, as indeed was the case for our 33, 23 patient originally assessed in the first cohort of the trial. These response rates are a strong indication of Mitazalimab, combined with FOLFIRINOX, offer significant clinical benefit for pancreatic cancer patients over standard of care. Similarly, in the chart on the right, we can see that the median duration of response was 8.7 months, significantly longer than the 5.9 months reported for FOLFIRINOX alone.
This is important because this is an indication of the immune stimulatory effect of Mitazalimab, and also points towards a potential increase in progression-free survival benefits and potentially also overall survival, which is, of course, the key outcomes, and endpoints for a study like OPTIMIZE-2. In addition, I like to mention that 19 patients, that's around 33%, achieved stable disease, resulting in a 77% disease control rate, and Mitazalimab manageable safety and tolerability profile in combination with FOLFIRINOX was confirmed once again. In addition to these hard facts, we are encouraged by the trial data, that we see beyond this, and also importantly, the positive feedback we get from our investigators in the trial.
At the ACR meeting last month, we were able to communicate that two of the patients in the trial saw a complete resolution of their target metastatic lesions, which is truly a remarkable result in this patient population. Our encouragement of Mitazalimab's effect in this patient population is also reflected by the fact that a lot more patients stay longer on treatment than was originally anticipated when we designed the OPTIMIZE-1 trial. Now, if I can get the next slide. Now, looking ahead onto the key inflection point for Mitazalimab in the coming months, we are planning to initiate discussions with the regulators in the U.S. and in Europe in the final quarter of the year to discuss the optimal route to the market for Mitazalimab in pancreatic cancer.
We are also expecting to complete our enabling toxicology work as part of our preparation for Mitazalimab phase 3 clinical evaluation in pancreatic cancer. This all sets us up perfectly for OPTIMIZE-1 phase 2 top-line readout, which we have mentioned is due in the early parts of Q1 2024, 9 months ahead of the original schedule. Next slide, please. Now, having spent a significant amount of time on Mitazalimab, let me take this opportunity to reintroduce you to our Neo-X-Prime platform. At this bispecific concept that is reflecting the biology of Mitazalimab and then incorporating additional innovation, making it a more efficacious, even safer, more indication-specific class of molecules. As we see as the second or third generation coming after Mitazalimab.
The front runner, 4066, which we have discussed briefly, is developed for indications like colorectal and gastric cancer, and has already demonstrated the ability to positively modulate the immune system inside the tumors, leading to efficacious, broad, and lasting tumor immunity. We see this next wave of innovation from Alligator as having the potential to be efficacious, single-agent treatment options for patients with hard-to-treat cancers. As I mentioned before, we're looking very much forward to present the latest data at the Citi Conference in the US next month. So next slide, please. Here you can see an overview of our fully owned internal programs, which gives a very good sense of the robust immuno-oncology pipeline that we have built and are continuing to develop with substantial clinical and commercial potential.
Our antibodies address key immune activation pathways and are designed with features that make them complementary to existing cancer therapies, and as I just said, some of them can even be regarded as single treatment or single-agent treatment opportunities. We believe this puts our antibodies in a unique position as part of tomorrow's combination therapies, helping patients with hard-to-treat cancers. There are a number of inflection points coming up, which are worth looking out for. In our CD40 program, we already mentioned OPTIMIZE-1 top line data early in Q1 2024. In our program targeting 4-1BB, we're expecting an interim readout from our phase 1 study, evaluating the molecule we call 527, which we are co-developing with Aptevo Therapeutics, and we expect to see these first clinical data during the Q4 this year.
So with this, let's turn to Marie Svensson, who will review our financial results for the quarter. Marie?
Thank you, Søren. Next slide, please. Going over the financial figures, net sales for the Q3 amounted to SEK 19.4 million, up from SEK 5.1 million in the prior year period. Operating loss for the quarter re-resulted in SEK 52.7 million, an increase from SEK 51.2 million in the prior year period. Cash flow for the quarter amounted to negative SEK 86.5 million, compared to negative SEK 45.6 million in the prior year. The increased cash flow out in the quarter is due to a SEK 50 million short-term investment in a fixed interest placement. For the nine-month period, January to September, net sales amounted to SEK 46.4 million, up from SEK 15.6 million in the prior year period.
Operating loss for the nine-month period resulted in SEK 178.6 million, an increase from SEK 140.1 million in the prior year. Cash flow for the nine-month period was negative SEK 23.1 million compared to negative SEK 131 million for the same period last year. Revenue in the quarter and the nine-month period for 2023 was a result of the research and license agreement with Orion. Operating expenses for both periods were mainly due to the cost of the ongoing clinical trial for Mitazalimab and ALG.APV-527, as well as phase 3 enabling activities for Mitazalimab. In the figure down to the left, you can see how expenses are distributed between our projects in Q3. Not surprisingly, 55% of our resources have been focused on the Mitazalimab project.
An important point I would like to bring to your attention is the focus of our financial resources behind our R&D efforts. While Alligator dedicated around 70% of the operational expenses to R&D in 2020 and 2021, this level has significantly increased in 2022, reaching 81%, and our efforts have continued, leading us to dedicate 87% as of September 30, 2023. Next slide, please. If we look at Alligator's operating cost on a rolling twelve-month basis, we note an increase due to the number of patients staying on longer in our ongoing clinical trial, as well as the ongoing investment in phase 3 enabling activities for Mitazalimab.
We received SEK 13.8 million through the exercise of warrants in the quarter, and together with the rights issue in earlier in June, we have received SEK 195 million in gross proceeds. Liquidity, including our short-term asset placed in an interest account, was SEK 123.9 million at the end of September. In order to support a continued development of our key assets, the company is continuously working on opportunities for partnerships, out-licensing deals, and equity financing. This includes both business development for new partnering agreements with an upfront payment upon signing, as well as other financial financing options. And that's... With that, I hand over to you, Søren.
Thank you, Marie. Thank you, Marie. Next slide, please. So looking ahead to the news flow over the next 12 months, we can see a number of important clinical and operational updates ahead. As I said, we are expecting a busy into the year with the preliminary phase 1 readout on ALG.APV-527, our collaboration with Aptevo. And we also see the phase 3 enabling toxicity data for Mitazalimab to be used in Q4 of the year. Then early in the Q4 next year, or Q1 next year, we have the statistically significant data readout, which we are very much looking forward to the top-line readout from OPTIMIZE-1 study in first-line metastatic pancreatic cancer.
Beyond that, we are potentially looking to initiate OPTIMIZE-2 in collaboration with a partner to evaluate Mitazalimab in the indication of urothelial carcinoma during 2024. If I can have the next slide. So finally, I want to briefly touch on the development of Alligator Bioscience, our vision for the next few years, and where we are heading as a company. Since our foundation in 2001, we have concentrated on immuno-oncology and the development of Mitazalimab, which we then progressed through our partnerships with Amgen. As we have grown and strengthened our organization, we focused on Mitazalimab in pancreatic cancer and have begun to leverage our proprietary platforms through a number of partnerships. For the next steps of our company, we have identified three areas of strategic focus.
First, we are looking for a partner to license Mitazalimab in order to maximize the value opportunity, both short and long term. Secondly, we will broaden our proprietary pipeline with up to three mid-stage clinical assets, primarily on the Neo-X-Prime platform, as previously discussed. And thirdly, we will add new partnerships with the aim of putting five partners assets in the clinic by 2030. These goals speaks to Alligator's core strength as a biotech technology company, and achieving them will give us the ability to maximize the number of indications we can target with our pipeline, extend our patient reach as far as possible, and secure long-term financial benefits for the companies and shareholders. And by then, could I have the last slide, please?
Coming up in Q4 is Alligator's Capital Markets Day, where we will feature several presentations detailing the overview of the company's strategy, our proprietary and partnered assets, and also our technology platforms. At the meeting, we will hear from key opinion leader Dr. Gregory Beatty from the University of Pennsylvania, one of the key pioneers in CD40 antibodies in pancreatic cancer. Professor Beatty will explain in more detail the current treatment landscape for pancreatic cancer and the potential of Mitazalimab to change the treatment paradigm. The event will be a great opportunity for Alligator's executive management team to present our latest work in the development of tumor-directed immune therapies, and for our participants to share their questions and views with us. With this final slide, we will now continue to the Q&A. I thank you for your attention.
And we have a question coming in here, and, Marie, that is for you. Do you expect the same cash flow or burn rate in the next two quarters as we have seen in this quarter? We cannot hear you, Marie.
Okay, sorry. Can you hear me?
Yes.
Yes. Yes, depending on, of course, how long patient stays in the study, in Mitazalimab and OPTIMIZE-1 study. But if they are staying on, the cash burn will be more or less the same.
I think here, if I may add, it's also important to note that we are coming to some key decision points in our CMC program, where we are reaching data points, significantly de-risking the future manufacturing ability of Mitazalimab, which will lower the burn rate slightly in the quarter or the burn rate on manufacturing in the next two quarters. Can we have the next question here? On a similar note, what are the income opportunities in the next two quarters? I think you can take that as well, Marie.
Mm-hmm. Yes, as I mentioned before, we are always working with, you know, BD activities, equity opportunities, working with partners, as Orion, for example, that you know, generate some type of revenue. I can't really say much more than that. We are continuously working with the funding of the company.
Yeah. Good. Then we have 2 questions here that I will take. They are both about Mitazalimab, not surprisingly. One question here is: do you still plan to find a partner before the end of Q2 for Mitazalimab? I assume that is yes. We are in contact with a number of big global pharma companies and big global biotechs on Mitazalimab. Some companies are performing due diligence on the molecule, and others are following the publicly available data. And these dialogues have been further nurtured by the data that we put out in June and also data that we presented during Q3 on the pharmacodynamics of the molecule. So yes, that is still the plan.
And how a similar question to what we just discussed, how important is the additional spending on toxicology, CMC, etc., in partnering discussions? And I can answer here that we believe that it is valuable to minimize risk, shortened timelines and increased development optionality for Alligator and a potential partner in the way that we run Mitazalimab currently. Therefore, we have finalized the phase 3 enabling toxicology, the cost carrying part of the study, so we will not invest significantly more there. And CMC is, of course, also a point where you are often on the critical path.
Investing balanced in that we believe is important in creating a short, mid-, and long-term value for our partner. Then, a third question directly on OPTIMIZE-1 and Mitazalimab: Are patients in OPTIMIZE-1 still receiving treatment longer than expected, and should this translate into interesting PFS and progression-free survival and overall survival numbers? Yes, we have a significant number of patients—as you recall, we finalized enrollment by end of Q1 this year. So meaning that all patients on the study have now been there for more than seven months. We have a significant number of patients still receiving Mitazalimab in combination with the FOLFIRINOX, which is a positive and a strong indication for a positive outcome.
As you also recall, probably from the data readout in June, and which was reiterated at ACR, we have a number of patients that have been on treatment for up to 18 months at that data readout. And we, of course, hope that these data translate into a positive median progression-free survival number. At the same time, we have a significant number of patients that have progressed but are still in survival follow-up, and we of course see this as a positive indication of a good readout on the overall survival when we get to early Q1. And straight following that, we have a similar question.
Looking at the interim results, I assume that's from OPTIMIZE-1, you mentioned that you expect improvement with longer time on treatment. What is your estimate for the top-line readout? We have a primary endpoint for objective response rate around 45, or it is 45. We hope that we can do better than that. I think also it's important to discuss that even though the objective response rate is definitely an important parameter, progression-free survival and overall survival, as we just discussed, are probably the key parameters that will be the endpoint in pivotal development of Mitazalimab, and therefore, we have a strong focus on following these two top-line readouts as well.
And then we have another question here on Mitazalimab and pancreatic cancer. What other drugs are being developed now for pancreatic cancer, and where do you position Mitazalimab among them? There are several molecules in the pipeline for pancreatic cancer, both in phase three and phase two. It's been a couple of decades since we had the last approval. I think the next approval will be the molecule owned by Ipsen and Servier, ONIVYDE, which is a part of, or new, one of the component of FOLFIRINOX.
And they showed with a NAPOLI-3 trial that, for the first time, head-to-head comparison, comparing FOLFIRINOX with gemcitabine, that the FOLFIRINOX or NALIRIFOX component is a better and more efficacious treatment than gemcitabine. And what we've seen based on these data is that there is a change in the treatment, in first-line treatment landscape in the U.S., seeing more and more patients or larger and larger proportion of patients getting FOLFIRINOX as the first choice in first-line metastatic pancreatic cancer. And therefore, we are significantly encouraged by the fact that Mitazalimab seems to be not adding significant safety signals on top of FOLFIRINOX, and that we see these long treatment durations of patients in OPTIMIZE-1.
Other than that, of course, there is a number of molecules being developed. I think the KRAS inhibitors, we will see what they will do in, in pancreatic cancer. But we believe that Mitazalimab is well-positioned as the prime, combination agent with FOLFIRINOX or other iterations of these, first-line, chemo reagents. And then the last question I can see on my screen here is: When would be the next financing? Would you need to finance again before the top-line readout or in conjunction with that readout? And Marie, maybe you can answer that for us.
Yes. I would say in conjunction with the readout, because it's of course of interest for everyone to understand where we are with Mitazalimab at that point. So, that type of data, I think all investors would like to have before we can talk about another investment round.
Thank you, Marie. That was indeed the last question that we have received during today's call. I wanna thank you all very much for your participation and interest in Alligator Bioscience. Thank you, and have a lovely day.
Thank you.