Earnings call transcript: Alligator Bioscience Q1 2025 reveals challenges

Alligator Bioscience (market cap: $8.9 million) reported its Q1 2025 earnings, highlighting ongoing clinical trial expenses and a significant stock price drop of 6.21% to 4.941 SEK. Despite the company’s promising developments in pancreatic cancer treatment, investors reacted negatively, likely due to short-term financial pressures. According to InvestingPro analysis, the company’s overall financial health score stands at 1.11, indicating significant challenges ahead.

Key Takeaways

• Alligator Bioscience’s stock fell 6.21% post-earnings call.
• The company completed a rights issue, raising SEK 153 million.
• Promising survival rates for lead candidate Miricelumab in pancreatic cancer.
• Workforce reduced by over 50% as part of cost-cutting measures.

Company Performance

Alligator Bioscience faced a challenging Q1 2025, primarily driven by ongoing clinical trial expenses. Despite these challenges, the company successfully raised SEK 153 million through a rights issue, strengthening its liquidity. The lead candidate, Miricelumab, continued to show promising results, positioning the company well in the competitive pancreatic cancer treatment market.

Financial Highlights

• Liquidity funds at quarter-end: SEK 29 million.
• Rights issue completed, raising: SEK 153 million.
• Expected additional cash from warrant exercises: ~SEK 80 million.

Market Reaction

Following the earnings call, Alligator Bioscience’s stock price dropped by 6.21% to 4.941 SEK. This decline reflects investor concerns over the company’s immediate financial performance and cash runway, despite positive developments in its clinical programs. InvestingPro data shows the stock’s RSI indicates oversold conditions, while its beta of 1.57 suggests higher volatility compared to the market. The stock has declined nearly 99% over the past six months, presenting a potentially interesting entry point for value investors.

Outlook & Guidance

The company anticipates initiating a Phase III trial for Miricelumab in 2025, with regulatory meetings scheduled with the FDA and EMA in Q2. Alligator Bioscience is actively seeking strategic partnerships, with potential announcements expected later in the year. Analysts tracked by InvestingPro forecast the company will return to profitability this year, with revenue growth expected at 133%. Get access to 15+ additional ProTips and comprehensive analysis with an InvestingPro subscription.

Executive Commentary

CEO Sam Weinholt emphasized the potential of Miricelumab as a "practice-changing drug" in pancreatic cancer treatment. CFO Johan Gilius reassured stakeholders of a cash runway until the end of 2025, highlighting the company’s strengthened financial position post-rights issue.

Risks and Challenges

• Ongoing clinical trial expenses may continue to impact short-term profitability.
• Workforce reductions could affect operational efficiency.
• The company’s reliance on successful partnerships and regulatory approvals presents potential risks.

Q&A

During the earnings call, analysts inquired about the company’s cash runway and potential partnerships. Management confirmed discussions with global pharmaceutical companies and highlighted the potential for early approval based on the Phase III trial design.

Full transcript - Alligator Bioscience AB (ATORX) Q1 2025:

Greta Hague, IR and Communications Manager, Alligator Biosciences: hello, and, welcome to Alligator Biosciences interim report call for the first quarter of twenty twenty five. My name is Greta Hague, IR and Communications Manager at Alligator, and I will be introducing today’s call. With me today are our CEO, Sam 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 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 Sarek.

Sam Weinholt, CEO, Alligator Biosciences: Thank you, Greta. And once again, welcome to Alligator Bioscience Q1 twenty twenty five call. If I could have the first slide, please. So Q1 has been another busy quarter for Alligator Bioscience. We have made significant progress with our lead candidate, miricelumab in first line metastatic pancreatic cancer.

We have announced twenty four months follow-up data, again showing an encouraging survival rate for mirtazalumab now at around thirty percent at twenty four 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. And we are happy to be able to announce that all the data from this cohort is fully in support of nine hundred microgram as the recommended Phase III dose. During the first quarter and in the end of last quarter, the fourth quarter of twenty twenty four, we’ve had a series of successful regulatory interactions both on manufacturing, on clinical design that together minimize the program risk of metasalumab and points towards a clear registrational approval for the drug in first line metastatic pancreatic cancer. In February, we also completed a rights issue raising SEK153 million in gross, and we are now coming off for exercise period of our t o 12 war insurance that you can move more 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 twenty twenty five, hence positioning the company well to maintain a low general OpEx in the coming quarters to pursue our strategic objectives. So if we have the next slide please. We are talking about the current focus of Alligator going forward, the cost reduction program that we initiated

Johan Gilius, CFO, Alligator Biosciences: in

Sam Weinholt, CEO, Alligator Biosciences: the fourth quarter last year will allow us to be laser focused on getting metasalumab 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 04/1966. Our optimized cost structure allows us to proceed 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. So 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. So 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 nisazolumab, our Phase III ready acid in first line metastatic pancreatic cancer and that we’re developing 4,066 as a follow-up candidate to this drug. We have a co developed program with Opdivo in The U. S.

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 HLX-twenty two, which is out licensed to Chinese company HETLUS. There’s been quite a number of progress and news surrounding this program into Q1. As late as yesterday, we announced that HETLUS 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 three study in HER2 positive gastric cancers.

And I want to remind all of us that this molecule is partly owned by Alligator through a sublicense 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 nisazolumab, our first line metastatic pancreatic cancer drug. We started Phase II clinical development of this molecule in the third quarter of twenty twenty one. Now almost four years later, we have 3.5 now announced twenty four months follow-up data showing that metazolumab in combination with first line chemotherapy leads to a twenty four month survival rate of approximately thirty percent, which is a tripling of what we can expect with the historical comparison for FERINOX in its own and also significantly and nominally better than Ipsen’s latest approved drug Odevide in the so called Nelirifox combination.

So combined with the very manageable safety profile of metazolumab, the strong overall survival data and these long term survival data, we still maintain our view that metazolumab is a potentially practice changing drug in the first line treatment of metastatic pancreatic cancer. And as I said in the beginning, the recent data from the four fifty microgram cohort that we announced in February strongly support that nine hundred microgram is the recommended Phase three dose. These data together with the regulatory progress that I will talk about in just a second and the therapeutic window of the molecule continues to drive big pharma interest in nisazolumab 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. And we maintain our view that metazolumab is or it’s very, very likely that we make an agreement with metazolumab during 2025.

’1 of the things that are, of course, worrying on 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 eight stage pipeline are intact.

We believe that nitsarcelumab 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 misexualimab. If I could have the next slide, Greta. I just want to reemphasize that we are moving forward with nisazolumab that we have agreed the Phase III protocol now both with FDA and the German authorities. We still have had a formal discussion with the FDA scheduled for June. The trial is a standard Phase III registrational trial, metasalumab plus chemotherapy randomized one to one versus chemotherapy in approximately five seventy patients with an opportunity for an early readout based on an interim analysis approximately two point five 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. And basically, are, as I said, an EMA scientific advice planned for June and also Type D meeting with the FDA to formally approve nine hundred microgram as the recommended Phase three dose. And 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.

Johan Gilius, CFO, Alligator Biosciences: Thank you, Soren. Let us start with a snapshot of our Q1 performance then. We have had still quite a lot of expenses in quarter due to the fact that we are have ongoing clinical trial, the Phase two study with mitasalumab. Patients are still treated and of course that incur 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 three to be able to start the clinical trial towards the end of twenty twenty five.

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

Sam Weinholt, CEO, Alligator Biosciences: comes to

Johan Gilius, CFO, Alligator Biosciences: 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’s because quite technical here. We have to record the TU12 and TU13 that we issued free of charge in connection with the rights issue in February at value then we recorded financial debt to 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. But hence, we have a positive financial net.

This 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 TEU 12 and TEU 13 going forward. Going back to the people then, as you can see in the bottom line then, we are still 33 people that was 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 periods after they may have days and weeks in the second quarter as well then to incur salaries and etcetera. By the end of the quarter two then we would have the only have the remaining allocated people within the company then around 15 people then.

Next slide please. What I can see that we have a trading effect of lower expenses than as predicted then, but also that it will become even more evident the next quarter and the coming quarters. And as mentioned before, we will have quite a low general OpEx in Q3 and onwards that When we have done more or less finalized the study with META in phase two, we have also concluded manufacturing of the IMP then. Actually, as we speak, they are doing the final steps for the IMP manufacturing and then it will go into stability phase then up until they can be used in the towards the end of twenty twenty five. We have a liquidity funds of SEK 29,000,000 at the end of the quarter And we have, we are expecting them as outcome of the TU-thirteen and TU-thirteen that is in line with our plans.

That’s also then we can use them for our financial flexibility to deliver on our current strategic objectives then. And of course, as mentioned by already earlier than that, we are looking to other avenues for getting new cash into companies through partnership etcetera. Next slide please. I’d like to take this opportunity just to remind everyone that on the call about the TU-twelve and that will come in to be exercised in mid May then. Next week then on the twenty eighth, it will be the last day of the pricing period.

And as you may recall then the price of the VWAP seventy percent of the VWAP for that particular period and eleventh of twenty eighth of April. We will announce that maybe after the close of the trading on twenty eighth or early in the twenty ninth morning and thereafter then. And then it will then be an exercise period from the May 5 throughout to the May 19. And please be aware that that your your bank may have different deadlines here, so make sure to reach out to to your bank and to to make sure that you can act on this either by subscribing or also trade if you want to buy or sell to your 12%. Last day of trading is May 15 then.

And towards the May then we will both announce the outcome and also have the proceeds to the company then. And there will be some time lag before these subscribed shares that also can be converted to actual shares. At the bottom then, we have this reverse split that has made a little bit some complexity to understand what are the rights worth, etcetera, and how much it will then trigger into new shares. But if you take the easy one that if you have 1,000 warrants to you 12, that’s equivalent to one new share at the subscription price then or exercise price. And then this will then be the the what what would be the cash inflow to the company.

And if the 19,600,000.0 equivalent shares that we can then maximize, maximum issue then in connection with TU12 and if we just use approximate like for Kronos then maximum inflow to the company will be then 80,000,000 roughly. With that said, I think I will hand over to Saren, for the final remarks before we go over to questions and answers.

Sam Weinholt, CEO, Alligator Biosciences: Thank you, Johan. So and 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 nine hundred 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 metazolumab, which is also a reflection of the drug’s efficacy and safety profile.

Mirtazalumab is lifesaving medication for these patients And the company is, of course, committed to maintain and continue to provide nixalizumab for these patients. But we are in the process, and this also goes for the four fifty microgram cohort where there are nine patients still on drug. We are in a process of reducing the readouts from these patients. So we track down the overall cash burn in the OPTIMIZE one study. So 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. And then we still believe that the trial or the program is still on track for Phase III initiation in this year. And it’s 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 4,066. 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 META deal. And the same goes for the Phase I asset five twenty seven. Here, we are not allocating any cash to that molecule in the coming quarters. So with that, could we have the final slide? Yeah, We have now time for Q and A, and I know that we have received a couple of questions here.

And Johan, if you are ready, then the first one goes to you. This is from Kiara at Kempen who would like to understand how far the cash runway is.

Johan Gilius, CFO, Alligator Biosciences: I will say it this way. With a prudent assumption for the TU12 and TU13 that will be upcoming now in May and September, we expect to have cash until end of twenty twenty five.

Sam Weinholt, CEO, Alligator Biosciences: And to to achieve our strategic objectives. Yeah.

Johan Gilius, CFO, Alligator Biosciences: That’s right.

Sam Weinholt, CEO, Alligator Biosciences: Yeah. Then Kiara also have another question. I was curious to know about how partnership discussions for metazolumab is going. And I think I’ll take that one. We are discussing now focused 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, which is a lot 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. Then 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 three design with potential for accelerated approval? Yes, I already mentioned it’s a one to one randomization of META plus FOLFIRINOX versus FOLFIRINOX in of course a blinded study but it’s a non placebo controlled study, which is a good thing for an alligator and a partner as it reduces operational complexity.

And 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 02/1930. And 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. Then Richard have a question on 05/27, what is the status and are we still incurring costs? We still own half of the molecule together with Apevo, 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 five twenty seven with a third party. And right now, we are not allocating significant cost to this molecule. And then the last question from Richard here is when could HLX-twenty two be on the market and start generating royalties? And I think that’s an excellent question, but it’s significantly difficult to answer.

Hemlioz have just received the FDA IND approval for a Phase III study. Let’s say that that can start sometimes this year, then we can add approximately three, four years on that. So I think again, we will probably talk about something twenty, thirty or maybe a little bit later than that. And with that, there are no more incoming questions. So I think we will end the call here.

And once again, thank you for your participation and your interest in in Alligator, and have a good afternoon. Thank you.

Johan Gilius, CFO, Alligator Biosciences: Have a good afternoon.

Greta Hague, IR and Communications Manager, Alligator Biosciences: Thank you.

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