Welcome to Alligator Bioscience's interim report call for the third quarter of 2026. My name is Greta Höög, I am the IR and Communications Manager at Alligator, and I will be introducing today's call.

With me is our CEO Søren Bregenholt and our CFO Johan Giléus. They will walk you through the events of the third quarter, after which they will be happy to take any questions that you may have.

These questions can either be put into the Q&A function of this call or you can email them to [email protected]. As Alligator is a publicly listed company, and today's presentation may include forward-looking statements.

Please refer to the disclaimer on this slide, which applies to the full presentation. With that, over to you, Søren.

Thank you, Greta, and welcome to this third quarter earnings call from Alligator Bioscience. It's a pleasure having you all on board.

Let's move to the next slide, Greta. Key events during the quarter.

You are hopefully all aware that in July, Alligator announced that we would discontinue our independent development of mitazalimab and refocus the company on Alligator's financial interest in HLX22. We'll spend some time on HLX22 later in today's call.

The reasoning behind the discontinuation of mitazalimab development was discussed at the Q2 call and is also elaborated in the Q3 report, as you can find on our homepage. Also in July, we announced a rights issue of approximately 125 million SEK and a bridge loan of 19.

Then we also announced that the first patient was dosed in an investigator-initiated study in early breast cancer. In August, we held an extraordinary general meeting.

In September, we announced that the outcome of the rights issue was subscribed onto the guaranteed level of 58.8 million before issue costs and bridge loan being repaid. Then we also announced that we had extended the loan maturity on our outstanding debt to Fenja Capital until June 30th, 2027, and that also a number of warrants were issued to Fenja Capital.

As a consequence of the refocusing of Alligator towards the financial interest of mitazalimab, we are reducing the headcount, and we will talk about that in a second. In October, it was also announced that in a planned leadership transition, I will step down as CEO by the end of the year.

Instead, and I'm happy to restate that, Johan will take over the role as CEO, continuing taking good care of the company's interests and thereby also of the shareholders' interest. If we take the next slide, Greta.

Let's talk a little bit about where we are in the refocused Alligator. We will now focus on ensuring the financial interest in the asset called HLX22, which is a HER2 antibody, a differentiated HER2 antibody that is in a number of clinical trials in China and globally, most prominently a Phase 3 study in gastric and gastroesophageal junction cancer.

The product is developed by and owned by Shanghai Henlius Biotech, a big global Chinese company. Alligator owns 35% of the royalty and fees interest of AbClon, and I'll come a little bit back to that.

All together, these numbers gives an effective royalty rate for Alligator of up to 1.75% of the net sales of HLX22, and Alligator will not incur any development costs. Pivoting the company towards these interests, of course, requires less resources.

That's why we have decided to wind down operations and reduce the organization accordingly. Those activities already started in July.

I've already said that we have discontinued the development of mitazalimab. We have given notice to all employees who will leave gradually over the coming month.

The operation costs that includes these wind-down costs will be reduced to be in full effect around Q2 next year. What will happen that?

We will run an organization minimally staffed, primarily by Johan, an appropriately sized board that will, of course, also help out as boards always do. We are working hard to divest mitazalimab and hopefully maintain some long-term value of that asset in the company to the benefit of the investors.

Likewise, we are working to maintain future rights in other of our assets, for instance, ALG.APV-527 that we are co-developing with Aptevo in the US, and also some of our antibody technologies that are currently being assessed by potential partners under evaluation and option agreements. If we take the next slide, Greta.

Let's just spend a little bit more time on HLX22. For deeper detail and a full overview of ongoing clinical trials with the molecule, please refer to the quarterly report, the Q3 report, which, as I said before, you can find on our homepage.

As I said, the antibody is a novel HER2 monoclonal antibody. It's targeting other epitopes than some of the already marketed antibodies and have increased efficiency in inducing HER2 internalization.

The antibody was originally discovered in a collaboration between a now fully owned Alligator subsidiary, Atlas Therapeutics from Stockholm, and AbClon. Under those agreements, Alligator then have a 35% ownership of AbClon's revenue from Henlius, both in terms of milestone payments and, most importantly, any future royalties.

AbClon have themselves disclosed part of that royalty scheme, the upper tier, and when you merge these two numbers, it gives a royalty rate of up to 1.75% effectively for Alligator. I know some of you might want to have more insights into the specific dynamics and potential royalty ladder here.

Alligator is not allowed to disclose these information as these are part of an agreement between Henlius and AbClon. So 35% and up to 1.75% is the level of detail that we can comfortably share and legally share, by the way.

Then we have estimated an annual royalty, and just to make sure that everybody gets this right. Alligator do not have specific insights into how Henlius will price or market HLX22.

We don't have access to any non-public information. The market has not yet made specific detailed analysis of HLX22 sales available.

What I will share with you now is Alligator's own sort of assumptions, and we are not in a position to share these in any detail in writing. What we can do is, of course, we can spend some time reviewing the facts that in gastric cancer and gastroesophageal cancer, there is approximately 1.1, maybe 1.2 million cases annually.

Of these, the metastatic diagnosis range is somewhere between 40% and 50%, giving us a combined number of patients of around 450 to 70,000 patients annually. If you then add the rate of patients that are actually HER2-positive, i.e., the target that the antibody addresses, then we are at around 110,000 to maybe a little bit more addressable patients on an annual scale.

How does that relate into the royalty rates that we are describing here? Alligator is working with a number of different assumptions about pricing and blended global pricing, and all that, of course, comes out to the readout of the data from the Phase 3 study that we are all eagerly expecting.

We see two scenarios here for us: one that is based on a set of data that is positive, but maybe not as fantastically positive as the Phase 2. Here we are working with a low scenario with a relatively modest rate of adoption in market share, somewhere in the teens, somewhere between 10% and 20%, and a blended global price, which is sort of comparable to monoclonal antibodies, and that will give a sort of a revenue to Alligator that hits around the bottom of the bracket here.

You can do your backwards calculation what that would mean in peak sales. Then on the other hand, we are working with a scenario where the data is still not as good as in the Phase 2 study, but are significantly better than competition, and this scenario, you'd see a higher market penetration globally, you'd see a higher price, up to 50% of higher than what you see in the low scenario, and in that scenario, you will reach approximately the middle of that bracket that we describe here.

Then I also have to remind you that this Phase 3 is not the only shot on goal. The company is currently in other Phase 3 studies in breast cancer, and the company has also recently registered Phase 2 studies in other indications on clinicaltrials.gov, but has not yet announced the first patient dosed, and there's also a number of other Phase 2 studies going.

We have a relatively high level of confidence that the combined market potential of HLX22 will land us comfortably in this bracket here between 150 and 450 million SEK on an annual basis. Just to sort of assert that the system works, we have over the years received payments from Henlius via AbClon, and we have a good and constructive dialogue with AbClon.

Sort of the business mechanics behind this agreement are in place and functional. Can I have the next slide, Greta?

This was maybe a better slide to have discussed the gastric cancer indications on. You have some of the specifics here.

We still believe that top-line data from the Phase 3 study are due in second half of next year. It may be before, it may be later, but this is a good estimate as we see it now.

Henlius has not been clear on their launch plans for the molecule. Again, we take a sort of an industry sort of standard approach to this and say from the first top-line data to the potential launch, it may be somewhere between 18 and 24 months, potentially shorter, but let's on the side of caution here.

That will then result in the first royalty revenue to Alligator the year after that. With those words, I will hand the floor to Johan.

Thank you, Søren. A little bit about the financials now for Q3 2026 then.

We still have an operating cost level that is higher than we will have going forward, and that's mainly due to that we still are incur costs for closing down the OPTIMIZE-1 study, which is now in the very, very final stages. There is also though quite a lot of costs that we had ramped up during the spring to be able to start the Phase 3, including CMC costs and other costs and for the Phase 3 that where now are closing down, and that of course has a trailing effect both in this quarter and the quarters to come then.

There is also though some financial items then that I don't want to bore you with, due to the rights issue and the TO 15s and warrants, etc., that we need to disclose and report in a certain way then. Moving over to the next slide, it's a little bit more forward-looking.

As you can see then, going back a couple of years now, we have really taken down our operating cost level from the high 250 and above, and then, as expected, going down over the last couple of years now. As you can see, it was starting to gear up here and will, as I mentioned, continue to be at a little bit higher level than going forward and before it's turned down to the really rock bottom, which is expected in the Q2 of 2027 then, when we will primarily then cover or manage the interest in HLX22 then.

After the rights issue, we have some 41 million in our cash accounts, and that is then after the repayment of the bridge loan. This is the net that we then can have for the spending then.

The obvious question is how long will this last then? Is a little bit of a tricky question, and because depending on how we will manage some of the outstanding obligations, including mitazalimab-related obligations, this will have very different effects on the runway.

I need to defer that in the next quarter then, where we have better visibility on how the wind-down and potential sales of such an assets have hopefully then been solved. Let us then move over to the next slide, please.

Little bit around the rights issue that we completed in September, and then also then there are some trading effects in October then when I come back to that then. We had some just shy of 50% subscription rate, and that meant also that the guarantors then came in, had to step in with some 20 29%, 30%.

That's predominantly two two larger guarantors, we believe, and we haven't seen the details in the share ledger as yet because that will happen then in October, but as soon as we can report on that, you will have that on our webpage then. It will also then mean that we have now issued first a number of units, 1.4 billion units, and then this has been then transferred into shares, 2.9 billion shares, that should be available on your accounts if you hold shares.

Then there is also warrants then for those who subscribed for units then, for TO 15 and TO 16 then for '27 and '28, respectively. Next important event then will be the TO 15, and that is exercised in January '27.

We will then, prior to that, have a pricing period that goes from mid-December to early January then to set the price for the TO 15 then. As agreed then with Fenja in the recent renegotiation, we are also then expected to do some repayments of the outstanding loan to Fenja out of the proceeds that we will hopefully then incur from TO 15 then.

As you hopefully know then, we still owe Fenja 6.6 million then as part of the initial loan that we had in from 2024 then. TO 16 is one year later then, and with the exercise period in January 2028 then.

The use of proceeds, as being communicated before, both in the press release and the prospectus, etc., is to fund the wind-down. The wind-down, as Søren mentioned, is going according to plan.

We hope to have some positive outcomes in terms of the discussions then. As a prudent CFO, I'm always count on the worst, we need to really be careful with our cash, of course, but also to make sure that we have the visibility on our cash forecast going forward then.

This all is just to preserve the future royalty potential of HLX22, as discussed earlier then. Depending on the outcome and depending on a few other things, then I'm quite certain that we will not have enough money until we can see the first royalty income, and that is expected in 2030, so that's quite a long way.

Hopefully we can extend it to get at least a better visibility of the outcome of HLX22 then, as expected then in the second half of 2027 then. Søren, over to you.

Thank you, Johan. Here I am.

Good. I think this was the last slide for today.

I think we have a number of questions from the audience here, or from you. There is a number of questions, and I fully can sympathize with these, about a wish to have a larger transparency in in in the royalty situation for HLX22.

I would share it if we could. We cannot.

I think what we can share is what we share today, that the royalty for Alligator is 35% of whatever royalty is paid to AbClon. AbClon has a royalty rate of up to 5% on on the global sales of HLX22 across across all indications.

Currently, the drug is developed in several of of several indications with gastric cancer being gastric cancers being the lead indication. I've tried to to illustrate for you that we believe that that even in a in a in a low, in a positive, but low penetration scenario, we will in that indication alone hit the the bottom of the bracket, in a more I wouldn't say mediocre, because that's not what but in a in a more in a more positive, but still modest scenario, a mid scenario, you could say, we would hit the middle of the bracket, and in a bull scenario that that may not be completely realistic for for these indications, for this indication alone, we'll hit the top of the bracket.

I think it's important for for for investors in Alligator to also understand that beyond this, there are trials in breast cancer, there are trial in in in colorectal cancer being registered and coming up, there are trials in pancreatic cancer, and Henlius is really investing significantly in HLX22 and pushing it forward across a broad set of indications as you would do with with a drug that that is as differentiated as HLX22. You all know that that if you follow other companies, their expectations is to HLX22 at least their expressed expectations to HLX22 is is somewhat more aggressive than than what we are describing here.

That I think was was was answer to to quite a number of of the questions for for Alligator or for from you. Without making commitments for the company, as as as I'm stepping down, I'm not making forward commitments for the company, but it is clear that when sort of consensus analyst reports or even just single analyst reports becomes available, that would be all natural for the company to to share those analyses with you as as investors.

There is a a a question, and I think it's a little bit hard to answer, but why is nobody interested in buying your shares? That, I don't really have an answer for that.

I have a a a one My only observation is that that this is now a share that has has a a defined probable outcome, and and that is royalties from mitazalimab. As Johan mentioned, and I think I mentioned as well, that that will take that will take some years for that to realize, and we of course see the next big value inflection point being the the the announcement of Phase 3 data for for for HLX22, giving us a very strong indication of whether the the the milestone or the the the royalty predictions are are realistic or even maybe being being too modest.

It's always hard to to second-guess other people's intention. How close are you with selling the mitazalimab project, and and how much do you expect from that?

We are we are making progress with that. I cannot comment closer closer than that.

What can we expect from that? I think in in deals, when when companies like Alligator have have announced the discontinuation of their own development, there will be value in the agreements, but it will probably most likely be more backloaded than you would expect in a in a, what can we say, a traditional business development deal.

Then we have a number of of questions from oh, are they from Richard? Can you walk us through the assumptions behind it, the the bracket of of royalties?

I think I've already did that, at least once, I think we'll leave it at that for now. What is the target run rate for the minimal organization, and when will this cost base be reached?

I think that's for you, Johan, if you have not already discussed that.

No problem. Now, I think the current estimate is that we will come down to in the region of 1 million per month in running costs then for that minimal organization, and that will be reached in the Q2 of 2027.

That's a rough estimate, but still something that we are aiming for

then. Thank you, Johan.

I can see others had that question as well, hereby addressed. What is the runway of the current cash, and what financing options are you working on?

I think you've already touched on that a little bit, Johan, but maybe a reiteration?

Sorry, could you repeat this?

What is the runway with the current cash, and what financing options, if any, are you considering?

I think we need to sort out the mitazalimab situation, as you mentioned before, and a few of the other wind-downs so we have the clear understanding on where we are and before I can do any predictions on the runway. Of course we monitor this very closely, but going out now and try to forecast the runway that would be obsolete in a day or two months is not appropriate either, and so I need to come back on that.

Thank you. If you could just, as a last one here, reiterate what loans are still outstanding?

That's the loan with Fenja then, nominal value 6.6 million then, and it's now prolonged to the end of June 2027 then.

Thank you, and I think this sort of covers all the incoming questions. Some of them may have been answered or asked in a little bit different language, but I think the answers from me and Johan sort of covers these questions.

With that, as this is my last quarterly call for Alligator, I want to thank you for your support, your loyalty, for our collaboration, and maybe also once in a while for your patience. It's been a pleasure.

Thank you for today, and have a good afternoon.

Thank you. Bye-bye.