Considering no deal has been signed yet for mitazalimab, we believe potential partners may be waiting for the mid-year readout, which will provide more mature progression-free and overall survival data. The data presented in January was quite early. This readout will therefore likely be important. We would like to see further improved PFS and OS data. ORR and duration of response data are already mature and convincing, but investors and partners may want to be more certain they translate into improved survival. The next readout is scheduled for late June 2024.

Another important milestones will be the full recruitment of the 450 micro-g/kg cohort (n=15) in OPTIMIZE-1, which is expected by Q3, with a readout in Q1 2025. This study is more focused on pharmacokinetics and pharmacodynamics than efficacy. The phase III study is then planned to start in H1 2025.

ALG.APV-527 is on track for a topline readout in the phase I study in Q4 2024. Furthermore, AC101 (out-licensed to Henlius), which is being developed in gastric cancer in Asia, should complete the phase II study (n=150) later this year.

Alligator had income of SEK7m classified as reimbursement for development work, which is likely due to the Orion collaboration. As both antibody programmes have now been handed over to Orion, we expect quarterly income to decrease, as should costs.

Operating costs decreased compared to the previous four quarters and amounted to SEK-67m. As we mentioned in our last update, the company had built up a deficit in working capital. This led to a negative cash flow effect of SEK-25m in Q1, with an operating and lease amortisation cash flow of SEK-85m in Q1. Alligator obtained a loan of SEK59m from the main owners in Q1, which has been converted into shares after the rights issue, from which the company obtained around net SEK97m. This leaves the company with a cash position of circa SEK78m.

Even with the cost reduction programme of cSEK5m per quarter implemented and assuming operating costs (and a similar cash flow) of cSEK60m or less per quarter, the cash position will only last into Q3 this year. A new rights issue so close after the last one would likely have to be underwritten (using a guarantor consortium) at a significantly lower price, so another solution would be preferable (e.g. a directed share issue). The ideal would solution would obviously be a deal.

We have decided to include some dilution in our base case like before. Alligator's rights issue was worth up to SEK150m+100m, but it was not fully subscribed, leading to less dilution and less cash available. We therefore assume additional dilution at the amount not subscribed for (cSEK140m) with a typical discount in order to maintain consistency in our valuation model. The company might strike a deal before this, which is reflected in our bull case where we do not assume any further dilution. TO9 should also lead to some dilution, but the discount is only 10% based on trading in November, for which reason we have not taken it into account in this update.

We have reconsidered our valuation of Neo-X-Prime/ATOR-4066 and increased the upfront payment to USD75m (USD30m), since the valuation assumption is the entire platform, which would consist of several antibodies, could be outlicensed after a first clinical study in humans finishes around 2028. The total deal value is still USD1000m. Our previous estimates were too conservative for a platform technology.

We have added two years to the ORION programme. Our original timeline was optimistic. This has a minor impact, decreasing the valuation by cSEK40m.

Since ATOR-1017 has been paused and we see no obvious way forward in the short term, we have removed it from our base case, including it only in the bull case. Furthermore, we have lowered our estimates, since we believe the focus is on the bispecific ALG.APV-527 (developed together with Aptevo Therapeutics), which is a more attractive asset. We have halved the total deal value and upfront payment to USD300m and USD10m, respectively; we have also reduced the peak sales estimate to USD800m (USD900m). This reduces the value by cSEK120m in the bull case.

Our bull case is SEK5.1 and our bear case is SEK1.0. In our bull case, we assume Alligator finds a partner for mitazalimab before Q3 with the same conditions as in our base case, leading to no dilution. We also set the LOA to 36% and lower the WACC to 13%. In our bear case, we have also removed ALG.APV-527. We have assumed Alligator has to raise another SEK250m early next year to fund the continued development of mitazalimab, though we have not changed the time plan for the market launch. We also assume worse deal conditions, a total deal value of USD600m with an upfront of USD35m and royalties of 13%.