Alligator presented positive preliminary phase I data on ALG.APV-527 at ESMO in September. It demonstrated a good safety profile and pharmacodynamics. It has also demonstrated early signs of efficacy, with disease stabilisation in 60% out of 15 evaluable patients. However, Alligator's partner, Aptevo Therapeutics, has financial difficulties with cash lasting only into early 2025. It is difficult to see how the company can obtain more funding with a market capitalisation that is down to USD3-4m. Nevertheless, it should cover the top-line readout of the trial which is due in December 2024.

Alligator's cash position at the end of Q3 was SEK48m, which will only cover around a quarter worth of expenditure. There are 100m TO 9 outstanding maturing in December. Alligator is dependent on receiving income from these to fund Q1 2025. Allegro Investment and Roxette Photo hold a large number of them, and we think it is reasonable to assume they will subscribe their parts. However, this leaves little margin.

The investment case hinges entirely on finding a partner for mitazalimab, which will be decided within the next six months. In the conference call, management suggested it may occur in Q1 2025. The cash position can only fund Q4, however. Additional funds may come from TO 9. It is uncertain whether it will be enough to fund the company over a deal. We have, therefore, added dilution of SEK160m representing both TO 9 and an additional capital injection of circa SEK120m to our base case, which we project would fund the company in H1 and, if necessary, cover the Fenja loan. This, together with other changes, results in a diluted base case of SEK1.6. However, the reader should also pay attention to our bull case of SEK3.3 representing deal in 2025 and our bear case of SEK0.5 representing the failure to attract a partner, as one of these scenarios is likely to play out.