Alligator Bioscience

Quarterly Report • Apr 17, 2019

Alligator Bioscience AB (publ) Q1 Interim report January-March 2019

First patient dosed in Phase I clinical study of ATOR-1015.

Significant events January-March

• First patient dosed in Phase I clinical study of ATOR-1015.
• New preclinical data presented demonstrating strong anti-tumor effects for the 4-1BB antibody ATOR-1017.
• Alligator Bioscience launched RUBY™, a novel concept in bispecific antibody formats.

Events after the end of the period

• Tumor-localizing properties of ATOR-1015 demonstrated by live imaging.
• New preclinical data for ATOR-1144 demonstrates potential for activation of both the innate and the adaptive immune system as well as direct anti-tumor effects.

Financial information

• January-March 2019
• Net sales, SEK 0.0 million (0.8)
• Total operating costs SEK -46.7 million (-45.0)
• Operating result, SEK -46.2 million (-44.0)
• Earnings per share before and after dilution, SEK -0.62 (-0.59)
• Cash flow for the period, SEK -34.3 million (0.8)
• Cash and cash equivalents, including securities, SEK 402.9 million (436.4)

"This is a very exciting year for Alligator. We currently have two projects – ADC-1013 and ATOR-1015 – in clinical development. These projects will soon be joined by ATOR-1017," CEO Per Norlén comments.

About the report

The information was submitted for publication at 8:00 a.m. CEST on April 17, 2019.

Notes to the reader

Figures in brackets refer to the outcome for the corresponding period in the preceding year for figures related to the income statement and cash flow. For figures related to the financial position and personnel, figures in brackets refer to December 31, 2018. Unless otherwise stated, all amounts stated are rounded correctly, which may mean that some totals do not tally exactly.

Alligator Bioscience AB (publ) 556597-8201

Medicon Village, Scheelevägen 2, 223 81 Lund, Sweden. Phone +46 46 540 82 00 www.alligatorbioscience.com

Comments from the CEO.

This is a very exciting year for Alligator. We currently have two projects – ADC-1013 and ATOR-1015 – in clinical development. These projects will soon be joined by ATOR-1017, where we plan to initiate studies in cancer patients during the year. In addition to this, we have established a new technology platform, RUBY™, giving us all of the technologies needed to create essentially any bispecific drug candidate.

ATOR-1015 in clinical Phase I

On March 7, 2019, the first patient was dosed in the Phase I study for ATOR-1015. The study is a dose-escalation study encompassing up to 53 patients with metastatic cancer. The primary aim of the study is to investigate safety and tolerability and to identify the recommended does for subsequent Phase II studies. Data read-out is planned for the second half of 2020. The Phase I study is expected to provide critical information about our innovative CTLA-4 blocking tumor-localizing concept. It is well documented that antibodies that block CTLA-4 offer clinical benefit in several types of cancer. The challenge has been the severe side effects caused by the treatment. ATOR-1015 has the potential to solve this problem by accumulating in the tumor region and localizing the immune activation to the area. This theory was reinforced by new preclinical data presented at the Essential Protein Engineering Summit (PEGS) in Boston in April.

ADC-1013 to be presented at ASCO

Janssen, our collaboration partner for the ADC-1013 project, is currently progressing a clinical phase I dose-escalation study. Patient recruitment for this study is expected to be finalized during this spring. Data from the study will be presented at ASCO, the world's largest oncology conference later this spring. The aim for 2019 is to conclude the ongoing Phase I study.

Another biotech company recently presented promising efficacy data from combination studies with their CD40 antibody and a PD-1 inhibitor. Although the results are preliminary, they clearly strengthen the concept and our conviction that the CD40 target molecule will play a central role in the future of cancer immunotherapy.

ATOR-1017 and ALG.APV-527 approaching clinical phase

In March 2019, we presented new preclinical data for ATOR-1017 at the 4th Annual Immuno-oncology Summit Europe. The data indicate that ATOR-1017 has the capacity to stimulate the two most important cell populations of the immune system: T cells and NK cells. The data also show that ATOR-1017 displays potent anti-tumor effects in an experimental model for colon cancer. This provides a strong basis for entering the next phase, namely clinical development. Toward the middle of the year, we plan to submit an application for clinical trial authorization and to begin treating cancer patients in the autumn. Shortly after ATOR-1017 follows ALG.APV-527, for which we plan to submit a CTA before year-end.

ATOR-1144 activates both the innate and the adaptive immune system

We have now presented our bispecific drug candidate ATOR-1144 to a scientific audience for the first time, which attracted considerable attention. At the Annual Meeting of the American Association for Cancer Research (AACR) in Atlanta, we demonstrated that ATOR-1144 activates both the innate and the adaptive immune system, which gives potential for efficacy in the fight against cancer. We were also able to demonstrate that the target molecule GITR is expressed in tumor samples from various types of cancer, which adds the possibility of a direct tumorkilling effect.

RUBY provides a competitive edge

In January, we launched RUBY™, a new and unique bispecific antibody format. RUBY gives Alligator competitive abilities to generate antibodies that are both efficient and highly manufacturable in less time than is currently possible. We now have all of the technologies needed to create essentially any bispecific antibody drug candidate.

Intense period

As a rule, the spring is an intense period in terms of major scientific conferences, and very much so this year. We have taken part in the 4th Annual Executive Summit on Cancer, the Immunooncology Summit, AACR and PEGS, where we presented several of our projects and showcased our bispecific format RUBY. At the end of May, there is ASCO, the world's largest meeting place for physicians, researchers and oncology professionals, where we can look forward to a presentation of the Phase I results of our CD40 project ADC-1013.

Per Norlén

CEO Alligator Bioscience AB (publ)

Performance measures, Group.

Net sales, SEK million

Total expenses, rolling 12 months, SEK million

Cash flow, rolling 12 months, SEK million

Cash and cash equivalents, including securities, SEK million

	Note	2019 Jan-Mar	2018 Jan-Mar	2018 Jan-Dec
Result (TSEK)
Net sales	5	40	776	26,959
Operating profit/loss		-46,238	-43,994	-153,080
Profit/loss for the period		-44,386	-42,209	-150,043
R&D costs		-34,880	-35,516	-139,493
R&D costs as a percentage of operating costs excluding impairments		74.7%	79.0%	76.8%
Capital (TSEK)
Cash and cash equivalents at end of period		329,533	474,684	362,878
Cash, cash equivalents including securities at end of period		402,893	548,652	436,391
Cash flow from operating activities		-30,781	6,168	-104,115
Cash flow for the period		-34,264	773	-111,770
Equity at the end of the period		424,043	575,916	468,310
Equity ratio at the end of the period, %		91%	96%	92%
Info per share (SEK)
Earnings per share before dilution		-0.62	-0.59	-2.10
Earnings per share after dilution*		-0.62	-0.59	-2.10
Equity per share before dilution		5.94	8.07	6.56
Equity per share after dilution*		5.94	8.07	6.56
Personnel
Number of employees at end of period		56	49	55
Average number of employees		56	48	51
Average number of employees employed within R&D		48	41	44
For definitions and calculations, see the sections later in this report.

*Effect from dilution is not considered when result is negative and options where call rate is higher than closing rate is not considered.

Our pipeline.

Alligator Bioscience AB is a public Swedish biotech company specialized in the development of novel immunooncology drugs for tumor-targeted immunotherapy, with the aim of providing more effective treatment with fewer side effects. The strategy is to develop drug candidates that selectively stimulate the immune system in the tumor region, rather than the whole body. In this area, Alligator is strongly differentiated and there is currently a major unmet medical need for novel and improved therapies.

The drug development process is carried out in Alligator's laboratory by the company's own personnel. All of the expertise required for running successful projects is represented. To make the process as competitive and time-efficient as possible, some of this work is also carried out in collaboration with other biotech companies, contract laboratories and leading international immuno-oncology research institutions.

Several patented technologies

The development of novel drug candidates is based on Alligator's patented technology platforms FIND® (protein optimization technology) and ALLIGATOR-GOLD® (antibody library). These platforms enable efficient generation of novel drug candidates with high potential. In addition, the company has two unique bispecific antibody formats for the development of novel dual-action antibodies. The latest, RUBY™, allows Alligator to easily generate bispecific molecules from any two antibodies, with excellent stability and manufacturability properties. The format abolishes the need for further optimization and enables Alligator to move drug candidates faster from preclinical to the clinical phase. Together, these technologies provide Alligator with a strong base for the development of bispecific, tumor-targeted drug candidates.

Competitive project portfolio

Alligator's project portfolio includes the clinical and preclinical drug candidates ADC-1013, ATOR-1015, ATOR-1017, ALG.APV-527 and ATOR-1144, plus a number of early-stage research projects. All drug candidates are developed for tumor-targeted immunotherapy, are directed against immunostimulatory receptors and can provide long-lasting protection against cancer. Future cancer treatments will probably involve several different drugs in combination. However, although the combination therapies used to date have boosted the clinical effect, they have also led to a higher risk of developing severe immune-related adverse events. Alligator's concept of tumor-targeted immunotherapy provides an opportunity to solve this and develop new cancer therapies with higher efficacy without increasing the risk of severe side effects.

Alligator's business model

Alligator's organization

Alligator's research organization is divided into three units: Discovery, Preclinical and Clinical. The Discovery Unit is responsible for early-stage research projects through to the identification of a drug candidate. This normally includes the development and evaluation of treatment concepts, the evaluation of potential drug candidates and early-stage efficacy testing. The Preclinical Unit is responsible for manufacturing clinical study materials and for compiling a clinical data package sufficient for clinical study applications. The Clinical Unit assumes responsibility when the drug candidate enters a Phase I clinical study and for the subsequent clinical development until successful outlicensing.

Business model that creates value across the development chain

The company's business model is based on proprietary drug development – from early-phase research and preclinical development to Phase II clinical studies, when the treatment is validated in patients. The plan is to subsequently out-license the drug candidate to a licensee for further development and market launch. This business model provides opportunities for the company to generate revenue even before the drug reaches the market, as revenue when agreements are signed and milestone payments received during the development process. The business model was validated in 2015 when a license agreement was signed with Janssen Biotech, Inc. Under the agreement, Alligator is entitled to up to USD 695 million (almost SEK 6 billion) in milestone payments during the development process as well as royalties from future global sales of the drug.

Drug development at Alligator – the different phases

DISCOVERY	PRECLINICAL	CLINICAL PHASE I	CLINICAL PHASE II	CLINICAL PHASE III
In the Discovery phase, Alligator creates mono and bispecific antibodies using its technology platforms ALLIGATOR-GOLD, FIND and two bispecific fusion formats.	In the Preclinical phase, final optimization takes place and the safety and efficacy of the drug candidate is assessed together with its clinical potential. These studies	The first human studies are conducted in smaller cohorts, normally 20–80 patients with metastatic cancer. The aim of these studies is mainly to show that the com	The endpoint of Phase II studies is to show that the substance has the intended medical efficacy and to determine optimal dosage. Normally, 100-300 patients are	The drug is tested on a larger cohort of patients in Phase III, usually between 1,000 and 3,000 patients.
The development and evaluation of	are conducted both internally at Alligator and together with external partners.	pound is safe.	tested.	The endpoint of Phase III studies is to demonstrate that the new compound is
treatment concepts, evaluation of various potential drug candidates and early-stage efficacy testing.	Alongside of these preclinical activities, research activities continue to increase	Studies are also carried out to see how the drug is absorbed, distributed and metabolized.	By the end of Phase II, the drug's efficacy, probable dosage and side-effects profile should have been determined.	at least as good or better than previously approved treatments.
The antibodies are optimized to achieve the set objectives in terms of function, binding affinity and stability, after which a drug candidate is selected for further development.	understanding of the candidate's biolog ical function. This phase also includes activities for the production of materials for upcoming clinical studies.			When the Phase III program is complete, a statement can be issued about the drug's properties and common side effects and the documentation required to register the drug has been compiled.

ADC-1013. Clinical drug candidate out-licensed to Janssen Biotech, Inc.

ADC-1013 is an immunostimulatory antibody for the treatment of metastatic cancer. The drug candidate has been out-licensed to Janssen Biotech, Inc., which is running all continued clinical development. To date, ADC-1013 (called JNJ-7107 by Janssen) has generated revenue of almost SEK 400 million for Alligator. The total amount of the predefined milestone payments is potentially USD 695 million, corresponding to approximately SEK 6 billion. ADC-1013 MoA Mode of action

■ Events during the first quarter

In January, the results from the first ADC-1013 clinical phase I study were presented in the scientific journal International Journal of Cancer. Taken together, the pharmacodynamic effects and the preclinical data support the further clinical development of ADC-1013 in the treatment of cancer. Activation Tumor Killing T cell

Dendritic cell

Commercial status: out-licensed to Janssen with potential milestone payments of USD 695 million

The license agreement with Janssen comprises predefined milestone payments with a potential total value of about USD 695 million (approximately SEK 6 billion). If the commercialization is successful, Alligator will also be entitled to incremental royalties based on global net sales.

Project status: Phase I studies

Tumor Cell

To date, the clinical program has comprised two Phase I studies. The first study was conducted by Alligator, and focused on intratumoral administration. The results showed that ADC-1013 is well-tolerated at clinically relevant doses. A second Phase I study is currently being run by Janssen and focuses on intravenous dose escalation. Janssen has completed the technology transfer associated with the manufacturing of clinical study materials to Biogen Inc. – a US company with a large-scale manufacturing plant. The main purpose of both Phase I studies is to identify a safe, tolerable and biologically effective dose for ADC-1013.

The second phase I clinical study is currently being conducted by Janssen. To date, the study has enrolled 95 patients. Information regarding the ongoing clinical phase I study is planned to be presented at ASCO in early June.

2019 objectives

• Conclusion of Phase I patient study.

Mechanism of action

ADC-1013 is an agonistic – or stimulatory – antibody that targets CD40, a receptor in the dendritic cells of the immune system, which are the cells that detect enemies such as cancer cells. ADC-1013's activation of CD40 enables dendritic cells to stimulate the immune response's weapons more effectively – in this case, T cells – allowing the immune system to selectively attack the cancer. ADC-1013 has been optimized using Alligator's unique FIND technology, with the aim of improving binding affinity. This makes it possible to achieve efficacy with very low doses. In preclinical experimental models, ADC-1013 has been shown to induce a potent tumor-targeted immune response and provide long-lasting tumor immunity. In addition, preclinical data have demonstrated how ADC-1013 can be used against multiple types of cancer.

ATOR-1015. Tumor-localizing bispecific CTLA-4 antibody with dual immunostimulatory function.

ATOR-1015 is a bispecific antibody that targets CTLA-4 and OX40, developed for tumor-directed treatment of metastatic cancer. One part of the antibody blocks CTLA-4 and the other part binds to OX40 and thus activates the immune system. The drug should be used as either a single therapy or in combination with other immunotherapies, such as PD-1 inhibitors. The ATOR-1015 antibody has been assembled and optimized using Alligator's unique ALLIGATOR-GOLD and FIND technologies and a bispecific fusion format. ATOR-1015 MoA (CTLA-4 x 0X40) Mode of action ATOR-1015 MoA (CTLA-4 x 0X40) Mode of action ATOR-1015 MoA (CTLA-4 x 0X40) Mode of action

■ Events during the first quarter

In March, the first patient was successfully dosed in the ongoing Phase I study of ATOR-1015. Data read-out of the study is planned for the second half of 2020. Treg Depletion Treg Treg Depletion Treg Treg Depletion Treg

Macrophage

Macrophage

Macrophage

■ Events after the end of the period

ATOR-1015 was presented at the Essential Protein Engineering Summit (PEGS) in Boston in early April. New preclinical tumor-localization data demonstrates that ATOR-1015 physically localizes to the tumor in an experimental tumor model using a live imaging technique. The new results further reinforce ATOR-1015's concept of selective activation of the immune system in the tumor area.

Project status: Clinical Phase I

Tumor Killing

Tumor Killing

Tumor Killing

In December 2018, the Swedish Medical Products Agency (MPA) approved the start of a clinical Phase I dose-escalation study in patients with metastatic cancer. The study is planned to include up to 53 patients. The principal investigator is Dr Jeffrey Yachnin at the Clinical Trials Unit, Department of Oncology at Karolinska University Hospital in Stockholm. The primary aim of the study is to investigate the safety and tolerability of ATOR-1015 and to T cell T cell T cell

identify the recommended dose for subsequent Phase II studies. For further information, please refer to:

https://www.clinicaltrials.gov/ct2/show/NCT03782467?term=1015&rank=1

2019 objectives

• Progress of the clinical Phase I study to enable preliminary data read-out in the second half of 2020.

Mechanism of action

ATOR-1015 binds to two different immunomodulatory receptors – the CTLA-4 inhibitory receptor, and an OX40 costimulatory receptor. In preclinical studies, the bispecificity has been shown to cause a significant increase in the immunostimulatory effect and is expected be achieved mainly in environments where both of the target molecules are expressed at high levels, such as in a tumor. This means that ATOR-1015 may have potent immunostimulatory effects in the tumor environment, but not in the rest of the body, with the goal of reducing the side effects while maintaining efficacy. ATOR-1015 is primarily designed for combination therapies and the preclinical results presented include data indicating an additive anti-tumor effect in combination therapy with a PD-1 pathway-blocking antibody.

ATOR-1017. Stimulation of both T and NK cells induces potent killing of tumor cells.

Macrophage

Macrophage

Macrophage

ATOR-1017 is a monoclonal antibody that activates the costimulatory function of 4-1BB on T and NK cells in the tumor region and has been developed for the treatment of metastatic cancer. 4-1BB has the capacity to stimulate the immune cell populations required for tumor control. ATOR-1017 MoA (4-1BB) ATOR-1017 MoA (4-1BB) ATOR-1017 MoA (4-1BB)

■ Events during the first quarter

4-1BB agonist activating

tumor leads to a tumor-di-

tumor leads to a tumor-di-

Mode of action

Mode of action

Mode of action

In March, new preclinical data for ATOR-1017 were presented at the 4th Annual Immuno-oncology Summit Europe in London. The new data showed that ATOR-1017 displays potent antitumor effects in an experimental model for colon cancer (MC38). The data also showed that ATOR-1017 induces a dosedependent effect on tumor growth inhibition and survival. ATOR-1017 is a FcgR (Fc gamma Receptor) crosslinking dependent ATOR-1017 is a FcgR (Fc gamma Receptor) crosslinking dependent ATOR-1017 is a FcgR (Fc gamma Receptor) crosslinking dependent Tumor Killing

Project status: Preclinical development

Extensive preclinical data have been presented showing that ATOR-1017 stimulates both NK and T cells, both of which contribute to an effective immune-mediated killing of tumor cells. As well as leading to amplification of the tumor-targeted immune response, the 4-1BB stimulation of T cells also develops an immunological memory of the tumor. NK cells are immune cells that specifically target tumor cells trying to evade the immune system's response. NK cells also strengthen cell-death signaling from the immune system's tumor-specific T cells. Stimulatory antibodies against 4-1BB therefore strengthen the ability of both NK and T cells to attack tumor cells. Tumor Killing Tumor Killing

These preclinical data provide additional support for the positioning of ATOR-1017 as a best-in-class 4-1BB antibody with the potential to reduce side effects, but also to generate a potent and long-lasting immune response. Tumor Cell T cell Tumor Cell T cell Tumor Cell T cell

A preclinical data package is currently being compiled with the aim of submitting an application for clinical trial authorization (CTA) toward the middle of the year.

2019 objectives

• Submit CTA application.
• Start of Phase I clinical study later in the year.

Mechanism of action 4-1BB and FcgR co-expressing cells within the 4-1BB and FcgR co-expressing cells within the 4-1BB and FcgR co-expressing cells within the tumor leads to a tumor-di-

effector T cells

effector T cells

effector T cells

4-1BB agonist activating

4-1BB agonist activating

• ATOR-1017 4-1BB Fc-gamma receptor ATOR-1017 4-1BB Fc-gamma receptor ATOR-1017 4-1BB Fc-gamma receptor
  • 1. ATOR-1017 binds to the target molecule 4-1BB on the surface of T cells and NK cells.
  • 1. The immunostimulatory function is dependent on binding to Fc-gamma receptor on macrophages.
  • 1. The beneficial T cells are activated to kill tumor cells.

ATOR-1017 is distinct from other 4-1BB antibodies, partly because of its unique binding profile, but also because its immunostimulatory function is dependent on crosslinking to Fc-gamma receptors in immune cells. This localizes the immunostimulation to the tumor region where both 4-1BB and Fc gamma receptors are expressed at high levels – totally in line with the treatment strategy for Alligator's drug candidates. The objective is to achieve an effective tumortargeting immune response with minimum side effects.

ALG.APV-527. A tumor-binding and immunomodulatory antibody in the same molecule.

ALG.APV-527 is a bispecific antibody (4-1BB and 5T4) for the treatment of metastatic cancer. The antibody has two functions: to stimulate antitumor-specific T cells via the costimulatory receptor 4-1BB, and to bind to the 5T4 protein on the surface of tumor cells and thereby localize the immunostimulation to the tumor. ALG.APV-527 (4-1BB x 5T4) ALG.APV-527 (4-1BB x 5T4) ALG.APV-527 (4-1BB x 5T4)

■ Events after the end of the period

Mode of action

Mode of action

Mode of action

In April, data for ALG.APV-527 was presented at the Annual Meeting of the American Association for Cancer Research (AACR) showing that ALG.APV-527 has a favorable safety profile, which will be important information for the upcoming application for clinical trial authorization. ALG.APV-527 active in 5T4+ tumor Binding to 4-1BB and 5T4 Clustering of 4-1BB ALG.APV-527 active in 5T4+ tumor Binding to 4-1BB and 5T4 Clustering of 4-1BB ALG.APV-527 active in 5T4+ tumor Binding to 4-1BB and 5T4 Clustering of 4-1BB

Project status: Preclinical development

Preclinical data for ALG.APV-527 has been presented at several scientific conferences. Data shows that ALG.APV-527 has the potential to selectively stimulate and strengthen the T cell T cell activation Tumor killing T cell activation Tumor killing T cell activation Tumor killing

response in the tumor without stimulating the immune system in the rest of the body. The data shows that ALG.APV-527 localizes to 5T4 positive tumors and selectively stimulates and enhances tumor-directed immune cell (T cell and NK cell) responses. Additionally, the data shows that 5T4 antigen is present on a wide range of tumor types. The findings support its overall potential to evoke an effective tumor-targeting immune response with fewer adverse events.

A preclinical data package is currently being compiled to support the submission of a clinical trial authorization (CTA) application in the second half of 2019.

Co-development with Aptevo

In July 2017, Aptevo Therapeutics and Alligator Bioscience signed an agreement regarding the co-development of ALG.APV-527. The antibody is based on Alligator's original bispecific drug candidate ATOR-1016. Under the agreement, the companies will equally own and finance the development of the drug candidate through the Phase II clinical study. Tumor Cell Tumor Cell Tumor Cell

The original molecules involved in the tumor-binding function and immunomodulatory function of ALG.APV-527 were developed using Alligator's patented antibody library, ALLIGATOR-GOLD. The bispecific molecule was then further developed and improved jointly with Aptevo, using their technology platform ADAPTIR™. A drug candidate was created by combining a tumor-binding function with an immunomodulatory function in the same molecule, that can selectively target the tumor and stimulate the antitumor-specific immune cells that are found there.

2019 objectives

• Submit CTA application.

Mechanism of action

T cell

Tumor Killing

T cell

Tumor Killing

T cell

Tumor Killing

4-1BB has the ability to stimulate the immune cells (antitumor-specific T cells) involved in tumor control, making 4-1BB a particularly compelling target for cancer immunotherapy. The tumor-binding function of ALG.APV-527 targets the 5T4 tumor-associated antigen. 5T4 is a protein expressed on multiple tumor types as well as certain types of aggressive tumor cells (tumor-initiating cells), but at low levels or not at all in normal tissue, making 5T4 a compelling target molecule for cancer therapy.

ATOR-1144. Tumor-localizing bispecific CTLA-4 x GITR antibody with the capacity to activate several parts of the immune system.

The drug candidate ATOR-1144 is a tumor-localizing bispecific CTLA-4 x GITR antibody with the potential to activate both the innate and the adaptive immune system with a direct anti-tumor effect.

■ Events after the end of the period

In April, new preclinical data was presented at the Annual Meeting of the American Association for Cancer Research (AACR) demonstrating that ATOR-1144 works through several pathways: activation of effector T cells, depletion of regulatory T cells (Tregs) and tumor cells, and activation of NK (natural killer) cells, with potential for enhanced tumor cell killing. In addition, GITR is shown to be expressed on tumor-infiltrating lymphocytes and neoplastic cells in tumor samples from, for example, head and neck, esophageal, ovarian cancer, melanoma and B and T cell lymphoma, allowing for direct tumor cell killing.

Project status: Preclinical phase

ATOR-1144 comprises two binding components: a GITR-specific antibody isolated from ALLIGATOR-GOLD and a CTLA-4-specific binding component developed by FIND optimization of CD86, a natural ligand for CTLA-4. ATOR-1144 entered the preclinical development phase shortly before the end of 2018.

2019 objectives

• Preclinical studies will continue during the year, including experimental studies to demonstrate anti-tumor effects.

Mechanism of action

Other projects.

Alligator's early-stage research projects include several projects with components created using ALLIGATOR-GOLD and FIND, and then assembled using Alligator's bispecific fusion format. In January 2019, the company also presented RUBY, a novel concept in bispecific antibody formats.

■ Events during the first quarter

In January 2019, the company presented RUBY, a novel concept in bispecific antibody formats. The RUBY concept gives Alligator competitive abilities to generate therapeutic antibodies that are both efficient and highly manufacturable. The format abolishes the need for further optimization and enables Alligator to move drug candidates faster from preclinical to the clinical phase. This positions Alligator with a competitive edge in the field of immuno-oncology to deliver pipeline leads at increased speed for successful out-licensing.

In autumn 2018, a third party, Shanghai Henlius Biotech, Inc. ("Henlius"), chose to expand the scope of the AC101 agreement from a regional to a global agreement. The exercising of this option triggered a payment of USD 10 million (approximately SEK 90 million) from Henlius to AbClon Inc. ("AbClon"). Alligator holds an ownership interest in this project through its subsidiary Atlas Therapeutics AB that entitles Alligator to 35 percent of AbClon's revenue from the agreement with Henlius. Alligator received a payment of USD 3.5 million (approximately SEK 25 million) in March 2019.

AC101 agreement with AbClon

Through its subsidiary Atlas Therapeutics AB, the Group holds an ownership interest in the Biosynergy (AC101) preclinical project, run by the South Korean company AbClon. Alligator incurs no overheads for this project, but is entitled to a share of any future returns. During previous financial years, Alligator received two milestone payments totaling SEK 2.1 million in conjunction with a regional out-licensing of one of these products, the HER2 antibody AC101.

There is a huge unmet need for new, effective treatments.

One in five men and one in six women worldwide will at some stage of their lives develop cancer. Every year, about 18 million people are diagnosed with cancer and approximately 10 million people die of cancer (Globocan 2018), which means there is a major unmet need for advanced cancer care. One reason why cancer cases are constantly increasing is our increasing lifespan. Another is that diagnostics have improved. This means that more cancer cases are detected, more often in an early stage, which improves the chances of successful treatment.

Targeted attack on the cancer tumor

The immune system is the body's protection against attacks by pathogenic micro-organisms (such as viruses and bacteria) and by cancer cells. Growing tumors often contain large numbers of immune cells with an innate ability to attack the cancer cells. However, the cancer often develops its own protection against the immune system, by producing immunosuppressive agents, for example. Immunotherapy strengthens the body's ability to fight cancer effectively, which blocks or weakens the tumor's defense. The immune cells that destroy the cancer cells can then survive in the body and protect against metastases that may develop after the treatment. This "vaccination effect" is unique to immunotherapy. Through the use of biomolecular engineering and the company's patented technology platforms, Alligator's drug candidates are designed to selectively stimulate the immune system in the area surrounding the tumor rather than the whole body – which is not only expected to have a better effect, but also fewer side effects.

Growing importance of immunotherapies

Immuno-oncology is one of the fastest growing areas of drug research. The global market for cancer immunotherapies is expected to grow to nearly USD 107 billion in 2023. As an example, the sales of Merck's drug Keytruda® (PD-1 inhibitor) is expected to exceed USD 11 billion in 2019 (USD 7.1 billion in 2018). Source: Cowen Therapeutics Outlook March 2019.

Immunotherapy has revolutionized cancer therapy in recent years, and is showing positive effects in a large proportion of patients and over a longer period of time compared with previous treatments. Future cancer treatments will probably involve several different drugs in combination. However, although the combination therapies used to date have boosted the clinical effect, they have also led to a higher risk of developing severe immune-related adverse events. Alligator's concept of tumor-targeted immunotherapy provides an opportunity to solve this and develop new cancer therapies with higher efficacy without increasing the risk of severe side effects.

The Alligator share.

Changes during the quarter

Among the Company's ten largest shareholders, the Fourth Swedish Pension Insurance Fund is now in sixth place after increasing its holding by 650,000 shares during the quarter, and Mikael Lönn is now in tenth place after increasing his holding by 133,000 shares. Stena AB is now in eleventh place with an unchanged holding, and Gladiator is in twelfth place after decreasing its holding by 105,000 shares.

The company's owner structure is updated monthly on the company's website: www.alligatorbioscience.com.

Number of shares and stock option program

The total number of outstanding shares in the company at the end of the quarter was 71,388,615 (71,388,615).

At the AGM held in 2016, a resolution was passed regarding two incentive programs: an employee option program and a warrant program.

Under the employee option program, 900,000 employee stock options were allotted free of charge to participants. The employee options will be vested in installments until May 1, 2019. Vesting is subject to the participant remaining in the company's employment and not having resigned on a given qualifying date. Of the allotted employee options, 573,318 have been vested, 273,346 may still be vested and 53,336 have lapsed since the individuals to whom they were allotted have since left the company. To secure delivery under the employee option program, and to cover ancillary costs, primarily social security contributions, a total of 1,182,780 warrants were issued to a subsidiary of which 900,000 were allotted to employees free of charge and 282,780 were issued to cover ancillary costs. As a consequence of the warrants having lapsed, a total of maximum 1,112,686 warrants can be exercised in the program.

A total of 1,000,000 subscription options were issued under the program, of which a total of 857,000 warrants had been transferred to the participants in the program at market value at the end of the quarter. Further transfers will not take place and, as a consequence, a maximum of 857,000 warrants can be exercised in the program.

Each warrant in the two programs entitles the holder to acquire one new share at an exercise price of SEK 75. The warrants can be exercised in the periods from June 1, 2019 until August 31, 2019 and from March 1, 2020 until May 31, 2020.

At the 2018 AGM, it was decided to set up another employee option program whereby 2,275,000 employee options were allotted free of charge to participants. The employee options will be vested in installments until May 1, 2021. Vesting is subject to the participant remaining in the company's employment and not having resigned on a given qualifying date. To secure delivery under the employee stock option program, and to cover ancillary costs, primarily social security contributions, a total of 2,989,805 warrants were issued to a subsidiary of which 2,275,000 were allotted to employees free of charge and 714,805 were issued to cover ancillary costs.

Each warrant in the program entitles the holder to acquire one new share at an exercise price of SEK 75. The warrants are expected to be available to exercise one month after the publication of the first quarter reports for 2021 and 2022.

Upon full exercise of all warrants issued in respect of the share subscription incentive programs, a total of 4,959,491 shares will be issued, thereby increasing the number of shares to a maximum of 76,348,106, corresponding a to dilution by 6.5%.

The Alligator share in brief (March 29, 2019)

• Listed on: Nasdaq Stockholm Mid Cap
• Number of shares: 71,388,615
• Average turnover per day: Approximately 73,000 (preceding quarter approximately 83,000)
• Number of shareholders: Approximately 5,600 (preceding quarter approximately 5,200)
• Market capitalization: SEK 1,756 million (preceding quarter SEK 1,606 million)
• Ticker: ATORX
• ISIN: SE0000767188

Largest shareholders, March 29, 2019

Shareholder	No. of shares	%
Banque Internationale à Luxembourg SA	13,650,525 19.1
Johnson & Johnson Innovation	5,762,523	8.1
Sunstone Life Science Ventures Fund II K/S	5,758,485	8.1
Lars Spånberg	3,213,858	4.5
Norron funds	2,200,792	3.1
The 4th Swedish Pension Insurance Fund	2,027,387	2.8
Catella Funds	1,876,744	2.6
Öhman Funds	1,660,012	2.3
Öresund, Investment AB	1,631,117	2.3
Mikael Lönn	1,422,183	2.0
Other shareholders	32,184,989 45.1

Banque Internationale à Luxembourg SA (BIL) is a group of mainly Swedish investors with their shares managed by BIL.

Source: Shareholder data is based on a report from Euroclear and Monitor (Modular Finance) as of March 29, 2019, where certain foreign accounts have been identified by the company.

Other information.

Review

This report has not been reviewed by the company's auditors.

Employees

The number of employees in the Group at the end of the quarter was 56 (55). Of these, 14 (14) were men and 42 (41) were women.

Of the total number of employees, 48 (47) were employed within Research and Development.

Future report dates

Alligator intends to publish its financial reports according to the following:

• Q2 Interim report on July 11, 2019
• Q3 Interim report on October 24, 2019
• Year-end report 2019 on February 12, 2020

Annual General Meeting 2019

The Annual General Meeting (AGM) will be held on Thursday 9 May, 2019 at 4 p.m. at Medicon Village, Scheelevägen 2, Lund, Sweden.

Shareholders who wish to attend the Annual General Meeting must be entered in the register of shareholders maintained by Euroclear as of Friday 3 May, 2019 and must notify Alligator of their intention to attend no later than Friday 3 May, 2019 by letter to Alligator Bioscience AB, Att: Lotten Almén, Medicon Village, SE-223 81 Lund, Sweden, or by telephone to +46 540 82 00, or by e-mail to anmalan@alligatorbioscience.com.

Prospective information

As the company's project portfolio is expected to advance to more cost-intensive phases, Alligator's management has concluded that costs for 2019 are expected to increase within the range of approximately 10-20% compared with 2018.

The company out-licensed the ADC-1013 project to Janssen Biotech, Inc. and receives milestone payments as the various milestones in the project are achieved. The company does not expect to receive any milestone payments from this project in 2019.

Even if management believes the expectations in this forward-looking information are justified, no guarantees can be given that they will be correct. Accordingly, the actual outcome may differ significantly from the assumptions stated in this forward-looking information depending on, among other factors, changes in the economy or market, changes in legal or regulatory demands, other political decisions and changes in exchange rates.

Risks and uncertainties

During the course of its business operations, the Group is exposed to various financial risks, such as market risk (comprising foreign exchange risk, interest-rate risk and price risk), credit risk and liquidity risk. The aim of the Group's overall risk management is to achieve minimal adverse effects in terms of earnings and financial position. The Group's business risks, risk management and financial risks are described in detail in the Annual Report for 2018. No significant events occurred during the year that impacted or changed these descriptions of the Group's risks and risk management

Parent Company

Net sales, earnings trend, financial position and liquidity

Both Group management functions and all operating activities are carried out in the Parent Company.

For additional details, refer to the information provided for the Group since the subsidiaries do not conduct their own operations.

Brand names

FIND® and ALLIGATOR-GOLD® are Alligator Bioscience AB proprietary brand names which are registered in Sweden and other countries.

For further information, please contact:

Per Norlén, CEO per.norlen@alligatorbioscience.com 046-540 82 00

Per-Olof Schrewelius, CFO per-olof.schrewelius@alligatorbioscience.com 046-540 82 03

Cecilia Hofvander, Director IR & Communications cecilia.hofvander@alligatorbioscience.com 046-540 82 06

Financial statements

Unless otherwise stated, this Interim Report refers to the Group. Due to the nature of the business, there can be large fluctuations in revenue which are not seasonal or regular but are mainly linked to when milestones generating a payment are reached in out-licensed research projects.

Like revenue, expenses can also fluctuate between periods. Among other factors, this fluctuation in expenses is influenced by the current phase of the various projects since certain phases generate higher costs. Figures in brackets refer to the outcome for the corresponding period in the preceding year for figures related to the income statement and cash flow. For figures related to the financial position and personnel, figures in brackets refer to December 31, 2018.

Unless stated otherwise, all amounts are in SEK thousand (TSEK). All amounts stated are rounded, which may mean that some totals do not tally exactly.

Consolidated Income Statement

Net sales

Sales for the period pertain primarily to payments for development work related to the agreement for ADC-1013. In the same period prior year, sales pertained primarily to payments for development work related to the agreement for ADC-1013.

Other operating income

Other operating income for the year comprises exchange gains in the company's operations. In the same period prior year, revenue comprised exchange gains in the company's operations.

Operating expenses

The company has expanded its operations compared with the same period prior year and its ongoing projects have progressed. The overall cost level is roughly on a par with the corresponding quarter in the preceding year. As the clinical study for ATOR-1015 progresses and the production of materials in certain projects begins, costs are expected to increase relative to the same period prior year. Employee benefit expenses have increased as a result of additional people being employed, mainly within R&D.

Total financial items

Pertains to returns on liquidity and financial assets as well as exchange losses as a result of significant liquidity positions in USD, EUR and GBP.

	2019	2018	2018
All amounts TSEK unless specified Note	Jan-Mar	Jan-Mar	Jan-Dec
Net sales 5	40	776	26,959
Other operating income 5	387	205	1,555
Total operating income	427	981	28,514
Operating costs
Other external costs	-27,932	-30,770	-121,162
Personnel costs	-14,919	-12,118	-52,144
Depreciation of tangible assets and intangible assets	-2,908	-1,409	-5,902
Other operatings expenses	-905	-677	-2,387
Total operating costs	-46,664	-44,975	-181,594
Operating profit/loss	-46,238	-43,994	-153,080
Result from other securities and receivables	310	314	1,160
Other interest income and similar income statement items	1,642	4,379	7,465
Interest expense and similar income statement items	-113	-2,908	-5,587
Net financial items	1,839	1,785	3,037
Profit/loss before tax	-44,399	-42,209	-150,043
Tax on profit for the period	0	0	0
Deffered tax	12	0	0
Profit for the period attributable to Parent Company shareholders	-44,386	-42,209	-150,043
Earnings per share before dilution, SEK	-0.62	-0.59	-2.10
Earnings per share after dilution, SEK	-0.62	-0.59	-2.10

Consolidated Statement of Comprehensive Income

		2019	2018	2018
All amounts TSEK	Note	Jan-Mar	Jan-Mar	Jan-Dec
Profit/loss for the period		-44,386	-42,209	-150,043
Other comprehensive income		0	0	0
Comprehensive income for the period		-44,386	-42,209	-150,043

Consolidated Statement of Financial Position

Cash and cash equivalents

Consolidated cash and cash equivalents, which consist of bank balances and short-term, highly liquid investments, totaled SEK 329,533 thousand (362,878). Bank balances amounted to SEK 177,965 thousand (112,024). A portion of the Group's liquidity is invested in short-term interest funds funds, which is recognized as cash and cash equivalents. This investment can easily be converted to cash and is subject to an immaterial risk of changes in value. The investment totals a nominal amount of SEK 150,908 thousand (250,439) and the value at the end of the period was SEK 151,568 thousand (250,854).

Cash, cash equivalents and other short-term investments, including financial assets

The Group invests a portion of its liquidity in corporate bonds, which are deemed to be easily convertible to cash. The value of these bonds amounts to SEK 73,360 thousand (73,513), of which SEK 20,161 (20,254) is classified as short-term since two of the bonds mature within 12 months. No loans had be raised as of 31 March 2019 and no loans have been raised since that date. The Group has no loans or loan commitments.

The Group plans to use its liquidity for operating activities. According to the Group's Financial Policy, the Group is to have sufficient bank balances to cover its expected liquidity requirements for a minimum of 18 months. Excess liquidity may be invested with a low risk and an average fixed period of not more than 18 months. A portion of the Group's liquidity is invested in USD, EUR and GBP foreign currency accounts. In accordance with the Group's Financial Policy, inflows of foreign currencies exceeding the expected requirements for the coming 18 months are to be converted to SEK at the time of payment. Besides this, no further hedging has taken place.

Equity

Equity at the end of the period amounted to SEK 424,043 million (468,310), corresponding to an equity ratio of 91% (92).

Equity per share before and after dilution

At the end of the period, equity per outstanding share amounted to SEK 5.94 (6.56), before and after dilution. Since the subscription price for issued options has not been reached, these are not taken into account (not "in-the-money").

All amounts in TSEK Note 2019-03-31 2018-03-31 2018-12-31

ASSETS
Fixed assets
Intangible assets
Participations in development projects 3	17,949	17,949	17,949
Patents	557	1,246	702
Softwares	437	0	464
Tangible assets
Improvements in leased premises	2,282	2,890	2,434
Right of use assets 2	22,099	0	0
Equipment, machinery and computers	15,279	17,501	15,804
Financial assets
Other investments held as fixed assets 2, 6	53,199	73,968	53,259
Other investments held as fixed assets	12	0	0
Total fixed assets	111,813	113,554	90,612
Current assets
Current receivables
Accounts receivable 6	40	2,681	25,328
Other receivables 6	3,446	4,353	4,564
Prepayments and accrued income	3,132	3,545	4,521
Other short-term financial assets 6	20,161	0	20,254
Cash and cash equivalents 6	329,533	474,684	362,878
Total current assets	356,313	485,262	417,545
TOTAL ASSETS	468,126	598,816	508,156
EQUITY AND LIABILITIES
Equity
Share capital	28,555	28,555	28,555
Other capital contributions	662,614	662,614	662,614
Retained earnings and profit/loss for the period	-267,127	-115,254	-222,860
Equity attributable to Parent Company shareholders	424,043	575,916	468,310
Non-current provisions and liabilities
Lease Liabilities 2, 6	15,129	0	0
Total non-current provisions and liabilities	15,129	0	0
Current liabilities
Accounts payable 6	7,270	11,309	17,702
Other liabilities	873	886	1,564
Lease Liabilities 2, 6	5,545	0	0
Accrued expenses and deferred income 6	15,267	10,707	20,580
Total current liabilities	28,954	22,901	39,847
TOTAL EQUITY AND LIABILITIES	468,126	598,816	508,156

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows All amounts in TSEK

	2019	2018	2018
All amounts in TSEK	Jan-Mar	Jan-Mar	Jan-Dec
Opening balance	468,310	617,956	617,956
New capital issue	0	0	0
Effect of share-based payments	119	169	397
Profit/loss for the period	-44,386	-42,209	-150,043
Other comprehensive income in the period	0	0	0
Closing balance	424,043	575,916	468,310

	2019 Jan-Mar	2018 Jan-Mar	2018 Jan-Dec
Operating activities
Operating profit/loss	-46,238	-43,994	-153,080
Adjustments for items not generating cash flow	0	0	0
Depreciation and impairments	2,908	1,409	5,902
Effect from warrant program	119	169	397
Other items, no impact on cash flow	714	399	32
Interest received	472	548	1,886
Interest paid	-113	0	0
Tax paid	0	0	0
Cash flow from operating activities before changes in working capital	-42,137	-41,469	-144,863
Changes in working capital
Change in operating receivables	27,794	49,814	25,979
Change in operating liabilities	-16,437	-2,177	14,769
Cash flow from operating activities	-30,781	6,168	-104,115
Investing activities
Acquisition of intangible assets	0	0	-541
Acquisition of tangible assets	-633	-5,395	-7,124
Divestment of property, plant and equipment	0	0	10
Cash flow from investing activities	-633	-5,395	-7,655
Financing activities
Amortization of leasing liabilities	-2,850	0	0
Cash flow from financing activities	-2,850	0	0
Cash flow for the period	-34,264	773	-111,770
Cash and cash equivalents at beginning of period	362,878	472,919	472,919
Exchange rate differences in cash and cash equivalents	919	993	1,728
Cash and cash equivalents at end of period*	329,533	474,684	362,878

* Bonds, SEK 73 millions, which are being expected to be easy to convert to cash, are not included in cash and cash equivilants.

Investments

Investments for the first quarter amounted to SEK 633 thousand (5,395). These investments comprised laboratory equipment totaling SEK 633 thousand (4,822). During the period, investments in leased premises amounted to SEK 0 thousand (573).

Cash flow for the period

Cash flow for the quarter totaled SEK -34,264 thousand (773). During the quarter, a payment was received as a result of Shanghai Henlius Biotech, Inc. exercising an option to acquire the global licensing rights to the Biosynergy project, which was recognized as revenue in the fourth quarter of 2018.

Parent Company Income Statement

	2019	2018	2018
All amounts in TSEK Note	Jan-Mar	Jan-Mar	Jan-Dec
Net sales	40	776	1,751
Other operating income	65	205	1,555
Total operating income	106	981	3,307
Operating costs
Other external costs	-29,411	-30,767	-121,159
Personnel costs	-14,919	-12,118	-52,144
Depreciation and impairment of tangible assets and intangible assets	-1,483	-1,409	-5,902
Other operatings expenses	-905	-677	-2,121
Total operating costs	-46,719	-44,972	-181,325
Operating profit/loss	-46,614	-43,991	-178,019
Results from financial items
Result from other securities and receivables	310	314	1,160
Other interest income and similar income statement items	1,294	3,980	7,871
Interest expense and similar income statement items	-0	-2,908	-5,587
Net financial items	1,604	1,386	3,444
Profit/loss after financial items	-45,010	-42,605	-174,575
Appropriations
Group contribution received	0	0	14,677
Total appropriations	0	0	14,677
Result before tax	-45,010	-42,605	-159,898
Tax on profit for the year	0	0	0
Profit/loss for the period	-45,010	-42,605	-159,898

Parent Company Statement of Comprehensive Income

		2019	2018	2018
All amounts in TSEK	Note	Jan-Mar	Jan-Mar	Jan-Dec
Profit/loss for the period		-45,010	-42,605	-159,898
Other comprehensive income		0	0	0
Profit/loss for the year		-45,010	-42,605	-159,898

Parent Company Balance Sheet

ASSETS Fixed assets Intangible assets Patents 557 1,246 702 Software 437 0 464 Total intangible assets 994 1,246 1,166 Tangible assets Improvements in leased premises 2,282 2,890 2,434 Equipment, machinery and computers 15,279 17,501 15,804 Total tangible assets 17,560 20,391 18,238 Financial assets Participations in Group companies 20,294 20,294 20,294 3 Other investments held as fixed assets 53,199 73,968 53,259 2 Total financial assets 73,493 94,262 73,553 Total fixed assets 92,047 115,900 92,957 Current assets Current receivables Accounts receivables 40 2,681 387 Receivables from Group companies 14,677 0 14,677 Other receivables 3,446 4,352 4,563 Prepayments and accrued income 4,614 3,545 4,521 Total current receivables 22,777 10,578 24,148 Other short-term investments 171,069 275,000 270,693 2 Cash and bank deposits 149,932 195,793 109,353 Total current assets 343,778 481,371 404,195 TOTAL ASSETS 435,824 597,271 497,152 EQUITY AND LIABILITIES Equity Restricted equity Share capital 28,555 28,555 28,555 Total restricted equity 28,555 28,555 28,555 Non-restricted equity Share premium reserve 662,741 662,741 662,741 Retained earnings -233,872 -74,322 -74,094 Profit/loss for the period -45,010 -42,605 -159,898 Total non-restricted equity 383,859 545,814 428,750 Total equity 412,415 574,370 457,305 Current liabilities Accounts payable 7,270 11,309 17,702 Other liabilities 873 886 1,564 Accrued expenses and deferred income 15,267 10,707 20,580 Total current liabilities 23,410 22,901 39,847 TOTAL EQUITY AND LIABILITIES 435,824 597,271 497,152	All amounts in TSEK Note	2019-03-31	2018-03-31	2018-12-31

Notes.

Note 1 General information

This Interim report covers the Swedish Parent Company Alligator Bioscience AB (publ), corporate registration number 556597-8201, and its subsidiaries Atlas Therapeutics AB, corporate registration number 556815-2424, and A Bioscience Incentive AB, corporate registration number 559056- 3663. All the Group's business operations are carried out in the Parent Company.

The Parent Company is a Swedish public limited liability company registered and domiciled in the Municipality of Lund. The head office is located at Medicon Village, SE-223 81 Lund.

Note 2 Accounting policies

This Interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable regulations in the Swedish Annual Accounts Act (ÅRL). The Interim report for the Parent Company has been prepared in accordance with the Swedish Annual Accounts Act (ÅRL) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.

The accounting policies and calculation methods used in this report are the same as those described in the Annual Report for 2018 with the following exceptions.

IFRS 16 Leases

The new standard that entered into force on January 1, 2019, IFRS 16 Leases, has been implemented during the financial year and had no material impact on the Group's or the Parent Company's financial statements for the period. This standard replaces IAS 17 Leases. The transition to IFRS 16 has been recognized in accordance with the modified retrospective approach, meaning that the transition has been recognized as an adjustment of the opening balance at the transition date. Comparative figures and previous years have not be restated. For more information on the impact on the consolidated financial statements at the transition date, refer to Note 2 Accounting policies and Note 10 Leasing in the Annual Report for 2018.

The Group determines whether a contract is, or contains, a lease at the start of the contract. The Group recognizes a right-of-use assets and a corresponding lease liability for all leases in which the Group is the lessee, with the exception of leases where the underlying asset is of a low value. For leases that fulfill the criteria for the exemption rules, the Group recognizes lease payments as an operating expense on a straight-line basis over the lease term, provided no other systematic method for allocating the lease payment provides a fairer presentation taking into account how the economic benefits from the underlying asset are consumed by the lessee.

The lease liability is initially measured at the present value of the future lease payments that have not been paid as of the start date for the lease, discounted by the implicit interest rate or, if this cannot easily be determined, by the incremental borrowing rate. The incremental borrowing rate is the interest rate that a lessee would need to pay for financing through loans in a corresponding period, and with corresponding collateral, for the right of use for an asset in a similar economic environment.

The following lease payments are included in the measurement of lease liabilities:

• fixed fees (including essentially fixed fees) less any benefits in connection with signing the lease that are to be received,
• variable lease payments that are dependent on an index or price, initially measured using an index or price on the start date,
• amounts expected to be paid by the lessee according to residual value guarantees,
• the exercise price for an option, if the lessee is reasonably certain that such an option will be exercised, and
• penalty charges paid upon termination of the lease, if the lease term reflects the fact that the lessee will exercise an option to terminate the lease.

Lease liabilities are presented on a separate line in the statement of financial position.

Lease liabilities are recognized in the subsequent period by increasing the liability to reflect the effect of interest and reducing the liability to reflect the effect of lease payments made.

Lease liabilities are remeasured with a corresponding adjustment of the right-of-use asset according to the rules of the standard. No such adjustments have been made during the current period.

The right-of-use asset is initially recognized at the value of the lease liability, plus lease payments made on or prior to the start date for the lease and initial direct expenses. The right-of-use asset is recognized in the subsequent period at cost loss depreciation and impairment.

If the Group undertakes an obligation to dismantle a leased asset, to restore land or to restore and renovate an asset to a condition agreed on in the lease, a provision for such obligations is recognized in accordance with IAS 37. Such provisions are included in the cost of the right-of-use asset, provided they are not linked to the production of inventory.

Right-of-use assets depreciated over their estimated useful life or, if it is shorter, over the agreed lease term. If a lease entails a transfer of ownership right at the end of the lease term, or if the cost includes a probable exercise of a call option, the right-of-use asset is depreciated over its useful life. Depreciation commences on the start date for the lease.

Right-of-use assets are presented on a separate line in the statement of financial position.

The group applies the principles of IAS 36 for impairment of right-of-use assets and recognizes this item in accordance with the accounting policy for tangible assets according to IAS 16.

Variable lease payments that are not dependent on an index or price are not included in the measurement of lease liabilities and right-of-use assets. Such lease payments are recognized as a cost under operating profit in the period in which they arise.

IFRS 16 contains practical exemption rules that entail that the lessee does not need to separate service components from the applicable lease payment by class of asset. The Group has chosen not to apply this exemption rule.

As a result of this new standard, complete updated accounting policies will be presented in the company's Annual Report for 2019.

Note 3 Effects of changed estimates and judgments

Significant estimates and judgments are described in Note 3 of the Annual Report for 2018. There have been no changes to the company's estimates and judgments since the Annual Report for 2018 was prepared.

Note 4 Segment reporting

The company conducts only one business activity, namely research and development in the field of immunotherapy, and the chief operating decision-maker is thus only responsible for regularly making decisions on and allocating resources to one entity. Accordingly, the company comprises only one operating segment, which corresponds to the Group as a whole, and no separate segment reporting is provided.

Note 5 Consolidated income

A breakdown of the Group's revenue is as follows:

	2019	2018	2018
All amounts in TSEK	Jan-Mar	Jan-Mar	Jan-Dec
Licensing income	0	0	25,207
Reimbursement for development work	40	776	1,751
Milestone revenue	0	0	0
Royalty	0	0	0
Total	40	776	26,959

A breakdown of the Group's revenue per project is as follows:

	2019	2018	2018
All amounts in TSEK	Jan-Mar	Jan-Mar	Jan-Dec
ADC-1013	40	746	1,720
Biosynergy	0	0	25,207
Other	0	30	32
Total	40	776	26,959

Alligator receives revenues in USD from out-licensed projects.

A breakdown of the Group's other operating income is as follows:

	2019	2018	2018
All amounts in TSEK	Jan-Mar	Jan-Mar	Jan-Dec
Swedish government grants received	0	0	68
EU grants received	0	0	0
Operational exchange rate gains	386	205	1,488
Other	1	0	0
Total	387	205	1,555

Note 6 Financial instruments

Cash and cash equivalents at March 31, 2019 consisted of bank balances amounting to SEK 177,965 thousand and investments in fixed income funds totaling SEK 151,568 thousand. Other investments held as fixed assets and other short-term investments pertain to investments in corporate bonds. The accounting policies for these are described in Note 2. For other financial assets and liabilities, the reported value as above is considered a reasonable approximation of fair value.

All amounts in TSEK	2019-03-31	2018-03-31	2018-12-31
Financial assets valued at fair value through profit and loss
Liquid assets - Interest funds	151,568	276,221	250,854
Financial assets valued at amortized cost
Other investments held as fixed assets	53,199	73,968	53,259
Other short term investments	20,161	0	20,254
Accounts receivable	40	2,681	25,328
Other receivables	855	0	843
Liquid assets - Bank accounts	177,965	198,463	112,024
Total financial assets	403,788	551,333	462,562
Financial liabilities valued at amortized cost
Long term lease liabilities	15,129	0	0
Accounts payable	7,270	11,309	17,702
Short term lease liabilities	5,545	0	0
Accrued expenses	11,125	7,498	15,827

Note 7 Related party transactions

Alligator has a consulting agreement with Carl Borrebaeck through the company Ocean Capital AB pertaining to expert assistance with the evaluation of early-phase research projects and new antibodies. Carl Borrebaeck also plays an important role in building and developing contacts with leading researchers and prominent organizations within cancer immunotherapy. Pricing has been determined on market conditions. These related party transactions corresponded to an expense of SEK 180 thousand (180) for the first quarter and SEK 180 thousand (180) for the year to date.

Total financial liabilities 39,069 18,806 33,529

Calculation of performance measures.

Alligator presents certain financial performance measures in this report, including measures that are not defined under IFRS. The company believes that these performance measures are an important complement because they allow for a better evaluation of the company's economic trends. These financial performance measures should not be viewed in isolation or be considered to replace the performance indicators that have been prepared in accordance with IFRS. In addition, such performance measures as Alligator has defined them should not be compared with other performance measures with similar names used by other companies. This is because the above-mentioned performance measures are not always defined in the same manner, and other companies may calculate them differently to Alligator.

The table below shows the calculation of key figures, for the mandatory earnings per share according to IFRS and also for performance measures that are not defined under IFRS or where the calculation is not shown in another table in this report.

The company's business operation is to conduct research and development which is why "R&D costs/Operating costs excluding impairment in %" is an essential indicator as a measure of efficiency, and how much of the company's costs relate to R&D.

As mentioned earlier in this report, the company does not have a steady flow of revenue, with revenue generated irregularly in connection with the signing of license agreements and achievement of milestones. Therefore, the company monitors performance indicators such as equity ratio and equity per share in order to assess the company's solvency and financial stability. These are monitored along with the cash position and the various measures of cash flows shown in the consolidated statement of cash flow.

For definitions, see the section "Financial definitions" on page 25.

	2019	2018	2018
All amounts TSEK unless specified	Jan-Mar	Jan-Mar	Jan-Dec
Profit/loss for the period	-44,386	-42,209	-150,043
Average number of shares before dilution	71,388,615	71,388,615	71,388,615
Earnings per share before dilution, SEK	-0.62	-0.59	-2.10
Average number of shares after dilution	71,388,615	71,388,615	71,388,615
Earnings per share after dilution, SEK	-0.62	-0.59	-2.10
Operating costs	-46,664	-44,975	-181,594
Impairment of tangible assets and intangible assets	0	0	0
Operating costs excluding impairments	-46,664	-44,975	-181,594
Administrative expenses	-8,877	-8,050	-36,199
Depreciation	-2,908	-1,409	-5,902
Research and development costs	-34,880	-35,516	-139,493
R&D costs / Operating costs excluding impairments %	74.7%	79.0%	76.8%
Equity	424,043	575,916	468,310
Average number of shares before dilution	71,388,615	71,388,615	71,388,615
Equity per share before dilution, SEK	5.94	8.07	6.56
Average number of shares after dilution	71,388,615	71,388,615	71,388,615
Equity per share after dilution, SEK	5.94	8.07	6.56
Equity	424,043	575,916	468,310
Total assets	468,126	598,816	508,156
Equity ratio, %	91%	96%	92%
Other investments held as fixed assets (publicly traded corporate bonds)	53,199	73,968	53,259
Other short-term financial assets (publicly traded corporate bonds)	20,161	0	20,254
Cash and cash equivalents	329,533	474,684	362,878
Cash and cash equivalents including securities at end of period	402,893	548,652	436,391

The declaration of the Board of Directors and the CEO.

The Board and the CEO declare that this Interim report provides a true and fair overview of the company and the Group's operations, positions and earnings and describes the material risks and uncertainty factors faced by the Parent company and the companies within the Group.

Lund, April 17, 2019

Peter Benson

Chairman

Carl Borrebaeck Ulrika Danielsson Member of the Board Member of the Board

Anders Ekblom Kenth Petersson Member of the Board Member of the Board

Jonas Sjögren Laura von Schantz Member of the Board Employee representative

Per Norlén CEO

Laura von Schantz Per Norlén

Financial definitions.

Average number of employees

Average number of employees at the beginning and end of the period.

Average number of employees within R&D

Average number of employees within the Company's R&D departments at the beginning and end of the period.

Average number of shares before and after dilution

Average number of outstanding shares during the period. The number of shares after dilution also takes account of outstanding options where the company's share price on the reporting date is at least equal to the conversion price of the option.

Cash and Cash equivalents including securities

Cash and cash equivalents consists of bank balances, interest funds and publicly traded corporate bonds.

Cash flow for the period

Net change in cash and cash equivalents excluding the impact of unrealized foreign exchange gains and losses.

Cash flow from operating activities

Cash flow before investing and financing activities.

Earnings per share before and after dilution

Earnings divided by the weighted average number of shares during the period before and after dilution respectively. If the result is negative, the number of shares before dilution is also used for the calculation after dilution.

Equity per share after dilution

Equity divided by the total number of shares at the end of the period and any outstanding options where the company's share price on the reporting date is at least equal to the conversion price of the option.

Equity per share before delution

Equity divided by the number of shares at the end of the period.

Equity ratio

Equity as a percentage of Total assets.

Operating costs excluding impairments

Other external costs, personnel costs and depreciation (excluding impairments of tangible and intangible assets).

Operating profit/loss

Profit/loss before financial items and taxes.

R&D costs

The Company's direct costs for research and development. Refers to costs for personnel, materials and external services.

R&D costs as a percentage of operating costs excluding impairments

R&D costs as a percentage of operating costs excluding impairments.

Total assets

Total of the Company's assets.

Glossary.

Agonist

A compound which binds to a receptor and stimulates its activity.

Antigen

Substance which triggers a reaction in the immune system, such as a bacteria or virus.

Antibody

Proteins used by the body's immune defenses to detect and identify xenobiotic material.

Bispecific antibodies

Antibody-based products which bind to two different targets and thus have dual functions.

Cancer

A disease in which cells divide in an uncontrolled manner and invade neighboring tissue. Cancer can also spread (metastasize) to other parts of the body through the blood and the lymphatic system.

Checkpoint inhibitor

An antibody with the ability to break the immune system's tolerance to something dangerous, for example a cancer tumor. Immune-inhibiting signals can be blocked through binding to a specific receptor such as CTLA-4 or PD-1.

Clinical study

The examination of healthy volunteers or patients to study the safety and efficacy of a potential drug or treatment method.

CRO (Clinical Research Organization)

A company specialized in performing clinical studies.

CTA (Clinical Trial Authorization)

An application to start clinical trials in humans which is submitted to a regulatory authority.

CTLA-4 (Cytotoxic T-lymphocyte-Associated protein-4)

An immune-inhibiting molecule expressed in and on the surface of T cells, primarily regulatory T cells.

Dendritic cell

A type of cell which detects xenobiotic substances. A key role of dendritic cells is their ability to stimulate T cells in the immune system.

Discovery

This research phase usually encompasses the development and evaluation of treatment concepts, the evaluation of potential drug candidates, and early efficacy studies.

Drug candidate

A specific compound usually designated before or during the preclinical phase. The drug candidate is the compound that is then studied in humans in clinical studies.

EMA

The European Medicines Agency.

Experimental model

A model of a disease or other injury to resemble a similar condition in humans.

FDA

The US Food and Drug Administration.

Good Manufacturing Practice (GMP)

Quality assurance methodology designed to ensure that products are manufactured in a standardized manner, such that quality requirements are satisfied.

Immuno-oncology

Field of oncology in which cancer is treated by activating the immune system.

Lead

A potential drug candidate which binds to the actual target molecule/s.

Ligand

Binds to a receptor. Could be a drug, hormone or a transmitter substance.

Macrophages

A type of white blood cell of the immune system that engulfs and digests cellular debris and foreign materia such as bacteria.

Milestone payment

Financial consideration received in the course of a project/program when a specified objective is reached.

Monospecific antibodies

Antibody-based product which bind only to one target, such as a receptor.

NK cells

NK cells (Natural Killer) are lymphocytes with the ability to activate several different cells in the immune system, such as macrophages.

Oncology

Term for the field of medicine concerned with the diagnosis, prevention and treatment of tumor diseases.

Patent

Exclusive rights to a discovery or invention.

PD-1 (Programmed Death-1)

Immune-inhibiting receptor on the surface of certain cells, for example tumor cells.

PD-L1 (Programmed Death-Ligand-1)

The ligand that binds to PD-1, helping the cancer evade the body's immune defense.

Phase I, II and III

The various stages of studies on the efficacy of a pharmaceutical in humans. See also "clinical study." Phase I examines the safety on healthy human subjects, phase II examines efficacy in patients with the relevant disease and phase III is a large-scale study that verifies previously achieved results. In the development of new pharmaceuticals, different doses are trialed and safety is evaluated in patients with relevant disease. Phase II is often divided into phase IIa and phase IIb. In phase IIa, which is open, different doses of the pharmaceutical are tested without comparison against placebo and focusing on safety and the pharmaceutical's metabolism in the body. Phase IIb is 'blind', and tests the efficacy of selected dose(es) against placebo.

Pharmacokinetics

The study of the turnover of substances in the body, for example how the amount of the substance is changed by absorption, distribution, metabolism and excretion.

Pharmacology

The study of how substances interact with living organisms to bring about a functional change.

Preclinical

The stage of drug development before the drug candidate is tested in humans. It includes the final optimization of the drug candidate, the production of materials for future clinical studies and the compilation of a data package for an application to start clinical studies.

Proof of concept studies

Studies carried out to provide support for dosages and administration paths in subsequent clinical studies.

R&D

Research & Development

Receptor

A receptor on a cell which picks up chemical signals.

Sponsor

The person, company, institution or organization responsible for initiating, organizing or financing a clinical study.

T-cell

A type of white blood cell which is important to the specific immune defense.

Tumor-associated antigen (TAA)

A protein expressed to a much higher degree on the surface of tumor cells than healthy cells.

Tumor necrotic factor receptor superfamily (TNFR-SF)

A group of immune-modulating target proteins related to the tumor necrosis factor protein. The name 'tumor necrosis factor' was derived from the fact that the first function detected for the protein was its ability to kill some types of tumor cells, though it was later discovered to have an immune-regulatory function.

2001 ENGELSKA 2019 Important milestones in Alligator's history. 2001 2019

ALLIGATOR GOLD® Antikroppsbiblioteket färdigställs

Aptevo Therapeutics Co-development agreement for ALG.APV-527