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Alligator Bioscience

Earnings Release Apr 1, 2021

3138_ir_2021-04-01_bb327b84-ed6e-44b7-9a85-2f7f58a98278.pdf

Earnings Release

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Positive Phase I data for ATOR-1017

Significant events April–June Financial summary

Pipeline

  • An article prepared by scientists at Alligator, on CD40 agonistic antibodies was published in Expert Opinion on Biological Therapy.
  • ATOR-1017 is the first monoclonal 4-1BB agonist antibody to show good safety and signs of efficacy. This interim data from the ongoing Phase I clinical study was presented at the 2021 ASCO Annual Meeting.
  • Preclinical data on the anti-CD40 antibody mitazalimab were published in the scientific journal Cancer Immunology, Immunotherapy.
  • Alligator and the Swedish biopharma company BioArctic AB entered into a joint research agreement in the neurodegenerative field.
  • Alligator and the US biopharmaceutical company MacroGenics entered into a joint research collaboration to develop Neo-X-PrimeTM.
  • Alligator and Scandion Oncology presented promising preclinical data from collaboration exploring the anti-tumor efficacy of mitazalimab in combination with chemotherapy and SCO-101.

Company

Søren Bregenholt

CEO Alligator Bioscience AB (publ)

  • The Board member Carl Borrebaeck, who had declined re-election ahead of the Annual General Meeting on June 1, 2021, resigned from the Board of Directors at his own request.
  • Søren Bregenholt took over as CEO on 1 June.
  • At the AGM Anders Ekblom and Graham Dixon were re-elected as board members, and Hans-Peter Ostler, Eva Sjökvist Saers and Veronica Wallin were elected as new board members Anders Ekblom was elected as new Chairman of the board, and Hans-Peter Ostler was elected as new Vice Chairman of the board.

"As new CEO of Alligator Bioscience, after just around a month, let me say that my high expectations on the company have been surpassed already. During this short time, I have been ascertained that Alligator has a strong pipeline that builds on a powerful technology platform."

April-June 2021

  • Net sales, SEK 3.8 million (4.4)
  • Operating result, SEK -34.5 million (-34.7)
  • Result for the period, SEK -35 million (-35.1)
  • Earnings per share before and after dilution, SEK -0.41 (-0.49)
  • Cash flow for the period, SEK -34.0 million (-33.2)
  • Cash and cash equivalents, incl. interest-bearing securities, SEK 109.7 million (169.8)

January-June 2021

  • Net sales, SEK 4.4 million (4.4)
  • Operating result, SEK -67.0 million (-79.6)
  • Result for the period, SEK -67.7 million (-77.9)
  • Earnings per share before and after dilution, SEK -0.79 (-1.09)
  • Cash flow for the period, SEK 6.4 million (75.4)

Comments from the CEO

As new CEO of Alligator Bioscience, after just around a month, let me say that my high epectations on the company have been surpassed already. During this short time, I have been ascertained that Alligator has a strong pipeline that builds on a powerful technology platform. I have the privilege of leading an experienced and dedicated team that is committed to bring innovative treatment to patients with cancer. To deliver on this promise, our key clinical programs, mitazalimab and ATOR-1017, are clearly in focus and will remain so as we gradually move them into clinical efficacy studies, starting with the clinical Phase II study with mitazalimab which we expect to start soon.

In the beginning of June, at the 2021 ASCO Annual Meeting, we presented novel data from the ongoing Phase I dose escalation study with ATOR-1017, Alligator's monoclonal antibody developed to improve combination therapy for metastatic solid tumors. ATOR-1017 is designed to stimulate the 4-1BB receptor on T cells and natural killer (NK) cells in the tumors, and not elsewhere in the body. As such, ATOR-1017 will induce potent tumor-directed immune responses leading to increased efficacy as well as reduced side effects for patients.

The novel data presented at ASCO are very encouraging and validate the mechanism and therapeutic potential of ATOR-1017, and demonstrate a very favorable safety profile. We are now focused on completing the study and determine the optimal therapeutic dose for the subsequent Phase II program. We are preparing for the Phase II program, that we will initiate once we have determined the optimal therapeutic dose and have secured financial resources allowing us to also complete the study.

Alligator's other key program, the human CD40 agonistic antibody mitazalimab, has shown encouraging data from more than 100 patients in two previous clinical Phase I studies; demonstrating early signs of efficacy, proof of mechanism and a manageable safety profile. OPTIMIZE-1, the mitazalimab Phase II study is designed to assess the efficacy and safety of the drug in combination with standard of care chemotherapy in first line metastatic pancreatic cancer patients.

The immuno-oncology mechanism behind this program is quite straight forward: While the chemotherapy kills tumor cells resulting in an increased release of tumor antigens, mitazalimab activates the CD40 receptor leading to improved presentation

of tumor antigens and activation of T cell-dependent anti-tumor responses which, in turn, leads to enhanced anti-tumor efficacy. OPTIMIZE-1 is an open-label, multicenter study that will include up to 67 patients. The study is underway and we expect to include the first patient soon. A first interim readout is expected by the end of 2021, and an interim efficacy readout during H2 2022.

The concept of mitazalimab was further strengthened in the past quarter by two publications in peer-reviewed journals. Data published in Cancer Immunology, Immunotherapy show that mitazalimab activates dendritic cells and tumor-reactive T cells resulting in enhanced anti-tumor efficacy in combination with a model cancer vaccine, thus expanding and strengthening the therapeutic potential for mitazalimab. The review article published in Expert Opinion on Biological Therapy provides an overview of the CD40 agonistic antibodies in clinical development, lists current

challenges and opportunities for this important class of immunooncology drugs, and describes the background for mitazalimab's best-in-class potential.

I would also like to mention the drug candidate ALG.APV-527, a bispecific antibody targeting the 4-1BB and 5T4 molecules, that is co-developed with our partner Aptevo Therapeutics. ALG.APV-527 is approaching clinical studies and a CTA application will be submitted during the second half of 2021.

Our ambition is to develop meaningful therapies for patients with cancer and to create value for our shareholders. This require that we focus our resources to areas where they make the most impact. Therefore, we must prioritize and even discontinue projects that do not align with our ambition. After a thorough diligence of potential ways forward, we have decided to stop further development activities in the ATOR-1015 program, where data from the previous Phase I study showed that the unique molecular format of ATOR-1015 caused infusion-related events.

Alligator has a solid and competitive technology platform. That is evident, not only through our programs, but also by our research collaboration agreements. Neo-X-PrimeTM is Alligator's proprietary drug concept for patient-specific immunotherapy. In April we entered a joint research collaboration with US-based MacroGenics. Under this agreement we leverage the Neo-X-PrimeTM platform to generate bispecific antibodies against two undisclosed targets. MacroGenics is widely viewed as a leader in the antibody field and we are truly excited by this possibility to create a drug candidate that takes advantage of a unique mechanism of a patient's own immune system to fight cancer. We also entered a joint research agreement with the Swedish biopharma company BioArctic AB where we will employ our proprietary antibody generation technologies to identify new product candidates for neurodegenerative diseases.

At the end of June, we presented promising preclinical data within our Scandion Oncology collaboration, where we explore the anti-tumor efficacy of mitazalimab in combination with SCO-101 as an addition to chemotherapy (FOLFIRINOX) in chemotherapyresistant preclinical tumor models. The preliminary results strengthen the preclinical efficacy data for mitazalimab and validate the potential of mitazalimab in combination with standard of care chemotherapy. This bodes well for our OPTIMIZE-1 Phase II study.

The Covid-19 pandemic, still affects how we operate but has had limited impact on Alligator's preclinical and clinical activities during last year. With the high vaccination rates achieved in Sweden and around Europe, the overall uncertainty has been reduced further and we do not foresee that Covid-19 will significantly impact our ability to prepare and execute clinical studies going forward.

In summary, the Alligator team is committed to deliver on our ambition to develop meaningful therapies for patients with cancer through a continued focus on the company's key clinical programs. We are convinced of the potential of our drug candidates and how they will impact future cancer therapy. The Alligator team is committed to provide true benefits for the patients, thereby creating true value also for the company's shareholders. My time at the helm at this amazing company has just begun and I look forward to keeping you updated on Alligator's developments on this exciting journey.

Søren Bregenholt

CEO Alligator Bioscience AB (publ)

Performance measures Group

Net sales, SEK million

Operating costs, SEK million

Cash flow from operation activities, SEK million

Cash and cash equivalents including securities, SEK million

Note 2021
Apr–Jun
2020
Apr–Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Result (TSEK)
Net sales 5 3,777 4,352 4,394 4,352 4,352
Operating profit/loss -34,492 -34,709 -67,013 -79,562 -144,298
Profit/loss for the period -34,959 -35,052 -67,700 -77,932 -143,296
R&D costs -27,810 -29,347 -50,285 -61,875 -110,252
R&D costs as a percentage of operating costs excl. impairments 72% 73% 70% 73% 73%
Capital (TSEK)
Cash and cash equivalents at end of period 109,705 169,757 109,705 169,757 103,342
Cash, cash equivalents and bonds at end of period 109,705 169,757 109,705 169,757 103,342
Cash flow from operating activities -32,158 -31,659 -64,715 -78,462 -141,352
Cash flow for the period -33,960 -33,176 6,395 -27,726 9,386
Equity at the end of the period 122,275 180,581 122,275 180,581 115,244
Equity ratio at the end of the period, % 79% 81% 79% 81% 76%
Info per share (SEK)
Earnings per share before dilution -0.41 -0.49 -0.79 -1.09 -2.01
Earnings per share after dilution* -0.41 -0.49 -0.79 -1.09 -2.01
Equity per share before dilution 1.43 2.53 1.43 2.53 1.61
Equity per share after dilution* 1.43 2.53 1.43 2.53 1.61
Personnel
Number of employees at end of period 45 56 45 56 43
Average number of employees 45 56 44 56 50
Average number of employees employed within R&D 40 49 39 48 43

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

For definitions and calculations, see the sections later in this report.

Operations

Alligator Bioscience AB is a public Swedish biotech company that develops novel immunooncology drugs for tumor-directed 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, rather than the whole body. There is a major unmet medical need for novel and improved therapies in this area.

In 2020, the Company focused it operations on the clinical development portfolio with the aim of realizing the value of clinical drug candidates. The Company's innovation platform and drug research are being retained to ensure the Company's long-term value creation. Drug discovery at Alligator is being conducted by the Company's own personnel, but on a smaller scale than previously. To make the development as competitive and time efficient as possible, some of

this work is carried out in collaboration with other biotech companies, contract laboratories and leading international immuno-oncology research institutions. The clinical studies are carried out in collaboration with leading specialist physicians and CROs with expertise in clinical development. In summary, the Company has all the necessary expertise to pursue successful projects from concept to clinical phase.

Several patented technologies and concepts

Alligator's technology platforms – FIND® (protein optimization technology), ALLIGATOR-FABTM and ALLIGATOR-GOLD® (antibody libraries) – are used for the discovery and development of novel drug candidates. These platforms enable efficient generation of novel drug candidates with high potential. In addition, the Company has bispecific antibody formats for the development of new dual-action antibodies. With the most recent antibody format, RUBYTM, Alligator can generate bispecific molecules from any two antibodies, with excellent properties in terms of stability and yield. The format eliminates the need for further optimization, enabling Alligator to move drug candidates from preclinical research to clinical phase faster. One such example is the new Neo-X-PrimeTM drug concept that was launched in September 2020. The concept can be described as a personalized vaccination aimed at curing cancer. Research is highly promising and shows that Neo-X-PrimeTM has

Alligator's business model

the potential to create a very potent anti-tumor effect, superior to current therapeutic options. These technologies combined give Alligator a strong base for the development of bispecific, tumordirected drug candidates.

Competitive project portfolio with clinical focus

Alligator has four drug candidates in, or about to enter, clinical study phases, including the two key assets ATOR-1017 and mitazalimab. Mitazalimab has completed Phase I and is initiating Phase II. ATOR-1017 is in Phase I and has presented novel proof-of-mechanism data at the 2021 ASCO Annual Meeting. AC101, which is being developed by Shanghai Henlius Biotech Inc. in China and in which Alligator will share future revenues, is in Phase I. The bispecific antibody ALG.APV-527, which is being developed in partnership with Aptevo Therapeutics Inc., has completed all preclinical studies. The Company is planning to submit a Clinical Trial Application (CTA) for a Phase I clinical study in 2021.

In addition to these projects, Alligator develops the Neo-X-PrimeTM drug concept for more personalized immunotherapy. The concept was launched by Alligator in 2020 and one Neo-X-PrimeTM candidate drug is being developed in partnership with MacroGenics, Inc.

Alligator's organization

Alligator's research and development organization is divided into four units: Discovery, CMC (Chemistry, Manufacturing & Control), Non-Clinical Development and Clinical Development. The Discovery unit is responsible for early-stage research projects up until a drug candidate has been identified. This normally includes the development and evaluation of treatment concepts, the evaluation of potential drug candidates and early-stage efficacy screening. The CMC unit develops manufacturing processes and is responsible for clinical trial material manufacturing. The Non-Clinical Development unit supports the clinical projects and is responsible for preparation of the data packages required for clinical trial

applications. The Clinical Develop ment unit is responsible for designing and implementing all of the clinical studies required to show that Alligator's products are safe and effective. Alligator will continue to build and shape the organization to match and support its strategy and objectives.

Business model that creates value across the development chain

The Company's business model is based on proprietary drug development. To maximize the value of the portfolio, the company intends to bring molecules from drug discovery and preclinical studies to demonstration of proof-of-concept in human clinical phase II trials. To generate income, limit portfolio risk and maximize long term value, the company will seek strategic global and regional partnerships for certain programs.

Phases of drug development at Alligator

DISCOVERY PRECLINICAL CLINICAL PHASE I CLINICAL PHASE II CLINICAL PHASE III
In the Discovery phase, Alligator generates
new mono and bispecific antibodies with its
ALLIGATOR-GOLD®, ALLIGATOR-FABTM, FIND®
and RUBYTM technology platforms.
In the preclinical phase, the safety and efficacy
of the drug candidate are assessed as well
as its clinical potential. These studies are
conducted both internally at Alligator and
The first human studies are performed with
a small number of subjects, normally 20–80
patients with metastatic cancer. The primary
endpoint of these studies is to show that the
The endpoint of Phase II studies is to confirm
the desired efficacy of the compound, and
to determine the optimal dose. Normally,
100–300 patients are tested.
In Phase III, the compound is tested on a
larger group of subjects, normally 1,000–3,000
patients.
The phase also includes development and
evaluation of treatment concepts, evaluation
of potential drug candidates and early-stage
efficacy studies.
together with external partners.
Alongside of preclinical activities, research
continues to acquire a better understanding of
the candidate's biological function. This phase
compound is safe.
How the drug is absorbed, distributed and
metabolized is also studied.
By the end of Phase II, the drug's efficacy,
probable dosage and adverse effect profile
should have been determined.
The primary endpoint of Phase III studies is to
confirm that the new drug is at least as good
or better than standard therapies.
By the end of Phase III, there is convincing
The antibodies are optimized to achieve set
objectives in terms of function, binding affinity
and stability, after which a drug candidate is
selected for further development.
also includes the manufacturing of material for
upcoming clinical studies.
evidence of the performance and common
side effects of the drug, and the documenta
tion required to register the drug has been
compiled.

Mitazalimab Clinical Phase II in pancreatic cancer

The human CD40 agonistic antibody, mitazalimab, is Alligator's most advanced drug candidate for immunotherapy and is designed for the treatment of metastatic cancers, primarily pancreatic cancer. Mitazalimab stimulates the CD40 receptor on the surface of dendritic cells, enabling the immune system to attack tumors selectively. ADC-1013 MoA Mode of action

The Phase II OPTIMIZE-1 clinical study is assessing efficacy and safety of mitazalimab in combination with standard of care chemotherapy, mFOLFIRINOX, for treatment of first line metastatic pancreatic cancer. The chemotherapy cocktail mFOLFIRINOX kills tumor cells leading to increased release of tumor antigens. Activation of CD40 leads to improved presentation of tumor antigens, and the consequent activation of T cell-dependent anti-tumor responses. Mitazalimab has previously reported positive clinical data from two Phase I studies, one performed by Alligator, one performed by Janssen Biotech Inc., demonstrating early signs of efficacy, proof-of-mechanisms as well as a manageable safety profile. Dendritic cell

Events during the second quarter

Preparations have continued to be able to include the first patient for the Phase II OPTIMIZE-1 clinical study. In June, the scientific journal Expert Opinion on Biological Therapy published an article

Mechanism of action

Project status: Initiation of Clinical Phase II

The OPTIMIZE-1 study is an open-label, multicenter study performed at clinical sites in Belgium and France and will include up to 67 patients. It is the first Phase II study with mitazalimab assessing the efficacy and safety of the drug in combination with chemotherapy in first line metastatic pancreatic cancer patients. First

interim readout is planned for H2 2021, and interim efficacy readout during H2 2022. To date, the clinical program has comprised two completed Phase I studies. The first study was conducted by Alligator with a focus on intratumoral administration. The results showed that clinically relevant doses of mitazalimab are well tolerated. Further promising safety and tolerability data from a second Phase I trial with mitazalimab in cancer patients was presented by Janssen Biotech, Inc. at the American Society of Clinical Oncology's (ASCO) Annual Meeting in 2019. The results showed that the adverse events were mild and mostly transient. The study comprised a total of 95 patients. Doses of up to 1,200 μg/kg i.v. with no premedication, and up to 2,000 μg/kg with premedication, were shown to be safe and tolerable. The results also gave indications of clinical activity. One renal cancer patient showed partial response (PR), while ten patients maintained stable disease (SD) for at least six months.

2021 objectives

First cohort dosed in pancreatic cancer efficacy study OPTIMIZE-1.

Mitazalimab is a stimulatory antibody that targets CD40, a receptor on the immune system's dendritic cells, which are cells that recognize cancer cells in the body. Mitazalimab's stimulation of CD40 enables the dendritic cells to activate the immune system's weapons more effectively – in this case T cells – and to direct the immune system's attack specifically to the cancer cells. Mitazalimab has been optimized using Alligator's unique FIND® technology to achieve an effect even at very low doses. In preclinical models, mitazalimab has been shown to induce a potent tumor-targeted immune response and provide long-lasting tumor immunity. Preclinical results have also shown that mitazalimab can be used to treat many different types of cancer.

ATOR-1017 Positive clinical Phase I results

ATOR-1017 is a monoclonal antibody that stimulates the 4-1BB receptor on T cells and NK cells in the tumor region and has been developed for the treatment of metastatic cancer. 4-1BB has an ability to stimulate the immune cells that are key for tumor control. ATOR-1017 is being developed to improve combination therapy for metastatic cancer. Novel supportive data from the ongoing Phase I clinical trial was presented at the 2021 ASCO Annual Meeting. ATOR-1017 MoA (4-1BB) Mode of action

ATOR-1017 has a unique profile, including boosting the immunostimulatory effect in environments with high levels of immune cells, which occurs specifically in tumors. This creates an opportunity for potent, tumordirected immunostimulation that can increase the effect and reduce side effects for the patient. ATOR-1017 is a FcgR (Fc gamma Receptor) crosslinking dependent

Events during the second quarter 4-1BB agonist activating

In June Alligator presented novel supportive data from the ongoing Phase I clinical trial, validating the therapeutic potential of ATOR-1017 and demonstrating clear signs of proof of mechanism combined with a very favorable safety profile. Dose escalation continues in order to identify the optimal dose for subsequent phase II studies. Preparations for Phase II efficacy studies are ongoing, including involvement of CRO and establishing contact with leading effector T cells 4-1BB and FcgR co-expressing cells within the tumor leads to a tumor-dikey opinion leaders in the gastric cancer field at European Organisation for Research and Treatment of Cancer (EORTC). Tumor Killing

Project status: Results from ongoing clinical Phase I study

ATOR-1017 is being evaluated in a dose escalation study in patients with advanced solid cancer (NCT04144842). The study is taking place at three medical centers in Sweden, and the primary endpoint is to assess the safety and tolerability of ATOR-1017 and determine a recommended dose for subsequent Phase II studies. The first patient was dosed in December 2019. As of data cut-off March 31, 2021, a total of 13 patients with varying advanced solid malignancies had been included. 4 patients (31 percent) remained on treatment, 3 (23 percent) of whom had confirmed stable disease for a period of 3.5-12.5 months. The results from the eval-Tumor Cell T cell Macrophage

uation of doses up to and including 200 mg, presented in a poster presentation at the 2021 ASCO Annual Meeting, demonstrate that ATOR-1017 has an encouraging safety profile as the drug related adverse events in the study have generally been mild and transient.

No dose-limiting toxicity or severe immune-related adverse events have been reported. The results further demonstrate that ATOR-1017 exhibits a favorable pharmacokinetic profile with linear elimination and no accumulation. Activation of T cells in the circulation was observed across therapeutic dose levels of ATOR-1017 demonstrating biological activity and proof of mechanism. Previous interim data from the ongoing Phase I study, presented in the autumn of 2020, showed a promising safety profile for ATOR-1017 with only a few drug-related side effects, all of which were mild or moderate (grade 1 or 2). Large volumes of preclinical data have been presented showing that ATOR-1017 stimulates both natural killer (NK) and T cells, both of which contribute to an effective immune-mediated killing of tumor cells.

2021 objectives

Results from clinical Phase I study. Initiation (CTA submission) of Phase II efficacy study.

Mechanism of action

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

Collaborations and out-licensing agreements ALG.APV-527

ALG.APV-527 is a bispecific antibody that targets the 4-1BB and 5T4 molecules, designed for the treatment of metastatic cancer.

The drug candidate has been co-developed with Aptevo Therapeutics Inc. since 2017, and preparations are under way to submit a CTA to initiate clinical testing.

Project status: Planning for Clinical Phase I

In November 2020, preclinical data for ALG.APV-527 were presented at the Society for Immunotherapy of Cancer's (SITC) Annual Meeting. Data shows that ALG.APV-527 has a positive safety profile, with no signs of systemic immunostimulation or liver toxicity. ALG.APV-527 also increases the anti-tumor response and induces a tumor-specific immunologic memory in experimental disease models. It has already been shown that ALG.APV-527 has the potential to selectively stimulate and strengthen the T-cell response in the tumor without stimulating the immune system in the rest of the body. Overall, the results support the potential of ALG.APV-527 to induce effective tumor-targeted immunostimulation with fewer adverse events.

Co-development with Aptevo

In July 2017, Aptevo Therapeutics and Alligator Bioscience AB signed an agreement regarding the co-development of ALG.APV-527. Under the agreement, both companies will own and finance the development. The original molecules involved in the tumor-binding function and the immunomodulatory function of ALG.APV-527 were developed using Alligator's patented ALLIGATOR-GOLD® antibody library. The bispecific molecule was further developed and improved with Aptevo's technology platform ADAPTIR™. A tumor-binding function was combined with an immunomodulatory function in the same molecule to create a drug candidate that can selectively target the tumor and stimulate the antitumor-specific immune cells that are found there.

Goal 2021

Submit CTA as preparation for Phase I clinical trials.

Collaborations and out-licensing agreements

Neo-X-PrimeTM research collaboration with MacroGenics

Neo-X-PrimeTM is a drug concept for more personalized immunotherapy, launched by Alligator in 2020. The concept builds on bispecific antibodies that physically link circulating tumor material to the immune system, to allow neoantigen-specific T cell priming with potential for superior anti-tumor efficacy.

In April 2021 Alligator entered into a joint research collaboration with US-based MacroGenics, Inc. a Nasdaq listed biopharmaceutical company focused on developing and commercializing innovative monoclonal antibody-based therapeutics for the treatment of cancer. The research collaboration utilizes Alligator's proprietary patient specific immunotherapy Neo-X-Prime™ to develop bispecific antibodies against two undisclosed targets.

Under the joint research collaboration agreement, which covers activities from candidate drug generation up until IND-enabling studies, each company will be responsible for its own costs. The parties may continue further development of the resulting bispecific molecule under a separate co-development collaboration and licensing agreement.

AC101 agreement with AbClon

Through its subsidiary Atlas Therapeutics AB, Alligator holds a participating interest in the clinical Biosynergy (AC101/HLX22) project, run by the listed Korean Company AbClon. The drug candidate is now being further developed by the Chinese Company Shanghai Henlius, which increased its rights to encompass a global license for development and commercialization in 2018. Alligator incurs no overheads for this project and is entitled to 35 percent of AbClon's revenue from out-licensing to Shanghai Henlius. In previous financial years, Alligator received two milestone payments totaling USD 3 million in conjunction with regional and global out-licensing of one of these products, the HER2 anti-body AC101. AC101 is since 2019 undergoing testing in Phase I.

Technology agreement with Biotheus

In August 2019, an agreement was concluded with Chinese company Biotheus. Biotheus obtained the Chinese rights (Greater China, Hong Kong, Taiwan and Macao) to an antibody from the ALLIGATOR-GOLD® antibody library. The agreement gives Alligator the right to total initial upfront payments, and milestone and option payments of potentially USD 142 million. To date, Alligator has received upfront payments of about SEK 10 million, for events such as positive results after an initial evaluation period.

An investment in Alligator Risks and opportunities

All drug development is associated with high risk

Drug development is costly, and there is a significant risk that a drug candidate will fail to reach the market. A drug candidate could, for example, demonstrate unacceptable side effects or lack the intended therapeutic effect. In bio-tech companies, the financing risk is always present due to the long development timelines.

Alligator mitigates risks

Alligator's drug candidates are tumor-directed, meaning that the risk of serious side effects is inherently lower than for drugs that works systemically. As Alligator develops drug candidates for different target molecules chances of success for the portfolio are high. The clinical success of the portfolio, is not dependent on the ability of a specific combination of antibodies/target molecules to show clinical efficacy.

Major potential

Immuno-oncology is now established as an effective form of therapy and an area with substantial potential. This was apparent, not least, in the 2018 Nobel Prize in Medicine, which was awarded to James P. Allison and Tasuku Honjo, two pioneers in the field.

Out-licensed projects

Alligator is pursuing a long-term and highly intensive business development program and since 2015 has generated income of approximately USD 50 million in the form of upfront payments and milestone payments. The objective is to have several outlicensed projects, which may generate significant income in the form of upfront payments and milestone payments.

For a more detailed review of how Alligator mitigates risks, see page 45 of the 2020 Annual Report.

Great medical need worldwide

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). This means there is a major unmet need for advanced cancer care. Alligator's ambition is to develop immuno-oncology drugs that can save lives all over the world.

Global market worth usd 140 billion

The global cancer therapy market is valued at USD 140 billion (2019). Immuno-oncology is one of the fastest growing areas and the global market for cancer immunotherapies is expected to dominate the market in the future and grow from USD 29 billion in 2019 to close to USD 120 billion in 2026. As an example, sales of Merck's drug Keytruda® alone amounted to USD 11.1 billion in 2019 (USD 7.1 billion in 2018). Source: GlobalData, 2020.

Projects ready for out-licensing

Alligator's pipeline and technology platform provides several opportunities for generating licensing income to support the Company's core activities. These include out-licensing of the Neo-X-PrimeTM technology platform, as well as global and regional deals on our clinical programs including mitazalimab, ALG.APV-527 and ATOR-1015. Alligator also sees opportunities for interesting deals using its broad knowledge and unique technology platform, on which the Company's development of unique antibodies is based.

High innovation capacity

Alligator possesses a very high innovation capacity. The Company's Discovery unit develops tumor-targeted immunotherapies focusing on active therapies that provide long-lasting tumor-specific immunity. The unit's most important assets are its world-class researchers and a unique technology platform, which can be seen as the Company's innovation engine, where future immunooncology drugs are already being developed.

The Alligator share

Number of shares and stock option program

The total number of outstanding shares in the Company at the end of the quarter was 85,666,338 (71,388,615).

At the 2018 AGM, it was decided to set up an employee option program whereby 2,275,000 employee options were allotted free of charge to participants. The employee options has been be vested in installments up to May 1, 2021. Vesting was subject to the participant remaining in the Company's employment and not having resigned on a given qualifying date. Of the allotted employee options, 1,767,500 have been vested and 507,500 have lapsed since the individuals to whom they were allotted have since left the Company. 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. As a result of lapsed warrants, a total of maximum 2,322,849 warrants can be exercised in the program. Each warrant in the program entitles the holder to acquire 1.03 new shares at an exercise price of SEK 73.01. 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 2,392,534 shares will be issued, thereby increasing the number of shares to a maximum of 88,058,872, corresponding a to dilution by 2.7 percent.

At the 2021 AGM, it was decided to implement a long-term incentive program in the form of a performance-based share saving program (the "LTI 2021") for employees in the Company. Following a predefined time period, the participants will, free of charge, have the right to receive additional shares in the Company ("Matching Shares"). In addition, conditional upon fulfilment of a goal related to the development of the share price, the participants will further, free of charge, have the right to receive additional shares in the Company ("Performance Shares"). The investment in Saving Shares shall be made through acquisition of ordinary shares on the stock market on 30 September 2021 at the latest.

The total number of Matching Shares will not exceed 175,500 and the total number of Performance Shares will not exceed 702,000, meaning that the total number of shares that can be issued to the participants in connection with LTI 2021 will not exceed 877,500. The maximum number of shares that can be issued in relation to LTI 2021 is 1,153,211, where of 877,500 for delivery of Matching Shares and Performance Shares to the participants and in the aggregate 275,711 related to hedging of cash flow for social security contributions, which corresponds to a dilution of approximately 1.3 percent of the Company's share capital and votes after full dilution, calculated on the number of shares that will be added upon full issuance of shares in connection with LTI 2021.

In case both the existing employee option program and the proposed LTI 2021 are exercised in full, a total of 3,545,745 new shares will be issued, which corresponds to a total dilution of approximately 4.0 percent of the Company's share capital and votes after full dilution, calculated on the number of shares that will be added upon full exercise of the outstanding employee options as well as the share saving program.

The Alligator share in brief June 30, 2021

Listed on: Nasdaq Stockholm Small Cap
Number of shares: 85,666,338
Average turnover per day: Approximately 154,000 (preceding quarter:
approx. 123,000)
Number of shareholders: 8,100 (preceding quarter: approx. 8,100)
Market capitalization: SEK 471 million (preceding quarter:
approx. SEK 533 million)
Ticker: ATORX
ISIN: SE0000767188

Largest shareholders June 30, 2021

Number of
shares
%
Union Bancaire Privee, UBP SA 10,710,162 12.5
Sunstone Life Science Ventures Fund II K/S 5,758,485 6.7
Banque Internationale à Luxembourg SA 4,510,101 5.2
Lars Spånberg 3,856,629 4.5
Försäkringsbolaget Avanza pension 3,463,333 4.0
Johnson & Johnson Innovation 2,740,919 3.2
Fjärde AP-fonden 2,727,819 3.2
Nordnet pensionsförsäkring 2,255,886 2.6
Öhman fonder 1,859,674 2.2
Mikael Lönn 1,730,619 2.0
Other shareholders 46,052,711 53.9
Total number of shares 85,666,338 100.0

Union Bancaire Privee, (UBP) and Banque Internationale à Luxembourg SA (BIL) is a group of mainly Swedish investors with their shares managed by UBP or BIL.

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

Source: Shareholder data is based on a report from Euroclear and Monitor (Modular Finance) as of June 30, 2021, where certain foreign accounts have been identified by the Company.

Other information

Review

This report has not been reviewed by the Company's auditor.

Employees

The number of employees in the Group at the end of the quarter was 45 (43). Of these, 10 (8) were men and 35 (35) were women. Of the total number of employees at the end of the quarter 40 (38) were employed within research and development.

Future report dates

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

  • Q3 Interim report: October 21, 2021
  • Year-end report 2021: February 11, 2022

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 2020.

The impact of Covid-19 on the Group's risks

The ongoing Covid-19 pandemic affected Alligator's operations during the spring, with temporary holds in patient enrollment for the company's clinical studies. Despite this, we see that we have good opportunities to keep our planned timelines in terms of study read-outs.

Statement of financial position

The Company works continuously to secure the financing of the operation. This include both business development for new partnering agreements, with an upfront payment upon signing, as well as other options. Following the Company´s savings program during the first half of the year, together with the now completed rights issue, the Company's assessment is that the financial resources are sufficient for the coming 12 months.

Forward-looking information

Even though the board and management believe the expectations in this report are justified, no guarantees can be given that they will turn out to be correct. Accordingly, the actual outcome may differ significantly from the assumptions stated in the forwardlooking information depending on, among other factors, changes in the economy or market, changes in legal or regulatory demands, political decisions and changes in exchange rates.

Parent Company

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.

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, 2020. Unless otherwise stated, all amounts stated are rounded correctly, which may mean that some totals do not tally exactly.

Registered trademarks

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

For further information, please contact:

Søren Bregenholt, CEO Email: [email protected] Phone: +46 46 540 82 00

Marie Svensson, CFO Email: [email protected] Phone: +46 46 540 82 03

Alligator Bioscience AB (publ) 556597-8201

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

Financial statements

Unless otherwise stated, this Interim report 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, 2020. 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 the licence agreement with Biotheus Inc and and to the joint research agreement with BioArctic AB. In the same periods prior year sales pertained primarily to the licence agreement with Biotheus Inc .

Other operating income

Other operating income for the quarter comprises primarily of 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's costs are aproximatelly in the same level compared to the previous year, and pertain mainly to costs related to clinical projects mitazalimab and ATOR-1017. The personnel costs in the second quarter is lower than last year due to strategic desicion to reduce preclinical expenses including a reduction in workforce.

Total financial items

Pertains to unrealized exchange gains and losses as a result of significant liquidity positions in USD, EUR and GBP.

TSEK Note 2021
Apr–Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Net sales 5 3,777 4,352 4,394 4,352 4,352
Other operating income 5 129 1,250 317 1,279 2,315
Total operating income 3,907 5,601 4,711 5,630 6,666
Operating costs
Other external costs -19,992 -20,157 -37,632 -45,251 -82,320
Personnel costs -15,044 -16,942 -28,291 -33,101 -55,710
Depreciation of tangible assets and intangible assets -3,277 -2,900 -5,607 -5,765 -11,522
Other operatings expenses -85 -311 -194 -1,076 -1,413
Total operating costs -38,399 -40,310 -71,724 -85,192 -150,964
Operating profit/loss -34,492 -34,709 -67,013 -79,562 -144,298
Financial items
Result from other securities and receivables - - - 192 192
Other interest income and similar income statement items - - -9 1,992 2,001
Interest expense and similar income statement items -467 -342 -678 -554 -1,191
Net financial items -467 -342 -687 1,630 1,002
Profit/loss before tax -34,959 -35,052 -67,700 -77,932 -143,296
Tax on profit for the period - - - - -
Profit for the period attributable to Parent Company hareholders -34,959 -35,052 -67,700 -77,932 -143,296
Earnings per share
Earnings per share before dilution, SEK -0,41 -0,49 -0,79 -1,09 -2,01
Earnings per share after dilution, SEK -0,41 -0,49 -0,79 -1,09 -2,01
TSEK Note 2021 2020 2021 2020 2020

Consolidated Statement of Comprehensive Income

TSEK Note 2021
Apr–Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Profit/loss for the period -34,959 -35,052 -67,700 -77,932 -143,296
Other comprehensive income - - - - -
Comprehensive income for the period -34,959 -35,052 -67,700 -77,932 -143,296

Consolidated Statement of Financial Position

ASSETS

Cash and cash equivalents

Consolidated cash and cash equivalents, which consist of bank balances, totaled SEK 109,705 thousand (103,342).

The Group plans to use its liquidity for operating activities. 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.

TSEK Note 2021-06-30 2020-06-30 2020-12-31
ASSETS
Fixed assets
Intangible assets
Total fixed assets 33,677 46,355 41,593
Equipment and machinery 6,337 10,898 8,600
Right of use assets 8,183 15,462 13,423
Improvements in leased premise 913 1,521 1,217
Tangible assets
Softwares 267 398 332
Patents 29 127 72
Participations in development projects 3 17,949 17,949 17,949

Current assets

Current receivables

Total current assets 121,782 175,759 110,345
Cash and cash equivalents 6 109,705 169,757 103,342
Prepayments and accrued income 6,210 1,787 2,079
Other receivables 6 5,867 4,215 4,924
TOTAL ASSETS
155,459
222,113
151,938
-----------------------------------------------

Consolidated Statement of Financial Position

EQUITY AND LIABILITIES

Equity

Equity at the end of the period amounted to SEK 122,275 thousand (115,244), corresponding to an equity ratio of 79 percent (76).

In January 2021, the Company carried out a rights issue SEK 85,666 thousand. Through the rights issue, the number of shares in the Company increases by 14,277,723 shares, from 71,388,615 shares to 85,666,338 shares. The rights issue entails a dilution of approximately 16.67 percent for shareholders who are not participating in the rights issue.

Equity per share before and after dilution

At the end of the period, equity per outstanding share amounted to SEK 1.43 (1.61), 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").

Right of use assets, lease liabilities and loans

At the end of the period, right of use assets amounted to SEK 8,183 thousand (13,423) and lease liabilities amounted to SEK 8,426 thousand (12,073). Both right of use assets and lease liabilities pertain primarly to leases for offices and laboratories. No loans had been raised as of June 30 2021 and no loans have been raised since that date. The Group has no loans or loan commitments.

Accrued expenses and deferred income

At the end of the period, accrued expenses and deferred income amounted to SEK 20,055 thousand (16,070). Expenses pertains to accrued expenses for clinical activities, personnel and other expenses.

TSEK Note 2021-06-30 2020-06-30 2020-12-31

EQUITY AND LIABILITIES

Equity
Share capital 34,267 28,555 28,555
Other capital contributions 731,765 662,614 662,614
Retained earnings and profit/loss for the period -643,757 -510,589 -575,926
Equity attributable to Parent Company shareholders 122,275 180,581 115,244

Non-current provisions and liabilities

Lease Liabilities 6 2,573 8,318 5,841
Other long-term liabilities 6 145 279 135
Total non-current provisions and liabilities 2,718 8,597 5,975

Current liabilities

TOTAL EQUITY AND LIABILITIES 155,459 222,113 151,938
Total current liabilities 30,466 32,935 30,719
Accrued expenses and deferred income 6 20,055 21,552 16,070
Lease liabilities 6 5,853 5,853 6,232
Other liabilities 1,295 1,194 1,879
Accounts payable 6 3,263 4,336 6,538

Consolidated Statement of Changes in Equity, in summary

TSEK Note 2021
Apr-Jun
2020
Apr-Jun
20201
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Opening balance 157,246 215,671 115,244 258,498 258,498
New capital issue - - 85,666 - -
Option premiums received - - - - -
Underwriting expenses -1 - -10,931 - -
Effect of share-based payments -11 -39 -4 14 42
Profit/loss for the period -34,959 -35,052 -67,700 -77,932 -143,296
Other comprehensive income in the period - - - - -
Closing balance 122,275 180,581 122,275 180,581 115,244

Consolidated Statement of Cash Flows

Investments

No investments were made during the quarter.

Cash flow for the period

Cash flow for the quarter totaled SEK -33,960 thousand (-33,176).

Apr-Jun
Apr-Jun
Jan-Jun
Jan-Jun
TSEK Note 2021 2020 2021 2020 2020
Jan-Dec
------------------------------------------ ------ ------ ------ ------ ------ ------ -----------------

Operating activities

Tax paid - - - -189
-
-
Interest paid -411 -93 -660 -347
Interest received - - - 218 218
Other items, no impact on cash flow 33 - -18 180 -
Effect from warrant program -11 -39 -4 14 42
Depreciation and impairments 3,277 2,900 5,607 5,765 11,522
Adjustments for items not generating cash flow
Operating profit/loss -34,492 -34,709 -67,013 -79,562 -144,298

Changes in working capital

Cash flow from operating activities -32,158 -31,659 -64,715 -78,462 -141,352
Change in operating liabilities 2,126 -863 284 -8,007 -10,608
Change in operating receivables -2,681 1,146 -2,911 3,120 2,119

Investing activities

Cash flow from investing activities - - - 156,988 156,886
Divestment of other short-term investments - - - 103,160 103,160
Divestment of securities - - - 53,828 53,828
Acquisition of tangible assets - - - - -102

Financing activities

Cash flow from financing activities -1,803 -1,517 71 109 -3,092 -6,148
Underwriting expenses -1 - -10,931 - -
New share issue - - 85,666 - -
Amortization of installment purchase -75 -72 -504 -210 -354
Amortization of leasing liabilities -1,726 -1,445 -3,122 -2,882 -5,794
Cash flow for the period -33,960 -33,176 6,395 75,434 9,386
Cash and cash equivalents at beginning of period 143,660 203,218 103,342 93,890 93,890
Exchange rate differences in cash and cash equivalents 6 -285 -31 613 145
Cash and cash equivalents at end of period 109,705 169,757 109,705 169,757 103,342

Parent Company Income Statement

TSEK Note 2021
Apr-Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Net sales 3,777 4,352 4,394 4,352 4,352
Other operating income 129 1,250 317 1,279 2,315
Total operating income 3,907 5,601 4,711 5,630 6,666
Operating costs
Other external costs -22,021 -21,681 -40,677 -48,297 -88,416
Personnel costs -15,044 -16,942 -28,291 -33,101 -55,710
Depreciation and impairment of tangible assets and intangible assets -1,323 -1,434 -2,675 -2,833 -5,658
Other operatings expenses -85 -311 -194 -1,076 -1,413
Total operating costs -38,472 -40,368 -71,837 -85,306 -151,196
Operating profit/loss -34,566 -34,767 -67,126 -79,676 -144,530
Results from financial items
Result from participation in Group companies - 12,500 - 12,500 12,500
Result from other securities and receivables - - - 192 192
Other interest income and similar income statement items - - -9 3,003 3,012
Interest expense and similar income statement items -75 -262 -37 -386 -881
Net financial items -75 12,238 -46 15,308 14,822
Profit/loss after financial items -34,641 -22,530 -67,172 -64,368 -129,708
Appropriations
Group contribution received - - - - 438
Total appropriations - - - - 438
Result before tax -34,641 -22,530 -67,172 -64,368 -129,270
Tax on profit for the year - - - - -
Profit/loss for the period -34,641 -22,530 -67,172 -64,368 -129,270
TSEK Note 2021
Apr-Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec

Parent Company Statement of Comprehensive Income

TSEK Note 2021
Apr-Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Profit/loss for the period -34,641 -22,530 -67,172 -64,368 -129,270
Other comprehensive income - - - - -
Profit/loss for the year -34,641 -22,530 -67,172 -64,368 -129,270

Parent Company Balance Sheet

ASSETS

TSEK Note 2021-06-30 2020-06-30 2020-12-31
ASSETS
Fixed assets
Intangible assets
Patents 29 127 72
Software 267 398 332
Total intangible assets 296 525 405
Tangible assets
Improvements in leased premise 913 1,521 1,217
Equipment and machinery 6,337 10,898 8,600
Total tangible assets 7,250 12,419 9,817
Financial assets
Participations in Group companies 3 20,294 20,294 20,294
Total financial assets 20,294 20,294 20,294
Total fixed assets 27,840 33,238 30,515
Current assets
Current receivables
Receivables from Group companies 438 - 438
Other receivables 5,867 4,215 4,923
Prepayments and accrued income 6,745 3,311 3,688
Total current receivables 13,050 7,526 9,050
Cash and bank deposits 108,840 168,888 102,473
Total current assets 121,889 176,414 111,523

TOTAL ASSETS 149,729 209,651 142,038

Parent Company Balance Sheet

EQUITY AND LIABILITIES

TSEK Note 2021-06-30 2020-06-30 2020-12-31
EQUITY AND LIABILITIES
Equity
Restricted equity
Share capital 34,267 28,555 28,555
Total restricted equity 34,267 28,555 28,555
Non-restricted equity
Share premium reserve 731,765 662,741 662,741
Retained earnings -573,888 -444,639 -444,611
Profit/loss for the period -67,172 -64,368 -129,270
Total non-restricted equity 90,705 153,735 88,861
Total equity 124,971 182,290 117,416
Non-current provisions and liabilities
Other long-term liabilities 284 571 432
Total non-current provisions and liabilities 284 571 432
Current liabilities
Accounts payable 3,263 4,336 6,538
Other liabilities 1,155 902 1,582
Accrued expenses and deferred income 20,055 21,552 16,070
Total current liabilities 24,474 26,790 24,190
TOTAL EQUITY AND LIABILITIES 149,729 209,651 142,038

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 2020.

Note 3 Effects of changed estimates and judgments

Significant estimates and judgments are described in Note 3 and Note 19 of the Annual report for 2020. There have been no changes to the company's estimates and judgments since the Annual report for 2020 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 regarding license revenue is as follows:

All amounts in TSEK 2021
Apr–Jun
2020
Apr–Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Licensing income 2,094 4,352 - 4,352 4,352
Total 2,094 4,352 - 4,352 4,352

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

All amounts in TSEK 2021
Apr–Jun
2020
Apr–Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Bioarctic 1,600 - 1,600 - -
Biotheus 2,094 4,352 2,094 4,352 4,352
Total 3,694 4,352 3,694 4,352 4,352

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

All amounts in TSEK 2021
Apr–Jun
2020
Apr–Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Swedish government grants received - 719 - 719 1,163
Operational exchange rate gains 129 530 317 559 1,151
Other 83 1 700 1 1
Total 212 1,250 1,017 1,279 2,315

Note 6 Financial instruments

Cash and cash equivalents at June 30, 2021 consisted of bank balances amounting to SEK 109,705 thousand (103,342). For financial assets and liabilities, the reported value as below is considered a reasonable approximation of fair value.

All amounts in TSEK 2021-06-30 2020-06-30 2020-12-31
Financial assets valued at amortized cost
Other receivables 1,505 1,257 832
Liquid assets - Bank accounts 109,705 169,757 103,342
Total financial assets 111,210 171,014 104,175
Financial liabilities valued at amortized cost
Long-term lease liabilities 2,573 8,318 5,841
Other long-term liabilities 145 279 135

Accounts payable 3,263 4,336 6,538 Short-term lease liabilities 5,853 5,853 6,232 Other short-term liabilities 139 292 297 Accrued expenses 12,019 16,398 10,081 Total financial liabilities 23,993 35,476 29,124

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 second quarter 2021. Carl Borrebaeck resigned from the Board of Directors at his own request on April 30, 2021.

Financial definitions

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 dilution

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

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.

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.

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.

Cash flow from operating activities

Cash flow before investing and financing activities.

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.

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.

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.

Equity ratio Equity as a percentage of total assets.

Total assets Total of the Company's assets.

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.

Below is shown 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 percent" is an essential indicator as a measure of efficiency, and how much of the Company's costs relate to R&D.

After the initial public offering, the Company had a surplus of liquidity. To get a rate of return, a certain proportion of the Company's liquidity was invested in listed corporate bonds. The Company uses cash and cash equivalents including securities as a financial performance measure to monitor the Company's liquid position.

As mentioned earlier, the Company does not have a steady flow of income, with income 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.

Calculation of performance measures

All amounts TSEK unless specified 2021
Apr-Jun
2020
Apr-Jun
2021
Jan–Jun
2020
Jan–Jun
2020
Jan–Dec
Profit/loss for the period -34,959 -35,052 -67,700 -77,932 -143,296
Average number of shares before dilution 85,666,338 71,388,615 85,666,338 71,388,615 71,388,615
Earnings per share before dilution, SEK -0,41 -0,49 -0,79 -1,09 -2,01
Average number of shares after dilution 85,666,338 71,388,615 85,666,338 71,388,615 71,388,615
Earnings per share after dilution, SEK -0,41 -0,49 -0,79 -1,09 -2,01
Operating costs -38,399 -40,310 -71,724 -85,192 -150,964
Operating costs excluding impairments -38,399 -40,310 -71,724 -85,192 -150,964
Administrative expenses -7,311 -8,063 -15,832 -17,552 -29,191
Depreciation -3,277 -2,900 -5,607 -5,765 -11,522
Research and development costs -27,810 -29,347 -50,285 -61,875 -110,252
R&D costs / Operating costs excluding impairments % 72% 73% 70% 73% 73%
Equity 122,275 180,581 122,275 180,581 115,244
Average number of shares before dilution 85,666,338 71,388,615 85,666,338 71,388,615 71,388,615
Equity per share before dilution, SEK 1,43 2,53 1,43 2,53 1,61
Average number of shares after dilution 85,666,338 71,388,615 85,666,338 71,388,615 71,388,615
Equity per share after dilution, SEK 1,43 2,53 1,43 2,53 1,61
Equity 122,275 180,581 122,275 180,581 115,244
Total assets 155,459 222,113 155,459 222,113 151,938
Equity ratio, % 79% 81% 79% 81% 76%
Cash and cash equivalents 109,705 169,757 109,705 169,757 103,342
Cash and cash equivalents at end of period 109,705 169,757 109,705 169,757 103,342

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

The declaration of the Board of Directors and the CEO

Anders Ekblom Graham Dixon Hans-Peter Ostler

Eva Sjökvist Saers

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, July 13, 2021

Anders Ekblom Hans-Peter Ostler Chairman Member of the Board

Veronica Wallin

Laura von Schantz

Søren Bregenholt

Eva Sjökvist Saers Graham Dixon Member of the Board Member of the Board

Veronica Wallin Laura von Schantz

Member of the Board Member of the Board

Søren Bregenholt CEO

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). Company specialized in performing contract research and clinical studies on behalf of other pharma or biotech companies.

CTA (Clinical Trial Authorization). Application to start clinical trials in humans which is submitted to a regulatory authority.

CTLA-4 (Cytotoxic T-lymphocyte-Associated protein-4). An immuneinhibiting 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.

GMP (Good Manufacturing Practice). 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.

INN (International Nonproprietary Name). Generic name on a drug substance. The INN is selected by the World Health Organization (WHO) since 1953.

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.

Lymphocyte. A type of white blood cells.

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.

Mitazalimab. Generic name (INN) for ADC-1013.

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 cell. A cell that divides relentlessly.

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.

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