Mendus AB (publ) (IMMU) Earnings Call Transcript & Summary

Welcome, and thank you for joining this virtual presentation between 2 companies, Immunicum and DCprime. And the presentation -- the goal is to provide an overview of the transaction that has been announced the -- to ensure that all of these interested parties are on the same level, informed on the key details and the entire rationale between the transaction and the combination of these 2 companies. Now first, let me welcome the speakers. We have Sven Rohmann.

Thank you very much, Martin. I'm the CEO of Immunicum, and today, with me is Erik who is the CEO of DCprime. Let me a little bit elaborate on what we are doing today here, and that is that there have been several questions from our shareholders about what is this merger in detail, what can we bring to the table? So my dear shareholders, this event here is for you and it is to get you more familiar with what this merger is like, what you get out of that merger and why a combined company is a much better company than just the 2 companies here. And with saying that, I'm looking forward to getting your questions after the presentation here. And feel free, please, to ask any question that you would like to know. The voting of the Immunicum shareholders will then be next week at the EGM. So this here is your presentation for your information. Let me jump on the disclaimer page. We have to put that here. We will provide you here with forward-looking statements. So we have to make sure we as a public company that you understand that we will try our very best to answer and show you what we can do. And this is the legal disclaimer. On the next page, I would like to show you a little bit what do we do in the next upcoming perhaps 40 to 45 minutes. First thing is the merger rationale, then the scientific background and the clinical pipeline update. I think those are the 3 things where we learned that there are still questions and some need for clarification. Let me start now with the next page. And I think you have seen that before and it is quite obvious. And I like this picture of the 2 things merging together. And the key underlying umbrella of all of that is that we got here a leadership in expertise in allogeneic dendritic cell biology. This is what we all have in common, and this is what drives both companies forward, and to bring this biology to the patients is the mission we share as both companies. If you then look at a little bit where are the differences, where are the synergies, where are the complementaries, you see that the priming agent of Immunicum is build on that we inject that into the tumor. While DCprime is the second generation, in that, I'd say, let's avoid to be necessary into the tumor. If we can do it, wouldn't it be much nicer to put it under the skin and avoid any kind of more complex transaction. So if you look then, what we have done on the clinical side with Immunicum, and I think the most recent activity where we received the fast track authorization from the FDA shows that we are really pushing the clinical side forward. This is something, I have to say, I'm very grateful for the team that we have that. And I think we have one of the best teams there on the ground that can do cell therapy clinical development. The second foot we should have is on the manufacturing side. And you see that sourced from healthy donor. And we will come to that topic several times in that presentation because this differentiation here between getting themselves from healthy donors, and if you look at DCprime, they get the cells already from cell line, that means produced by steel tanks on an as-needed basis. So there you see, yes, we paved the way, and they are very fast behind us, so-called fast followers, and they are in clinical Phase II. So they are showing us already the efficacy of that relapse-preventing vaccine. Let's go on to the next page. Again, this is trying to illustrate to you the complementary approaches that we see with the allogenic dendritic cell biology. I will not read that to you. Let me just highlight a few things. And that is we get a pipeline as Immunicum. Immunicum started off as a one idea, then it became one platform and now it is one ilixadencel moving into the patients and forward to the market, hopefully. So now we can add at least a second clinical program and much more on the pipeline side to come. And maybe you have seen that interview by Alex, our Chief Scientific Officer and Founder of the company, where he very nicely illustrated that he sees synergies by applying each other's technology to the other technology platform. If not, I really recommend to do that, this is fantastic what Alex has a mind there. And you will see later on that we have here also the Chief Medical Officer, Jeroen, from DCprime, who will add to that, if you like. So the synergistic organization is something, I think, is important to understand that we really complement the organizations by each other. We hand that over. And just as a reminder, let me show you where we stand right now under my leadership with Immunicum. So we have built a really nice, effective organization that drives the clinical development forward. Alex, I already mentioned. Simon, you have seen the last times, 2 or 3 times, and I think I cannot be very grateful for Simon to jump in because we had some technical issues there. Otherwise, I would have covered all the presentation. Thanks to Simon, we could keep the presentation, and he presented it. Then we have Peter, our CSO, who is doing a fantastic job and getting all the documentation done, the due diligence done in that process of that merger. Then we have Peter who is with us. He is our Chief Medical Officer, and he really can give you the absolute insights into what we are doing, what we are planning, what the ideas are. Sharon is the one who is in charge of our manufacturing. And Margareth is our genius when it comes to any kind of regulatory, and this is where a big thank you go because she is the one who made RMAT and the fast track applications happening. And Margareth, I count on you with the orphan drug designations. Erik, I talk now a lot, I would say, over to you. Thank you for listening to me so nicely.

Of course. Thanks, Sven. And also, on my behalf, happy to address the Immunicum's shareholders and tell more about DCprime. My name is Erik Manting. I'm a CEO at DCprime. And as a company overview -- first of all, the company was founded in 2005. So it's based on a long history of research. It was founded at the Amsterdam UMC, but we are now based in Leiden, which is one of the oldest university cities in the Netherlands, but it also hosts a big bioscience park where we are also housed. We have an organization, which is no longer purely scientific, but also now incorporates a lot of important corporate functions, and the development of the company has been supported by Van Herk. Van Herk is a strong institutional investor, and to have a strong shareholder allowed us to build out the company from a research-driven organization into a fully operational company. Having said that, research is still a very big part of our organization. We are in total with 21 people. We have senior staff covering all operational aspects of the company. But what you can also see from the organogram is that the majority of the operational team is still in research and in development, so CMC in this graph stands for process development, so that is the team, which is working on optimizing and further developing the process development of our products. Next slide, please. We have not included pictures of all senior staff, but I do want to give a good impression of the broad operational business and scientific leadership of the company. And I will come back to a bit more detail with respect to the people that are envisaged to join Immunicum as Board members and management teams. But what I would like to highlight in this overview is that this mix of people that are part of our management team being Jeroen Rovers, our Chief Medical Officer and myself; part of our supervisory board, being Dharminder Chahal who represents Van Herk; Hans Preusting, who is a very renowned person, not only from the business side but also from the manufacturing side with a lot of expertise; Andrea van Elsas who is a renowned immuno-oncologist, they are part of our supervisory board. And then we have a scientific advisory board, which is chaired by our founder, Professor Ada Kruisbeek, Professor Tanja De Gruijl; and Professor Sjoerd Van Der Burg, who are all very renowned immuno-oncologists with a long history in cancer biology. Next slide, please. So going into the combination, I think what we bring to the table, Sven, is an organization, which is roughly the same size as Immunicum, which is built on operational side, to a large extent, on our research and development expertise, but combined with, of course, clinical and operational expertise as well. And of course, as an important element of DCprime, we have taken in-house our own process development as one of the key strengths of the company.

Thank you, Erik. And this is one of the slides where I really want to draw your attention to because this is one of the basis for why we are talking about a merger of equals. So if you combine that and you see employees compared with Immunicum, nearly the same number. We have a little difference in the priority in the 2 companies. DCprime is very strong if it comes to manufacturing and perhaps a little bit less on the clinical development. Immunicum is very strong on the clinical and regulatory development, but a little bit less on the manufacturing side. So by combining that, you are strengthening the weaknesses of each of the companies. And the combined company, as you see, is really then becoming my famous already mentioned powerhouse. So if you dig a little bit here more in the details, then you -- as I said around this intratumoral priming and now combined with relapse vaccination, this could be really the ultimate combination in treating cancers. Then we were out for the solid tumors, they come in from the blood bone, their first data in ovarian cancer shows that they are not limited to blood bone, they can do solid as well. So nice, fast follower to our ilixadencel program. Then what we have lost on our way to the market, they bring now back to us, which is, I think, very important to have that. We have now back discovery research. We have now our own process development. That means we are in control of our own manufacturing done that way. And we have a nice addition and synergies on the clinical development and regulatory affairs. The product, starting material, I have put here explicitly to remind you and had several discussions and pointed to that as well that healthy donors, as a starting material for our therapy, is a good one, but you need healthy donors. And if you do want to do large solid cancer indications, you need a lot of healthy donors. And I don't have to point to that COVID-19 crisis just to illustrate to everybody out there if we would be now be hunting for a few thousand healthy donors to bring cells to our cancer patients how much of a mission that would be. So it is very nice that we can now add to our arm an entire cell line-based dendritic cells. And this makes us then with the second product line, absolutely reliable. It is fully scalable to any size of cancer indications since all these approaches are cancer-indication-agnostic and so every cancer patient could profit from it and we could serve them after the upscaling. And what I think is always important in the manufacturing, it is simple. Erik, maybe since this is quite an important point of our synergy scenario, maybe you want to dig a little bit deeper there?

Sure. So maybe go to the next slide. With this slide, I would like to emphasize a few points that Sven just made. First of all, I think we're living in a new era, an area whereby cell-based therapies have become reality and have revolutionized the immunotherapy of cancer. A lot of people have heard about CAR-T, for example, but there's a lot more platforms now being developed. The rollout of these therapies has become the next challenge. Particularly when you work with so-called autologous products or products that are derived from patient material, you need the same patient as the donor and as the recipient of the therapy. And that has turned out to be quite a manufacturing and logistics challenge. So the next generation of cell-based therapies is based on allogeneic products. And that has, as an advantage, as Sven also highlighted, scalability and also a much more simpler logistics of getting the product to the patient, but at the same time, it also requires an understanding of the biology, which is different if you have an allogeneic product from autologous product. So this is where I think we can capture leadership. What we have set out with the DC-1 platform is to have a cell line, which is, in principle, a cancer cell line and leukemic cell line. But we have made sure that we selected cells that are stable in cell culture. So we can grow them to larger quantities. And what we have discovered is that we can shift these cells towards a dendritic phenotype and this makes them highly immunogenic. So that's, in a nutshell, our platform. What it means for the patient is that from a manufacturing perspective, we start with a so-called working cell bank, and behind that, we have master cell banks. So we have it in the liquid nitrogen or in the freezer, if you like. So we can start always with the same material, and we are not dependent on harvesting it from a patient. And secondly, we can have, as a reliable source material, also a more scalable manufacturing process. This is a process we have now in place for the manufacturing of our current clinical trials which we are also constantly developing to further optimize. So that is also an advantage of having the same starting material each time. And lastly, the logistics of having a product, which is manufactured on a central location, storage on the shelf, as we call it, and it can be delivered off-the-shelf to the hospital when it is needed for the patient. And that makes the logistics of the whole process a lot more simple as compared to material that is derived from a donor. So that's in a nutshell of our platform, Sven.

So what about the synergy with the shareholder base?

Right. I'm happy to introduce Van Herk as the main shareholder of DCprime. Van Herk is a family office, founded by Mr. Van Herk, who is a very successful entrepreneur in real estate. And also since the late '90s of the previous century in biotechnology, he's become one of the leading European investors in biotechnology. And how they act as a shareholder is basically facilitating management to do what they need to do, to create shareholder value, and that is what I have done with DCprime but also with many other companies of which Sven mentioned in this presentation. Of course, within the setting of Immunicum, Van Herk will be joined by other strong shareholders, including AP4, who have also expressed their support for this transaction. Van Herk will own approximately 43% after the transaction. Van Herk group will be paid in shares of Immunicum, and that also holds up for the minority shareholders. And the minority shareholders comprise of Dharminder Chahal, our Chairman, representing Van Herk and myself. So we will also be paid in Immunicum shares and become Immunicum shareholders after the transaction. What is, I think, also important because we got quite some questions about this, is about the lockup and what will Van Herk do with this 43%. And there's a factual answer to it, which is there is a lockup arrangement in place. So this sets out a set of rules, which prevents Van Herk from trading their shares in the first 6 months of that arrangement. And in the second half, so the second 6 months of that arrangement, they can trade blocks of shares with other institutional investors. And the reason to arrange for that is that in the end, it is in everybody's interest that there will be a well-balanced shareholder basis for Immunicum. And of course, we do want to grow the company with a broader shareholder base as to create optimal value. So the second half of that lockup arranges for that type of transactions.

And that was something we both agreed upon because usually 12 months are customary that the last 6 months can be used for building that investor base and making sure that there are always enough shares available for people who would like to join the party at Immunicum.

Exactly. And what is often the case with institutional investors, who, of course, need to invest large amounts of money, as pension funds or insurance companies, that kind of money, they need to be able to buy larger amounts of shares, and that's what these block trades I refer to facilitate. So that is what is possible under the lockup arrangement. Van Herk has expressed their intention to invest SEK 82.5 million into Immunicum as part of a future financing strategy. And also, they are a very experienced investor. So they have a long-term view and they act not only on their own behalf but also on creating optimal value for all other stakeholders.

I think for me that sounded really logical, if you are out there for the long run to make sure that you have not everything on your shoulder, and I saw questions coming in with, what do we do if they want 50% or something like that? We know both that this is not their intention. They would like to have more institutional investors. And they bring people to the management like you and to the Board. Maybe you want to describe them a little bit more in detail?

With pleasure. So from the management side, subject to EGM approval, I will join and our Chief Medical Officer, Jeroen Rovers, will join in a somewhat different function. My function will be Chief Business Officer and Deputy CEO. Jeroen will remain a Managing Director of DCprime and also take care of the majority of the daily operations. About myself, I have a background in science. So I have a PhD in biochemistry and I spent a few years in research in immunology and then switched to banking. So I spent 15 years in banking before I stepped back into biotechnology and started as an adviser to DCprime and later on as their CEO. By now, I have also some activities with other biotechnology companies. I'm a Board member, for example, in a company called Synerkine Pharma, but I've switched back from banking into the industry. So that's about myself. With respect to Jeroen. Jeroen is a very experienced Chief Medical Officer. Before joining DCprime, he was with multiple smaller and larger companies. And his last assignment was with Kiadis Pharma. Kiadis Pharma was a company also based in hematology-oncology, also with a cell-based product. So Jeroen has a long and deep expertise in the field. Then to introduce Dharminder Chahal and Andrea van Elsas as they envisage new board members to Immunicum. Dharminder is a very well-rounded person with also a background in both technology, in his case, aerospace, engineering and banking. So he was also working at Kempen, a business bank that I have also been working for. And he is now the adviser for Van Herk for all the biotechnology activities. And next to that, he is also the CEO of a diagnostics company called SkylineDx. And then as a last person to introduce on this slide is Andrea van Elsas. Andrea van Elsas is a very experienced immuno-oncologist. He has been working most of his career on so-called immune checkpoint inhibitors, which have revolutionized cancer immunotherapy. He was also part of the discovery team behind KEYTRUDA which is now the largest-selling immune checkpoint inhibitor, so a big success. But next to that, Andrea has also been part of many different companies, including Aduro, which was a listed U.S. biotechnology company. So next to his scientific expertise, he also brings a lot of business expertise.

I was deeply impressed when I heard that Andrea would be willing to join our Board. You see it on the presentation that he is with Third Rock Ventures, which I think if we would be an American company, a lot of people would now get extremely excited to know where he is on the Board with a new small Swedish company. And as you all know, in one of our trials, we are using KEYTRUDA. So maybe he feels immediately home at Immunicum. I'm very happy to have them with us at Immunicum. Let me a little bit, on the next slide, talk about the process which we had there. And one of the most highly discussed points about how did we come to our valuation split? The first thing is that, of course, we knew each other for quite a while, which does not mean me personally. As you know, I'm just a few months with the company, but the company has really good contact. And even the former, former CEO, Jamal said, "Yes, we have looked into DCprime at that point in time." So the merger rationale was something I could hop on and then move it forward. Then as you will appreciate is, of course, this is a private company, and we are a public company. If we would merge with a public company, a lot of those things, which we expect as a public company to be out there as public information would be available, which is not the case with a private company. So we had to do extensive due diligence on all the topics. And I can tell you the most intensive discussions and interactions we had were on the manufacturing side to better understand how big is the synergistic potential because this could be transformative for the combined company to have the leadership in cell therapy. So we looked into that. Everything in that industry counts on the IP position. So we digged deep into that. And then, of course, we had to do our homework on all the other aspects. Then let's come to this fascinating point of merger evaluation. So I said before, we, from day 1, understood that this is a merger of equal. So we used then an algorithm called equal enterprise value to come up. So we assumed at a certain point in time, that the value, the asset value of both companies is the same. This allows us to calculate on using Immunicum as the company that is publicly listed to come up with a value and then add or deduct the amount of money that is in the company. And usually, if you talk about a merger of equal, you expect 50-50, but since Immunicum had, thanks to the existing shareholders of Immunicum, a significant larger portion of cash on the bank. The distribution was outed in such a way that we are now talking 56 Immunicum, 44 for DCprime. And this is the foundation of everything. Keep in mind that this is relative. So if the value of Immunicum goes up or down, exactly the same way as the value of DCprime going up and down in that deal. I don't have to read that to you. I think those who are interested in the details have looked into our press release which we put out yesterday and the one before to get all the details and move it forward and so on. So the understanding then was how do you know that this is the right value. I would say, if we deal with a private company, there is no such thing that's the right value. But our Board has done his homework and looked into different evaluation models and opinions to make sure that this split can be justified. We tried to put that a little bit in a graphical mode, which we see on the bottom that illustrates what I have said, equal enterprise value, the difference in the relatively contributions is secondary to the difference in net cash. You usually do a merger because you see immediate synergies. And this is something that we saw as well and was one of the drivers behind manufacturing the portfolio approach. Not to mention because a lot of documentation is around that is about the pro forma cash position. Then the combined clinical pipeline will do 3 important things: it will de-risk the complete company because now we have a portfolio, we are not betting everything on one horse from Immunicum one more time; we have a portfolio, right now, we start off immediately jump starting with 2 clinical programs. There is more to come out of the preclinical portfolio; then we have the things about manufacturing and I reemphasize that. This is a big synergy potential, not only from the way we do the processes but from the cost structure of those processes as well, and something I heard from day 1 being the CEO of Immunicum, you have to do something with the investor base, Sven. Yes, we do something with that investor base because now we are adding an institutional investor who has the network to come up with more institutional investors to give us the right firepower to move this combined company forward. In a nutshell, key terms, conditions and estimated time lines, I don't tell you much more about the merger. I don't think that is necessary nor the financials. You have heard that before. And you have read it in more detail even on the press release. The management team and the Board members that will be added, they are really a big plus for our company. Then time line, next week on December 18, you can vote as an Immunicum shareholder, whether you like this merger or not. On December 21, given that 2/3 of all the Immunicum shareholders said, "Yes, Sven, please go forward with that deal," then we can close the deal and make sure that we exchange the shares and Van Herk and the minority shareholders, including Erik here, get their shares ready in time before Christmas. And after the closing of the transaction, there will be published -- or with the closing of the transaction, there will be published prospectus. I was a little bit surprised when I first heard that you put the prospectus out after the EGM rolled. If you do a normal new issue or something like that, you have the prospectus out there as a basis for people buying the shares. But here, with the SPA, the share purchase agreement, already in place and signed by both parties, I learned that this prospectus will be published after you have voted for the EGM. So this is a way it has to be. I'm sorry for that, that you cannot read the prospectus beforehand. If we then have the EGM, then I think we have to look into another EGM to allow the Board members to get on board to have the combined entity completed. I read here that January 2021 is that potential date for the EGM. And this, of course, only happens if you vote with a yes. So now I -- you have heard from Erik that he was a really successful banker, working with that quite famous European biotech bank, life science Bank, Kempen, but he has a scientific background. So I would say, Erik, than you are in the perfect position to explain all the science that comes with DCprime into Immunicum.

[Foreign Language] With pleasure, Sven. Of course, we focus on DCprime because as Immunicum shareholders, you have heard oftentimes the story from Immunicum. Alex Karlsson-Parra will also be part of the Q&A. He has probably explained many times to you how ilixadencel works. So we focus now after a brief introduction about the cancer immunotherapy field on the DCprime programs. I think we can go through these slides relatively quickly, but what it shows you is that cancer immunotherapy has revolutionized cancer treatment, with patients suffering from cancers that were untreatable, all of a sudden, responding to these new therapies. There is a remaining challenge, which is that the majority of cancer patients still does not respond to the so-called checkpoint inhibitors. So although they have been a real breakthrough and have also led to the Nobel Prize in medicine to Jim Allison with whom Andrea van Elsas has worked in the past. There's also still a lot of room for improvement, but this was a big start of a whole new therapeutic field. In the next slide, you see a quite obvious result of that, which is that, of course, a lot of pharma companies have jumped on this bandwagon and are now developing therapies in this field, and it's also become one of the fastest-growing fields in the pharmaceutical industry. Next slide, please. We have talked a lot about dendritic cells. And the key element I would like to leave with you is that dendritic cells are the orchestrators of the immune system. So we are all born with certain functioning parts of our immune system, but also certain parts need to be trained to adjust ourselves to viruses, bacteria, also keeping control of tumor cells. And those cells and particular T cells, for example, have gotten a lot of attention recently, also as a therapeutic potential. They have to be trained. And the dendritic cells are the parts of the immune system that basically train the other parts of adaptive immune system and what they should recognize as foreign or as dangerous and what they should go after. So the dendritic cells, in a nutshell, are the orchestrators of the immune system. From a therapeutic perspective, you can see that, as Sven also alluded to in the beginning of the presentation, that Immunicum and DCprime approach tumors from different angles. When there is an established tumor and particularly tumors that have been already treated with the first treatment and have become resistant but there's also other tumors which are difficult to treat, it will be beneficial if we can train the immune system to help fight the tumor. That is what Immunicum is doing with intratumoral administration of ilixadencel, which then acts as an immune primer in the actual tumor and draws in and activates additional immune cells. What DCprime is doing with the so-called relapsed vaccination is a different concept. Many tumors are treated successfully in the first treatment, but the biggest fear of cancer patients and also the factual risk of many different cancers is that the tumor comes back. And then it's actually often a difficult-to-treat tumor and also the primary cause of death. What we try to do with our relapse vaccination is prevent that tumor from recurring, so thereby avoiding or postponing the need to treat those tumors. We are currently pursuing that in blood-bone tumors, but the same principle holds up for solid tumors, including ovarian cancer. Next slide, please. Now we go a bit more into detail about our product because that, of course, has not been introduced to you by Alex, at least not in the detail we will do today. What we have basically invented, and this was the original finding of the people in Amsterdam UMC and of our founder, Ada Kruisbeek, is that certain leukemic cells for certain cancer cells can be manipulated to become dendritic cells, so to adopt dendritic or matured dendritic phenotype. And our platform, on the one hand, comprises a cell line, we call it the DCOne cell line, and these are these cells that can grow stable for manufacturing purposes. And on the other hand, a manufacturing process, which is proprietary to us, where we can shift these cells into a dendritic phenotype. The phenotype of the cells changes completely and they become from a cold cell, so cancer cells are poorly recognized by the immune system, which is why they are often called cold, into a hot cell, which is very well recognized by the immune system because, of course, dendritic cells are the orchestrators of the immune systems. So they are decorated with all kinds of so-called co-stimulatory molecules to stimulate other parts of the immune system. So we end up with a hybrid between a cancer cell biology, carrying also antigens that train the immune system to fight tumors combined with this highly immunogenic nature of a dendritic cell. We irradiate the product, so that it is safe for administration. We freeze the product so that is off the shelf, and it is shipped to the hospital on demand where it is sought and then administered as an intradermal vaccine to the patient. The next slide is a bit of a technical slide, but if I stick to the main message, this is the cold and hot phenomena I just described. So what is shown on the left-hand panel is that the cells actually start to look like dendritic cells during our manufacturing process, this is the difference between the blue bars and the red bars. And also, on the right-hand side, you see what our product does when you mix it with other immune cells. And what you see is basically that the red line indicates these immune cells become highly activated and start dividing. We've also shown that they become activated in their nature. And the blue cells, so the original cancer cells, hardly have that effect. So the trick is to combine these cancer cells with the dendritic cell biology and they become highly immunogenic. The next slide. What is a very crucial part of the mode of action of our products. So what happens after we inject it into the skin? What we have discovered, in many ways, these are just a few examples to visualize that, is that once you mix our products, which is these irradiated cancer cells with the dendritic phenotype with antigen presenting cells, which by themselves also become dendritic cells and start activating the immune system, the product is actually digested by these antigen presenting cells. They don't eat the antigens of our products and are in a position to trigger the immune system against these antigens, and next, of course, to fight the tumor. If we go to the next slide. That is a graphic representation of what I just showed. Sven, maybe you can go to the next slide. So what you see here on the left is basically a visualization or a cartoon of what you just saw in -- as a real picture that was an electron micrograph. This is a cartoon of that same picture. So you see antigen-presenting cells eating the antigens of our products. And next, they stimulate what we call a multifunctional immune response. So they stimulate T helper cells, which supports the expansion of other T cells. They activate the CD8+T cells or cytotoxic T cells. These are the guys carrying out the actual work of killing tumor cells. But what we have discovered and published is that they actually also stimulate B cells and B cells make antibodies. And all of that combines into a very powerful immune response that in the end leads to what we call improved immune control over residual disease. So any residual cancer cells, which will be the main reason for the tumor coming back or the tumor recurrence, we are trying to capture with an improved immunity, which we boost with our vaccination. So this is, in a nutshell, the concept of relapse vaccination. In the next slide, we show another very important element of our lead product, DCP-001. What we have observed in the clinic is that the main side effect of the product is the redness in the skin where it is injected. So we administer it via so-called intradermal injection, so an injection into the skin. And then, of course, because you get all this immune activation, patients get a large, big red spot where all the immune cells start responding to the vaccine but that disappears. And then you get a triggering of the systemic immune responses that I referred to, and that side effect profile is, of course, when you compare it to very aggressive cancer therapies like chemotherapy and surgery and radiation, what have you, it's a very gentle procedure actually. And that makes it a perfect product to combine with other therapies. And we've just highlighted a few here. Chemotherapy is a very logical one; antibody therapies, which are also now becoming a lot more common in the cancer space, can be well combined; CAR-T, which is a very powerful T cell based therapy also combine very well with our products; and lastly, the hypomethylating agents are specific subgroup of chemotherapies, which are very broadly applied in blood-bone tumors. So we also feel that there's a lot of combination potential with those agents. With that, I think I have provided you with hopefully a quite extensive overview of the different elements that are part of our corporate strategy and clinical development plans and also a little bit already of the deeper research pipeline and the kind of project we are working on. So with that, I'd like to hand it back to you, Sven, to cover the clinical pipeline developments.

Thank you. And everybody who would not want to write this all the details down, this is recorded. And you will have the access via our website whenever you want to see that again and want to go to it. I think our Immunicum shareholders remember very well, the CD8 story Alex presented, so that rings really a bell. Let me jump now to the ongoing trials. This looks, in my eye, so much better now because we have now 2 products in various indications that we can move forward. And I don't have to tell anybody here about attrition risks of clinical development and biotech, pharma to make sure that this risk can be leveraged in some way, you have to have a second product. It's my true belief that a one-trick pony doesn't work. And this one-trick pony is a slang from the U.S. venturers, meaning, if you have only one product, this is extremely high risk. And I think if we want to bring down risk in clinical development, to add the second product that is a fast follower to our ilixadencel, this is good. And by the way, that works in both directions. So we de-risked, of course, DCprime as well by having adding ilixadencel and [indiscernible]. A slide I like a lot. I will not -- looking at the clock here, not going into too much details of that. I think you have on the left side, this true potential of GIST, nivo + ipi, in renal cell and so on what Immunicum has to offer already now, and that will be then supported by the things that are coming from DCprime, the assets, not only on the competence, network and so on but it fills one of the things we cannot do with ilixadencel because we have to inject into a tumor. We cannot do blood-bone tumors. And this is where, you, at DCprime, started your clinical journey off with. So you have talked a lot, but now it's over to you again, Erik.

Yes. I realize what the majority of this presentation comprises, introducing DCprime to the Immunicum shareholders for obvious reasons because they have not heard our story very often. So happy to take it from here. I've explained, to a certain extent, the relapse vaccination concept. I will do that also as part of the clinical pipeline. What I think is an important addition to what Sven said is, on the one hand, we are looking to also clinically advance a much deeper pipeline of preclinical projects and we do that in a business model that varies from doing it ourselves to risk-sharing partnerships, what have you. And in choosing the indications going forward, on the one hand, we have chosen indications that fit very well with the relapse vaccine strategy but also indications that I think going forward, we'll have a chance of a successful proof-of-concept trial based on, let's say, the smaller patient numbers involved in these indications. And that allows us to move forward fast in these indications with also relatively fast clinically significant results. So let me start in the next slide with acute myeloid leukemia. This is a blood-borne tumor of almost unparalleled aggressive nature, unfortunately. So many of these patients are treated successfully, particularly with an aggressive chemotherapy regime. But almost all of them suffer from relapse. And the one way to prevent it is actually a transplantation procedure, where you get the immune system of another person in a bone marrow or hematopoietic stem cell transplant procedure. And that is just a horrible procedure, but it is life saving. So for those patients eligible for those transplantations, they will often get a transplant. Still for a large number of patients, actually the majority that transplant is either not available or the patients are in a too poor health state to undergo that procedure, leaving them at a high risk of relapse. So what we have done, and this is the next slide, in our Phase I study, is we have treated patients with no other treatment options with, in this case, 4 vaccinations. And we have looked into not only the safety profile of these patients but also their clinical response. As I have summarized, the safety profile of the product is relatively benign, it's a relatively gentle product, mainly leading to redness in the skin for only a brief period of time. But if we go to the next slide, we can show what we have actually observed in the longer-term follow-up of these patients. So this trial is now completed. The last patient passed away after roughly 6 years after 71 months. And what you can see, on the left-hand side, is the key conclusion of that trial, which means that the overall survival of these patients was dramatically improved as compared to expectations. So we're talking about 36 months as compared to 6 to 10 months, maybe the expectation based on, let's say, standard of care. So a dramatic increase, although in a small patient group, it was a promising sign of efficacy. What you also see is that there is a divergence between those patients that immediately relapsed, and we could not even complete the vaccination and those patients which completed the vaccination and showed a very good response. So what we have learned from this study is that we need to focus on those patients that are in a clinical state of remission but are still at a very high risk of tumor recurrence. And that is called complete remission or CR. So we select for those patients. But what we have now included, and this is new, and that's the next slide, a new development in the field of blood-bone tumors is there's novel methods with so-called flow cytometry or with PCR-based techniques, these are all molecular biology techniques to detect residual disease. And that phenomenon called MRD, and it stands for minimal or measurable residual disease, is associated with a very high risk of tumor recurrence or relapse. So what we do now, based on the Phase I, is we select patients that are in a complete remission, but we select those patients that are MRD positive, so that are at a very high-risk of the tumor recurring. Those are the patients we include in our trial. And the reason why is what you see on the right-hand side is that there is a divergence between those patients that were lucky and were MRD negative and are relatively stable and those patients that were MRD positive, and unfortunately, have a poor prognosis. Going to the next slide, you can see that we have also changed one additional element, and that is that we added 2 booster vaccinations. So after a period of 2 months, we do 2 additional vaccinations to hopefully boost the immune system even further. If we go to the next slide, it shows you that we are not doing this trial by ourselves. We are working with a very broad group of university hospitals, but also other companies and other universities to perform this study. And it was covered by so-called Horizon 2020 grants by the European Union. So a nice big project, and it allowed us not only to set up and carry out the study but also to build out a very valuable network with many centers involved, and the study is currently ongoing in 10 different clinical centers throughout Europe. If we go to the next slide, this is a very brief summary of a presentation that was just provided by our principal investigator, Professor Dr. Van de Loosdrecht at the so-called ASH Conference. This is an annual conference for actually all diseases that take place in the blood, including blood-bone malignancies. So a very prestigious conference. We were selected for a so-called oral presentation. So a nice recognition of the work. For now, I think the key messages I would like to leave you with is, why we are doing this? So we are aiming to prevent tumor recurrence in these patients that are at a high risk of the tumor recurrence. And one way to measure that is the minimal residual or measurable residual disease. And of course, what we look for is signals that these patients respond. And how do we do that? Next to, let's say, looking at their survival, we also look at actually the primary endpoint of the study, what happens on the level of MRD. And what you see here is an example and we now have more than one example -- actually, we presented actually 2 examples in the ongoing study already, where patients get rid of their MRD. And that, with a treatment like this, is a very good result. And what you see on the bottom right of the slide is what we also do to show the connection with our vaccine, and that is we measure immune responses against different tumor-associated antigens. And what you see here is a response, which is quite diverse actually against multiple tumor-associated antigens, confirming that the vaccine induces this boosting of the immunity and that, that correlates with the patients converting to an MRD-negative status.

So let's switch to solid cancer. Those were the first data I saw recently and said, "Wow, you're moving now into our space."

Great. So in a nutshell, the reason we approach solid tumors is that also in solid tumors, a lot of recurrence is associated with basically the outcome. And ovarian cancer is one of the most deadly gynecological diseases for the simple reason that it always comes back. So the majority of patients have the disease back after 2 years. So that was the main reason to go after it. But of course, we test it, and that's the next slide, whether our product would lead to a response. And what we have done here is what we call humanized mouse model, so a mouse carrying a human immune system and we have looked into the actual blood of ovarian cancer patients which we obtained through our collaboration with the university medical hospital in Groningen, with whom we also set up the Phase I clinical study. And what we could show is that our products basically stimulates the immunity against ovarian cancer and also in the mice that it actually slows down the growth of these ovarian cancer. So this very nicely demonstrated that our product is able to boost immunity against ovarian cancer. And these data provides for the basis of the start of the Phase I study. So if we go to the outlook for DCprime, and then I will hand it over to you, Sven, for the Immunicum outlook, based on the ongoing studies, we have just presented the Phase II update at ASH and we will have a more complete readout of the study by end of next year, and of course, we look to include the first patient into the Allison study, which is the ovarian cancer study.

I think that is a nice addition. As we all know, the biotech and pharma industry is driven by data, and here, we can provide data, we can provide value inflection points, really, like on a quarter-to-quarter basis. So this can create the noise in the market we need to drive shareholder value as well and to make sure that the awareness of Immunicum as a combined company is really driven and reaches the eyes of everybody out there on an international level. We know that we have quite a reputation in our home market, but now it is time to spread the wings and to become truly international. Thank you for that addition. On Slide 40, and yes, we are running to the end. This is just again a summary of that what I have shown initially for why we do that merger, why we believe the 2 of us combined, not only Erik and me who are becoming more and more a really good team but really as a company where the management teams are working together and the project fits so nicely, the topic fits so nicely. So this could be really the beginning of something great, new, innovative and something that really creates value. So of course, as I said in the very first beginning, a lot of forward-looking into it. But I think this merger is really worth all the efforts we have put in this year. And I hope that you will help us support us and move that to a big success. I would say this concludes now the presentation, and we will then continue with the Q&A session after a short break.

And that was a short break, indeed. I've been getting some questions, Sven and Erik. I was hoping to start with actually -- what would you say are the key synergies of this transaction?

It is on all the pillars, but what was most striking one and the one that we discussed most was really the manufacturing part, and they are really Jeroen and Sharon, together with the adviser who is on your Board, have done a fantastic job that we had an understanding before we've signed the purchase agreement that is really, as I say, a marriage in heaven. And the other thing that struck us a lot is IP portfolio using the cell lines for other products to come. And I only refer to Alex which we have here on the call as well what he has put out in his interview where we see a huge potential to come, and we are happy to leverage that. There is an old Harvard study that said 50% of the value of a company comes from its management. And I feel that we have added with this really nice competence. Again, on the manufacturing side but on the R&D we now control everything, and I don't have to tell you how happy is that I have a banker on my side who can talk science, this is something you have to find in that industry first. And then, of course, it comes to the synergistic play that goes there. And we haven't had any kind of own lab, own R&D where we can test a few things. We have brilliant ideas, but we were always nailed down that we cannot test it. This changes now, so it gives us more flexibility. And with the all the competencies on Board, we are now a fully integrated company. We can control every piece of our steps forward to the market with our in-house competencies.

Yes. And we will learn a bit more about your in-house competencies as well because as you mentioned, we have added a few people to a team's call as well to be able to answer a few specific questions because we're getting a lot of specific questions as well. But I want to start now. You've rated the synergies. I want to clarify the valuation again because I think there's a lot of questions about that. Can you tell us again, how did you land in this equal enterprise value valuation?

The foundation of the deal is that we do a merger of equal. And a merger of equal implies that if you take all the competencies you have and look and sum that up in both companies, you feel that they are equal. And then there is an algorithm that is called equal enterprise value that takes into account that value. And this has been then corrected for the cash that is in the company, and since Immunicum had significantly more cash on the bank than DCprime, this gave us a little advantage on a relative basis.

So what about the Fast Track that you gained? It was a news that was published just a few days ago? Was this valued in the valuation before you completed the merger discussions?

I was a little bit surprised about the effect it had on the share price. And I think it has to do that we had 2 press releases going out the same day, which is quite unusual. So we had DCprime out there announcing their fantastic ASH data, and we had our Fast Track approval out there. But those Immunicum shareholders who listened to my strategy already heard that between the lines in September. So it shouldn't be too much of a surprise to them that we keep our promises. And in that context, I said that we should go for orphan drug designation. And this is something DCprime, again, this equality thing can bring to the table as well because the indication they are in is an orphan drug indication. So all that fits quite nicely. I would never go so far and say that an individual event, if it's not one of the big ones like market approval, has an implication on the value. It is the way you perform it to get to it. And finally, we are living in a data-driven industry, where, at the end, there's always a digital event, you get the market approval or not. And you can have been championed for 10 years, if you don't get the market approval, you have not created value.

Will you make any effort to renegotiate the purchase of DCprime or the valuation?

No. The deal is the deal we have on the table. And this has been signed by both parties. So we cannot offer to our shareholders that we open up that again and renegotiate it. We have to go into the EGM and have to ask them, please support us the way this deal is presented, yes or no.

I want to bring in Erik as well into the mix a bit. I have a question about -- you mentioned that DCprime's data was selected on ASH. Why do you think it was selected and what were the key findings?

Sure. I've taken quite some time explaining the data. And I think for this specific question, I would like to refer to Jeroen who is also part of the Q&A. Can we hand it over to him?

Yes. I think we have Jeroen on a link. We'll see if we can find him. Now, Jeroen, did you hear the question?

Yes, I heard the question. And I think it's twofold. I think Erik already explained it. In acute myeloid leukemia, there is still a very high medical need to give patients a maintenance therapy to actually keep them in a response. So typically, this is such an aggressive disease that you don't have time to wait around, you have to start treating, and that's typically done with high doses of chemo, and those patients who cannot tolerate, they are treated with hypomethylating agents. But the essence still is that even if you create a response, meaning, that you blast the malignant cells in the bone marrow go down, you still have to do something on top of that. And the only real potential for cure is to do a bone marrow transplant, but it's a very, very aggressive procedure, of course, because you have to destroy the immune system, bring in new cells to build up a new immune system and not everybody can tolerate that. So if you look at the acute myeloid leukemia, responses, yes, we can create, but can we give durable responses, and I think that's still a challenge. And that's what -- one of the reasons why I think our abstract was selected at the oral presentation because we are all going to have to show that if we are working in an population while this risk of getting relapse is due to the fact that you can measure the residual disease, so not everything is gone, so it will come back for sure. If you have an impact there, that's of high relevance for the whole field. So that's the one thing. I think the other thing is, of course, immunotherapy, as explained by Erik, is an extremely, say, evolving field, but the dominant so far has always been on T cell approaches. And where we see the very good upsides is specifically also in the liquid tumors. But we also see the downsides, meaning that also some of these responses are not durable. So people are looking into other, say, parts of the immune system to maybe have an effect, and there's lots of attention on NK cells, but for sure, dendritic cells are coming up. And the fact that we are working on the dendritic cell approach creates an additional interest in the whole medical field.

Erik, I want to continue now that we've gotten a taste of the medicinal experts as well. I want to continue with a question that I got e-mailed to me as well because I'm not a PhD in this. But it goes like this, "Why do you think you share the approach of the allogeneic dendritic cells? And how are your platforms different from the landscapes of other dendritic cells and tumor-associated antigen approaches?"

Sure. In a nutshell, the devil is in the details. And what I've shown you is a glimpse of the research that we have done, which is much more extensive about understanding our products, and that creates leadership, right? So on the one hand, allogeneic products hold a big future, but they are different from autologous products, which are derived from the patients that also received the therapy. And for that, you need to understand your product. So I've just explained what it means for our products and how we believe our mode of action is. And I connected on that with Alex on several occasions but we got mutual appreciation for each other's platforms. But I think it's appropriate that maybe Alex summarizes briefly why he thinks allogeneic dendritic cell biology is also important for the combined company.

Yes, let's ask him. Alex, did you hear the question?

Yes, I heard the question. So I think I'd take it. I mean, when we're talking about dendritic cells, we have to know that there are subpopulation of dendritic cells. One subtype is the dendritic cell that is capable of eating the antigens, processing the antigens and then represent, for example, the tumor-derived antigen from specific molecules on the cell membrane. And by doing that, they can educate tumor-specific T cells. But in order to educate the T cell, the dendritic cells has to be autologous, which means they must come from the patient because, for example, if I take my dendritic cells, and I let them eat tumor antigens and I try to educate Sven Rohmann's T cells, they will not be educated. Sven Rohmann's T cell will attack my dendritic cell that are injected and will destroy it. So what we are using when we are using allogenic cells, dendritic cells, it's not to educate tumor-specific T cells directly, it's actually to induce an inflammatory reaction due to -- that they are allogeneic that historically is strong inflammatory reaction, which, in turn, will lead to that the patient's old dendritic cell will come to this place where we have injected the allogenic thesis, they will become activated, they will eat our cells, so kill our cells, but they will also consume and process antigens derived from our cells and that migrates to the lymph node. In our case, we don't have any tumor antigens inside our cells, and that's why we have to inject them into the tumor while we look at this prime DCs, they are actually expressing several tumor associated antigens. So these antigens will be captured by the patient's own dendritic cells and then presented into the -- drain into their own T cells, inducing a tumor-specific immune response. Usually it takes at least 1 lecture, 45 minutes to explain all this, but this is the way to very rapidly explain it.

No, it's a good -- very good explanation. And I'm going to direct my next question to Sven, actually, because you haven't had the air for a while. Now we have a criticism that I found in the chat here that criticizes the weak investment positions among Board members and the CEO. So my question will be, "Why -- how come CEO and Board members do not own significant positions in Immunicum?"

Well, let me first comment to Alex. We have to discuss that how educated my T cells are. I have to learn there a little bit more. To get to that question, I cannot speak on behalf of the Board and this is an individual decision what you do. But I came in and said, I would like to build the cell therapy powerhouse. I would say, if I see support from our shareholders and if they vote with a yes for the idea of this cell therapy powerhouse, I will definitely consider that.

Maybe I can add, Martin, because I think just to emphasize that Dharminder and I as minority shareholders of DCprime were happy to be paid in Immunicum shares, right, so we will become Immunicum shareholders, and just like Van Herk, we are long-term investors into the company.

I think one thing that we should also delve into a bit is this lockup agreement with Van Herk. Can you explain the details a bit, Erik?

Sure. I think what's customary in these lockup arrangements is that there is no free trading, so that there are stringent conditions what can be done, in this case, over a period of 12 months. And the first 6 months is just customary exemptions, like, in the case of a trade sale for the whole company, Van Herk's shares and also shares can be transferred to internal parties. So including, for example, in the transaction with the Dharminder and myself, shares of transfers from Van Herk to us to buy us out. So that's the first part. And the second part, I think we discussed why it is in the joint interest of the company, Van Herk and also the other shareholders, that we create a well-balanced shareholder basis, and this is facilitated by the second part of the lockup arrangement. After the 12 months, of course, Van Herk is still a professional investor and will not spoil the market neither for himself nor the other shareholders. So the lockup arrangement only covers so much. You may also expect that professional shareholders act as they should in the interest of all shareholders.

I'm going to ask a question, you can grab it. That -- I saw a slide where you measure the both companies, and you saw that they were -- it was an equal merger. They are very similar companies. Does that mean that we can assume that there's a similar burn rate between these companies?

I would say we go for a combined company. So we are not just adding burn rate plus burn rate, but we will end up with something that uses all the synergies. And just to preempt your next question a little bit, we have to have the EGM in place with a positive vote before we can go into any kind of details. I saw that people were asking about what do you do with GIST? What will happen there? How do you finance that? So under the assumption maybe that we get a no vote from the shareholders, I have to tell, dear shareholders, I don't want to tell Erik everything about what we do, because if you vote with no, Erik is perhaps my most fierce competitor just around the corner. And we showed him so many things already that I have a really bad feeling there. But this little thing I kept to myself just in case. And this is why, for example, we say, we would like to share our business plans, our cost estimates and so on, after the EGM. I told to my management before a positive vote at the EGM, we have ideas after the EGM, we have planned. And I think this has to be understood that we have to protect the company a little bit from that with all neat and willingness for transparency.

Yes. So for a last question, I know that we're running out of time as well. We've been live for almost 1.5 hours. What -- could you maybe paint up a time line of the next steps in the merger process?

Yes. But before we do that, we have to have a question for our CMO as well for Peter. So if you find something on your chat list, please do that as the next thing. The time lines are very clear. We expect the voting of our shareholders at the EGM on December 18. Then afterwards, we close the transaction, if we have a positive vote. If the vote is positive, then there will be another EGM in which we can put the new Board members that you showed how I go to that and make it part of our Board and then we are fully functional.

Sven, I think I actually found a great question here as well. We have a pipeline question from one of the viewers who is asking, can you confirm that in the future RCC trial, will ilixadencel be combined with an anti-CTLA-4 or will a PD-1 inhibitor be added as a triplet therapy as previously suggested? That sounded kind of scientific, right?

That is a perfect question for Peter. Peter, are you still there?

Yes, I am. Thank you for this question. So as we have communicated before the -- from our preclinical experiments, we have seen that the triple combination of ilixadencel plus nivolumab plus ipilimumab or [indiscernible] ilixadencel plus PD-1 inhibitor plus CTLA-4 inhibitor generates a deeper education of tumors in mouse models and this really is in mouse models from different institutions. So this was actually preclinically clearly confirmed. This means that there is really hope for a breakthrough in -- from our side, by adding ilixadencel to the current standard of care with nivolumab and ipilimumab. And therefore, the idea to do a Phase II study in the first-line MRCC, where we combine ilixadencel with nivolumab and ipilimumab in those patients to explore really the effect size. I hope that clarifies.

It sure does, Peter. Thank you very much. Sven, Erik, is there any question you feel has been unanswered?

I would say no. But I know that there is one magic question that I have been asked several times, and that was, "Yes, Sven, please tell me what's happening if we vote with yes or no?" And I can tell you if you vote with yes, you will get a much bigger company with complemented competencies. It will be a company that is de-risk from its clinical development risk, it will be de-risked from its manufacturing risk, and it will be de-risked from its financial risks. So if you take into account the high risk of running a biotechnology company. This will become something where a lot of risks are leveraged. If you say no, then I think this is not like one of the bloggers called it the kiss of death for Immunicum, then we will have to find a way how to move Immunicum forward, but it will definitely increase the risk of failure because then we have to run in GIST, and if that indication doesn't work, there is very limited future for Immunicum. The financial risk will be high because we do not have a second institutional investors and the existing shareholders right now have to carry a move that deal forward. So I, of course, leave it to our shareholders to decide what kind of company they have, but what I have, what's the tipping point is really now to decide you want to have this kind of company or the other.

Thank you so much, Sven, and thank you so much, Erik. And thank you also the viewers and the participants on the Teams' link as well. Thank you so much for signing in. And if you have any additional questions, just write it in the comments. I know that Immunicum will post a Q&A, frequently asked questions on their website as well afterwards to just clarify everything that you need to know about this transaction. Thank you so much for tuning in, and I'll see you again later.

Thank you.

Thank you.