Transgene SA (TNG) Earnings Call Transcript & Summary

[Audio Gap] today's event. Please note that this conference is being recorded. [Operator Instructions] And I will now hand you over to your host, Philippe Archinard, Chairman and CEO, to begin today's conference. Thank you.

Yes. Thank you, Courtney. It's actually, Lucie. So indeed, Philippe Archinard, our Chairman and CEO, as well as Jean-Philippe Del, VP Finance, are with me today for this call. Before I turn the call over to Mr. Archinard, I'd like to remind everyone that today's discussion contains forward-looking statements, and they are subject to a number of risks and uncertainties. The call will be available in our webcast -- on our webcast (sic) [ website ]. [Operator Instructions] With this short introduction, I now turn the call over to Philippe Archinard.

Thanks, Lucie, and welcome, everyone. Before I provide more details on our activities in the quarter, I'd like to give you some background on my decision to embark on a new chapter in my career. So I joined Transgene now close to 16 years ago at a time when [indiscernible] of Mayo was still with us. A lot has happened in this period, and I believe now it's a good time for me to move to a new position. So regarding the timing of this decision, I think we have to be frank. After 15 years in the job and at age 61, let's say, almost the question is not about should I do or should I think about initiating something new but rather when is it the most appropriate. So I believe now is the right time. The company is in good shape. We have 2 exceptional technology platform with myvac and Invir.IO, which I believe can have a major impact on the treatment of multiple cancer. We have also generated extremely promising clinical data with TG4001 and very encouraging data with TG6002, paving the way for broadening the range of indication for always beyond IT to IV route of administration. We have a promising preclinical pipeline with new product already programmed to enter in clinic in the coming years. We have -- we are already programming next-generation vaccine and also in research. We have promising partners with Merck-Serono, with NEC and AZ that we need to further develop. And finally, we have a cash visibility until 2022, and we believe that these financial resources will allow Transgene to demonstrate the power of its immunotherapy. So therefore, I believe this is the right time to hand the reins over to Hedi Ben Brahim at the end of the year. He had been proposed as the company's new CEO by the Board, and the formal decision will take place in December. Hedi has served as a Board member since May 2019. Actually, he was attending the Board before being officially a director. So it's almost 2 years that Hedi has been close to the company. He is a brilliant executive with all the talent and energy required to continue the development of the company and bring Transgene to the next level. You will have the opportunity to meet him in the coming months here for sure. Before then, I intend to ensure the transition period until December and for it to go as smoothly as possible. I'll remain a director at Transgene after this transition and continue to be involved thereafter. Okay. Well, that's enough for me. So I would now like to return to Transgene's strong and exciting clinical development pipeline. 2020 has seen Transgene make remarkable progress with its new technology platforms, its clinical pipeline and strengthening financial position. All of this has been achieved despite the challenges we have faced, all of us, as a result of this unprecedented COVID-19 situation. First, we have obtained very positive results with TG4001, which give us the confidence we'll provide the clinical development of these vaccines against HPV-induced cancers. With these results, we believe that we have established a very encouraging clinical proof-of-concept for our virus-based approach in combination with immune checkpoint inhibitors. We are continuing to follow up the patients, and I can tell you that I'm very confident in the data we will present at an upcoming congress. We are in contact with the participating investigators with new and -- new KOLs and investigators who have been attracted by our recent results announcement. They are clearly eager either to continue or to start dosing patients. For a company like Transgene, as you can imagine, this is the best possible reward we can -- one can expect. We are working hard on the next planned trial with TG4001, and we will obviously keep you posted on our progress before year-end. In other words, we can't give you yet the specific, but we are thrilled by the data and the prospects. Our oncolytic virus, so TG6002, also produced positive preliminary result. The study showed that TG6002 when given -- when administered intravenously induce the production of a chemotherapy agent in the tumor in Phase I. This is together with what we have published in 2018 and 2019 in a so-called U.K. neoadjuvant study, the first evidence to support the mechanism of action of an oncolytic virus administered by an IV route. These results confirm the safety and the -- safety of TG6002 administered IV. Beyond 6002, they also provide highly encouraging data on the viral backbone itself. So it forms the basis of our new generation of oncolytic virus. And as you know, that we are developing another trademark of Invir.IO. Regarding myvac, patient inclusion continues in line, I must say eventually ahead of our own plans with the 2 Phase I trials ongoing for 4001, our individualized immunotherapy. This progress has been enabled by our success in building up the GMP-compliant production facility needed to produce this individualized immunotherapy. We are allocating a significant amount of time and energy to make sure that our best-in-class myvac platform gets the visibility and recognition that it deserves from the scientific and the pharma community. And we will keep you informed further on the progress we are making using digital science more and more in our developments. The Invir.IO collaboration with AZ, as indicated, progressing as planned. As a reminder, this collaboration is particularly important as AZ is one of the, I would say, major companies which has built its in-house expertise in the field of oncolytics. And therefore, their decision to access and their confidence in our platform is a strong validation of its potential for novel product that can be generated using our proprietary technology. We have delivered the new oncolytic -- we have delivered new oncolytic virus to AZ, and we are looking forward to hearing about the outcome of their ongoing in vivo preclinical experiments, which, as you know, are necessary for a possible option exercise. Finally, we have seized a short window of opportunity, actually very short window of opportunity, to sell at a premium price a part of our stake in Tasly Biopharma for $22 million, which, added to our EUR 33 million cash situation at the end of June, secures our cash position vision -- until 2022. The financials that we have reported today are in line with what you could expect from us. And with this recent progress and the current level of funding, I am very optimistic about Transgene's ability to deliver and generate shareholder value. So that's basically what I wanted to say. As you've seen, we have not detailed the specific of the financial. Obviously, Jean-Philippe is on the line and, if you have any questions or specific points to raise on the financial aspect, is there to answer. And obviously, I'm also here to take any questions you may have. So it's now your turn.

[Operator Instructions] We currently have no questions in the queue. [Operator Instructions] Okay, we do have some questions coming through. Our first question comes in from the line of Sebastiaan van der Schoot calling from Kempen.

First off, on TG6002 via the IHA route. It was passed before because of COVID-19, and I was just wondering how the recruitment went with the other trial with the intravenous -- via the intravenous route on enrollment and if you expect to read out in the second half or the first half of 2020.

Well, thanks for your question. So indeed, what we call the TG6002, all 3 trials was a single-center trial in U.K. Indeed, specifically, this trial was halted because -- after having the first patient treated because of the COVID situation in U.K. The situation has resumed there, so the trial has restarted in this center in September. And we are expecting to treat the patients as we speak and to guarantee that we will deliver results of this trial during 2021. We have extended the -- we have broadened the spectrum of site, and we are opening new centers for these trials in different countries, including France. So we are expecting to catch up the delay that was caused by the COVID-19. And regarding the IV trial, so the 6002 trial, we have been stopping the enrollment for this -- quite some time to enable the maturation of the data to be able to communicate the data. As we've communicated on the market specifically, the trial as is will not continue. We are about to file an amendment on this trial to end up in a larger, randomized, controlled trial. So trial as is will not be pursued because we have signals of activity which are such that they were out a larger exploration in a controlled setting. And we are quite ambitious in this plan, and we will communicate the details, the synopsis of the trial, in the coming months at the occasion of the publication of the full data. But we are quite ambitious in the trial. And this trial should have the capacity of bringing us closer to the finish line, if not to the finish line.

Okay. And then also regarding TG6002, you just mentioned that you are reaching the active dose. Do you have any historic benchmarks for the chemotherapeutic agent, in which concentration it needs to be chemically active? And -- yes, that's the question.

So we have already reached therapeutic doses of 5-FU in the existing dose, but we have not -- we have still a very satisfactorily tolerability profile. So we are continuing to increase and thus are collating the product or at least to lower the dose through an amendment because we were not expecting at this dose the product to be well tolerated. So we don't know what are the -- which are the most efficacious dose, if you will, at this stage, and we will clearly treat the patient with the maximum tolerated dose possible. And also, to complement this answer, the 5-FU is not the only mechanism of action. We do expect the oncolytic backbone in itself to induce an oncolysis of the tumor cells to induce an immunogenic cell death to amplify the immune response. So here, we are expecting a synergy between the activity of locally produced 5-FU together with the activity of the oncolytic. So in other words, the 5-FU is not the only metrics that will follow in term of efficacy, obviously. But it's a bit too early to say. So we have -- we do expect in Q2 next year to be able to have reached the higher doses and to be able to hopefully respond to your question.

The next question comes in from the line of Thibaut Voglimacci calling from Invest Securities.

I just have one question regarding your visibility on the Tasly IPO process. And on the long run, what is your strategy with your shares you have currently? Are you planning on staying like a long-term shareholder for Tasly? Or maybe you have a lockup period after the IPO? Just to have more visibility on this -- these stakes you have.

Thanks for the question. So yes, we do have a lockup -- 12-month lockup period as of the IPO. So that's today basically a common law in China. It may change. There are some projects discussed over there that may change this. But for the time being, we are betting on 12 months lockup. No, we are not -- we don't have the strategy to become a long-term shareholder of Tasly Biopharma. So this position is meant to be liquidate as soon as we can based on our own needs. And three, regarding the IPO process, so they have signed in late August for the obtention of the visa. The normal process from A to Z is a 6-month process. But because they already had -- got the visa in the Hong Kong Board, they think we agree on what they're saying that it's going to take rather 3 months than 6 months. So they expect to get the visa before year-end. And they are still -- they still remain as an objective to list before year-end -- at or around year-end, let's say. So that means, in other words, if they -- and obviously, we are closely monitoring this. But if they manage to follow their plan, that we could basically start to sell shares as early as late Q1, Q2 2022.

Okay. So you don't include it in your -- yes, financial visibility?

They are, to some extent, part of our -- the expansion of our financial visibility. We have EUR 32 million of cash plus EUR 20 million that we managed to get from the sale of part of our shares. And we have kind of a stake in Tasly Biopharma worth a little bit less than $40 million. So that's -- all in all, this is our cash visibility that enabled to extend our financial visibility through 2022.

Okay. And just quickly, regarding the news flow and more specifically the TG4050, did you see some delay because of the -- well, the COVID situation? Because I think your last comment was publishing like results -- the first direct scientific results during H1 '21 and now you're saying in '21. Just I want to be completely clear there.

I think it's -- so we -- no, we -- honestly, we do not have, recruitment-wise, the patient inclusion, where it took place as planned. As I said, then just a nuance on the quantity of the data we may be able to get. As you know, we don't know exactly, at least for one trial, when exactly we can treat the patient because that's based on biological symptoms, let's say, or biological markers' activity. So it's a medically educated guess, I mean, at around mid-next year. But we should start to get the first data regarding safety, obviously, and mostly immunogenicity as an earlier readout, which is the first data point that we will obtain before expecting to get clinical or biological activity. So no. Then honestly, we have been rather surprised -- positively surprised by the fact that mostly in the U.S., that the Mayo Clinic's -- in the 3 centers of the Mayo Clinic, that the recruitment will continue as planned. We have another site in France that has also been recruiting very well. And we are opening new centers as we speak. We will be opening in the U.K. So, I mean, no, things have been really moving very nicely.

Okay. And lastly on vaccine. So we know like respiratory disease right now is kind of a hot topic. Was it like a opportunistic stake? Or are you planning to do something else with them like on the medium term?

Well, this is not -- I mean, it's an investment in kind, if you will, where the situation was that over time, we have developed a cell line to produce viruses. This was -- basically, this was internally in end -- late 2015, sorry, at the time where, if you recall, we decided to sell our pharma operation assets to a sister company, ABL in Europe. At that time, we had no reason why -- to pursue this work in developing a cell line. We were not basically making ourselves directly our own product. So what we did is to set up a research collaboration with a scientific group, which turns out to be one of the now best-known group in biological research especially quite involved in the COVID pandemic. So they did further develop the cell line. They developed in parallel a vaccine on metapneumoviruses, which turns out to be very difficult to progress in general and grow very well on our cell line. All in all, they decided to create a company around these assets. And basically, we set an agreement with this -- with the founder of the company to bring gradually our assets in the company against equity to enable the company to grow and benefit from different type of subsidies and help in get the proper status. We remain -- our stake remain kept in the company, and we will move gradually the -- move up in the stake of this company as they grow, as they raise new money. So if you will, it's not a financing investment. We have no -- we have a Board seat in this company because we are a shareholder, but there is a -- it's not a diversification of Transgene. It's rather an opportunity to create value on an asset that we had enhanced and that would stay in a drawer otherwise.

Okay. All right.

But having said that, they've shown interest to invest in vaccine. I called the guy. It's a good opportunity.

[Operator Instructions] Our next question comes in from the line of Arsene Guekam calling from Kepler Cheuvreux.

First of all, could you give us some more detail on the confirmatory trial for TG4001 that you intend to carry out? I'd like to know and to understand the timing, number of patients. If you can have some detail, it could be great. Second question is more a general question. Today, you have an interesting portfolio. While it's very early stage, what is your strategy in term to market access? Are you going to sign partnership with other partners? Or do you want to continue alone? If you could clarify your strategy, I think it could -- it will be interesting for me, of course. And the last question is about your move, Philippe. And how can we read -- we have to read this move? Are you going to stay in the manager space? Transgene -- your name is associated with Transgene for a very long time now, so I'd just like to know why now and why at this moment.

Okay. So the correction was not completely perfect. So, I mean, -- and I think you have now 3 questions regarding the TG4001 and the details of the upcoming trial, though it's -- I just can't give you a precise answer except that I think I'll let you understand that we are quite ambitious and bullish on this trial, and we have all the reason to believe that we could end up in a pivotal track. So this will be confirmed. This will be confirmed. But we are quite ambitious on this, and that's going to be several hundreds of patients. We have a safety base on this product which is already quite substantial. So if we have -- if we extrapolate the efficacy we have seen in the last results, we do not need too many patients either. So let's say 150, 200 patients should suffice to fully demonstrate the case. But again, we -- you should wait a bit more. And before year-end, definitively, we will clarify the precise protocol, the size, the statistical plan, the center, the countries and all the 9 yards. So bear with us. The strategy regarding partnership, clearly we are not -- we are very confident on 4001. We will keep 4001 and try to get it to the finish line. So we are not aiming at partnering 4001. I think it's a key asset for the company, and that's -- I think it's an asset that can really transform the company from, as you say, a rather early-stage company in term of clinical development to rather more mature stage. So clearly, this one is not for -- open for licensing for now. The -- for the other one, we will not partner either before at least a strong clinical proof of concept. So clearly, for 4050, for TG6002, BT-001, the partnership event is not to be expected imminently. We think that partnering before having clinical proof of concept is too early to retain a substantial enough part of the value-added of the product. So that's not where the optimal is. And basically, our Board institutes are completely in line with this strategy. Now, as you've seen, we have set up earlier-stage partnership with AstraZeneca there, for instance, but this is a completely different story in parallel of our own development on the Invir.IO platform. We wanted to get validation. We wanted to get someone with the financials. And also, we are working with the appropriate -- proprietary targets, sorry. In other words, what we do with them, we can't do it alone. So, I mean, it's not like we trade off what we can do for ourselves versus what we do with a third party. So I think it's pretty clear, at least in our mind, what we want to do. If we get opportunity, without derailing the development of our own portfolio, to get mobility financing, we will but not at the expense of moving forward the strong proprietary portfolio of clinical products at least to the clinical proof of concept. So that's kind of the strategy. And the third question on myself, indeed the -- and I tried to cover the point. I mean clearly, I've been within this company for now more than 15 years. I'm 61 years old. I could certainly continue to do so. But I'm convinced that in any situation, it's a good opportunity after a certain while to have a new blood, a new eyes on things. There's always things that can be improved. And sometimes, after a while, we don't see it that clearly. It's also that I'm convinced that we are entering into a new cycle in term of value creation. And if you think of bringing a product to the finish line, that's kind of a 4 years, 5 years trip. There may be other corporate things that we could do. So I think it's better to get somebody on board at the initiation of this cycle to lead it to its completion than just dropping in the middle. So the timing is good because the company now is in good shape. We have a good momentum. We have many opportunities in term of clinical development. We have a strong research. We will do more in term of moving our research in the digital age, and there will be some further communication in the coming weeks. We have the financial visibility. So it's kind of a good period for transitioning and leaving things in good order and enabling Hedi to get a few months to digest things and get fully ready early next year to lead the company. So, I mean, it's simple, I would say, in that there's no -- nothing else to look at or second guess. It's not a change of strategy. It's not a -- I mean, witnessing any difference of vision from the Institut Mérieux to our project. And so clearly, it's never more of the same because we do expect a newcomer to bring new things. But clearly, it's a continuation of what has been already developed. And obviously, we are in a world and in a business which is -- you can't predict everything. So there's always new things to -- new opportunities to grab. But I am convinced that we have all the ammunitions, the resources, the people, the competencies and the financing to really play our cards in the best possible manner. And me, it's going to be a very different job always on science and technological innovation because that's basically what I like the most in different capacity. I won't be acting as a manager but more as somebody that can influence, warm-challenge what the companies of the group are doing. And Institut Mérieux, they've always been quite passionate about the development of their company, but very respectful of the governance of each of these company. So clearly, the management of Transgene will develop its plan and will interact with the shareholder. And if in my new capacity I can help Transgene to seize some opportunity, technology -- and some technological -- in the technological field, and then I will certainly contribute to it. So that's not more complicated than that, not more -- nothing else to read there. If you wait for me, it's clearly quite emotional because I put a lot of energy behind it. I have a lot of friends in [ Calbo ]. I would be missing them. But it's -- as I said, it's always good to get new blood on things. I mean it's just a new page, a new chapter, whatever, but nothing really different, in a way, to expect.

There are no further questions coming through, so I shall turn the call back across to yourself, Philippe, for any closing remarks.

Okay. Thank you. So as I said earlier, I think Transgene is now well placed to deliver improved therapies to cancer patients. Our most advanced clinical asset, TG4001, has delivered promising results, and I'm confident that the next planned clinical study will have the potential to bring us to the finish line. I'm really looking forward, as is most, to announcing the detailed results of this -- of the trial and basically the synopsis and the detail of the upcoming study. For TG6002, we are on the right path, and we can expect the next data to confirm with a higher dose the promise of this novel oncolytic. And again, what is true for TG6002 is going to be leading to a read across for the rest of the Invir.IO platform. I am extremely confident in the potential of our myvac and Invir.IO platforms and in the -- and more broadly in the preclinical and clinical portfolio of the company. These novel approach are based on a world-leading technology. I'm very proud of what Éric and his team have done. The partnership with NEC. I'm not sure the market has fully understand it. The -- what we've done with the blockchain orchestrated supply chain is a -- I have to trust, is also a first. We'll see in the coming weeks what we've done as a company, Transgene, in the field of patient mapping, if you will, or character -- patient characteristic mapping in our trial. So really, we are, I think, at the forefront of the precision medicine, of bringing digital age to the -- well, our development to the digital age, and that's just the beginning. So I expect clearly this platform to deliver new assets that will have a major impact on the treatment of solid tumors. Over the next 18 months, I expect Transgene to deliver multiple value-creating milestone as progresses on TG4050, BT-001, the new product out of Invir.IO platform that will enter clinical zone in 2021, 6002. So really, we will have ample opportunities, not to mention also delivering on the partnership with AZ. So I really am very much appreciative having the opportunity to interact with you to discuss the development of Transgene over many -- over these many years with you. I will be here for another couple of months in my existing position to make sure Hedi has all the support he needs to take over the leadership of Transgene. Clearly, over this period, you'll see Jean-Philippe and myself are available for any question you may have. And with this, I would like to conclude today's call. I don't know if it's the last or the one before last, but it's clearly among the last ones. So I hope I will still have the opportunity to see you or talk to you in the future in my new capacity or so maybe. So thanks and goodbye.

Thank you for joining today's call. You may now disconnect your handsets. Hosts, please stay connected and await further instruction.

Again? Okay.