Transgene SA (TNG) Earnings Call Transcript & Summary

Hello and welcome to the Transgene First Half 2021 Financial Results and Business Update. My name is Jess and I'll be your coordinator for today's event. [Operator Instructions] I will now hand you over to your host, Lucie Larguier to begin today's call. Thank you.

Thank you Jess. So I'm Lucie, Director of IR at Transgene. During our call today Hedi Ben Brahim, Chairman and CEO of Transgene will provide you with a short overview of the important progress we have made during the period. After that Jean-Philippe Del, Chief Financial Officer; Eric Quemeneur, Chief Scientific Officer; and Maud Brandely, Chief Medical Officer will be available to answer all your questions. Before I turn the call over to Mr. Ben Brahim, I would like to remind everyone that today's discussion contains forward-looking statements, which are subject to numerous risks and uncertainties. The webcast can be accessed via the Investor page of our website, and via the press release issued today. If you are listening to the webcast via the Internet, you will not be able to ask questions. So if you wish to ask questions, please make sure that to join us via one of the conference call numbers that are available in today's press release. With this short introduction, I now turn over the call to Hedi Ben Brahim.

Thank you Lucie and hello everyone. Thank you for joining today's update call. So I became CEO of Transgenes in the beginning of 2021 and the last nine months have been truly exciting for me, for the team, and for the company and it's also been a real pleasure to talk with you over the last nine months. So today, I will focus on our achievements since January. The year has seen a great deal of progress with TG4050, our individualized cancer vaccine, which is based on myvac our cutting-edge and proprietary viral vaccine platform. As you know, myvac has two components. First an improved viral delivery system based on the MVA strain that we've been using for our previous vaccines. It has been modified molecularly to induce the stronger prevailing of the immune response against the target integer. The second component of myvac is a process along the design and manufacturing of the vaccine for clinical use and the meeting a timeframe that is suitable for the patient drug. For TG4050, 2021 has been a very active year. We were able to dose very first patient of the head and neck trial where patient with ovarian cancer was already being treated in the US since fall 2020. Also the opening of several centers in Europe and US continue to support our two clinical trials. This site have been added to the initial investigating centers that those of first patient in late 2020 and early 2021. This additional site will contribute to recruitment, but also demonstrated, the approach has a potential to be rolled out to multiple sites worldwide. It validates the robustness of our entire supply chain for TG4050 from biopsy to manufacturing and injection to the patients. We continue to observe a high level of interest about specific studies both from the clinicians and the patients. And I'm happy to report that the recruitment and pace of treatments are going well and in line with forecast. In January, we made the commitment to communicate the full data in Q4, 2021. I do confirm the same line and even narrow the window of our communication, so you can expect this data in the second half of November. Why can you wait from us to a particular data of TG4050 in November. First 50 data. We have a good safety protocols with our viral vaccine and our patient platform. Our product is customized using an artificial intelligence-based system and could be placed potentially unprecedented strength in terms of immunogenicity. So it is necessary to make sure that TG4050 is well tolerated, particularly with respect to potential immune-related safety events. Second, the topic of key interest will be immunogenicity of the vaccine. Obviously, you all know the importance of the T cell in antitumor in response and this is central to the mechanism of action of this novel individualized immunotherapy. In that previous generations of vaccine, we are here are addressing 30 new target specific to each patient. This means that we'll be looking carefully at each rate of injection to see how we are selecting the right antigens for each specific patient. All these data taken together are expected to validate the platform and could provide valuable insights on which the way we design our Phase II studies. Finally, we will provide you with available data on the actual antitumor activity in patients that have the had acquired or sufficient follow-up. These data will make sure over time and will be enriched by using additional biomarkers like CA-125 in the ovarian cancer. We are looking to validate our myvac platform when compared to other personalized vaccine approaches. Our trials are specifically designed to assist TG4050 as immunotherapy and what we see will result from our treatment only. This data will reflect the activity of the product in patients without a vaccine and therefore with a functional immune system. This monotherapy data will be highly useful if we look to undertake combination studies in the future. Together with the team, I'm really looking forward to presenting you the initial Phase 1 data of TG4050 in the second half of November. Let's continue with our other vaccine TG4001. We know it is an MVA based therapeutic vaccine and it entered with randomized Phase II trial based on the very promising Phase Ib/II data. Positively, some patients from the earlier element of the trial seen on treatment with TG4001 and are doing well. In this randomized Phase II trial, TG4001 is being administered in combination with avelumab versus avelumab alone in patients with HPV16 positive anogenital cancer without liver metastases. Regular FDA clearances have been obtained in France, Spain and the US. The trial enrolled such patients in June that we've communicated. Again, I'm very happy to report antigens forecast, so we should be able to proceed to an interim analysis in 50 patients around the end of 2022. This trial has been designed to demonstrate the contribution of TG4001 plus avelumab versus avelumab alone in population of patient that mostly do not receive prior therapy checkups. The positive interim analysis will allow us to further progress the trial and enroll around 150 patients overall will be aim to demonstrate the power of the combination regimen. In development of pipeline of oncolytic viruses, there has been also several key achievements. The first actual data with TG6002 that showed it could be successfully administered by the intravenous route were presented at ESMO last week and AACR last spring. At Transgene we are convinced that developing ovis that can be delivered would be a major advance as it will provide an extraordinary opportunity to enlarge number cancer that could be treated by this number of class of therapeutics. We have demonstrated that even at the highest dose tested the safety profile of TG6002 when given by the IV route meets our expectations. The dose cohorts also provided evidence the virus is able to reach the tumor, replicate within the tumor and express fully functional at Transgene as assessed by the detection of chemotherapy in the treatment of patients. This is important and the same backbone is central to our Invir.IO platform as with administration via IOs. This clinical proof of concept of the feasibility of the IV route is key to continuing the development of TG6002 and further progressing our ongoing collaboration with AstraZeneca. To finish on TG6002, a few words on next steps. We are now able get in different administration schedules on the oncolytic. We expect to complete this cost during the first half of 2022 with an addition of another of dozen of patients. We will come back to you once we have completed the steps as we would expect this move to the Phase II part of the trial that will follow to assess the efficacy of the treatment. Moving to BT-001, the first oncolytic virus based on our Invir.IO platform [indiscernible] is in the Phase I/IIa trial currently enrolling patients in France and in Belgium. It has also received IND clearance from the US FDA. BT-001 has been designed to combine post productivity anti-CTLA4 antibody, which will give an increasing competency of the tumor with the ability to stimulate the strong immune response. BT-001 is expected to show better durability profile in patients than that of anti-CTLA 4 antibody and is done by our systemic routes. With the event, we'll be presenting a poster on our preclinical data with BT-001 at SITC in November. In parallel, the Phase I/II trial is progressing well and we are in the dose escalation phase of BT-001 and directly into the tumor. We expect to release further data from Italy in the first half of next year, allowing us to move in the next part of the trial. Here the aim is to rapidly generate data in combination with a checkpoint blocker and identify the most providing indication. Our P&L in the first half of 2021 was in line with our expectations. At the end of June we had EUR48.1 million in cash and cash equivalents, following the success of a private placement of EUR34 million in June. Also you have noticed that we've just signed an agreement on the sale of 49% of the remaining shares we own in Tasly BioPharmaceuticals for $20.2 million, approximately EUR17 million. The share sale was undertaken to monetize part of our stake in this company. All these extend our financial visibility until the end of 2023, which mean that we can deliver all of key anticipated milestones. I am confident that the upcoming trials will demonstrate the potential of Transgene's portfolio of immunotherapy by generating significant benefits for patients with the aim of creating value for our shareholders. Thank you for listening. So with that, we'll now take your questions.

[Operator Instructions] And the first question comes from the line of Jean-Jacques from Bryan Garnier.

Good afternoon and thank you for taking my question. I have a few financial questions regarding the Tasly shares. The first one is when -- I understood when you stated your financial -- you have no financial visibility until end of 2023, does it include all of the $20 million USD or EUR17 million coming from the sale of Tasly shares? The second financial one is what does this sale mean for the credit facility opened with Natixis? Mention something -- do you have to reimburse something if you already have drawn some cash from this facility. And my third question is despite I understand it's always difficult to comment clinical trials from competitor, but do you think -- is there any takeaways or lessons from the clinical data released by Gritstone at ESMO a few days ago with their Individualized Neoantigen vaccine, which is, could be or which is a competitor to myvac despite it's not the same indication, but is there any signal or things you get from this results and this trial for your own technology? Many thanks.

Thank you Jean-Jacques. Of course, Jean-Philippe will take care of the finance part and Eric will take you through, maybe adding a few words on Gritstone.

Hello Jacques, this is Jean-Philippe. Thank you for your question. So, first regarding the -- our cash visibility, so when we say that we have the capability until the end 2023, it includes, first let's say Tasly share and also the sale of the remaining share in the three years to come. So that's for your first question. For the second question regarding the credit line, we are not -- go down on this credit line state. So this EUR 15 million credit line is still fully available, but as a result of this sale, the credit plan will be cancelled as soon as we proceeds are received because I remind you that credit line is [ pegged ] with our Tasly share and as agreed with -- contractually with Natixis, the amount of variable from this credit line actually reduced by the amounts provided from the sale of shares. But the fact that we cancel this credit line has also no impact on our creditability because the deadline of this credit line work is in mid of 2023.

Eric?

Regarding the question on the Gritstone, for sure we saw those data and frankly we've been pretty impressed with their current results. Of course that would validate the neoantigen based approach, that's the good news. May be the concern is that it's very difficult to compare with their results and ours in the sense that their data approach is based on two technologies combined in the prime boost approach both in [indiscernible]. So they are combining the prime plus an RNA-based vaccines as a boost in more advanced cancer cells in combination with nivolumab and ipilimumab. So by saying that, I'm just suggesting the fact that we have made a completely different design and we look forward to the efficacy of our product in monotherapy. So one side is that the good news that the neoantigen approach is providing so nice response rates but difficult to compare at the same time regarding their design and their combined technologies.

The next question comes from the line of Sebastiaan van der Schoot from Kempen.

Hey, good afternoon everyone, thank you for taking my questions. Maybe we can go through them one by one if that's okay. So first I had a couple on TG4001. So the interim analysis data for next year year-end, this comprised a futility analysis and if so can you then even show data and can you also remind us of what you believe will be the benchmark in that setting?

Thank you for this question. So actually this interim analysis is for sample size adjustment, meaning that we will analyze the magnitude of the difference in terms of PFS between the two study arms and define the number of additional patients we will need to add to the total population to detect a significant difference. So it is not a futility analysis per se. And in terms of benchmark, we have hypothesis that are set in the protocol, which means that we are expecting compared to avelumab single agent to bring us the progression free survival.

And then, will you be able to show data on progression-free survival at that point or not?

Well, we will calculate -- the aim is not because, the new 50 patients that much to detect significant different is not to show data in terms of progression-free survival intent, it to calculate a number of additional data in 50 or 100 additional patients to be added to the population so that we will be in a position to show a significant difference. This is our intent because you know without significant difference, there is no meaning in what we could present.

Yes, okay. Now that's very clear. And then regarding the TG6002. Can you maybe expand on what you have learned so far from the Phase 1 trial and how you would progress when the Phase 1 trial is completed into -- in terms of which patient population were target?

Sure. For TG60002 the #1 learning is that to 50 is pretty good because actually one reason for the trial is not completed is that we were not expecting to go that high in terms of dose levels. So we have reached the moment the [ indiscernible] dose level meaning that we inject this amount of virus to the patients without having reached the maximum tolerated dose. So you can see that the safety profile is pretty good and much better that we have seen by the past with other disease. So that a #1 learning because that is pretty important to be able to implement a Phase II trial. The #2 learning is that we were able to detect the virus injected by IV route in relation in metastases. So through bacteria which were taken mainly from liver but we are also [indiscernible] and therefore we were able to detect the presence of the virus and importantly to detect the fact that the virus is replicating and expressing its transgene as established by the conversion of the product 5-FE to 5-FU. So in all patients, we were able to detect within the tumor tissue the presence of 5-FU it which is you know critical. And as far as future of the product is concerned, we are contemplating GI malignancies which may include and we are discussing with QL our data of course, it is an important step to define whether it is appropriate to do for colon cancer or pancreatic cancer. So this is a kind of discussion we will have during the end of the year, beginning of next year, so that we would be in a good position to start an appropriate Phase II trial to show the interest of institution of TG6002.

Okay, very clear. Thank you. And then regarding TG4050, will the data readout -- that is more orientated towards ovarian cancer or head and neck?

Well actually if you -- maybe you remember that designs of the two trials. One trial ovarian cancer is an open trial and we are following a well-known biomarker which is CA125, which is generally increase when the patients developed relapse or tumor progression. And therefore we are following carefully this new marker to see what is the impact of TG4050 on the evolution of the biomarker. In the case of the head and neck trial, it's randomized trial which compare immediate treatment with the vaccine versus delayed treatment at the time of relapse. And we intend to compare the duration of the relapse-free survival between the two arms. Having said that, it's true that there is some new biomarker that are not as regulated as the biomarker used in ovarian cancers here CA125. I am thinking about CT DNA which is a pretty new way of following these patients but in the field of head and neck cancer it is not yet totally validated as it might be in lung cancer for instance. But this is something we are looking for.

And will you also be able to check T-cell specifically against each antigen that you will include in the vaccines for each patient?

Maybe I will let Eric answer to this specific question.

Sorry I could not hear. What is your question, can you say it again, please?

Sure. I was wondering whether for the next data readout, if you would be able to check now specifically for each antigen that you will include in the vaccine.

Yes. Okay, thank you for saying it again. You're right. Actually, the plan is really to document the specific response against each single antigen so we have designed the peptide in that way. Of course, the number of quality of concerns of with vaccine, we will also try to -- when you talk the intensity of the specific T-cell response, as you can imagine it is not an easy task but those are quantifying the rate of volatility and the intensity of the T-cell response are the two continual goals. And everything has been made ready for that.

Great. And then my final question is on BT-001. Can you maybe explain the differentiation from RP2 and can you also expand on what type of data you will expect to report on for the BT-001 update in H1 '22 and how many patients that will involve?

Well, as far as the number of patients is concerned, it's start out with dose escalation trial, meaning that we all three to six patients per dose level and at the moment, we are testing escalating dose with addition to the population of patients [indiscernible] patients dose escalation and then maybe again I will turn to Eric for the differentiation versus regimen stuff.

Yes, of course, you have in mind that the vector are very different. They are also different in the sense that the antibody encoded by the virus has been quoted for optimal [indiscernible] kind of specifically for the antibody. And regarding the vectors, of course we carefully look at the key feature for the vaccinia compared to HSV. But something we plan to report that -- report was submitted and the moments that you would get soon the full details on difference performance levels, and important data on HSV. The major difference in terms of the impact of vaccine [indiscernible] Of course we don't have the head-to-head comparison with this vector, but we believe that we have demonstrated something very strongly the few months.

Eric the line is not very good on your side. Can you just repeat the last part of the difference of the vaccine regimen?

Yes, in the paper that is about to be published, we documented on the properties to attract T cells in the tumor microenvironment and we also within the T cell repertoire the level of memory T cells and we saw very good results. This was in mice model, of course. We will do our best to detect if this also true in human samples.

The next question comes from the line of Arsene Guekam from Kepler.

Hello gentlemen, thank you for taking my question. Three if I may. First of all, regarding TG4050, what could be the key findings of the ongoing Phase 1 and how will you put all the data as this treatment is an individualized treatment and regarding immunogenicity it could be a very important individual variation. Beyond that I have two financial question. First, could you give us the share of the manufacturing activities in your R&D expenses and the last one, what do you expect in term of cash burn for 2021? Thanks for that.

Do you want me to comment on the immunogenicity analysis?

Yes.

As Hedi told, the idea is to analyze very broadly the immune system induction and you're right, that would be for every single patient. The good point is that for each patient who we have a ranking of the highly is that type and those who are less immunogenetic in our prediction and really important that we compare the ability of the vaccine to induce results for duration to two week immunogenic peptides. So that would be a key result but would be collected from each single patient. In terms of comparison, of course, you're right that it would be difficult to compare but the number of it would be maybe a key for transition and it's difficult to give a specific number, but we hope to be able to demonstrate in every patient that whatever the initial cell ratio at the beginning we can increase the most significant T-cell trends.

The main point will be the increase of the T-cell response.

Absolutely right. Yes. And on top of the specific T-cell growth even is possible for weaker antigens.

Okay. Do you have any threshold?

No of course. Considering the way they were selected we are as we said before we are in AI based the selection process. So it's more -- it's not the ranking but more selection by AI of most recent antigens. But we have some parallel data allowing us to rank them as I moderate weak immunogens.

And regarding your financial questions so first on the expected cash burn for 2021, we expect to have an operational cash burn meaning excluding the private segment and the sale of that share, its operational cash burn, should be around EUR 30 million for 2021 with around EUR 40 million of expense fees and around EUR 10 million of revenue. Regarding the of parts of the manufacturing activities, we can consider that it represent around EUR 10 million per year regarding the staff and all those because linked to the manufacturing activities and also the external costs linked to the process development and external manufacturing.

So this is both for in IO with several loss and all myvac manufacturing.

[Operator Instructions] The next question comes from the line of Dominic Rose from Intron Health.

I've got three, if that's all right. Question one, it was a great, we could have a bit more of an update on where you stand with your collaboration with AstraZeneca. I know there were five targets and I think the transfer to -- so what's your thoughts about the three targets and what kind of, what does the payments which are expected if they transfer ESMO and question two is on the Tasly share sale. I was a little bit surprised by that. I thought there was a one year lock up, I assume this figure is guarantees and when would you expect to receive the cash from that. And finally question three, you've obviously got a lot of relapse over the next 18 months. Just wondering which one you were most excited about.

I'm sorry, Dominic. We did not understand or hear your second question very well, can you please repeat it, please?

Yes, of course. Can you hear me?

Yes.

Yes, question two was on the Tasly share sale. I just wanted to confirm that the EUR17 million is a guaranteed figure as I was under the impression there was a one-year lock up and you wouldn't be able to monetize them until late next year.

Eric can start with first if that's okay and Jean-Philippe will comment on the payment related to AstraZeneca and Tasly and then I will finish with the readouts.

So regarding the collaboration with AstraZeneca, you might remember that we had this program, it's holding up to Pfizer project to be designed with them, so everything has been going well and we are working in line with the plan in fact, and we are currently working on the last two construct that were defined in the first two years. There are advanced product in rising in their side. The contract plan that the project will be transferred after preclinical and individual characterization to their premises. They are carrying out the final analysis pre-clinical studies, and for the first product delivered almost one year ago, they now have to organize the decision, we are discussing heavily with them on where they stand now and move it's possibly done -- possibly it could decide for the first option to be precise by the end of this year or around the end of this year. So it's been going well on that side. So that's what I can say. Regarding that the finance I don't think that we already reported the amount planned for their permit, they will be ready for those numbers. So we have not communicated on the financial term beyond the EUR 10 million that we've received from AstraZeneca three years ago. So I think the priorities -- I mean we hope that AstraZeneca will appreciate the product we are delivering to them and they would move into clinic and that we will be a great confirmation and interest and the value of our technology that would be a payment, the goal is one product into clinic. It will be transformative to Transgene, it will not impact significantly our cash definition. I think it's re-model technology than short-term money. And with that I will let Jean-Philippe.

So after this EUR20 million sale of partial shares of Tasly, we still had 8.7 million shares of this Chinese company and those shares are valued approximately at $20 million. So as you probably remember, we have to respect a 12 month lock up after the IPO of Tasly before being able to sell the remaining shares. So we think with the opportunity today to sell those shares because Tasly is about to resubmit its IPO filing. So it was just an opportunistic operation, but for the remaining shares, we will have to wait 12 months after the IPO before being able to sell those shares, before the end of '23.

We've demonstrated last year and confirming that that we find solution to monetize these assets. So we are not worried about the future. So let me talk about the results. I think the first half of this year, this H1 was really mainly driven by the initiation or acceleration of the clinical trial which BT-001, 4050, 4001 and so on. We had very interesting data to present to. The value is not yet fully understood by everybody but that once again the stuff was really more about launching clinical trials. Coming 18 months would be much more driven by results. So I think it's even more exciting for us and for you and for patients. The one in Q4 please remember the date, second half of November. I know you ask question about what we would say at that point on TG4050, I mean you will see that in what we can communicate, I'm really excited by that. Even we talk about handful of patients we are immunotherapy, we are early in the chain of treatment, so we have, I think all the tools to have the best readout and Eric has explained part of everything we are doing to assess the depth of the immune response. We will not give one figure about immune response but we will give many because we have to check every antigens what is happening which will enable us to learn if it confirmed the interest of the artificial intelligence tool. So I think TG4050 will give phase 1 safety is important, we are not worried and we need to confirm, but more importantly the immunogenicity will BT-001, it probably the start of Invir.IO platform. I would say it is a more classical Phase 1 data. So very positive for the products. Preparing the phase 1b with the combination with the immune checkpoints which is more classical but paving the way for the line of product. Then TG4001 around the end of 2022, it's our most [indiscernible] products. And if we are in the target zone, I think it will really make us think about the future of the product right and how to differentiate too and even beyond. So it's -- it will really even I mean strengthen that product but here we really look at pure data. I mean, we talked about PFS and Maud has explained the complexity it's more about designing the rest of the trial which we look at really pure data as PFS and we have TG6002. The TG6002 with shared data at [indiscernible] confirmation, and then we are working very hard with the team to design the Phase II. So here results, reading confirmation we have reached the highest dose, we've already communicated few patients at the highest dose, so really confirmation. Globally very different readouts, very exciting. I would say maybe more to TG4050 under and faster than one, BT-001 more classical Phase 1 data [indiscernible].

[Operator Instructions]

If no other questions, let me conclude. So thanks a lot for your very stimulating questions. Thank you for your time, for listening to us. I believe that with our very attractive proprietary clinical and pre-clinical product portfolio, Transgene is ideally positioned to deliver multiple milestones in the coming 18 months. And this as a key innovator in immunology. You We are confident that by successfully delivering our program, our strategy, we will be able to generate significant value and production flow to patients. So thanks again for your time and for your questions. So we'd like to conclude today's call. Thank you and have a good evening.

Thank you for joining today's call. You may now disconnect your line.