Transgene SA (TNG) Earnings Call Transcript & Summary

Hello, and welcome to the Transgene First Half 2023 Financial Results and Business Update Call. Please note, this conference is being recorded. [Operator Instructions] . I will now hand you over to your host, Lucie Larguier, to begin today's conference. Thank you.

Thank you, [ Francois ]. Hello, everyone, I'm Lucie, Director of IR Transgene. I have the pleasure today to introduce you to Dr. Alessandro Riva, our Chairman and CEO along with several members of the Executive Committee. So you will have Eric Quéméneur, our CFO; Maud Brandely, Chief Medical Officer; Jean-Philippe Del, CFO; and Christophe Ancel, VP Pharmaceutical Operations. We will review today's news regarding on the progress of the first half of this year and answer any questions you may have. Before I turn over the call to Alessandro, I'd like to remind everyone that today's discussion contains forward-looking statements, which are subject to numerous risks and uncertainties. If you listen to this webcast via the Internet, you will not be able to ask questions. So if you wish to, please make sure you join us the other conference call members that are available in the press release. You can also directly send me in an email at [indiscernible], And I'd be happy to read your questions. With this, I now turn the call over to Alessandro Riva.

Thank you, Lucie, and thank you for joining today's call. It's a real pleasure to update you on the progress of Transgene. I spent the last 3 months getting to know the company, its employees and its program in detail. It has been a very enriching experience that has confirmed Transgene's mission to boost scientific boundaries in a very highly innovative field of therapeutic vaccine and oncolytic viruses. During the next few minutes, I will update you on our portfolio and, in particular, the leading compounds that are in clinical development. TG4050, our individualized therapeutic cancer vaccine is a clear example of our ability to innovate by combining the identification of immunogenic mutations through the artificial intelligence and the latest advances in personalized medicine manufacturing. As you certainly know, earlier this year, the ACR and ASCO congresses, we presented a highly promising immunological data in a randomized Phase I trial conducted in the adjuvant setting of head and neck cancer patients. All available patients have developed a cellular immune response after treatment with TG4050 as a single agent. The response was directed against several targets and new antigens in all evaluable patients and included both newly generated an amplified responses against the Class 1 and Class 2 antigens in addition to a notable increase of a factor CD4 and CD8 T-cell. Importantly, the engagement of a broad T-cell response is crucial in enhancing the chances of the risk of recurrence. It is worth noting that all treated patients in this randomized Phase I trial are still disease free, while 2 have relapsed in the control arm. We believe that our individualized viral vector-based vaccine is very promising and may differentiate from the current individualized neoantigen therapeutic vaccine in development. Based on this very solid proof of principle, Transgene, together with its partner NEC, plans to launch a randomized Phase II trial in head and neck cancer in adjuvant setting in 2024. We will continue to update you on the ongoing Phase I trial with additional immunological data as they become available and also clinical follow-up that will be presented during the first half of 2024. Moving on to the next program. Our HPV-positive cancer therapeutic vaccine TG4001 remains an important therapeutic vaccine within an evolving treatment landscape. We are running a randomized Phase II trial that compares TG4001 in combination with avelumab versus avelumab in HPV-induced anogenital cancer patients that have not received prior therapy with checkpoint inhibitors. We announced it late last year that following a preplan progression-free survival interim analysis, the members of the Independent Data Monitoring Committee have recommended that the study continues. The trial currently intends to randomize a total of 120 patients. At ASCO earlier this year, we presented a poster showing that TG4001 induced a specific immune response against a vectorized antigen. In particular, 11 out of 13 patients with an immune response had either stable partial or complete tumor response according to the international RECIST criteria. Also 2 patients with a stronger Epitop-6 and 7 immune response experienced a complete critical response. We are observing a progressive slowdown in patient recruitment in the trial due to the recent availability of new treatments in first line and second line cervical cancer. In response to this situation, we are assessing all options to have a data readout from the trial by the end of 2024. We continue to believe that there is a very strong medical need in HPV-positive cancer patients, including cervical cancer and head and neck cancer. Transgene is currently in active discussion with all stakeholders to define the optimal path forward to continue development of TG4001 in the most appropriate target patient population. Moving now to our oncolytic virus portfolio. As you know, Transgene capitalize on each viral vector expertise to develop another type of innovative immunotherapy, the oncolytic viruses. Oncolytic viruses with their selective replication in tumor cells only are ideal carbon transporters in using site-specific expression of proteins in the tumor to boost the immune of response. With the ability to be administered intravenously, our novel Invir.IO platform-based candidates. Can really be differentiated from our oncolytic viruses in development. Our leading intravenous candidate is a TG6050 a novel oncolytic virus that vectorize interleukin-12 and anti-CTLA4 antibody. We have decided to move the compound into clinical based on a very encouraging preclinical data showing a sustained expression of interlocking trial in tumors remodeling of the tumor micro environment activation on numerous innate and adaptive immune pathways and a very strong antitumor activity in several mice models. The first patients in our ongoing clinical trial in relapsed refractory in non-small cell lung cancer was treated with mono-therapy TG6050 in May this year. We plan to complete the trial in second half 2024, which will be the basis of a future potential evaluation in combination with an immune checkpoint inhibitor. Moving into our intratumor oncolytic virus program in collaboration with BioInvent. We communicated a positive Phase I data with BT-001 in solid tumors in May 2023. Out of 18 patients who received escalating doses of BT-001 to show the decrease of injected lesion size of 50% or more and 11 out of 18 had a stabilization of the injected lesion. Safety data was also satisfactory. We are now progressing the trial with our co-development partner, BioInvent and MSD were supplying pembrolizumab for use in combination with BT-001 the combination part of the trial with pembrolizumab is due to start in Q4 2023. A few words on finance. As you have seen, Transgene as a standard is cash runway from -- or by 2024 -- until the end of 2024. This was made possible by non-dilutive financing in the form of a noncurrent account advance from our bidding shareholder Institute Mérieux. This additional funding will allow us to focus on delivering key value-creating milestones. So next year, including significant additional clinical data on all programs in clinical development as well as the start of the TG4050 randomized Phase II trial for head and neck cancer patients in the adjuvant setting. The rest of our financials are very much in line with our expectation. And Jean-Philippe will be more than happy to answer questions you have during the Q&A session. I hope that this brief overview has clearly highlighted the potential of our immunotherapy pipeline. As you can see, our strategy based on our strong portfolio of assets and the significant innovation and differentiation they can bring to patients with solid tumors. Innovation and differentiation are the center of what we are doing here at Transgene with an approach that allow us to maximize the chances of success for all key stakeholders. Over the last 4 months since taking up my role as a CEO, there's been lots of detailed assessment, significant internal discussion and very careful forward planning. I believe that Transgene is on the path to an exciting future ahead, and I look forward to telling you more about our plans in the coming months as we progress. The team and I will now take your questions. Lucie?

[Operator Instructions] And our first question comes from the line of Martial Descoutures.

Good afternoon, everyone, Martial Descoutures from ODDO BHF. My first question concerns the development of TG4050. In Phase I, the objective is to achieve 18 months without relapse. So we are at more than or broadly 10 or 11 months at this step, I think. So we could expect to achieve, according to me, this objective in Q2 next year. So my question is, Will you wait this data to adjust your trial? Or could you launch the Phase II before this data? It is my first question. I have another maybe a general question for Alessandro, if i may. Last week, Moderna highlighted during its Capital Markey Day, the changes to produce its oncology vaccine. So how do you consider the transient position in terms of manufacturing at step. Do you also see maybe a few changes in short or midterm? And what do you expect for the midterm? And my third question is maybe for Jean-Philippe, if you are here. We observed in your publication and increase of your other expenses. So just my model. Could you give us maybe more detail on this aspect?

Maybe I start on the first question, and that is about the TG4050 and the initiation of the Phase II trial based on the Phase I data. Of course, we'll continue to update the community on the Phase I study and in particular, we will have the immunogenicity data for all patients entered in the randomized Phase I study that we plan to present at the AACR or ASCO next year. And of course, we will have the information before the official presentation. This is a very important milestone for us to consolidate our decision to move forward with the randomized Phase II study. And then we will have the updated follow-up analysis. We will have the 2 years follow-up analysis in July 2024 for the randomized Phase I trial. However, we are going to start what we call the start-up activities related to the trial before receiving the 2 years follow-up data in July 2024. In other words, we are going to start to activate the startup activities a little bit I would say, it, risk in order to prepare to launch the recruitment immediately after. So you will see some activities during the first semester 2024, but the official I would say, speed up of recruitment will happen immediately afterwards. So that's for your first question. For your second question, I guess, you assume -- if I understand the question, you're asking about the manufacturing optimization with regards to the TG4050.

Yes. So yes, it's for TG4050 and the other asset in your portfolio.

Right. So one of the strengths of Transgene is that we have our internal manufacturing capability to support the early phases of development of our compounds, both from a therapeutic vaccine perspective and also oncolytic viruses perspective. However, we also realize that as the programs move to the next step and for example, TG4050, our personalized cancer vaccine, we will need also to strengthen our capability to make sure that we can speed up and recruit quickly in the new trial in the randomized Phase II of head and neck. There is also a component, as you know, for the personalized cancer vaccine of the time, that is the time between the biopsy and the vaccine available to be infused to patients. So we are also committed to work, I would say, very closely on this matter in order to make sure that we continue to improve the lead time to make the vaccine available to patients and therefore, of course, to strengthen the recruitment even better and also to open a potential also in new indications that may be very interesting for a personalized cancer vaccine. So of course, I cannot comment about Moderna and what they are doing. You know better than me what they have shared in the public domain. And now I guess, I turn on Jean-Philippe that will answer your financial question.

Thank you, Alessandro. So you're right that we have seen an increase in other expenses in the first half of '23. This increase comes for the decision that we took in early '23. To definitely stop all infectious activities and to close our labs in Liam. So we have a one short cut here at the end of June '23, corresponding to the cost of this close of these sites.

The next question comes from the line of [ Gordon from Interim Health. ]

I got a couple. Going back to the TG4001 program, you mentioned a slowdown in patient enrollment, and you want to adopt different methods to ensure readout. Could you elaborate a bit more on what type of methodology that you have in mind? And then perhaps a follow-up to that. Does that mean we will expect to see a higher sort of R&D costs associated with enrollment. And together with the initiation of 4050, what does that mean for the R&D costs going forward in 2024?

So maybe I start from the second question. So there will be no impact whatsoever on the R&D cost with regards to the potential next step on the trial with TG4001. So of course, we cannot disclose the methodological details, but the bottom line is that we'll -- we make every effort to have a readout of the trial within the year 2024, while keeping a statistical power that is consider a good one to have that interpretation. So then again, we cannot discuss the details, but of course, we will communicate it in a formal way as soon as we have also an agreement with our clinical partner Merck Serono that is supporting the trial with avelumab. So in other words, no impact on our spending, we are committed to have a readout in 2024 with a statistical power that is kind of credible to have an interpretation of the randomized Phase II data. I guess these are -- these were your 2 questions.

Can you also comment on sort of the R&D expense expectation for that in 2024?

You mean for TG4001?

Overall R&D expense for 2024, please?

Yes. So we did not discuss detail of our expected cash burn for '24, but -- as you can imagine, we can -- we'll do our best to keep the level of R&D expenses at the same level that we have today or we will have a slight increase, but this should be a matter in all expenses.

Yes overall, I would say that our expenditure for 2024 are not very significant of what you are observing in 2023. So -- and we will keep the spending overall kind of flat with earning plus and minus, but that's not very significant. But of course, by applying discipline in the way we spend money. And we think also that we have an appropriate prioritization in our portfolio across clinical development compounds and researchers. So you will see plus or minus the same kind of spend in that year of serving now in 2023.

There are no further questions. So I'll hand you back to Lucie to reply to some written questions.

Yes. Thank you. I received some questions from [ Jemini and Ruhini ] from Investor Securities e-mail. So one of the question is with regards to the signing of the spending with [indiscernible]. So she assumes that spends are available as of today and wanted to understand why there is sort of a delay in initiating the Phase II trial of TG4050 in 2024 versus end 2023. If we have the available resources. And another question, Q1 TG4050 is to know what our plan is to go with a Phase II followed by a pivotal Phase III trial. Or if we want to stick to the idea to have a very robust Phase II that could potentially be considered as pivotal depending on the results that will be obtained and discussions with regulator and agencies.

Okay. So, again thank you for the question. I'll start from the first one. So the delay in the initiation of the mice Phase II in head and neck cancer patients is not related to budget or financing reasons. But essentially because we made the decision to have a consultation of with the Food and Drug Administration around the randomized Phase II study and to have a sense from them what they think about prior design and also the manufacturing that is associated in manufacturing process that is associated to this important trial. And of course, based on their feedback also, we will have a sense on whether this study may be consider eventually as potentially for a subparty accelerated approval moving forward. So we think that before embarking into the finalization of the trial design, the input from the Food and Drug Administration is very important. And also because we wanted to expose this trial to U.S. head and neck cancer patients. So that's essentially, I would say, the reason no financial kind of reasons, but really methodological reasons that we would like to kind of strengthen that based on the input from the Food and Drug Administration. I guess, yes, this was a bit -- and then whether there is a Phase II followed by Phase III. Again, this will depend from the FDA inputs today -- and also it will depend on the evolving landscape in head and neck patients. And we are convinced that if we have a very strong randomized Phase II trial with clear disease-free survival data with a reliable follow-up that a user is at least 2 years follow-up, we can discuss with the agency the potential to have an accelerated approval in United States of America and inventory conditional approval in Europe. So that -- these are the 2 questions from.

I think we don't have any other questions, either [indiscernible] or via phone. Maybe you want to have your closing statements [indiscernible].

I think -- I would just to say thank you for people that have joined the call. We look forward for further updating you as our pipeline and our business strategy progresses, and please not hesitate to reach out to Lucie or me or Jean-Philippe for any questions. Thank you very much and a great afternoon or evening. Thanks.

Thank you.

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