Hello, and welcome to the Transgene first half 2023 financial results and business update call. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you'll be connected to an operator. I will now hand you over to your host, Lucie Larguier, to begin today's conference. Thank you.
Thank you, François. Hello, everyone. I'm Lucie, Director of IR at 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. You will have Éric Quéméneur, CSO, Maud Brandely, Chief Medical Officer, Jean-Philippe Del, CFO, and Christophe Ancel, VP Pharmaceutical Operations. We will review today's news regarding 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're listening to this webcast via the internet, you will not be able to ask questions, so if you wish so, please make sure you join us via the conference call numbers that are available in the press release. You can also directly send me an email at Larguier@transgene.fr, and I'd be happy to read your question. 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 three months getting to know the company, its employees, and its program in details, and it has been a very enriching experience that has confirmed Transgene mission to push 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, at the AACR and ASCO congresses, we presented 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 target neoantigens in all available patients and included both newly generated and amplified response disease against class I and class II antigens, in addition to a notable increase of effector CD4 and CD8 T cell. Importantly, the engagement of a broad T cell response is crucial in enhancing the chances of delay the risk of recurrence. It is worth noting that all treated patients in this randomized phase I trial are still disease-free, while two 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 an 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 preplanned 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 the 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, two patients with a strong epitope E6 and E7 immune response experienced a complete clinical 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 data read out from the trial by the end of 2024. We continue to believe that there is a very strong and 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 its 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 cargo transporters inducing site-specific expression of proteins in the tumor to boost the immune 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 TG6050, a novel oncolytic virus that vectorize interleukin-12 and anti-CTLA-4 antibody. We've decided to move the compound into clinic based on very encouraging preclinical data, showing a sustained expression of interleukin-12 in tumors, remodeling of the tumor microenvironment, activation of numerous innate and adaptive immune pathways, and a very strong antitumor activity in several mouse models. The first patients in our ongoing clinical trial in relapsed refractory non-small cell lung cancer, was treated with monotherapy 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 on into our intratumoral oncolytic virus program in collaboration with BioInvent, we communicated positive phase I data with BT-001 in solid tumors in May 2023. Out of 18 patients, who received escalating doses of BT-001, 2 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, while 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 has extended its cash runway from early 2024 until the end of 2024. This was made possible by non-dilutive financing in the form of a non-current account advance from our leading shareholder, Institut Mérieux. This additional funding will allow us to focus on delivering key value-creating milestones 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 Gianfilippo 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 builds on our strong portfolio of assets and the significant innovation and differentiation they can bring to patients with solid tumors. Innovation and differentiation are at 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 four months, since taking up my role as CEO, there's been lots of detailed assessments, 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?
Thank you. As a reminder, if you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two. Please ensure your lines are unmuted locally as you'll be prompted when to ask your question. Our first question comes from the line of Martial Descoutures. Please go ahead.
Good afternoon, everyone, Martial Descoutures from Oddo BHF. Thank you for taking my question. So 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 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 customer day, the changes to produce its oncology vaccine.
How do you consider the Transgene position in term of manufacturing at this step? Do you also see maybe a few changes in the short or midterm? What do you expect for the midterm? My sub question is maybe for Jean-Philippe, if you are here, we observe in your publication an increase of your other expenses. It just- just my model. Could you give us maybe more details on this aspect? Thank you very much.
Thank you very much. Maybe I start from 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 will, 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, you know, next year. And of course, we will have the information before the official presentation. This is a very important milestone for us to consolidate, you know, our decision to move forward with the randomized phase II study. And then, you know, we will have the updated follow-up analysis.
We will have the two-year follow-up analysis in July 2024, for the randomized phase II trial. However, you know, we are going to start what we call the startup activities related to the trial before receiving the two 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, at risk, in order to be prepared to launch the recruitment immediately after. So you will see, you know, some activities during the first semester of 2024, but, you know, the official, I would say, you know, speed up of recruitment will happen immediately afterwards. So that's for your first question.
For your second question, I guess, I mean, you assume—if I understand the question, you're asking about the manufacturing optimization with regards to the TG4050?
Yes. Sorry, yes, it's for TG4050 and, and the other asset in your portfolio.
Right. So, one of the strengths of Transgene is that we have our internal manufacturing, you know, capability to support the early phases of the 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, you know, TG 4050, our personalized cancer vaccine, we 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 already in make. There is also a component, as you know, for the personalized cancer vaccine, of the lead time.
That is the time between the biopsy and the vaccine available to be infused to patients. 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 patient, and therefore, of course, to strengthen the recruitment even better, and also to open the potential also, you know, new indications that may be very interesting for a personalized cancer vaccine. 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. Now, I guess I turn, I turn on Jean-Philippe that will answer your financial question.
Yes, thank you, Alessandro. Hello, Martial. You're right, we have seen an increase in other expenses in the first half of 2023. This increase comes from a decision that we took in early 2023 to definitely stop our infectious disease activities and to close our labs in Lyon. We have a one-shot cut here at the end of June 2023, corresponding to the cost of this close of this site.
Thank you very much. Take care. Thanks a lot.
The next question comes from the line of Bo Zhang from Intron Health. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. I got a couple. Going back to the 4001 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 cost associated with enrollment, and together with the initiation of 4050, what does that mean for the R&D cost going forward in 2024? Thank you.
Maybe I start from the second question. There will be no impact whatsoever on the R&D cost, you know, with regards to the potential next step on the trial with the 4001. Of course, we cannot disclose, you know, the methodological details, but the bottom line is that we make every effort to have a readout of the trial within the year 2024, while keeping a statistical power that is considered a good one to have a data interpretation.
So then, you know, again, we cannot discuss the details, but of course, we'll communicate it in a formal way as soon as we have also an agreement with our clinical partner, you know, Merck Serono, that that is supporting a 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, yeah, these were your two questions. If-
Thank you for that. Can you also comment on sort of the R&D expense expectation for that in 2024?
You mean for 4001?
Just overall R&D expense for 2024, please?
Yeah. Yeah. So we did not discuss the detail of our expected cash burn for 2024, but as you can imagine, we'll do our best to keep the level of R&D expenses at somewhere that we have today, or we will have a slight increase, but it should be minor in our expenses.
Yeah. Overall, I would say that our expenses for 2024, you know, are not very significant of what you are observing in 2023. So, and we will, you know, keep the spending, you know, overall kind of flat with pro- I mean, plus and minus, but it's not, that's not very significant. But of course, by, you know, by applying discipline in the way we spend money, and, and we think also that we have an appropriate prioritization in our portfolio across clinical development compounds and research. So you will see plus or minus the same kind of spending that you are observing now in 2023.
Okay, thank you very much.
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 Jamila El Bougrini from Invest Securities by email. So one of the questions is with regards to the signing of the funding with Institut Mérieux. So she assumes that the funds are available as of today, and wanted to understand why there's a sort of a delay in initiating the phase II trial of TG4050 in 2024, versus end of 2023, if we have the available resources. And another question, still on TG4050, is to know whether 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 agency.
Okay. So I thank you for the question. I'll start from the first one. So the delay in the initiation of the randomized phase II in head and neck cancer patients is not related to budget or financing reasons. But essentially because. You know, we made the decision to have a consultation with the Food and Drug Administration around the randomized phase II study, and to have a sense from them on what they think about the trial design and also the manufacturing that is associated, the manufacturing process that is associated to this important trial. And of course, you know, based on their feedback also, we will have a sense on whether the study may be considered eventually as potentially for a Subpart H accelerated approval moving forward.
We think that, you know, before embarking into the finalization of the trial design, the input from the Food and Drug Administration is very important. Also because we wanted to expose this trial to, to U.S., you know, head and neck cancer patients. That's essentially, I would say, the reason. No financial kind of reasons, but really methodological reasons, you know, that we would like to, to, to kind of strengthen based on the input from the Food and Drug Administration. I guess, yeah, this will be—And then whether there is a phase II followed by phase III, again, this will depend from the, you know, FDA input, you know, today, and also it will depend on the evolving, you know, landscape in, in head and neck patients.
And we are convinced that, you know, if we have a very strong randomized phase II trial, with a clear disease-free survival data, with a reliable follow-up, that usually is at least two years follow-up, we can discuss with the agency the potential to have an accelerated approval, in United States of America, and eventually conditional approval in Europe. So that, these are the two questions from-
Yes.
Yeah.
I think we don't have any other questions, either by internet or via phone. Maybe you want to have your closing statements, Alessandro?
I think it's every 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. 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.