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. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator.
I will now hand you over to your host, Lucie Larguier, to begin today's call. Thank you.
Thank you, Jess, hello, everyone. 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 Quéméneur, 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'd 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're listening to the webcast via the Internet, you will not be able to ask questions. If you wish to ask questions, please make sure that you 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. Hello, everyone. Thank you for joining today's update call. I've been with CEO Transgene since the beginning of 2021, and the last nine months have been a truly exciting period for me, for the team, and for the company. It's also been a real pleasure to interact with you over the last nine months. Today, I will focus on our key 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 built on the MVA strain that we've been using for our previous vaccines. It has been modified molecularly to induce a stronger priming of the immune response against the target antigens.
The second component of myvac is a process allowing the design and manufacturing of the vaccine for clinical use and within a timeframe that is suitable for the patient dose. For TG4050, 2021 has been a very active year. We were able to dose the very first patients of the head and neck trial, while patients with ovarian cancer were already being treated in the U.S. since fall 2020. The opening of several clinical centers in Europe and U.S. continue to support our two clinical trials. These sites have been added to the initial investigating centers that dosed the first patients in late 2020 and early 2021. These additional sites will contribute to recruitment but also demonstrate that the approach has the potential to be rolled out to multiple sites worldwide.
This validates the robustness of our entire supply chain for TG4050, from biopsy to manufacturing and injection to the patient. We continue to observe a high level of interest to participate in these studies, both from the clinicians and the patients. 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 first data in Q4 2021. I do confirm this timeline and even narrow the window of our communication, you can expect this data in the second part of November. What can you wait from us to report in terms of data of TG4050 in November? First, safety data. We have a good safety track record with our viral vaccines and our MVA backbone.
Our product is customized using an artificial intelligence-based system and could display potentially unprecedented strength in terms of immunogenicity. It is necessary to make sure that TG4050 is well-tolerated, particularly with respect to potential immune-related safety events. Second, a topic of key interest will be the immunogenicity of the vaccine. Obviously, you all know the importance of the T cell in the antitumor immune response, and this is central to the mechanism of action of this novel individualized immunotherapy. Unlike previous generations of vaccine, we are here addressing 30 new targets specific to each patient. This means that we'll be looking carefully at the titrate of each vaccine to see how good we are at selecting the right antigens for each specific patient. All these data taken together are expected to validate the platform and could provide valuable insight on which to base the design of phase II studies.
Finally, we will provide you with available data on the actual antitumor activity in patients that have had a period of sufficient follow-up. This data will mature over time and will be enriched by using additional biomarkers like CA-125 in ovarian cancer. We are looking to validate our myvac platform when compared to other personalized vaccine approaches. Our trial have specifically been designed to assess TG4050 as a monotherapy. What we will see will result from our treatment only. This data will reflect the activity of the product in patients without a disease burden, 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 am really looking forward to presenting you the initial phase I data of TG4050 in the second half of November.
Let's continue with our other vaccine, TG4001. You know it's an MVA-based therapeutic vaccine. It entered the randomized phase II trial based on the very promising phase I-B/II data. Positively, some patients from the earlier elements of the trial are still on treatment with TG4001 and avelumab and are doing well. In this randomized phase II trial, TG4001 is being evaluated in combination with avelumab versus avelumab alone in patients with HPV 16 positive anogenital cancer without liver metastasis. Regulatory clearances have been obtained in France, Spain, and the U.S. The trial enrolled its first patient in June, like we've communicated. I'm very happy to report that inclusions are in line with forecast. We should be able to proceed to an interim analysis on 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 patients that mostly do not receive prior therapy with checkpoint blockers. The positive interim analysis will allow us to further progress the trial and enroll around 150 patients overall, with the aim to demonstrate the power of the combination regimen. In terms of our pipeline of oncolytic viruses, there has also been several key achievements. First, the first clinical data with TG6002 that showed it could be successfully be administered by the intravenous route were presented at ESMO last week and AACR last spring. At Transgene, we are convinced that developing OVs that can be delivered by the IV route would be a major advance as it would provide an extraordinary opportunity to enlarge the number of cancers that could be treated by this novel class of therapies.
We have demonstrated that even at the highest dose tested, the safety profile of TG6002 when given by the IV route meet our expectations. The dose cohorts also provided evidence the virus is able to reach the tumor, replicate within the tumor, and express a fully functional transgene as assessed by the detection of 5-FU chemotherapy in the tumor of patients. This is important as the same backbone is central to our Invir.IO platform and to its administration via the IV routes. 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 the next steps. We are now evaluating different administration schedules on the oncolytic.
We expect to complete this cohort during the first half of 2022, with an addition of another dozens of patients. We will come back to you once we have completed this step, we will expect to thus move to the phase II part of the trial that will allow to assess the efficacy of the treatment. Moving to BT-001, the first oncolytic virus based on our Invir.IO platform has entered the clinic, is in a phase I/II-A trial currently enrolling patients in France and in Belgium. It has also received an IND clearance from the U.S. FDA. BT-001 has been designed to combine the powerful activity of BioInvent's anti-CTLA-4 antibody, which will deplete Treg and increase immune competency of the tumor with the OVs ability to stimulate a strong immune response.
BT-001 is expected to show better tolerability profile in patients than that of an anti-CTLA-4 antibody administered via systemic route. With BioInvent, we will 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 administered alone and directly into the tumor. We expect to release first data from the study 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 promising indication. A few words on finance. Our P&L in the first half of 2021 was in line with our expectations.
At the end of June, we have EUR 48.1 million in cash and cash equivalents following the success of a private placement of EUR 34 million in June. 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 EUR 17 million. This share sale was undertaken to monetize part of our stake in this company. All this extend our financial visibility until the end of 2023, which means that we can deliver all of key anticipated milestones. I'm confident that the upcoming trials will demonstrate the potential of Transgene portfolio of immunotherapies by generating significant benefit for patients with the aim of creating value for our shareholders.
Thank you for listening. With that, we'll now take your questions.
If you would like to ask a question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. Once again, that's star one if you would like to ask a question. The first question comes from the line of Jean-Jacques Le Fur from Bryan, Garnier. Please go ahead.
Good afternoon. Thank you for taking my question. I have few financial questions regarding the Tasly shares. The first one is, to be sure I well understood, when you stated your financial visibility, you have now a financial visibility until end of 2023. Does it include or not the $20 million or EUR 17 million coming from the sale of the Tasly shares? The second financial one is, what does this sale mean for the credit facility opened with Natixis? Does it change something? Do you have to reimburse something? If you already draw some cash from this facility.
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 lesson from the clinical data released by Gritstone at ESMO a few days ago with their individualized neoantigen vaccine, which could be or which is a competitor to myvac, despite it's not the same indication. Is there any signal or things you get from these results and this trial for your own technology? Many thanks.
Thanks, Jean-Jacques. Of course, Jean-Philippe will take you on the finance part, and Eric will take a tail of maybe having a few words on Gritstone.
Hello, Jean-Jacques. This is Jean-Philippe. Thank you for your question. First, regarding our cash visibility. When we say that we have a cash visibility until the end of 2023, it includes, first, this last sale of Tasly share and also the sale of the remaining share in the two years to come. That's for your first question. For the second question regarding the credit line. We have not drawn on this credit line today. The EUR 15 million credit line is still fully available. As a result of this sale, the credit line will be canceled as soon as the proceeds are received, because I remind you that this credit line is pledged with our Tasly shares. As agreed contractually with Natixis, the amount available from this credit line has to be reduced by the amount provided from the sale of the shares.
The fact that we cancel this credit line has also no impact on our cash visibility because the deadline of this credit line is in mid 2023.
Okay. Thank you. Eric?
Yep. Hello, Jean-Jacques. 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 for the good news. Maybe the concern is that it's very difficult to compare with their results and ours in the sense that their approach is based on two technologies combined in a prime boost approach, both in the intramuscular way. They are combining an immuno prime plus mRNA-based vaccines as a boost in more advanced cancers in combination with nivolumab and ipilimumab. By saying that, I'm just arresting on the fact that we have made a completely different design, and we look for the efficacy of our product in monotherapy.
One side is 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.
Okay. Very clear. Many thanks.
Thank you. Second question?
The next question comes from the line of Sebastiaan van der Schoot from Kempen. Please go ahead.
Good afternoon, everyone. Thank you for taking my questions. Maybe we can go through them one by one, if that's okay. First I had a couple on TG4001. The interim analysis data for next year end, will this comprise a futility analysis? If so, can you then even show data? Can you also remind us of what you believe would be the benchmark in that setting?
Thank you for this question. 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. It is not a futility analysis per se. In terms of benchmark, we have hypotheses that are set in the protocol, which means that we are expecting, compared to avelumab single agent, a doubling of the progression-free survival.
Okay. Will you be able to show data on, progression-free survival at that time point or not?
Well, we will calculate. The aim is not because, 50 patients is not that much to detect a significant difference. The intent is not to show data in terms of progression-free survival. The intent is to calculate the number of additional patients, whether it's 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 without significant difference, there is no meaning, in what we could present.
Sure. Okay. No, that is very clear. Regarding TG6002, can you maybe expand on what you have learned so far from the phase I trial and how you would progress, when the phase I trial is completed in terms of which patient population you would target?
For TG6002, the number one learning is that the safety 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 those levels. We have reached at the moment the three 10 to the 9 dose level, meaning that we inject this amount of virus to the patients without having reached the maximal tolerated dose. You can see that the safety profile is pretty good and much better that we have seen by the past with other VV like Pexa-Vec, for instance. That's number one learning because that's pretty important to be able to implement a phase II trial. The number two learning is that we were able to detect the virus injected by IV route in the lesion in metastasis.
Through biopsies which were taken mainly from liver, but we have also some lung biopsies. 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-FC to 5-FU. In all patients, we were able to detect within the tumor tissue the presence of 5-FU which is critical. As far as the future of the product is concerned, we are contemplating GI malignancies which may include, and we are discussing with KOL our data, of course, which is an important step, to define whether is it appropriate to go for colon cancer or pancreas cancer.
This is the 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 the IV administration of TG6002.
Okay. Very clear. Thank you. Regarding TG4050, will the data readout, will that be more oriented towards ovarian cancer or head and neck?
Well, actually, maybe you remember the design of the two trials. One trial, ovarian cancer, is an open trial and we are following a well-known biomarker, which is CA-125, which is generally increased when the patients developed a relapse or tumor progression. Therefore, we are following carefully this biomarker 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 a randomized trial which compare immediate treatment with the vaccine versus delayed treatment at the time of relapse. We intend to compare the duration of relapse-free survival between the two arms.
Having said that, it's true that there is some new biomarker that we are not as validated as the biomarker used in ovarian cancer, CA-125. I am thinking about ctDNA, which is a pretty new way of following the patients. In the field of head and neck cancer, it is not yet totally validated as it might be in lung cancer, for instance. This is something we are looking for.
Will you also be able to check T cell specificity against each antigen that you will include in the vaccines for each patient? Did I understand that correctly?
Maybe I will let Eric answer to this specific question.
Sorry, I could not hear well 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 specificity for each antigen that you will include in the vaccines?
Yeah. Okay. Thank you for saying it again. No, you're right. The plan is really to document the specific response against each single antigen. We have designed the peptide arrays in that way. Of course, the number of positive T cells would be a criteria for the merit of the vaccine. We will also try to monitor the intensity of the specific T cell response. As you can imagine, it's not an easy task, those quantifying the rate of positivity and the intensity of the T cell response are the two conceptual goals.
Okay.
Everything has been made ready for that.
That's great. My final question is on BT-001. Can you maybe explain the differentiation from RP2 of Replimune? Can you also expand on what type of data you will expect to report on for the BT-001 updates in H1 2022 and how many patients that will involve?
Well, as far as the number of patients is concerned, it's a standard dose escalation trial, meaning that we enroll three to six patients per dose level. At the moment we are testing escalating dose within different population of patients. It's not an intra, but an inter patient dose escalation. Maybe again, I will turn to Eric for the differentiation versus Replimune stuff.
Of course, you have in mind that the vector are very different. The payload are also a bit different in the sense that the antibody encoded by the virus has been selected for optimal Fc gamma engagement and depletion of the Treg. There are some kind of specifics for the antibody. Regarding the vector, of course, we carefully look at the key features for the vaccinia compared to HSV. That's something that we plan to report. We have a paper submitted under revision at the moment that you will get soon the full details on the difference for the observed between vaccinia and the reported paper on HSV.
The major difference in terms of vector is that the vaccinia demonstrated very good results at recruiting T cells in the tumor and inducing memory T cells. Of course we don't have head-to-head comparison with this vector, but we believe that we have demonstrated something very strong with vaccinia.
Eric, the line is not very good on your side.
Oh, sorry.
Can you just repeat the last part of the difference of the vaccinia versus HSV maybe?
Yeah. In the paper that is about to be published, we documented on the properties of the vaccinia to attract T cells in the tumor microenvironment. We also analyzed within the T cell repertoire, the level of memory T cells, and we observed very good results. These were in mice model, of course. We will do our best to detect if this is also true in human samples.
Okay, great.
Yeah. Thank you. That was very clear. Those were my questions.
Thanks, Sebastian.
The next question comes from the line of Arsène Guekam from Kepler. Please go ahead.
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 I on how will you pool all the data as this treatment is an individualized treatment? Regarding immunogenicity, there could be very important inter-individual variation. Beyond that, I have two financial questions. First, could you give us the share of the manufacturing activities in your R&D expenses? The last one, what do you expect in term of cash burn for 2021? Thanks a lot.
Do you want me to comment on the immunogenicity analysis?
Yes.
As said before, the idea is to analyze very broadly the immune T cell induction. You're right, that will be for every single patient. The good point is that for each patient who will have a ranking of the highly immunogenic peptide and those who are less immunogenic in our prediction, it will be important that we compare the ability of the vaccine to also induce T cells for moderate to weak immunogenic peptides. That will be a key result that will be collected from each single patient. In terms of individual comparison, of course, you're right, that would be difficult to compare, but the number of hits would be maybe a key for this presentation.
Difficult to give a specific number, but we hope to be able to demonstrate in every patient that whatever the initial T cell ratio at the beginning, we can increase the most significant T cell clones.
In fact, the main point will be the increase of the T cell response.
Absolutely right. Yes. The onset of specific T cell clones, even if possible, for weaker antigens.
Okay. Do you have any threshold?
No, of course, considering the way they were selected, as I said before, we are on AI-based selection process, it's not a ranking, but more selection by AI of the most potent antigens. We have some parallel data allowing us to rank them as high, moderate, or weak antigens. We block it.
Okay. Thank you.
Regarding your financial question, first, on the expected cash burn. For 2021, we expect to have an operational cash burn, meaning excluding the private placement and the sale of Tasly shares. Operational cash burn should be around EUR 30 million for 2021, with around EUR 40 million of expenses and around EUR 10 million of revenue. Regarding the parts of the manufacturing activities, we can consider that it represents around EUR 10 million per year regarding the staff and all the costs linked to the manufacturing activities, and also the external costs linked to the process development and the external manufacturing.
This is both for Invir.IO with several lots and third batches and all myvac manufacturing.
Okay. Thank you.
Thank you.
There are currently no questions in the queue. As another reminder, please press star one if you would like to ask a question. The next question comes from the line of Dominic Rose from Intron Health. Please go ahead.
Hi, this is Dominic from Intron Health. Sorry about that. I thought I registered my question, but apparently not. I've got three, if that's all right. Question one, it would be great if we could have a bit more of an update on where you stand with your collaboration with AstraZeneca. I know there were five targets originally, and I think they've transferred two. What are your thoughts about the other three targets, and what other payments would you expect if they transferred more? Question two is on the Tasly share sale. I was a little bit surprised by that. I thought there was a one-year lockup. I assume this figure is guaranteed. When would you expect to receive the cash from that?
Finally, on question three, you've obviously got a lot of readouts over the next 18 months. Just wondering which one you are most excited about?
I'm sorry, Dominic. We didn't understand or hear, I would say, your second question very well. Can you just 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 EUR 17 million is a sort of guaranteed figure. I was under the impression there was a one-year lockup and you wouldn't be able to monetize them until late next year.
Sure.
Okay. Great.
Eric can start with AstraZeneca, if that's okay. Jean-Philippe will comment on the payments related to AstraZeneca and the Tasly, and then I will finish with the readouts.
Regarding the collaboration with AstraZeneca, you might remember that we had this program involving up to five product to be designed with them. Everything has been going well, and we are working in line with the plan, in fact. We are currently working on the last two constructs that were defined in the first two years. They are advanced products. They are analyzing on their side the contract plan that the product would be transferred after preclinical and in vitro characterization to their premises. They are carrying out the final analysis, preclinical studies. For the first product delivered almost one year ago, they now have to organize a decision. We are discussing heavily with them on where they stand now, and it's a possibility that they could decide for the first option to be exercised.
By the end of this year or around the end of this year. It's been going well on their side. That's what I can say. Regarding the finance, I don't think that we already reported on the amount planned for the option, but I will leave the floor to Hedi for those numbers.
We have not communicated on the financial terms beyond the EUR 10 million that we've received from AstraZeneca two years ago. I think the priority, we hope that AstraZeneca will appreciate the product we are delivering to them, and they would move into clinic, and that will really be a great confirmation on the interest and the value of our technology. That would be a payment if they go with one product into clinic. It would not be a transformative sum to Transgene. It would not impact significantly our cash vision. I think it's really more about technology than short-term money.
About Tasly, I will let Jean-Philippe talk with us.
Yes, fine. After this $20 million sale of partial shares of Tasly, we still have 8.7 million shares of this Chinese company, and those shares are valued approximately at $20 million. As you probably remember, we had to respect a 12-month lock-up after the IPO of Tasly before being able to sell the remaining shares. We saved a window of opportunity today to sell those shares because Tasly is about to resubmit its IPO filing. It was just an opportunistic operation. For the remaining shares, we will have to wait 12 months after the IPO before being able to sell the shares. Exact pattern before the end of 2023.
I think we've demonstrated last year, and we confirmed last year that we find solution to monetize this asset. We are not worried about the future. Let me talk about the readout. I think the first part of this year, this H1, was really mainly driven by the initiation or acceleration of the clinical trial, BT-001, TG4050, TG4001, and so on. We had very interesting data on TG6002. I think the value is not yet fully understood by everybody, but once again, the first part was really more about launching clinical trials. The coming 18 months would be much more driven by readouts. I think it's even more exciting for us and for you and for patients.
The one in Q4, and please remember the date, second half of November. I know you asked questions about what we would say at that point on TG4050. You'll see then what we can communicate. I'm really excited by that. Even if we talk about handful of patients, we are immunotherapy. We are early in the chain of treatment. We have, I think, all the tools to have the best readout. Eric has explained part of everything we are doing to assess the depth of the immune response. We will not give one figure about the immune response, but we give many because we have to check every antigen what's happening. It will enable us to learn and, we think, confirm the interest of the artificial intelligence tool.
I think TG4050, even if it's a phase I, safety is important. We are not worried, and we need to confirm. More importantly, the immunogenicity will be key. BT-001, it's really the start of our Invir.IO platform. I would say it's a more classical phase I data. Very important for the product, preparing the phase I-B with the combination with immune checkpoint. We said it's more classical but paving the way for the line of products. TG4001, around the end of 2022. It's our most recent product. If we are in the target zone, I think it will really make us think about the future of the project, of the product, say, and how to finish phase II and even beyond. It will really even strengthen that product.
Here we really look at pure data. We talked about PFS, and Maud has explained the complexity. It's more about designing the rest of the trial, but still we look at really clear data such as PFS. We have TG6002. The TG6002, we share data at AACR, then ESMO. Now it's really more about confirmation. Maud is working very hard with the team, with the KOL to design the phase II. Here, readouts, really confirmation. We have reached the highest dose. We've already communicated on few patients at the highest dose, really confirmation.
Globally, very different readouts, very exciting. I would say maybe more TG-4050 and the TG4001, if I need to choose. BT-001, more classical phase I data. TG6002, more confirmation.
Okay, great. Thanks. That is very helpful. There is clearly a lot to look forward to. Thank you.
There are currently no questions in the queue. As one final reminder, please press star one if you would like to ask a question.
All right. If no other questions, please let me conclude. 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 be seen as a key innovator in immunology. We are confident that by successfully delivering our program and our strategy, we'll be able to generate significant value and improve options to patients.
Thanks again for your time and for your questions. We'd like to conclude today's call. Thank you, and have a good evening.