Good afternoon, and welcome to the Heidelberg Pharma half-yearly financial report 2021. The call will be hosted by Dr. Jan Schmidt-Brand, CEO and CFO of Heidelberg Pharma AG. My name is Molly, and I'll be your coordinator for today's conference. For the duration of the call, the lines will be on listen-only. However, at the end of the call, you will have the opportunity to ask questions. If at any time you need assistance, please press star zero on your telephone keypad and you will be connected to an operator. I'm now handing you over to Dr. Jan Schmidt-Brand, CEO and CFO, to begin today's conference. Please go ahead.
Thank you, Molly. Hello, ladies and gentlemen, and welcome to the Heidelberg Pharma conference call to discuss our results for the first half of 2021 and to provide a business update. My name is Jan Schmidt-Brand, and I am CEO and CFO of the company. Joining me on the call today is my colleague, Professor Andreas Pahl, Chief Scientific Officer, and Katja Arnold, our investor relations consultant. Please note that this presentation is available for download on the Heidelberg Pharma website. This conference call is being recorded, and the replay will be available on our website after the live event. Before I begin, let me remind you that we will be making forward-looking statements on this call, as well as during the question and answer session. Please see our safe harbor statement here on slide two.
For a more detailed discussion of the risks and uncertainties affecting our business, please see the 2020 management report, which is available on our website. Please turn to slide three. On the call today, we will give you a brief corporate overview and outline the key achievements for the year to date. We will provide an update on our proprietary ATAC programs as well as our partner projects. This will be followed by a review of our financial results and an outlook for the year ahead. At the end of our prepared remarks, we will have a Q&A session. We invite you to ask questions in English or in German. Please turn to slide four. This slide provides a quick overview of our company.
As a reminder, we are the first to develop a completely new mode of action in cancer treatment by using the toxin amanitin to develop anti-cancer therapies. Amanitin is a natural toxin found in the death cap mushroom and has a unique biological mode of action, the inhibition of RNA polymerase II, which could serve as the basis for developing highly effective innovative drugs. We use our proprietary and innovative technology to manufacture antibody-targeted amanitin conjugates. We call them ATACs. With our novel proprietary technology, we seek to provide cancer patients new treatment options that improve efficacy, overcome resistance mechanisms, and kill both proliferating and dormant tumor cells. We plan to use a biomarker to stratify the patient population and expedite clinical development.
Our business model is based on three pillars: to develop a proprietary ATAC pipeline, to partner our ATAC technology platform, and to generate upside potential from our legacy clinical portfolio. Please turn to slide five. As you can see from this slide, we have a substantial and growing pipeline of proprietary ATAC programs, collaboration programs, as well as two partnered legacy clinical assets. We will update you on key programs in the next few minutes. We made good progress in the first half of the year in building our company. Earlier this year, we were pleased to have Dr Mathias Locher join us as Chief Development Officer, a newly created position. Dr András Strassz was promoted to Chief Medical Officer. The team has a wealth of experience that is critical as we advance the development of our ATAC programs, including bringing HDP-101 into the clinic.
We have also strengthened our financial footing. In December 2020, our main shareholder, dievini, made a EUR 15 million loan commitment, of which we have drawn EUR 10 million up to now. In March, followed a EUR 30 million financial commitment by dievini, which enabled our going concern and planning for our R&D activities in the next months. With dievini's backing, we were able to recently complete a EUR 20 million private placement. I'm particularly excited that we were able to attract new institutional investors with this financing. This included Polar Capital and Invus, two well-known and well-respected life science specialists. With the recent private placement and remaining commitment from dievini, we have sufficient funds through mid-2022 based on our current planning. This was an important step into expanding our shareholder base internationally. I want to briefly discuss the impact of COVID-19 on our business.
We have been fortunate that our internal day-to-day business processes have only been affected to a small extent. We had to deal with external limitations. We experienced some delays among our collaboration partners with early-stage projects due to reduced capacities and temporary laboratory closures. Patient recruitment at some of our partners was impacted. Clinical sites report lack of capacities due to the pandemic. There still remain risks in terms of logistic chains, restrictions on laboratory and manufacturing capacities, processing bottlenecks at regulatory authorities, especially due to priority processing of COVID-19 studies, but also limited availability of resources and access restrictions at trial centers. On slide eight, my colleague, Andreas Pahl, will now summarize the R&D highlights, starting with the ATAC technology. Thanks, Andreas.
Hello, everybody. I will start with our lead for proprietary product candidate, HDP-101, a BCMA ATAC. We have received regulatory clearance in the U.S. to initiate our first-in-humans trial with this exciting compound and are continuing to initiate trial sites. In Germany, we submitted the clinical trial application to the Paul-Ehrlich-Institut in March 2021, and we are in the approval process. We expect to be able to start enrolling patients in the third quarter of this year and will provide more details later in the presentation. Looking beyond our lead drug candidate, we are continuing our non-clinical development work with two other ATAC candidates. HDP-102 is a CD37 ATAC, which we expect to develop for the treatment of B-cell malignancies, such as non-Hodgkin's lymphomas, and HDP-103 is a PSMA ATAC for the treatment of prostate cancer.
Preclinical data on both of these programs were presented at the American Association for Cancer Research, or AACR, annual meeting this spring. The data presented show that CD37 ATACs and PSMA ATACs have strong anti-tumor activity and inhibit the growth of hematologic solid tumors even at low doses. The favorable safety profile due to the good tolerability of these ATACs support that they may represent promising new therapeutic options against these cancer types. In the first half of the year, we have reached important milestones for the manufacturing of HDP-102 and HDP-103 at CMOs, where batches of antibody were produced with very high yields. We also reinforced the development team to get the preclinical program started. In February, data from our HER2-targeting trastuzumab ATAC against triple-negative breast cancer were published in the peer-reviewed journal, Science Translational Medicine.
This data were jointly published with a research group from the School of Medicine, Indiana University in Indianapolis. In preclinical models, this HER2 ATAC showed strong efficacy for treating triple-negative breast cancer with low HER2 expression and concomitant hemizygous deletion of chromosome 17p in preclinical models. The HER2 ATAC induced immunogenic cell death of the tumor cells, the type of cell death that elicits an immune response. When combined with immune checkpoint blockade therapy in preclinical HER2 low breast cancer models mimicking TNBC, the efficacy of the HER2 ATAC treatment was greatly improved. This is important because this subgroup of patients does not have efficacious treatment options available. Please turn to slide nine. Let me now turn into our ATAC technology partnerships. We are delighted that our partner, Magenta Therapeutics, continues to make good progress with the ATAC programs.
MGTA-117 is Magenta's lead targeted conditioning product candidate. It's designed to selectively deplete stem cells from patients prior to transplant or hematopoietic stem cell-based gene therapy to reduce the need for high-dose or high-intensity chemotherapeutic agents, or in the case of gene therapy applications, to potentially eliminate the need for chemotherapeutic agents altogether. MGTA-117 targets the CD117 receptor, which is highly expressed on the cell surface of hematopoietic stem cells and leukemia cells, making it an ideal target for conditioning across broad sets of diseases, including certain blood cancers, hemoglobinopathies, sickle cell disease, and beta thalassemia, and inherited metabolic disorders. Magenta has announced its plan to submit an IND to begin clinical testing in mid-2021, with a plan to start the first-in-humans trial in the second half of this year. The second Magenta ATAC program, CD45-ADC, is currently in preclinical testing in various transplant and autoimmune disease programs.
We are also very pleased to announce that Takeda has extended its research agreement with us by 18 months to the end of 2022 and has nominated a new target. For this, we will receive a payment for technology access, which will not influence our guidance. Please turn to slide 10. It has been gratifying to see the progress our partners for our legacy clinical programs have made. Let me start with Telix, which is developing TLX250-CDx, a radiolabeled form of the antibody girentuximab, which binds to the tumor-specific antigen CA9 on clear cell renal cell carcinoma. Telix is evaluating TLX250-CDx for diagnosing renal cancers using positron emission tomography, PET, in a global multicenter phase III trial with sites in Europe, Turkey, Australia, Canada, and the U.S.
The first U.S. patient was dosed in early 2021, and overall recruitment in this global study is expected to complete in mid-2021, so very soon. Telix has received a breakthrough therapy designation from the FDA for this program. Telix has also successfully completed the Japanese bridging study. The study achieved its objectives, demonstrating safety and tolerability, and there was no difference between Japanese and Caucasian patients in these areas. Recently, in June, a phase I study in bladder cancer called ZiPUP was initiated with TLX250-CDx. The study is exploring the clinical utility of TLX250-CDx to image other cancers beyond renal cancer and in indications where conventional imaging has limitations. Our partner, RedHill, has also made some nice progress advancing the development of RHB-107, an oral serine protease inhibitor. The phase II/III trial in patients with mild to moderate COVID-19 started in early 2021 and is currently ongoing.
Link Health Group has finally started a phase I clinical trial with LH011 in patients with locally advanced metastatic pancreatic cancer. This trial is expected to complete by the end of 2021. Coming now to slide 11 and HDP-101. We are excited about the progress made with HDP-101. As I mentioned earlier, we have received clearance from the U.S. FDA to start clinical testing. We also submitted the clinical trial application in Germany with the Paul-Ehrlich-Institut. We expect a decision from the German regulatory authorities in the third quarter of this year. For us, these were very important milestones and the prelude to the initiation of the clinical centers in the U.S. We focus now on initiating the trial as soon as possible.
In the U.S., we have to deal with an additional challenge, as clinical sites in the U.S. have specific requirements for the equipment used to prepare the infusion of drugs with the potential toxicity for the clinical staff. We are moving full speed ahead with the necessary steps, but we will need additional time for this, so the start of the patient recruitment will be delayed for technical reasons. Currently, we plan with six to eight weeks. Our first clinical data is still expected to be available in 2022. Please turn to slide 12. Here are some more details about the planned clinical trial. The study is an open-label, non-randomized, multicenter, phase I/II-A trial evaluating HDP-101 in patients with relapsed or refractory multiple myeloma for whom limited treatment options exist. The primary aim of the phase I dose escalation part is to determine the maximum tolerated dose.
Up to 36 patients are planned to be enrolled in the first part of the study. We will evaluate if there are any dose-limiting toxicities in the patients and establish the recommended dose for the phase II part. The study scheme, as depicted in the lower part of the slide, ensures a safe dose escalation to reach a therapeutically effective dose in these patients who have limited or no therapeutic options. The primary objective of the phase II-A part will be to assess the preliminary antitumor activity of HDP-101. Up to 30 patients are planned to be enrolled, and patients will be stratified based on our biomarker, the 17p deletion status. Given that the first part of this trial is a dose escalation study, the timing as to when we might have first data is difficult to predict, but we plan for initial data next year.
As already mentioned, we plan to start enrolling patients as soon as possible. I would like to get back to Jan for the financials. Please turn to slide 14.
Thank you, Andreas. As a reminder, our fiscal year ends on November 30, and therefore the first half ends on May 31st. Look on slide 14. In the first six months of the 2021 fiscal year, Heidelberg Pharma has generated sales revenue and income totaling EUR 1.1 million, thus falling short of the previous figure of EUR 3.9 million. Sales revenue totaling EUR 0.8 million comprises the collaboration agreements for Heidelberg Pharma's research, ATAC technology of EUR 0.6 million and its service divisions of EUR 0.2 million. Sales revenue in the prior year quarter was boosted by revenue generated from supplying the amanitin linker partners. Other income of EUR 4.3 million was also lower than the previous year's figures of EUR 4.7 million and comprised income from the reversal of unused accrued liabilities, governmental grants, and other items. Operating expenses including depreciation, amortization, and impairment, amounted to EUR 14 million, slightly above the previous year figures of EUR 13.2 million.
Looking briefly at the breakdown of expenses. Cost of sales is directly related to sales revenue. These costs are EUR 2 million in the first half, mainly related to customer-specific research and for preparatory steps for the next supply of our amanitin linkers to licensing partners. Research and development costs rose year-over-year to EUR 10.1 million due to the expansion of cost and tenders, external manufacturing for all three ATAC projects, and preparations for the clinical trial with HDP-101. At 72% of operating expenses, R&D remained the largest cost item. Administrative costs were EUR 1.7 million and include the costs for the holding company activities and the stock exchange listing. Other expenses for business development, marketing, and commercial market supply activities, which mainly comprises staff and travel costs, were EUR 0.2 million. Net loss was increased to EUR 13.1 million due to revenue being lower and higher expenditures.
Loss per share was EUR 0.42, up from EUR 0.33 in the previous year. Please now look on slide 15. The group had cash equivalents of EUR 0.9 million at the close of the first half, but had a remaining loan commitment from dievini. Average cash usage per month was EUR 2.3 million, slightly below our guidance of EUR 2.5 million-EUR 2.9 million. Equity as of the end of May was -EUR 0.1 million. This corresponded to an equity ratio of minus 0.5%. In March 2021, dievini confirmed a new financial commitment of up to EUR 30 million, which enabled the company to prepare its 2020 financial statements on a going concern basis. Based on this, we started the process of a capital raise. In June 2021, we raised gross proceeds of EUR 20 million from a private placement with select institutional investors and dievini using EUR 12.5 million from the latest commitment.
Cash reach is secured until mid-2022 based on the current budget planning. Please turn to slide 16. On this slide, you can see some basic stock performance data, ownership information following the capital increase, and the latest analyst recommendations. Following the green light from the FDA to initiate clinical development of this first ATAC, Heidelberg Pharma significantly intensified its investor relations activity in the first half of the year. Virtual meetings were held with many specialist biotech investors across Europe and U.S., including those new to the Heidelberg Pharma story. Investors showed strong interest in our ATAC technology, its potential, and the company strategy. Bryan, Garnier & Company initiated research coverage in April. In line with the increase in the share price and reflecting the issue of new shares, the market capitalization of Heidelberg Pharma doubled from EUR 130.9 million- EUR 266.6 million compared to the end of H1 2020.
Our annual general meeting was held on 18th May 2021, and 81.57% of the current share capital represented. All resolutions proposed by the management were adopted with a large majority. Let me now wrap up with you what you can look for during the rest of 2021. Please turn to slide 18. We confirm our full year financial guidance issued on 26th March 2021. Like expenses and funds used, sales revenue has so far been below our expectations. We still plan to generate the majority of sales revenue in the second half of the year. As a reminder, this includes potential income from existing ATAC collaborations, including early research contracts. R&D costs are expected to increase, mainly due to the clinical trial, manufacturing, and pre-clinical studies for pipeline projects, and cash requirements will increase along with that. Please turn to slide 19.
We expect 2021 to be another busy and productive year at Heidelberg Pharma. HDP-101 is about to enter clinical development for the treatment of multiple myeloma. Clinical centers in the U.S. and in Germany are currently preparing to enroll patients as the application process for the clinical study is moving ahead. Dosing of the first patient is now scheduled to take place in the third quarter of 2021. Meaningful patient data is expected to become available in 2022. The application to conduct a clinical trial in Germany is currently being examined by the Paul-Ehrlich-Institut, with Heidelberg Pharma expecting a decision to be made during the third quarter. Preclinical development for the other ATAC candidates, HDP-102 and HDP-103, is slated to begin still this year. Turning to our collaborations, our partner Magenta plans to submit the IND for MGTA-117 mid-year.
Dosing of the first patient is planned in the second half of 2021. In addition, Magenta is working on the preclinical validation of a CD45-ATAC that could be used for the treatment of various autoimmune diseases, such as multiple sclerosis. Our partner Takeda will conduct preclinical testing of the ATAC technology on a new target molecule. Regarding our legacy clinical programs, the clinical product candidates outside the ATAC technology are being further developed by our partners, Telix, RedHill and [Kinvia]. As you can see, there's a lot ongoing. Telix expects to complete patient recruitment in the phase III ZIRCON trial later this year and will evaluate TLX250-CDx in other indications.
RedHill Biopharma plans to test RHB-107 as the third arm in a phase I/II-A combination study in advanced cholangiocarcinoma, subject to discussions with the FDA. They're also continuing the phase II/III trial with RHB-107 in patients with mild to moderate COVID-19. [Kinvia] plans to complete the phase I clinical trial in Chinese patients with locally advanced metastatic pancreatic cancer at the end of 2021. All research and development activities for our out-licensed legacy programs are performed by our partners. Heidelberg Pharma is not involved. As a licensor, we would share some of the revenue associated with any successful development. Please turn to slide 20 now. We at Heidelberg Pharma believe that the ADC field is an exciting one to be part of. It is an area of research and development that is producing highly promising therapies.
We have seen a lot of recent progress in the field by way of financing transactions and regulatory approvals. Just to mention some highlights, the FDA approved ZYNLONTA from ADC Therapeutics as a single agent treatment for adult patients with relapsed or refractory diffuse large B-cell lymphoma as the first and only CD19 targeted ADC. Zydus Cadila is marketing Ujvira, the first ADC biosimilar of Kadcyla. ADCs are also gaining strategic importance in the pharmaceutical industry and are expanding the range of therapeutic options. Daiichi Sankyo has reported it plans to invest over $13.8 billion through 2025 in three comprehensive ADC programs evaluating different solid tumors under the development alliance with AstraZeneca. [inaudible] acquired from Eisai an anti-FOLR1 ADC targeting solid tumors in a $650 million collaboration.
We are excited about what the future holds for us and are driven by our vision of developing this new generation ADC to address major challenges in cancer therapy. On slide 21, you can find our current conference schedule for the first half of the year. We thank you for your time and are happy to take your questions now. Thank you.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Please ensure that your line is unmuted locally. You'll then be advised when to go ahead with your question. That's star one. We do have a question come through. The first question today comes from the line of Olga Smolentseva calling from Bryan Garnier. Please go ahead.
Good afternoon. Jan and Andreas, congratulations on the ongoing progress, and thank you for taking my questions. Firstly, maybe could you provide a little bit more clarity on the supplementary tests that clinical sites in the U.S. are requiring? Would this requirement apply for German sites as well, or is specific for U.S. only?
Yes, sure. Thank you. Andreas, do you want to take this one?
Yeah, sure. To start with the second one, it's easy, though. It's not a trial for the German site. It's for U.S. sites specifically, and like mentioned, so we need to run a compatibility test and stability testing so that the dedicated devices used by them are in compliance with our clinical trial material. That's an additional assay that needs to be performed, which is currently ongoing.
That's helpful. Thank you. Maybe just a clarification on clinicaltrials.gov, there is currently no mentioning of 17p deletion cohort analysis. I think that's basically the post-hoc analysis that is planned. Maybe just to specify again, would that be 17p specific probe or p53 based one?
For the post escalation, it's indeed the post-hoc analysis. To be very specific, it will be a POLR2A specific probe, because otherwise you need to argue about correlation. We are really aiming for POLR2A, which is a major subunit of the RNA polymerase, to really detect the target of the amanitin by the FISH assay.
That's very helpful. If I may, just one last question. Basically, on the agreement with Takeda, should we expect the in-licensing decision by the end of 18 months? Maybe do you have some visibility on how many targets could be considered?
Maybe it's a bit early to say so. As we have reported earlier, there was a couple of changes in the strategy that was implicitly pursued by Takeda in terms of targets and specific targets. I would say it's too early for a concrete prognosis right now.
That's clear. Thank you, and thank you for taking my questions.
Yeah, you're welcome.
We have no further questions in the queue at this time. As another reminder, if you would like to ask a question, please press star one on your telephone keypads. We have no further questions coming through on the phone lines. I'd like to hand the call back for any closing remarks. Thank you.
Thank you, Molly. Thanks everybody for attending. Let's look forward to an exciting and successful second half of the year at Heidelberg Pharma. Thank you and bye-bye.
Thank you for joining today's call. You may now disconnect your lines. Host, please stay on the line.