Hello, and welcome to our conference call on Medigene's strategic refocus and organizational realignment announced yesterday. My name is Pamela Keck, and I will be moderating today's session. Our Chief Executive Officer, Dr. Selwyn Ho, will present the company's updated corporate strategy with a German translation provided by my colleague, Kristin Foglietta. Following the pre-recorded presentation, there will be an opportunity for questions during a live Q&A session. To participate, please use the Q&A button located below the presentation window. Kindly note that all participants are in listen-only mode, and this conference is being recorded. Before we get started, let's quickly run through the forward-looking statements. Please note that as part of our discussion today, management will be making forward-looking statements.
Although we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on the call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements. [Foreign language] With that, I'll hand the call over to Selwyn.
Thank you, Pamela. Today, I'd like to address the announcement we made in yesterday's press release regarding the update of our corporate strategy to refocus our capital allocation on R&D programs with highest potential for return on invested capital, resulting in an organizational realignment. This update to our strategy aligns with current market realities while positioning us for sustainable growth and long-term success. This decision has not been made lightly, and I will walk you through the rationale behind our refocus, the opportunities it unlocks, and the steps we are taking to ensure that we meet our obligations to patients, partners, and investors alike.
[Foreign language]
Let me start by emphasizing the progress we've achieved in the past two years and how it sets the stage for this next chapter of our journey. We remain fully committed to developing therapies guided by optimal T-cell receptors, or TCRs, that are sensitive, specific, and safe, we call them 3S TCRs, to precisely target cancer cells. In the past year, we have made significant advances and additions to our end-to-end platform that has enabled us to generate additional optimal 3S TCRs that form the foundation of our pipeline. We have filed numerous patents on our proprietary technologies and are constantly expanding and improving our platform. With MDG1015, we have successfully developed a highly differentiated autologous T-cell receptor engineered T-cell therapy, or TCR-T therapy for short, which has received rapid IND approval in Q3 and is now ready to enter the clinic.
Further, we have delivered on our promise to expand the development of TCR-guided therapies beyond just autologous cell therapies to off-the-shelf approaches. In August, we entered a partnership with WuXi Biologics to develop TCR-guided T-cell engagers, or TCR-TCEs for short, an antibody-based modality that targets immune responses towards cancer cells. TCR-TCEs have important advantages over standard cancer therapies for patients while offering a more streamlined development and production, and I will talk more about our first TCR-TCE program, MDG3010, later. Additionally, we are developing our TCRs to be used in off-the-shelf non-autologous cellular modalities such as TCR natural killer cells, or TCR-NKs, again, which may potentially offer advantages over autologous TCR T-cell therapies.
[Foreign language]
Despite the excellent progress of our TCR-T programs and our expertise in TCR generation, we have carefully considered the current landscape in cell therapy and investment trends. Even with the recent FDA approval of Adaptimmune's Tecelra in the autologous cell therapy space, investment and partnering sentiment for TCR-T cell therapies has remained less favorable, particularly for preclinical stage microcap biotech companies like Medigene. However, there is significantly higher interest from investors and potential partners in non-cellular therapies, such as antibody-based bispecific approaches, as recent partnering deals have shown. This trend also extends to Medigene's innovative TCR-TCE approach, which holds strong potential in this shifting landscape. Subsequently, we have decided to refocus and optimize our pipeline to prioritize the programs that offer the highest potential return on invested capital in the near term.
This will still support the company's short, mid, and long-term vision of generating optimal 3S TCRs for the development of multiple off-the-shelf TCR-guided therapies while creating value for all stakeholders. Let me outline the steps we are taking as part of our strategic refocus. Firstly, we will continue to focus on developing optimal 3S TCRs specifically for use in off-the-shelf TCR-guided modalities. These represent a significant market opportunity by maximizing the unique advantages of our 3S TCRs to addressing the need for precise and safe delivery of therapeutics to cancer cells. As such, our R&D efforts will be centered on advancing our first TCR-TCE program, MDG3010, in collaboration with WuXi Bio. Looking ahead, we anticipate expanding our TCR-TCE pipeline through expansion of our partnership with WuXi Bio and also through additional strategic partnerships in the near future.
Secondly, for MDG1015, our lead TCR-T therapy program, we will delay the start of the phase one clinical trial and are actively seeking partnerships and additional financing options to advance this program into the clinic. We remain confident in the differentiated potential of MDG1015, a first-in-class, third-generation TCR-T therapy targeting NY-ESO-1 LAGE-1A for the treatment of advanced gastric cancer, ovarian cancer, myxoid round cell liposarcoma, and synovial sarcoma. This innovative therapy, co-expressing the co-stimulatory switch protein, PD1-41BB, is designed to address a significant unmet medical need in the treatment of solid tumors. Reflecting our confidence, we will complement the IND approval by still submitting a clinical trial application, or CTA, for MDG1015 to the European Medicines Agency, and this remains on track for the fourth quarter of 2024.
In parallel, and consistent with our focus on off-the-shelf therapies, Medigene will deprioritize further work on all other autologous cell therapy programs, including MDG2021, MDG2011, and MDG2012. Preclinical development on these programs will be paused, and we will be actively seeking partnerships to advance them from the preclinical stage to IND. As a result, organizational realignments leading to a reduction in headcount of approximately 40%, along with other cost-cutting measures, will be necessary to match our refocused R&D activities. Finally, we will retain our ability to deliver on our obligations to existing partners, which will remain unaffected.
[Foreign language]
Now let me provide you with a brief overview of our realigned pipeline resulting from the strategic focus. As mentioned, we are focusing our efforts on the development of MDG3010 together with our partner WuXi Biologics, and we expect the first proof of principle data from this collaboration in the second half of 2025. We will temporarily delay the start of our IND-approved MDG1015 phase one clinical trial with a CTA submission planned for 2024, quarter four, to enhance the opportunity for patient recruitment. Additionally, you can see our partnered autologous TCR-T therapy programs will continue and are not impacted by our realigned strategy.
We will pause all preclinical development work for our autologous cell therapy programs, including MDG2021 targeting KRAS G12D with HLA-A11, MDG2011 targeting KRAS G12V with HLA-A11, and MDG2012. It is important to emphasize that these decisions are made to optimize our overall portfolio. We remain dedicated to TCR-T cell therapies and believe that with the right partnerships, these programs can still achieve their full potential. As our foundation, work on our 3S TCR generation to support additional TCR-TCEs and TCR-NK programs, and further innovation in our end-to-end platform generation will continue.
[Foreign language]
We believe that TCR-guided modalities offer broad potential as part of a portfolio of next-generation precision therapies. On the left-hand side of this slide, as understanding into cancer treatments has advanced, there is clear agreement on the need to have different options to target multiple pathways that underpin cancer development. This can be through therapies that enhance or activate the immune system or those that directly kill tumor cells. We believe that in either of these scenarios, TCR-guided modalities through either autologous or off-the-shelf modalities can play a key part within the treatment paradigm.
Our updated pipeline focuses on off-the-shelf therapies, such as TCR-TCEs with our MDG3010 program and TCR-NK therapies. Off-the-shelf therapies are those that can be pre-produced and stored, ready for immediate use until a patient needs them. This compares to autologous cell therapies, which have a lead time of up to six weeks from a decision to treat, manufacture away from the treatment center, and delivery back to the physician before being able to administer the therapy to a patient.
[Foreign language]
Let me now turn to TCR-TCEs, which will be the first of our off-the-shelf TCR-guided modalities going forward, and specifically our bispecific TCR-TCE program, MDG 3010, which we will develop in collaboration with WuXi Biologics.
[Foreign language]
So, why bispecifics? According to a market research study by KBV Research, the market for bispecific therapies represents a significant opportunity in the fight against cancer and is projected to experience a large compound annual growth rate of 40.9% from 2023 to 2030, underscoring the robust and accelerating interest in this field. By 2030, the market is conservatively estimated to exceed $80 billion, reflecting this substantial potential.
In terms of the competitive landscape, there are several approved bispecifics and huge interest in both the development and licensing activity. TCR-guided TCE bispecifics set us apart from most companies in this space by using the precision of the TCR and its ability to recognize a much greater range of tumor-specific target molecules that are inaccessible to the classic bispecific antibody approaches. Leveraging our expertise in generating optimal 3S TCRs positions us well to lead in this space.
[Foreign language]
In August this year, Medigene entered into a three-year multi-target strategic partnership with WuXi Biologics to design and co-research TCR-guided T-cell engagers for the treatment of solid tumors. MDG3010 is the first of several programs and aims to co-develop TCR-TCE constructs jointly owned with WuXi Biologics, with Medigene retaining the option to further advance their development.
These constructs will integrate Medigene's highly specific 3S TCRs for precise target recognition with WuXi Bio's anti-CD3 monoclonal antibody TCE platform and proprietary bispecific antibody platform WuXiBody. For patients, we believe that MDG 3010 could offer enhanced safety profiles through precision binding of the TCR, as well as improved efficacy compared to the current standard therapies, while providing greater accessibility to patients compared to autologous cell therapies.
[Foreign language]
The refocus of our corporate strategy brings an organizational realignment to match our updated R&D activities. This will include a workforce reduction of approximately 40% effective in 2025, as well as other cost-reducing measures in line with the reduced R&D activities. We intend to retain employees essential for supporting activities as part of our strategic refocus going forward. This decision to reduce personnel to match our new focus has been a difficult decision to make, but this is a necessary step to ensure the long-term success of Medigene.
As we implement these changes, we are grateful to all our employees for their dedication and commitment, as their expertise has been instrumental in getting us to this point. We are committed to supporting our employees through this transition. Our 2024 financial guidance, including our cash runway guidance into July 2025, remains unchanged at this point in time due to lower income expected in 2025, offsetting the aforementioned cost reductions. Ensuring our financial stability is paramount as we navigate this strategic focus. As such, we are actively seeking and evaluating partnerships to further the development of our pipeline and are assessing all appropriate financing and strategic options to advance our cash runway into 2026 and beyond.
[Foreign language]
To conclude, our strategic refocus represents a pivotal moment for Medigene. Every strategic decision we make is guided by our dedication to delivering value and making a meaningful impact on patient care. Our vision as a company is to discover and generate a library of optimal 3S T-cell receptors that we can then deploy across multiple off-the-shelf TCR-guided modalities.
We remain committed to both developing and partnering these 3S TCRs and TCR-guided therapies, aiming to achieve clinical validation of these modalities ourselves or through our partners. We will continue to innovate our end-to-end platform and, where appropriate, partner out certain technologies. Ultimately, we hope that these therapies fulfill their potential and become available to patients. We believe that TCR-guided modalities offer broad potential as part of a portfolio of next-generation precision therapies.
[Foreign language]
Thank you for your attention. I'm now happy to take your questions.
[Foreign language] Ladies and gentlemen, at this time we will begin the Q&A session. You may ask questions in writing via the Q&A button below the presentation window in English or German. I will then read the questions aloud. Selwyn will answer in English. Following this call, a transcript, including the Q&A in both languages, will be available on our website. [Foreign language]
Thank you for all the details and completely understand the resource-based decisions. Two questions, please. First, if you consider all your current resources, could you have shut everything down and focused all efforts on MDG 1015 since a clinical stage asset provides the most value inflection points for investors? Selwyn, I will leave that answer first and then we'll follow with the next question, please.
Sure. So thank you, Joe. Thank you, Pamela. The simple answer to that question is no. We could not have shut everything down to focus all our efforts on 1015 because beyond the actual cost of the trial, we also would have needed to extend our cash runway, which we have guided to July 2025, towards at least the end of 2025. So the simple answer to that, unfortunately, is no.
Thank you. So following now the second question from Joe, since this is such a BD-focused effort across the space, are you able to discuss the maturity of any potential discussions as non-dilutive capital is a significant opportunity for you going forward? Selwyn?
Sure. So I think we have been very transparent that we have been actively looking at any form of partnering to expand our existing partnerships or to develop new partnerships throughout my tenure at Medigene. You've seen some of the results of that and the products of that with the WuXi Biologics deal, for example. However, we cannot make any comments on the maturity of any ongoing discussions. Suffice to say that we are actively in the partnering process and will continue to update the market as and when we have any material information.
Thank you. There's one last question from Joe. Can you give a general product profile regarding population targeting for an off-the-shelf TCR from an HLA standpoint? Selwyn?
Okay. So if you think about HLAs, they are very important in the precision targeting process and the value of a TCR. The data generally suggests that the different populations around the world, take Europe, the U.S., or China, for example, have a slightly different mix of HLAs. I think the one thing that we can say is HLA-A2 is a very common HLA across Europe, the U.S., or China. So in Europe, it's approximately 50% of the population will express HLA-A2.
In the U.S., it's just about a third of patients will express the same HLA-A2. And in China, I think it's just under 20%, but it's still a very high proportion. Thinking of it another way is if you took, for example, the top three HLAs in Europe, HLA-A2, A1, and A3, those three combined would have covered over 80% of the population. To get a similar figure for over 80% of the population in the U.S., you would need to go to five HLAs. So in addition to A2, A1, and A3, you would need to add in A24 and A11.
In China, the top four HLAs would just be under 75%. And that would, sorry, the top four HLAs would be, yeah, approximately just under 80%. And that would include HLA-A*02, HLA-A24, which is a very different HLA group to what we see potentially in Europe and the USA, HLA-A11, and HLA-A*02 that we've already discussed. So those would make up the biggest group. And then others is quite a heterogeneous group in China. So you can see a very different type of overall mix with some commonalities of HLA-A*02 across Europe, the USA, and China, with HLA-A24 and A11 being also very common in China. Hopefully, that addresses your question.
Thank you, Selwyn. I have another question from the audience. I would like to thank you very much for this update. I have two questions. The first one. In the press release, you said you will be evaluating all appropriate financing and strategic options. Could selling the company to secure Medigene's long-term future be one option for you? And I'll leave this first question to you.
Thank you for the question, Pamela. So the responsibilities of both the executive management board as well as the supervisory board will be to evaluate any potential offer for the company, should one exist, for us to assess the value for the company and for potential shareholders. So the simple answer is if an appropriate offer came in or any offer came in, we would review that as part of our responsibilities.
Thank you, Selwyn. I also just want to say I am filtering through a question. So please excuse if I don't read if there are similar questions or same questions down the line and they have been answered, like the question we just had that Selwyn answered. I will not repeat a similar type of question just in the interest of time. Second question here. You also presented to us that you will be refocusing on generating optimal 3S TCRs for the development of multiple off-the-shelf TCR-guided therapies. Could you please provide us with an idea on a possible timeframe when you think you could start generating revenue out of it and so creating value for patients, shareholders, and the company? Selwyn?
Sure. So what we have provided guidance on is the timeframes that we believe we will have our lead construct from the MDG3010 program as an example. By the second half of 2025, our collaboration with WuXi, we believe that we will have such a construct should the experimental work go to plan. And if that is the case, that is the time that we can then move forward potentially into IND work. Based on the history of looking at bispecifics, we have seen potential partnering of products for the bispecifics at a preclinical stage.
For example, in July, sorry, in January of 2023, we saw WuXi sell three preclinical assets in the bispecific space to GlaxoSmithKline, based out of the U.K., for $40 million upfront. So we have some benchmarks and some firm data points that suggest preclinical assets can be of value and partnered early. Clearly, the longer you develop these and the further you go into development, the value increases, but obviously the costs increase as well. So that gives you some idea of the possibilities. Clearly, we need to obviously demonstrate the lead construct first of all with this first collaboration before we are able to maximize any further value.
Thank you, Selwyn. Next question from the audience. Is there an opportunity for WuXi Biologics to invest in Medigene?
That's a great question. I think that question probably should be directed more at WuXi Bio than towards us. But clearly, on every partnership, we have discussions as to what type of collaboration and what type of partnership we would like and what our partner would like. And certainly, as part of our overall focus going forward, we will be having conversations with all our potential partners and existing partners about any appropriate strategic and financing options.
Thank you. I'm moving on to the next question. When will be the next capital raise?
So the market, as we've established and highlighted in both our press release and in this discussion today, at the moment doesn't seem to be favorable for general market capitalization of any small micro cap biotech, which is at preclinical stage. Now, we evaluate and monitor the market conditions almost hourly and daily. So if the opportunity exists and we see sentiment rapidly change or even change in a trend that we feel are comfortable with, we will take that opportunity to look at financing on the capital markets. Clearly, if that is the case, we will be starting to reach out to do that in the appropriate manner.
Thank you, Selwyn. There's another question. If you are unable to sell the company or cannot do any other form of financing, when would the company be insolvent?
So those criteria will be looked at in due course as appropriate. Clearly, we keep a very close eye on the criteria required that would trigger an insolvency, and if that point comes, that will be the point where we would obviously make that known to the market. As it stands as of today, we are not in that position where we are insolvent. I want to make that absolutely clear, so when that does occur, the market will be informed.
Thank you. I'm moving on to the next question. Is there any general interest in our end-to-end platform?
Absolutely. There are constant requests for further information and for the potential to understand more about each of the individual technologies that we present. These opportunities arise when we announce the intellectual property updates that we have, as well as present some of the data that we have announced in our press releases at conferences such as the recent Society for Immunotherapy of Cancer, the SITC meeting. There we've had interest from a number of companies wanting to understand more about the technologies because they can see value for incorporating those in their own product portfolios or in terms of their product development portfolios. So we see that very, very frequently. We remind you that we have previously licensed technologies to BioNTech as part of the original deal that we made back in February of 2022.
Thank you, Selwyn. A question about our agreement with WuXi. What kind of an annual contribution can we expect from the contract?
So the details of the contract that we have announced and I'll reiterate again is a very different type of collaboration that we put in place with the previous collaborators you may be more familiar with in terms of BioNTech and for Regeneron. With WuXi Biologics, we have decided that we wanted to capture as much of the potential economics as possible. So what we have decided to do is to go for a research and collaboration agreement, which also fitted well with what WuXi wanted to do. So this was a joint view that we wanted to have a research and collaboration agreement where the development as well as the value was split 50/50. So effectively, 50% of the economics comes to Medigene, 50% goes to WuXi Biologics. That is up until the development of the lead candidate from our proof of principle.
Should either one of the parties wish to continue, the economics will change there in favor of the partner who wishes to continue further. So they would gain more economics, and the partner who decided to take a step back would take less economics. I think in either situation where we see revenue being generated outside of the partnership would be at the point where we would then partner that to a big pharma or another company that wanted that particular asset. And as I've said, we've seen both historical benchmarks in 2023 as well as new benchmarks this year for high interest in acquiring bispecific assets.
Thank you, Selwyn. The next question is about our share price performance. Do you see an opportunity for real upward share price performance within the next year?
I believe that the share price that we have now is, first of all, it's unsatisfactory from a company perspective and I'm sure from a shareholder's perspective. I also think it is radically undervaluing the company. I do not believe that the valuation that the share price reflects is correct in any way, shape, or form. Based on what we know of the potential in terms of partnering for what assets have historically and more recently have gone for, and on the fact that the company has consistently delivered on every single objective that we had set ourselves out for, we believe that there is clearly an opportunity for the share price to improve. Now, that said, it does appear that the market is looking for some form of business development and/or M&A type activity to generate that increase in share price.
Because despite everything that we do in terms of increasing our patent library, demonstrating that we've hit the next development milestones, we do not seem to be rewarded as a company, and neither is the share price rewarding our shareholders. So I think there is absolutely that opportunity in the next year, but that is dependent really, I think, based on our understanding, on the potential for business development work to occur.
Thank you, Selwyn. A question about our current partnerships. When can we expect milestone payments from either BioNTech or Regeneron regarding the clinical trial?
So in terms of specifically for the clinical trial, that is dependent obviously on both Regeneron and BioNTech advancing both the MAGE-A4 and the PRAME A*02 programs into clinical development. For Regeneron, we know that they have gone out publicly with an agreement with a Chinese company called JW Therapeutics to initiate a clinical trial in China. We know that their work has been ongoing since the start of this year.
So we remain hopeful and do expect at some point to receive milestones related to that because they've gone out publicly to say that. With regards to BioNTech, we are less clear as to where they are with their programs. We have obviously been notified of the progress of the scientific work, but as to where they are in terms of their potential plans for clinical, unfortunately, that's not something that we can disclose at this moment in time as we are not aware. So that's something to ask, unfortunately, of BioNTech.
Thank you, Selwyn. Now coming to the close of our session, one final question from the audience. When do you expect MDG1015 entering the clinic?
I think a lot of the discussion we've had today is exactly around this question. We've made it very clear that we are pausing the start of this trial until we have additional financing options or partnering options to do that. Our intent is to get this product into the clinic as we remain very, very confident that it is highly differentiated compared to existing T-cell receptor T-cell therapies. Clearly, for the partnering side of things, if we can find partners that believe exactly this sentiment, we will be progressing there.
But in terms of additional financing, we will rely, as we have mentioned in previous answers to questions, on the market sentiment improving towards both the company, but also towards biotech small cap stocks in Germany in general. And so if that is the case, then we would obviously look at that and take the opportunity to finance as appropriately. In either situation where that is positive, we would want to start the clinical trial as per our press release and what we have said today.
Thank you. This concludes the Q&A session. I will now hand the call back to Selwyn for closing remarks. [Foreign language]
Thank you, Pamela. And thank you, first of all, to all the people joining the call and to all the questions. As you can imagine, it's been a difficult time to make the announcement for our employees and for the company, but we remain confident of the strategy going forward and the value that these TCR bispecifics and our TCR-TCE programs can add in the mid to longer term.
A lot of our focus, as mentioned, will be on partnering and securing additional financing, but also finding the partnering and additional financing for our 1015 programs so that we can progress that. Should that be the case, as we stated clearly, we will be initiating that clinical trial. But in the meantime, we will be advancing our TCR generation, we will be advancing our TCR-TCE programs, and we'll be focused on execution and creating that value. So thank you very much to everyone. Good afternoon, good morning.