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Major Achievements in 2016 Validate Transgene's Strategy and Provide Promising Outlook for 2017Regulatory News: Transgene (Paris:TNG) (Euronext Paris: TNG), a biotechnology company focused on designing and developing viral-based immune-targeted therapies for the treatment of cancers and infectious diseases, today announced its financial results for the fiscal year ended December 31, 2016, and provided its outlook for 2017. In 2016, Transgene has focused its efforts on implementing its strategy, which looks to combine Transgene's immunotherapies (therapeutic vaccines and oncolytic viruses, which boost the immune system), with immune checkpoint inhibitors (ICIs). Over the last twelve months, additional data from clinical studies combining active immunotherapies with ICIs have confirmed the strong rationale behind this strategy. During the second half of 2016, Transgene signed two clinical collaboration agreements that allow clinical studies with:
Several clinical trials have recently started or are being initiated to confirm the potential of Transgene's immunotherapeutics in combination with ICIs. The first results from these studies are expected around the end of 2017. During the 2016 fiscal year, the Company strengthened its financial structure which will provide it with the funding to execute its clinical development plan through the end of 2018. This improved financial situation was the result of:
In parallel with strengthening its financial position, Transgene completed its reorganization with the result it is now focused on research and clinical development (R&D). As part of the restructuring, Transgene sold its production facility to ABL Europe, a Mérieux Group Company, for €3.5 million. Philippe Archinard, Chairman and Chief Executive Officer of Transgene said: "Our achievements in 2016 have reinforced our position as a major player in immunotherapy. Our portfolio of immunotherapies, our clinical collaborations and our much-improved financial position have put us in a strong position to execute our clinical plan which is designed to deliver a rich news flow over the coming months. Positive results from these studies would allow us to conclude partnership agreements with pharmaceutical companies. We are looking forward to demonstrating the important clinical benefits that our immunotherapies in combination with ICIs can offer to patients with severe diseases." Product pipeline review 1. Therapeutic Vaccines TG4010 in advanced non-squamous non-small cell lung cancer TG4010 is a therapeutic vaccine that induces an immune response against MUC1 expressing cells. TG4010 is being developed in non-squamous non-small cell lung cancer (NSCLC). TG4010's mechanism of action and excellent safety profile make it a very suitable candidate for combinations with other therapies. TG4010's development plan is focused on Phase 2 studies that can generate a comprehensive data package for TG4010 in 1st- and 2nd-line treatment of advanced NSCLC over the next 9 to 18 months. The clinical trials aim to confirm the synergies that are expected to result from the combination of a therapeutic vaccine and an ICI. The expected clinical benefits are an increase in the response rate, in the quality and in the duration of the response to current and future standards of care.
TG4001: trial in combination with avelumab following collaboration agreement with Merck KGaA and Pfizer TG4001 is a therapeutic vaccine that has already been administered to more than 300 patients with high grade cervical intra-epithelial neoplasia (CIN 2/3). This clinical experience has demonstrated good tolerability, a significant HPV clearance rate and promising efficacy results for TG4001. Its mechanism of action and good safety profile make TG4001 an appropriate candidate for combinations with other therapies, such as the anti-PD-L1 ICI avelumab.
TG1050: ongoing recruitment in the Phase 1/1b trial, results expected in 2H 2017 TG1050 is a therapeutic vaccine for the treatment of chronic hepatitis B. In 2015, Transgene started a study (NCT02428400) evaluating the safety and tolerability of TG1050 in patients who are currently being treated for chronic HBV infection with standard-of-care antiviral therapy. The technology of TG1050 is also being developed in China, where Transgene operates a joint-venture with Tasly Biopharmaceutical Technology.
2. Oncolytic viruses Pexa-Vec: ongoing Phase 3 trial, initiation of the Phase 2 clinical trials in combination with ICIs Pexa-Vec is an oncolytic virus designed to selectively destroy cancer cells through intracellular viral replication (oncolysis), and by stimulating the body's immune response against cancer cells. Its mechanism of action and its tolerability profile make it an appropriate candidate for combinations with immune checkpoint inhibitors (ICIs).
TG6002: preparation of first-in-human trial TG6002 is a next generation oncolytic immunotherapy. It has been designed to induce the breakdown of cancer cells (oncolysis) and express the FCU1 gene in cancer cells it has infected leading to the local production of 5-FU, a widely used chemotherapy. TG6002 could potentially be used both in combination or as monotherapy.
3. Research and preclinical portfolio Transgene has delivered multiple important research and preclinical milestones in 2016. Transgene is exploring a new generation of armed oncolytic viruses. These oncolytic viruses can be armed with ICIs and/or therapeutic moieties that modulate the tumor micro-environment. These novel therapeutic payloads are designed to modify cell interactions within the tumor and enhance the efficacy of oncolytic viruses. Transgene has filed a patent for an oncolytic Vaccinia Virus expressing an anti-PD1 antibody. Transgene presented a poster at the AACR (American Association for Cancer Research) meeting in April 2016, demonstrating our capacity to engineer advanced multifunctional viruses. Corporate
Key financials for 2016
"Transgene's 2016 financials reflect the completion of the reorganization that started in 2015. This has led to a significant reduction of our operating costs and as a result a 46% reduction in our net loss when compared to 2015. This reduction in fixed costs has enabled us to devote a greater proportion of our increased financial resources to our key strategic clinical and pre-clinical programs," said Jean-Philippe Del, Vice President, Finance. The financial statements for 2016 as well as management's discussion and analysis are attached to this press release (Appendices A and B). Financial Outlook 2017 Transgene expects its cash burn to be around €30 million in 2017. This figure takes into account the increase in costs related to the launch of clinical trials in 2017, as well as a confirmed significant reduction of our fixed costs following the restructuring that has taken place since 2015. The Company still has access to further funding of up to €10 million from the second tranche of the EIB loan. Transgene will host a "R&D Day", on June 22, 2017. The event which will be conducted in English will feature presentations from several leading international scientists and clinicians. The Board of Directors of Transgene met on March 17, 2017, under the chairmanship of Philippe Archinard and closed the 2016 financial statements. Audit procedures have been performed by the statutory auditors and the delivery of the auditors' report is ongoing. The registration document, which includes the financial report, will be available in April 2017 on Transgene's website, www.transgene.com. A conference call in English is scheduled on March 20th at 6 PM CET.
A replay of the call will be available on the Transgene website (www.transgene.fr) following the live event.
About Transgene Follow us on Twitter: @TransgeneSA
Disclaimer Opdivo® is a registered trademark of Bristol-Myers Squibb Company. Appendix A: 2016 Financial Statements CONSOLIDATED BALANCE SHEET, IFRS, (In € thousands)
CONSOLIDATED INCOME STATEMENT, IFRS (In € thousands, except for per-share data)
CASH FLOW STATEMENT, IFRS (in € thousands)
Appendix B: Management Discussion of 2016 Financials Revenue: During the periods under review, revenues from collaborative and licensing agreements mainly included:
As of December 31, 2016, government financing for research expenditures consisted of a research tax credit, as well as grants received and receivable:
Operating expenses: Research and development (R&D) expenses amounted to €26.4 million in 2016, compared to €32.1 million in 2015. This decrease of 18% was mainly due to the impact of the restructuring plan initiated in 2015, with a decrease in payroll costs and operating expenses. The following table details R&D expenses by type:
Employee costs allocated to R&D (salaries, employer contributions and related expenses) amounted to €10.8 million in 2016, compared to €14.6 million in 2015. This decrease of 26% was explained by the reduction in the headcount as results of the restructuring plan decided in 2015, especially in preindustrial development activities. Intellectual property and licensing expenses amounted to €1.1 million in 2016 versus €1.5 million in 2015. External expenses for clinical trials amounted to €5.0 million in 2016 versus €4.2 million in 2015. This increase was due to the acceleration of clinical trials with TG4010 (€1.6 million in 2016 vs. €1.0 million in 2015) and Pexa-Vec (€2.4 million in 2016 vs. 2.3 million in 2015). Other external expenses, including expenses for research, preclinical and manufacturing projects, amounted to €3.8 million in 2016 versus €4.4 million in 2015. As results to the sale of the manufacturing unit, the Company now subcontracts the clinical lots manufacturing, notably to ABL Europe, the new owner of the Illkirch's unit since February 2016. This manufacturing subcontracting amounted to €1.2 million in 2016. Furthermore, the expenses for the commercial production unit with Sanofi/Genzyme decreased at 0.5 million in 2016 versus 2.0 million in 2015, due to the end of the construction part of the project, which enters into validation step. No expense related to regulatory toxicology studies was booked in 2016 (0.4 million in 2015 for TG1050 and TG6002). Operating expenses, including the cost of operating research laboratories, amounted to €4.1 million in 2016 versus €5.1 million in 2015 (-20%), as expected as results of the restructuring. General and administrative (G&A) expenses amounted to €6.2 million in 2016 versus €5.8 million in 2015. The following table details G&A expenses by type:
Employee costs allocated to G&A amounted to €3.8 million in 2016 versus €2.9 million in 2015. This increase was mainly due the transfer of the Chairman and Chief Executive Officer's home entity. Fees and administrative expenses amounted to €1.5 million in 2016 versus €1.7 million in 2015. Other income and expenses Other income amounted to €1.6 million in 2016 versus €0.4 million in 2015. In 2016, the Company participated to a capital increase of Transgene Tasly (Tianjin) BioPharmaceutical Co. Ltd. This operation was performed half in kind and half in cash and generated an income of €1.2 million with the transfer of TG6002's rights in China to this joint-venture. Other expenses amounted to €0.3 million in 2016 versus €7.8 million in 2015. The decision in 2015 to restructure the Company resulted in a net restructuring charge of €7.5 million in 2015. Interest income (expense): Net interest expense amounted to €0.6 million in 2016 versus €0.9 million in 2015. Financial income (investment income) amounted to €0.9 million in 2016 versus €0.5 million in 2015. This was mainly related to the appreciation of assets related to interest in SillaJen, Inc. subsequent to the disposal of Jennerex, Inc. shares in 2014. Interest expense amounted to €1.5 million in 2016 versus €1.4 million in 2015. This mainly consisted of bank accrued interests on EIB loan (€0.4 million), discount of the advances received by Bpifrance under the ADNA (Advanced Diagnostics for New Therapeutic Approaches) program (€0.6 million) and interest on financing leases (€0.2 million). Net loss from continuing operations: Net loss from continuing operations was €24.2 million in 2016, compared to €37.9 million in 2015, decreasing of 36%. Net loss from discontinued operations: Net loss from discontinued manufacturing operations amounted to €1.0 million in 2016, compared to €8.5 million in 2015. The manufacturing assets were sold to ABL Europe for €3.5 million on February 1, 2016. Total net loss: Total net loss for 2016 was €25.2 million, compared to €46.4 million in 2015, decreasing of 46%. Net loss per share was €0.45 in 2016 (€1.20 in 2015). Investments: Investments in tangible and intangible assets (net of disposals) amounted to €0.1 million in 2016 (€1.4 million in 2015). Repayable advances and loans: No repayable advances were received by the Company in 2016. In 2016, the Company refinanced its 2015 research tax credit of €7.8 million. To this effect, it took out a bank loan with Bpifrance that matures in mid-2019, at which time the receivable is expected to be paid by the French government. The tax credit for competitiveness and employment was also financed in 2016 in the amount of €0.1 million through a loan from Bpifrance (which matures in mid-2019). In June 2016, Transgene drew down the first tranche of a loan granted by the European Investment Bank (EIB) in January 2016. This first €10 million tranche out of a total €20 million is payable in 2021. The interest accrued is payable starting in 2019. Liquidity and capital resources: The Company's cash is invested in short-term money-market mutual funds or placed, at market conditions, in a cash pool managed by the majority shareholder of Transgene, Institut Mérieux. As of December 31, 2016, the Company's available cash amounted to €56.2 million versus €31.7 million on December 31, 2015. At the date of this document, the Company had no bank debt subject to covenants. Cash flow: Excluding capital increases and EIB loan, the Company's net cash burn amounted to €30.6 million in 2016 versus €34.8 million in 2015. Post-closing events: None. View source version on businesswire.com: http://www.businesswire.com/news/home/20170320005860/en/ |