Medigene AG

Good morning ladies and gentleman my name is Julia Hofmann, Head of Public and Investor Relations at Medigene. Welcome to our nine months earnings call.

Today’s presentation is available for download on our website and the webcast will be recorded and will be accessible later on our website. Before we start, I would like to remind you that during this conference call we will present and discuss certain forward-looking statements.

So kindly note the disclaimer on Slide 2 of our presentation. With us today on this conference call are Prof.

Dolores Schendel, Chief Executive and Scientific Officer of Medigene; and Dr. Kai Pinkernell, Chief Medical Officer and Chief Development Officer at Medigen.

Now, I would like to handover to Dolores Schendel to start with the presentation. Please go ahead, Dolores.

Thank you, Julia. And good day to all the listeners joining our call today.

I would like to start as usual with the first slide that shows the major events occurring at Medigen since the beginning of 2018. Our Phase I/II clinical trial with Medigen’s first TCR-T cell therapy MDG1011 has started.

We expanded our TCR alliance with bluebird bio in Boston from four to six TCR candidates. We completed a successful capital raise of €32 million in an oversubscribed private placement.

We announced the cooperation with structured immunity to explore the structural basis of TCRs on the path of predicting better receptor, starting with the T-cell receptor targeting a solid tumor antigen. We strengthened our passive portfolio with the US patents on the T-Cell receptor and a European patent coving a new method to identify CD4 T-cell and their T-cell receptors.

Our Head of Technology and innovation Dr. Milosevic gave a very well received presentation at the Annual Neoantigen Targeted Therapies Meeting in Boston, discussing Medigen’s technologies to identify T-cell receptors against neoantigens.

I will give a short summary of the approaches at -- applied at Medigen in a minute. And finally, yesterday evening we announced the closure of a license deal with Leiden University for a T-cell receptor candidate targeting the minor histocompatibility antigen HA-1.

HA-1 is a single nucleotide polymorphism, called SNP, that is recognized as a strong T-cell target antigen. We have intensively studied this valuable target in-house and I would like to discuss the reasons that we chose to in-license the TCR with a few slides also coming up.

So the next slide takes us to the foundation of our CD4 T-cell technologies that were included in the European patents that was granted earlier this year and announced in our Q1 report. This IP covers an extension of our [NV propriming] technology from CDA T-cell to that of CD4 T-cells.

It is becoming increasingly apparent that CD4 T-cells can function not only as helper T-cells to faster the anti-tumor immune response of CDA T-cells but they also themselves can play important direct roles in control of some tumors. The antigens that are seen by CD4 T-cells represent peptides that are presented by MHC class II molecules on the surface of antigen presenting cells and then on some tumor cells.

CD4 specific T-cells have take on a new level of importance with the discovery that they might may provide very strong responses against neoantigens. And that takes me to the next slide.

I think it’s important to note here that Medigene is the active CAR TCR arena but also our technology is applied to neoantigens. Neoantigens are currently a hot topic in the scientific and biotech community.

And why is, this the case? It seems we think that neoantigens are the key to ultimate personalized cancer therapy.

If you look at a patient’s tumor and find the mutation that distinguishes tumor cells from all other healthy cells in the patient’s body, you have the possibility to develop a highly specific and probably very safe immunotherapy against this neoantigen. This sounds good, but it is not so simple.

It’s actually quite difficult to select relevant mutations of individual patients that are suited as neoantigens for using individualized vaccine or TCR T therapy. Reasons can be imprecise prediction algorithms that can lead to selection of poorly immunogenic mutation or patient T-cell responses are often not detected in validation as assay due to small or poor quality of blood sample.

Patients may have lost their relevant T-cells to harsh chemotherapy or activation induced cell death. Medigene’s solution that overcome these hurdles consist of applying our VC base priming methods in-vitro in combination with highest throughput screening methods to select mutations that are truly immunogenic by their ability to induce T-cell responses.

Our high throughput screening robots enable us to look for rare T-cells that recognize neoantigens using cells of healthy donors that are correctly matched for selective class II allele. Thereby we can bypass defaces in patients t-cells, but still determine whether mutated peptide is presented by given class II allele type and recognize by T-cell.

Additionally, we implement our in-silico screening tools to enable us to judge any potential TCR cross-activity for safety considerations. We have now shown that this systematic approach has worked to discover not only CDA T-cells but also CD-4 T-cells that are specific for classical antigens such as members of the cancer testes family as well as for neoantigens in the form of shared or patient unique mutations as well as for single nucleotide polymorphisms.

And this takes me to my next slide. This slide outlines the new license agreement that we concluded with Leiden University announced yesterday evening.

Scientists at Leiden University Medical Center who discover this antigen and several of us at Medigene have a long standing shared scientific interest and exchange on this target. In our own studies, we have explore mutations and where we have explored mutations, we also looked at SNPs with our TCR technology tools and our results supported the conclusion that the minor histocompatibility antigen HA-1 is a very good target.

The team in Leiden actually isolated T-cells from a HLA 0201 patient who underwent allogeneic stem cell transplantation that led to activiation and the expansion of T-cell that recognized HA-1 and provided clinical benefit to the patient. They further tested this TCR in a small distributor initiated Phase I study in five patients.

The results provided preliminary insight into the safety and tolerability of this particular TCR. Because each TCR carries an inherent risk for potentially severe side effects, they’re only discovered in first in-human setting.

We felt the preliminary de-risking of this T-cell receptor gave us a great opportunity to acquire a unique preclinical assay -- asset to a target molecule that was in our slate of candidate antigen with a chance to more quickly advance potential clinical development based on results of further in-house evaluation. On this basis, we concluded a license agreement with deal terms that include an upfront and milestone payments and royalties in the low-single-digit percentage range.

So to the next slide. So why do we judge that this HA-1-specific TCR is a unique asset for Medigene?

Let me take three pages from a TCR T-cell therapy playbook. For any TCR T therapy, we must evaluate three parameters.

And I would like to outline some of our considerations regarding these three aspects. First, the HA-1 antigen has been extensively studied in-house.

It is a very well-defined antigen and since it represents a SNP, it can be easily accessed by TCR in DNA samples from patients. This pattern of tissue expression is well characterized, and most importantly, it is a clinically validated T-cell target based on the long history of its association with positive clinical benefits in allogeneic stem cell transplantation.

Second, HA-1 antigen is broadly expressed in liquid tumors, and is also expressed in several solid tumors and there is a high medical need among the patient groups who could benefit from a TCR T therapy specific for HA-1. This is particularly the case in patients who relapse after allogeneic stem cell transplantation, which is used to treat both leukemias and lymphomas.

On this basis, we can already identify indications where HA-1-specific TCR-T therapy would very likely yield high clinical benefit. Thirdly, since this T-cell receptor with already tested in five patients in small investigator initiated trial, it has been partially de-risked with respect to safety and tolerability.

Thus, one’s concerns for dramatic side effects that accompanies every test of a new T-cell receptor in first in-human setting has been reduced by this first clinical safety and tolerability data. One must state here clearly that other parameters in TCR T therapy such as preparation of the TCR expressing T-cells and the clinical trial design must be equally considered in assessing risk and tolerability of any T-cell receptor tested.

But the on-target off-tumor toxicity and off-target toxicity has shown manifestations with other T-cell receptor after transfer into just a very few patients, none of which have been seen in the five patients tested in Leiden. Altogether, these three considerations showed us that this T-cell receptor would indeed be a valuable asset for evaluation for future clinical development in our TCR T program.

And with this, I would like to now turn over to Kai, who will discuss our clinical developments.

Thank you so much, Dolores. I’m of course also very excited from the clinical side about the prospects for HA-1 as one of our next candidates.

Really due to its restricted expression on the hematopoietic system it could be really useful on the disease treatment form with regards to leukemia and lymphoma indications. During -- this could happen also during or after stem cell transplantation.

It could also be an elegant approach to remove the whole hematopoietic system as a preparation for transplant, so independent of the disease, if the safety profile of course is adequate which needs to be shown further. For many years just as a reminder our physicians have really used depleting antibodies like OKT3 which is the anti-CD3 antibody or other antibody likes anti-CD52 or of course chemotoxic substances to remove the whole hematopoietic system with different degrees of success at the end of the day.

So TCR might really offer an alternative here which we of course will follow. So let’s go to the slide together.

Our DC vaccines trial progresses according to plan and the one year treatment period for all of the patients in the trial will occur this quarter. As communicated earlier, this trial will reach its primary endpoint at the end of 2019.

So that means next year when all patients in the trial will have received vaccines for two years. Very important for us this year was initiating our first T-cell trial MDG1011 and this included of course not only the process of T-Cell discovery and characterization where we looked at specificity, in-vitro safety, preclinical efficacy, but it also required the full establishment of a robust GMP compliant process for preparation of the cellular process -- product for each of the patient and of course the regulatory approval of the cell product and the production process.

And I will give you a more detailed update within the next few slides. Of course and we’ve now added the HA-1 TCR to our pipeline as a preclinical candidate and as explained by Dolores we have to do some work internally before we will decide on a potential clinical study, and of course indications trial outline and more information about a potential study we will announce closer to filing of the clinical trial application.

So now let me give you an update on our first TCR clinical trial with MDG1011. This is the trial outlined again that we’ve presented previously, we started the TCR modified T-cell trial against PRAME in patients with AML, MDS or multiple myeloma using this HLA-A or 201 restricted TCR.

The trial is a Phase 1/2 safety feasibility trial and we’re currently enrolling into the first dose cohort of the trial. In the next slide the status of the clinical trial is as follows.

The trial protocol was amended to remove an earlier stipulation from regulatory authority, which made us include one patient per indication per dose cohort and this has now been changed to one multiple myeloma patient in each dose cohort as well as one AML or MDS patient. This showed result in an easier completion of the dose cohort due to facilitation of enrollment.

Furthermore we have improved our method for detection of PRAME in patients leading to an adjustment that makes a larger group of patients eligible for the trial. In addition we have successfully produced our first MDG1011 product for the patient with AML that was enrolled into the trial and despite a high blast count it was possible to produce a product at specification and also with inadequate dose.

Unfortunately the patient progressed before MDG1011 could be given, and dropped out of the trial. Just as a reminder that these types of immunotherapy trials with high efficacy and toxicity potential can only be tested in patients that have exhausted drugs in the therapy lines and are often times only offered salvage therapies of high care.

So, while of course this stocking out of the clinical trial is not unexpected to happen in CAR TCR trials it’s nevertheless really disappointing on our front, front really means of course from patient perspective, trial side perspective as well of course production perspective and team perspective from our side. On top of this of course this has been our first patient production.

So, we are currently not able to announce the treatment of first patient, or patients and we will do so of course as soon as possible. All of our three signs are actively screening patients and we have identified and intensified efforts to speed up enrollment in two major areas.

First, we have approached referral centers around the vicinity of universities that we would be including in our screening efforts, in the screening study and et cetera. Second, we are increasing the number of clinical trials to increase our chances in funding patients suitable for the trial.

Addressing the referral centers more intensely is an important sector we believe since the trial patients as I’ve previously stated are rather entering preventive care sometimes or remaining the outpatient setting than going back to university hospital. So, screening at the level of the referral centers will really allow for a faster turnaround of screening and results in a better presence of our setting -- study at the referring center or referring institution.

Increasing the number of the dispensers will allow us to identify more patients obviously with all required characteristics for the trial, so they could be potentially included. So it is also important to remember some of the indications who’re affecting the orphan indications.

If we now go to the next slide, you see a slide was shown earlier, it’s an outline of our Phase I dose escalation study design showing three to four different dose cohorts ranging from 100,000 to 10 million PRAME TCR positive T-cells per kilogram body weight. The change in the protocol that I mentioned in the last slide, the amendment regarding the stipulation of one indication per dose cohort that was now changed is also shown here in the changes.

In the next slide, the short update on our DC vaccine, in our DC trials was outlined and we have presented numerous -- several times in the calls. The enrollment was completed last year.

The primary endpoint will be reached as I stated earlier end of next year 2019. And just as a reminder the DC trail opposite to the TCR trial is addressing patients with AML and remission after chemotherapy who cannot undergo stem cell transplantation.

We are currently preparing a 12 month interim analysis that we intend to submit to Science Conference in 2019 since all the patients now towards the end of this year 2018 have now been triggered for at least one year. Oslo University Hospital has submitted an abstract about their own compassionate use cases that was accepted to be presented the ASH meeting, The American Society of Hematology Annual Scientific Meeting which will happen this year beginning of December in San Diego the abstract presentation is stated for the 8th of December.

We will follow up with press releases around this event. We now come to an overview of our financial figures for the first nine months of 2018, in this overview slide in the first nine months of 2018, total revenue increased by 11% up from €8 million to -- up to €8 million due to significantly higher revenues generated from our core business of immunotherapies and revenue from our collaboration with bluebird bio increased by 38% to €4.7 million.

This is revenue results from the payment of US$1 million associated with the first collaboration milestone, a pro rata recognition of the upfront payment of US$15 million and we received in 2016 and of US$8 million in 2018 as well as the reimbursement of R&D expenses. So compared to last year, 2017, revenues from immunotherapies were €3.4 million.

Medigene’s R&D expenses went up as planned by 20% to €13.3 million in the first nine months of 2018 compared to €11.1 million in the first nine months of 2017 last year. This increase reflects the expansion of our preclinical and clinical development activities for the immunotherapy programs and the development or the deployment of extra staff in this area.

Despite our high R&D costs -- or higher R&D costs, the EBITDA loss only increased by marginally 5% to €10.7 million, as higher revenues were generated in the core business of immunotherapies and SGA expenses, so selling and general administrative expenses were scaled back due to lower selling expenses for the legacy product Veregen. After the successful completion of an oversubscribed private placement with gross proceeds of €32.2 million this May, we can report liquid assets and time deposits of €76.3 million at the end of September 2018.

So therefore Medigene further improves the financial guidance for 2018. On the next slide, you see the financial guidance 2018, an overview for the rest of the year.

On the occasion of the six months reporting ‘18, so this year we have already improved the guidance as this trend continues now as we see clearer towards the end of this fiscal year. Our guidance for the total revenue remains unchanged.

We expect to generate between €9.5 million and €10.5 million in 2018. For R&D, we now expect somewhat lower expenses in the range of €19 million to €21 million, whereas we previously guided a range of €21 million to €23 million.

It is more than the €15 million last year but lower than what was initially expected for 2018. The main reason for this is a clinical trial costs are lower than we expected.

And that is another factor as the GMP production project was pushed out to 2019 due to capacity issues at a contract manufacturer that also has influence on the numbers of 2018. Our EBITDA loss should therefore also be less between €16 million and €18 million at the end of 2018, which is on the lower end of the raised guidance from August 2018.

Without considering the proceeds from the capital increase conducted in May 2018 Medigene forecasts now total cash usage of approximately €12 million to €14 million for 2018 instead of €15 million to €17 million from the previous guidance. As already mentioned, liquid assets at the end of September 2018 amounted to €76.3 million, which is sufficient financing beyond at least the planning horizon of two years.

Only as a reminder, the forecast does not include potential future milestone payments or cash flows from existing or future partnerships or transactions. At such events, the timing and the amount depends to a large extent on external parties, we cannot reliably predict them.

So we leave and out of the guidance. So much all on financial figures.

And I now would like to conclude my presentation and I’ll hand over back to Dolores for the outlook and final remarks.

Thank you, Kai. I would now like to conclude our webcast presentation with our updated outlook.

Within our TCR trial with Medigen1011 we’re looking forward to commence treatment of the first dose cohort. As Kai has explained in detail we’re undertaking intensive preparations with a number of additional clinics to increase the current number of three active clinical centers and to expand screening activities accordingly.

For our DC trial in AML data from all patients over treatment duration of one year is expected in Q4 2018, this corresponds to the half way point of the full treatment period and interim analysis is planned to be presented at scientific conferences in 2019. The final read out is expected at the conclusion of the two year for all patients towards the end of 2019.

With our newly announced HA-1 TCR candidate we’re starting further preclinical evaluation immediately. We also wish our collaborators in Berlin all the best that they can soon start their academic TCR trial.

And last but not least we continue working successfully in close collaboration with bluebird bio on the sixth TCR project.

Alright. Thank you, Dolores.

Thank you, Kai. Operator, could you please give the instructions for the Q&A session now?

A few, I’d just focus on the MGD1011 initially. To look at that patient to be progressed, can you give some idea of kind of the vein-to-vein timeline and at what point they progressed and maybe also kind of screening them what you’ve seen so for, obviously got a few facts of screening with PRAME positive, et cetera, just give us idea of how many having to screen to get some old -- or start with there and go on from there?

Okay, Daniel. This is Kai.

So the first part of the question was around first patient. So the vein-to-vein time we calculate was about eight weeks, so six weeks for production.

And then there is step of loop depleting chemotherapy before you can have an infusion. But so the production with apheresis sending it in and doing the cultivation on quality really is sort of the six to eight weeks.

So unfortunately of course this particular patient progressed, we have stipulations in the trial as well that bridging therapy can be given and to control this but unfortunately here and there this cannot be -- or does not result in the sufficient suppression of the ongoing disease. And if you look at the experience on the CART T-cell front, it is unfortunately something that has been seen on many fronts in these autologous produced trials where you have this end stage patients highly actgive disease and then you have several weeks of time that needs to bridged that unfortunately the patient can progress to a degree where we are just -- we can’t keep up any more, so to say we can’t catch this anymore.

The second part of your question if I understood this right was around the screening efforts, so we do not really comment on exactly how many patients screened, I just want to maybe outline again that the difficulties with looking for a double positive patients because remember it’s HLA-2 restricted that means half of patients roughly have A-2. Then on top of this you have a PRAME expression which is reported to be roughly 60% in AML patients as an example, but of course we are not targeting the lower expressing patients, but rather the higher expression patients.

And then of course you can also have reasons inclusion, exclusion criteria as to why a patient could not participate in the trial. So, at the end of the day, you can roughly estimate that you can hope for maybe 10 plus, maybe 20% of patients being eligible for a trial like this.

Okay. Thank you.

That’s great. And then just looking at the Leiden announcement you made yesterday.

This preclinical trial there, I think possibly there’s more information may be on that when it comes to the efficacy, we’ve seen that. I think more I can tell is, met with 20 patients that obviously meant to be enrolled, can you just talk about what about cohort in there?

And then maybe as well as just moving forward about putting into a pipeline about the kind of the design around this HA-1 and TCR maybe the course, I mean you are talking about CD-4 a lot here today. So can you give us any idea about what you expect from your own in-house TCR?

Yes. Sure.

So, the Leiden Group has been really great -- a very great center worldwide with investigating histocompatibility antigens. So mean minor differences in the gene expression or variances that would lead to an -- could lead to an immune reaction, sometimes seen as part of allo-transplant.

So, when you do this transplant all of a sudden there is a great anti-leukemic response and patients get rid of their disease and they trace this back to certain potential antigens. And one of those is HA-1.

So, there was a trial initiated a few years back that initially intended to include 20 patients. I think the results have not been presented, that’s why we want to wait for the Leiden Group to show those results in more detail.

The -- at the end of the day five patients have been treated and if you look at the trial outlined, it’s available online that they have used in the past in your clinical trial register. When they’d initially planned this trial, they planned to trial with DLI approach almost immediately after transplant.

And after transplant based on the intense chemotherapeutic regimen is given, have very low to absence -- absent disease. So the first treatment is then supposed to be within the first two to three months after transplant with almost no antigen available on the other front -- on the other side.

When the TCR, modify T-cells come in. On top of this chosen as a basis -- cell base for the production they chose antigen specific T-cells.

And I think that the process they, that they did in the production was very cumbersome logistically, because they had to go back to the initial donor and had to get another apheresis very close after the first apheresis, they have to isolate the antigen specific T-cells which only present at a very low percentage. So, you’re just talking about a handful of cells if I’m allowed to say so and those needed to be transduced ambulant.

So the learning then was during the trial that it was really logistically very cumbersome to do that they wanted to regroup and do the trail differently. And this is principally where we are now together with them, where we have thought not bringing in our experience from our GMP processing, and of course, their experience as well and the trial set up would be different.

It’s not -- because I mentioned it already, the initial infusion was done close after transplant, but no antigen is available. That’s of course something we wouldn’t do anymore.

I think there are lots of learnings from the CART T files in the meantime. And in addition, learning was in Leiden they did not use cyclophosphamide and fludarabine as a conditioning regimen, because it was so close to the transplant.

And of course, all of this we will change now moving forward. But really, we’re still in the early steps of planning and we want to really announce detailed plans once we have higher in everything else.

But I hope this helps a little bit in putting this into perspective.

Okay, thank you. And then just on the design of HA-1 TCR, give any overview of what to expect from that …?

Let me just -- I’m not sure, I’ve understand the question correctly. Daniel So…

You’re talking about to-date in what so CD4 cells and that kind of …

Yes, may be Dolores can take, yes.

In the first instance, we would move forward with the HA-1 CD T-cell receptor from the -- that we have just in-licensed from Leiden, because of the de-risking early safety and tolerability data. As I tried to point out, one of the biggest risk with any first in human T cell receptor, trial is the possibility for on target off-tumor toxicity or for off-tumor toxicity.

And this has been -- we really have the first information from this recapture that these types of reactions have not been seen. So that’s a, is the first step that we would take in moving this into a clinic and then later when can make a determination based on the emerging results, whether we would see the need for a CD4 arm in this trial or any of our other trials.

Okay, thank you. And then just one final one, you already mentioned previously the PRAME analytical methods changed a bit, which you’ve kind of have screened a few more patients.

Can you just give an overview of what’s changed there and get a bit more granularity on that?

Yes. I can Daniel.

So this is Kai again. So principally and initially we did set up the PRAME assay as a -- with the low cut of -- determined by the lower limit of quantification.

And this -- since we are using quantitative PCR in order to determine the number of transcripts of PRAME in the subject, this could not go as real as we would have liked to. So we have now changed this to a -- using a cut off approach, it goes down into the, let’s say the basis for analytics of all of this or the method ultimately giving us the ability to have better discrimination in the low end of the copy numbers, still staying away from healthy -- clearly staying from healthy individuals of course.

And that has just led to the effect that we have more patients eligible for being PRAME positive in the sense or definition of our trial.

Hi there. And thanks for taking my question.

The first one comes back to MDG1011, if I may. Just with the new design of the trial to -- so each dose cohort will be either one multiple myeloma or AML or an MDS.

Do you expect still to do three patients per dose cohort? I expect the answer is yes, but just to confirm that.

The answer is absolutely, yes.

And then with that patient who progressed prior to receiving the cell therapy, does that occurrence give you any lead you to think that you should be looking perhaps at less advanced patients, if at all possible?

Of course that’s of course a very good question and of course we’ve noticed over even in the preparations for this trial but there are certain issues with getting in earlier, which is really as long as patients have the standard of care available you can't get earlier. So it’s really you don't get an ethics role to positive and you don’t get regulatory authority approval.

So it is unfortunately a little bit of a conundrum, if you start with these really early explorations of something totally normal. This will of course change as one has additional safety and potential efficacy data but for the time being we’re little bit put into this corner of having to take patient at the end of their disease stage with a little to do.

Just on the increasing number of clinical sites as well. Firstly, will that be still just in Germany or are you are potentially going to look wider, how many sites might you go up to and what might be the effect on costs for the trial of the increasing number of sites?

So already have planned the original trial for more centers than just three because we knew once we would also enter Phase II, we would have not been able to do this with just three centers. So the cost was principally already put in, so we do not expect large changes on this front.

And we are really looking at doubling at least if not even more putting more centers online as soon as we can.

And Germany as well as other countries in Europe?

Also for the time being we would remain in Germany because really there is -- you get a time penalty if you try to go outside Germany because of the additional norms with regulatory agencies and production-related questions and all of this. The penalty is so high that would not help us at the moment.

And if I could just move to bluebird briefly. With the expanded collaboration I mean that's great news in itself but is there any sense yet from bluebird or even from your inside as to when a candidate might be selected and -- into the clinic, have in long before that happened?

I’m sorry -- this is Dolores, I am sorry, I can’t give you a precise answer to your question here because all of the communication around the next steps of development lies in the hands at bluebird. That’s actually read upon between the two companies, the communication run through them.

No problem. And finally -- the interim data on the DC vaccine, you say you’re going to present that in 2019 at a conference.

Will that be a Q1 type of conference or first half at least?

Yes. Rather first half, I would say because the problem is the -- if you remember we announced last patient enrolled in November last year.

So that means this November everybody reached 12 months, you need sometime for the analysis and then most of the abstract deadlines are gone for the Q1 conferences. So, we try to get it in as soon as we can, but we have difficulties making the exact prediction.

Because obviously also it’s not going to accepted, I mean it that would be worse of course and ...

Okay. The final one for me is on HA-1, if I may.

And just to understand a little bit more of that antigen itself and the T-cell receptor reactivity with it. So, you talked about being expressed in liquid and solid tumors interested to know solid tumors you think are relevant?

And also is the antigen, HA-1 antigen is it expressed as the pep, or is the TCR reactivity at peptide from HA-1 on a class I background or is it some other structure that’s being recognized? Thanks.

So, Kai I will let you address the clinical and mutation, the solid tumors and then I will come back or I will immediately about the HA-1. So, HA-1 is the genetic polymorphism, there are two alleles in the population, they’re both -- both of those alleles are expressed at about -- in about 50% of individuals.

It’s a single amino acid exchange that one sees between the two alleles and this particular change from an arginine to histidine residue allows that peptide process out of HA-1 to be presented as a peptide fragment in HLA-A2 MHC molecules. And so that it’s a classical target presentation -- target peptide presentation by MHC class I molecule for HLA-A2 in this case that is seen by T-cell receptor.

And the T-cell receptor that was isolated in Leiden came from a patient that received an allogeneic bone marrow transplant or stem cell transplant and the cells of the donor recognized there’s a unique variance in the patient and this led to development of a very strong T-cell response that had clinical benefit for that patient. And those T-cells were isolated and the receptor was taken out of that patient.

That means that T-cell receptor co-existed in the patient, apparently may have contributed to the control of the leukemia in this patient. So, it was safe from that at that dimension in the patient.

And then at receptor then when expressed in donor viral-specific cell for the adopted transfer study, when those cells were transferred into the patients -- into five patients there was also a good safety profile seen there.

Yes. Because obviously everybody is afraid of GvHD in the setting if you do the stem cell transplant -- after stem cell transplantation.

So, you were asking for the solid tumor target and so in order to give you something if you look into the literature, there have been also nice publications on renal cell carcinoma where the apparent expression of HA-1 has been seen, as well as breast cancer as an example.

Back to HA-1, it seems that it’s sort of complicated Phase I. So could you push HA-1 directly in Phase II?

And if yes, when could that be? What would be the impact on your R&D costs?

This is Kai again. So the HA-1 did complete this first five-patient small preliminary study.

But please realize that we will change the production of this and the timing. So it means, you will have a different product at the end of the day that will -- where you would need to redo a dose escalation trial.

So unfortunately, we’ll not be able -- that could be abbreviated. There’s still lot to be negotiated with the authorities and the ethics committee.

So but there could be of course some gain just based on that initial de-risking as we were always talking about. We do not anticipate changes in our financials because principally we have done our planning in a way that this is already let’s say planned into our ways moving forward.

So I understand this is included in your guidance for your cash reach going forward?

This is included. Yes.

Okay. And maybe again on HA-1.

And what change at antigen compared to last quarters to motivate such in-license deal and the adoption of an external TCR asset? So far we’ve seen developing really 100% in-house TCRs.

Did something change in your perception of your on-product development or could you give a little bit of color on that?

So first of all, we just saw a really unique opportunity that could help us jumpstart a study around an antigen that’s been on our slate of candidates that we have really been exploring as potential highly specific target molecules in our own pipeline. Certainly what influenced our decision to in-license this receptor is the fact that it has been -- it was isolated out of the patient without showing signs of graph versus host disease, and that was seen again when the receptor was used in five patients.

So this enormous de-risking of a receptor which is always the basis for potential side effect to have that information going forward allows us a width of data package around the first-in-man utilization of a receptor for a regulatory approval for the clinical settings that we would envision. As I’ve tried to state in discussion of HA-1, this has really been among a set of target molecules that we have been studying and we have to prioritize each of those target molecule candidates in our decisions to move forward for the search of the T-cell receptor candidates to move into the clinical setting.

This was maybe a little bit lower down the line. And suddenly we have this unique opportunity to get a very valuable asset by the in-licensing of this receptor and that’s why we chose to move with speed to add this to our clinical development pipeline for the future.

And let me maybe add to this, we really -- that was really a coincidence and it was a also based on this longstanding relationship on the science side and we have managing personnel as with line. And it was a coincidence that this would all come together and really allow us to may be shortcut or bypass certain things and move quicker than we would otherwise do.

Okay, thank you. And a very last one.

I’m aware it’s not your priority to comment on competitors but we’ve seen some data from Adaptimmune at ESMO, with MAGE-A4, A10 in lung cancer which were definitively on the low end of expectations. Could you comment on maybe -- again I understand it's not on your priority but could you comment on the differentiation between your dossiers and the ones from Adaptimmune and what gives you confidence that the differentiation is strong enough to grant sort of differentiated efficacy in clinical studies compared to Adaptimmune?

Bruno, this is Dolorus. And I would like to take you back to the three pages from the TCR therapy playbook, because these are the three considerations that we have to understand for any T-cell receptor that’s moving into the clinical testing.

First of all that’s the antigen and everything that you can do to characterize that antigen and understand where it’s expressed and its safety profile. This is why we’re particularly excited about HA-1 because there’s such a clinical history around this antigen and T-cells developing in-vivo in patients to the specificity, so we have a lot of information there.

So that’s the per se. And those are -- the cancer testes antigens have been considered as important target molecules for therapy but how they are expressed by different tumor indications to levels then have to correlate with the T-cell receptor that is generated to the antigen as well, and then finally, the patients and the medical indication.

So you can see that a common approach is to do a basket approach to start testing a particular receptor in a number of indications in order to seek out to find those that are likely to have the most clinical relevance. And all of those three things have to come together to be -- to find a successful match of an antigen and a T-cell receptor and the right clinical indication.

And I think those are all factors that impinge on the early result in any T-cell receptor trial in addition to reaching the cell numbers that are required. And I think that’s an important consideration that people analyzing the results that are being presented should look at what doses and how does that compare to the CAR trials and other earlier TCR trials, when do you reach those potentially effective cell doses in the clinical trials.

I would give that as a piece of background information to look carefully when you’re judging abstracts.

Yes. And so maybe just to add, so maybe the data is too early.

The good thing is that this treatment approach and the dependent patients in all cases presented have been safe, so which is good. And of course I mean we wish everybody in the T-cell field the best really in order to move the field ahead because you -- one could obviously see that there is kind of like a classes like that the expectations have been different and it has -- it kind of leads over into all kinds of different other T-cell related companies or areas.

So, I think it maybe some of the data is early and at least it’s safe and we obviously hope that there is progress on all kinds of fronts not only from us, but from other companies as well.

Okay. Thank you very much.