Medigene AG

Thank you, operator. Good afternoon, ladies and gentlemen.

My name is Julia Hofmann, Head of Public and Investor Relations at Medigene. Welcome to our conference call regarding our Annual Report 2018 that we’ve published this morning.

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

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; and Dr. Kai Pinkernell, Chief Medical and Chief Development Officer at Medigene.

Now, I would like to hand over to Prof. Schendel to start with the presentation.

Go ahead, Dolores.

Thank you, Julia. Good day to all listeners from Germany and abroad and thank you for dialing in from both sides of the Atlantic.

We are pleased to have this opportunity to present our Annual Report 2018 and to give you an update on our latest clinical and technology development. I’ll begin with an overview of several corporate highlights of the last year and then turn over immediately to Kai who will provide an update of our clinical programs and our preclinical plans before I return to discuss several technology events.

Finally, Kai will present the financial figures for the year 2018. Here's the snapshot view with several major events in 2018 and 2019 to date.

We were pleased to announce last year that we received a green light from the regulatory authorities for our clinical trial with MDG1011. I should highlight here that this is the first approved trial with TCR-T's in Germany.

We were even more pleased to announce that we treated the first patient in February of this year. Kai will give more details regarding the developments of MDG1011.

The year 2018 was also quite busy with other agreements and achievements. In May, we announced the expansion of our collaboration with bluebird bio, extending the original four targets to six targets that we'll work on together.

With this six expansion, we have received an additional US$8 million as an upfront fee and at the same time US$1 million for the achievement of a first milestone in the collaboration. During the year, new patents in the U.S.

and Europe were granted that cover components of our TCR platform, encompassing discovery, development and application purposes. Towards the end of the year, we closed the deal with Leiden University Medical Center to in-license the TCR candidates against the HA-1 antigen, an antigen that is very well defined and has been extensively studied in-house.

We thank this T cell receptor can be unique asset for Medigene for a future clinical development program. Another licensing process they kept us busy in 2018 was a license for chimeric co-stimulator from the Helmholtz Zentrum Munich.

Our vision is to use this construct as an amplification tool for TCR therapies in solid tumors in an immune hospital microenvironment. In December, we announced promising topline data of the patients in our DC vaccine trial after 12-month treatment period.

Kai will go into detail in a moment. On the financing side, we were able to raise €32 million in May through the placement of new shares with institutional investors in the U.S.

and Europe, and from April onwards, we will be happy to welcome a new member in our management team when Axel-Sven Malkomes joins as our new Chief Financial and Business Development Officer. I am pleased now to turn back to Kai for an update on the clinical program.

Thank you so much, Dolores. Our first slide is our immunotherapy pipeline, and as you can see our different programs are listed for some of which I will go into further detail as we progress through the slides.

Our first program is the DC vaccine, which is furthest along as a Phase I/II study where we are currently treating or have enrolled 20 patients in with acute myeloid leukemia being vaccinated with WT-1 and PRAME. The first-year interim topline data results have been presented in December and I will go into a little bit more details what these topline results are.

On our MDG1011, our first T cell receptor clinical study in AML, MDS and multiple myeloma with the antigen target PRAME. I will update you where we are currently within the trial.

Our collaboration with Charité, where Charité is running a trial with MAGE-A1 TCR, you will hear an update towards the outlook for 2019 at the very end. And of course like Dolores just mentioned, we have an in licensed HA-1, potential TCR that we are currently evaluating for taking the TCR into the clinic as well.

With this, I would like to turn to our first TCR therapy clinical trial that's started with the first patient treated end of February of this year. So as you remember, it's a Phase I, Phase II combined dose escalation and expansion trial.

And in February, like I’ve just said, we treated the first patient of myeloma patient that had several rounds of chemotherapy and other therapy approaches, that patient was treated in that University in Erlangen and is currently being followed up. There are two more Universities.

One Regensburg with our Pi’s and monotonous the other one, University of Würzburg were currently open. But of course as all of you would have loved to see, we would have loved also from the company side.

We've love to make more progress in the trial with more patient treated. In the meantime, since this did not happen, we have started and push forward efforts to increase the trial side number dramatically.

So we will open up to five additional clinical trial centers in Germany, over the next 3 to 5 months. In the next slide you see again the overview of our autologous TCR modified T cells therapy, where we take an apheresis means lymphocytes from the patient.

We manipulate those lymphocytes by putting in the gene sequence with our SIN, gamma-retroviral vectors. We then activate the cells and expand the cells to necessary size or a number.

And then we freeze down the product quality checking and then the product would be ready to be shipped to the site. And upon arrival at the site, the drug is actually thought quite rapidly and then administered quite rapidly as well.

The next slide shows the overview of the design of the Phase I/II again. The target is PRAME.

The drug that we administered HLA 0201 restricted T cells carrying the TCR receptor specific for PRAME. And since PRAME could be antigen of interest in the three diseases I outlined before.

This is why we try this particular TCR or specific TCR in this clinical trial. The primary endpoints are safety and feasibility for the Phase I portion of the trial and safety and early efficacy for the Phase II portion of the trial and again the diseases we are looking at in the Phase I portion are AML and MDS that particular type of MDS were including is very close to becoming an AML and the third disease indications, multiple myeloma.

For planning purposes, we're currently planning with about two indications being carried from the Phase I into the Phase II. But this number could be lower or it could be higher.

The next slide shows you the outline of the Phase I, it's a three plus three design dose escalation study with a primary endpoint being safety. We have those ranges starting from 100,000 cells per kilogram body weight, up to 10 million per kilogram body weight and there is a sequential enrollment of the patients and there’s some spacing between a patient treatments after completion of a dose cohorts.

The data is reviewed by data and safety monitoring board, which will then give us a green light to move into the next dose cohort. If toxicities would occur, it could mean that particular dose cohort gets doubled up and then there was a recommendation by the DSMB to increase or to stay at the particular dose or even to go lower.

If we go to the Phase II portion of the trial, after we have hopefully successfully completed Phase I and have shown this early indications of safety, the treatment groups in Phase II would be 20 treated patients per indications, and also 20 controlled patients on the other side. And we do this by taking the genetic randomization so to say based on the HLA type, because roughly in the Caucasian population, roughly 50% of patients are A or 02:01 positive and the other half do not have this particular HLA type.

And the patients who cannot get the treatment will be asked to participate in a concurrent control group, which will help us moving forward in the particular – in the next phase trials in order for instance to gauge sizes of a – sample sizes moving forward in order to hopefully show that this therapeutic is not only safe, but also efficacious. This is the part about TCR trial.

We are currently continuously screening patients and like I said, key steps in order to step up enrollment are the increase of the center size up to five within the next very few months. And also we have started major efforts, outlining activities on the PR sides to make our trial and to patients better known to lay people as well as to the professional press meaning hemato-oncologist, which are in private practices or smaller hospitals that could be potential for referral sites.

We're also, like we stated already during the last call, we are expanding the screening study into referral centers, so that’s due to – you have to have a certain likelihood to be double positive for HLA-A or 02:01 plus PRAME, so that these centers can already help us screen patients and then send double positive patients for potential treatment into the university hospitals. So with this, I would like to switch gears a little bit and talk about the DC vaccine trial that has reached the interim analysis endpoint in November, December of 2018.

We have conducted an interim analysis, and just to remind you again on the trial outline slide, you see it's an ongoing Phase I/II trial, 20 patients with AML has been included. And just to show again, the difference to the TCR side, here AML patients have a complete remission.

But unfortunately they cannot undergo allo transplant. Therefore, there is nothing else for them to do therapeutically and by vaccinating them with WT-1 in PRAME or against WT-1 in PRAME.

We tried to prevent the recurrence of AML, where they have a very high likelihood of this happening. The primary or just to add on the last part, the TCR trial is different.

These are patients at the end of standard treatments. They have nothing else that medicine can provide other than trials with salvage cyto or chemo reductive therapeutics.

So participation in clinical trials is oftentimes the last treatment drought these patients can undergo before going into palliative care. But here it's patients with disease burden.

They get the infusion of the gene modified cells and then the cells would react to the antigen, and hopefully that's our hope of course, clear the AML or the MDS or the multiple myeloma. So difference between TCR active disease patients, single dose of therapeutic, here DC vaccine, these are patients that have the disease, but have a complete remission, and by vaccinating them we tried to prevent the recurrence of the disease.

Primary objectives are feasibility and safety. Secondary objectives, of course look at efficacy as well, like overall survival and other measurements.

The 20 patients like I said was treated in end of 2018 for 12 months and that means it was the cut for interim analysis. The full analysis will be available later this year after all patients having principally completed all of the time points of treatments and then we'll do the final analysis.

Oslo University has also presented own compassionate use data in this year. That was at ASH in December, 2018 where they have updated everybody on the follow-up of five compassionate use patients on which we had also reported or they had also reported earlier.

This was a follow-up on these particular patients. On Slide number 14, just one more time.

The treatment scheme that we have with dendritic cell vaccine, it's a monthly treatment. At the beginning it's even a little bit more often.

And now at December, 2018 the interim analysis offline data were available and December, 2019 this will be the case for the final analysis that would be the two-year time point. In the meantime, patients continuously get vaccination monthly.

So what were the data? Next slide shows the topline data.

We hope that we are able within the first half of this year to present the data at the Scientific Conference, and of course, we will update everybody once the date and the place is known. First of all, there’s very good feasibility for manufacture, so you remember the AACR abstract that we had last year that was talking about our ability to manufacture the drug product for all of the patients.

On top of this, we have an excellent safety and tolerability profile. We also reported that there was no related series adverse event related to our treatment.

And total of 20 subjects were roughly between 24 and 73 years of age. It was AML in different risk groups, as usual 13 were good risk, 5 intermediate and 2 poor.

The overall survival was very good with 89% overall survival as a secondary end point, 18 out of 20 patients are still alive. And on the progression free survival, 60% of the patients did not have a recurrence of the disease that is 12 out of 20.

The majority of relapses that's an important observation that we think is that the majority of relapses, 5 out of 8, and the 2 deaths that occurred in the study were all really early. The deaths were within 45 days and 64 days and the relapse is that 5 out of 8 within the first 80 days.

This just hinges towards the fact that the patient may have had already an up growing leukemic clone that would be coming back, and as you remember or maybe we call it seen elsewhere. If AML comes back and gets into the exponential growth phase, all of the progression happens really, really rapidly.

So we believe to a certain degree that some patients might have entered with a pending relapse and then the vaccine of course at that point might not be able anymore to hold the disease. Also, please remember it takes a few vaccinations, we hope we get more clarity over conductance of our trials.

What that specific time point is, but most likely needs a few months until you have or the patient has built up an immunity against the antigens and that immunity could then be active. So again, hopefully we'll present further details at an upcoming Scientific Conference that's planned for the first half of this year, so since we’re at the end of Q1, so it should be Q2 of this year.

So with this clinical update, I would like to hand back over to Dolores.

Thank you, Kai. So I'm now pleased to turn to the science-driven projects that build the fundaments of our clinical development programs.

On this overview slide, you can see that we have multiple projects and TCR candidates we are continuing with after the work that was done to launch MDG1011. This T cell receptor research pipeline consists of our own projects and projects of partners like the MAGE-A1 investigator initiated trial in Berlin.

It includes T cell receptor candidates for both liquid and solid tumors, so we're opening the door to have a much more expansive possibility to treat malignant disease in a broad variety of tumors. And don't forget our technology allows the identification of TCRs for diverse HLA restrictions.

So we can focus on known targets also from competitors, but also for other HLA genotypes that are prominent in other world regions and different from the most common HLA 0201 found in Caucasians. For competitive reasons, we do not show you the antigen specificities of all of the various T cell receptors, but the graphic demonstrates that our TCR discovery engine is running and productive.

On the next slide, although we contractually are not allowed to comment on our work for bluebird bio, we can show you what they showed publicly at the JP Morgan Healthcare Conference in January in San Francisco. Currently, bluebird shows two projects for Medigene and their preclinical development block indicated by the red circle.

The number of TCR discovery projects that we do with bluebird, increased from 4 to 6 in 2018 and the deal structure is as follows; we received an upfront payment of US$15 million in 2016 for US$4 million TCRs and additional payment of US$8 million in 2018 to add-on two more discovery projects. Potential preclinical, clinical, regulatory and commercial milestones of up to US$1.5 billion can be realized through the course of this deal as well as royalties on net sales.

Joint preclinical development of all products is done between the two companies. Bluebird gains worldwide development and commercial rights and an exclusive license for IT covering the T cell receptors, generated in this project.

In November, 2018, may close their license agreement with Leiden University Medical Center for an HA-1 specific TCR. Why do we see this as a unique asset for Medigene?

Let me take three pages from a TCR T therapy playbook. For any TCR T therapy, we must evaluate three parameters and I would like to outline some of our consideration regarding these three aspects for an HA-1 specific T cell receptor.

First, the HA-1 antigen has been extensively studied in-house. It is a very well defined antigen and sense it represents a nucleotide polymorphism, a SNP.

It can be easily assessed by PCR and DNA samples from patients. Its pattern of tissue expression as well characterized and most importantly it is a clinically validated T cell targets based on the long history of its association with positive clinical benefits in allogeneic stem cell transplantation.

Second, MAGE-A 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 for the patients. Thirdly, since this T cell receptor was already tested in five patients in a small investigator initiated trial, it has been partially de-risked with respect to safety and tolerability.

Thus, one major concern for dramatic side effects that accompanies every test of a new TCR in a first in-human setting has been reduced by these first clinical safety and tolerability data. One must state here where they clearly other parameters in TCR T therapy such as preparation of the TCR expressing cells and the clinical drug trial design must be equally considered in assessing risk and tolerability of any TCR in a different clinical settings, but the on-target off-tumor toxicity and off-target toxicity have shown manifestations with other TCR after the transfer into just a very few patients.

Altogether, these three considerations showed us that this TCR would be a unique asset for evaluation for future clinical development in our TCR T program. Another important in-licensed that we announced in January is for our co-stimulator protein for T cell.

We believe that additional power is necessary for TCR modified T cells to persist and function well against solid tumors. Therefore we've acquired an exclusive worldwide license for the therapeutic and diagnostic use of a so-called chimeric co-stimulatory receptor, in our case, a fusion protein of PD-1/4-1BB.

These two abbreviations stand for two receptor pairs that played important roles in the regulation of T cell activity and have influence on let's call it aggressiveness of T cell. The HMGU received an upfront payment, an annual – they will receive an annual maintenance fee and future potential milestone payments and royalties for TCR Ts that we develop that include this fusion protein.

Let's have a look at the next two slides to see in detail how it should work. In our opinion, a good TCR T therapy depends on two major components.

Firstly, the T cell receptor itself. This needs to be selected for particular parameters, including target specificity and optimal sensitivity.

Very important, it control no dangerous cross reactivity and it should have a good expression on the surface of living T cell. Secondly, the recipient T cells play a very important role in TCR-T.

It is crucial to know exactly how to isolate, manipulate and grow them in order to maintain their capacity to persist and proliferate in-vivo and enhance their important killing capacity. Medigene can build value in this area due to our very long and deep knowledge on the biology of T cells and how to maintain critical functions of T cells during GMP production.

If these two components come together, the modified T cell should show good proliferation rates and a memory function as well as important effector function. All these factors are heavily dependent upon the original T cell populations in the patients that we start with and the right and robust manufacturing process.

We include all of this technology and are currently started clinical trial with MDG1011 for our various blood cancers. But for solid tumors, we need even more because solid tumors form particular hindrances for T cell.

We believe we can overcome a major pathway of inhibition with our chimeric co-stimulatory protein. Let's look at this with a [indiscernible].

On the left, when a T cell encounters a professional antigen presenting cell, such as a dendritic cell, it receives a balance of positive and negative signals from various receptor ligand pairs, to such pairs, our 4-1BB receptor on T cells and the 4-1BB ligand on the dendritic cell. This gives a positive co-stimulation signal to the T cell.

In contrast, the PD-1/PD-L1 interaction delivers an inhibitory signal. These two provide a balanced controlling T cells.

Now, when such a T cell encounters the tumor cells, only the inhibition signal occurs because tumor cells do not express 4-1BB ligand. So now only the PD-1/PD-L1 inhibitory pathway is engaged.

What we accomplished with the PD-1/4-1BB fusion protein is that when the PD-1 extracellular domain binds the PD-L1 on tumor cells. As we see on the right hand side, we deliver a positive signal to this T cell because the intracellular signaling domain is switched to use the positive domain of PD-1/4-1BB.

Thus we turn co-inhibition into co-stimulation. We know the checkpoint inhibitor antibodies that block the PD-1/PD-L1 access improved clinical outcomes in many solid tumors.

We take this principle one step further and not only stop inhibition, but add stimulation. We think this opens a very valuable route to explore TCR-Ts in solid tumors.

And with this discourse, I would like to leave you with a vision of how our future TCR-Ts may look and hand back to Kai for the financial report.

On the financials as we reported this morning with €6 million, we have increased our revenues from immunotherapies by 22%. This brings our total revenues to €7.8 million, which is a decrease by 13%.

And I will talk about this later. The EBITDA loss increased as planned to €16.3 million, which is an increase by 11%.

Our R&D expenses increased also as planned, but not as high. We planned even higher expenditures to 15%, mainly due to the progress in clinical programs.

I will also elucidate this further. And our liquid assets and time deposits increased by 38% due to the capital raise of €32 million in May last year, which brings our liquid assets time deposit to €71.4 million on the December 31, 2018.

So with this, we did meet our EBITDA guidance. On the next slide, let's look at the revenues that we received from our TCR collaboration mainly.

So revenues of €6 million from the bluebird bio collaboration, 2017, it was €4.9 million because it also included in 2018 a revenue recognition of an upfront payment and R&D reimbursement. Our total revenue is influenced by – also still by the non-core business.

On the one hand there is – the decrease in Veregen revenues which are as expected, because we sold off the U.S. rights to Fougera in 2017.

And there is a reduction in non-cash revenue also from non-core business, which was still associated with the deal around Eligard revenues or the income that we received that deal was done in 2012, and I’ll talk in the next slide about why this reduction happens now. In the next slide, you see an audit decision by the German Financial Reporting and Enforcement Panel.

They reported in random audit of our consolidated financial statements as of December 31, 2016. So the 2016 report, we have these FREP audits already also in 2007 and 2010.

And for the 2016 report, the FREP found that Medigene had not recognized a gain on the sale from the transfer of a variable license claim for Medigene's former drug Eligard. In 2012 there was a fixed purchase price that Medigene – that’s based on this future variable license claim and the head and said recorded it as a liability.

So as a result of the FREP finding, the other operating income as of December 31, 2016 was then realized in full with retrospective effect in the consolidated statements for 2018. As a result of all of this, the equity will be increased by €10.9 million and the corresponding liabilities will be reversed.

What is important looking forward is that there will be no more operating income associated with Eligard 2017, 2018 and thereafter. I just would like to reiterate that in 2012, the decision to deal with this income was based on a certain judgements and we – even more importantly this has no influence on our cash position as of today and moving forward.

So in the next slide, you'll see why and how R&D expenses increased by 15%. If you recall the earlier guidance through 2018, the guidance on the R&D expenses was lowered over the course of the year.

We have steady progress in the clinical trial, for the DC trial, MDG1011 trial, we have some expansion on the internal TCR discovery platform, but we have a real expansion on the clinical research team due to our increased activities on the research front and our increased expenses associated with this. So we had even thought that we would have even higher R&D expenses in 2018, but there were some project that moved from 2018 into 2019 leading to a shift of some of the expenses from 2018 to 2019, to decrease for 2018 and you will see it in our guidance for the coming year – for this year will lead to an increase on the R&D side.

There's a decrease of 8% on the SG&A costs mainly due to one-time effect in 2017, but the G&A level of expenses is similar or comparable to the one in 2017. Slide 28 shows our EBITDA loss and our net results, our EBITDA loss increased by 11% due to the higher R&D costs.

There was also of course lower revenue and lower SG&A expenses, and the differences to their net results between EBITDA net results are due to the points listed here: foreign exchange gain, financial results, taxes, and Amgen income with regards to Imlygic. Slide number 29, has I already said, we are happy to do all the progress we are doing within the company.

We are moving projects further and very importantly our R&D expenses also cover of course our clinical trial activity in our GMP production, so all the productions for our trial part of the R&D expenses. But first let's do – let's talk briefly about the total revenues which will be guided at €5.5 million to €6.5 million compared to €7.8 million for 2018.

And why is that? We're not guiding on any milestones coming in.

So this is the guidance for 2019 from our side. And that is combined income from the bluebird bio collaboration as well as of course from the non-core side of Veregen.

On the R&D expenses side, just like I said, some of the projects moved from 2018 to 2019 bringing some of the costs into 2019, increasing our R&D expenses, and of course the other very, very important portion is our progress as we hope to make this year that will increase our expenses to arrange of €24 million to €29 million. In sync with this, our EBITDA – our loss would [indiscernible] to a range of €23 million to €28 million for 2019 compared to €16.3 million for the year of 2018.

Again, liquid assets end of last year €71.4 million and we have sufficient financial resources for the two-year planning horizon, and again a reminder, there are no milestone payments or cash in flows from existing or future partnerships in this transaction. Okay.

So with this, I would like to hand over one more time to Dolores for the outlook for 2019.

Now we have a game of ping-pong. So thank you, Kai.

And now I would like to just close with highlighting five items that we see on our outlook on – in highest priority for 2019. Within our TCR-T trial with Medigene 1011, we are looking forward to treat the first dose cohorts in 2019.

For our DC trial in AML, we will present detailed data from all the patients over the treatment period of one-year at Scientific Conference in the next several months. The final readout is expected as the conclusion of the two-year treatment for all patients towards the end of 2019 and we will then report accordingly.

With the HA-1 TCR candidate, we're carrying out further preclinical evaluation to determine if we will move this into clinical development. We also wish our collaborators in Berlin all the best that they can soon start their academic trial using the receptor specific for MAGE-A1.

And last, but not least, we continue working in close collaboration with bluebird on the 6 TCR projects and like you, we will look forward to their further communication on progress in this respect. With this, I would like to stop.

Thank you for your attention and move on to the question-and-answer period.

Hi. Thanks for taking my questions.

Just a couple if I may. Firstly, on the DC vaccine, early progresses as you've suggested that they might have enrolled at the beginning of the study with pending relapses.

And I just wonder if you have any biomarker or any observation allows you to identify such patients before treatment begins, so that would allow you to stratify patients? And the second question relates to the progress of MDG1011 and to the increase in trial sites in Germany.

And I just wonder if you could specify whether you're going to bring in five new trial sites or whether the target by the end of the year is to have a total of five sites running? Thank you.

Okay, Gary. Thanks for the questions.

This is Kai. So to the first part on the DC trial, so if you remember, of course, the DC trial is running already quite a few years.

In the meantime, I think the molecular tools that are available today are much more capable of trying to identify patients that have still maybe a molecular sign of relapse. So I think it could be possible to stratify those patients.

We are also – we have samples and we are doing immune monitoring and we are currently conducting all of these analyses. So those might not all be ready for Q2, but over time, where we are also looking at a particular molecular hits that those patients might have had already going into the trial.

So we will be able to update a little further as we progress with releasing the data. So to answer it quickly, I think it could be possible in the future to stratify the patients.

On the other question that you had, also we have three existing trial sites which are enrolling, so we plan to add up to five more. So that means that could be a total of eight.

Okay. Thank you very much.

You’re welcome.

Hi. Good afternoon, guys.

Thank you very much for that presentation. Just three questions from my end.

The first one is looking at the trajectory of bluebird related revenue. Is it fair to assume that the partnership is running at full capacity?

The second one is regarding the cash guidance. So I was just wondering if that does or does not include the HA-1 program.

And the third question is, I missed something during the call where I think you were saying about which indications you might take forward in MDG1011, whether that – I mean it's guided to be two, but you could say – I think I heard you say that it could be one or three or that it could vary from that? If you could maybe clarify that?

That will be very helpful. Thank you.

Yes. So this is Kai.

I will take this – the questions here again. And so on the first one with the bluebird revenue, I think it is safe to say that we are quiet up at this speed and vision, but there's also, there could be some movements in either direction.

Please remember that the amount of work you spend on a particular project can at times be higher or a little bit lower. So that could lead depending on which region you are recording, it could be higher or lower, but I would say, we're generally in the ballpark.

But remember on all of this, the revenue has no milestones, at least the future what we are guiding has no milestones and other payments in there. On your question number two, you’re asking is in our cash guidance, the HA-1 project is already included as a project moving forward and this is something we can confirm.

So we have several projects that we are planning in our pipeline and the costs associated with are to the degree that we see at least roughly planned. So to your question number three, that was the MDG1011, which indications were taken forward.

When we always say we take two out of three forward that it's really just for planning purposes. I mean, it really also of course depends on feasibility as well as on safety signals.

Those could be maybe a little bit different between these different indications. So it's really just for planning purposes.

That would be something decided by the end of the Phase I, and it could be one indication, it could be up to all of them that move forward. But just for planning purposes, we put two into that.

Thank you very much for answering my questions.

Hi. Thanks for taking my questions.

Obsolete with MDG1011, just on that first patient. Can you give us the kind of idea the learning so far maybe the vein to vein time you experienced with the patients?

So we haven't really said that we would want to report on a single patient level, but what I can say is that the vein to vein time was within the range of what we are planning. So currently what we officially communicate is we have the six weeks of vein to vein time.

We are also looking just for everybody's information purposes, we're looking at how we can shorten this time. But for the first productions, it would be six weeks, around six weeks depending sometimes also on availability of decide of the patient or slots.

The patient was a multiple myeloma patient. This is what we can say having had multiple therapeutics as really outlined.

Of course, I mean you see it in our clinical trial protocol these patients must have had three different lines of therapy before they allowed and able to enter into our trial.

Okay.

So I hope I answered all the aspects.

No, no that’s great. Thank you.

And then just on the kind of expansion of sites. Are you screening a lot of patients what you see kind of arm PRAME positive and have then correct HLA or it kind of factor taking place as well?

So it’s a multitude. So as I just said also for the other points, these patients are end stage.

And some of them as an example the AML patients, one, so nominee – let’s take those as an example. So nominee what would happen to those is the first diagnosis of AML is then oftentimes these patients are immediately referred to university hospital.

And the hospital clarifies if the patients are eligible for allo-transplant. If they are not eligible or if they are eligible, they would get the initial treatment in the university.

But then after they are in complete remission, they would go in oftentimes into smaller hospitals or into a private practices for continued care. If they would then have a relapse after the initial response, sometimes because they are no candidates for allo-transplant that was already decided earlier on, they do not get referred back to the university hospital.

So parts of our – it's not parts of our efforts right now is not only to increase the number of trials sites, but really to go into these referrals centers and having them participate in our screening study. Also another point was that we have seen and learned, which was more important than we anticipated initially was that a referral side sends a patient for evaluation to the university.

The patient comes so first of all, then there was somebody who tries to make an appointment at the university for the polyclinics, so principally the outpatient clinic for the patient to show up. And the patient comes get blood drawn and bone marrow if both is available and that can be done, that is sent to us for analysis.

Then the patient has about an 8 of 10 chance to be sent back to the referral side, not being able to be included into the trial. So currently we can get about 10% to 20% of the patients into our trial due to the double positivity, because of the thresholds we have for the PRAME expression and HLA incidents rate or occurrence rate.

So that just means, there was a certain reduction in enthusiasm about sending patients out of which most of them will come back, if you look at referral sites. So what we're currently doing is we educate the much better about why so many patients might come back and on top of this larger referral centers and larger private practices will be part of our screening study moving forward.

So that would mean they would already right then and there with screen the patient for HLA-A2 and for PRAME. And if the patient double positive, the patient would be immediately then refer to the university.

This increases the awareness of these private practices and smaller hospitals and we believe could help us in recruitment and enrollment of these patients. Does that make sense?

Okay. Yes.

That's great. Thank you.

And then just one final question on solid tumors, obviously got the PD-1/4-1BB, I mean is the force to kind of combine that with the HA-1, TCR and then are you also looking at maybe adding other stuffing today or like cytokine, set cytokine releases or maybe selection of certain T cell ratios in CD4, CD8. Give us an idea of that I'm potentially also walks so tumors should be thinking of for this PD-1/4-1BB coasting?

Well, I think we have to consider the many different possibilities who lifts there in a very systematic, as stepwise consideration and really to collected the preclinical data around both. We do not necessarily see the PD-1/4-1BB construct with the HA-1 receptor because the targets for that receptor would primarily be in the first instance, myeloid and lymphoid, blood cancers.

And the PD-1, PDL-1 access is a very prominent in inventory access in the setting of carcinomas and subsets of carcinomas that we know very well from those groups of patients that profit from being treated with checkpoint inhibitor antibody. So that's where we would direct our attention and therefore we would consider that it would be a receptor appropriate for those kinds of tumors.

And then enhancing the recipient cells with the PD-1/4-1BB construct. You address the issue of mixing particular ratios of CD4s and CD8s, I think that's really relevant depending on the T cell receptors is being utilized.

Can it be expressed and is it functionally relevant in both CD4s and CD8s, then you would look to having such a mixed population. If the receptor is a type that is this function only in a CD8 context, then one would look to using enrich CD8 population because the further proliferation of CD4 would be diluting the potential functional unit in your drug product.

What I would like to say, we put in particular selection criteria for those receptors, which are primarily functional and CD8s cells and that we have published and we have demonstrated that you can find T cell receptors, which when expressed in CD8 cells can drive and a self IL-2 production of those cells. And that in essence makes them independent of the CD4 cells.

So then you can come with a very powerful CD8 drug product has that access that gives a degree of independence from CD4 cells.

Okay. Thank you.

Hi. Good afternoon and congratulations on the progress.

I have a couple of scientific questions. Firstly with HA-1, you mentioned that there's a world characterize tissue expression pattern.

Does that mean that there are potential on target of tumor effects that you have to manage? And secondly with the glad to be your elegant cursive nature approach, would that increase the risk of cytokine release syndrome or not?

Okay. This is Dolores.

Thank you, Mick for your questions. And let’s start with HA-1.

HA-1 is a lineage antigen. It's a protein that is expressed in the hematopoietic at lineage.

That means it will be present on all cells, both normal and malignant cells in the patient. That expressed that have the SNP polymorphism that we're going to target.

That means the T cell receptor that then is directed towards this peptide derived from the HA-1 SNP variants will recognize all hematopoietic cells in that individual. This can in the setting of allogeneic stem cell transplantation can lead to faster chimerism because you will be wiping out a patient normal recipient cells and at the same time wiping out the remaining malignant cells.

So this receptor is utilized in the setting of allogeneic stem cell transplantation where you are taking into account and you are actually probably even wishing to have that recognition of the normal patient, hematopoietic cell so that you get a very good engraftment, and that in parallel the elimination of residual tumor cells.

And maybe I just add one portion to this, which is – it principally wipes out hematopoietic, but you can take a myeloid malignancies and so myeloid and lymphoid malignancies. Yes.

So this is the interesting thing. So you have the right combination, you can really wipeout and it's very restricted to the hematopoietic system.

It's sometimes comes up in a few solid tumors as well, but only in tumors, not in healthy tissue. So if somebody carries this HA-1 variant of this immunogenic – has it only in its hematopoietic system and you could really wipe this out.

And this could be a way also maybe to patients who are transplant in the future.

Okay. Understood.

Thank you.

And the second one was the increase in CRS, right?

This we will have to try to model. What we can see is that this construct works very synergistically with the T cell receptor.

So we get enhanced cytokine production and we get enhance killing capacity. But I think the potential for cytokine release, depends on the whole fundament cytokines that are going to be re released by the drug product.

And what it may allow us to do is titrate down in the number of cells, while still giving us the power that we need in our drug product.

Yes. Maybe also try adjust their from my clinical perspective that is something that we would of course try to figure out within the dose escalation portion of such a trial and we would try to make assumptions and comparisons between PD-1/4-1BB manipulated cells versus non – and see how they – we will behave and then adjust the dosing accordingly.

I think what's important to recognize here is this construct is giving us – this some of the properties that you achieve with an anti PD-1 or an anti-PDL-1 antibody, meaning releasing that break on the T cell function. And in fact, we're leading to an enhancement of that, but that is going to be a property that is only in the T cell receptor transgenic cells and this is only going to be happening in the tumor microenvironment, whereas if you would take a transgenic TCR-T and combine it with the checkpoint antibody, you're going to carry all of the toxicity of that checkpoint antibody, which happened systemically when you use these.

So we're trying to get the two in one, put those two things right together and keep them confined in the tumor microenvironment where these T cells will be functioning and being enhanced by the tumor stimulation. But the T cell receptor will be specifically taking them into this microenvironment.

Thank you very much for the very detailed response. Very clear.

Thank you.

Hi again. Just to follow-on the theme of PD-1/4-1BB, I mean I wonder if you could describe the data that you saw that triggered your interest.

I mean there's a fundamental rationale, which is attractive in combining this fusion protein turning a negative into a positive signal. But was there any mouse in-vitro human data that you can describe that got you so excited in the first place?

Thanks.

Thank you, Gary. Yes, actually there was a precursor version of this concept that we published in cancer research in which the construct utilize PD-1 with the CD28 signaling domain.

We know a lot about switching and moving in different signaling domains from the CAR-T field and this is just more or less switching out the antibody binding fragment and moving in the PD-1 receptor on the T cell. So we published it.

We could take a low affinity T cell receptor and make it comparable to an hour restricted high affinity T cell receptor by the addition of this construct. Then we established a collaboration with a research group in my former academic institute and move then to looking at other variants.

And there we started exploring the 4-1BB pathway. And we had this group do a year of study for us actually exploring this and we will be submitting some abstracts and posters in the upcoming year to present more and more of this data because it's very, very exciting story for us and get the scientific underpinning of why we moved ahead then to license in this product.

Thank you.

Thank you for taking my question. It is a question on the timeline of your HA-1 specific TCR.

Will you finalize your preclinical evaluation in this project this year and go ahead for clinical development and make a decision this year for going forward to clinic in this year?

This is Kai. Thomas, yes, I think that is safe to say.

Yes, so we are in the midst of all the assessments and it's fair to say that we don't make that decision this year. That’s at least our plan for now.

Okay. And will you go straight away – straight on with the clinical development or will you stop and wait?

No. So we would – of course, I mean and there's also some preparation that needs to happen for a clinical trial, but we would of course then immediately move this through the preparations and everything then happened quite rapidly, yes.

Okay. Thank you.

And maybe I’ve also just to reiterate, this was one of the charming points in licensing this HA-1. This is a receptor that has clinical experience and that has let's say experienced physicians having done this already.

So there are quite some positive synergistic efforts that could potentially reduce timelines to the clinic if you compare this to all our earlier efforts with MDG1011. So that was one of the convincing points when we had this opportunity to in licenses this HA-1 TCR.

Indeed. Thank you.

Thank you, operator. And thanks to everyone for participating and for interesting questions and discussion.

We look forward to talking to you again soon. Good bye.