Medigene AG

Good afternoon, ladies and gentleman. My name is Julia Hofmann, Head of Public and Investor Relations at Medigene.

Welcome to our conference call regarding our six months report 2019 that we published this morning. 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. Kindly note the disclaimer on Slide 2 of our presentation.

With us today on this conference call are Prof. Dolores Schendel, Chief Executive Officer and Chief Scientific Officer of Medigene; Axel Malkomes, CFO and Chief Business Development Officer; 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 hello to all our listeners joining the call today.

As usual, I turn to the first slide that shows the major events occurring at Medigen since the beginning of 2019. With our annual report 2018 we announced the treatment of the first patient with our T cell receptor-modified immunotherapy MDG1011.

In order to speed up patient recruitment we opened new trial centers and Kai will certainly give more details on all of these developments. We're preparing the clinical development for Medigene second TCR therapy MDG1021 in cooperation with the University of Leiden Medical Center, the Phase I study start is planned for 2020.

bluebird bio presented positive preclinical data and announced the start of the Phase I clinical trial in 2020 with the first TCR from our collaboration. At the beginning of April we announced the start of its strategic partnership with Roivant Sciences and their new affiliate Cytovant.

Medigene and Cytovant will work together on the research and development of cellular immunotherapies for Asian patients. We closed the sales agreement with Aresus Pharma for the remaining rights and stocks of our legacy product Veregen.

In January, we in-licensed a chimeric co-stimulatory receptor to enhance TCR therapies for solid tumor, I gave some explanation on the science behind this construct already during the last call, so I just mentioned it here for clear things. And finally, we presented data the EHA conference in June on the 12 month interim analysis of data from our dendritic cell vaccine and Kai will tell you more in his presentation.

Now, let's look at a few of these points a little more closely. In May, our partner bluebird bio held an Analyst Day in Boston and presented data from the TCR candidate specific for MAGE-A4 discovered for bluebird by Medigene.

The preclinical data showed strong sensitive tumor cell recognition both in vitro and in xenograft model. Importantly the MAGE-A4 receptor showed functional responses in both CD4 and CD8 T cells which is a unique feature for Class 1 restricted TCRs and indicate that both types of cells can be mobilized to fight tumors in vivo without the need for addition of CD8 as a co-receptor.

bluebird plans to bring this MAGE-A4 TCR into the clinic in 2020. We hope that our other projects that we sequentially developed for bluebird can follow similar path for success for Medigene.

On the next slide, it is part of our strategy to look for business opportunities. One success in such outreach to Asia the new collaboration with Roivant Sciences, they have built their affiliate Cytovant, a company founded to bring immunotherapies directly to Asian population.

The patient population covered in this collaboration is Greater China, South Korea and Japan. And this is huge, offering more rapid development of clinical trials due to the shared number of available patients.

Study will start with the TCR candidate specific for the well known tumor antigen NY-ESO-1 that was already in the TCR pipeline of Medigene. The two companies will then work together to discover two further TCR lead candidates.

And in addition, Cytovant [circulizes] for Medigene’s dendritic cell vaccine to offer this treatment for AML, soon to Asian patients. Medigene has meanwhile received an upfront payment and Cytovant will cover our complete R&D costs and Medigene is entitled to potential development, regulatory and commercial milestone patients which could aggregate up to over $1 billion for the four products across multiple indications.

And in addition, we will receive royalties in the relevant countries. On the next slide, with the focus of Medigene on cellular immunotherapies, it was our goal to divest the last remaining non-core products.

This happened mid-April with Aresus Pharma’s taking over all relevant contracts with distribution partners outside the U.S. and external service providers for the Veregen business.

Aresus has also acquired the remaining stock of the active pharmaceutical ingredient. Medigene will receive up to approximately 7.75 million oral over the next 10 years, of that we received 300,000 oral upfront and from 2021 onwards the rest of the balance should come in as annual revenue based earnout payment.

With that, I would like to turn over to Kai, who will review the update on our clinical development.

Thank you so much Dolores. Ladies and gentlemen in our immunotherapy pipeline side, you see that it’s nicely growing and additional projects are being listed now for some of which I will go into a little bit more detail and explain to you where the status is and what our short, medium, and long-term goals are.

So with this, I would like to go to our first TCR therapy clinical trial MDG1011, where you see an outlining of the Phase I/II clinical trial that we are currently running in myeloid and lymphoma malignancies, the targets that we're aiming at PRAME, which is a well recognized tumor antigen over expressed in lots of different tumors, in the liquid and solid tumors. The drug MDG1011 principally describes the autologous T-cells from the patient transduced with the T cell receptor encoding PRAME and all of this happens in the HLA background of A0201.

Just an outline briefly, it’s a combined Phase I/II clinical trial, where in the Phase I the focus is on safety and feasibility and where the Phase II has the portion of safety and early efficacy. The three disease indications that we're looking at are all in advance stage.

We're looking at acute myeloid leukemia, myelodysplastic syndrome and multiple myeloma. Just for training purposes, we're currently planning with two out of three indications moving forward, but there could be more and there could be less, of course it depends on the outcome.

In the next slide, just an overview of where we are. So we have started dosing the first dose cohort and our volume with first dose cohort, the first patient treated was in February, with our PRAME TCR in the University Hospital of Erlangen.

The clinical trial is currently being conducted in six centers. We started off in three, we added three more.

The original three centers were Regensburg, Erlangen and Wurzburg and new centers are Dresden, Freiburg and Heidelberg, and we intend to open two more sites soon, which will be Frankfurt and Mainz. In the next slide you see just a geographic depiction of Roivant Sciences are currently located and where presumably, which -- Roivant Sciences actually are and it’s not only that we increase the number of trial centers, but we also change several other features of how we try to address patients and get patients into screening and then feeding into the trial.

This is outlined in the next slide, where you can really see that we are building and have built a concentric infrastructure around the trials, trial sites which are in the say middle of the university trial centers and the apherese units, where patients can be treated. Around this we will have regional referral hospitals or private practices that can refer patients to the university.

And they can also participate in our screening effort where they can determine the HLA status and the PRAME status of a potential patient for the trial. And on top of this at the outside ring, you see that we have national, regional and local multimedia outreaches via social media, we have radio pieces, we have a trial website up and running, where potential patients are linked to.

Patients can also do some pre-screening themselves by answering some questions. And then they are referred to an agency that will after answering a few more questions bring them to one of our trials and does full potential valuation by our PIs and also the inclusion is eligible for our trial.

So not only this infrastructure has changed, but in the next slide, you will see what we have done in the protocol amendment. Just for reference, this was already presented in our Shareholders Meeting in May.

So just the reiteration for a broader public who may have attended Shareholder Meeting. So we have done a clinical trial protocol amendment in May, that was approved in May, broadening our indication around AML and even around earlier apheresis.

So the indication of AML has broadened to patients who are not responsive to the initial induction chemotherapy and patients after allo stem cell transplant, so after bone marrow transplantation that have recurrence of AML. So those patients would now also be eligible for participating in the trial with MDG1011.

On top of this, we have now announced to perform preemptive apheresis, so if you want to call it this way, for patients who would be HLA eligible, so A0201 and PRAME-positive, but for whatever reason do not yet fulfill all the inclusion criteria yet. So you know that all the diseases we’re tackling since they're also all advanced stages, this is specifically fast advancing disease AML and MDS, dosed every week that we can save accounts there.

And currently, the preemptive apheresis will be all the patients who do not yet fulfill all eligibility criteria but who are entering a CPI, the patient can be uneligible in the near future. That's when isolation of the apheresis material can be done.

And it can be pre-produced and could be ready for application to patient who becomes eligible in signs informed consent. So that can really save us a few weeks of time in order to be able to have a product for patient as soon as possible.

Where could something like this become effective as you know sometimes certainly chemotherapeutic treatment as an example done in different cycles and in several cycles and it could be that in the middle of the different cycles the investigator as an example or a treating physician has the feeling that -- or does not see a response. So he is not really thinking about -- he or she is thinking about additional treatment cell aligned, that’s where PRAME HLA testing could come in and it’s probably positive thinking around preemptive apheresis.

So with this I would like to go to our next T cell clinical trial candidate which is MDG1021 and in this outline slide, next slide MDG1021 which is a HA-1 specific T cell TCR candidate and is currently in preparation for a Phase I clinical trial. Dolores already mentioned that we licensed this TCR in from Leiden University Medical Center.

Just as a recollection HA-1 belongs to the group of minor Histocompatibility Antigens. So these are antigens for which the immune system of a donor can mount an immune response.

And the interesting thing about this TCR that we licensed it from Leiden is, that is was already tested in the small clinical trial where five patients were dosed showing safety -- early safety and tolerability which makes this way for us to view this asset moving us forward into trial and we're planning to start the trial next year. So we're working together with Leiden University and you will see the Leiden University Medical Center will carry out the trial for us at this time.

Just in order to add a little bit more to this mechanism of how tackling HA-1 could really help with pushing back a disease or could really be therapeutic in essence. We made this particular graph, so on the left hand side you see a donor, donor would be HA-1 negative.

Donor of this is under one, the stem cell to a potential patient that patient is HA-1 positive. And remember HA-1 positivity and negativity, this is not a tumor antigen per se but this is normal variant in a nucleotide sequence that leads to amino acid change that makes a particular amino acid in that particular position immunogen into the immune system.

So this is especially in this -- treated in this vector on HLA A201 wherein another immune system that comes in from a donor could actually recognize this HA-1 -- so this -- and even on the acid exchange at this moment is immunogenic. What's important is this is a normal variation amongst human being.

So some people have this exchange that this immune has a difference some don’t. So going back to the depiction, on the left side, number one, the donor is HA-1 negative, does not carry the immunogen in HA-1, the patient is HA-1 positive, the patient has that HA-1 positive -- immunogenic amino acid exchange in all of his hematopoietic cells and that’s important, it’s all the healthy hematopoietic cells has that amino acid but also of course all the disease cells.

So leukemic cell and lympho malignancies have the same exchange and could be tackled by the immune system. But it principally means that if you carry all this immunotherapy you wipe out the hematopoietic system of the patient and hematopoietic system which is HA-1 positive.

So, let’s say if a patient normally gets the transplant the donor gets the cells -- patient has residual tumor cells, then it goes unfortunately for most patients right into their corner, patients will get a relapse because really a tumor at that point outcompetes the normal hematopoietic system of the patient. But if you do TCR therapies on the left lower part, you can take the donor T-cells get the TCR in that would tackle this HA-1 positive hematopoietic cells, and then you do the adoptive transfer infuse those donor cells into the patient who is HA-1 negative, at that point use TCR modified T-cells against HA-1 positive hematopoietic cells.

They should actually wipe out the hematopoietic system, including the malignant cells. So this is the whole idea around this particular treatment aspect, how this can be therapeutic.

And of course, on top all of this, one thing also speculates for a future potential other areas of interest, where this could be exploitive this kind of mechanism of being able to really wipe out all lymphoid cells, means all the immune cells in the body, as well as all the myeloid cells as an example in transplant of renal diseases, which are currently not done because of high toxicity around the transplant approaches. But with a potential therapy like this, this -- we would think, at least it would be interesting to exploit or look at.

This could be a much more low side effect way to get rid of the hematopoietic system, including new cells, and could make transplant a better way maybe for this patient population. So just as a little outlook into what does HA-1 approach could do as well.

So with this, I would like to leave the TCR side and go to our DC vaccine trial in AML. And we have presented an abstract in the next slide on our previously published top-line data.

This abstract was presented at European Hematology Association in the mid of June. Just as a reminder, this is a patient where -- this is a trial with patients come that are in remission of the chemotherapy and they for whatever reason cannot undergo other transplantation.

So we have 20 patients included in the trial, and this what you see here is the one year interim data of a child that spanned for two years total. So the one year data is what we're talking about.

We have different objectives of course primary feasibility of the vaccine. We have already reported that we have very good feasibility results of manufacture of the vaccine.

We have an excellent safety and tolerability profile, and all the preliminary data around overall survival and progression free survival were already mentioned and presented. But on top of this, we looked into the molecular makeup of the disease of the patient.

And this is what you can see in the next slide where we have already had this observation that a majority of the relapses that we saw in these 20 patients in our AML DC vaccine trial, five out of those had dose relapses early on, actually within 80 days of treatment. And the two deaths that we reported in this particular time were also within the very early days.

So we took with next generation sequencing a look at the molecular mutation makeup of the patient cells. And we saw in two out of the five early relapses that patients already had a mutational load coming into the trial.

So this assessment was not done as screening and eligibility and inclusion criteria, this is principally all start looking at the samples we have. So this was not used for getting patients into the trial or out of the trial, but now of course we're trying to make in terms of why some of these patients might have relapsed so early.

So two out of the five early relapses showed pretty serious mutation. So the one patient with an IDH2 mutation as an example and the other had RUNX1 KRAS mutation, which could be an explanation for this very early -- already going into the trial without having received any vaccine.

So maybe a vaccine at that point could not help anymore. Two out of later three relapses that we had in our trial showed also mutational burden before a vaccination.

One patient had a KRAS mutation and a TET2 mutation and the other had a RUNX1 IDH2 mutation as well on top of others. So you see that this isn’t all that we do.

Of course, we will follow up with a two-year data, as well and doing more investigation on different areas. And we'll of course report the final endpoint of the study 24 months by the end of this year, start of the next year.

And with this, I thank you very much. I am going to hand over to Axel.

Thanks, Kai. I would like to give you a quick overview about the financials for the first six months of 2019.

So overall, revenues increased by 33%, which came mainly out of our bluebird relationship and new now as of April out of Roivant deal with Eur 2.2 million for the DC vaccine, which amounts to the Eur 5.6 million revenues. In terms of the -- so that means that our overall immunotherapy revenues increased to 47%.

By 47%, the remainder of Eur 700,000 is still out the first quarter revenues, which are -- which come from our legacy product Veregen. In terms of the R&D expenses, they increased by 26%, which is mainly due to the expansion of the clinical programs, as well as the manufacturing we had.

We will go into that in more detail on the next slide. In terms of cash and cash equivalents, we stayed with Eur 65 million, which means that for the next two years we have enough funds.

The Eur 65 million, we’re also seeing by the end of the first quarter the figures stayed the same as we had a payment of Roivant amounting to -- coming to the Eur 65 million. In terms of the result, the EBITDA is minus Eur 13.2 million with the Veregen disposal.

Without the Veregen disposal, we would stay at minus Eur 8.5 million, which would mean a 14% increase, which is mainly due to the increased R&D expenses and the revenue rise. In terms of the R&D expenses, the rise of 26% comes out of, as I said earlier, the expansion of the clinical team and the internal TCR discovery program that means headcount increase, expansion of activities within the clinical programs, as well as the expansion of the GMP manufacturing.

That amounts to the 26% and we believe that’s also in line with what we've planned. Next side please.

In terms of the general and administrative costs, we reported a rise of 20% from Eur 3.4 million to Eur 4.1 million, which is mainly due to management changes within the company, and as we reported in Q1 as to specific business development, things we included in the first quarter. In terms of the overall increased EBITDA, what you can see on the next slide, this is reduced by 77%.

But this includes as outlined earlier, the sale of the Veregen asset, but taking that out it actually would only improve by 14%, which is mainly due as reported earlier by the increase of the R&D expense, as well as the higher revenue through the Roivant licensing agreement. So now, the last, in terms of the financial guidance, you see that the total revenues were Eur 5.6 million.

We keep the guidance for the full year at Eur 10 million to Eur 11 million. We also keep the range for the R&D expenses of Eur 24 million to Eur 29 million.

And in terms of the EBITDA loss, we also stay in the same range even though we have higher revenues. We have after the Veregen sale and the re-evaluation of Eur 4.7 million stayed in the same bracket for the EBITDA loss of Eur 23 million to Eur 28 million.

This forecast of course -- this guidance does not include any milestone payments or cash inflows from existing and future partnerships as outlined also early -- in the early quarterly reports. In terms of the cash balance, we have enough institution financial resources for beyond forecasting horizon of two years.

And with this, I'd like to hand it over to Dolores.

Thank you, Axel. So on the last slide, then to the presentation today, I'd like to give an outlook for all of our plans for the rest of the year.

In our TCR trial with MDG1011, we will continue with recruitment and treatment of patients in the first dose cohort. We prepare the clinical development for MDG1021 and cooperation with the University of Leiden, with a planned Phase I study start in 2020.

We expect to report the final readout at the conclusion of the two-year treatment for all patients in this dendritic cell vaccine towards the end of 2019 or early 2020. We also wish our collaborators in Berlin the best that they can soon start their academic TCR trial this year.

And last but not least, we continue working in close collaboration with bluebird bio and now with Roivant/Cytovant on different TCR projects. With that, I close and return to Julia Hofmann for questions-and-answers.

Thank you, Dolores, and thank you to all of you. Operator, please give the instructions for the Q&A session.

Just have four if I may. On MDG1011, could you break down how many eligible patients you had come in.

By the existing centers wanting to participate, how many were screened and how many were enrolled? That's question one.

Second one is, could you flesh out which inclusions, less exclusion criteria are hampering enrollment for these patients for what you do the frame HLA apheresis amendment thing? That's question two.

And the third one is on the HA-1, MDG1021, could you tell us would you change to the construct or if you did any sort of additional work on that since they -- since you acquired the asset? And the last question is, if we were just going to present any additional preclinical data that you are aware of on the MAGE-A4 program?

Thank you very much.

Hi, Dylan. So this is Kai.

So I’ll take some of these first questions. So number one was you were asking about how much screening and how much enrolling.

So we've not done any forecasting on this. But of course, as you can see, our experience was that our screening efforts, the way we initially set it up with the three centers starting, the patient pool that we were able to address was not large enough.

Obviously that's why we have undertaken that effort to really increase the number of patients, not only patients but sites that have patients that could be eligible for the trial. So just as an example, the AML is normally assessed by university center for transplant eligibility, if a patient can be transplanted, then you stage in the -- that patient stage in the university treatment center.

Once if they are -- for whatever reason, if there is some kind of disease that makes them not eligible for transplant, they go back into smaller hospitals, or most likely private practices, where they get chemotherapeutic regimens. And normally, these patients are not referred back to the university center.

So we've addressed not only the numbers of patients that could be potentially seen by centers, we also have involved in these surrounding centers. And I think now that we have a set of the known substantial and faster progress than from what we had.

The second question was around what is usually hampering the patients to get into the trial, why we are -- that's why we did this preemptive apheresis. So as one example, we have one case where a patient was in the middle of a treatment cycle that was not completed yet, the -- for eligibility the patient would have had to complete that particular chemotherapy cycle.

And until all of that is completed, and the patient is assessed, again, you could not enroll that patient into the trial. So what we now can do, actually, we could use the time we can test for HLA and PRAME.

And we can then if the PI determines that a patient could reach all the eligibility criteria, could then do the apheresis before the patient -- this particular patient would have finished all his treatment cycles, until then after some period he could become eligible for the trial. So this is just a way to we use already let say pre-identify patients who are now the positive, basically you can use the time why, unfortunately, they might progress because they don't respond to the cycles being carried out.

You can already use the time for production. The third one, maybe I hand over to Dolores.

Yes, so I'll pick up Dylan, this is Dolores and answer your question about the construct for the HA-1 TCR, we are not planning changes in the construct, but we are planning to change the recipient cell formulation. So the direct product in the end is the T cell receptor that’s expressed in a certain way that the recipient cells are prepared for the infusion and the original patients that were treated in the trial in Leiden is the very complex precision making Epstein-Barr virus specific T cell clone from each donor into which the receptor was inserted in and those populations were transferred back to the patients.

That was the reason the trial was stopped earlier at only five patients because it was just not feasible to do this, it was too many failures on trying to achieve that steady protocol. So of course we will go to our more standardized approach that the field has learned from the CAR-T fields and read from our own TCR-T trials.

So the changes at that the recipient cell level not at the receptor. And you asked that are we aware of bluebird planning any further presentations about the MAGE-A4.

All communication is in their hand. We are not aware of upcoming presentations but they are normally around it a lot of engaged.

So we might also be surprised along with you if there are some further information provided about that receptor.

And maybe just to -- allow me to make -- actually there are a number of three parts around HA-1, so the trial that was already carried out by Leiden had issues with the feasibility of the logistics. So it was not around that HA-1 TCRs maybe not with TCR or whatever, it’s really around this biospecific T cells they have to get them from the donor which is obviously difficult in a transplant I think and then you have small cell numbers.

The virus needs to be put in with the TCR and that was very logistically an effort and like Dolores said the field has learned so much also out of the CAR-T cell side that there one can do this whole trial now much, much easier just by pre-infusing.

And also reduce the amount of time that one needs for preparation of the drugs products, starting from a T cell clone, an Epstein-Barr virus specific T cell clone, it’s a long time period to get to the final drug product.

Just to expand a bit on some of those already asked. With MDG1021 HA-1 TCR, can you just give us an idea of what’s needed before the clinical trial starts, just kind of the key milestones that you’re looking at internally of offering those manufacturing that you want to hit?

To follow Dylan, which is the next one a bit on the DC vaccine data that was presented at the EHA conference, kind of think about that and potential design of what Cytovant can do with the trial over in Asia? Can -- any learnings from that?

I know this is kind of data evolving still. But any learnings from that preclinical trial design for Cytovant, well potentially plans DC vaccine trial over there?

Thank you.

Yes. So I’ll will take both questions.

So your first question around the HA-1 TCR MDG1021 what milestone would we be looking at. So Of course in the preparation what we are currently setting up is with GMP production.

We are setting up all clinical trials related documents. So protocol, everything, setting everything up for submission of -- that would be the first let's say lifting and submission of the trial for authorization to the competent authorities in the Netherlands.

And they have a certain period of time obviously, they will mostly likely have questions coming back to us. We answer the question and over one point we will get green light to start the study.

So all of this is currently ongoing. The preparations for really being able to open the trial and enroll it.

Some of it’s really to predict when all of this is happening is difficult. But on the other hand, we try to do everything quick as we can.

And that's why we currently have the target set for 2020. I think as we move along, during the year, we will maybe at one point narrow that window a little bit, when we have a little bit more clarity.

On the DC vaccine side, obviously, it's great to have that partner now in Asia. Having interest in Asia and trying to carry out this DC vaccine strategy in Asia as well.

And the collaborations we set up as a collaboration where we learn from each other. So whether we continue to doing in the with this particular product, and what Cytovant and Roivant is doing with this particular product, we will learn out of what's coming out of the clinic safety and efficacy wise that we are pretty certain will help us also in our strategy of how we should move that asset forward.

What I think is very important is the two-year readout. And it's just something you should not underestimate.

AML is a progressive disease. The major progression comes early in the disease.

But it starts tapering off after about two to three years. And that's where you normally would try -- would like to see the curve start flattening out.

But that's why I just want to caution a little bit. So the one year milestone for AML is always early.

That's why we're really looking forward to the two-year data point. I'm not sure if that answers your question.

Otherwise, please feel free to …

Just I think to pick slides on the kind of mutational load you saw, you attended at EHA conference. I mean, any idea when it comes to trial design, or even maybe a modification of the DC vaccine to kind of get around that?

Yes, so I don't think we would modify the drug product, the vaccine. But I think, of course, what we look forward would be what's the mutational status of the patient?

If you have a patient with an IDH2 mutation, today that patient would receive targeted therapy. Yes.

So there's always a little bit of problem since this trial was planned and initiated, the field that has evolved. And that for sure, the amount of sequencing that is now done on a standardized session is already much, much bigger than when we started carrying out the trial.

So I think it is safe to say that this part of screening patients upon enrollment for inclusion and for eligibility is definitely something to consider than is why is to consider.

Yes. So I mean in essence you can consider that as my service kind of biomarker that could be integrated into how patients are screened and then set up that trial to really assess whether or not this would be a suitable measure to determine going forward in the larger registration trial, for example, the patients that already have evidence of this molecular mutation scenario in their bone marrow that they -- we wouldn't find -- or have the window of opportunity, the time period needed to induce a strong immune response.

And therefore they would not likely benefit from the therapies if they would be in that category of early relapse. So that would have to be then tested but this kind of information we will make available to Cytovant.

Thank you, operator. And thank you for the questions.

If there are no further questions, I would like to close the call. Thank you for your interest in Medigene.

Good bye.