Medigene AG

Good afternoon and good morning to those dialling in from the U.S. My name is Gary Waanders, I am the Vice President of Investor Relations at Medigene.

I'd like to welcome you to today's conference call and webcast in which we will describe Medigene's financial and operational results for the first three quarters of 2019. Ahead of getting into the call proper, let me say what a pleasure it is to be here as part of the Medigene team today.

With us today on this conference call, Professor Dolores Schendel, Chief Executive and Chief Scientific Officer of Medigene; Axel Malkomes, Chief Financial and Business Officer; and Dr. Kai Pinkernell, Chief Medical and Development Officer at Medigene.

Today's presentation is also available to download on our website and this webcast will be recorded and will be accessible later on our website as well. On Slide 2, I would like to draw your attention and to remind you that during this conference call we will present and discuss certain forward-looking statements.

On Page 3, you will find a snapshot of Medigene today from which I would like to highlight that Medigene is at heart a biotech company developing innovative T cell based therapies for the treatment of a variety of cancers. We are based in Martinsried, Munich in Germany.

We have approximately 140 employees and are listed on the Frankfurt Stock Exchange. We have a market cap of approximately €150 million.

As of September 30, we had €60.5 million of cash. I will now hand over to Kai, who will give you some more information on our current development projects.

Thank you, very much, Gary. Thanks to everybody and if we move to Slide #4 you will see our growing immunotherapy pipeline.

You see we've given it a makeover to make it more informative for you as readers and listeners. So I would like, as you are aware of most of our parts of our pipeline, I would just briefly go over the parts you already know and highlight the ones that we have added that might be new to you.

So, on one had of course we run our MDG1011 trial and are in preparation of our MDG1021 trial against HA-1 that I will come to later. And we have put in termed MDG10XX we are in preparations for solid tumor trial that is currently in the preclinical stage and that we'll try to move into clinical stage as soon as possible.

You will also see the partner TCR-T programs with bluebird and Cytovant and Cytovant has recently named not only the trial name but also indications and the targets that they want to go after with their NY-ESO-1 TCR that is in synovial sarcoma, multiple myeloma and solid tumors. In addition, they have listed the name and the indications for their first dendritic cell target which is acute myeloid leukemia using the antigens WT-1 and PRAME.

And if you remember their dendritic cell vaccine and the NY-ESO-1 are licensed for the Asian regions. With this, I would like to move to Slide #5, that highlights our ongoing clinical preparations or trials.

So the key clinical trials MDG1011 of course which is ongoing, that has HLA-A or 02:01-restricted PRAME TCR is in the dose escalating phase of the trial. The indications are again AML, MDS, and multiple myeloma.

Until now within Q3 we have now opened eight centers total in Germany and are still opening more. We are also preparing our clinical trial for MDG1021.

That is the HA-1 specific TCR; that is also going to be HLA-A or 02:01 restricted. We are currently planning a Phase 1 dose escalation trial that will have an expansion cohort that is looking for safety and feasibility and off course already efficacy as far as that can be done in that Phase 1 for this particular TCR.

The indications there are hematological malignancies after allogeneic stem cell transplant. So every patient with hematological malignancies and these indications that has a relapse of allo transplant could be eligible for this particular treatment if they are HLA-A or 02:01 positive and have this particular donor recipient pairing of HA-1 immunogenic versus non-immunogenic form.

We are awaiting topline results of our DC vaccine, that's going to be right at the change of the year. So, end of 2019 or early 2020.

If you remember, it is a DC vaccine against WT-1 and PRAME. This was an open label Phase 1/2 clinical trial looking for safety/feasibility and early efficacy on clinically relevant endpoints and the idea here was the prevention of AML relapse for patients that could not undergo allogenic hematologic stem cell transplantation.

This should serve as high level overview of our clinical programs. And with this, I would like to hand over to Dolores.

Thank you, Kai. We again reported on two tools at recent scientific conferences and the first is our inducible T cell receptor.

This is a tool that allows us to churn the surface expression of our trans gene T cell receptors on TCR-T often on in a concentration and time dependent manner. The two TCR chains are mutated so that they do not pair naturally and new domains have been added at their tail colored here in the picture in blue.

These represent high affinity binding domain for the very well known drug, tamoxifen. Upon addition of tamoxifen to the TCR-T, the TCR chain pair and the T cell receptor pairs on the cell surface where it displays whole functionality.

When tamoxifen is removed, the TCR is down regulated and disappears from the cell surface. A particular advantage of our system is the use of tamoxifen as the dimerizing agent to control TCR expression since studies in breast cancer patient showed that the drug can be used over years.

This is a very well known drug and can be – has a high, well defined safety profile in vivo. And now, moving on to Slide 7, the second tool is designed to advance the activity of TCR-Ts in hostile solid tumor microenvironment.

As you know, cancer tissue protects itself from being attacked by the immune system and the PD-1, PDL-1 axis is a critical pathway in inhibiting the function of T cells. We have in-licensed the PD1-41BB switch receptor that couples the natural extracellular domain of PD1 to the intracellular domain of 41BB, so that instead of inhibiting T cell function this construct delivers a strong positive co- stimulatory signal to the T cells upon binding of PDL-1.

The switch receptor importantly is introduced together with the T cell receptor on the same vector, so both are expresses simultaneously. And when TCR-Ts are localized in the tumor microenvironment due to their specificity, and encounter tumor cells expressing PDL-1, instead of being inhibited, they receive 41BB co-stimulatory signals which strongly improve their activity.

As you may know, currently clinical studies are combining adopted transfer of T cells with checkpoint inhibitor antibodies to maintain T cell function in the tumor microenvironment. But since checkpoint inhibitor antibodies are given systemically, they can cause serious side effects of autoimmunity in the large fraction of patients.

With our tool, interference in the PD-1, PDL-1 axis is localized specifically to the tumor microenvironment and we do not merely block the negative regulation of T cells like tumor cells, but actually cause the PDL-1 positive tumor cells to drive the activation of T cells. And with this, I'll now hand over to Axel, who will provide you an update on our partnerships and financials.

Gentlemen, hi and this is Axel. I'd like to give you a short snapshot on the partnerships and financials.

So, thank you Dolores for this. On the partnership side, the relationships to bluebird bio which is a worldwide relationship runs very smoothly and shows progress as you can also see in terms of the major MAGE-A4/HLA-A2 which they selected for clinical development starting in 2020.

And on the Roivant side, which is a relationship as you know focused in on China and selected Asian countries is running also very smoothly showing progress in the sense of that clinical indications in terms of NY-ESO-1 has been chosen and the DC vaccine program is also defined for AML. Turning – moving on to Slide 9, turning on the financial review and outlook and the guidance to 2019, as you can see the guidance for 2019 on the revenue as well as R&D and subsequently also EBITDA is confirmed as we sticking to the line for the same period for the first six months, so we still have the €10 million to €11 million on the revenue side and also the bracket for R&D.

This of course doesn’t include milestone payments or cash inflows from existing or future partnerships. In terms of cash, you heard that by end of September we have cash of €60.5 million and that means that we have sufficient financial resources for the next two years.

So now, I would like to hand back to Dolores for the last pages.

Thank you, Axel. So now coming to the last slide, the left hand side of this table, summarizes the accomplishments achieved in 2019 including the start of treatment of patients in MDG1011 and the report of the one year interim data for our DC vaccine in AML.

I have just given you some insight into the ongoing preclinical research that places us at the cutting edge of innovation for safer and more efficacious TCR-T immunotherapy. In the area of BB we have completed the sale of Veregen his year, making us now a pure play immunotherapy company.

The first thing event in 2020 will be the release of topline data for our DC vaccine, and as just discussed by Kai, and upcoming in 2021 we will see advances in our TCR-T clinical activities with completion of three dose cohort in MDG1011 estimated by Q4 2020 as well as the launch of MDG1021 as a Phase 1 trial conducted with Leiden University Medical Center and the start of the MAGE-A4 trial by bluebird bio that utilizes the receptor provided by Medigene in our ongoing collaboration. We continue to characterize new TCR candidates from our own in-house programs that offer in our collaborations with bluebird and Roivant/Cytovant.

And we further optimize our TCR-Ts in order to move into development of TCR-Ts for solid tumors and the tools I've introduced to you will play a critical role in those developments. So now at the end thank you very much for your attention and I will now hand back over to the operator to open the Q&A session.

Hi, thanks for taking my questions, just got a few. Just on the inducible TCR system, just thinking about that in the context of the clinical setting, will there be kind of a narrow, broad, dosing window for TCR activation and how long do you think that activation will last?

I'll start with that and go from there. Thank you.

We have a dose and it can add its relationship in the same dose of our receptor, so the levels of T cells that are expressed and the time required to induce particular levels can be controlled by the amount of the dimerizing agent, one could envision that one could start by induction of the receptor on the TCR-Ts ex vivo, applying them to the patients and then maintaining over any period of time that one wishes. So the further expression of the receptor, if one would then see no further need for the receptor in the patients, tamoxifen could be removed and then the receptor will be down regulated, but still available to be up regulated in the future if there would again be a clinical need in the patient.

Okay, thank you. I mean you probably can't answer this, but timelines for Cytovant TCR-T cell trial starts or is that in the hands of them?

That is rather in the – hi this is Axel. This is rather in the hands of the other side, so it is at their discretion when they will publish that.

Okay, thank you. And then, just a finer one on the MDG1011 enrollment, and how that's progressing?

So, obviously the trial is ongoing and progressing. I think it is probably quite clear that the rate of recruitment has been slightly disappointing and I'll ask Kai to say a few words about the expansion strategy and what we think the timeline of the Phase 1 remaining is.

Yes, thanks Gary. And Daniel, if you recall maybe some of the remarks and the outlines that we have done during the last webcast, so we have drastically expanded our clinical trial centers.

If you remember we started over with three trial centers, we are now already at eight and getting a few more onboard. So that in combination with outreach strategies we have implemented referral center contacts, we have put them into our screening studies.

So they're also looking for patients in their own patient population because some of, as an example, some of the AML patients if they are – and the key there really was expansion of the centers and getting this outreach referral center strategy in place. Because as you might recall or have seen and also in the CAR-T cell trials to pick up these patients of course you have to look for them long and hard and the rates of really patient being able to get into the trial is then sometimes lower then whatever you calculated including margins.

Okay.

It helps?

Yes, yes, that's great, thank you.

Good afternoon, just one quick question. You talked about the PD-1 activator being used for solid tumors.

Might you use it in hematological tumors as well?

Yes, that's clearly possible. It is applicable for any tumor microenvironment or any environment where you direct the T cells where there is presence of PD-1, it can be either on the tumor cells themselves or on axillary cells in the microenvironment.

It can drive a very strong activation of the T cells. So it's not limited to solid, but that's part of where we will make that the first application.

Thank you.

Good afternoon and thank you for taking my questions. I have few questions regarding the PD-1 TCR and the 1011.

So regarding the PD1-41BB TCR, would it be likely that this trial going forward would be combined with another treatment and therefore pathway? And regarding the 1011, regarding recruitments would it also be possible to include the Leiden Medical Center into the study population when it also activated for the HA-1?

I’ll take the first question and I'll let Kai answer the second question regarding study in Leiden. So the PD – since we hold the construct and the license for the PD1-41BB we envision first of all setting up the whole system and having the in vivo animal models completed, so that we can make the decisions of exactly in what clinical settings we would apply this combination of TCR and the co-stimulatory switch receptor.

And I think Medigene always says we're open to collaborations in all venues, that we have the option to develop on our own or look for other settings where we can do that in collaboration.

Would there be any preferred combination treatment?

I mean, there are many different approaches that you can use that could potentially use this dual receptor tool for enhancing the functionality that might be involved in better infiltration of the T cells into the tumor microenvironment. Those kinds of settings I think are open for discussion on what is the best approach.

And Anita, if you know someone who has got a PD-1 up regulator that might be something that we could talk about.

Right, that makes sense, very good, thank you.

Okay then I would take the second part or the second question that you had which was if we could then include Leiden as well in the MDG1011 trial if the centers open for the HA-1. So to open Leiden as part of the MDG1011 trial would be a National Submission, which is separate from a [indiscernible] HA-1, so unfortunately there are no synergies other than of course that we're working together with Leiden.

So that's the synergy, but to work to get Leiden and up means not only telling the authorities that there is another clinical trials center, but also you need to go through the Dutch National System, so the CCMO for approval. So unfortunately that timeline is really then obviously quite longer compared to opening a center in Germany.

And if I can be – maybe that's not that obvious anymore, but Leiden had a collaboration together with Bellicum, if you might remember. So the Bellicum license TCR that they have in the clinic actually comes from Leiden.

So there is let's say, I don't want to say competition between Leiden and us, but for sure we want to keep things clean to a certain extent, if that makes sense.

That makes a lot of sense, thank you.

Thank you operator, and thanks to everyone for the call today. Thanks for your interest in Medigene and we look forward to speaking with you again soon.

Thank you and goodbye.