TG4010 and Pexa-Vec readouts to define 2019

Transgene 30 November 2018 Update
Download PDF

Transgene

TG4010 and Pexa-Vec readouts to define 2019

Corporate update

Pharma & biotech

 

30 November 2018

Price

€3.00

Market cap

€187m

Gross cash and short-term investments (€m) at 30 September 2018

26.6

Shares in issue

62.3m

Free float

43%

Code

TNG

Primary exchange

Euronext Paris

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.0

(3.4)

9.1

Rel (local)

0.0

6.6

17.3

52-week high/low

€3.3

€2.6

Business description

Transgene is a French drug discovery and development company focused on the treatment of cancer and infectious diseases with immunotherapies. Its products are Pexa-Vec, TG4010, TG4001, TG1050 and TG6002.

<Insert the business description here, up to a maximum of seven lines. To paste text here, use 'PASTE UNFORMATTED TEXT' on the Edison Toolbar>

Next events

Safety data for Pexa-Vec+ nivolumab data in first-line HCC

Q418

TG4001 + avelumab Phase I data in HPV HNSCC

Q418

TG4010 + nivolumab + chemo in 1st -line NSCLC

H219

Analysts

Dr Daniel Wilkinson

+44 (0)20 3077 5734

Dr Sean Conroy

+44 (0)20 3077 5700

Transgene is a research client of Edison Investment Research Limited

Late-stage clinical trial readouts in 2019 will be critical to Transgene’s immunoncology (IO) aspirations and, if positive, could further its position in the sector; notably efficacy data expected from the Phase II TG4010 (+nivolumab +chemotherapy) trial in first line non-small cell lung cancer (NSCLC) and the Phase III Pexa-Vec (+sorafenib) trial in first line hepatocellular carcinoma (HCC) (trial conducted by partner SillaJen). Next-generation platforms Invir.IO and myvac continue to progress, with assets from both expected to enter the clinic in 2019. Additional financing is needed to ensure a cash reach beyond September 2019. We value Transgene at €4.68 per share (€290m).

Year end

Revenue (€m)

PBT* (€m)

EPS* (€)

DPS (€)

P/E (€)

Yield (%)

12/16

10.3

(23.1)

(0.43)

0.0

N/A

N/A

12/17

8.1

(35.0)

(0.52)

0.0

N/A

N/A

12/18e

7.2

(36.8)

0.16

0.0

18.8

N/A

12/19e

7.9

(33.8)

(0.55)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments

TG4010: First-line NSCLC efficacy data in H219

Transgene’s strategy involves developing its immunotherapies for the treatment of cancer and viral indications in combination with other products, predominantly immune checkpoint inhibitors (ICIs). Following the completion/termination of five trials and the addition of the Phase I TG6002 trial in gastrointestinal adenocarcinoma, Transgene now has six ongoing studies across five products. Efficacy data from the Phase II TG4010 (+nivolumab +chemotherapy) trial in first-line NSCLC be central to determining Transgene’s long-term IO strategy.

Invir.IO and myvac to enter clinic in 2019

At the SITC 2018 conference, Transgene presented data on its next-generation IO platforms. Myvac is a viral vector system designed to deliver a patient’s specific neoantigens into the body in the hope of stimulating an immune response against the patient’s tumour. Clinical trials in HPV-negative head and neck cancers and ovarian cancers are expected in 2019. In collaboration with its partner BioInvent, Transgene presented data on a novel (Inviro.IO) oncolytic virus encoding for either an anti-CTLA-4 or PD-1 antibody. Clinical trials are expected to initiate in 2019.

Financials: Funded to September 2019

Transgene reported cash, cash equivalents and financial assets of €26.6m at 30 September 2018 (compared to €33.0m as of 30 June 2018). Its cash burn was €14.8m in 9M18 and it anticipates FY18 cash burn to be €25m, with Q418 forecast cash burn higher than earlier quarters due to tax credits previously received.

Valuation: €290m (€4.68 per share)

We value Transgene at €290m (€4.68/share) vs €289m (€4.65/share) previously based on a risk-adjusted NPV model of TG4010, TG4001, TG1050, Pexa-Vec and TG6002. We have rolled forward our model and updated for cash and fx.

Key data readouts now expected in 2019

Transgene’s strategy involves the development of its immunotherapies for the treatment of cancer and viral indications, notably in combination with other approved therapies like PD-(L)1 ICIs. Key to determining the success of Transgene’s combination strategy will be efficacy readouts in 2019 from the Phase II TG4010 (+nivolumab +chemotherapy) trial in first line NSCLC and the Phase III Pexa-Vec (+sorafenib) trial (PHOCUS) in first line hepatocellular carcinoma (trial conducted by partner SillaJen). If the PHOCUS trial is successful, it could enable the first commercial launch of a Transgene developed product.

Following the completion/termination of five trials and the addition of the Phase I TG6002 trial in gastrointestinal adenocarcinoma, Transgene now has six ongoing studies across five products (Exhibit 1). Recently clinical data were presented on TG1050 in hepatitis B at the American Association for the Study of Liver Diseases (AASLD) 2018 liver conference and we expect initial Phase I data from the Phase I/II T4001 (+avelumab) trial in second-line human papillomavirus (HPV) positive cancers by the year end.

Transgene’s current cash position enables a cash reach until mid-2019. However, we expect Transgene to raise additional capital before then, most likely in the form of bank loans. We note that as a result of Transgene’s strategic collaboration with Tasly Biopharmaceuticals, it possesses $48m in Tasly shares. Transgene will be able to exercise these 12 months after any potential Tasly IPO. We note the valuation of this holding could decrease or increase.

TG4010: First-line NSCLC now the focus

With the continuing shift in the first line standard of care (SOC) for NSCLC towards PD-(L)1 use (9m18 sales of two leading PD-(L)1 inhibitors Opdivo (nivolumab) and Keytruda (pembrolizumab) were $4.93bn and $5.02bn respectively), Transgene’s second-line TG4010 (viral vector expresses MUC1 antigen and IL-2) NSCLC trial enrolling patients who have not previously received PD-(L)1 treatment has become more difficult and no longer clinically relevant. As a result of this changing SOC, the second-line NSCLC trial testing TG4010 in combination with Opdivo has been terminated. Although it is possible future second-line trials could be initiated to test TG4010 in patients who have already received first-line PD-(L)1 treatment, the focus now falls on the Phase II (NCT03353675) trial in first-line patients testing a triple combination of TG4010, Opdivo and chemotherapy.

Data for the first-line TG4010 trial were originally anticipated before year-end but Transgene now expects to present overall response rate (ORR) data on 35 patients in H219 after more patients have been enrolled. The trial is a single-arm EU/US study and is anticipated to enrol patients (without EGFR mutations or ALK rearrangements) who express low or undetectable levels of PD-L1. Transgene is funding the study with Bristol Myers Squib supplying Opdivo. For patients without a driver mutation (EGFR, MEK etc), the SOC has quickly become chemotherapy plus Keytruda, irrespective of PD-L1 status or Keytruda alone in high expressing PD-L1 patients. However, in general, patients that respond effectively to PD-(L)1 ICIs in the first line remain a minority of the total NSCLC patient population. For example, Keytruda’s approved label (Keynote-024) demonstrated it had a 45% ORR as a monotherapy in first-line patients whose tumour proportion score for PD-L1 expression was above 50%. ORR plus chemotherapies in first-line patients irrespective of PD-L1 expression range between 48% and 58%. The number of complete responses (removal of the cancer) across these treatment regimens has not been reported higher than 4%. Responses to PD-L1 ICIs for low expressing PD-L1 patients are typically lower, as evidenced by Keynote-042 data presented at ASCO 2018. NSCLC patients with 50% or more PD-L1 expression had a median overall survival (OS) of 20 months (95% CI: 15.4-24.9) with Keytruda vs 12.2 months (95% CI: 10.4-14.2) with chemotherapy. This compares to patients with PD-L1 expression of 1% or more who have a median OS of 16.7 months (95% CI: 13.9-19.7) with pembrolizumab vs 12.1 months (95% CI: 11.3-13.3) with chemotherapy.

The first-line setting could be a significant clinical and commercial opportunity for Transgene if TG4010 in combination with a PD-(L)1 ICI is proven to be more effective than PD-(L)1 ICI monotherapy treatment (particularly in low PD-L1 expressing patients). We note healthcare bodies are starting to show willingness to pay for earlier line patients to be prescribed PD-(L)1 therapies, as recently noted by the National Institute for Health and Care Excellence (NICE) recommending Keytruda to be made available on the Cancer Drugs Fund for first-line patients. However, we note NICE will have likely negotiated a significant discount to the gross price of Keytruda.

Pexa-Vec: Changing HCC SOC as Phase III data near

Pexa-Vec is in three ongoing clinical trials testing the virus in combination with one of either nivolumab (Opdivo), ipilimumab (Yervoy) or sorafenib (Nexavar), with data particularly from the nivolumab and sorafenib readouts key to Transgene’s future strategy. Data from the global Phase III trial (PHOCUS) in first-line HCC (run by partner SillaJen) are anticipated in 2019. The PHOCUS trial is testing Pexa-Vec in combination with sorafenib in 600 patients (300 patients in experimental arm of sorafenib + Pexa-Vec and 300 in comparator arm of sorafenib alone) with a primary endpoint of overall survival. Transgene retains the rights to commercialise Pexa-Vec in Europe and we anticipate that it will look to out-license this opportunity to a commercial partner if the PHOCUS results are positive and the compound is approved by regulators.

Treatment for inoperable HCC has historically relied on Nexavar with no advancements to the SOC since its approval in 2007 until recently. In 2018, two new drugs were approved for the treatment of HCC. Lenvantinib (Lenvima), a VEGFR 1/2/3 inhibitor, was approved in August for the first-line treatment of patients with untreated unresectable HCC. In its pivotal study (Prescribing information), lenvantinib demonstrated it was non-inferior to sorafenib for overall survival (OS) but it did not demonstrate a statistically significant improvement in median OS (13.6 months [95% CI: 12.1–14.9] vs 12.3 months [95% CI: 10.4–13.9] for sorafenib). However, it did demonstrate a statistically significant improvement in median PFS (7.3 months [95% CI: 5.6–7.5] vs 3.6 months [95% CI: 3.6–3.7] for sorafenib) and ORR (41% [95% CI: 36–45%] vs 12% [95% CI: 10–16%] for sorafenib).

As lenvantinib did not demonstrate a statistically significant improvement in OS, Transgene and SillaJen’s Phase III trial design remains valid. However, while the risk of rapidly changing SOC in HCC is lower than in other cancers such as NSCLC, there is a risk that the SOC will change, making ongoing trials invalid. For Pexa-Vec’s Phase III trial we see this possibility as small. However, PD-(L)1 inhibitors continue to change the SOC in multiple cancers as they are beginning to make an impact in HCC.

Recently, pembrolizumab (Keytruda) was approved in second-line HCC patients who had previous treatment with sorafenib (or are intolerant to sorafenib). This accelerated approval was based on data from the Keynote 224 trial. The trial was a single-arm study in 104 patients with a primary endpoint of ORR. Pembrolizumab demonstrated a 17% ORR (95% CI: 11–26%). In the long term, we note a collaboration with Merck and Eisai to test Keytruda and Lenvima (lenvantinib) in first-line HCC patients (NCT03713593) could have a major impact on HCC SOC. The Phase III trial (MK-7902-002/LEAP-002) is expected to initiate before year end and will enrol 750 patients across two arms (lenvantinib plus pembrolizumab vs lenvantinib alone). Primary endpoints include PFS and OS, with primary completion of the study in mid-2022.

Exhibit 1: Transgene’s clinical pipeline

Compound

Combination compound

Indication

Phase

Collaborators

Trial status

Data read-out

Notes

Company-sponsored trials

TG4010

Opdivo (nivolumab) and chemo

First-line NSCLC

II

N/A

Ongoing

H219

Data were originally expected in H218, ORR data now expected in H219 after more patients have been enrolled. Total of 35 patients expected to be enrolled.

Pexa-Vec

Nexavar (sorafenib)

First-line HCC

III

Conducted by partner SillaJen

Ongoing

2019

Global study with expected complete enrolment of 600 patients (300 per arm). First data are expected in 2019.

Pexa-Vec

Opdivo (nivolumab)

First-line HCC

I/II

Nancy, France

Ongoing

H218

Safety review expected by year end with an interim analysis on ORR (overall response rate) expected in 15 patients by mid-2019. 30 patients are expected to be enrolled.

TG4001

Avelumab

HPV+ (Human papilloma virus) head and neck squamous cell carcinoma (HNSCC)

I/II

Institut Curie (PI Pr Christopher Le Tourneau)

Ongoing

Q418

Phase I data expected in Q418 on nine patients. Phase II enrolment is ongoing with additional sites being activated in Europe. Data expected in H219.

TG6002

N/A

Advanced gastrointestinal adenocarcinoma (colon cancer)

I/II

Principal investigator: Prof Philippe Cassier, Centre Léon Bérard, Lyon

Ongoing

H220

First patient expected to be treated shortly. 50 patients expected to be enrolled. Primary endpoint for Phase I is dose-limiting toxicity, for Phase II it is overall response rate.

TG1050

SOC antiviral

Chronic hepatitis B

I

N/A

Complete

H218

Phase I data were presented at AASLD liver meeting 2018. TG1050 was well tolerated over three dose levels in both single and multiple (three) dose cohorts. Immune responses at the higher doses (1010 and 1011 virus particles) against the three antigens vectorised by TG1050.

Investigator-sponsored trials

TG4010

Opdivo (nivolumab)

Second-line NSCLC

II

University of California Davis Medical Center

Terminated

N/A

ICIs are now commonly SOC in first-line patients, as such recruiting ICI-naive patients in second line has been difficult. Trial terminated as no longer clinically relevant. No unexpected safety issues were observed.

Pexa-Vec

Yervoy (ipilimumab)

Solid tumours

II

Centre Léon Bérard

Ongoing

N/A

Data originally expected in H218. Patient recruitment is ongoing with additional sites now added. According to clinicaltrials.gov study completion expected in H219 (60 patients expected to be treated). The combination has been well tolerated to date.

Pexa-Vec

Cyclophosphamide

Sarcoma and breast

II

Institut Bergonié

Terminated

N/A

The primary endpoint in soft tissue sarcoma patients was not reached at the interim analysis. Trial was terminated. Combination was well tolerated.

Pexa-Vec

N/A

Solid tumours

Translational

University of Leeds

Completed

N/A

Data presented at ASCO 2018. Patients were treated with a single dose of Pexa-Vec (1x109) 14 (+ 4 days) days before surgery. Of the five evaluable CRLM patients, four had evaluable tumours of which one patient’s tumour was completely necrotic while another was partially necrotic.

TG6002

N/A

Glioblastoma

I/IIa

Assist. Publ Hôpitaux, Paris (PI Pr Delattre); French NCI

Ongoing

H119

No safety issues to date. According to clinical trials.gov primary completion date expected in H119 with study completion in 2021.

Source: Edison Investment Research, Transgene

Pexa-Vec IO combination efficacy data expected in 2019

Pexa-Vec is being tested in a variety of combinations that aim to synergistically enhance its efficacy. Phase I/II trials are ongoing with Pexa-Vec in combination with Opdivo in HCC and Yervoy in solid tumours.

A Phase II trial (METROmaJX trial) testing Pexa-Vec in combination with cyclophosphamide in advanced soft tissue sarcoma or advanced breast cancer patients has been terminated. This was a result of the primary endpoint in soft tissue sarcoma patients not being reached at the interim analysis. Data so far demonstrated the combination was well tolerated. We await the full data package to be presented for further analysis.

Patient enrolment is ongoing for the Phase I/IIa trial of Pexa-Vec in combination with Opdivo in first-line HCC patients. In the Phase I part of the study, the safety of the combination will be assessed, in particular dose-limiting toxicities. In Phase IIa, the primary outcome will be efficacy with reference to the ORR. Secondary endpoints will include OS and DCR (disease control rate). A safety review is expected by year end from the Phase I component. An interim analysis on ORR is expected in 15 patients by mid-2019. In total 30 patients are expected to be enrolled.

An open-label, investigator-sponsored Phase I/II trial of Pexa-Vec in combination with Yervoy in up to 60 patients with solid tumours is ongoing at the Léon Bérard Cancer Centre. Data were originally expected in H218. Patient recruitment is ongoing with additional sites now added and data are expected in H219 (60 patients expected to be treated). The combination has been well tolerated to date.

TG4001: Initial Phase I data by year end

TG4001 is a therapeutic vaccine based on an MVA vector engineered to express HPV 16 antigens E6 and E7 with adjuvant interleukin-2 (IL-2). In collaboration with Pfizer and Merck, Transgene is running a Phase Ib/II study in second-line HPV-positive head and neck squamous cell carcinoma combining TG4001 and the anti-PD-L1 antibody avelumab. The trial is funded by Transgene, whereas Pfizer and Merck will provide avelumab. Pfizer and Merck do not have exclusive rights to the data or TG4001, both of which remain Transgene’s. Patient enrolment is ongoing with 52 patients expected to be treated.

The study is split into two parts. In the Phase Ib component, under a 3+3 design consecutive cohorts of three to six patients will be tested at increasing doses of TG4001 in combination with a fixed dose of avelumab. Patients will have HPV16-positive recurrent or metastatic malignancies. In the expansion cohort (Phase II), patients with oropharyngeal squamous cell carcinoma of the head and neck will be enrolled into a single-arm cohort. The primary outcome of the Phase II part will be efficacy as measured by ORR. Initial data from the Phase I component are expected in nine patients by year end.

TG1050: First data presented at AASLD 2018

TG1050 is a therapeutic vaccine for the treatment of chronic hepatitis B that expresses three antigens of the hepatitis B virus (HBV). Transgene recently presented Phase I data (NCT02428400) for TG1050 at the AASLD 2018 liver meeting. Data were presented on the safety and immunogenicity of either single or multiple injections of TG1050 at various dose levels. The 48 patients were split into single (n=12) or multiple injections (n=36) cohorts. Patients in each cohort were then randomised across three dose levels (109, 1010 and 1011 virus particles) and randomised in each dose level 3:1 to either receive treatment or placebo. Patients were doses and monitored as outlined in Exhibit 2.

Exhibit 2: TG1050 Phase I trial design

Source: Transgene

Blood samples were taken and peripheral blood mononuclear cells (PMBC) were analysed at baseline and weeks two, four and 12 in the single injection cohort and at baseline, week four, six and 12 in the multiple injection cohort. As TG1050 is based on a type-5 adenovirus (patients may have had previous exposure to a type-5 adenovirus in their life), patients were tested to determine if they had any previous antibody immunity to the virus. All patients enrolled into the single injection cohort had no detectable levels of anti-Ad5 antibodies. Some patients in the multiple injection cohorts had high anti-Ad5 immunity; they were removed from the analysis and all reported analysis focused on no or low anti-Ad5 immune patients.

There were no serious adverse events (AE) reported and all AEs were grade 1 or 2 except one grade 3 which was not related to treatment. Immune responses to the HBV antigens that TG1050 encodes for were monitored (Exhibit 3). Detectable responses occurred at the higher doses (1010 and 1011 virus particles) in both the single injection (SD) cohort and the multiple injection (MD) cohort against the three antigens vectorised by TG1050. The intermediate dose (1010 vp) was immunogenic in c70% of patients.

Exhibit 3: Individual evolution of ELISpot response over time in patients with low anti-AD5 pre-immunity

Source: Transgene

Additionally, at the 2018 AASLD Liver Meeting Transgene presented preclinical data on the combination of TG1050 with a range of immunomodulators (TLR9 agonist, PDE5 inhibitor) and direct acting antivirals (siRNA, capsid inhibitor, entecavir). Combinations with the TLR9 agonist, PDE5 inhibitor and the sIRNA led to improvements in antiviral effects.

TG6002: Localised chemotherapy

TG6002 is in two ongoing trials in glioblastoma and advanced gastrointestinal adenocarcinoma. It is a viral vector derived from vaccinia virus expressing the FCU1 gene. The FCU1 gene encodes a protein that catalyses the transformation of the nontoxic pro-drug flucytosine, into 5-FU and 5-fluorouridine monophosphate, a widely used chemotherapy regimen. Its expression is believed to be restricted to tumours, thereby reducing toxicity to normal tissues.

The Phase I/II trial in glioblastoma with Assistance Publique Hôpitaux de Paris (principal investigator Professor Delattre) and support from French National Cancer Institute is enrolling patients. No safety issues have been present to date; according to clinicaltrial.gov the primary completion of the trial is expected in H119 with the study completion in 2021.

A new Transgene-sponsored Phase I/II trial in advanced gastrointestinal adenocarcinoma (colon cancer) has been initiated with the first patient dosed in October 2018. The trial (NCT03724071) will enrol 50 patients who have failed or are intolerable to standard therapeutic options. Primary completion date is December 2020 with the Phase I primary endpoints of dose-limiting toxicities.

Long-term focus: Myvac and Invir.IO

Transgene continues to progress its internal technologies with two early stage platforms in development, Invir.IO and myvac. Invir.IO technology platform aims to use the cancer cell-killing capability of oncolytic viruses in combination with the ability of the viruses to insert relevant genes into cancer cells to express other anti-cancer compounds. Recent data comes from the Society for Immunotherapy of Cancer (SITC) 2018 conference where Transgene and BioInvent presented pre-clinical data on its oncolytic virus encoding for an anti-CTLA-4 or PD-1 antibody. Data demonstrated the antibodies retained functionality after vectorisation and that high tumour but low system concentrations were achievable in a mouse model. The anti-CTLA-4 expressing oncolytic virus is expected to enter the clinic in 2019.

Myvac is viral vector-based immunotherapy that is being developed to treat solid tumours. It is based on the principle of determining a patient’s neoantigen’s (antigen’s encoded by tumour specific mutated genes) that are present in their tumour, engineering a virus to express these neoantigen’s and then administrating them back into the original patient. This approach would in theory stimulate a patient’s immune response to these neoantigen’s and in turn the tumour which possess these antigens. At SITC 2018, Transgene presented data that the myvac system generated clinically relevant immune response in mice with responses in CD4 and CD8 cells. Transgene have announced a partnership with NEC corporation to utilise its AI platform to aid in the section of a patient’s neoantigens. The first clinical trials in ovarian cancer and head and neck cancer are anticipated to start in 2019.

Financials

Transgene reported revenue in Q318 of €37.5m (Q317: €1.6m). This was driven by the €35.6m sale of TG1050 rights to Tasly in the form of shares (total value of Tasly transaction €41.4m, c $48m). Transgene has sold the greater China rights for TG6002 and TG1050 to Tasly Biopharmaceuticals. Transgene hold approximately 2.53% of the outstanding capital of Tasly Biopharmaceuticals; the company intends to float on the Hong Kong stock exchange before year end. Transgene has a 12-month post IPO lock up on its shares in Tasly Pharmaceuticals.

Transgene’s cash burn was €14.8m in 9M18 and it anticipates FY18 cash burn to be €25m, with Q418 forecast cash burn higher than earlier quarters due to tax credits previously received earlier in the year. Transgene reported cash, cash equivalents and financial assets of €26.6m at 30 September 2018 (compared to €33.0m as of 30 June 2018). Our model predicts a cash reach until mid-2019 and we model illustrative debt of €20m to ensure funding beyond 2019.

We forecast net profit of €9.9m in FY18 compared with FY17 net loss of €32.3m. This is driven by the non-cash gain of €41.4m from the allocation of Tasly Biopharmaceutical shares.

Valuation: €290m (€4.68/share)

We value Transgene at €290m (€4.68/share) vs €289m (€4.65/share) previously based on a risk-adjusted NPV model of TG4010, TG4001, TG1050, Pexa-Vec and TG6002. We have rolled forward our model and updated for cash and fx. We do not value TG6002 in gastrointestinal adenocarcinomas and will address this as the trial progresses and the exact patient population becomes clear.

Exhibit 4: Transgene valuation model and key assumptions

Product

Status

Market launch

NPV (€m)

Peak sales (€m)

Probability of success

Royalty estimate

rNPV (€m)

rNPV/ share (€)

Key assumptions

TG4010 – NSCLC (EU)

Phase I/II

2025

185.9

1,062

40%

17.5%

79.0

1.27

Approximately 313k annual EU-28 incidence of lung cancer; 85% NSCLC; 75% MUC1 +ve; 66% normal NK cells; 20% peak penetration; €30k treatment price; €30m upfront on Phase IIb completion.

TG4010 – NSCLC (US)

Phase I/II

2025

161.4

1,429

40%

17.5%

64.6

1.04

Approximately 222k annual US incidence of lung cancer; 85% NSCLC; 75% MUC1 +ve; 66% normal NK cells; 20% peak penetration; $50k treatment price.

Pexa-Vec – HCC (EU)

Phase III

2021

151.3

518

50%

25.0%

73.8

1.19

Approximately 66k annual EU incidence of liver cancer; 80% HCC; 25% peak penetration; €30k treatment price.

TG1050 – HepB (EU + US)

Phase Ib

2025

374.6

2,054

15%

20.0%

46.1

0.74

Approximately 5.4m chronic hep B prevalence in EU + US; 66% diagnosis rate; 33% require treatment; 5% peak penetration; €35k treatment price.

TG4001 – Oesophageal cancer (EU + US)

Phase Ib/II

2026

41.4

198

15%

20.0%

4.1

0.07

Approximately 42k annual incidence of oesophageal cancer in EU5 + US; 70% with HPV; 75% fail; 25% peak penetration; 20% peak royalty rate; €35k treatment price.

TG6002 – Glioblastoma (EU + US)

Phase I/IIa

2026

64.0

240

15%

25.0%

7.5

0.12

Approximately 36k annual incidence of brain/central nervous system cancer in EU5 + US; 30% are glioblastoma, 85% will be recurrent, 50% peak penetration, 25% peak royalty rate, €50k treatment price.

Net cash (30 September 2018)          

15.1

0.24

Total

290.2

4.68

Source: Edison Investment Research. Note: Peak sales represent the largest one-year sales that occur over the projected product lifespan. Spot rate $1.23/€.

For a full overview of our valuation, please see our report Near-term data to define long-term strategy.

Exhibit 5: Financial summary

€'000s

2016

2017

2018e

2019e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

10,311

8,144

7,170

7,887

Cost of Sales

0

0

0

0

Gross Profit

10,311

8,144

7,170

7,887

R&D expenses

(26,419)

(30,359)

(31,175)

(34,292)

G&A expenses

(6,236)

(5,674)

(5,844)

(6,020)

EBITDA

 

 

(20,397)

(26,352)

(28,413)

(31,093)

Operating Profit (before amort. and except).

 

(22,514)

(28,043)

(29,774)

(32,363)

Intangible Amortisation

(150)

0

(75)

(62)

Exceptionals (restructuring costs / discontinued operations)

(1,024)

0

0

0

Operating Profit

(23,688)

(28,043)

(29,849)

(32,425)

Other

0

0

41,400*

0

Net Interest

(602)

(2,287)

(1,619)

(1,470)

Profit Before Tax (norm)

 

 

(23,116)

(35,048)

(36,786)

(33,833)

Profit Before Tax (IFRS)

 

 

(24,290)

(30,330)

9,933

(33,894)

Tax

0

0

0

0

Minority interest

(917)

(1,944)

0

0

Profit After Tax (norm)

(24,033)

(32,274)

10,008

(33,833)

Profit After Tax (IFRS)

(25,207)

(32,274)

9,933

(33,894)

Average Number of Shares Outstanding (m)

56.0

62.1

62.1

62.1

EPS - normalised (c)

 

 

(42.9)

(52.0)

16.1

(54.5)

EPS - IFRS (€)

 

 

(0.45)

(0.52)

0.16

(0.55)

Dividend per share (c)

0.0

0.0

0.0

0.0

BALANCE SHEET

Fixed Assets

 

 

48,895

42,137

82,586

81,763

Intangible Assets

423

250

206

176

Tangible Assets

14,580

13,604

12,697

11,904

Other

33,892

28,283

69,683

69,683

Current Assets

 

 

74,055

58,736

31,672

24,051

Stocks

221

270

270

270

Debtors

2,385

2,564

2,750

3,025

Cash

56,207

41,405

14,155

6,259

Other

15,242

14,497

14,497

14,497

Current Liabilities

 

 

(19,919)

(16,866)

(15,255)

(13,785)

Creditors

(4,504)

(2,868)

(3,117)

(3,429)

Short term borrowings

0

0

0

0

Short term leases

(10,198)

(10,283)

(8,423)

(6,641)

Other

(5,217)

(3,715)

(3,715)

(3,715)

Long Term Liabilities

 

 

(56,528)

(55,918)

(55,174)

(74,461)

Long term borrowings

0

0

0

(20,000)

Long term leases

(52,803)

(51,717)

(50,973)

(50,260)

Other long term liabilities

(3,725)

(4,201)

(4,201)

(4,201)

Net Assets

 

 

46,503

28,089

43,829

17,567

CASH FLOW

Operating Cash Flow

 

 

(34,187)

(37,657)

(29,520)

(32,064)

Net Interest

602

2,287

(1,860)

(1,782)

Tax

0

0

0

0

Capex

(47)

(462)

(485)

(508)

Acquisitions/disposals

0

0

0

0

Financing

45,080

13,272

0

0

Dividends

0

0

0

0

Other

4,561

8,935

5,358

7,170

Net Cash Flow

16,009

(13,625)

(26,506)

(27,183)

Opening net debt/(cash)

 

 

22,147

6,794

20,595

45,241

HP finance leases initiated

(427)

(120)

1,860

1,782

Other

(229)

(56)

(0)

(0)

Closing net debt/(cash)

 

 

6,794

20,595

45,241

70,643

Source: Company accounts, Edison Investment Research. Note: *Transgene recognises value of Tasly Biopharmaceuticals shares as other revenue; in our model we have recognised this as other non-operating income.

General disclaimer and copyright

This report has been commissioned by Transgene and prepared and issued by Edison, in consideration of a fee payable by Transgene. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Transgene and prepared and issued by Edison, in consideration of a fee payable by Transgene. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd who holds an Australian Financial Services Licence (Number: 427484). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Neither this Communication nor any copy (physical or electronic) of it may be (i) taken or transmitted into the United States of America, (ii) distributed, directly or indirectly, in the United States of America or to any US person (within the meaning of regulations Regulation S made under the US Securities Act 1933, as amended), (iii) taken or transmitted into or distributed in Canada, Australia, the Republic of Ireland or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws, (iv) taken or transmitted into or distributed in Japan or to any resident thereof for the purpose of solicitation or subscription or offer for sale of any securities or in the context where the distribution thereof may be construed as such solicitation or offer, or (v) or taken or transmitted into any EEA state other than the United Kingdom. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this Communication in or into other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues