Transgene reported FY18 revenue of €42.9m (FY17: €8.1m). This was driven by the €35.6m sale of TG1050 rights to Tasly Biopharmaceuticals in the form of shares (27.4m). Transgene has sold the Greater China rights for TG6002 and TG1050 to Tasly and holds approximately 2.53% of Tasly Biopharmaceuticals shares. Using these shares as capital, Transgene has secured a €20m revolving credit facility with Natixis (a French corporate and investment bank). The credit facility has a 30-month term, and Transgene will be able to draw and repay the facility at its discretion. Tasly intended to float on the Hong Kong Stock Exchange before year-end 2018. However, this did not occur and we have no visibility on if or when it will. Transgene has a 12-month, post-IPO lock-up on its shares in Tasly.
In additional support of the industrialisation of the myvac platform, the NEOVIVA project was awarded a €5.2m grant from Bpifrance’s ‘Investments for the Future’ programme. Transgene will receive €2.6m of the grant. The NEOVIVA project is across four companies, and aims to develop and validate manufacturing approaches for individualised therapies. The two TG4050 trials will provide proof of concept.
R&D expenses decreased in FY18 to €27.3m (vs €30.4m in FY17) as a result of a reduced IP expense and licensing costs to €0.9m (vs €4.8m in FY17). The increased costs in FY17 were due to a €3.8m milestone payment to SillaJen on enrolment of the first patient in the PHOCUS study. The majority of R&D expenditure continues to be driven by payroll costs (as R&D staff costs are accounted for in R&D expenditure) and external expenses for clinical projects. Payroll costs were €11.2m vs €11.1m in FY17 and external expenses for clinical projects increased slightly to €7.9m (FY17: €7.0m). We forecast that FY19 R&D will decrease slightly to €24.6m as numerous clinical trials were completed or terminated in 2018 (TG4010 in second-line NSCLC, TG1050 in hepatitis B and Pexa-Vec in both breast and solid tumours) and we expected reduced ongoing costs.
G&A costs increased to €7.0m in FY18 from €5.7m in FY17. This was predominately driven by an increase in fees and admin expenses to €2.8m (vs €1.6m in FY17) as a result of the Tasly transaction. We forecast a slight increase in FY19 G&A to €7.1m.
Net interest generated a loss of €2.0m in FY18 (vs €2.3m in FY17). We note accrued interest on the EIB loan (€10m) that was drawn down in June 2016 is repayable in June 2019 with the capital repayable in 2021.
Net profit for FY18 was €8.0m, compared with a €32.3m loss in FY17, as a result of the non-cash gain of €41.4m in FY18 from the allocation of Tasly shares. We forecast a net loss in FY19 of €26.3m.
Cash burn was €24.5m in FY18 (vs €28.1 in FY17) and Transgene expects this to rise in FY20 to between €25m and €30m. Transgene reported cash, cash equivalents and financial assets of €16.9m at 31 December 2018 (compared to €41.4m at 31 December 2018). Our model predicts the full drawdown of the €20m credit facility with Natixis to enable cash reach until mid-2020. In addition, we model illustrative debt of €30m in 2020 to ensure continued operations.