2023-03-29 14:42:04 ET
Medigene AG (MDGEF)
Q4 2022 Earnings Conference Call
March 29, 2023 09:00 ET
Company Participants
Pamela Keck - Head of Investor Relations & Corporate Communications
Selwyn Ho - Chief Executive Officer
Conference Call Participants
Presentation
Operator
Welcome to the Medigene Full Year 2022 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.
I would now like to hand over to your speaker today, Ms. Pamela Keck, Head of IR and Corp Communications. Please go ahead.
Pamela Keck
Welcome, everyone and thank you for joining us. With me today is Dr. Selwyn Ho, CEO of Medigene. Today, we announced financial results for the year ended December 31, 2022. You can access the press release on the Investor Relations page of our website at medigene.com.
Before we get started, let's quickly run through the forward-looking statements. Please note that as part of our discussion today, management will be making forward-looking statements. Also, we believe our expectations are based on reasonable assumptions, by their very nature, forward-looking statements involve risks and uncertainties and may be influenced by factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements made on the call reflect the knowledge and information available at the time of this call. The company undertakes no obligation to update forward-looking statements.
With that, I'll hand the call over to Selwyn.
Selwyn Ho
Thank you, Pamela. Good morning, good afternoon, everyone and thank you for joining Medigene's full year 2022 earnings call. I'm excited to review the past year accomplishments as we continue the transition at Medigene and provide an outlook on all that we expect to achieve in 2023. Since joining the company as CEO in July 2022, I've been working diligently with the team to evaluate our corporate vision and as a result of our work, we released our updated strategy in November of last year. I am proud to call Medigene a platform biotech company, focused on developing differentiated T cell receptor engineered T cell or TCR-T in short, therapies for the treatment of multiple solid tumor indications in patients with high unmet medical needs.
At the heart of our work is our extensive expertise in T cell immunology and many years of development of a proprietary, innovative, end-to-end platform. Medigene's focus is to leverage this platform to build incremental differentiation of our TCR-T therapies at multiple sequential stages of the drug discovery and development process whilst continuously innovating the technologies within the platform.
In the management of cancer, personalized medicines are and will continue to play an increasing role. Immuno-oncology cell therapies, such as TCR-T therapies, are emerging as a novel class of treatments with clinical benefits being consistently demonstrated in treating solid tumors. Despite these advances, unmet needs clearly indicate for further improvements, particularly in sustaining efficacy and with a lower risk of adverse side effects. Our end-to-end technology platform built on these multiple combinable product enhancements and development optimization technologies allows us to identify and develop TCR-T therapies for multiple solid tumor indications that we believe will be optimized for both safety and efficacy. We further believe this platform may allow us to create best-in-class TCR-T therapies ensuring that Medigene has a unique opportunity to make a real impact on the lives of cancer patients.
To date, the robustness of our work has been signed -- well validated through multiple partnerships in which by potentially highly differentiated T cell receptor and novel individual platform technologies have been outlicensed from Medigene to our partners. Clinical validation of our platform also consumed the results of our Phase I trial with MDG1011 in patients with certain blood cancers.
Moving to our platform. As I've mentioned, the basis of our differentiation is our end-to-end platform of multiple, combinable, exclusive and proprietary technologies. These technologies enable both the potential enhancement of our TCR-T drug products from a safety and/or efficacy perspective, such as with our PD1-41BB Switch Receptor, as well as the optimization of our development processes across the stages of drug discovery and development.
2022 is clearly a transformational year for Medigene. We announced the strategic update that involved the shift of our pipeline focus from liquid to solid tumors, expanding our in-house pipeline and accelerating the development of our lead candidates. We were thrilled to welcome BioNTech as our new global strategic partner and received a milestone payment from one of our existing partners, 2seventy bio related to the MAGE-A4 target license to 2seventy bio. In addition, we continue to expand our patent portfolio which now consists of 57 issued and 94 pending patents across both our assets and technologies within our end-to-end platform.
Throughout 2022 and into the start to 2023, we continued to strengthen the executive leadership team with the addition of James Cornicelli, Pamela Keck and Kirsty Crame to the company. James as our Head of Corporate Development and Strategy, brings over 20 years of experience in business development and strategy advisory. His knowledge and insight will be invaluable as we navigate critical decisions around partnerships and consider an ambitious growth strategy.
Pamela is a highly experienced investor relations at a Corporate Communications professional, who brings over 15 years of expertise to her role as Head of Investor Relations and Corporate Communications. She is responsible for developing and executing an effective investor relations program to attract and diversify our shareholder base, as well as enhancing our communications with existing shareholders.
Kirsty, our newly appointed Head of Clinical Research and Development now completes the team and leads our clinical development activities. She brings more than 10 years of experience in drug development and clinical operations, focusing primarily in immuno-oncology and its cell therapy development.
Moving to our pipeline. MDG1015 is our lead internal solid tumor program and is being advanced through a Phase 1 clinic -- towards a Phase 1 clinical trial and is currently undergoing Investigational New Drug or IND and Clinical Trial Application or CTA enabling experiments with the aim of having the IND/CTA approved in the second half of 2024. As a reminder, MDG1015 is a third-generation TCR-T therapy that combines a novel optimal affinity TCR in terms of sensitivity, specificity and safety targeted against NY-ESO-1, a well-characterized and validated cancer antigen expressed in multiple tumor types that is further provided with a key product enhancement technology.
Our PD1-41BB Switch Receptor which has the potential to significantly improve the ability of our TCR-T cells to kill cancer cells on a sustained basis. This program is unique and that is the only NY-ESO-1 directed TCR-T therapy with this PD1-41BB enhancement technology. And has the potential for more targeted, safer and potent immune response while overcoming the highly immunosuppressive tumor microenvironment in comparison to other NY-ESO-1 programs that have been deprioritized by competitors.
Our second recently announced TCR-T therapy program in solid tumors, MDG10xx is being developed to get several as yet undisclosed targets and involving multiple HLAs. Again, in combination with the PD1-41BB Switch Receptor technology. We plan to announce the first lead within this program in the second half of this year. As previously announced, we have successfully completed our Phase I MDG1011 program in patients with blood cancers such as acute myeloid leukemia, myelodysplastic syndrome and multiple myeloma. The MDG1011 trial provides clear clinical validation of our ability to generate and manufacture TCR-T therapies. Based on these manufacturing capabilities were presented at the CAR-TCR Summit in London in February of this year.
Despite the positive data generated for MDG1011, we have made the strategic decision to focus any further research and development efforts to more solid tumors and are exploring the potential to partner out MDG1011. Moving specifically now into partnerships. To date, we have partnered a number of assets with BioNTech, 2seventy bio, formerly known as Bluebird bio and Hongsheng Sciences, formerly known as Roivant Cytovant. And the table presented here summarizes those partnerships with potential value of the triple-digit millions from milestone, auction and royalty payments.
In February of 2022, we signed a global strategic partnership with BioNTech to advance TCR-based immunotherapy cell cancer. Under the terms of the agreement, Medigene received an upfront payment of €26 million and will be reimbursed for the research and development costs incurred for the period of the collaboration. Medigene contributes its proprietary TCR discovery platform for the development of TCRs against multiple solid tumor targets nominated by BioNTech and will also be responsible for global development and hold exclusive worldwide commercialization rights on all TCR therapies resulting from this research collaboration.
BioNTech acquired Medigene's TCR-4 of the original MDG10xx program targeting the cancer antigen frame. BioNTech also obtained exclusive option to acquire additional existing TCRs in Medigene's discovery pipeline and received licenses to Medigene's PD1-41BB Switch Receptor and precision pairing library technologies. Both of these have the potential to augment TCR cell therapy efficacy and they apply to all of BioNTech's cell therapy programs. Upon achievement of contractually defined targets, Medigene will be eligible to receive development, regulatory and commercial milestone payments up to a triple-digit million euro amount per program.
In addition, the company will receive tiered deferred option payments on global net sales for products based on TCRs arising from the collaboration and royalties on products utilizing at least one of the license technology. Our partnership with 2seventy bio concluded in June of 2022 in accordance with the contract. Upon achievement of contractually defined targets, Medigene remained eligible for milestone payments and royalties from 2seventy bio as per the existing agreement. In December of 2022, a strategic partnership between 2seventy bio and JW Therapeutics was announced that include the plan for the advancement of the MAGE-A4 TCR licensed from Medigene into a Phase I clinical trial in China. This triggered a US$3 million payment from 2seventy bio which we received in January of this year.
As previously announced, Hongsheng Sciences has temporarily suspended its development activities within the Medigene partnership until new funding is available to them. We are currently monitoring events closely and we'll announce any updates in due course. We remain committed to exploring new partnership opportunities to maximize the value of our current and future assets and technologies and ultimately deliver novel and differentiated TCR-T therapies for patients and hope to provide further updates during the course of 2023.
I will now go through the financials for the full year 2022. Our 2022 revenue consisted of revenues from the existing partnerships with 2seventy bio, Hongsheng Sciences and the new partnership with BioNTech. Revenue for the year ended December 31, 2022, approximately tripled to €31.3 million compared to €10.5 million in the previous year. The increase was as a result of the comprehensive TCR-T and technology partnership previously described with BioNTech, as well as a milestone payment received from 2seventy bio.
Revenue recognized includes income from service contracts with development partners, pro-rata revenue recognition from upfront payments received in the past as well as the 2seventy bio milestone payment.
General and administrative expenses were approximately €7.7 million in the 2022 financial year compared to €6.2 million in the prior year. This 25% increase was mainly due to higher personnel expenses and consulting costs. In addition, some of the expenses for Executive Board compensation were reported under G&A, general and administrative expenses, whereas in previous years they were reported under R&D expenses.
Moving to R&D expenses. This increased from €12.8 million in 2021 to €28.5 million in 2022. The significant increase is mainly due to depreciation related to the full impairment of the drug candidate RhuDex which was outlicensed to Dr. Falk Pharma in the amount of €20.4 million. This is attributable to the results of a clinical trial for primary biliary cirrhosis, or PBC as the efficacy of the drug candidate, RhuDex was not able to be demonstrated. In the previous year, the impairment loss on RhuDex amounted to €1.5 million.
Cash and cash equivalents amounted to €22.2 million at the end of '22 compared to €22.4 million at the end of 2021. Based on current planning which includes the actual payment of €26 million received under the new partnership with BioNTech as well as the €3 million milestone payment from 2seventy bio, Medigene's financed into the fourth quarter of 2024.
The 2023 financial guidance reflects the company's focus and progress in its core immunotherapy business. Not included in these projections are potential future milestone payments from existing or future partnerships or transactions as the occurrence of such payments or their timing and size largely depend on external stakeholders. As such, Medigene is not able to reliably forecast such event.
Medigene expects revenue in 2023 to be between €5 million and €7 million. The company expects R&D cost to range from €13 million to €16 million. Please note that EBITDA as a result of the aforementioned key performance indicators, revenue and R&D costs, will not be pursued as a performance indicator in the future. Instead, cash balance liquidity of Medigene will be used as a key performance and management indicator starting in the fiscal year 2023. This is described as cash and cash equivalents and fixed term deposits and expressed as the cash reached in the planning period. Again, based on current planning, the company is funded until the fourth quarter of 2024.
Looking ahead to 2033, we are focused on executing in 4 key areas. Firstly, we will advance our Medigene-owned propriety pipeline into clinical trial stage by accelerating and prioritizing our research activity for MDG1015, with the next milestone expected to be CTA/IND approval in the second half of 2024. And so MDG10xx with the first target lead selection expected in the second half of 2023. We've already made significant progress on both programs and we recently announced that the very first presentation of MDG1015 preclinical data will be shared at the American Academy of Cancer Research or AACR in April 2023.
For future discovery stage programs, our teams are also investigating additional novel antigen targets. Currently, all our programs are [indiscernible] in nature but we will continue to explore the potential for allogeneic therapy. Secondly, we continue to expand our collaborative approach to R&D, maximizing our existing partnerships and evaluating new partnerships for our technology and assets. Our collaboration with BioNTech signed in February of last year has made good progress to date. As mentioned earlier, BioNTech licensed by the existing TCR assets and T technologies such as the precision pairing tool and the PD1-41BB Switch Receptor and has additional purchase options on several future characterized TCRs which we continue to work on with BioNTech.
These partnerships provided important scientific validation of our technology and assets. As these programs move into clinical development, they will also provide further clinical proof-of-concept alongside Medigene-owned programs. Thirdly, with a few partnerships, license agreements or internal development, we will continue to innovate and expand our end-to-end platform to generate additional value for new development optimization and new product enhancement technology. Again, we have made significant progress here and hope to be able to announce updates to our proprietary technologies in 2023.
Finally, with respect to our financial position and as mentioned before, I'm pleased to confirm that we have a strong cash runway until the fourth quarter of 2024. We are confident that our partnerships will continue to progress thus generating additional milestone payments and revenues which will support continued investment in an R&D strategy.
Despite the strong position, biotechnology is a capital-intensive industry and we wish to be fully prepared to raise additional capital to expand our cash rate into 2025 and beyond. As such, we continue to manage expenses prudently, while exploring financing opportunities. We aim to be ready to execute the capital raise, allowing us to have sufficient capital to fully achieve our medium- to long-term corporate objective.
In summary, the fiscal year 2022 has certainly been transformational for Medigene. We remain fully on track in the first 2 months of 2023 on the successful execution of our updated strategy and the delivery against our vision to develop differentiated, best-in-class TCR-T therapies for patients with solid tumors.
Thank you, everyone and this marks the end of today's prepared remarks. At this time, I'd like to open up the call for questions.
Question-and-Answer Session
Operator
Pamela Keck
Thank you, Catherine. Thank you, everyone, for your time and for joining us for today's call. And this marks the end of this call.
Thank you very much until next time.
Operator
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.
For further details see:
Medigene AG (MDGEF) Q4 2022 Earnings Call Transcript