Medigene AG (FSE: MDG1), a biotechnology company specializing in T cell receptor engineered T cell therapies (TCR-T therapies) for solid tumors, has disclosed its financial outcomes for the year ending December 31, 2023. The company has announced the advancement of its lead TCR-T therapy program, MDG1015, towards a first-in-human clinical trial, with anticipated Investigational New Drug (IND)/Clinical Trial Application (CTA) approval in the second half of 2024.
Despite a decrease in revenue and an increase in net loss for the year, Medigene has extended its cash runway into April 2025 and is actively seeking additional capital to further extend it. The company’s partnerships, particularly with BioNTech (NASDAQ:BNTX) and 2seventy bio, are progressing, with milestone payments expected from ongoing trials. Medigene has also entered into a cooperative research and development agreement with the United States National Cancer Institute.
Key Takeaways
- Medigene AG focuses on TCR-T therapies for solid tumors, with MDG1015 leading towards clinical trials.
- Revenue for 2023 was €6 million, an 81% decrease from 2022, with a net loss of €16.2 million.
- Cash and cash equivalents stood at €8.7 million, with a cash runway extended to April 2025.
- Partnerships with BioNTech and 2seventy bio are advancing, with milestone payments expected.
- The company plans to present further scientific data at conferences in 2024 and seeks new partnerships.
Company Outlook
- IND/CTA approval for MDG1015 expected in H2 2024, with clinical trial initiation by year-end, subject to successful financing.
- Revenue in 2024 projected to be between €9 million and €11 million, with R&D costs of €11 million to €13 million.
- Medigene is exploring financing options to extend the cash runway into 2026 and beyond.
Bearish Highlights
- Revenue declined significantly by 81% compared to the previous year.
- The company experienced a substantial net loss of €16.2 million in 2023.
- Medigene terminated its partnership with Hongsheng Sciences for the NY-ESO-1 targeted TCR.
Bullish Highlights
- Positive preclinical data presented for MDG2011, targeting KRAS G12V HLA-A11.
- Progression of other KRAS programs, MDG2021 and MDG2012, towards IND/CTA enabling work.
- Strategic partnership milestones, including a $3 million payment from 2seventy bio's agreement with JW Therapeutics.
Misses
- Lack of interest from potential partners led to the discontinuation of active partnering for MDG1011.
Q&A Highlights
- Discussions on the advancement of lead program MDG1015 and KRAS programs.
- Exploration of new partnerships and financing opportunities to support R&D and extend cash runway.
- Confirmation of the company's strategic focus on developing TCR-based therapies for solid tumors.
Medigene AG remains committed to its strategy of advancing TCR-T therapies, with a focus on MDG1015 and its KRAS-targeted programs. The company's financial situation, while challenging, is supported by strategic partnerships and a clear vision for future clinical trials and scientific presentations. Medigene's executive team is actively exploring opportunities to secure the company's long-term financial health and to continue its mission of bringing innovative cancer treatments to patients.
Full transcript - None (MDGEF) Q1 2023:
Operator: Ladies and gentlemen, welcome to the Medigene AG Full Year 2023 Earnings Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions] At this time, it's my pleasure to hand over to Pamela Keck. 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, 2023. 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 a 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 that 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 2023 earnings call. I look forward to reflecting on the past year and its achievements as we continue Medigene's journey and as we look ahead to all that we aim to achieve in 2024. Cancer remains a leading cause of death worldwide. Over the past decades, cancer research efforts have contributed to major breakthroughs, arguably most notably in immunotherapy, impacting patients lives in a profoundly positive manner. Despite these advancements, significant challenges remain, in particular regarding treatment options for patients with solid tumors. Cell therapies, such as T cell receptor engineered T cell therapies, or TCR-T therapies for short, represent one of a few promising treatments with the potential for a curative therapy for solid cancers. At Medigene, our work starts with a patient in mind. With our comprehensive expertise in T cell immunology, specifically TCR-based therapies, and decades of research and development of our own innovative end-to-end platform, we aim to unlock the immune system's potential to achieve curative therapies for patients with solid tumors. MediGene’s proprietary end-to-end platform provides a differentiated approach to addressing the key challenges in developing effective, safe and durable TCR-T therapies and thus ultimately advancing cancer patient outcomes. Starting with ensuring treatments target the cancer optimally, our technologies allow for the engineering of optimal affinity specific, sensitive and safe, or so called three S, T cell receptors or TCRs, for improved safety and efficacy. Secondly, solid tumors have a high immunosuppressive tumor microenvironment that significantly inhibit the body's T cells to destroy cancer cells. Our armouring and enhancement technologies such as our exclusive PD1-41BB costimulatory switch protein or CSP, enhances the activity and persistence of the TCR-T cells in the hospital tumor microenvironment, resulting in better efficacy and sustained anti-cancer immune responses. Finally, cellular therapies are living treatments and are highly complex to produce the optimal product. Our drug composition has been developed over many decades and is tailored to an accelerated, automated manufacturing process which reduces time to treatment in patients and generates the optimal cell composition of our TCRT therapy to improve clinical efficacy, safety and durability of the treatment. Taking a closer look at our end-to-end platform, this is the basis of our differentiated approach and combines multiple, exclusive and proprietary technologies to create best-in-class differentiated TCRT therapies in specific development modules. The platform includes multiple safety focused technologies, here in green; efficacy enhancing technologies, in orange; and development optimization technologies, designed to make development process more efficient, higher quality, cheaper and faster, in grey. Examples of such technologies across each of our module include TCR generation and optimization technologies such as the Allogeneic-HLA or Allo-HLA, TCR Priming as well as precision pairing and TCR-T therapy armouring and enhancement technologies such as our PD1-41BB, and CD40L-CD28 costimulatory switch protein and our inducible MediGene T cell receptor to address challenges in developing effective, durable and safe TCR-T therapies. Our platform is dynamic and constantly being expanded with new intellectual property and technologies. And our partnerships with multiple companies including BioNTech and 2seventy bio continue to validate the platform's value. Reflecting on our achievements in 2023, I would like to mention how proud I am of all my colleagues at Medigene and the execution and delivery of all our commitments. Over the past year, we have prioritized the programs that we believe will create the most value for patients and shareholders, with significant progress in further developing our end-to-end platform and advancing our product pipeline. In terms of platform innovation, we have significantly advanced our E2E platform. We've been able to improve clinical efficacy, safety and durability of our drug product with our accelerated six-day automated GMP manufacturing. This includes the quick drug product generation with high proportion of CD8-positive cells. We also acquired the exclusive license for the CD40 ligand CD28 costimulatory switch protein which expands our suite of product enhancement technologies within our platform and joins our existing PD1-41BB costimulatory switch protein. As a technology that has the potential to further enhance the antitumor activity of our TCR-T cells and improve their ability to overcome the immunosuppressive solid tumor microenvironment. Additionally, we added the next-generation of the expected safety screening tool. Antigen selection and assessment of on and off-target specificity is a major challenge in generation of TCR-T therapies. To make such selections and reduce off-target toxicity, the identification of suitable epitopes is the first and most critical step for creation of our best-in-class TCR-T therapies. The advantage of our E2E platform allowed us to extend and strengthen our patent portfolio with new technologies to expand existing patents into additional jurisdictions such as our costimulatory switch proteins for use in multiple cell types as well as their geographical expansion. As of December 31, 2023, our IP portfolio consists of 112 issued and 131 pending patents. In 2023, we also made progress on expanding our platform into new TCR-based modalities and more on that later in the presentation. In terms of our pipeline expansion advancements, for our lead program MDG1015 is our third-generation NY-ESO TCR combined with PD1-41BB. Here, we made substantial progress advancing this towards a first-in-human clinical trial. We have selected the CDMO or contract development and manufacturing organization, AGC Therapeutics and CRO or clinical research organization and that we will work with as we look to bring our lead program into the clinic. Additionally, we have positive interactions with regulatory authorities in both the U.S. and Europe. We remain on track for submitting an investigational new drug application to the FDA and the clinical trial application or CTA to the European Medicines Agency, EMA for this program with the plans and to the clinic at the end of 2024 subject to financing. Importantly, we recently announced that we aim to recruit patients with synovial sarcoma, myxoid/round cell liposarcoma, ovarian cancer and gastric cancer as part of our first Phase 1 clinical trial, thus targeting both rare tumors as well as those which are more commonly seen. In addition, we successfully broadened our pipeline into neoantigens, which are oncogenic driving mutations that alone are sufficient to initiate and maintain cancer, with KRAS as one of the most frequent neoantigens in solid cancers. As part of our lead program MDG2011, which is a KRAS G12V specific T cell receptor targeting HLA-A*11. This is combined with our PD1-41BB costimulatory switch protein and we generated three outstanding T cell receptors, all of them exceeding the company’s selection criteria for highly specific, sensitive and safe TCRs. We were then able to select one of these TCRs as a lead to advanced to the preclinical stage. Our follow-on KRAS programs MDG2021, MDG2012 and MDG20XX, enables us to offer multiple TCR candidates and to potentially provide products for a much larger patient population with a variety of KRAS neoantigens and human leukocyte antigens in diverse solid cancers. This is our library approach. In partnering to support the development of our research projects, we have established a partnership network of both biotechs and renowned academic bodies. In 2023, we entered into a joint collaboration with the U.S. National Cancer Institute to assess the potential of Medigene’s proprietary T cell receptors producing new cell constructs in the treatment of solid tumors. Our existing partnerships with BioNTech and 2seventy bio are progressing well, with a number of undisclosed targets on the go with BioNTech currently. We received a milestone payment from 2seventy bio related to the MAGE-A4 target license to them. We extended a licensing for our costimulatory switch proteins PD1-41BB and CD40L-CD28 for use in additional cell types and in chimeric antigen receptor T cells or CAR T therapies, broadening the application scope of our innovative technologies in immuno-oncology as well as expanding our IP portfolio. Finally, on a corporate basis, we extended our cash runway through efficiencies in our cash spend and portfolio prioritization and expanded our research coverage from investment banks. We also continue to strengthen the executive leadership team to support the execution of our corporate strategy. Coming to our pipeline. MDG1015 is our lead program, following recent positive EU and U.S. preliminary regulatory interactions, we remain on track for an IND/CTA approval in the second half of 2024. Subject to financing, we expect to initiate a first-in-human trial for MDG1015 by the end of 2024, targeting patients with multiple solid tumors, including gastric and ovarian cancer and synovial sarcoma or myxoid/round cell liposarcoma. Our second TCR-T therapy program is MDG2011, a best-in-class third generation TCR-T therapy targeting KRAS G12V HLA-A11, again armored and enhanced by the PD1-41BB costimulatory protein. Encouraging first preclinical data on MDG2011 was presented at the ESMO Congress in 2023 as well as the SITC Annual Meeting in 2023. Lead selection for MDG2011 was announced in the third quarter of last year. We will progress the remainder of our announced KRAS program, namely MDG2021 and MDG2012, towards IND/CTA enabling work and lead selection, respectively, over the next 18 to 24 months. Consistent with our previously announced strategic pivot in November 2022 away from hematologic cancers to focus on solid tumors, the company has evaluated the possibility for partnering MDG1011 with interested parties. A lack of interest from potential partners to drive the program forward indicates that the competitive landscape has changed. We have therefore decided to discontinue the active partnering of MDG1011. As mentioned previously, our partnerships with BioNTech and 2seventy bio for the MAGE-A4 and PRAME TCRs we have licensed respectively, continue to progress well and provide crucial scientific validation of MediGene's technology and assets. As these partner programs move into clinical development, they will further provide clinical proof-of-concept alongside MediGene's owned programs. Coming on to partnerships and from our biopharma partnerships, with BioNTech since the commencement of the agreement in February 2022, this has been making great progress, with work progressing now on multiple potential targets. For 2seventy bio as previously communicated, the research terms for our partnership was concluded in accordance with the contract in 2022. Upon achievement of contractually defined targets, we remain eligible for milestone payments and royalties as per the existing agreement. To that end, in December 2022, 2seventy bio announced a strategic partnership with JW Therapeutics, which triggered a $3 million milestone payment from 2seventy bio. The payment was booked in 2022 and received in January of 2023. In November 2023, 2seventy bio announced the initiation of an investigator initiated study in China of 2seventy bio’s MAGE-A4 T cell receptor program in solid tumors, and this was anticipated by the end of 2023. The trial is led by 2seventy bio’s partner in China, JW Therapeutics and MediGene expects to receive further milestone payments based on the successful conduct of this trial. Separately, 2seventy bio recently announced it will focus exclusively on the commercialization and development of ABECMA in partnership with Bristol Myers (NYSE:BMY) Squibb, and as a result, it will sell the research and development pipeline, clinical manufacturing and platform technologies in oncology and autoimmune disease, which includes MediGene MAGE-A4 TCR, to Regeneron (NASDAQ:REGN) Pharmaceuticals to form the Regeneron Cell Medicines business. The transaction is expected to close in the first half of 2024, subject to certain closing conditions. As previously communicated, due to the prolonged funding and development pause by Hongsheng Sciences that included MediGene’s NY-ESO-1 targeted TCR, the parties mutually agreed to terminate that partnership agreement as it relates to the NY-ESO-1 asset in the third quarter of 2023. Subsequent to the end of the reporting period, MediGene and Hongsheng Sciences have mutually agreed to terminate the remaining framework agreement of that partnership. Those assets previously under this agreement have been returned to MediGene for potential expansion into our pipeline. In April 2023, MediGene enters into a cooperative research and development agreement, or CRADA, with the United States National Cancer Institute, headquartered in Bethesda, Maryland, to evaluate the use of MediGene’s proprietary T cell receptors in novel cell constructs. Through this collaboration, the company expects to expand the range of tools and technologies in its E2E Platform and expects that this could lead to opportunities to use multiple immune cell types, in addition to MediGene’s current work with T cells. The development of our research projects is also supported by our long standing partnerships with academic institutions, notably the Helmholtz Munich and the Technical University in Munich. As innovation remains a lifeblood of both big farmers and biotechs, we remain very active in developing new partnership opportunities to maximize the value of our current and future assets and technologies and Ultimo [ph] deliver novel and differentiate TCR beta therapies to patients and hope to provide further updates during the course of 2024. I will now go over the financial data for 2023. Our 2023 revenue consists of income from service contracts with partner companies. Pro rata revenue recognition from upfront payments received in the past, as well as milestone payments. Revenues amounted to €6 million, a decrease of 81% compared to €31.2 million in 2022. The decrease in 2023 is due to the comprehensive TCR-T and technology partnership with BioNtech concluded in February 2022, as a result of which, €20.9 million in product revenues were generated in 2022. In addition, revenues from the partnerships with 2seventy bio and Hongsheng Sciences were also generated in 2022. The cost of sales in 2023 amounted to €1.6 million, a 14% decrease compared to approximately €2 million in 2022. The cost of sales included expenses incurred to generate sales revenue, and this mainly relates to research and development activities for our partner companies. General and administrative or G&A expenses were €9.3 million in 2023 compared to €7.7 million in the prior year. This 21% increase was mainly due to higher personal expenses as we supported our strategic efforts to advance all our scientific and partnering activities. Research and development or R&D expenses decreased by 59% to €11.5 million compared to €28.5 million in 2022, despite the increased work associated with new preclinical development activities. The significant decrease in 2023 was mainly due to depreciation related to the full impairment of the drug candidate RhuDex, which was out licensed to Dr. Falk Pharma in the amount of €20.4 million in 2022. R&D expenses incurred in the collaborations with partner companies were reimbursed by the companies. These reimbursements are recognized as R&D payments in the immunotherapies revenue. The company's EBITDA decreased by €28.2 million from €13.1 million in 2022 to negative €14.7 million due to the product sale in the previous year as part of the partnership BioNTech. The net loss for fiscal 2023 increased to €16.2 million compared to €8.3 million in 2022. This increase is due to the prescribed partnership with BioNTech in February 2022 and associated revenues. Cash and cash equivalents amounted to €8.7 million as well as time deposits in the amount of €8 million, totaling €16.7 million as of December 31, 2023. In comparison, €33.2 million as of December 31, 2022, with a cash runway extended into April 2025 previously first quarter of 2025. Based on these results, I'm pleased to report that we have met our financial guidance. As previously communicated, the group's revenue as well as R&D costs are the key performance indicators, as Medigene's core activities are related to R&D. In addition, liquidity of the group and of Medigene AG is used as a key performance and management indicator. Liquidity is described as cash and cash equivalents and fixed term deposits and is expressed as a cash reach in the planning period. This leads me now to our 2024 financial guidance. The 2024 financial projections include potential future milestone payments from existing partnerships that are highly likely to materialize in the amount of US$1 million and €2 million, respectively. They do not include potential milestone payments from our future or new partnerships or transactions, as the occurrence of such payments or the timing and size largely depend on third parties and cannot be controlled or influenced by Medigene. As such, the 2024 financial guidance reflects the company's focus and progress in its core immunotherapies business. Based on the above assumptions, Medigene expects revenue in 2024 to be between €9 million and €11 million. The company expects R&D costs ranging from €11 million to €13 million. And as already mentioned, based on current planning, the company is funded into April 2025. The basis of our non-financial outlook 2024 and beyond which you might be familiar with, involves the expansion of our focus into the potential for new TCR based treatment modalities. This leads us to our corporate vision. At the core of our expertise and capabilities is our ability to generate optimal TCRs validated by our numerous partnerships. Underpinning this ability to generate potentially best-in-class TCRs is our decades of experience in immunology, T Cell biology and cancer biology, which manifests in our proprietary end-to-end platform. As such, as we continue to generate these optimal TCRs, we aim to leverage these and apply these into new modalities beyond TCR T Cell therapies, where additional value could be created for patients and our shareholders. Firstly, based on the significant interest in the role that TCR derived off-the-shelf therapies, we'd be aiming to apply our T Cell receptors in the form of antibody based T Cell engages, or TCE and allogeneic TCR-Natural Killer cells or TCR NK cells, which both have a key advantage of being available to patients without long manufacturing time. We believe that by integrating optimal best-in-class TCRs within these new modalities we could create highly differentiated therapies for patients. This is a short-to-medium term aim and we look forward to being able to update you on progress in these new areas. In terms of our TCR T Cell therapies to be clear we remain fully committed to TCR T Cell therapies as part of the range of potential therapies for patients and focused in advancing our lead program MDG1015 towards the clinic. As mentioned, MDG1015 will be advanced towards first-in-human clinical trials with IND/CTA approval expected in the second half of 2024. Subject to successful financing we expect to be able to initiate a first-in-human trial for MDG1015 by the end of 2024. We are also progressing our announced KRAS programs, which will be supported with further scientific data and presented at upcoming scientific conferences in 2024. We will continue to extend our collaborative approach to R&D, maximizing our existing partnerships and evaluating new partnerships for our technology and assets. Whether through partnerships, licensing agreements or internal development, we will continue to innovate and expand our end-to-end platform to generate additional value from new technologies. Again, we have made significant progress here and hope to be able to announce updates to our proprietary technologies throughout 2024. Finally, with respect to our financial position, and as mentioned before, I'm pleased to confirm that we have extended our cash runway into April 2025. We are confident that our current partnerships will continue to progress and that with our expanded approach to TCR based therapies, that new partnerships will be forged with the potential to support continued investment in our research and development strategy. Despite this strong position, biotechnology is a capital intensive industry and we wish to be fully prepared to raise additional capital to extend our cash runway into 2026 and beyond. As such, we continue to manage expenses prudently while exploring financing opportunities. We aim to be ready to execute a capital raise, allowing us to have sufficient capital to fully achieve our medium to long-term corporate objectives. So, in summary, the fiscal year 2023 has been incredibly successful for Medigene. We remain fully on track in the first few months of 2024 on the successful execution and expansion of our strategy and the delivery against our vision to develop differentiated best-in-class TCR-T and more broadly speaking, TCR-based 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.
Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Joseph Pantginis from H.C. Wainwright. Please go ahead.
Sara Nik: Hi, this is Sarah on for Joe. Thanks for taking the question. We were just wondering regarding the end of the MDG1015 trial. I know it's not slated to start till the end of the year, but do you have any insights into, I guess, guidelines for any initial data readouts we could expect from that study? Would you be looking for like an interim readout that we could expect? Maybe early 2025? Thank you.
Selwyn Ho: Thanks for the question Sarah. Selwyn here, our base assumptions is again subject to financing and starting the trial as planned by the end of this year, that we would have an interim data readout towards the end of 2025.
Sara Nik: Okay, thank you.
Operator: [Operator Instructions] So far we have no further questions. I would like to turn the conference back over to Pamela Keck for any closing remarks.
Pamela Keck: Thank you so much, operator. Thank you, everyone, for your time today. And I guess I'll send you all off into a Happy Easter weekend. Thank you so much.
Selwyn Ho: Thank you
Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
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