Medigene AG (FSE: MDG1), a biotechnology company specializing in T cell receptor (TCR) therapies for cancer treatment, has reported a 45% revenue increase in the first half of 2024, with earnings of €4.5 million. The company has made significant advancements in its TCR-T programs, including the lead program MDG1015, which is on track for regulatory submissions to the FDA and EMA in the latter half of 2024. Medigene also announced a partnership with WuXi Biologics (HK:2269) to develop therapies targeting solid tumors and has extended its cash runway to July 2025 following an oversubscribed capital raise.
Key Takeaways
- Medigene AG reported a significant revenue increase to €4.5 million in H1 2024.
- The company's lead TCR-T program, MDG1015, is set for FDA and EMA submissions in Q3 and Q4 2024, respectively.
- A partnership with WuXi Biologics aims to co-develop TCR-TCEs targeting solid tumors, with a proof of principle study expected by end of 2025.
- Existing partnerships with BioNTech (NASDAQ:BNTX) and Regeneron (NASDAQ:REGN) are providing validation for Medigene's technology.
- The company successfully completed a capital raise, extending its financial runway to mid-2025.
Company Outlook
- Medigene anticipates revenues between €9 million and €11 million for the full year of 2024.
- The company is seeking additional financing to support its ongoing activities.
- A strategic focus on developing differentiated TCR-guided therapies for solid tumors and expanding partnerships is central to Medigene's strategy.
Bearish Highlights
- Despite revenue growth, Medigene is still in the process of seeking additional financing to support its research and development activities.
- The company has had to implement cost-saving measures, including reducing pipeline programs and controlling R&D and G&A costs.
Bullish Highlights
- Medigene's revenue growth and successful capital raise reflect investor confidence and a strong financial position.
- The company's robust patent portfolio and academic partnerships are expected to support its research projects effectively.
- Progress with the KRAS program and plans to advance MDG2021 towards lead selection and IND/CTA-enabling work over the next two years.
Misses
- There were no specific financial misses reported in the earnings call. However, the company's need for additional financing indicates that it is not yet self-sustaining.
Q&A Highlights
- Management discussed potential milestones, including a $1 million milestone and a €2 million milestone expected this year and in 2025.
- The team emphasized the importance of delivering clinical data to validate Medigene's platform and its differentiation in the market.
Medigene AG's earnings call highlighted the company's progress and future plans in the development of TCR therapies. With a clear strategic focus on precision immunotherapies and solid partnerships, Medigene aims to continue its growth trajectory and deliver innovative treatments for cancer patients. The company's management team, comprised of biotech specialists with extensive experience, is committed to advancing TCR-T therapies and TCR-guided modalities into the clinic while maintaining financial discipline through cost-saving measures and seeking additional funding. Investors and stakeholders can look forward to further updates as Medigene works towards achieving its milestones and solidifying its position in the biotechnology industry.
Full transcript - None (MDGEF) Q2 2024:
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Medigene AG Half Year 2024 Earnings Call and Live Webcast. [Operator Instructions] The conference must not be recorded for publication. 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 6 months ended June 30, 2024. You can access the press release on the Investor Relations page on 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. Although 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, afternoon, everyone, and thank you for joining Medigene's Half Year 2024 Earnings Call. I look forward to reflecting on our achievements from the past 6 months and our plans going forward. Over the past decades, research into the quarters and treatment of cancer have contributed to major breakthroughs with important reductions in patient mortality. However, despite these advancements, significant challenges remain, particularly for solid tumors, and new precision immunotherapies and treatment modalities are still needed to further improve survival and patient quality of life. At Medigene, our work starts with the patient in mind to deliver highly efficacious, safe and durable therapies and with a vision to unlock the immune system's potential to treat and cure cancer. Our focus and expertise is in generating extraordinary T cell receptors, or TCRs for short, for use in multiple different modalities of first-in-class and best-in-class TCR-guided precision immunotherapies. The basis of these TCRs and TCR-guided therapies is our proprietary End-to-End Platform. Before we discuss the first half of 2024 and the significant progress we have made, it would be remiss of me if I did not mention that this month marked a major milestone for the potential of TCR-T cell therapies with the FDA approval of the very first TCR-T therapy for the treatment of a rare solid tumor. This approval is a huge step forward for the company involved, Adaptimmune, the entire immuno-oncology sector and, above all, for patients with solid tumors. And we congratulate all the researchers, physicians, health care specialists and patients involved in making this happen. This approval also clearly paves the way for further innovation with the next generation of TCR-T therapies, which will be designed for greater efficacy, safety and further durability. For Medigene, with our lead TCR-T program, MDG1015, we now have a clear benchmark against which to measure ourselves with the goal of developing the best possible therapeutic options for solid tumors. Overall, the first 6 months of 2024 was relatively stable for the biotech-focused capital markets, following the rally at the end of 2023. However, access to public capital in the equity markets remained very challenging, with a number of publicly listed biotech companies unable to fully finance their operations. However, at Medigene, with the successful completion of an oversubscribed capital raise, we've been able to focus on our core strategy and meet all our targets and commitments. In terms of our End-to-End Platform, we continually expanded this, and I'd like to highlight the addition of our UniTope & TraCR combination technology for high-precision TCR tracking. This technology uniquely tags the TCR and exactly tracks its location, allowing precise evaluation and localization of a TCR-guided cell therapy, whether the study is in vitro or in patients and provides insights into cell therapy efficacy, safety and the mechanism of action. We've had several data presentations in the first half of 2024, and the totality of these presentations across MDG1015 and MDG2011 continue to demonstrate the three key solutions and resulting benefits that Medigene is providing that address the major challenges for optimizing TCR-T therapy. Firstly, the importance of having an extraordinary specific, sensitive and safe so-called 3S TCR as a starting material for any TCR-T cell or any TCR-guided therapy. Secondly, overcoming the immunosuppressive tumor microenvironment, or TME, to ensure superior T cell functionality in tumor cell killing as well as a favorable safety profile of TCR-T cells through armory and enhancing with our PD1-41BB costimulatory switch protein, or CSP. And thirdly, the importance of optimizing cell therapy drug product composition to enable short, efficient 6-day production process, which leads to younger, fitter cells and results in very high proportions of T cells with stem-like qualities, leading to longer cell durability and marked reductions in the overall vein-to-vein duration for patients for less than 3 weeks. Finally, with the advancement of our End-to-End Platform has been an expansion of our patent portfolio. As of June 30, 2024, the patent portfolio consisted of 97 issued patents and 124 pending patent applications. In terms of our pipeline, we have advanced this in TCR-T cell therapies and expanded the use of our extraordinary TCRs into new TCR-guided treatment beyond TCR-T cell therapies, such as TCR-guided T cell engagers, or TCR-TCEs for short, that could further complement our existing cell therapies and further address the unmet needs in treating solid tumors. Our TCR-T cell therapies are advancing well and our lead program, MDG1015, a third-generation NY-ESO-1 LAGE-1a-targeted T cell receptor, combined with our PD1-41BB costimulatory switch protein is near clinic and remains on track for submitting an investigational new drug IND application to the FDA in the third quarter 2024; and a clinical trial application, or CTA, to the European Medicines Agency, or EMA, in the fourth quarter of this year with a plan to enter the clinic at the end of 2024, subject to IND/CTA approval and further financing. As an example of the progress made, work with our potential trial clinical investigators in the United States and the European Union, and the manufacturer of our cell therapies is virtually complete. Our lead KRAS program, MDG2011, a KRAS G12V-specific T cell receptor targeting HLA-A11 combined with our PD1-41BB costimulatory switch protein, has advanced the preclinical stage. We also announced the lead selection for our second KRAS program, MDG2021, a KRAS G12D-specific TCR, again, targeting HLA-A*11 in June of this year. Our recently announced partnership with WuXi Biologics with our new program, MDG3010, is an off-the-shelf TCR-T cell engager or TCR-TCE, targeting solid tumors and marks a real milestone for the company as the first of our TCR-guided therapies beyond TCR-T cell therapies, enabling us to potentially provide greater access to new treatment types that will benefit greater numbers of patients. TCR-T cell therapies, which despite their benefits, are complex to optimize, difficult to manufacture and require a lag time from a patient providing cells to a therapy be precision manufactured for them of up to 6 weeks. In contrast, a TCR-TCE is a so-called off-the-shelf therapy, meaning it can be stored at the physician's office or pharmacy and await a decision for immediate treatment without any lag time. Our existing partnerships with BioNTech and Regeneron have been progressing as well. More on that later. Finally, in terms of corporate updates. In 2024, including our oversubscribed successful capital raise with subscription rights in May, with gross proceeds of approximately €5.9 million, this financing round was one of the first successful transactions of a publicly listed small-cap biotech in Europe and the only one in Germany in 2024 at that time. This has enabled Medigene to extend our cash runway into July 2025 and advance our operations further. During our discussion with investors, we have continued to receive positive feedback on the advancement of our End-to-End Platform and pipeline as well as our updated corporate strategy into new TCR-guided modalities, and the support from our existing shareholders as well as new investors validates our approach. Our End-to-End Platform is dynamic and has also progressed and expanded in the first half of 2024. Our modular format has easily allowed us to incorporate new technologies and support the new TCR-TCE and TCR-guided modalities. Our TCR generation and optimization modules provide the unique proprietary differentiation that enables us to generate our extraordinary potential best-in-class 3S T cell receptor. These have unique and distinctive attributes that are utilized in multiple therapeutic modalities, such as TCR-T cells, T cell-guided T cell engagers and TCR natural killer cell therapies for both in-house product pipeline and for potential partnering. The platform includes multiple safety-focused technologies here in yellow, efficacy-enhancing technologies in pink and development optimization technologies designed to make the development process more efficient, of higher quality, cheaper and faster in light blue. From our End-to-End Platform, we now have 3S TCRs built into our current pipeline of multiple modality TCR-guided therapies. Starting with MDG1015, our lead TCR-T cell program. This is targeting NY-ESO-1 LAGE-1a. And as stated earlier, following positive European and U.S. regulatory interactions, we remain on track for an IND submission in the third quarter and a CTA submission in the fourth quarter of this year. Subject to additional financing, we expect to initiate a Phase I trial for MDG1015 by the end of this year and to unveil early data from the dose escalation phase in the fourth quarter of 2025. Importantly, our approach to this proposed trial differs markedly from the current approved therapy, which is only using the rare soft tissue cancer by targeting patients with high unmet medical need in a broad range of solid tumors, including common serotypes such as gastric, esophageal and ovarian cancer as well as the rare soft tissue cancers such as synovial sarcoma, myxoid/round cell liposarcoma. With MDG1015, this means that we can also target significant numbers of patients in this trial, and that's a significantly large market opportunity of over 108,000 patients in the top 8 markets. Most recently, we announced the lead selection of our next KRAS program, MDG2021, again, a potentially best-in-class, third-generation TCR-T cell therapy targeting KRAS G12D HLA-A11. We will progress our announced KRAS programs towards IND/CTA-enabling work and lead selection, respectively, over the next 2 years. Our partnerships with BioNTech and Regeneron 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 also provide further clinical proof of concept alongside Medigene's owned program. Additionally, our latest strategic partnership with WuXi Biologics focused on the co-research and codevelopment of TCR-guided T cell engager therapies, for which we expect to have our proof of principle study outcome by the end of 2025. This now brings me on to our partnerships. To support the development of our research projects, we have established a partnership network of both biotechs and renowned academic bodies. In January 2024, Regeneron Pharmaceuticals, formerly 2seventy bio, commenced patient enrollment in an investigator-initiated trial, or IIT, in Greater China for the program utilizing Medigene's TCR-targeting MAGE-A4. Upon reaching the contractually agreed milestones for the IIT, Medigene anticipates receiving an additional set of milestone payments from Regeneron. In February 2024, Medigene and Hongsheng Sciences mutually agreed to terminate the remaining framework agreement of our partnership, including the agreements regarding the DC vaccine and the license of discovery. As a reminder, due to the prolonged funding and development pause by Hongsheng Sciences, that also included Medigene's NY-ESO-1-targeted TCR returning to us. And the parties mutually agreed to terminate the partnership agreement as it relates to this asset in the third quarter of 2023. In May 2024, Medigene and BioNTech announced their collaboration to advance TCR immunotherapies against cancer will extend beyond the initial 3-year term outlined at the signing of the global research collaboration agreement in February 2022. This extension enables ongoing and future work required to potentially generate novel TCR directed against multiple newly nominated antigen targets that could further expand the BioNTech warehouse of TCR candidates. Subsequent to the quarter, on August 8, Medigene and WuXi Biologics entered into a 3-year multi-target strategic partnership to design and co-research T-cell receptor-guided T cell engagers, or TCR-TCEs, for the treatment of solid tumors. We are delighted to call WuXi Biologics our new partner, which combines the respective expertise of each company. With Medigene's extraordinary 3S TCR generation and characterization capabilities combined with WuXi Biologics' unique anti-CD3 monoclonal antibody, its industry-leading TCE platform of proprietary bispecific antibody platform, WuXiBody. The company is going to co-research and codevelop novel TCR-TCE constructs, which will be owned by both corporation partners with options to further advance their development. The development of our research project is also supported by our long-standing partnerships with academic institutions, notably, the Helmholtz Munich and the Technical University Munich. We remain very active in developing new partnership opportunities to maximize the value of our current and future assets and technologies and ultimately deliver novel and differentiated TCR-guided therapies to patients. Moving on to our financial results. For the financial data for the first 6 months of 2024, our 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 in the reporting period amounted to €4.5 million, an increase of 45% compared to the €3.1 million in the first half of 2023. This increase is due to the reversal of the remaining contractual liability to Hongsheng Sciences Limited following the termination of the partnership. Selling and general and administrative expenses decreased by 5% to €4.1 million in the first half of 2024 compared to €4.3 million in the first 6 months of 2023, in particular due to lower personnel expenses. Research and development, or R&D expenses, increased by 21% to €6.3 million in the first half of 2024 compared to €5.2 million in the first half of 2023. The reason for this is to focus on the development of our TCR-T therapies: MDG1015, 2011 and 2021 for the treatment of solid tumors and preparatory activities for clinical trials for MDG1015. The net result of the first half of 2024 improved by €0.3 million to minus €6.7 million compared to the first half of 2023, which was minus €7.0 million. In the first half of 2024, the company's EBITDA improved by 10%, from minus €6.6 million to minus €6 million due to the reversal of contract liabilities. As of June 30, 2024, cash and cash equivalents amounted to €14.0 million compared to €16.7 million, including time deposits for December 31, 2023, with a cash runway extended into July 2025, previously April 2025. This leads me to our current 2024 financial guidance. Performance in the first half of 2024 was in line with the Executive Management Board's expectations. As mentioned earlier, in May, the company reported that it successfully completed an oversubscribed capital raise with gross proceeds of approximately €5.9 million. The company subsequently amended its guidance and extended its cash runway into July 2025. Initial guidance for 2024 was for a cash runway into April 2025. Research and development costs were also amended and are expected to increase from prior estimates of €11.0 million to €13.0 million to €11.5 million to €13.5 million in 2024 to support additional activities enabling first patient enrollment for MDG1015's Phase I clinical trial by the end of 2024, subject to further financing. The company maintains its guidance on expected revenues to be between €9 million and €11 million in 2024, which is unchanged. These projections include potential future milestone payments from existing partnerships that are highly likely to materialize. See the annual report in 2023. They do not include potential milestone payments from future or new partnerships or transactions as the occurrence of such payments or their timing and size largely depend on third parties and cannot be controlled or influenced by Medigene. Finally, moving on to our vision. I wanted to confirm what our short-, medium- and long-term plans for Medigene are. At the core of our expertise and capabilities is our ability to generate extraordinary 3S TCRs from our unique proprietary End-to-End Platform, validated by our numerous partnerships. Further expansion and innovation of our platform is a key enabler for the success of our plans for multiple future TCR-guided modalities, allowing greater access for patients for a range of different but potentially complementary therapies. In terms of our TCR-T cell therapies, we remain fully committed and are focused in providing clinical validation of MDG1015 and of our emerging library of third-generation KRAS-targeted TCR-T cell therapies targeting broader cancer patient populations. As mentioned, we hope to initiate MDG1015 by the end of 2024, subject to additional financing and would subsequently expect an early day to readout by the end of 2025, which will provide clinical validation of this as well as our platform. We will continue to expand our collaborative approach to R&D, maximizing our existing partnerships and evaluating new partnerships for our technology and assets. As we develop these highly differentiated therapies, we will continue to seek partnering for the new TCR-T and TCR-guided modalities and technologies, leveraging our expertise together with our partners' research and development strengths. In summary, as a near-clinical-stage oncology platform company developing multiple TCR-guided immunotherapies, the first half of 2024 has been incredibly successful for the company. We expanded and executed on our scientific and corporate strategy and have delivered fully, including the first steps against our vision to develop differentiated, best-in-class TCR-guided therapies for large numbers of patients with solid tumors, whilst managing expenses prudently and improving our financial position through a successful oversubscribed capital raise. With a range of value catalysts, we're very excited about the second half of 2024 and the prospect of shortly entering the clinic, providing a treatment solution for patients with solid tumors and demonstrating the significant value of our approach. 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: [Operator Instructions] And the first question comes from Joe Pantginis from H.C. Wainwright.
Joshua Korsen: This is Josh on for Joe. So I was just wondering if you could provide more specifics about your new partnership with WuXi Biologics, like about what the partnership will look like over the next 3 years? And also any terms from the deal that you're able to disclose?
Selwyn Ho: Thank you very much for the question. So at this moment in time, we have not disclosed specifics of the deal other than to say it's a potential multi-target collaboration, looking at multiple TCRs combined to the CD3 WuxiBody construct. The idea would be over the next 15 to 16 months, I think we have guided towards the end of 2025, we'll be ensuring that the combined TCR/CD3 construct will be ready for its first lead selection for the first target. And contingent on that, then that partnership will allow us to decide to move further into potential developments, i.e., into IND-enabling work and then potentially into clinic. At the point where we take a selection of the leads based on the TCRs that we will decide in partnership with WuXi, we have the opportunity also to partner out. And historically, just to give some kind of context, WuXi has done this with previous big biopharma partners in January of 2023 last year. For example, they partnered out through preclinical candidates with GSK (LON:GSK). So there is a kind of benchmark out there to give you some sense of how both companies are thinking. However, also would add that there is the opportunity for Medigene or Wuxi to continue development if we see the further opportunities to create incremental value near term for both of ourselves.
Operator: [Operator Instructions] And the next question comes from Abhishek Raval from AlphaValue.
Abhishek Raval: This is Abhishek Raval. So my question to the management is around how different is this management, the current management versus the previous ones or the ones that we have seen over the last 10-odd years? And could you please elaborate also on the cost saving measures that are being undertaken in recent times?
Selwyn Ho: Sure. Thank you, Abhishek, for the questions. So we have members of the previous management on the call with our previous CEO, Dolores, who is currently our CSO. So I'll just make some very general statements. I mean first of all, the management team has being changed quite dramatically with biotech specialists coming into the management team with extensive experience, not just in biotech but also in big pharma. If I look at the team, we have specific expertise now in corporate development, business development, corporate financing, commercialization. And also, we brought in specialists for early-stage clinical development, ,particularly and specifically in cell therapy, which is an area that we haven't necessarily had prior. So to summarize, a very broadened, very expanded and very highly skilled management team now that is focusing on moving to the next stage of development, which is to bring our TCR-T therapies and TCR-guided modalities into the clinic. In terms of cost savings, just again to give you a perspective of something that we have communicated over this year and actually last year as well, we've kept a very tight look at costs, looking at prioritizing programs, reducing programs out of the pipeline, halting and postponing programs as well as keeping a very tight control over both the R&D and G&A costs, really focusing on projects of maximum value. So we've been told consistently by potential investors and partners as well as our colleagues and partners in the investment banks that delivering clinical data is critically important to validate our platform, but also would give a very clear view of how differentiated our platform is. So we have really focused our activities on moving forward our 1015 program as fast as possible into clinic. But also, as you can see, we built out our pipeline in a very careful, judicious way looking at brand-new TCRs where we believe that there are huge patient benefits still unmet by current or in development therapies, particularly with the TCRs targeting KRAS, as an example. Finally, in terms of personnel costs, you can see from our financial reports this year, we have managed to do all of that and decrease our G&A costs predominantly through reductions in personnel costs. So hopefully, that gives you a sense of the broader picture of what we're trying to achieve.
Abhishek Raval: And just if I may add just one last question from my side. In what time frame do you expect the next milestone probably from BioNTech or WuXi? So at the earliest, what is the range of time frame that you expect to milestone agreement from any of your partners?
Selwyn Ho: Sure. So in terms of progressive milestones, we've already included in guidance for this year that we expect milestones from our partners. We've not specified which partners or the amounts and link them to a specific partner. But if I said to you that we have guided to a $1 million milestone as well as a €2 million milestone, you'll be able to join the dots together, and we expect that this year. Obviously as well that we are working very well with BioNTech. And so we are working on a number of targets beyond what we have previously communicated and is in the public domain. And we would expect milestones based on the natural progression of delivering data that shows compelling differentiation. And then that will be up to BioNTech to nominate and, therefore, choose any given particular TCR that we develop for them. So we see a milestone this year, and we see milestones in 2025.
Operator: Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Pamela Keck for any closing remarks.
Pamela Keck: Thank you, operator. Thank you, everyone, for joining us on the call today. Thank you for your time, and we're looking forward to providing you with the next update in due course. Thank you.
Operator: Ladies and gentlemen, the conference has now concluded and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.
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