Transgene to Announce Major Clinical Results in 2018 and Achieve Promising Progress on Its New Oncolytic Viruses

Philippe Archinard, Chairman and Chief Executive Officer of Transgene, commented:
“In 2017, Transgene made significant progress across all aspects of its business and launched seven clinical trials. These studies are designed to demonstrate the potential of our therapeutic vaccine and oncolytic virus immunotherapeutics in combination with ICIs. As a result, we remain on track to communicate t clinical data on five products before the end of 2018.

“With the launch of our Invir.IO^TM platform, we also confirmed our positioning at the forefront of innovation in the field of oncolytic viruses, an area of immense promise. With Invir.IO^TM, we design novel virotherapies against cancer with multiple and complementary modes of action to better control the tumor microenvironment and to attack tumors much more effectively. The signings of collaborative agreements with BioInvent and Randox are the first steps of the acknowledgement of this potential. They cumulate with our ongoing clinical developments of Pexa-Vec and TG6002.

“Our expertise in both therapeutic vaccines and oncolytic viruses, confirmed by recent achievements, allows us to look at 2018 with confidence.”

Clinical Pipeline Review

TG4010: combination trial with nivolumab (ICI); collaborations with Bristol-Myers Squibb

TG4010 is a therapeutic vaccine being developed for the treatment of advanced-stage non-squamous non-small cell lung cancer (NSCLC). TG4010’s mechanism of action, excellent safety profile and existing clinical data make it a very suitable candidate for combinations with other therapies.

Treating lung cancer remains an important medical need despite recent progress. There is a clear need to increase both the number of patients responding to treatment (response rate) and the duration of response to achieve better patient outcomes. New positive clinical data from the ICI pembrolizumab in first-line lung cancer patients were recently announced. As a result, we expect most first-line patients, particularly in the US, to receive an ICI as a monotherapy or in combination with chemotherapy depending on the level of PD-L1 expression of the patients’ tumor cells.
Transgene, with its company-sponsored first-line trial assessing TG4010 in combination with nivolumab and chemotherapy, is well positioned both in Europe and in the US to prosper in this changed environment. We continue to believe that the addition of TG4010 could be crucial in improving outcomes for first-line patients.

Pexa-Vec: ongoing Phase 3 trial, ongoing Phase 2 combination trials

Pexa-Vec is Transgene’s lead oncolytic virus drug candidate. It is designed to selectively target and destroy cancer cells through intracellular viral replication (oncolysis), and by stimulating the body’s immune response against cancer cells. Its mechanism of action and tolerability profile make it an appropriate candidate for use in combinations.

Advanced liver cancer remains an important medical need. The approaches currently being developed are aimed at increasing treatment response rates and improving overall survival. The registration of nivolumab in the US as a second-line treatment, together with existing data, suggest that patients could also respond positively to an ICI as a first-line treatment.
Transgene’s development of Pexa-Vec as a first-line treatment combined with both the current standard of care (sorafenib) and nivolumab, could play an important role in the future treatment of hepatocellular carcinoma.

Pexa-Vec is also being developed for the treatment of other solid tumors.
Ongoing trials are expected to deliver results in 2018.

Our partner SillaJen has also published clinical data that further demonstrate the potential of Pexa-Vec. It presented a poster at ASCO GU featuring the results of a clinical trial in patients with renal cell carcinoma and liver metastases (n=17). The disease control rate reached 76%, with one complete response, confirming that Pexa - Vec, administered intravenously as a monotherapy, can induce antitumor activity.

TG4001: trial in combination with avelumab (ICI); collaboration agreement with Merck KGaA and Pfizer

TG4001 is a therapeutic vaccine that has demonstrated good tolerability, a significant HPV clearance rate and promising efficacy results. Its mechanism of action and good safety profile make TG4001 a good vaccine candidate to be combined with other therapies.

TG6002: first-in-human trial started

A new-generation oncolytic immunotherapy, TG6002 has been designed by Transgene to combine the mechanism of oncolysis (targeted breakdown of cancer cells) with local production of the chemotherapy (5-FU) directly in the tumor. This approach aims at attacking solid tumors on several fronts while avoiding the chemotherapy-associated side effects.

TG1050: First part of the results featured at the AASLD in October 2017

TG1050 is a therapeutic vaccine designed for the treatment of chronic hepatitis B. TG1050’s technology (T101) is being developed in China through the joint-venture between Transgene and Tasly Biopharmaceutical Technology.

Invir.IO^TM: New Industry Leading OV Platform

In September 2017, Transgene announced the launch of Invir.IO™ a patented cutting-edge technology platform designed to generate a new generation of multifunctional oncolytic viruses capable of enhancing the tumor micro-environment’s modulation. Novel oncolytic virus therapeutics based on Invir.IO™ have the capacity to incorporate several transgenes encoding for a range of specific anticancer weapons. By using this approach and working alongside external collaborators to provide access to clinically relevant transgenes, Transgene aims to develop OV therapeutics that can transform the treatment of cancer.

Transgene has already demonstrated that oncolytic viruses from the Invir.IO™ platform attack tumors on several fronts and, in addition to the remarkable oncolytic properties of Vaccinia viruses, may:

• induce immunogenic death of cancer cells, and
• allow the expression of several anticancer weapons such as cytokines, chemokines, enzymes, monoclonal antibodies or mini-antibodies (SdAbs, single-domain antibodies) in the tumor.

Transgene is currently evaluating 10 preclinical Invir.IO™ OVs to identify the most appropriate candidates to take into clinical development to address a number of priority indications.

To complement its in-house expertise, Transgene signed two collaborative research agreements in 2017 to gain access to partners’ transgene sequences, coding for anticancer agents, to be incorporated into an Invir.IO™ patented oncolytic virus owned by Transgene. The resulting oncolytic viruses have the potential to be significantly more effective than the combination of these agents administered separately:

• Incorporating an anti-CTLA-4 antibody from BioInvent alone or together with other anticancer weapons. The local expression of anti-CTLA-4 antibodies in the tumor should reduce Treg mediated-immunosuppression in the tumor, thus increasing antitumor activity. This approach is expected to have a much better safety profile compared to the systemic use of anti-CTLA-4 antibodies;
• Incorporating one or more SdAbs generated by Randox in order to combine the effects of oncolytic viruses with the therapeutic properties of SdAbs, which will be expressed directly in the tumor micro-environment, in order to directly or indirectly stimulate effector cells in solid tumors.

In 2018, Transgene plans to invest approximately two thirds of its preclinical research spending on its Invir.IO™ platform and OV candidates. Transgene expects to obtain preclinical proof of concept for its lead candidates OVs in 2018 and to be in a position to initiate the first clinical trials with Invir.IO™ designed virotherapies in 2019.

Research Collaboration with Servier

In June 2017, Transgene signed a collaboration agreement with Servier to generate an original engineering process of allogeneic CAR-T cell therapies by applying Transgene’s viral vectorization technology and capabilities. The aim is to improve the engineering performance of the process by reducing the number of steps.Transgene received €1 million as upfront payment. The collaboration also generates R&D service fees as well as potential success fees.

Intellectual Property

In 2017, Transgene filed several patent applications on new technologies, including Invir.IO^TM developments.More than 20 patents were granted and ensure the protection of Transgene’s innovations.

Key Financials for 2017

• Net cash burn for 2017 was reduced to €28.1 million compared to €30.6 million in 2016.
• Cash available at year-end 2017: €41.4 million, compared to €56.2 million at the end of 2016. This cash balance includes €13.5 million (net) raised from a private placement concluded in November 2017.
• Net operating expenses of €36.0 million in 2017, compared to €33.0 million in 2016.
• Net loss of €32.2 million in 2017, compared to a loss of €25.2 million in 2016.

“We were able to reduce our cash burn in 2017 despite accelerating our development plan, starting numerous clinical trials, and making a planned milestone payment to SillaJen of €3.8 million. Operating costs remain under good control which has allowed the Company to allocate most of its financial resources to strategic clinical and preclinical operations. Our current cash resources, including the funds we raised in the private placement in November 2017, will allow us to deliver a number of important clinical milestones in the second half of 2018,” said Jean-Philippe Del, Vice President, Finance.The financial statements for 2017 as well as management’s discussion and analysis are attached to this press release (Appendices A and B).

Financial Outlook 2018

Transgene expects its cash burn for 2018 to be comparable to 2017. The Company has the financial resources to execute its strategy through mid-2019.

The Board of Directors of Transgene met on March 21, 2018, under the chairmanship of Philippe Archinard and closed the 2017 financial statements. Audit procedures have been performed by the statutory auditors and the delivery of the auditors’ report is ongoing. The Company’s registration document, which includes the annual financial report, will be available in April 2018 on Transgene’s website, www.transgene.fr.

A conference call in English is scheduled on March 21^st at 6:00 p.m. CET.

Webcast link to English language conference call:
https://ssl.webinar.nl/webcast/transgene/20180321_1/

Participant telephone numbers:

A replay of the call will be available on the Transgene website (www.transgene.fr) following the live event.