TxCell Announces First-Half 2016 Financial Results and Provides Strategy Update

VALBONNE, France--(BUSINESS WIRE)--Regulatory News:

TxCell SA (Paris:TXCL) (FR0010127662 – TXCL), a biotechnology company developing innovative, personalized cellular immunotherapies using regulatory

T-cells to treat severe chronic inflammatory and autoimmune diseases, today announces its consolidated financial results for the first half of 2016 and provides an update on its strategy and outlook.

The TxCell Half Year Financial Report as of June 30, 2016 is available (in French) on the company’s website www.txcell.com.

More than 10 new CAR-Treg discovery programs initiated

TxCell has intensified the research efforts on its second technology platform, ENTrIA, composed of engineered regulatory T cells (CAR-Treg). Over the last twelve months, these efforts have led to the initiation of more than 10 new CAR development programs.

Initially, and following the advice of its recently formed Scientific Advisory Board (SAB), TxCell will focus its resources on 4 to 5 programs targeting notably lupus nephritis, bullous pemphigoid, multiple sclerosis and transplantation. TxCell’s objectives are: firstly, to generate several additional preclinical proof-of-concept data within the next 12 months and, secondly, to start at least one first-in-man clinical study before the end of 2018. A number of these programs are being developed through collaboration agreements with leading academic laboratories, such as Ospedale San Raffaele (OSR) and the Lübeck Institute of Experimental Dermatology (LIED), as communicated in the first half of 2016.

These objectives are in line with TxCell’s strategic roadmap disclosed in March 2016. As a result of recent positive findings, additional resources are being allocated to the ENTrIA platform to enable a further intensification of activity.

Development of less expensive and more efficient manufacturing processes

In February 2016, TxCell launched a new manufacturing process development and technology transfer unit with the primary objective of: (i) enhancing the manufacturing process for TxCell’s first platform ASTrIA and (ii) developing a new process for the manufacturing of its engineered ENTrIA Treg programs. Within its first nine months of operation, TxCell has identified a new isolation method for its non-engineered Treg cells (ASTrIA). This innovative procedure should enable a reduction of approximately 50% of both the production costs and the overall manufacturing leadtime, as well as a reduction of the risk of non-compliant manufacturing for future clinical trials and a potential commercial launch.

Combining these encouraging preliminary results and TxCell’s strict cost control policy, TxCell has decided to finalize and GMP-prove this new manufacturing process prior to the initiation of new clinical trials from the ASTrIA platform. Resulting from this decision, the clinical development of Ovasave® in refractory Crohn’s disease will not restart immediately.

In addition, a manufacturing process for the ENTrIA platform should be validated by 2018 for the start of a clinical study with a first CAR-Treg program.

Ongoing business discussions to establish relevant partnerships

Since the beginning of the year, TxCell has met a significant number of pharma or large biotech companies and started several confidential business discussions. Regularly signing R&D partnerships with pharma or biotech companies is a key objective of TxCell’s strategic plan.

“There has been considerable progress made on a variety of R&D fronts in the first 12 months following the strategic repositioning initiated by TxCell in mid-2015. In particular, the key recent process improvement for the ASTrIA platform, if and when GMP-proven, would greatly reinforce the viability of our economic model,” said Stéphane Boissel, CEO of TxCell. “In addition, TxCell’s initiation of over ten promising CAR-Treg programs gives us a roadmap to multiple preclinical catalysts in the next 24 months. TxCell will continue to increase development on these promising technologies to maintain its first mover advantage in this fast-growing field.”

“TxCell has, and will continue to make sure that resources are optimally used to bring innovation and value by carefully monitoring costs throughout TxCell’s structure,” said Raphael Flipo, CFO of TxCell. “Following the decision to focus on manufacturing process improvement and new CAR-Treg programs, as well as strict cost control measures, we are revising our operating cash burn guidance for 2016, from €15 million initially down to approximately €12 million. In addition, we are very pleased that TxCell has effectively implemented in August 2016 the convertible bonds line of €20 million plus warrants to ensure the financing of its preclinical research activities.”

Financial highlights for the first half of 2016

The interim TxCell financial statements as of June 30, 2016, established according to IFRS standards, have been subject to a limited review by the statutory auditors and approved by the Company’s Board of Directors on September 21, 2016.

TxCell’s 2016 half-year financial results are a result of the strategic shift initiated in 2015. The net loss amounted to €7.1 million as of June 30, 2016, compared to €5.7 million at the same date in 2015. The net loss increase is for the following reasons:

• The termination by TxCell of its agreement with Ferring/Trizell in order to regain full rights to its lead product Ovasave®. As a result, this has led to no revenue for the first half of 2016, compared to €0.5 million for the same period in 2015.
• A non-recurring €0.6 million increase in TxCell’s general and administrative expenses following:
  • the launch of new process industrialization laboratories and technology transfer academy

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