Transgene Update

Transgene
Investment Summary: A Setback But That Is All
Transgene’s shares have fallen by over 25% since the setback with TG4001, but we have only reduced our valuation by 9%. This product was the least valuable of Transgene’s four-Phase II products and still has potential in HPV-associated cancers. The more valuable Phase-II programmes are progressing as expected. There was more promising data on TG4040 in HCV, posters on TG4010 and JX-594 will be presented at ASCO in June and recruitment for the Phase-II/III TIME trial with TG4010 is progressing.

TG4001 Efficacious, But Not Enough For CIN
Data from the Phase-IIb trial (n=206) with TG4001 in CIN (cervical intraepithelial neoplasia, pre-cancerous cervical lesions) showed the TG4001 increased histological resolution to 25% compared to 10% with placebo at six months. However, for TG4001 to have a commercial future it was considered that a 60% resolution rate was required. So, TG4001 is no longer being developed for CIN.

Potential In HPV-Associated cancers
TG4001, probably with chemotherapy, still has potential to become a treatment for head and neck and cervical cancer. In the CIN Phase-IIa trial, viral clearance was 37% in patients receiving TG4001 compared to 14% on placebo. HPV infection causes cervical cancer and is increasingly the cause of head and neck cancer. Development in these new indications depends on a partner being found.

TG4040 Continues To Show Promise In HCV
24-week data from the Phase-II trial in HCV with TG4040 continues to show the product’s potential. The next step is a combination study with a new direct-acting antiviral agent, such as Gilead’s GS7977 or Bristol-Myers Squibb’s daclatsavir (both in Phase-III development). It is expected start in 2012 and report data in 2013.

Valuation: DCF Reduced By €52m To €554m
Our valuation of Transgene is lowered to €554m after the setback with TG4001, compared to the current market cap of €233m. The next catalysts for the shares are the four posters that will be presented at the ASCO meeting at the beginning of June; one on the Phase-II/III TIME trial with TG4010 and the others with interim analyses and information on JX594.

To Read the Entire Report Please Click on the pdf File Below.