PARIS - Transgène SA has reported a net loss of FFr142.5 million (US$23 million) for the first quarter of 1998, compared with a loss of FFr18.2 million in the corresponding three months of 1997. The near eightfold increase in the Strasbourg-based gene therapy company's loss was attributable to its payment of FFr155.4 million to Human Genome Sciences Inc. (HGS), of Rockville, Md., under terms of the collaboration agreement signed last February.
That agreement provided for Transgène to make an up-front payment to HGS of an initial license fee, together with a first installment of research funding. The whole amount has been treated as a research and development expense and entered in the accounts as a non-recurring item. If not for that payment, Transgène would have posted a net profit of FFr12.9 million, and that would have been due primarily to an initial license fee of FFr48.6 million received from Schering-Plough Corp., of Madison, N.J., under a collaboration agreement also signed in February.
Altogether, Transgène's revenues in the first quarter totaled FFr52 million, up from just FFr11.1 million in the corresponding period last year. Virtually the whole of those revenues came from research collaboration and licensing agreements, income from which bounded to FFr51.3 million from FFr3 million. In the first three months of 1997, Transgène was still dependent on the R&D grants it received; they had amounted to FFr8.1 million, accounting for 72.8 percent of its revenues during the period.
As of last March 31, Transgène had cash and cash equivalents of FFr472.3 million, including the proceeds of its initial public offering in March but not the proceeds of the overallotment option exercised by the underwriters in April. Altogether, the IPO raised FFr613.5 million, of which FFr402.7 million came from the sale of 1,314,000 ordinary shares to the public and the underwriters' green shoe of 197,100 shares. (See BioWorld International, March 11, 1998, p. 1; April 1, 1998, p. 3; and April 15, 1998, p. 5.)
The other FFr210.8 million came from private placement sales of shares to HGS and to two existing shareholders. Transgène will be using the funds it has raised to finance a burgeoning R&D program. Its R&D spending in the first quarter of 1998 rose to FFr33.3 million from FFr27.7 million in the corresponding three months of last year, as a result of its preparation for and launch of Phase II clinical trials of cancer therapies using its vectors. R&D outlays are expected to rise further this year, as additional clinical trials get under way and products advance to later-stage clinical trials.
The company has validated two in vivo cancer therapies in Phase I trials. One is a non-specific immunotherapy using monkey Vero cells to deliver the cytokine interleukin-2 (IL-2), which is already in Phase II trials for the treatment of melanoma and other solid tumors. The other involves the delivery of IL-2 using the vaccinia virus MUC1. Phase II trials of the therapy in breast, prostate and other cancers are now beginning in Europe and Israel and are due to start in the U.S. later in the year.
Trials are also under way of a genetically modified adenovirus carrying IL-2 therapy for gastrointestinal and lung cancer, and the same therapy is due to be tested in metastatic liver cancer. The 10-year agreement with HGS provides for the two companies to cooperate in the identification of genes with therapeutic potential. Among other things, it gives Transgène the right to acquire exclusive licenses to as many as 10 genes for gene therapy applications.
Proceeds from the 10 percent stake HGS acquired in Transgène were used entirely for the latter's initial licensing and R&D payment. Transgène's eight-year research agreement with Schering-Plough gives it the right to use the U.S. company's p53 tumor suppressor gene and up to five other proprietary genes for developing gene therapy products using its adenoviral gene delivery technology. *