TxCell First-Half 2017 Financial Results and Strategy Update

Regulatory News:

TxCell SA (Paris:TXCL) (FR0010127662 – TXCL), a developer of cellular immunotherapies based on regulatory T cells (Tregs) for inflammation, autoimmunity and transplantation, today announces its consolidated financial results for the first half of 2017 and provides an update on its strategy and outlook.

The TxCell Half Year Financial Report as of June 30, 2017 is available on the company’s website www.txcell.com in the Investors / Documentation / AMF regulated information section.

HLA-A2 CAR-Treg program on track to start first-in-man study in transplanted patients

TxCell’s most advanced CAR-Treg product-candidate, which targets the prevention of chronic rejection after organ transplantation, is on track to start a first-in-man study by the end of 2018. Start of clinical development will be subject to availability of appropriate funding.

In June 2017, TxCell achieved a critical step in the development of this product candidate by appointing Lentigen Technology, Inc. (LTI) as its contract manufacturing organization (CMO) for the GMP production of the product’s lentiviral vector. Finalization of the CAR-Treg manufacturing process is ongoing and TxCell is in the process of selecting a second CMO for GMP production of the cellular therapy drug product per se. Such selection should be done before year end 2017.

Recently, TxCell and its academic partner, UBC, obtained a new preclinical proof-of-concept in a GvHD model with a humanized clinical candidate. This humanized candidate showed similar efficacy results to those previously published with the original murine construct. This is in addition to an improved safety profile. Detailed data will be presented by Prof. Megan Levings during the 18^th Congress of the European Society for Organ Transplantation (ESOT) to be held in Barcelona, Spain on September 24-27, 2017. TxCell will provide more details on results the day of the oral presentation.

Promising results obtained with other CAR-Treg programs

Ongoing in vitro and in vivo studies conducted by TxCell are showing promising preliminary results in relevant models of autoimmune diseases, including multiple sclerosis, confirming TxCell’s CAR-Treg platform strategy. In the next few months, TxCell will present new proof-of- concept data in clinically relevant mouse models with several candidates at appropriate scientific conferences and/or in peer-reviewed journals.

TxCell intends to focus on its 4 to 5 most promising preclinical programs. As a result, the Company may discontinue certain discovery programs and/or academic collaborations.

Update on ASTrIA

TxCell has fully completed the optimization of the ASTrIA manufacturing process. As expected, the reduction of production costs and of the overall manufacturing leadtime allowed by the new process identified by TxCell in 2016 can reach 50%. The new ASTrIA process is simple, robust and scalable. However, TxCell now intends to lower its investment on the ASTrIA platform and to focus on continuing promising developments on the ENTrIA platform. This includes utilizing know-how and intellectual property from the ASTrIA platform to work on new engineered Tregs. As a result, the ASTrIA and ENTrIA denominations will ultimately be replaced by a single platform of engineered Treg products.

"After making important progress with our CAR-Treg programs, we can now confirm that we have successfully achieved the conclusion of TxCell’s transformation to a platform of engineered regulatory T cells,” said Stéphane Boissel, CEO of TxCell. "Our unique CAR-Treg technology positions TxCell as a pioneer at the crossroad between two vibrant industry segments – the CAR-T space and the Treg space. The CAR-T space only this month provided a $12 billion acquisition and a revolutionary first FDA approval. In the Treg space, five strategic Treg business deals have been signed by pharma/biotech companies in less than a year. Therefore, we remain confident in the future prospects of our technology.”

"TxCell’s H1 figures are in line with our expectations regarding operating costs and cash burn. We continue to carefully monitor all costs,” said Raphaël Flipo, CFO of TxCell. "The warrants which were attached to new shares as part of the February 2017 financing have passed halfway through their maturity. If all the warrants are exercised, the proceeds would finance TxCell’s activities through to the IND approval for the first CAR-Treg clinical study, which is expected by the end of 2018. We are also looking at alternative financing options should these warrants not be fully exercised at maturity. We will continue to keep the market informed in due time regarding these options.”

Financial highlights for the first half of 2017

The interim TxCell financial statements as of June 30, 2017, established according to IFRS standards, have been subject to a limited review by the statutory auditors and approved by TxCell’s Board of Directors on September 20, 2017.

TxCell’s 2017 half-year financial results are a result of the strategic shift finalized in September 2016 and concentrating the majority of its resources on the development of the CAR-Treg technology of the ENTrIA platform.

The net loss amounted to €5.3 million as of June 30, 2017, compared to €7.1 million at the same date in 2016. The net result improvement is explained by:

• a 31% decrease in research and development expenses, following the closure of TxCell’s manufacturing site in Besançon and the final termination of Ovasave® Phase IIb clinical study, and therefore of activities subcontracted to Contract Research Organizations (CROs) and Contract Manufacturing Organizations (CMOs), and;
• a 27% decrease in general expenses, mainly due to the presence in the first half of 2016 of non-recurring legal consultancy fees, especially for collaboration and license agreements signed during this period.

Research and development investments remain the largest expense for TxCell, representing 68% excluding expenses related to share-based payments). As of June 30, 2017, R&D expenses totaled €3.9 million, compared to €5.6 million as of June 30, 2016. For the first half of 2017, these R&D expenses were mostly invested in:

• improvements to TxCell's production process for the ASTrIA platform and development of a production process for the ENTrIA platform;
• investments in CAR-Tregs research programs for the generation of preclinical proof-of-concept data on the ENTrIA platform.

As of June 30, 2017, TxCell’s cash and cash equivalents totaled €8.7 million, including partial pre-funding of its 2017 Research Tax Credit for an amount of €0.6 million.

Excluding capital increase, TxCell’s cash burn amounted to €4.9 million for the first half of 2017.

As a reminder, on the basis of its development plan, TxCell forecasts an operating cash burn for the full year 2017 of approximately €13 million.

Conference call in English

A conference call in English will be held on Friday, September 22, 2017 at 11:30am CET. To participate:

• Dial-in: +33 (0)1 72 00 15 10
• PIN Code: 58761201#
• The presentation will be available on TxCell’s website www.txcell.com in the Investors / Presentation and webcasts section.

Following the live call, a replay will be available for 90 days. To listen to the replay, please dial:

• USA: +1 877 64 230 18
• United Kingdom: +44(0) 20 33 67 94 60
• France: +33(0)1 72 00 15 00
• PIN Code: 310700#

Next financial milestone

• October 19, 2017: Q3 2017 financial information (post-market)

About TxCell – www.txcell.com

TxCell is a biotechnology company that develops platforms for innovative, personalized T cell immunotherapies for the treatment of severe inflammatory and autoimmune diseases with high unmet medical need. TxCell is targeting transplant rejection as well as a range of autoimmune diseases (both T-cell and B-cell-mediated) including multiple sclerosis, lupus nephritis and bullous pemphigoid.

TxCell’s cellular immunotherapies are based on regulatory T lymphocytes (Tregs). Tregs are a T cell population discovered in the nineties for which anti-inflammatory properties have been demonstrated. Contrary to conventional approaches based on non-specific polyclonal Tregs, TxCell is exclusively developing engineered antigen-specific Tregs, where the antigen specificity is brought by a Chimeric Antigen Receptor (CAR) (CAR-Treg cells).

Based in Sophia-Antipolis, France, TxCell is listed on Euronext Paris and currently has 46 employees.

Next events

Forward-Looking Statements – TxCell

This press release contains certain forward-looking statements relating to the business of TxCell, which shall not be considered per se as historical facts, including TxCell’s ability to develop, market, commercialize and achieve market acceptance for specific products, estimates for future performance and estimates regarding anticipated operating losses, future revenues, capital requirements, needs for additional financing. In addition, even if the actual results or development of TxCell are consistent with the forward-looking statements contained in this press release, those results or developments of TxCell may not be indicative of their in the future.

In some cases, you can identify forward-looking statements by words such as "could," "should," "may," "expects," "anticipates," "believes," "intends," "estimates," "aims," "targets," or similar words. Although the management of TxCell believes that these forward-looking statements are reasonably made, they are based largely on the current expectations of TxCell as of the date of this press release and are subject to a number of known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by these forward-looking statements. In particular, the expectations of TxCell could be affected by, among other things, uncertainties involved in the development of the Company’s products, which may not succeed, or in the delivery of TxCell’s products marketing authorizations by the relevant regulatory authorities and, in general, any factor that could affects TxCell capacity to commercialize the products it develops, as well as, any other risk and uncertainties developed or identified in any public documents filed by TxCell with the AMF, included those listed in chapter 4 "Risk factors” of the 2016 document de référence (registration document) approved by the AMF on April 26, 2017 under number R.17-024. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements made in this press release will in fact be realized. Notwithstanding the compliance with article 223-1 of the General Regulation of the AMF (the information disclosed must be "accurate, precise and fairly presented”), TxCell is providing the information in these materials as of this press release, and disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

View source version on businesswire.com: http://www.businesswire.com/news/home/20170921005837/en/