TNG Tong Ren Tang Technologies Co

Regulatory News:

Transgene (Paris:TNG) (Euronext Paris: FR0005175080) announces today its half year financial results for the six-month period ended June 30, 2012. The 2012 half year results were approved by the Board of Directors on September 11, 2012. They will not be submitted for approval by the shareholders. Limited review procedures have been performed by the statutory auditors. The Interim Financial Report is available on the Company’s website.

Financial Statements for the six-month period ending June 30, 2012:

Key highlights of the 2012 half year annual financial statements are as follows:

• Revenue amounting to 6.1 million euros in the first six months of 2012, to be compared with 8.1 million euros in the first six months of 2011,
• Research and development expenses amounting to 23.8 million euros in the first six months of 2012, compared to 23.4 million euros in the first six months of 2011,
• A net loss of 21.8 million euros in the first six months of 2012, compared to 17.7 million euros in the first six months of 2011,
• A net cash consumption of 18.1 million euros during the first six months of 2012, compared to 17.1 million euros in the first six months of 2011.

As of June 30, 2012, the Company had 121.4 million euros in cash, cash equivalents and other financial assets.

Cash consumption in the second half of 2012 is expected to be higher than in the first half. Transgene therefore expects a cash consumption in the region of 50 million euros in 2012.

« Our cash consumption and our development are in line with our business plan. » said Stéphane Boissel, EVP and CFO of Transgene. He added: « The increase of our burn rate in 2012 will be directly linked to the increase in clinical expenses, due to a large panel of ongoing studies, notably with TG4010 (lung cancer) and JX594/TG6006 (liver and colorectal cancers)”.

« The first part of 2012 was robust in news for Transgene, with additional efficacy data for TG4040 in HCV, a new program in HBV (TG1050) and clinical proof of concept obtained with TG4001 that should enable us to continue its development in HPV-induced cancers” said Philippe Archinard, Chairman and CEO of Transgene. He added: “We expect a rich news-flow ahead, with critical clinical data for three of our most advanced programs and possibly the start of our first pivotal clinical trials”.

DISCUSSIONS ON FINANCIALS FOR THE FIRST HALF OF 2012

Revenue:

The following table summarizes the change in revenue in the first six months of 2012, in comparison to the same period in 2011:

  First six months In million euros 2012   2011 Revenue from collaborative and licensing agreements 1.6   3.8 Government financing for research expenditures   4.5   4.3 Revenue 6.1 8.1

During the first half of 2012, revenue from collaborative and licensing agreements was composed principally of:

• Fees for manufacturing product batches or conducting research or development activities for third parties (such as for Jennerex, in connection with JX594/TG6006), amounting to 0.4 million euros in the six-month period ended June 30, 2012, compared with 2.4 million euros in the same period in 2011,
• Milestone or upfront payments on products partnered-out (such as the option payment from Novartis in connection with TG4010), amounting to 1.0 million euros in the six-month period ended June 30, 2012, compared with 1.2 million euros in the same period in 2011, and
• Royalties on sales of technologies or products out-licensed by Transgene, amounting to 0.2 million euros in the six-month period ended June 30, 2012, unchanged.

The 10.0 million US dollars (7.4 million euros) received from Novartis in March 2010 for the payment of the exclusive option for license of TG4010, was spread over the expected duration period of the option. Revenue recognized on this option amounted to 0.9 million euros in the six-month period ended June 30, 2012, and 5.6 million euros since the upfront payment was received. The balance, 1.8 million euros, will be recognized as revenue up until June 2013.

For the six-month period ended June 30, 2012, government financing for research expenditures were composed of subsidies received or accrued as well as of research tax credit.

Subsidies amounted to 0.6 million euros in the six-month period ended June 30, 2012, compared to 0.4 million euros in the six-month period ended June 30, 2011. In the first half of 2012, subsidies were mostly related to the ADNA program, for which Transgene cashed-in 3.6 million euros in subsidies and grants in the first half of 2012.

The research tax credit amounted to 3.8 million euros in the six-month period ended June 30, 2012, compared to 3.9 million euros in the six-month period ended June 30, 2011. The research tax credit for the first six months of 2012 was calculated as half of the research tax credit expected (as of June 30, 2012) for the full year 2012.

Operating expenses:

R&D expenses amounted to 23.8 million euros in the six-month period ended June 30, 2012, compared with 23.4 million euros in the six-month period ended June 30, 2011.

The main R&D line items were:

• Staff costs, including payroll and other staff related expenses, amounting to 9.9 million euros in the six-month period ended June 30, 2012, unchanged,
• Expenses related to operating the research and production facilities, and other on-going expenses such as the cost of the finance lease, laboratory materials and intellectual property expenses, amounting to 6.1 million euros in the six-month period ended June 30, 2012, unchanged,
• External expenses in relation to clinical trials, amounting to 5.6 million euros in the six-month period ended June 30, 2012, compared to 4.3 million euros in the six-month period ended June 30, 2011,
• Other external expenses, including expenses on research and pre-clinical programs as well as expenses on industrial projects, amounting to 2.2 million euros in the six-month period ended June 30, 2012, compared to 3.1 million euros in the six-month period ended June 30, 2011.

General and administrative expenses amounted to 3.3 million euros in the six-month period ended June 30, 2012, compared to 3.0 million euros in the six-month period ended June 30, 2011. Principal G&A expenses were staff costs (1.3 million euros in the six-month period ended June 30, 2012, compared to 1.4 million euros in the six-month period ended June 30, 2011) as well as consulting and management fees (1.3 million euros in the six-month period ended June 30, 2011, compared to 1.0 million euros in the six-month period ended June 30, 2011).

Other expenses and income, net:

Other expenses, net amounted to 0.4 million euros in the six-month period ended June 30, 2012.

Interest income and (expenses), net:

Interest expenses, net, amounted to 0.1 million euros in the six-month period ended June 30, 2012, compared to 0.6 million euros in interest income, net, in the six-month period ended June 30, 2011. Interest income on investments amounted to 0.4 million euros in the six-month period ended June 30, 2012, compared to 0.9 million euros in the six-month period ended June 30, 2011. The interest expenses were principally related to the interest on lease financing of the main premises of Transgene, which amounted to 0.1 million euros in the six-month period ended June 30, 2012, unchanged.

Net loss:

Net loss amounted to 21.8 million euros in the six-month period ended June 30, 2012, compared to 17.7 million euros in the six-month period ended June 30, 2011. Net loss per share amounted to 0.69 euro in the six-month period ended June 30, 2012, compared to 0.56 euro in the six-month period ended June 30, 2011.

Investments:

Investments in tangible and intangible assets (net of disposals) amounted to 1.2 and 2.2 million euros in the six-month periods ended respectively June 30, 2012 and 2011.

Borrowings and conditional subsidies:

In the first six months of 2012, Transgene received conditional loans to the amount of 3.1 million under the ADNA program, which has public funding from OSEO.

In the first six months of 2012, the Group pre-financed its 2011 research credit amounting to 7.9 million euros through a bank loan maturing mid-2015, the expected repayment period by the French government for this claim.

Cash, cash equivalents and other financial assets:

Cash is invested primarily in short term mutual funds or in a cash pooling managed by the Institut Mérieux, its controlling shareholder.

As of June 30, 2012, the Company had 121.4 million euros in cash, cash equivalents and other financial assets, compared with 139.5 million euros as of December 31, 2011.

Elements of cash-flow:

The cash consumption amounted to 18.1 million euros in the first six months of 2012, compared with 17.1 million euros in the first six months of 2011.

Transgene expects a net cash consumption in the region of 50 million euros in 2012.

About Transgene:

Transgene, a member of the Institut Mérieux Group, is a publicly traded French biopharmaceutical company dedicated to the development of therapeutic vaccines and immunotherapeutic products in oncology and infectious diseases and has four compounds in phase 2 clinical development: TG4010 and JX594/TG6006 having already completed initial phase 2 trials, TG4001 and TG4040. Transgene has concluded strategic agreements for the development of two of its immunotherapy products: an option agreement with Novartis for the development of TG4010 to treat various cancers and an in-licensing agreement with US-based Jennerex, Inc. to develop and market JX594/TG6006, an oncolytic virus. Transgene has bio-manufacturing capacities for viral-based products. Additional information about Transgene is available at www.transgene.fr.

Disclaimer:

This press release contains forward-looking statements referring to the anticipated cash consumption for 2012. The Company’s anticipated cash consumption for 2012 is based on currently anticipated costs for on-going and planned product development and testing, but may increase in the event of unanticipated expenses. For further information on the risks and uncertainties involved in the testing and development of Transgene’s product candidates, see Trangene’s Document de Référence on file with the French Autorité des marchés financiers on its website at http://www.amffrance.org and on Transgene’s website at www.transgene.fr .

CONSOLIDATED INTERIM BALANCE SHEET, IFRS (in thousands of euros)

              ASSETS   NOTE   30.06.2012   31.12.2011 CURRENT ASSETS:             Cash and cash equivalents   2   10,696   1,733 Other current financial assets   2   110,726   137,774 Cash, cash equivalent and other financial assets:   2   121,422   139,507 Receivables       702   624 Inventories       1,175   1,093 Other current assets   3   3,338   2,560 TOTAL CURRENT ASSETS       126,637   143,784 NON-CURRENT ASSETS:             Property, plant and equipment   4   25,478   25,507 Intangible assets   5   1,547   1,581 Financial assets   6   7,134   6,175 Equity consolidated affiliates   6   344   544 Other non-current assets   7   20,049   15,993 TOTAL NON-CURRENT ASSETS       54,552   49,800 TOTAL ASSETS       181,189   193,584               EQUITY AND LIABILITIES   NOTE   30.06.2012   31.12.2011 CURRENT LIABILITIES:             Payables       9,088   10,840 Financial liabilities   8   953   955 Provision for risks       2   3 Other current liabilities   9   9,245   9,319 TOTAL CURRENT LIABILITIES       19,288   21,117 NON-CURRENT LIABILITIES:             Financial liabilities   8   38,179   27,374 Defined benefit obligations   10   3,005   2,794 Other non-current liabilities   9   -   883 TOTAL NON-CURRENT LIABILITIES       41,184   31,051 TOTAL LIABILITIES       60,472   52,168 EQUITY:             Share capital   11   72,723   72,523 Share premiums       427,003   426,041 Retained earnings       (356,655)   (313,030) Net loss for the year       (21,760)   (43,626) Other comprehensive income       (594)   (492) TOTAL EQUITY AND RESERVES ATTRIBUTABLETO EQUITY HOLDERS OF THE COMPANY       120,717   141,416 TOTAL EQUITY AND LIABILITIES       181,189   193,584

CONSOLIDATED INTERIM INCOME STATEMENT, IFRS

(in thousands of euros, except for per share data)

                  NOTE   30.06.2012   30.06.2011 Revenue from collaborative and licensing agreements   12   1,593   3,744 Government financing for research expenditures   12   4,481   4,320 REVENUE       6,074   8,064 Research and development expenses       (23,814)   (23,431) General and administrative expenses       (3,313)   (2,983) Other income and (expenses), net   13   (424)   41 NET OPERATING EXPENSES       (27,551)   (26,373) OPERATING INCOME       (21,477)   (18,309) Interest income and (expenses), net   14   (83)   639 INCOME / (LOSS) BEFORE TAX       (21,560)   (17,670) Income tax expense   15   -   - Income from equity affiliates   6   (200)   - NET INCOME / (LOSS)       (21,760)   (17,670) Net income per share (¤)   11   (0.69)   (0.56) Diluted earnings per share (¤)   11   (0.69)   (0.56)

COMPREHENSIVE INCOME, IFRS (in thousands of euros)

              30.06.2012   30.06.2011 NET INCOME / (LOSS)   (21,760)   (17,670) Foreign exchange gains or losses   24   (2) Reevaluation of hedging instruments   (126)   77 OTHER COMPREHENSIVE INCOME   (102)   75 COMPREHENSIVE INCOME   (21,862)   (17,595) Of which, equity holders of the parent   (21,862)   (17,595) Of which, minority interests   -   -

CONSOLIDATED INTERIM CASH FLOW STATEMENT, IFRS (in thousands of euros)

              30.06.2012   30.06.2011 CASH FLOW FROM OPERATING ACTIVITIES:         NET INCOME:   (21,760)   (17,670) ELIMINATION OF NON-CASH ELEMENTS:         Income from equity affiliates   200   - Non cash interest   323   121 Changes in provisions   135   143 Depreciation and amortization of tangible and intangible assets   1,368   1,305 Payments in shares   436   720 Others   -   23 NET CASH GENERATED FROM / (USED IN) OPERATING ACTIVITIES BEFORE CHANGE IN WORKING CAPITAL AND OTHER OPERATING CASH FLOW:   (19,298)   (15,358) CHANGES IN OPERATING WORKING CAPITAL:         Receivables   (416)   1, 017 Inventories   (82)   (61) Other current asset   (3,992)   (3,953) Payables   (2,081)   (405) Prepaid income   (401)   (1,438) Accrued employee benefits expense   (316)   (591) Other current liabilities   (242)   - NET CASH GENERATED FROM / (USED IN) OPERATING ACTIVITIES:   (26,828)   (20,789) CASH FLOW FROM INVESTING ACTIVITIES:         (Purchase) / disposal of property, plant and equipment   (827)   (1,709) (Purchase) / disposal of intangible assets   (148)   (463) Other (purchase) / disposal   (170)   (390) NET CASH GENERATED FROM / (USED IN) INVESTING ACTIVITIES:   (1,145)   (2,562) CASH FLOW FROM FINANCING ACTIVITIES:         Gross proceeds from issuance of share capital   726   255 Fees paid in relation to capital increase   -   - Conditional subsidies   3,116   13 (Acquisition)/disposal of current financial assets   27,048   29,493 Research tax credit financing   6,500   6,465 Repayment of finance lease liabilities   (478)   (461) NET CASH GENERATED FROM / (USED IN) FINANCING ACTIVITIES:   36,912   35,765 Effect of changes in exchange rates on cash and cash equivalents   24   (2) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:   8,963   12,412 Cash and cash equivalents at beginning of period   1,733   1,379 CASH AND CASH EQUIVALENTS AT END OF PERIOD   10,696   13,791 Investment in other financial assets   110,726   149,424 CASH, CASH EQUIVALENT AND OTHER FINANCIAL ASSETS:   121,422   163,215

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY, IFRS

(in thousands of euros, except for shares data)

                                 

Number of shares

 

Share capital

 

Share premium

 

Retained earnings

 

Other comprehensive income

 

Profit and loss

 

Closing balance net worth

As OF June 30, 2011   31,695,882   72,523   425,320   (313,029)   (146)   (17,670)   166,998 Payments in shares   -   -   720   -   -   -   720 Capital increase   -   -   -   -   -   -   - Net loss for the period   -   -   -   -   -   (25,956)   (25,956)

Change in fair valueof marketable securitiesavailable-for-sale

  -   -   -   -   1   -   1 Cash flow hedging   -   -   -   -   (347)   -   (347) As OF December 31, 2011   31,695,882   72,523   426,040   (313,029)   (492)   (43,626)   141,416 Payments in shares   -   -   437   -   -   -   437 Issuance of shares   87,058   200   526   -   -   -   726 Net loss appropriation 2011   -   -   -   (43,626)   -   43,626   - Net loss for the period   -   -   -   -   -   (21,760)   (21,760) Foreign exchange gains or losses   -   -   -   -   24   -   24 Cash flow hedging   -   -   -   -   (126)   -   (126) Comprehensive income   -   -   -   -   (102)   (21,760)   (21,862) As OF June 30, 2012   31,782,940   72,723   427,003   (356,655)   (594)   (21,760)   120,717

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