Medincell

Hello, everyone. Welcome to this video conference dedicated to the presentation of our half-yearly results, meaning the period from April 1 to September 30, 2021. Today, we published two documents after the close of the stock market. Firstly, a press release with a summary of our financials for this period. Secondly, an extended report that you can download on our website. This conference will last 45 minutes maximum. You can send your question by using the chat module to the right of your screen. You can also like the questions so that they are given higher priority. For this meeting, I'm in Paris with Christophe Douac, CEO of Making Cell. Hello, Christophe. Hello, David. Hi to all. And Remy Arambo, our chief financial officer. Hello, Remy. Hello, David. Hello, everyone. Joël Richard, our Chief Development Officer, is joining us live from our headquarters in Montpellier. Hello, Richard. Hello, Loël, sorry.

Hello, everybody.

So, we will start with an update of our portfolio of products based on our long-acting injectable technology, BIPO. The main event is obviously the progress of our most advanced product, NDC-IRM, a program developed with TIVA we have two major announcements in the past months. First, the acceptance of the NDA, the new drug application, which is the request for marketing authorization. It was accepted for review by the FDA in August. Christophe, would you like to make a comment on why this is so significant for Medincel? Thank you David.

Yes, indeed. It is a fundamental event for the company. If we take into account the usual delays, since the filing was accepted by the FDA in August, the approval should happen before summer 2022. TEVA confirmed that commercialization should start in 2022 as well, of course, subject to the approval from the FDA. As a reminder, The antipsychotic long-acting injectables market has today a size of 4 billion in 2021, 7 billion worldwide, 4 billion in the States, sorry, and 7 billion worldwide. Its growth, average growth rate in the last three years has been 14% per year, one-fourth, 14%. And there is still a lot of needs since only 160,000 patients are treated today with antipsychotic long acting injectables in the States. We believe we have the ideal partner, a partner with which we have a very strong relationship, a relationship that started seven years ago. Teva, our partner, is showing its dynamics, and its CEO, Kerr Schultz, has not done a single analyst meeting in the last year without mentioning our product MDC IRM. Beyond this, and we've communicated on them, the presentations by Teva at the psychiatry annual Congress, November 1st, were also very meaningful. Everything indicates that Teva is preparing all it needs to do for the potential approval in 2022.

Thank you, Christophe. So as you mentioned, the second major event was a presentation by Teva of 16 posters during a Thai Congress at the end of October. Thai Congress is the largest American psychiatric conference. Maybe you can explain why this is so significant for Medince. Yes.

Well, not only Teva presented at the Congress, David, but it also presented 16 abstracts, 16. This is, again, a testimony to the dynamics of TEVA. And all the data that was presented confirms what we hoped to see at MedinCell. Our technology has allowed us and TEVA to develop a product which should be a true game changer in the field of long-acting injectables and antipsychotics. We have developed a product which is sub-Q and not intramuscular, which is injectable with a sharp needle, which is ready to use, easy to use, very flexible. On top of all these attributes, The data shows that the product has excellent efficacy and tolerability. All these results go beyond, you know, our hopes. It is a great product. Its potential is enormous, as you can understand. And I can tell you that our teams are extremely proud. There's a lot of excitement at Made in Cell. And, you know, I will quote Kershaw, the president of Teva, and this should become the preferred treatment for patients.

Thank you, Christophe. We also received some information from our partners, Chiva and AIC, about our partnership programs.

Yes, as usual, we've asked them to tell us which information they could share about the programs that they are financing and which they are developing. On the Teva side, we are awaiting news on the next steps for MDC-TJK and MDC-ANG, respectively, potential phase three and potential phase one. It will be in 2022. We don't have any more details that our partner wishes to share right now for regulatory, strategic and competition reasons. On AIC and MDC CWM, our partner confirms that they are ready to launch phase three, but the interactions with the FDA continue to finalize the protocol of a product which would be a first in its category. A lot is at stake. The objective is to maximize the chances to get the approval to go to market. but also to guarantee the commercial success of MDC CWM.

Thank you, Christophe. Maybe now a few words on our TTG COVID-19 program. We announced a few days ago that we received €3 million loan from BPI France for the development of this product. Can you tell us where we stand on that?

Yes, the program is moving forward. We explained that the priority was to do an efficacy clinical trial that is very well structured to have a proof of efficacy that nobody can discuss in prophylaxis, but also to optimize the development of our long-acting injectable. The preparation for this trial are very advanced. And we are planning that the trial will start in Europe as soon as January in several European countries where vaccination rates are lower than they are in France. And the protocol of the trial will be described when the trial starts.

Thank you, Christophe. Is there anything else you want to highlight regarding our portfolio? Yes.

The other programs are moving ahead on plan, especially our project in contraception. You know, I remind you that we received an envelope of $23 million from the Bill and Melinda Gates Foundation to move this program into clinicals. And most importantly, I really believe we are entering a period which I've been waiting for 10 years. We have completed a phase three, a successful phase three. It's a major event in our industry and it validates the technology, brings a lot of credibility to the company. And as we thought, Discussions with partners are accelerating. We are prepared. News to come.

Thank you, Christophe. I turn to you, René, now. Let's talk about our financial results. In a few words, René, can you describe our situation at the end of the period on September 30?

Absolutely, David. At the end of September, we have a solid cash position of 37.4 million euros. composed of 34 million in cash and cash equivalent and 3 million in non-risk investments. Since September, since the end of September, we have received 3 million euros of the research tax credit from the year 2020. And perhaps you have also read that we have received 3 million euros from BPI France to support the product NDC TTG. And we have also received a partial payment of a grant that we received from the, of the 1 million that we received from this, from the government in this scheme called . Thank you, Remy.

Can you highlight what are the highlights of the period in terms of revenue and expenses?

In terms of revenue, it grew by 30% to reach 4.1 million euros. These 4.1 million euros are split between 1.6 of the services that we provide to the Bill and Melinda Gates Foundation for the program WWM, with UNITED for the program MDC STM. And in addition to that, we also recorded 2.5 million euros in the research tax credit. Regarding the operational expenses, they also grew this time by 36% to reach 15.3 million euros. However, let's put this growth into context. let's put us back, let's step back over 18 months ago when this pandemic started. And there were a lot of uncertainties then, and we had to take measures in order to maximize the cash that we had then. So we had to put in place austerity measures, prioritizing the types of expenses. There were certain teams that were on partial activity, but since the end of last year, we're going full-fledged. F. Ponta and Apurva P.E.: : Investing in our products advancing them into the next stages, therefore, these high growth. F. Ponta and Apurva P.E.: : On the financial expenses they decrease by 79% to finish at 544 K euros last year this increases explained because last year we had to reevaluate the cost. of the EIB loan regarding the variable remuneration that was due to a renegotiation and an amendment that was signed with them in the mid of 2020.

Thank you very much, Rémi. Can you tell us if these numbers fit with what was anticipated? And can you tell us what is the expected evolution of our finances over the current semester?

Absolutely. We're in line with our expectations. By the end of March 22, our fiscal year ends in March next year, we should receive $3 million from TEVA thanks to MDC-TJK. We're anticipating that it goes and it advances into phase three, that we continue our collaboration with the Bill and Melinda Gates Foundation and Unitaid. Therefore, our top line is expected to be more or less at the same level as we finished last year at around 12 million euros. In regards to expenses, we should have a more moderate growth than the initial six months to finish them at around 31 million or plus 15%.

Thank you, René. Can you tell us when do we anticipate receiving the first revenue from Teva following a potential NDC IRM commercialization?

Right. So today with the three products that we have with Teva, We have in this contract, we have three different types of revenues. We have milestones that have gone to development. We have commercial milestones that we will receive once the products attain a certain level of sales. And third, we have the royalties, medium to high single digit, and that from the first product that is sold on the market. Let's go back to the milestones for each product. The total amount of milestones can reach up to 122 million, and the maturity of these milestones are commercial ones. So if we combine the three products, the total amount of milestones that we can receive is $366 million. Now, to give you an idea of the split between the development and the commercial milestones, let's take the example of MDC IRM. Gorka Puente, Today, to date, we have received over $10 million in development milestones and the next one that we're expecting on development is on the marketing authorization that this product will get from the FDA we're expecting $4 million. Gorka Puente, From then. Gorka Puente, Then over $100 million will be dedicated to the commercial milestones that we're expecting to receive in the coming years. Gorka Puente, Now the question is, do we have the confidence that we will receive the totality of these commercial milestones in the years to come, and our feeling is that today, yes. given the very positive results of the phase three, as Christophe mentioned, should be the preferred product for patients, for healthcare professionals, we're convinced of the potential of this product. Now, the royalties, they will start kicking in as of 2022 when the first product is commercialized. So from then on, each quarter, we will be recording and receiving the cash of these royalties again mid to high single digit from the first sales so this is very exciting we're expecting to receive these royalties again next year if there's the fda approval of course but it is something that it's a new stage for the company coming with regular increasing income and we're preparing the company for that

Thank you very much, Remy. I think it was pretty clear. Christophe, last week we announced that we secured 1 million euros in the framework of France Finance to extend our lab capacity. Can you provide more details about the use of this plan?

Yes, definitely, David. We'll soon be moving to a new building extension. This will free up room to extend our current lab. And this is absolutely necessary to help with the growth of the company. As you know, the lab is where it happens at Made in Cell. This is where the formulations are designed, tested, and determined to go into regulatory development. So we had put the new lab on hold at the beginning of the pandemics. And this, you know, one million dollar, sorry, one million euros will help us, you know, to start it and put it back on track.

Thank you very much, Christophe. A lot of people connected today, but only one question received. So I take the question. Christophe, I don't know if you can answer, sorry. How many cells? reps with Teva have detailing your product? And how does this compare to individual with spare service? Thanks. Okay.

Two great questions. Thank you. You know, unfortunately, Teva will not disclose, you know, how many sales forces they will bring to this program. You know, I think we have enough clues to tell us that they will do as much as they can to get a successful launch based on the data, based on the comments from the CEO. It's quite rare to see the president of a company announcing a product like this at every analyst meeting. We know that Teva has a great reputation to launch products the last launch ostedo has been a great success you know bringing a very significant additional revenue to the company and so and this is the same sales force as the one that will sell our product i believe um on the second question in the viewer and per service okay so in the viewer actually did uh bring I got the approval for the first sub-Q program. When I'm asked about this question, I usually show the needle that is needed to inject a product, gauge 18, and usually I show it to people because they can see it from the other side of the room and it's not very appealing. And their volumes of injections are quite high as well. So there's a lot of attributes that a product has that they don't have. And certainly not the quality of data that we have obtained in phase three, not only in terms of quality, but also in terms of duration. I believe our clinical trial was the longest trial that has been done in the long acting injectables and has shown many improvements that people don't see usually.

Thank you, Christophe. Another question, and I think that Joëlle can answer it. Is your LRI selecopsy being explored to treat osteoarthritis? Thank you Remy, sorry.

Joel? Yes, this is a good question. I'm not sure we can... really comment on this at the present time. Yeah, this is, let's say, one of the opportunities that may need to be investigated further in the next months or years. But at this stage, I think we cannot really comment on this.

Thank you, Joel. So no more question. I think we reach the end of this video conference. Christophe,

I can give you the floor for conclusion. Yes, thank you very much for attending our conference. I wish all of you great holidays. Merry Christmas. And I hope all your families and yourself will stay safe. And we are looking forward for more news in the new year. 2022 should be an exciting year, should be the year of approval of our first product. And it's extremely exciting for all of us at MedinCell. Thank you very much.

Thank you, Joel. Thank you, Emil. Thank you, Christophe. Thank you, everyone. Thank you.