Market Overview

MOLOGEN and ONCOLOGIE: Global assignment and co-development agreement relating to MOLOGEN's lead compound lefitolimod

  • Term sheet: Global assignment and co-development agreement for lead
    compound lefitolimod
  • Substantial potential payments in milestones and in addition royalties
    – near-term consideration of €23 million
  • Pivotal IMPALA study with lefitolimod would be almost entirely funded

The biopharmaceutical company MOLOGEN AG yesterday signed, with the
consent of the Supervisory Board, a term sheet outlining the framework
for a global assignment of all intellectual property and other rights in
MOLOGEN's lead compound lefitolimod to ONCOLOGIE and an expansion of the
existing global co-development agreement between MOLOGEN and ONCOLOGIE.
The potential total deal value would be over €1 billion plus low double
digit royalties on net sales, representing an attractive upside for
MOLOGEN. MOLOGEN would receive a near-term consideration of €23 million.
This transaction would secure the major part of the funding for the
pivotal IMPALA study until read-out, projected for 2020.

Dr Ignacio Faus, Chief Executive Officer (CEO) of MOLOGEN: "We are
delighted to intensify our ongoing collaboration with ONCOLOGIE, which
would not only cover to a large extent the funding of our pivotal IMPALA
trial but would also allow for a timely conduct of lefitolimod
combination studies to fully exploit its potential in immuno-oncology.
This reflects our common belief that lefitolimod has the clear potential
to become a paradigm-changing compound in this area. Long term revenues
from this deal could reach more than €1 billion."

"Increasing our investment in lefitolimod furthers ONCOLOGIE's mission
to acquire and develop innovative oncology drugs globally. We have great
confidence in the value this agreement with MOLOGEN can bring to our
growing pipeline, and the positive impact our continued collaboration
can have on the lives of cancer patients around the world," said Dr
Laura Benjamin, Chief Executive Officer of ONCOLOGIE.

Walter Miller, CFO of MOLOGEN: "Notably ONCOLOGIE, which is backed by
strong international investors and a team of seasoned scientific and
development experts, starts to emerge as a strong player in the
immuno-oncology area. ONCOLOGIE's global strategy, that leverages the
strengths of both the U.S. and the China regulatory and clinical
opportunities, will enhance the global value of lefitolimod whose
current pivotal trial is a European study."

Global rights and co-development agreement for lefitolimod: Major
part of funding of pivotal IMPALA study can be secured

The term sheet envisages that all rights to MOLOGEN's immunotherapeutic
agent lefitolimod, including intellectual property (IP) and know-how,
will be transferred to ONCOLOGIE. In return, MOLOGEN would receive
short-term as well as development and sales milestone payments.
ONCOLOGIE would be solely responsible for all development, manufacturing
and commercialization activities relating to lefitolimod globally and
bear the corresponding expenses. Under the co-development agreement,
MOLOGEN would carry out certain manufacturing activities to supply the
clinical medication. ONCOLOGIE would also obtain a Right of First
Refusal to license the optioned products, EnanDIM® and
MGN1601 – but excluding the MIDGE® technology.

With such a transaction, MOLOGEN would secure most of the funds needed
for the completion of IMPALA. The remaining part would be raised through
further capital measures. A substantial and long-term upside of
attractive development payments, as well as sales milestones and
royalties, remains with MOLOGEN. This agreement would allow the project
to be almost entirely funded until the read-out of the pivotal IMPALA
study which is expected in 2020.

The transaction is still subject to the agreement of the parties in a
definitive transaction documentation.

In addition to finalizing the IMPALA study, the co-development agreement
would provide an opportunity to fully realize the potential of
lefitolimod in combination with other immuno-oncology drugs and in
additional indications outside the colorectal cancer (CRC) maintenance
setting. Success in additional indications would bring in additional
milestones and royalties representing substantial value for MOLOGEN.

MOLOGEN eligible to receive short-term and milestone payments as well
as royalties

As consideration for the global assignment of all rights to lefitolimod
and the provision of the co-development services, MOLOGEN would receive
short-term as well as development and sales milestone payments
comprising the following elements:

First of all, to fund the further development of lefitolimod, MOLOGEN
would receive a near-term consideration in the aggregated amount of €23
million consisting of (1) an initial purchase price of the global rights
in the amount of €3 million due at the signing of the definitive
transaction documents, (2) subsequent quarterly cash payments reflecting
MOLOGEN's budgeted expenses for such quarters in a total amount of €7
million, and (3) a commitment by ONCOLOGIE to run several clinical
trials designed to expand the clinical setting for lefitolimod beyond
the IMPALA indication in the amount of €9 million. (4) a commitment of
ONCOLOGIE to invest a total amount of €4 million into two zero interest
mandatory convertible bonds ("MCB") with a term of five years and a
nominal value of €2 million each. Such MCBs would be issued by MOLOGEN
to ONCOLOGIE without subscription rights of the existing shareholders
backed by the existing conditional capital 2018. The initial conversion
price will correspond to the 10-days volume weighted average (stock)
price (Xetra) immediately preceding the Company's decision to actually
issue the respective MCB plus a 30% premium. The first MCB is envisaged
to be issued by 31 August 2018. The second MCB is envisaged to be issued
at the time of signing of the final contract.

ONCOLOGIE would place an amount of €5 million, including the €2 million
for the second note and €3 million for the global assignment of all
intellectual property, in an escrow account within twenty days of
signing the term sheet.

The subscription of the first MCB also discharges ONCOLOGIE's equity
investment obligation in the amount of €2 million under the existing
co-development agreement announced on 13 February 2018. The funds
referred to under (1), (2) and (4) above (i.e. a total amount of €14
million) will be used for the completion of the IMPALA trial until
read-out including the preparation of the production upscale. In
addition, ONCOLOGIE would invest a minimum of additional €9 million in
combination studies as part of the co-development agreement beyond

Secondly, ONCOLOGIE would be responsible for all future development
activities, including regulatory interactions and production of drug
material to support the future commercialization of lefitolimod.

Thirdly, the parties agreed on development and commercialization
milestones. They would be due upon reaching predefined development steps
as well as market approval. MOLOGEN would be eligible to receive up to
approximately €200 million in development and regulatory milestone
payments based on IMPALA success, and on the success of additional
indications that the parties intend to further explore. After
registration of lefitolimod in major territories, additional commercial
milestones could add up to more than €900 million depending on potential
future sales. Furthermore, ONCOLOGIE would pay MOLOGEN tiered royalties
on a low double-digit percentage average with a peak rate of 16%. In
case of a licensing by ONCOLOGIE to a third party outside Greater China,
MOLOGEN is entitled to receive 35% of all licensing receipts in
condition of a positive read-out of the IMPALA study and otherwise 30%
but not less than 50% of the agreed milestones and royalties for
territories outside Greater China. In the event Oncology would
commercialize lefitolimod on their own or by licensees in the Greater
China territory, MOLOGEN would receive 100% of the agreed milestone
payments and royalties.

The parties have agreed on a three months exclusivity period to
negotiate the definitive transaction documentation. A condition for the
closing of the assignment of all rights in lefitolimod is the further
funding of ONCOLOGIE in a mid-double-digit million amount.


ONCOLOGIE is an oncology therapeutics company committed to delivering
better outcomes for cancer patients through an improved understanding of
which patients will benefit from each drug in the pipeline. The current
pipeline is focused on mid-stage clinical programs that modify the
immune system to enhance efficacy of current standards of care and
emerging immunotherapy agents. Headquartered in Boston, Massachusetts
and Shanghai, China, Oncologie is working with global partners to
acquire and develop innovative drugs for cancer patients around the


MOLOGEN AG is a biopharmaceutical Company and a pioneer in the field of
immunotherapy on account of its unique active agents and technologies.
Alongside a focus on immuno-oncology, MOLOGEN develops immunotherapies
for the treatment of infectious diseases.

The focus of the development work is on the product family of DNA-based
TLR9 agonists. This includes the lead compound lefitolimod and the
next-generation molecule family EnanDIM®.

The immunotherapeutic agent lefitolimod is the Company's lead compound
and is currently being investigated in a pivotal trial. It is regarded
as the best-in-class TLR9 agonist. Treatment with lefitolimod triggers a
broad and strong activation of the immune system. On account of this
mode of action, lefitolimod could potentially be used in various
indications. Lefitolimod is currently being developed within the
framework of a pivotal study for first line maintenance therapy for
colorectal cancer. Key data of the phase II IMPULSE study in small cell
lung cancer have been announced in April 2017, and the final analysis in
the first quarter 2018 confirmed the data. Furthermore, data from the
extension phase of the TEACH study in HIV have also been published in
2017. In addition, lefitolimod is currently being investigated in a
phase I combination study with the checkpoint inhibitor ipilimumab
(Yervoy®) in various cancer indications.

Along with various checkpoint inhibitors, lefitolimod, which is being
investigated as part of a phase III clinical trial currently, is one of
the few near-to-market product candidates in the field of

MOLOGEN's pipeline focus is on new innovative immunotherapies to treat
diseases for which there is a great medical demand in particular.

MOLOGEN AG is a publicly listed Company, headquartered in Berlin. The
shares (ISIN, DE000A2LQ900/SIN: A2L Q90) are listed in the Prime
Standard of the German Stock Exchange.

Note about risk for future predictions

Certain information in this report contains forward-looking
statements or the corresponding statements with negation or versions
deviating from this or comparable terminology. These are described as
forward-looking statements. In addition, all of the information given
here that refers to planned or future results of business areas, key
financial figures, developments of the financial situation or other
financial figures or statistical data, is to be understood as such
forward-looking statements. The company points out to investors that
they should not rely on these forward-looking statements as predictions
about actual future events. The company is not obligated and refuses to
accept any liability for the forward-looking statements and has no
obligation to update such statements in order to accurately reflect the
current situation.

MOLOGEN AG · Fabeckstr. 30 · 14195 Berlin · Germany I
PHONE +49-30-841788-0 I FAX +49-30-841788-50 I EMAIL
Amtsgericht Berlin-Charlottenburg · Germany I TAX NO. 29 / 446 / 30918
DE 192 609 647 I BANK DETAILS Berliner Sparkasse / LBB AG · BLZ
100 500 00 · ACCOUNT NO. 12 20 01 46 60 · BIC BELADEBEXXX
DE53 1005 0000 1220 0146 60 I EXECUTIVE BOARD Dr. Ignacio Faus
(Chairman) · Dr. Mariola Söhngen · Walter Miller · Dr. Matthias Baumann

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