09.11.2017

Nine-month result of MOLOGEN AG: key milestones reached in clinical studies, funding and licensing negotiations

• U.S. investor Global Corporate Finance is providing further capital and acquiring a stake of up to 10% in MOLOGEN • Binding term sheet signed with Chinese company iPharma for the development, manufacture and commercialization of lefitolimod in the markets of China, including Hong Kong and Macao, Taiwan and Singapore • Presentation of first results from the TEACH and IMPULSE clinical studies • Outlook slightly changed for full year 2017

Today, the biopharmaceutical company MOLOGEN AG (ISIN DE0006637200; Frankfurt Stock Exchange Prime Standard: MGN) presented its result for the first nine months of the current financial year. MOLOGEN recently achieved an important milestone in its further funding. In October, the company signed a contract with U.S. investor Global Corporate Finance (GCF), which committed to purchase up to approximately 10% of the share capital of MOLOGEN. Based on the current share price, MOLOGEN could raise gross proceeds of around €10 million through this capital increase. In the third quarter of 2017, out-licensing activities in relation to the lead product candidate lefitolimod were again the clear focus for MOLOGEN. A decisive step was made in this area in August 2017: MOLOGEN and the Chinese drug development company iPharma signed a binding term sheet for a license agreement regarding the development, manufacture and commercialization of lefitolimod in China, including Hong Kong and Macao, 

Taiwan and Singapore, as well as for a cooperation to jointly develop lefitolimod in oncol-ogy indications. In September, MOLOGEN presented key data from its IMPULSE phase II clinical trial in patients suffering from an extensive disease stage of small-cell lung cancer at the European Society for Medical Oncology (ESMO) Conference in Madrid, Spain. At the start of August, MOLOGEN published the key results for its extension phase of the phase Ib/IIa TEACH study in the indication HIV. 

Dr. Mariola Söhngen, CEO of MOLOGEN AG: “In the past nine months, we have come a great deal closer to achieving our objective of soon out-licensing our lead product lefitolimod. Through the planned cooperation with iPharma, we have reached a first important milestone. This will help us progress in the further development of lefitolimod and paves the way for additional licensing agreements in the future. The future funding of MOLOGEN is an equally important matter for the company. In this area, we have attracted an important investor from the USA with GCF.” 

Funding presumably secured until mid-2018: U.S. investor committed to acquire up to 10% of MOLOGEN

The signing of a Share Subscription Facility for a cash capital increase with the U.S. investor GCF in October 2017 has presumably secured the funding of MOLOGEN until the middle of 2018. Accordingly, GCF has committed to purchase up to 3.4 million MOLOGEN shares, which corresponds to approximately 10% of the current share capital. As a result, GCF could become a new major shareholder of MOLOGEN. The shares will be issued to the new investor in several tranches from MOLOGEN’s authorized capital 2017 and excludes the subscription rights of exist-ing shareholders. Under the terms of the agreement, MOLOGEN has the right – but is under no obligation – to issue, in its sole discretion, several Draw Down Notices in an amount of up to €1 million each for a period of up to 30 months. At the same time, MOLOGEN is still completely free to conduct additional or other capital measures. The company currently plans to fully exer-cise its draw down rights under the Share Subscription Facility. Based on the current share price, MOLOGEN could raise gross proceeds of around €10 million. Depending on the current share price when exercising, the proceeds could be both above and below €10 million.

The funds raised will above all be used to continue with the implementation of the “Next Level” strategy. 

First licensing agreement for lead product lefitolimod in view

The signing of a binding term sheet with the Chinese drug development company iPharma for a collaboration regarding the development, manufacture and commercialization of MOLOGEN’s lead product candidate, the immune surveillance reactivator (ISR) lefitolimod, marks an important step for the planned commercialization of lefitolimod. The final agreement consists of two parts: First, a license agreement including sublicense rights under which MOLOGEN grants iPharma an exclusive license for the development, manufacturing and commercialization of lefitolimod in the markets of China including Hong Kong and Macao, Taiwan and Singapore. The second part of the contract comprises an agreement for a potential cooperation in the further development of lefitolimod in oncology indications following a previously agreed development plan and in the defined territory and on a global level. MOLOGEN and iPharma will share the financial returns from this joint development of lefitolimod. 

On signing the agreement, iPharma is to make an initial payment of €3 million and a capital in-crease amounting to €2 million within a period of 12 months following the execution of the final license agreement. In addition, further milestones have been defined which are due on achieving predefined development steps, provided that certain study phases or sales thresholds in com-mercialization are reached. Overall, MOLOGEN could gain as much as €100 million through these payments. The company would also receive royalties, at a low double-digit percentage of sales. The final license agreement with iPharma is expected to be concluded by the end of 2017.

Important first results from TEACH and IMPULSE clinical studies

When it comes to the current clinical studies with the lead product candidate lefitolimod, MOLOGEN has made important progress in the last few months: in mid-September, key data from the exploratory IMPULSE phase II clinical trial in patients suffering from an extensive dis-ease stage of small-cell lung cancer was presented at the ESMO Conference in Madrid, Spain. The study – for which the main results were published in April – delivered notable results with regard to overall survival in two relevant patient subgroups when compared with the control group. Notably, a strong overall survival signal was observed in patients with a low count of activated B cells who were treated with lefitolimod. This substantiates the hypothesis that activated B cells may serve as a valid biomarker in the further development of lefitolimod in this relevant subgroup of patients with extensive-disease small cell lung cancer. The final results of the IMPULSE study are expected to be available in the first quarter of 2018. 

At the start of August, MOLOGEN presented key results of the phase Ib/IIa TEACH trial in the indication HIV that was carried out in collaboration with Aarhus University Hospital in Denmark. The study provided important positive findings pertaining to the safety profile and the effects of lefitolimod on the reactivation of the immune system in HIV. This suggests that lefitolimod could play an important role in combination therapies for the treatment of HIV in the future. In January 2017, the Danish Aarhus University received a grant of US$ 2.75 million from the U.S. biophar-maceutical company Gilead Sciences, Inc. to finance a clinical trial in HIV positive patients on antiretroviral therapy (ART), in which MOLOGEN’s TLR9 agonist will be investigated in combina-tion with innovative virus-neutralizing antibodies. Preparations are currently underway for the study to start in 2018. 

Beginning of November, MOLOGEN received the approval for a grant of approximately US$ 2.6 million from the Global Health Innovative Technology (GHIT) Fund, Tokyo, Japan. This is a part of the total grant amounting to US$ 3.6 million that GHIT Fund awarded to an international con-sortium – which includes MOLOGEN – for the further development of a leishmaniasis vaccine based on MIDGE® technology. MOLOGEN will initially be providing the vaccine on a transitional basis for the studies which will be conducted as part of this project and at the same time will support activities for outsourcing the production of the vaccine to a contract manufacturer. Pursuant to the “Next Level” strategy, MOLOGEN is not planning to continue the studies itself, with these activities instead to be taken on by a partner in future.

Expenses for research and development (R&D) remain high due to the  full patient number having been recruited for the IMPALA study 

R&D expenses in the amount of €10.6 million are almost on a par with the previous year's level, while EBIT is €-14.5 million and therefore slightly down year on year (€-14.3 million). 

The decline in liquid funds to €9.8 million as of 30 September 2017 (31 December 2016: €20.5 million) stems from the cash burn in the scope of operating activities. As of the reporting date of 30 September 2017, MOLOGEN AG’s shareholder’s equity amounted to €-2.2 million (31 December 2016: €11.8 million). The further decrease is essentially due to the increase in the accumulated deficit. 

Monthly cash consumption amounted to an average of €1.8 million per month in the first nine months of 2017 and was therefore higher than the value of €1.6 million in the same period of the previous year. 

Outlook for full year 2017 slightly adjusted

Overall, MOLOGEN developed positively in the first nine months of the current financial year. Through the capital measures that were successfully completed at the end of 2016 and the start of 2017 as well as the recent agreement with U.S. investor GCF for the subscription of new shares, the funding of MOLOGEN AG has been presumably secured until mid-2018. The mile-stone of €3 million, presumably due by the end of the year within the framework of the final agreement with iPharma as well as potentially stable expenses for R&D could lead to a corre-sponding improvement of the forecasted annual result. In addition, the Executive Board also confirms the statements contained in the Annual Report 2016 with regard to objectives in the fields of research and development, cooperations and partnerships, earnings and liquidity development as well as personnel. 

MOLOGEN AG’s full interim report for the first nine months of 2017 can be found on the compa-ny’s website at: www.mologen.com.

MOLOGEN AG

As a biopharmaceutical company, MOLOGEN AG is considered a pioneer in the field of immuno-therapy 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 immunotherapy lefitolimod (MGN1703) is the company’s lead product and is regarded as the best-in-class TLR9 agonist. Treatment with lefitolimod triggers a broad and strong activation of the immune system. In contrast to other TLR9 approaches, lefitolimod contains only natural DNA and may therefore be less prone to non-specific side effects. The resultant broad therapeutic window allows for both systemic treatment (in particular, subcutaneous use) and intra-tumoral administration. On account of this mode of action, lefitolimod is an immune surveillance reactiva-tor (ISR) and has the potential to be used in a variety of different indications. The ISR lefitolimod (MGN1703) is currently being developed within the framework of a pivotal study for first-line maintenance therapy for colorectal cancer. The phase II IMPULSE study in small cell lung cancer is showing positive results in two previously defined and clinically relevant patient sub-groups, even though the primary endpoint of overall survival in the overall study population was not met in this very challenging indication. Detailed analyses of IMPULSE data and the recently published TEACH data of the extension phase are currently being conducted. In addition, lefitolimod (MGN1703) is currently being investigated in a phase I combination study with the checkpoint inhibitor ipilimumab (Yervoy®) in various cancer indications. Alongside various checkpoint inhibitors, lefitolimod is one of the few product candidates in the field of immuno-oncology which is close to market. It is being investigated as part of a phase III clinical trial at present.

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

www.mologen.com

Important note:

This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in the United States, Australia, Canada, Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to in this press release have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from registration or in a transaction not subject to the registration requirements of the Securities Act. There will be no public offer of the securities in the United States of America. Subject to certain exceptions under the Securities Act, the securities referred to herein may not be offered or sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan.

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