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

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 IMPALA.

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, Inc

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 world. WWW.ONCOLOGIE.INTERNATIONAL

MOLOGEN AG

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 immuno-oncology.

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.

www.MOLOGEN.com

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 info@mologen.com I www.mologen.com REGISTERED OFFICE Berlin · Germany I REGISTER OF COMPANIES HRB 65633B · Amtsgericht Berlin-Charlottenburg · Germany I TAX NO. 29 / 446 / 30918
VAT REG. NO. DE 192 609 647 I BANK DETAILS Berliner Sparkasse / LBB AG · BLZ 100 500 00 · ACCOUNT NO. 12 20 01 46 60 · BIC BELADEBEXXX
IBAN DE53 1005 0000 1220 0146 60 I EXECUTIVE BOARD Dr. Ignacio Faus (Chairman) · Dr. Mariola Söhngen · Walter Miller · Dr. Matthias Baumann I CHAIRMAN OF THE SUPERVISORY BOARD Oliver Krautscheid

View source version on businesswire.com: https://www.businesswire.com/news/home/20180817005431/en/