The biopharmaceutical company Mologen signed 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.
“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,” Dr. Ignacio Faus, Chief Executive Officer (CEO) of Mologen said. “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.
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.
Mologen would secure most of the funds needed for the completion of IMPALA. The remaining part would be raised through further capital measures. 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.
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.
Oncologie would be responsible for all future development activities, including regulatory interactions and production of drug material to support the future commercialization of lefitolimod.
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.