In the last six months, mixed readouts in the Phase II SCLC trial (IMPULSE) and the Phase Ib/IIa HIV trial (TEACH) weighed on the stock. Full data packages presented in the next 12 months may yet highlight potential in these indications. Our valuation is adjusted to take into account both the current trial data and visibility of the long-term strategy in certain geographical regions. While long-term potential lies in the lefitolimod Phase III mCRC trial (IMPALA, readout expected in 2019), Mologen has additionally signed a binding term sheet with Chinese iPharma, which could provide €100m+ in revenues over several years and boost the cash position. We value Mologen at €253m.
Top-line data from TEACH, an exploratory, non-randomised Phase Ib/IIa trial testing lefitolimod in HIV-positive patients, failed the primary endpoint of reduction in viral reservoir in 12 patients receiving both antiretroviral therapy and lefitolimod. However, an increased duration of viral control above what is typically expected was observed in one patient out of nine after stopping ART (further analysis ongoing). Full data will likely be presented next March at the Conference on Retroviruses and Opportunistic Infections (CROI). Data were presented at ESMO from the exploratory Phase II IMPULSE trial in small cell lung cancer (SCLC), which demonstrated that it did not meet the primary endpoint of overall survival. However, it showed potential, non-statistically significant advantage in two subgroups. SCLC is a difficult disease to treat and any benefit hints at potential for lefitolimod.
Signed deal terms with iPharma look to aid the development, manufacturing and commercialisation of lefitolimod, particularly in China. Mologen would be eligible to receive a €3m upfront payment, milestone payments of up to €100m, as well as low double-digit royalties and a €2m equity investment (within 12 months following execution of the final licensing agreement). Net cash of €7.6m (gross cash €14.2m) was reported as of 30 June. Monthly cash burn for H117 was €1.9m and current cash reach is expected into Q118.
We now value Mologen at €253m (€7.36/share) vs €252m (€7.33/share) previously. Alterations to our model and valuation predominately relate to the development strategy in certain geographical regions, the removal of MG1601 from our valuation and the addition of the iPharma deal. We note that an improved liquidity situation and better visibility on future developments would have a positive effect on our valuation.