Following a negotiation period between Mologen and Oncologie, a global deal was not reached, although the Greater China deal remains in place. Mologen states this was a result of new inferior deal terms being presented to what was originally agreed. Separately, Mologen announced an updated prediction on the timelines for its top-line Phase III IMPALA data readout; it is now forecast for H219 (vs H120 previously). The company now aims to out-license/sell lefitolimod post IMPALA data. 

At SITC 2018, first clinical data was presented on the combination of the immune checkpoint inhibitor Yervoy and lefitolimod in patients with solid tumours. To date, 19 patients have been enrolled and no dose limiting toxicities were encountered at any dose level. The combination was generally well tolerated and safe. Two patients experienced stable disease for 45 weeks (primary peritoneal carcinoma) and 24 weeks (high-grade pancreatic neuroendocrine tumor), respectively (NCT02668770).

We forecast a reduction in FY18 revenue to €3.0m (from €6.0m) and FY19 revenue to €0.0m (€7.0m) as a result of the termination of the Oncologie deal. Q3 costs remained in line with expectations and we maintain FY18 R&D of €7.3m and SG&A of €5.5m. We forecast an FY18 net loss of €14.2m vs €11.1m. Estimated current gross cash of approximately €12m should fund Mologen until mid-2019. In addition, Mologen has announced plans for a new convertible bond of up to €2.7m and an equity capital raise (of up to 50% of the outstanding shares) is proposed. 

We value Mologen at €169m (€18.2/share) vs €188m (€16.6/share) previously, updated for the termination of the Oncologie negotiations; additionally, we have rolled forward our model, updated for FX and number of shares. We now forecast lefitolimod will be out-licensed post the IMPALA trial readout and that any potential future deal signed will have similar terms to those Oncologie originally presented.