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On the 20th of February 2018, MOLOGEN AG entered into a financing agreement with the European High Growth Opportunities Securitization Fund (EHGO), which is advised by Alpha Blue Ocean (ABO). According to the agreement, MOLOGEN can require EHGO to subscribe for the former’s convertible bonds that have an aggregate amount of EUR 12 million over a period of two years.

These convertible bonds will be issued in 24 phases (tranches) of EUR 500,000 at MOLOGEN’s request, with a waiting period of at least ten trading days after the issuance of a tranche before a new request can be made. The right to make such a request is also subject to various conditions such as the absence of a change of control and the required authorisations made under stock corporation law.

MOLOGEN is among the pioneer companies in the field of immunotherapy, with the firm’s focus trained on developing highly innovative solutions to tackle severe infectious diseases and oncology. The company has made use of various technologies in the fields of immunology and molecular medicine that can help the human immune system fight diseases. In its operations, MOLOGEN has made use of patent-protected technology platforms that enable it to produce effective and well-tolerated drugs that meet a medical need in the market.

EHGO is a Luxembourg-based institutional investment firm that focuses on providing financing to innovative companies on a pan-European basis. The firm is advised by Alpha Blue Ocean, which was founded by Pierre Vannineuse. ABO is investment manager to a family of funds and focuses on financing companies with innovative solutions while remaining non-invasive in the management of these portfolio companies. Many of the firms that ABO has invested in are found in sectors such as energy, mining, technology and healthcare.

Deal Terms

Under the terms of the financing agreement, the bonds can be converted at EHGO’s discretion, but the conversion becomes mandatory 12 months after the relevant tranche has been issued. The proceeds from the issuance of the bonds put together with a capital increase announced around that time would be around EUR 17 million, a figure that would secure MOLOGEN’s financing of its operations and the implementation of a “Next Level” strategy.

While commenting on the deal, MOLOGEN’s Chief Financial Officer, Walter Miller, said that the flexible financing facilitated by Alpha Blue Ocean would help the firm’s short- and mid-term needs. Pierre Vanninuese, manager of EHGO and Alpha Blue Ocean Chief Executive Officer, was particularly happy that ABO had signed a leader in infectious disease immunotherapeutic solutions, which also happened to be the firm’s first transaction in Germany. He also noted that ABO was confident in MOLOGEN’s management and ability to take its product solution to the next level.

Lead Product

Among MOLOGEN’s product offerings is the immunotherapy lefitolimod (MGN 1703), which is the company’s lead product. Treatment using this product triggers a strong activation of the human immune system, which makes it an immune surveillance reactivator (ISR). Lefitolimod is being developed within the guidelines of a study as a therapy for various cancers, including colorectal and small cell lung cancer. More about how it’s designed to fight against these diseases is explained in the PDF article.

The “Next Level” strategy program mentioned has a framework that ensures the focus is on lefitolimod and a next-generation technology called EnanDIM®, with the aim being to commercialise these products. With much of the focus on these two products, the development of a therapeutic vaccine for renal cancer called MGN1601 has been put on hold.

In the long run, however, when lefitolimod is successfully licensed, MOLOGEN hopes to continue the development of MGN1601. Other products will be spun off or sold with their clinical candidates and progenies.