Medigene's Asia Deal

Medigene’s long search for a development partner for its Phase II breast cancer candidate EndoTAG-1 has reached a significant milestone with SynCore Biotechnology acquiring development and commercialisation rights in Asia, Australia and New Zealand. Medigene retains rights in the US and Europe to the paclitaxel-based drug and continues to seek partners for these key territories. Medigene now expects an NDA filing in 2018, so we assume a potential launch in 2019, a two-year delay to our prior estimate, which reduces our valuation by €9m to €87m.

Wider Relationship
SynCore, a subsidiary of Sinphar Pharmaceutical and already a partner of Medigene’s in Taiwan for the commercialisation of genital warts ointment Veregen, will take over all development and commercialisation duties for EndoTAG-1 in Asia, Australia and NZ. Specific financial terms of the deal were not disclosed. Medigene will receive a modest upfront fee (we assume <€1m as the deal does not affect Medigene’s financial guidance for 2012), and is eligible for development/approval milestones and royalties.

50% Cost Of Pivotal Trial Covered
Medigene is now planning a global Phase III pivotal trial for EndoTAG-1 in 400 women with triple-negative breast cancer (TNBC), 50% of whom will be recruited in Asia. SynCore will therefore cover half of the estimated €20m cost of the trial (we assume an average €50k per patient cost for a Phase III cancer study).

Further Partnership Potential
With Medigene making no changes to its financial guidance for 2012 and still expecting existing cash to extend beyond 2013, we assume the company continues to seek EU/US partners to fund the remaining 50% (€10m) of the pivotal study. The desire to secure further partners for EndoTAG-1 and the need to scale up the manufacturing process help to explain the six-year gap to NDA filing. Ultimately, Medigene remains focused on the development of anti-rheumatic agent Rhudex.

Valuation: Reduced By €9m To €87m
The longer than expected development timeline for EndoTAG-1 reduces our valuation of Medigene by €9m to €87m. This includes our net cash estimate of €26m at the end of June 2012 and shows clear upside to the company’s €44m market capitalisation. We have not made any changes to our financial model, which currently predicts that Medigene is likely to have a funding requirement in H214.

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