Current report 4/2024 – Celon enters into collaboration agreements with Tang Capital to create Novohale Therapeutics, LLC and advance Falkieri into global Phase 3 development for bipolar depression; and delayed disclosure of confidential information about the signing of a term sheet.

On 4 April 2024, Celon Pharma S.A. (the “Company” or “Celon”) and Tang Capital Management, LLC signed a non-binding term sheet (the “Term Sheet”) setting out the terms and conditions of the collaboration agreements between the Company and Tang Capital Management, LLC and its controlled affiliates (“Tang Capital”), which provided for an investment by Tang Capital in Celon, the creation of Novohale Therapeutics, LLC and the conduct of the first, acute-treatment Phase 3 study of esketamine dry powder inhalation (“Falkieri”) in bipolar depression (the “Study”).

On 22 May 2024, the Company and Tang Capital have entered into the collaboration agreements, which provide for the following:

  1. a direct investment by Tang Capital in Celon, consisting of the subscription for 2.700.000 newly issued ordinary bearer shares in the form of a private placement with the exclusion of the pre-emptive right of the Company's existing shareholders (i.e., pursuant to Article 431 § 1 of the Comercial Companies Code) in exchange for a cash contribution in the total amount of PLN 40.500.000 (i.e., for the issue price of PLN 15 per each share);
  2. the creation of Novohale Therapeutics, LLC (“Novohale”), a Delaware, U.S.A., limited liability company jointly owned by Celon and Tang Capital. Mr Kevin Tang will be CEO of Novohale, which will be governed by a board consisting of members from both Celon and Tang Capital. Novohale will be initially capitalized with USD 30,000,000, including a USD 20,000,000 investment from Celon and a USD 10,000,000 investment from Tang Capital. Above capital will be invested by both partners over a 2-year period. Additionally, Celon will contribute to Novohale its worldwide, excluding Poland, intellectual property rights in Falkieri permitting Novohale to advance Falkieri. Celon will be entitled to approximately 80% interest in the profit and loss and net assets (economic interest) of Novohale, while maintaining approximately 20% of the voting interest of Novohale. This will allow Novohale the autonomy to develop Falkieri and conduct the Study, while maintaining majority economic interest in Novohale for Celon. In the event Novohale conducts an initial public offering, Celon’s voting interests will become proportional to its economic interest;
  3. Celon will have the option to purchase all of Tang Capital's shares in Novohale, at any time between 1 January 2025 and the 60th day after the date that the Study results are delivered to Celon, for the aggregate price of: (i) two and a half times Tang Capital's current investment in Novohale and (ii) 5% of future worldwide, excluding Poland, sales of Falkieri (Royalty Payment) and/or 5% of any proceeds of any disposition of Falkieri. Conversely, if Celon does not execute its option, Tang Capital will have the option to invest a further amount of up to USD 30,000,000 in Novohale; and
  4. Tang Capital will provide the management expertise and clinical personnel to conduct the Study and Celon will supply Falkieri to Novohale.

As a result of the collaboration agreements described above, the Company has secured funding for the next stage of development of Falkieri, and, importantly, has engaged a strategic partner with many years of experience in clinical development of innovative medicines to provide management and expertise, which meets a key need of the Company.

Tang Capital Management, LLC is a U.S.-based, life sciences-focused investment company founded in 2002. Kevin Tang, Tang Capital’s President and founder, also founded Odonate Therapeutics, Inc. and has since served as its Chairman since 2015. In 2012, Mr. Tang co-founded La Jolla Pharmaceutical Company and, from 2014 through its acquisition by Innoviva, Inc. in 2022, served as its Chairman. In 2013, he co-founded Heron Therapeutics, Inc. and served as its Chairman through 2020. From 2009 through its acquisition by Endo Pharmaceuticals, Inc. in 2010, Mr. Tang served as a director of Penwest Pharmaceuticals Co. In 2006, he co-founded Ardea Biosciences, Inc. and served as a director through its acquisition by AstraZeneca PLC in 2012. From 2001 to 2008, Mr. Tang served as a director of Trimeris, Inc. From 1993 to 2001, he held various positions at Deutsche Bank Alex. Brown, an investment banking firm, most recently serving as Managing Director and head of the firm’s Life Sciences research group. Mr. Tang received a B.S. degree from Duke University.

At the same time, the Company announces that, insofar as it relates to the signing of the Term Sheet, this current report constitutes the publication of confidential information, the disclosure of which was delayed from 4 April 2024 pursuant to Article 17(4) of the MAR. The premature public disclosure of the said confidential information could have had an adverse effect on the course and outcome of the negotiations between the Company and Tang Capital and could have triggered market circumstances or third party behaviour that could have jeopardised the ongoing negotiations as well as the conclusion of the agreements between the Company and Tang Capital, thereby prejudicing the legitimate interests of the Company. In the Company's view, there were no conditions for considering that the delay in disclosure of the confidential information was likely to mislead the public, particularly because the Term Sheet was non-binding. The Company also ensured that the information whose disclosure to the public was delayed was duly protected, in particular under the applicable laws and internal procedures of the Company and Tang Capital. Pursuant to the third subparagraph of Article 17(4) of the MAR, the Company shall, immediately after the publication of this report, inform the Polish Financial Supervision Authority of the delay in the disclosure of the confidential information by submitting a written explanation regarding the fulfilment of the conditions set out in Article 17(4)(a) - (c) of the MAR.

Legal basis: Article 17(1) and (4) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.