DGAP-News: Formycon is acquiring the biosimilar assets FYB201 and FYB202 and strengthening its position in the global growth market of biosimilars through long-term partnership with ATHOS KG

Press Release // March 29, 2022

Formycon is acquiring the biosimilar assets FYB201 and FYB202 and strengthening its position in the global growth market of biosimilars through long-term partnership with ATHOS KG

- Total value of transaction volume approximately Euro 650 million

- Complete acquisition of biosimilar candidate FYB202 (ustekinumab) and acquisition of a 50% stake in biosimilar candidate FYB201 (ranibizumab)

- ATHOS will be the largest future shareholder of Formycon with a stake of around 26.6%

- Significant increase of the share in the marketing revenues of FYB201 and FYB202 by integration within the Formycon Group

- Strengthening of the development organization and accelerated pipeline expansion through acquisition of Bioeq GmbH

- Transaction-based fair-value valuation of the Formycon share at Euro 83.41

Munich - Formycon AG (ISIN: DE000A1EWVY8 / WKN: A1EWVY) ("Formycon") and ATHOS KG ("ATHOS") have agreed to merge their development activities in the area of biosimilars through a long-term strategic partnership.

The structure of the transaction will involve Formycon acquiring all the rights in FYB202, a biosimilar candidate for Stelara(R)¹ (ustekinumab), as well as a 50% share in FYB201, a biosimilar candidate for Lucentis(R)² (ranibizumab). Stelara(R) is used to treat various serious inflammatory diseases like moderate to severe psoriasis and inflammatory bowel diseases such as Crohn's disease and ulcerative colitis. Lucentis(R) is used to treat age-related neovascular (wet) macular degeneration (nAMD) and other serious eye diseases.

Furthermore, the acquisition and integration of long-time partner Bioeq GmbH ("Bioeq") is enabling Formycon to expand its expertise in a number of areas that are important for the development, approval and commercialization of biosimilars.

For purposes of development, approval and commercialization, Formycon integrated FYB201 in 2013 and FYB202 in 2017 into the existing partnerships with Bioeq AG (since 2016, previously Santo Holding GmbH) and respectively Aristo Pharma GmbH, a company of ATHOS. The acquisition of the biosimilar candidates will give Formycon a significantly higher share in the future revenues from their marketing. The company will primarily invest the cash inflows expected from this transaction into accelerated expansion of the development pipeline. This will enable future biosimilar candidates to be developed independently. The intention is for them to contribute sustainably to the value added and to the ongoing growth of the company.

The transaction therefore creates key enablers for further expanding Formycon's position as a company operating on the global stage in the growth market for biosimilars. Subject to the assumption of the expected approvals and market launches or out-licensing of their biosimilar candidates, Formycon is targeting an EBITDA³ in the amount of a triple-digit million euro figure in 2025.

The value of the consideration to be paid by Formycon as part of the transactions (issuance of new shares to ATHOS and an earn-out component) amounts to approximately Euro 650 million as of the completion date. After the deal is closed, ATHOS will be the largest shareholder in Formycon with an indirect shareholding of around 26.6% in the share capital. In the context of the transactions, the Formycon share was valued at a fair value of Euro 83.41 confirmed by expert opinion.

Dr Nicolas Combé, CFO of Formycon, said: "The certified valuation reports of both parties confirm the attractiveness of this transaction for Formycon and implicitly also the potential of our share. This should be significantly further increased by these acquisitions. The measure empowers Formycon to expand its sphere of operation in the strongly growing biosimilar market. This deal demonstrates our ongoing commitment to sustainable growth through the future income of our biosimilar candidates and continuous expansion of our development pipeline."

Dr Stefan Glombitza, COO of Formycon, explained: "This takes us into the next stage of partnership with ATHOS and consolidates our position as a highly specialized company for biosimilar development. Pooling expertise in the area of Research & Development combines the complementary capabilities and strengths of Formycon and Bioeq honed over years of collaborative partnership. This will give the expansion of our development pipeline additional dynamic impetus."

Dr Carsten Brockmeyer, CEO of Formycon, added: "The transaction is of outstanding relevance for Formycon and creates the best enablers for further development to becoming a fully integrated pharmaceuticals company in the area of biosimilars. I would like to extend my explicit thanks to all those involved in successfully moving this transaction forward."

Melissa Simon of ATHOS added: "Formycon is one of the few dedicated biosimilar experts worldwide. We have the common objective of providing patients better access to modern and highly effective therapies. We are confident that Formycon will be in a position to fully exploit its potential in the biosimilars' growth market through this merger."

Details of the transaction

The transaction will involve Formycon in acquiring (I.) the operational development unit Bioeq GmbH, (II.) all the rights in FYB202, a biosimilar candidate for Stelara(R), which has so far been developed in a joint venture between ATHOS (75.1%) and Formycon (24.9%) and (III.) the 50% shareholding of ATHOS in Bioeq AG, a joint venture between ATHOS and Polpharma SA, Poland, which holds the commercial rights in FYB201, a biosimilar candidate for Lucentis(R):

(I) The acquisition of Bioeq enables Formycon to strengthen its own organization with experienced experts from the areas of clinical development, regulatory affairs, business development, commercial affairs, IP and project management. On the basis of many years of partnership and collaboration between the two companies in ongoing biosimilar projects, synergies should be leveraged and an efficient expansion of the development pipeline is to be driven forward. Furthermore, Bioeq has an established international network in the area of commercialization of biosimilars.

(II) Acquisition of all the rights in FYB202, a biosimilar candidate for Stelara(R), which is currently in clinical phase III, involves Formycon in purchasing 75.1% of the project shares of Aristo Pharma GmbH, a fully-owned subsidiary of ATHOS. In future, Formycon will consequently own the project and commercialization rights for FYB202 and will thereby be able to benefit to a much greater extent from the potential revenues of the biosimilar candidate in a target market with an estimated volume of around nine billion US dollars.

(III) The worldwide licensing and marketing rights in FYB201, a biosimilar candidate for Lucentis(R), have been held by Bioeq AG since 2016, a 50/50 joint venture between ATHOS and Polpharma SA. As part of the transaction, Formycon will acquire the 50% shareholding of ATHOS in Bioeq AG. By comparison with the previous compensation structure, Formycon will increase its potential income by more than 40% as a result of the transaction. The approvals for FYB201 in the USA and Europe are expected in the third quarter of 2022.

Furthermore, Formycon continues to hold the rights in FYB206, a preclinical biosimilar candidate and in FYB207, a broad acting antiviral drug development for the treatment of COVID-19.

Valuation level and financing of the transaction

The transaction between Formycon and ATHOS was carried out at fair-value conditions that were jointly determined and confirmed by experts and on the basis of a valuation of the Formycon share at Euro 83.41. The payment of the purchase prices to ATHOS for the assets being acquired (I. - III.) in the value of approximately Euro 650 million is to be partly financed by the issue of shares from a non-cash capital increase and by making full use of the existing authorized capital (Euro 4,000,000 or shares) of Formycon. This issue of shares from a non-cash capital increase will solely include the participation of ATHOS via various subsidiaries. Furthermore, ATHOS is to receive an earn-out component in the future sales of Formycon generated with FYB201 and FYB202, which are expected overall to be in the middle triple-digit million range for ATHOS.

ATHOS will be the largest future shareholder of Formycon with a shareholding of around 26.6%. A further 15.87% of the shares will be held by Wendeln & Cie. KG including associated entities and 6.64% of the shares by Active Ownership Capital after the capital increase has been carried out. The anchor shareholders as well as the members of the Executive Board and Supervisory Board have entered into a customary lock-up agreement for a period of 10 months starting from today's date. This agreement includes more than 50% of all total issued shares of Formycon. They want to support the company over the long term in driving forward the growth strategy to become a fully integrated company operating on the global stage in the growth segment of biosimilars.

In addition, the investor consortium made up of ATHOS and the investment company Active Ownership, which focuses on healthcare investments, will make available an on-demand line of credit amounting to up to Euro 50 million. In this way, ATHOS and Active Ownership are strengthening the liquidity base of the Formycon Group to enable further short-term investments in the pipeline. The commitment of Active Ownership as an anchor shareholder of Formycon has been characterized by enormous confidence in the management and the potential of the company since its entry in 2020. The fact that Active Ownership is now also participating with debt capital is a confirmation of this trust.

The transaction is subject to the usual conditions including specific regulatory approvals and is projected to be closed in the first half-year of 2022.

¹⁾ Stelara(R) is a registered trademark of Johnson & Johnson
²⁾Lucentis(R) is a registered trademark of Genentech Inc.
³⁾ EBITDA calculated in accordance with the current accounting policies for financial reporting

Webcast for presentation of the transaction at 11.00 (CET) on March 30, 2022

The Executive Board of Formycon AG will present and explain the transaction to analysts and shareholders in an audio webcast (in German) at 11.00 (CET) on March 30, 2022.

Live-Link to Audio Webcast:
https://www.webcast-eqs.com/formycon20220330

About Formycon:
Formycon is a leading, independent developer of high-quality biopharmaceutical medicines, especially biosimilars. The company focuses on treatments in ophthalmology, immunology and on other key chronic diseases, covering the entire value chain from technical development to the clinical phase III as well as the preparation of dossiers for marketing approval. With its biosimilars, Formycon is making a major contribution towards providing as many patients as possible with access to vital and affordable medicines. Formycon currently has four biosimilars in development. Based on its extensive experience in the development of biopharmaceutical drugs, the company is also working on the development of a COVID-19 drug FYB207.

About ATHOS:
ATHOS invests directly in companies with long-term and entrepreneurial technological focus.

About Biosimilars:
Since their introduction in the 1980s, biopharmaceuticals have revolutionized the treatment of serious diseases such as cancer, diabetes, rheumatoid arthritis, multiple sclerosis and eye diseases. In the coming years, many of these biotech drugs will lose their patent protection - and by 2025 medications with revenues of approximately USD 100 billion will be off patent. Biosimilars are follow-on versions of biopharmaceuticals, for which exclusivity has expired. They are approved via stringent regulatory pathways in highly regulated markets (such as EU, US, Japan, Canada, Australia) based on proven similarity of the biosimilar with the originator biopharmaceutical reference product. Global sales of biosimilars are estimated to exceed $15 billion by 2020. By 2030, analysts estimate that this figure could rise to over $60 billion.

Contact:
Sabrina Müller
Senior Manager Corporate Communications and Investor Relations
Formycon AG
Fraunhoferstr. 15
82152 Martinsried/Planegg/Germany
Tel.: +49 (0) 89 - 86 46 67 149
Fax: + 49 (0) 89 - 86 46 67 110
Sabrina.Mueller@formycon.com // www.formycon.com

Florian Bamberg
Director, Strategic Communications
FTI Consulting
Park Tower
Bockenheimer Anlage 44
60322 Frankfurt am Main
Tel.: +49 (0) 170 - 2871258
Florian.Bamberg@FTIConsulting.com

Disclaimer:
This press release may contain forward-looking statements and information which are based on our current expectations and certain assumptions. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, performance of the company, development of the products and the estimates given here. Such known and unknown risks and uncertainties comprise, among others, the research and development, the regulatory approval process, the timing of the actions of regulatory bodies and other governmental authorities, clinical results, changes in laws and regulations, product quality, patient safety, patent litigation, contractual risks and dependencies from third parties. With respect to pipeline products, Formycon AG does not provide any representation, warranties or any other guarantees that the products will receive the necessary regulatory approvals or that they will prove to be commercially exploitable and/or successful. Formycon AG assumes no obligation to update these forward-looking statements or to correct them in case of developments which differ from those anticipated. This document neither constitutes an offer to sell nor a solicitation of an offer to buy or subscribe for securities of Formycon AG. No public offering of securities of Formycon AG will be made nor is a public offering intended. This document and the information contained therein may not be distributed in or into the United States of America, Canada, Australia, Japan or any other jurisdictions, in which such offer or such solicitation would be prohibited. This document does not constitute an offer for the sale of securities in the United States.