Celon Pharma S.A.

M&A Activity • May 23, 2024

Report Content Celon enters into collaboration agreements with Tang Capital to createNovohale Therapeutics, LLC and advance Falkieri into global Phase 3development for bipolar depression; and delayed disclosure ofconfidential information about the signing of a term sheet.

On 4 April 2024, Celon Pharma S.A. (the "Company" or "Celon") and TangCapital Management, LLC signed a non-binding term sheet (the "TermSheet") setting out the terms and conditions of the collaborationagreements between the Company and Tang Capital Management, LLC and itscontrolled affiliates ("Tang Capital"), which provided for an investmentby Tang Capital in Celon, the creation of Novohale Therapeutics, LLC andthe conduct of the first, acute-treatment Phase 3 study of esketaminedry powder inhalation ("Falkieri") in bipolar depression (the "Study").

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

a) a direct investment by Tang Capital in Celon, consisting of thesubscription for 2.700.000 newly issued ordinary bearer shares in theform of a private placement with the exclusion of the pre-emptive rightof the Company's existing shareholders (i.e., pursuant to Article 431 §1 of the Comercial Companies Code) in exchange for a cash contributionin the total amount of PLN 40.500.000 (i.e., for the issue price of PLN15 per each share);

b) the creation of Novohale Therapeutics, LLC ("Novohale"), a Delaware,U.S.A., limited liability company jointly owned by Celon and TangCapital. Mr Kevin Tang will be CEO of Novohale, which will be governedby a board consisting of members from both Celon and Tang Capital.Novohale will be initially capitalized with USD 30,000,000, including aUSD 20,000,000 investment from Celon and a USD 10,000,000 investmentfrom Tang Capital. Above capital will be invested by both partners overa 2-year period. Additionally, Celon will contribute to Novohale itsworldwide, excluding Poland, intellectual property rights in Falkieripermitting Novohale to advance Falkieri. Celon will be entitled toapproximately 80% interest in the profit and loss and net assets(economic interest) of Novohale, while maintaining approximately 20% ofthe voting interest of Novohale. This will allow Novohale the autonomyto develop Falkieri and conduct the Study, while maintaining majorityeconomic interest in Novohale for Celon. In the event Novohale conductsan initial public offering, Celon's voting interests will becomeproportional to its economic interest;

c) Celon will have the option to purchase all of Tang Capital's sharesin Novohale, at any time between 1 January 2025 and the 60th day afterthe date that the Study results are delivered to Celon, for theaggregate price of: (i) two and a half times Tang Capital's currentinvestment in Novohale and (ii) 5% of future worldwide, excludingPoland, sales of Falkieri (Royalty Payment) and/or 5% of any proceeds ofany disposition of Falkieri. Conversely, if Celon does not execute itsoption, Tang Capital will have the option to invest a further amount ofup to USD 30,000,000 in Novohale; and

d) Tang Capital will provide the management expertise and clinicalpersonnel to conduct the Study and Celon will supply Falkieri toNovohale.

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

Tang Capital Management, LLC is a U.S.-based, life sciences-focusedinvestment company founded in 2002. Kevin Tang, Tang Capital's Presidentand founder, also founded Odonate Therapeutics, Inc. and has sinceserved as its Chairman since 2015. In 2012, Mr. Tang co-founded La JollaPharmaceutical Company and, from 2014 through its acquisition byInnoviva, Inc. in 2022, served as its Chairman. In 2013, he co-foundedHeron Therapeutics, Inc. and served as its Chairman through 2020. From2009 through its acquisition by Endo Pharmaceuticals, Inc. in 2010, Mr.Tang served as a director of Penwest Pharmaceuticals Co. In 2006, heco-founded Ardea Biosciences, Inc. and served as a director through itsacquisition by AstraZeneca PLC in 2012. From 2001 to 2008, Mr. Tangserved as a director of Trimeris, Inc. From 1993 to 2001, he heldvarious positions at Deutsche Bank Alex. Brown, an investment bankingfirm, most recently serving as Managing Director and head of the firm'sLife Sciences research group. Mr. Tang received a B.S. degree from DukeUniversity.

At the same time, the Company announces that, insofar as it relates tothe signing of the Term Sheet, this current report constitutes thepublication of confidential information, the disclosure of which wasdelayed from 4 April 2024 pursuant to Article 17(4) of the MAR. Thepremature public disclosure of the said confidential information couldhave had an adverse effect on the course and outcome of the negotiationsbetween the Company and Tang Capital and could have triggered marketcircumstances or third party behaviour that could have jeopardised theongoing negotiations as well as the conclusion of the agreements betweenthe Company and Tang Capital, thereby prejudicing the legitimateinterests of the Company. In the Company's view, there were noconditions for considering that the delay in disclosure of theconfidential information was likely to mislead the public, particularlybecause the Term Sheet was non-binding. The Company also ensured thatthe information whose disclosure to the public was delayed was dulyprotected, in particular under the applicable laws and internalprocedures of the Company and Tang Capital. Pursuant to the thirdsubparagraph of Article 17(4) of the MAR, the Company shall, immediatelyafter the publication of this report, inform the Polish FinancialSupervision Authority of the delay in the disclosure of the confidentialinformation by submitting a written explanation regarding the fulfilmentof 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 theEuropean Parliament and of the Council of 16 April 2014 on market abuse(Market Abuse Regulation) and repealing Directive 2003/6/EC of theEuropean Parliament and of the Council and Commission Directives2003/124/EC, 2003/125/EC and 2004/72/EC.