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Business Plan

March 2018

InnoMedica | Business Plan March 2018

First ProductTalidox is about to enter phase I clinical trials in five Swiss hospitals.

InnoMedica can use the knowledge gained in the development of Talidox

for drug development in other areas of application.

Executive Summary

InnoMedica is a Swiss start-up company in nanomedi-cine that has developed a technology platform to opti-mize the distribution of active substances in the body. Talidox, the first application of the innovative liposomal transport system in oncology, is designed to enable sig-nificantly more effective treatment of cancer while re-ducing side effects for patients. Furthermore, the new pipeline product Talineuren opens up a new area of ap-plication in neurology. Research results show that the patented nanotechnology can provide decisive advan-tages for the treatment of neurodegenerative diseases.

Medicines are usually individual active substances that are produced in the purest possible form. In order to administer them as a pill or intravenously with a sy-ringe or infusion, they may be combined with neutral carrier material or mixed with a blood-compatible li-quid for intravenous delivery.

Innovative pharmaceutical companies have recognized the potential of complex drugs in which the drug is linked to a therapeutically functional carrier. However, in many cases these carriers are too large and do not correspond in their construction to the natural func-tional model of the body. Thus they are often recog-nized as foreign bodies and usually eliminated by the immune system or the excretion process.

Liposomes as an alternative carrier model offer a solu-tion. Their construction is based on the natural trans-port vehicles, the body’s own vesicles. Theses vesicles can transport messenger substances in the blood and tissue. After a long development phase, InnoMedica has now successfully produced such biocompatible li-posomes on an industrial scale. Since the liposomal construction imitates the vesicles of the body, the lipo-somes can circulate undetected in the blood. InnoMedi-ca’s nanocontainers can be used as a transport system and bring active substances to their destination in the body, where they unfold their therapeutic effect.

The effect of the liposomal transport system can be fur-ther optimized via surface modifications and lipid com-positions, but also by varying the particle size. These adjustments in the liposomal design should respond as well as possible to the different signals of the body de-pending on the application, for example inflammation, more permeable blood vessels or deficiency symptoms in the nerve pathways.

With the development of Talidox, InnoMedica has been able to use a liposome as a carrier for the chemothera-peutic agent doxorubicin and thereby achieving a bet-ter effect in inhibiting tumor growth with fewer side ef-fects. The positive toxicological results have confirmed the expectations from the preclinical phase and show that Talidox has a high biocompatibility. This clears the way for conducting phase I and IIa clinical trials.

As part of the preclinical experiments, various proto-types were investigated, which differed in their liposo-mal design. InnoMedica also came across a version that made it possible to overcome the blood-brain barrier. For example, in neurodegenerative diseases, a regener-ative drug can be delivered to the brain. In InnoMedica’s second pipeline product, Talineuren, GM1 is transported into the brain, a biological building block whose positive effect on Parkinson’s disease is already known. The two products Talidox and Talineuren demonstrate the broad applicability of the liposomal transport system and the great commercial potential of the developed nanotech-nology.

Since both products use active substances that are al-ready in use in the clinic, the risk of translation is lower than that of the development of conventionsal drugs with new active substances. For this reason InnoMedica has given special emphasis to GMP production and the scale-up of Talidox. In order to remain independent as a company, it is important to prevent delivery bottle-necks when study results are good and demand is in-creasing. Like the approval and implementation of the studies, the development of industrial resources also takes time. Therefore InnoMedica has decided to ad-vance both tasks simultaneously and preferably bring prototypes to the clinic only after the scale-up. This approach has proven its worth and now paves the way for InnoMedica for capacity expansion and increasing automation in manufacturing processes. The clinical trials for Talidox and Talineuren, the expansion of GMP production and the moderate expansion of the person-nel require a further increase in equity. The progress achieved to date has been made possible by good co-operation between investors and a team of motivated and entrepreneurial thinking employees. This success model should be maintained during the phases of clini-cal trial as well as the following market launch of Inno-Medica’s medications.


Table of Contents

Pharmaceuticals Efficiently Targeted 6

InnoMedica 7

Liposomal Technology Platform 8

Pipeline 12

Talidox – liposomal Doxorubicin 12

Talineuren – liposomal GM1 12

Liposomal Docetaxel (TLTX-1) 12

Liposomal contrast agent as tumor marker (TLNIR-1) 14

Liposomal arteriosclerosis therapy (TLFR-1) 15

Liposomal bacteria control (TLTS-1) 17

Market and Competition 18

Liposomes in the market environment of nanomedicine 18

Oncology application: Talidox 21

Neurology application: Talineuren 22

Marketing 23

Trademark rights 26

Production 28

Team 34

Finances 42

Financial planning 42

Financing 48

Risk management 57

Outlook 65


The most common causes of death today are cancer,

cardiovascular diseases and diseases of the central

nervous system. Research has made tremendous

progress in these areas over the past two decades

and has developed many potent drugs. Nevertheless,

these diseases are still responsible for most deaths.

This is often due to the fact that with today’s appli-

cations, the active substance does not reach the di-

sease site in the body. For example, it is known that

in chemotherapy often less than one percent of the

active substance reaches the tumor. In diseases of the

central nervous system, the blood-brain barrier often

prohibits access to the nerve cells altogether. The

problem with developing successful therapeutic ap-

proaches is therefore not a lack of potent drugs, but

rather their biological distribution within the body.

The three biochemists James Rothman, Randy Schek-

man and Thomas Südhof have tackled this problem

and together uncovered the molecular principles ac-

cording to which substances in cells are delivered to

the right place at the right time. They deciphered with

high precision the system through which cells pack

certain molecules into biological nanoparticles (vesi-

cles) and send them to a specific location in the body.

The groundbreaking findings were recognized with

the Nobel Prize for Medicine in 2013.

InnoMedica has succeeded in harnessing the findings

of this biological transport system for medical pur-

poses. With the patented technology platform, Inno-

Medica has found a solution to one of the great chal-

lenges in today’s medicine. The aim is not to develop

new expensive drugs, but instead to transport potent,

proven agents specifically to the disease site, where

they may unfold their full effect. For proven pharma-

ceuticals, an improved efficacy with simultaneous re-

duction of side effects is achieved and new areas of

application may be opened up.

First and foremost, this improved formulation of the

active substances benefits the patient with a therapy

that is at once gentler and more efficient. In addition,

InnoMedica’s approach can also have positive effects

on the cost explosion in the healthcare system, as

proven and cost-effective active substances can be

used more often and more effectively through Inno-

Medica’s technology.

InnoMedica has made it its goal to remain indepen-

dent in the long term and to further develop and uti-

lize the promising technology for various applications

in order to exploit the potential of the technology

platform in cooperation with a large number of phar-

maceutical companies. A sale of the company explici-

tely is not part of the strategy. Rather, InnoMedica

wants to be an independent pharmaceutical company,

supported by a broad shareholder base and success-

ful on the international market.

Pharmaceuticals Efficiently Targeted

Objectives of InnoMedica

Development, production and marketing of Talidox, a no-vel cancer therapy, which • treats efficiently• reduces side effects to a minimum • can be marketed worldwide at a socially acceptable cost

allowing for a broad range of applications

Development, production and marketing of Talineuren, a novel therapy for neurodegenerative diseases that • reduces cell degradation in the brain• protects the cells from further degradation • can be administered orally

Development of a drug pipeline for further medical ap-plications based on InnoMedica’s liposomal transport sys-tem.

Independent GMP production for the manufacturing of liposomal nanotechnology formulations.

Maintaining the independence of the company with a

shareholder base that is anchored in a broad public and

supported by a stable core shareholder base.

InnoMedica

Today InnoMedica has offices in Bern and Zurich (man-

agement, administration), Marly (production), Zug

(headquarters) and Ibaraki (Japan, Yamazaki-DDS Co.,

Ltd.). InnoMedica Holding AG was founded in 2000 as a

financial company with headquarters in Zug, which fo-

cused primarily on traditional investments in the fields

of biochemistry and medicine. The company shifted

strategies after the massive slump in the stock market

as a result of the events of September 11th, 2001; in

a turnaround project Dr. Herbert Früh and Dr. Peter

Halbherr initially stabilized the company and then

gradually reoriented it to focus on startup companies.

The first investments in liposomal transport systems

took place in 2010, as InnoMedica acquired patents

from Dr. Denis Bron. In 2012 the project leader Pascal

Halbherr, with the support of Dr. Stéfan Halbherr and

Andrea Zurkirchen, contacted Dr. Noboru Yamazaki.

In spring 2013, Yamazaki-DDS Co., Ltd. was integrated

into InnoMedica, including the significant patent port-

folio of Dr. Yamazaki in the field of glycan targeting.


In order to make biodistribution – i.e. the biological

distribution of molecules in the body – medically use-

ful, the functioning of the body’s natural logistics

must be understood. Numerous researchers around

the world have dedicated themselves to this task. The

three most famous, James Rothman, Randy Schek-

man, and Thomas Südhof, have been awarded the No-

bel Prize for their discoveries in the area of biological

transport systems in 2013. The main components of

the body’s own transport system are small globules

consisting of fat membranes, so-called vesicles, which

are called exosomes, endosomes or lysosomes de-

pending on their function and occurrence. With these

nanometer sized vesicles, the body transports hor-

mones, proteins or genetic material from the interior

of the cell via the bloodstream to the target organ

and to the specific target cells.

Based on the scientific findings on the body’s biolo-

gical transport system, InnoMedica has developed a

proprietary technology platform that enables the tar-

geted distribution of drugs in the body. The vesicles

from InnoMedica are processed from originally na-

tural building blocks (lipids) into so-called liposomes.

The liposomes of InnoMedica are modeled on the

natural vesicles in size and structure. However, the

charge is not an endogenous substance but a thera-

peutic agent. Once the liposomes are in the body, they

make their way to the diseased tissue where they de-

liver the drug. As a result, a disease can be specifical-

ly treated and at the same time the side effect profile

of the drug can be improved. Table 1 compares Inno-

Medica’s liposomal transport system with the body’s

functionality and the postal delivery service.

The synthetic production of such biologically func-

tional liposomes typically involves three major tech-

nical challenges. With the development of a propri-

etary, innovative process InnoMedica has been able

to overcome these hurdles:

Stability

The liposomes must be brought into a chemically and

biologically stable form. The manufacturing process

developed by InnoMedica is based on the fact that

the liposomes are not shaped under pressure by ex-

trusion as was the case up to now. As a result, the

liposomes of InnoMedica are in a natural balance and

are stable over a long period without the addition of

stabilizers.

Liposomal Technology Platform

Charge

The liposomes must be able to be loaded with thera-

peutic relevant amounts of the desired drug. Espe-

cially with expensive medical agents, the question

of the efficiency of the charging process also comes

up, whereby the waste must be minimized. Once the

active substance is inside the liposome, it must be

ensured that it does not leave the liposome again.

Depending on the chemical profile of the active sub-

stance, InnoMedica has developed different proce-

dures for loading the liposomes.

Reproducibility

The good manufacturing practice required in the

production of pharmaceuticals demands that the

end product of different production runs is always

identical. Only minor, precisely defined deviations

are therefore tolerated from one production run to

the next. Compliance with these tolerance ranges in

production can only be achieved with a stable, well-

characterized manufacturing process. Previous indus-

trial production processes made it difficult for pharma-

ceutical companies to achieve this consistency in the

production of liposomes, which in the past even led to

delivery stops of liposomal drugs. The manufacturing

process developed by InnoMedica meets the require-

ments of good manufacturing practice due to its sim-

plicity and robustness.

The flexibility of the manufacturing process allows

InnoMedica to build the liposomes in a way that they

can target different organs or cells in the body. Vari-

ous critical factors control this biodistribution:

Composition of the shell: The mixing ratio of the

lipid components of the liposomal shell prove to be

central. Even small changes in the corresponding con-

ditions can lead to significantly changed distribution

profiles.

Size and size distribution of liposomes: The aver-

age size and the size distribution of the liposomes

influence the biodistribution and penetration of the

tissue. For example, there are organs like the brain,

which are accessible only by very small liposomes.

Shape of the liposomes: The form also plays an im-

portant role in the uptake. Spherical liposomes be-

have differently in the body than elliptical or tubular

liposomes.

Comparison of InnoMedica’s liposomal approach with the body’s own transport system and the delivery system of the postal service (Table 1)

Approach Transported content

Packaging

Postal service

DocumentsGoods

Envelops Packages

HumanHormonesProteinesGenotype

ExosomesEndosomesLysosomes

InnoMedica Medications Liposomes

ExosomesImage of adrenaline-loaded vesicles,

waiting for removal in an adrenal cell.

Dr. Camille Peitsch, research associate

at InnoMedica, recorded the vesicles

during her PhD thesis using cryo-elec-

tron microscopy.

LiposomesImage of liposomes produced via

InnoMedica’s innovative manufactu-

ring process before they are loaded

with drugs. The image was taken by Dr.

Camille Peitsch at the cryo-electron

microscope of the University of Bern.


Nature of the liposome surface: The liposome sur-

face is particularly important on the liposomes’ way

through the body to the target tissue. For example, li-

posomes must be hidden from the immune system by

camouflage molecules on the surface to reach their

destination undetected. For body navigation, Inno-

Medica uses sugar molecules attached to the liposome

in certain applications, which play an important role

in the tracing of specific tissue types or target cells.

The natural ligand-receptor interactions are used for

targeting.

Depending on the nature of the liposomes, large dif-

ferences in biodistribution can occur. Figure 1 illus-

trates how contrast media-filled liposomes distribute

differently throughout the body.

The ability of the liposomes of InnoMedica to bring

drugs in the body to the target, opened a high medi-

cal potential. The technology platform is best suited

for diseases which, despite treatment, mostly have a

severe course and for serious diseases without fur-

ther treatment options. The following two factors are

also decisive for selecting the area of application for

a liposomal drug:

Transport function: The liposomal transport function

is of particular medical value whenever the previous

form of administration only delivers very small quan-

tities of the drug in the target tissue or none at all.

In this case, liposomes can significantly increasethis

amount and thereby improve the effectiveness of a

therapy.

Protective function: If an active substance in its cur-

rent form of administration causes severe side effects

and damages healthy tissue, a liposomal formulation

can make the therapy gentler for the patient. Thanks

to the liposomal packaging, healthy tissue is protect-

ed from the active substance and the side effects can

be reduced or completely prevented.

Based on these considerations, InnoMedica has cho-

sen oncology as the most important and first applica-

tion of liposomal nanotechnology. A second area of

application has been accessed during the year 2017

in neurology. The two brochures “Talidox - Liposomal

Doxorubicin for the Targeted Treatment of Cancer” and

“Talineuren – Liposomal GM1 for the Targeted Treat-

ment of Parkinson’s Disease” provide the interested

reader with detailed information about the preclini-

cal data and the planned clinical studies with the two

medicines.

Figure 1: Images taken with eXplore Optix of living mice given dif-ferent variants of InnoMedica’s liposomes. The images show how the liposomes are distributed in the body according to composi-tion, size and surface modification.

High concentration

Low concentration

Lungs

Liver

Kidney

Liposome 1

Liposome 2 Liposome 3

Lungs

Liver

Kidney

Lungs

Liver

Kidney

Technology PlatformInnoMedica does not develop new agents, but improves already known agents

in their biodistribution. Henc, not only a lower translation risk can be assumed,

but also simplified conditions in the approval process.


Pipeline

InnoMedica has built a broadly diversified pipeline

based on the liposomal technology platform. All pipe-

line products have in common that no new molecules

are used, but substances with known efficacy profiles.

This approach is interesting from a medical point of

view as well as from entrepreneurial risk and return

considerations. The therapeutic effect of theses sub-

stances is considerably enhanced by the combina-

tion with the liposomal nanocontainer and biological

fine-tuning. This approach enables the creation of

drugs with high chances of success in translation, as

well as large potential therapeutic benefits.

Talidox – liposomal Doxorubicin

The cancer drug Talidox is InnoMedica’s first applica-

tion of the liposomal technology platform. In recent

years, the majority of InnoMedica’s resources have

been directed towards the development of this onco-

logical application, which is intended to therapeutical-

ly optimize the active substance doxorubicin.

InnoMedicas Talidox liposomes are considerably

smaller than most nanocarriers in use today and uni-

formly round. Therefore, they are more stable and are

better absorbed by tumor tissue. This results in less

uncontrolled and early release of doxorubicin. The

advantageous biodistribution achieves a stronger ef-

fect with fewer side effects.

InnoMedica can now apply the knowledge gained in

the development of Talidox for drug development

in other areas of application. Talidox is about to go

into phase I clinical trials in five Swiss hospitals and

be brought to market readiness in Switzerland. In the

brochure «Talidox – Liposomal Doxorubicin for the

Targeted Treatment of Cancer» InnoMedica provides

detailed information on the advantages of this appli-

cation and how it works. In addition, the development

status of the product and the further development

strategy are explained.

Talineuren – liposomal GM1

During the development of Talidox, the behavior of

numerous differently structured liposomes in the

body was investigated. Even the smallest adjustments

to the nanocarrier can cause major changes in the

biological distribution of the liposomes in the body.

In an experiment to develop Talidox, a liposomal for-

mulation was tested that surprisingly transported the

drug to the spinal cord and brain region rather than

to the tumor. Based on this discovery, the new nano-

carrier prototype was no longer loaded with chemo-

therapy inhibiting cell division, but with a vitalizing

and nerve cell building substance.

This novel Talineuren liposome protects and posi-

tively stimulates neurons. The mode of action of the

GM1 substance contained is wide and there is much to

suggest that the drug can be used in neurodegenera-

tive diseases such as Parkinson’s, Alzheimer’s and

Huntington’s disease. Talineuren can be administered

orally, spreads through the bloodstream and accu-

mulates in the nerve tissue. The nerves take up Tali-

neuren and strengthen their cell membrane, which

has further positive effects.

InnoMedica is now organizing a team of doctors and

scientists to bring Talineuren to the clinic. Further-

more, cooperations with larger pharmaceutical com-

panies are being evaluated for this project. InnoMedi-

ca has a good starting position in these negotiations,

since a patent has been filed for this application at

the end of December 2017. In addition, InnoMedica’s

application is protected by the company’s confidential

know-how regarding the product’s complex manufac-

turing processes. InnoMedica has compiled detailed

information for the second pipeline product in the

brochure “Talineuren – Liposomal GM1 for the Target-

ed Treatment of Parkinson’s Disease”.

Liposomal Docetaxel (TLTX-1)

The doxorubicin used in Talidox prevents cell divi-

sion by penetration into the genetic material, which

can no longer duplicate in the cell division process.

All chemotherapies based on this function fall into

the class of anthracyclines. Taxanes are a second

class of substances that destroy the cancer cell

by forming abnormal molecules in the cell skele-

ton. Like doxorubicin, taxanes are very often used

in cancer therapy. The two most effective taxanes

are docetaxel and paclitaxel, whereby docetaxel is

slightly superior to paclitaxel.

With the development of a docetaxel liposome, Inno-

Medica has added a representative of the second

class of chemotherapies to its pipeline. InnoMedica

can fall back on the innovative production process for

chemotherapy liposomes established during the Ta-

lidox development. The existing manufacturing pro-

cess for this pipeline product only had to be slight-

ly adapted and the development of the prototype is

therefore cost-effective.

Directly in the first two efficacy studies in animal

models the docetaxel liposome has rendered convinc-

ing results. Both studies used a cancer model that is

comparable to highly aggressive and metastatic hu-

man breast cancer.

The first experiment (Figure 2) shows the superior ef-

ficacy of InnoMedica’s liposomal docetaxel compared

to the free docetaxel. Abraxane, an albumin-paclitaxel

nanoparticle that is regarded as the new standard in

taxane chemotherapy and generates more than USD

1 billion in annual sales worldwide, was also used as

a comparator in the study. InnoMedicas liposomal

docetaxel was able to achieve the same effect as Ab-

raxane with a third of the dose administered. The high

Abraxane dose led to serious side effects and led to

an early trial end of this group.

In the second experiment (Figure 3), an everyday sur-

gical situation was simulated. A patient diagnosed

with cancer usually undergoes surgery to remove

the primary tumour and all detectable metastases.

The patient is typically undergoing postoperative

chemotherapy for the treatment of possibly existing,

invisible metastases. This so-called adjuvant chemo-

therapy is a common scenario and is intended to re-

duce the likelihood of a new outbreak of the disease.

In InnoMedica’s experiment, the tumors were sur-

gically removed after a growth phase and the mice

were then treated. InnoMedicas liposomal docetaxel

was the only treatment that prevented tumor growth.

While in the other groups all mice developed tumors

again and therefore died early, in some cases the

group with liposomal docetaxel treatment survived

more than twice as long as the comparison groups

after tumor removal.

The good study results prove the great potential of

Inno-Medica’s liposomal nanotechnology, which is

able to outperform even one of the most successful

modern drugs on the international pharmaceutical

market.

Figure 3: Efficacy study of adjuvant chemotherapy in murine me-tastatic breast cancer model in mice. Treatments with free and liposomal docetaxel (10 mg/kg each) and Abraxane (30 mg/kg) were compared after the primary tumor was surgically removed.

Figure 2: Efficacy study with murine metastatic breast cancer mo-del in mice. Treatments with free and liposomal docetaxel (10 mg/kg each) and Abraxane (30 mg/kg) were compared. The mice of the Abraxane group died after 23 days; InnoMedica’s liposomal docetaxel was able to stop tumor growth compared to free do-cetaxel.

Control Abraxane (Paclitaxel 30 mg/kg) Free docetaxel Liposomale docetaxel (10 mg/kg)

Murine metastastatic breast cancer

Days after tumor implantation

Treatment start

0

500

1000

1500

Tum

or

size

(m

m3)

0 2 5 7 9 12 14 16 19 21 23 26 28 30 33

Days after tumor implantation

Tumor explantation and treatment start

0

500

1000

Tum

or

size

(m

m3)

0 2 5 7 9 12 14 16 19 21 23 26 28 30 33 35 40 43 47

Tumor growth after explantation

Control Abraxane (Paclitaxel 30 mg/kg) Free docetaxel Liposomale docetaxel (10 mg/kg)


Liposomal contrast agent as tumor marker (TLNIR-1)

Diagnosis of cancer at an early stage of tumor devel-

opment often leads to a much more positive course

of the disease, while later diagnosis often complicates

treatment. In colorectal cancer, tumor diagnostics has

been proven to be a major breakthrough. The removal

of a polyp before metastasis is a commonly used pre-

ventive measure today, which can prevent subsequent

malignant development. However, many tumours are

much more difficult to find. Therefore, a tool based

on nanotechnology for the simplified identification of

tumor tissue is to be made available to surgeons.

InnoMedica has developed a technique for the experi-

mental investigation of the biodistribution of liposomes

in the body, in which the liposomes are marked with a

color molecule. Infrared light makes it easy to see how

the liposomes are distributed in the different tissues.

InnoMedica’s liposomal contrast agent can now be

used to color-code the tumor tissue for surgery in

cancer patients. The technique of color coding can-

cer tissue is already being applied experimentally to

some extent in leading university and private clinics

and is mainly used to support the surgeon in the iden-

tification of lymph nodes. Without color coding, the

surgeon operating on the tumor cannot clearly dis-

tinguish between healthy tissue and tumor tissue. A

universally applicable liposomal contrast agent would

provide the surgeon with an improved basis for deci-

sion-making in the precise surgical removal of tumour

tissue.

InnoMedica’s preclinical evidence shows how the col-

ored liposomes accumulate specifically in the tumor

tissue. In a study with 25 mice, InnoMedicas liposomal

contrast agent TLNIR-1 accumulated 24 hours after in-

travenous administration in highly metastatic breast

cancer in all 25 experimental animals. The visualiza-

tion was performed under anaesthesia in an intravital

scanner in the near infrared range and made visible

that, apart from the tumor, a signal of similar inten-

sity only occurs in the liver. After visualization, the

tumors were surgically removed and the mice were

visualized again to ensure that all tumor tissue was

removed and the color signals were not from other

organs. Figure 4 is an example of the images of an

experimental animal.

If InnoMedica’s liposomal contrast agent technique

can be used in cancer patients, the tumor mass could

in the future be removed with increased precision

during surgery. This would have an extremely positive

effect on the course of disease in patients with solid

tumours, and in a comparatively cost-efficient man-

ner. Since the coloring liposomal contrast agent is not

classified as a drug, but only as a medical device, the

registration procedure is relatively simple. No phase

I - III/IV clinical studies are required, but only a single

study to evaluate the tolerability and benefits of the

technology. As a result, the time-to-market can be

significantly faster than in drug development.

Figure 4: Liposomal contrast agent as a tumor marker allows a more precise surgical removal of the tumorous tissue.

Before surgical removal

After surgical removal

Liver

Tumor

Tumor

Liver

Liposomal arteriosclerosis therapy (TLFR-1)

Another application of the InnoMedica Technology

Platform has been investigated in collaboration with

a research group from the John A. Burns School of

Medicine, USA. In this case, InnoMedica modified the

liposome surface with a specific sugar (sialyl-Lew-

is-X), which is intended to navigate the liposomes to

inflamed cells, as they occur in arteriosclerosis. Arte-

riosclerosis is the pathological storage of cholesterol

esters and other fats in the inner wall layer of arterial

coronary vessels.

In addition to several cell experiments and the anal-

ysis of the biological distribution of liposomes in ani-

mal models, the research group has also investigated

the therapeutic applications of liposomal nanotech-

nology in animal models. The results show that Inno-

Medica’s liposomes bring the therapeutic substances

to the arteriosclerotic plaque zone (Figure 5). A con-

trol group was compared with two liposome groups,

one group being treated with the two encapsulated

drugs forskolin and rolipram (liposome with forskolin/

rolipram), while the other group was given empty li-

posomes (empty liposome). In the group treated with

liposomal forskolin/rolipram, plaque size decreased

significantly. With the help of the liposomal transport

system of InnoMedica not only was it possible to re-

duce the atherosclerotic plaque deposits, but also to

address the inflammatory reactions and prompt the

regeneration of the arterial blood vessels. The de-

tailed results were published in “Nature Communica-

tions” and can be found in Baumer, Y., et al. (2017),

Hyperlipidemia-induced cholesterol crystal produc-

tion by endothelial cells promotes atherogenesis, Na-

ture Communications, 8: 1129

Figure 5: Liposomes filled with forskolin and rolipram reduce plaque size (top right). In addition, inflammations are speci-fically addressed and regeneration is promoted.

Plaque size

Control Empty liposomeLiposome with forskolin/rolipram


Many agents used in medicine today could be improved by a liposomal

formulation in their efficacy, but also in their side effect profile. This results

in a broad portfolio of potential pipeline products for InnoMedica.

Pipeline

Liposomal bacteria control (TLTS-1)

The potential of the Technology Platform also pre-

sents itself in the area of infectious diseases. Inno-

Medica’s research department has been able to achieve

promising first results in the area of neutralizing bac-

terial infections without the use of antibiotics. In co-

operation with the University of Bern, a liposome was

developed which is able to neutralise the cytotoxins

of the bacterial strains Clostridium difficile, Campy-

lobacter jejuni, Escherichia coli, Vibrio cholerae and

many others. The infection was stopped and the heal-

ing process could begin.

Interestingly, the liposomes can differentiate between

the desirable bacteria in the body and the pathogens,

e.g. leave the intestinal flora intact in an intestinal in-

fection. Only the alien bacteria are rendered harmless

and removed. Normal antibiotics cannot achieve this

distinction and often lead to the unwanted loss of the

body’s indispensable microbes. This can lead to con-

siderable problems. In antibiotic therapies, the for-

mation of resistance mechanisms of the pathogens

is also a persistent problem that may be tackled with

these liposomes. Bacteria must be able to bind and

adhere to cell structures in order to trigger an infec-

tion. InnoMedicas liposomes use the same structures

in massive numbers, which distract the bacteria like

a dummy from the human cells. Since the bacteria

cannot distinguish between liposomal dummies and

human cells, they bind to the liposomes and the infec-

tion can be stopped.

Preclinical development Clinical studies

Product / Applica-tion

Discovery Development Animal studies

Toxicity and safety

Phase I Phase II

Talidox (TLD-1)Oncology

Talineuren (TLGM-1)Parkinson’s disease

TLTX-1Oncology

TLNIR-1Oncology / diagnostics

TLFR-1Arteriosclerosis

TLTS-1Bacterial infection

Overview of InnoMedica’s pipeline projects


Market and Competition

InnoMedica’s liposomal platform is based on nano-

technology. Accordingly, InnoMedica competes with

all companies in the field of nanomedicine. Nanoma-

terials are produced in a number of ways, with a wide

variety of end products. The only thing the nano-

particle range has in common today is their size:

they are all really small - but even there «big» differ-

ences exist.

Liposomes in the market environment of nanomedicine

Nanoparticles differ primarily in their chemical

composition. In nanomedicine, different organic ap-

proaches with liposomes, protein particles, polymers

and micelles, but also inorganic approaches with iron

oxide, silicon, gold, silver, titanium and other sub-

stances have been developed. Of these nanoparti-

cles, only liposomes in their natural form are found

in the human body. The individual building blocks of

liposomes, so-called phospholipid bilayer membranes,

can be found in all cells and even in their functional

subunits (cell organelles). This natural occurrence is

one of the strongest arguments why liposomes are

far superior to other nanoparticles in their function-

ality and usability.

Market conditions

A look at the current market situation in Europe and

the USA underlines the importance of liposomes in

applied nanomedicine. Their use as a carrier system

for therapeutic agents has attracted a great deal of

attention in recent years. The nanometer-sized and

bilayered fatty vesicles have become popular as po-

tential drug transport systems, especially in oncology,

due to their efficiency, biocompatibility, immune com-

patibility, improved solubility of active ingredients and

their ability to encapsulate a large number of drugs.

Today, liposomal formulations are used not only in on-

cology but also in fungal diseases, as painkillers, for

photodynamic therapy or as vaccines (Figure 6).

The superiority of liposomal transport systems in

nanomedicine is underpinned not only scientifically

but also by the market situation. Of all eight nano-

therapeutics approved for sale in oncology in Europe

and the USA to date, seven are based on liposomes

(Table 2). Only Abraxane had reached market maturi-

ty as non-liposomal nanoparticles.

Competitive situation

A competitor analysis in the market segment of lipo-

somal drugs shows that liposomal nanomedicine is not

primarily concerned with competing for market shares,

Scope of application of liposomal formulations (Figure 6)

Marketed liposomes

Viral vaccinesInclexal VEpaxal

Cancer therapyCaelyx/Doxil DaunoXomeDepocyt MepactMarqibo MyocetOnivyde

Fungal diseasesAbelcetAmbisomeAmphotec

Photodynamic therapyVisudyne

AnalgsicsDepoDurExparel

but rather with technical questions of development and

production. Conventional production methods repeat-

edly lead to supply bottlenecks. In 2012 and 2013, for

example, the manufacturer of Caelyx was only able to

produce 17 of the 65 batches in demand. The manufac-

turer of Depocyt even had to halt production complete-

ly in 2017 because technical issues could not be solved.

The production of liposomes using conventional

methods is technically so expensive and demanding

that the development of a liposomal platform for a

broad range of applications is hardly commercially

feasible. Hence, the nanomedicine companies usu-

ally adhere to one liposomal application and active

substance, and as a result the liposomes developed

are not combined with new active agents for further

applications. As with the natural transport system of

the human body, exchanging the cargo alone does not

suffice. The composition, size and shape of the lipo-

some itself must also be adapted for optimal control

of biodistribution.

A liposomal formulation almost always has certain

advantages over the administration of the pure drug.

Based on this consideration, 29 liposomal applications

are currently being clinically tested worldwide. Of these,

12 are in oncology. However, only 5 of these candidates

are tested in multiple oncological indications and none

of the companies have liposomal applications in other

medical areas such as neurology or infectiology.

InnoMedica, on the other hand, has fundamentally

changed the usual approach of liposomal drug de-

velopment. Building on the more than 30 years of

research experience of Dr. Noboru Yamazaki, board

member of InnoMedica and founder of Yamazaki-DDS

Co, Ltd. acquired from InnoMedica, InnoMedica has

understood the importance of the platform character

of liposomal technology and has placed the overcom-

ing of the known technical hurdles at the center of

early development work. Three central elements have

emerged for the successful establishment of the lipo-

somal technology platform:

Name Company Formulation Revenue (USD) Application Initial regis-tration

Abraxane Celgene Albumin with Paclitaxel

2015: 1’000 m. Breast, pancreas, lung cancer

2005

Caelyx/Doxil

Janssen-Cilag PEG-liposome with Doxorubicin

2015: 400 m. Kaposi’s sarcoma, ovarian cancer, breast cancer

1995

DaunoXome Galen Liposome with Daunorubicin

Kaposi’s sarcoma 1996

Depocyt Pacira Liposome with Cytarabine

2017: technical pro-duction issues, sales discontinued

Lymphomatous meningitis

1999

Marqibo Talon Therapeutics

Liposome with Vincristin-Sulfat

2014: 6 m. Leukemia 2012

Mepact Takeda Liposome with Mifamurtid

Osteosarkoma 2009

Myocet Teva Pharma Liposome with Doxorubicin

Breast cancer 2000

Onivyde Ipsen PEG-liposome with Irinotecan

400 m. (expected potential of analysts)

Adenocarcinoma 2015

Nanoparticle therapies in clinical application (oncology) (Table 2)


Production of liposomes: The production process

had to be converted to an innovative process with

more flexibility in its production possibilities.

Composition of the lipid shell: The composition of

the lipid shell must be adaptable to the intended med-

ical application. Short changeover times are particu-

larly important for the manufacturing process.

Surface coating: Depending on the target tissue in

the body, the surface of the liposomes must be struc-

tured differently. These biocompatible surface modi-

fications can only be produced by complex chemical

reactions.

It is therefore not enough simply to change the agent.

For a successful liposomal platform, the design of the

liposome and thus the manufacturing process must

also be adapted to the specific application. This in-

sight prompted InnoMedica to focus on the technolo-

gy used in liposome production. Through a systematic

approach, InnoMedica has succeeded in developing a

unique platform.

In order to demonstrate the added value of this nano-

technology and in contrast to standard practice,

InnoMedica decided to develop the first application

with an oncological agent for which another liposo-

mal formulation already existed. Caelyx, a liposomal

doxorubicin preparation, is regarded by experts as

the gold standard in nanomedicine. During the pre-

clinical studies InnoMedica succeeded in achieving a

technical breakthrough in constant comparison with

Caelyx. If InnoMedica, like other liposome manufac-

turers, had simply chosen another active substance

that has never been approved as a liposomal drug,

only a comparison with the administration of the free

active substance would have been possible and the

potential of the new liposomal technology might have

remained unrecognized.

At the current stage of scientific development, com-

mercial success depends above all on the technolog-

ical superiority of the manufacturer. InnoMedica is

convinced that through a systematic approach, great

progress has been achieved, which has been fully

confirmed by the results of the preclinical studies.

Oncology application: Talidox

In addition to the improvement in treatment options,

early diagnoses in particular have increased the

chances of survival for cancer patients in recent de-

cades. Nevertheless, 30 percent of men and 22.6 per-

cent of women diagnosed with cancer still die today.

This makes cancer the most common cause of death

in Switzerland for men between the ages of 45 and

84 and for women between the ages of 25 and 84.

Cancer therapy continues to face major challenges.

Increasing efficacy: Due to the still often fatal course

of the disease, the efficacy of cancer drugs must be

further improved. This is the only way cancer may

one day be defeated in the body and classified as a

controllable chronic disease such as HIV.

Reduction of side effects: Many patients suffer from

the acute side effects of cancer therapy. However, the

long-term consequences of both the treatment and

the disease itself can also be very stressful. Certain

side effects such as pain, exhaustion, increased sus-

ceptibility to infections, nausea or lymphoedema can

now be partially treated. However, life-threatening ef-

fects such as cardiotoxicity pose a very high health

risk with serious long-term consequences and are

therefore only reluctantly accepted.

More reliable and simple diagnostics: An early di-

agnosis increases the chance of survival many times

over. In high-risk groups the aim is therefore to carry

out regular check-ups, which can be carried out with

simple means. Particularly important is the local-

ization of metastases (hostile tumor branch-offs) in

other parts of the body with the help of diagnostics.

Another improvement in diagnostics is the measuring

of simple parameters, such as biomarkers, which can

be used to determine a type of cancer in the body.

Economy (cost-benefit ratio): The high costs of

some newly developed drugs have been met with

great public criticism. A pharmaceutical company

cannot escape the public discussion about a balanced

cost-benefit ratio.

With the development of Talidox, InnoMedica makes a

significant contribution to improving cancer therapy.

Talidox brings the chemotherapeutic agent doxorubi-

cin into tumor tissue specifically. Doxorubicin was dis-

covered around 1950, but has to this day and in many

cases remained the most effective cytostatic drug.

Clinical studies have repeatedly shown that doxoru-

bicin can be used as a therapy for a wide variety of

cancers and is still one of the best therapeutic op-

tions for patients in many cases. Today, doxorubicin

is widely used for the treatment of 17 cancers. These

include indications such as leukemia, bladder cancer,

breast cancer, lung cancer, lymphoma, brain tumors

in children, ovarian cancer, gastric cancer and thyroid

cancer. The scope of this list illustrates how important

doxorubicin is for oncology in general. No cytostat-

ic drug has a similar range of effects. The oncologist

currently has three doxorubicin formulations at his

disposal:

Adriblastin (free doxorubicin): Adriblastin is a che-

motherapy based on the active substance doxoru-

bicin. The drug doxorubicin is administered to the

patient by infusion in its pure form and acts as a sys-

temic therapy throughout the body. The tumor-inhibit-

ing effect is accompanied by numerous side effects.

The most serious side effects are the strain on bone

marrow and blood production, damage to the liver

and irreversible damage to the heart muscles.

Caelyx (liposomal doxorubicin): Caelyx is a che-

motherapy similar to Talidox in which doxorubicin is

encapsulated liposomally. Although Caelyx protects

the patient from cardiac damage, it carries the risk of

hand-foot syndrome, which is a direct burden on the

patient. This novel side effect of acute inflammation

of the palms and soles of the feet prevented a broad

therapeutic use of this drug.

Myocet (liposomal doxorubicin): Myocet is also che-

motherapy with liposomal encapsulation, but requires

a complex preparation procedure in the hospital. The

infusion solution must be mixed immediately before

administration at the hospital bed and is stable only

for a very short time. Myocet also has a negative ef-

fect on blood production, the immune system and the

bone marrow and causes hair loss and inflammation

of the mucous membranes. For these reasons, Myocet

is rarely used.

Neither Caelyx nor Myocet showed an increase in

effect, but only a shift in the side effect profile. The

preclinical data show that Talidox makes great pro-

gress in this respect by increasing the antitumoral


effect and at the same time mitigating the side effect

profile. In particular, numerous strong side effects,

such as irreversible heart damage, seem to be almost

non-existent in the treatment with Talidox, or not at

all in the case of hand-foot syndrome. In addition, the

accumulation of drug substance in the cancer cell

is higher compared to the reference drugs Caelyx

and Adriblastin (free doxorubicin). If the favourable

side-effect profile can be confirmed in clinical studies

in humans, the oncologists expect Talidox to quickly

establish itself as the new therapeutic standard for

doxorubicin-based treatments.

Global sales of the established doxorubicin-contain-

ing products worldwide totaled USD 1.62 billion in

2015. About half of sales are generated with free

doxorubicin, which is 12 times cheaper than liposomal

formulations. The regional breakdown shown in Fi-

gure 7 shows that North America and Europe already

account for 83 percent of global sales.

If the benefits of treatment with Talidox can be con-

firmed in the clinic, it can be assumed that a signifi-

cant part of conventional doxorubicin therapies will

be replaced by Talidox. If only about 10 percent of

patients who have received treatment with free doxo-

rubicin are treated with Talidox, the higher price of

Talidox already results in annual sales of about USD

960 million.

How quickly such a shift can occur is illustrated by

the example of Abraxane in paclitaxel therapy. Abrax-

ane is the latest nanoparticle on the oncology market

and combines the conventional chemotherapy active

agent paclitaxel with the blood protein albumin. This

compound improves the efficacy/side effect profile

compared to free paclitaxel. Abraxane has reached

a turnover of more than USD 1 billion per year in a

short time.

Neurology application: Talineuren

Among the diseases of the central nervous system,

Parkinson’s disease is the second most common neu-

rodegenerative disease after Alzheimer’s disease.

The first symptoms usually occur between the ages

of 50 and 60. For 5 to 10 percent of patients, the dis-

ease becomes apparent earlier between the ages of

20 and 40, with men being affected about 1.5 times

more frequently than women.

Around 6.3 million patients worldwide suffer from

the consequences of Parkinson’s disease. According

to the Swiss Parkinson Association, this number will

rise to around 8.7 million by 2030. More than 15,000

people with Parkinson’s disease currently live in Swit-

zerland, around 250,000 in Germany and 1.2 million

patients in Europe. As life expectancy increases, so

will the number of patients with Parkinson’s disease.

Parkinson’s is a neurodegenerative disease with a

progressive degradation of nerve cells in the brain. In

the first years of the disease, this usually affects the

nerve cells responsible for the production of the mes-

senger substance dopamine, lovated in the substantia

nigra (black substance, located in the midbrain) . The

resulting lack of dopamine leads to various motor dis-

orders.

Today’s drug treatment options are aimed exclusive-

ly at treating symptoms. Levodopa, COMT inhibitors,

dopamine agonists or MAO-B inhibitors are used to

artificially provide the body or brain either with more

dopamine or for longer periods of time or to replace

the effect of the hormone in some other way.

Talineuren, on the other hand, has the potential to

become the first drug therapy that can stop the pro-

gressing cell death and slow down the neurological

break down of affected cells. The drug allows ther-

10 %Asia

49 %North America

4%South America

3% Rest

34 %Europe

Regional distribution of global sales of doxorubicin medicines (Figure 7)

apeutic intervention even before symptoms develop

and therefore is fundamentally different to dopamine

replacement therapy. Neurological degeneration is

slowed down by protecting the nerve cells. By pre-

venting cell death, the development of a dopamine

deficiency, which eventually leads to Parkinson’s

symptoms, can be averted.

Talineuren has the potential to be used as first-line

therapy and would thus be the preferred first treat-

ment option after diagnosis of the disease. Such

treatment in the early stages of the disease promises

not only to improve the quality of life of patients but

also to have a major impact on reducing indirect costs

such as work absences, care and nursing.

According to the latest estimations, the global market

for Parkinson’s drugs will amount to CHF 4.2 billion in

2017. However, this figure is hardly representative of

the effective market potential of Parkinson’s drugs,

as there are currently only symptom treating drugs

and no disease-modifying drugs.

Marketing

InnoMedica’s marketing strategy for oncology and neu-

rology is based on the following three cornerstones:

Cooperation with medical professionals

The competence to administer prescription drugs is

with the treating physicians. InnoMedica therefore

strives for direct cooperation with opinion forming

specialists for all pipeline projects. In the case of

Talidox, this cooperation is reflected in the existing

partnership with the SAKK oncologists. The Swiss on-

cologists are organized through the umbrella organi-

zation of the SAKK and supervise innovation projects

for new initiatives in cancer therapy. SAKK is aware of

Talidox’s preclinical and toxicological data and will use

the new drug in an independent clinical study in pa-

tients for the first time. As part of this clinical study,

it is also informed about all product related quality

data. InnoMedica and SAKK can jointly develop a de-

tailed profile of the possible applications of Talidox

based on the results of the clinical studies. This lev-

el of information leads to a significant reduction in

the sales efforts needed toward Swiss oncologists.

These follow the technical orientation of SAKK. A lot

of technical information about Talidox and its use will

reach the oncologists directly from SAKK or with only

indirect support from InnoMedica.

In international expansion, the key element of collab-

oration with opinion forming physicians continues to

be the conduct of clinical studies in which the effect

of the drug is no longer simply proven in phases III

and IV, but individual indications are specifically ad-

dressed. This leads to an increasingly clear instruc-

tion for the attending physician in the hospital or in

the practice to what extent he can use Talidox within

the framework of the best possible treatment of the

patient. Only these results will allow an efficient ex-

pansion of sales, in connection with the correspond-

ing approvals of the regulator.

In addition, the support from hospitals and doctors

through medical advice is to be expanded. As al-

ready established in many other industries, sales will

change from the previous push model to a pull mod-

el in which the physician can contact InnoMedica as

required and find a competent partner to answer or

discuss technical questions. In certain countries, such

as Germany, the expansion of medical consulting can

Top-selling Parkinson’s drugs and their worldwide sales:

Levodopa (L-Dopa):

• Madopar from Roche Pharmaceuticals (USD 302 million)

• AbbVie duodopa with nasoduodenal probe (USD 293 million)

• Stalevo, Comtess and Comtan, respectively, from Novartis

Pharma (USD 138 million)

Dopamine agonists:

• New patch from UCB-Pharma (USD 430 million)

• Requip from GlaxoSmithKline (USD 177 million)

MAO-B inhibitors and COMT inhibitors:

• Azilect from Teva Pharma (USD 461 million)

• Xadago by Zambon (new launch 2017)


The joint implementation of clinical trials with the SAKK ensures that the

technical information about Talidox and its use reaches Swiss oncologists

directly from the SAKK or with only indirect support from InnoMedica.

Marketing of Talidox

be solved through a separate subsidiary. In many cas-

es however, cooperation with a local representative

will also be appropriate, or possibly with a group that

already operates internationally in the oncology seg-

ment, is well positioned, and could in certain cases

even take over distribution logistics. InnoMedica and

its highly qualified scientific staff already focus on

this model of medical consultation in personal con-

tact with physicians.

From the very beginning of development, dialogue

with neurologists and scientists specializing in neuro-

degenerative diseases was also initiated with regard

to the pipeline product Talineuren. A Parkinson’s drug

is also sold by opinion forming doctors. The response

to the protective and regenerative approach of Inno-

Medica’s Talineuren is consistently positive and the

product can address a real patient need.

Increasing awareness by presenting preclinical

and clinical results at scientific congresses

InnoMedica already organizes events with physi-

cians, where the exchange of information between

scientists and practitioners is cultivated. InnoMedica

demonstrates the potential of Talidox on the basis

of study data, the doctors provide information on its

applicability in everyday clinical practice and on the

various indications. In addition, InnoMedica receives

feedback from the university environment, where Ta-

lidox has been tested analytically and in animal mod-

els. Following successful phase I and IIa clinical trials,

this model is to be expanded into events at which

doctors and scientists present their experiences and

results to an interested specialist audience.

In the six capital increases InnoMedica has already

built up a very good competence in the organisation

and execution of events. This experience can also be

used in medical marketing. In finance as well as in

medicine, the challenge lies not only in the effective

organization of the events, but also in the develop-

ment and preparation of the content in the necessary

quality.

Efficient organization of the

sales process and distribution

Distribution costs in the pharmaceutical industry are

often above average. This is one of the main reasons

for the high prices of medicines. The companies are

trying to counteract this situation with mergers that

create large corporations that can afford worldwide

distribution. A significant cost driver in sales is the

sales force, which visits the hospitals and doctors on

site. Especially in this arena, however, an upheaval is

emerging due to increasing digitization. As in other

industries, the sales force is being replaced by digital

media, which can provide doctors and patients with

the desired information precisely and at any time. At

the same time, the distribution of medicines is more

and more outsourced to specialised companies such

as Galenica in Switzerland. Such companies optimize

the flow of goods to pharmacists, doctors and hos-

pitals by means of information technology and thus

achieve ever higher productivity.

InnoMedica can benefit from this development and

build an efficient sales force with a relatively small

number of employees. However, InnoMedica will ini-

tially supply hospitals directly as part of the clinical

studies with Talidox. Only with the expansion of the

quantities and the availability of appropriate experi-

ence is it planned to gradually hand over the delivery

to pharmaceutical logistics companies. In this con-

text, the question also comes up whether qualified

partners could at best take over InnoMedica’s tech-

nology under licence for their own production. This

is possible in principle, but requires the elimination of

several obstacles. The production of liposomes in the

quality achieved by InnoMedica places high demands

on the technology used and the manufacturing pro-

cesses. Furthermore, these procedures are subject

to increased secrecy at InnoMedica. Accordingly, the

costs of know-how transfer and the establishment

of own production for the license partner would be

rather high and probably only justified if the partner

could also quickly develop a corresponding sales vol-

ume due to its market position.


Trademark rights

InnoMedica’s IP strategy is based on three pillars:

Patents

InnoMedica acquired the first patents in liposomal

targeting from Dr. Denis Bron in 2010. Dr. Bron had

already applied for these patents as a Swiss pioneer

in 2001 and proposed liposomal transport systems

as a possible business area. With the acquisition of

Yamazaki-DDS Co, Ltd. InnoMedica has significantly

expanded its existing patent portfolio in this area.

These patents originate from Dr. Yamazaki’s work

at the state research institution AIST in Japan. Dr.

Yamazaki is registered as the inventor and Yamaza-

ki-DDS Co, Ltd. is managed together with AIST as the

owner. All patents are in effect until 2023. The patent

rights in the key markets of Europe (including Swit-

zerland, Germany, France, UK, Netherlands), USA and

Japan are significant (Figure 8). Attempts by estab-

lished large pharmaceutical companies to attack Dr.

Yamazaki’s patent family have failed.

After the acquisition of Yamazaki-DDS Co, Ltd. the

patents are jointly owned by InnoMedica and the

research institution AIST. Licensing to third parties

is provided for in the contracts between InnoMedi-

ca and AIST, subject to the written consent of both

patent holders. Under these agreements, the only ex-

ception is the overriding public interest. In contrast

to numerous university spin-offs, InnoMedica not

only holds a patent license, but is also an effective

co-owner of the patents. An example of a licensee is

the Japanese Katayama Chemical Industries Co, Ltd.

which was the only company previously not exclusive-

ly licensed by Yamazaki-DDS Co, Ltd. and AIST for a

diagnostic application of the technology. InnoMedica

is thus the only company that can use and outlicense

the patented technology in therapeutic applications.

The core of the patents is the liposomal glycan target-

ing, which can be used as a technology platform with

various active agents.

In December 2017, InnoMedica filed a patent appli-

cation in cooperation with internationally renowned

patent attorneys, building on the newly generated

knowledge of recent years. Research results on the

surface structure of liposomes have enabled Inno-

Medica to change the distribution of active substanc-

es in the body in such a way that, contrary to pop-

ular scientific opinion, the blood-brain barrier could

be crossed, thus enabling the targeted transport of

drugs into the brain. To protect this liposome, newly

developed by InnoMedica, a patent specification was

Figure 8: Cover page of the European (left) and the American (right) patent of Dr. Noboru Yamazaki.

PatentsEurope: EP 1 447 081 (important countries)

• Schwitzerland• Germany• France• Great Britain• Netherlands

USA: US 7 070 801

Japan: JP 3 882 034 JP 3 924 606 JP 4 500 930 JP 4 590 519

written and filed at the patent office. This prevents

the patented technology from being copied and en-

ables InnoMedica to specifically treat various neuro-

degenerative diseases with this liposome in the fu-

ture. The new patent builds on the previous patents

of InnoMedica and Dr. Noboru Yamazaki concerning

liposomal transport systems and glycan targeting and

supplements these with the crossing of the blood-

brain barrier using liposomes and neurology as new

area of application. Thus, the application potential of

InnoMedica’s technology platform is extended by a

significant medical field, which shows a high demand

for effective therapies.

Inventor:

The basis for active targeting using glycan-modified

liposomes was created by Dr. Yamazaki during his

work at AIST. As an intellectual father and registered

inventor of patents, he has a deep understanding of

the technology. This pool of technological knowledge

is of central importance for successful clinical devel-

opment. The patents reveal the basic idea of targeting

and thus protect it. However, the detailed technical

implementation, mastery of challenges in preclinical

development and clinical studies require competen-

cies that go far beyond patented intellectual property.

Through the substantial financial participation of Dr.

Yamazaki and his function as a member of the Board

of Directors, InnoMedica will retain this knowledge.

In the development phase of Talidox, the InnoMedica

team was able to significantly expand its know-how

in liposomal technology and industrial manufacturing

processes. This is also reflected in the new patent ap-

plication for use in Parkinson’s disease. The key per-

sons are closely linked to the company through family

ties and shareholdings.

Secrecy

InnoMedica has created a lot of new intellectual prop-

erty within the scope of preclinical development, es-

pecially in the design of the pharmaceutical produc-

tion process. When dealing with this new knowledge

under intellectual property law, the advantages and

disadvantages of patenting must be cleverly weighed

up against business secrecy. Patenting always goes

hand in hand with disclosure of the protected idea.

For example, if a production process is disclosed in a

patent, the competition knows how to proceed in pro-

duction and can copy this. In such a case InnoMedica

would have to enforce the patent in court with consid-

erable cost consequences. Proof of infringement of a

procedural patent is also extremely difficult. There-

fore, the contents of new patents must be carefully

considered and, if necessary, also protected as trade

secret. A secrecy system and corresponding IT securi-

ty are indispensable and implemented at InnoMedica.


Production

The core of InnoMedica’s production is the production

facility for aseptic drugs according to pharmaceutical

guidelines of good manufacturing practice at the site

in Marly, Fribourg. In the selection of the location in

2013, the existing clean room infrastructure was one

of the decisive factors for the Marly Innovation Cen-

ter (MIC). A clean room measuring around 25 m2 was

modernized and retrofitted to meet current pharma-

ceutical development requirements. Since 2013, an en-

tire technology and industrial park with more than 130

companies has been created in the MIC. In the near fu-

ture, an extensive expansion of the infrastructure with

an industrial complex, office buildings and living space

for several thousand people is planned (Figure 9).

After evaluating various outsourcing options, Inno-

Medica decided in favor of in-house production. This

offers the following strategic advantages:

• protection of intellectual property, in particular with

regard to innovative manufacturing processes

• continuous optimization of the production process

and expansion of production volumes

• cooperation with the research and development de-

partment and development of further application

options

An essential precondition for setting up an industrial

pharmaceutical production is the availability of space

for expansion and the possibility of amortizing invest-

ments in the plants over a long period of time. This

requires a stable, long-term contractual relationship

with a landlord who can provide sufficient space re-

serves. InnoMedica has found such a partner in MIC.

Especially in the initial phase of the cooperation, MIC

actively promoted InnoMedica’s start-up approach

and made it affordable to rent. In the current phase,

the MIC ensures good location conditions through a

lease agreement deposited in the land register with

a 21-year notice period on the part of the propri-

etor and investments in the building infrastructure

in accordance with InnoMedica’s requirements. The

investment burden will be shared between MIC and

InnoMedica, with the landlord investing primarily in

the renovation of the existing infrastructure, the of-

fices as well as in energy recovery and InnoMedica

in the premises for pharmaceutical storage, process

development and clean room production. The premis-

es for the further expansion of production have been

contractually assured by MIC and taken over into the

planning by InnoMedica. With these framework condi-

tions, the MIC ensures an optimal investment climate

and allows InnoMedica to strategically stick to its cur-

rent production site.

In order to successfully industrialize the production

of Talidox and Talineuren, numerous other elements

are of central importance in addition to the infra-

structure:

Quality Manangement System

The quality management system (QMS) was anchored

in the company right from the start in order to check,

ensure and continuously improve the quality of pro-

cesses and products. InnoMedica’s QMS works to en-

sure that all employees consciously strive to develop

quality, recognize problems and implement measures

to solve them.

Figure 9: Planned expansion of the Marly Innovation Center (MIC), with production site of InnoMedica.

The production facility in the Marly Innovation Center, certified by Swissmedic, made it possible to

protect intellectual property - in particular innovative manufacturing processes.

In-house GMP Production


This enables InnoMedica to produce pharmaceuticals

that meet the high demands of patients. InnoMedica’s

QMS complies with the requirements of current Good

Manufacturing Practice (cGMP) and was accordingly

certified by Swissmedic (last time in January 2017,

(Figure 10).

Quality control by means of analytical procedures

InnoMedica carries out the necessary quality con-

trols of raw materials, intermediate products and end

products during production. Raw material control in-

cludes identity and purity analyses to ensure that the

ingredients are correct and have the required degree

of purity.

The precise monitoring of the individual production

steps ensures the reproducibility of the individual pro-

duction runs. Consistent production is a key factor in

the quality of nanoparticles. The complex processes

during production require a careful control of all pa-

rameters involved. All process and analysis steps are

carried out according to exact regulations on regular-

ly qualified equipment. The production always takes

place hand-in-hand with the analytics. Process-rele-

vant parameters are measured within the framework

of in-process checks at the same time as production,

thus guaranteeing the product’s durability.

Special attention is paid to the safety-relevant pro-

cess steps, above all the final sterile filtration, which

was optimized by the validation of the filters and the

control of the bacterial load before the filtration step.

The routinely conducted bacterial contaminant mea-

surement methods and their toxins were developed

with experienced, specialized companies in this field

and validated for InnoMedica’s production. Thus, any

bacterial components in the final product can be ex-

cluded. In addition to the production itself, the pro-

duction environment including air pressure, humidity

and particle load is continuously monitored.

The finished drug must meet exact specifications re-

garding size, size distribution, content of ingredients

and other parameters. In addition, it ensures that no

decomposition products occur among the constitu-

ents of the finished liposomes.

Talidox’s analytical audit, along with production doc-

umentation, serves as the basis for the release of the

batch. At InnoMedica, Stéphane Gumy is the Qualified

Person (QP) responsible for the certification and re-

lease of clinical batches.

Innovation in the manufacturing

process and scale-up

The production process of InnoMedica is divided

into the production of the bulk drug product and the

finished dosage form, i.e. small vials containing 30 ml

injectable liquid.

InnoMedica is breaking new ground in many areas

with the technology used to manufacture the lipo-

somal bulk drug product. This is often reflected in

the lack of availability of usable solutions from es-

tablished technology manufacturers. As a result of

this, InnoMedica has invested in the development of

the key technology for the production of liposomes

with its own personnel and specialized consultants.

In summer 2017, a scale-up of the production process

to 6 litres of bulk drug product was achieved. After

initial work on an enlarged laboratory scale, scalable

industrial plants and processes have now been intro-

duced. Temperature-controlled double-shell reactors

allowed further stabilization of the manufacturing

process, allowing the determination of the necessary

normal operating ranges (NOR) and proven accept-

able ranges (PAR).

Figure 10: InnoMedicas operating licence for the production of pharmaceuticals according to Good Manufacturing Practice (GMP).

The open vial filling technology used to produce the fin-

ished dosage form in class A sterile zones has been op-

timized by various manufacturers over decades, espe-

cially on a large scale. In order to avoid the sometimes

very high investment costs of open vial filling for the

time being, InnoMedica has decided to use a new con-

cept for the phase I and II clinical study, the so-called

closed vial filling. In this process, which is particularly

suitable for smaller series, the production of the sterile,

sealed vial is outsourced to an external supplier. This

avoids major investments for a ultrapure water system

and the systems for sterilising the vials at the beginning

of the clinical phases. The externally procured vials are

slowly filled with very thin needles at InnoMedica. For

the time being, InnoMedica is using a system developed

in-house for this purpose. For phase II, an automated

filling system with robotics can also be used for closed

vial filling according to the supplier’s offer.


Realization of industrial production

To meet the expected market demand, further scal-

ing of the bulk drug product manufacturing process

is required. This is planned as a combination of par-

allelisation of the first process steps and subsequent

pooling during further processing, which should lead

to batch sizes of 18 litres, later 36 or even 72 litres.

Planning for these production facilities in the new

Clean Room II is already well advanced. This applies

to the reactors as well as the necessary heating and

cooling technology and filtration systems. In order to

achieve high productivity with constant quality, auto-

mation concepts are currently being developed for

several process steps. With regard to larger quantities

– daily administration is planned for Talineuren – in-

dustrial high-performance systems of open vial filling

technology are also being evaluated as an alternative

to closed vial filling.

In order to cope with the industrial volumes, Inno-

Medica invests specifically in the expansion of the in-

frastructure. InnoMedica’s expansion is divided into

two stages. The first stage has already started and

is partly underway. It includes the renovation and re-

construction of the following infrastructure:

Offices: The offices are being expanded step by step.

From July to November 2017, two former laboratories

were converted into one office. The third office will

also be renovated in the first quarter of 2018.

Process development laboratories: The process de-

velopment laboratory will be converted in the second

quarter of 2018 to create a modern working environ-

ment for the future development of InnoMedica’s li-

posomal production technology.

Development laboratories: Development and Analy-

tics were separated and have their own rooms after

the expansion. In Analytics, two uHPLC instruments

are working to capacity. A additional laminar flow for

the filling of raw materials was set up in the new, spa-

cious development laboratory.

Storage unit: The expansion of the storage place is

scheduled for completion in the second quarter of 2018.

The additional space is used for the cold storage of

products and for the storage of raw materials and pack-

aging materials. A separate zone is available for filling

the raw materials. In addition, packaging and raw mate-

rial sampling are to take place in the new storage room.

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Rue de Fin-de-Praz 8 Tél: 032 835 50 89Fax: 032 835 50 86

DateRev. Modifications Visa

Date création: Nom:

2024 St-Aubin

Fichier:Dénomination:

18.01.18

Format: A3 Paysage3478 Innomedica V15 - 2017

Echelle:

A3 Paysage PDF

timothée.favre

Date impression: 24.01.18

###

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Figure 11: Planned large Clean Room II with technical zone (left), control station (centre) and personnel lock (right).

GMP-Production: The existing small Clean Room I,

currently used for the production of Talidox, will be

upgraded with an additional material lock for the sim-

plified installation of newly designed mobile produc-

tion reactors.

New large Clean Room II: The largest structural in-

tervention is required in the large Clean Room II of

clean room class C (Figure 11). This will cover a total

area of 100 m2. The largely completed concept envis-

ages the construction of a state-of-the-art production

plant with optimized material and personnel flow as

well as a control station for automated control and

monitoring. Furthermore, a special high-security

pressure cascade is planned which prevents both the

entry of particles or microbiological disturbing fac-

tors and the escape of toxic substances.

All expansion steps in the first stage are based on

the existing MIC infrastructure. An important infra-

structure component for clean rooms is the specially

treated filtered room air, for which an air treatment

system operated by MIC is used. This plant uses only

fresh air, which is processed into clean air and fed into

the corresponding clean rooms. To save energy, the

installation of a heat recovery system is planned.

In the second expansion stage, a large industrial

Clean Room III for the filling and packaging of larg-

er volumes is to be expanded in accordance with

GMP guidelines. The pre-booked rooms are located

in the same building as InnoMedica’s current infra-

structure. According to current planning, larger vol-

umes of vials can also be filled in this Clean Room

III according to planning for the year 2022 (approx.

1.5 million/year). Clean Room III is primarily intended

for the production of Talineuren, but other solutions

are also possible depending on the development of

market volumes.

Water for Injection (WFI) is a key component for the

successful production of sterile drugs. This is current-

ly being purchased from third parties. Since the ex-

pected quantities of water in WFI quality will increase

sharply in the second expansion stage, the installa-

tion of a special plant is planned with which WFI and

pure steam can be produced on site. Treated water

that can be used for WFI production is already avail-

able in the MIC and the InnoMedica building.

Automated systems for washing, sterilizing, filling

and closing are to be installed in the planned industri-

al clean room. These are to be set up in clean rooms

of classes D or C with isolator technology where

necessary. In addition, automated systems for opti-

cal inspection, labelling and packaging are required.

Additional analytical laboratories are planned in this

zone in order to meet the increasing analytical re-

quirements for larger amounts of product.

Current investment planning budgets investments in

equipment and infrastructure in the amount of CHF

7.15 million until 2020 (Table 3). These investments

enable InnoMedica to sell Talidox and Talineuren in-

ternationally. The planned production facilities have

enough capacity to successfully supply the market

with sufficient amounts of product during market

launch of both drugs and to bring InnoMedica into the

profit zone.

Investments Infra- structure

Equipment Total in CHF

1. stage 375,000 273,000 648,000

2. stage 580,000 5,922,000 6,502,000

Total in CHF 955,000 6,195,000 7,150,000

Planned investments in equipment and infra-structure (Table 3)


Team

InnoMedica’s team has grown steadily over the last 5

years. With an experienced Board of Directors and the

founding team as management, InnoMedica unites the

knowledge that is important for the company to real-

ize such a project. InnoMedica’s goal is to involve the

entire team as shareholders and to develop an entre-

preneurial spirit among its employees. This is made

possible by a buy-in program, in which the key share-

holders of InnoMedica made 10 percent of their shares

available twice. In recent years, motivated employees

have been recruited who enthusiastically contributed

their skills and commitment to InnoMedica.

With Dr. Herbert Früh, the Board of Directors brings

valuable know-how from the areas of production, de-

velopment and marketing in the pharmaceutical in-

dustry to InnoMedica. Dr. Noboru Yamazaki has over

30 years of research experience in active liposomal

targeting. Manuel Frick is an internationally active

lawyer and complements the Board of Directors of

InnoMedica with his legal expertise in contract law,

European law, procedural law and intellectual prop-

erty. Dr. Peter Halbherr is an experienced entrepre-

neur and was active as a consultant in life sciences, IT

and financial services. During the entire seed period,

Peter Halbherr as Chief Financial Officer ensured the

continuity and preservation of InnoMedica’s equity.

Peter Halbherr established the liposomal technology

project and today, as Delegate of the Board of Direc-

tors and General Manager, connects the Board of Di-

rectors and the Executive Board.

The Manufacturing division is headed by Pascal Halb-

herr as a member of the Executive Board, Dr. Stéfan

Halbherr manages the Research and Development

division and Dr. Jonas Zeller the Finance and Admin-

istration division. Andrea Zurkirchen is responsible

for Communications, Human Resources, Legal and

Compliance. The founding team is complemented

by Stéphane Gumy, who brings important know-how

from pharmaceutical cGMP production to the compa-

ny in his function as Qualified Person. InnoMedica’s

strong technical focus is reflected in its 14 of 22 em-

ployees with degrees in biochemistry, chemistry or

medicine. The high level of competence in this core

area is an important prerequisite for InnoMedica’s

success.

For the planning of the clinical studies of Talidox, Dr.

med. Christian Baumgartner joined for the Medical

Affairs division and Lisa Halbherr for the Regulatory

Affairs & Registration division. Christian Baumgart-

ner brings experience from the pharmaceutical indus-

try and from his work as a practicing physician to the

company. Dr. Patrick Buschor is responsible for Trans-

lational Research, as an interface between preclini-

cal research and the introduction of a product in the

clinic. In addition, in his Quality Assurance function

together with Dr. Fabiola Schorer (Quality Design),

he ensures that the manufacture of the products is

carried out and documented in accordance to GMP

regulations. In research and development, Dr. Camille

Peitsch is product manager for InnoMedica’s project

in the area of neurodegenerative diseases. In addi-

tion, she produced images of InnoMedica liposomes

at the Institute of Anatomy at the University of Bern

using cryo-electron microscopy.

In view of the imminent entry into the clinic, the Man-

ufacturing division was further expanded and today

comprises a growing team with Dr. Florian Weiss in

Process Engineering, Andreas Inderbitzin in Technical

Engineering and Andreas König and Daniel Fallegger

in Production. Analytics and quality control, which

was established by Dr. Christoph Mathieu, is expand-

ing its capacity with Dr. Petra Gottier.

Also in the area of Finance and Administration, im-

portant recruitments were made. In addition to the

controlling and product management of Roman

Odermatt, Vanessa Ackermann takes over the office

management as a jurist and also provides support

for Andrea Zurkirchen and the Executive department

Communication, HR, Legal and Compliance. Silvana

Baselgia is appointed to the new Marketing position.

Supply Chain Management was transferred to a newly

created position and very well occupied by Dr. Stefan

Peterli. IT is headed by Urs Bretscher and supported

by Anna Roth as Business Application Engineer.

In addition, InnoMedica is supported by Dr. Philipp

Halbherr with his experience in finance and Dr. med.

Denis Bron with his network of physicians and medi-

cal institutions. Figure 12 shows the InnoMedica orga-

nization chart. The Board of Directors, the team and

the consultants are briefly introduced below.

Financial Advisor

Dr. Philipp Halbherr

Medical Advisor

Dr. med. Denis Bron

Board of Directors

Executive Board

Chairman

Dr. Herbert Früh

Director

Manuel Frick

Delegate

Dr. Peter Halbherr

Chief Technology Officer

Dr. Noboru Yamazaki

General Manager

Dr. Peter Halbherr

Qualified Person

Stéphane Gumy

Communication, HR, Legal & Compliance

Andrea Zurkirchen

Finance &Administration

Dr. Jonas Zeller

Research &Development

Dr. Stéfan HalbherrManufacturing

Pascal Halbherr

Analytics & Quality Control

IT & Infrastructure

Supply ChainManagement

ProcessDevelopment

TechnicalEngineering

Quality Assurance

FinancialAccounting

Office Manage-ment, Legal & Compliance

Marketing

Medical Affairs

Regulatory Affairs

& Registration

Translation

Organic Chemistry

Nano Structures

Pharmacology

CleanroomProduction

Organization chart (Figure 12)

Staff

Advisors


Dr. Herbert Früh has been with InnoMedica since 2000 and Chairman of the Board since 2002. He has many years of experience with industrial standards in the pharma-ceutical sector.

In addition to his work at InnoMedica, Dr. Früh is a member of the Board of Directors of the dental start-up Regedent AG, which he founded and built up as CEO. Previously, he worked as Business Unit Manager Regenerative at Straumann and was Head of Chemicals, Agro and Water Technology at CU Chemie Uetikon. As Managing Director Pharma and Biomaterials at Geistlich, he led the restructuring of the family business, introduced new products in biomaterial market and built up an international sales net-work. At Schering he was responsible as Marketing Manager for hormone therapy and dermatics. At Hoffmann-LaRoche he was Product Manager for Oncology and Infectio- logy responsible for the introduction of interferon.

After his doctorate in protein chemistry and enzymology, he began his career in drug development at Spirig. Dr. Früh studied natural sciences at the ETH Zurich with a diplo-ma and dissertation in biochemistry and microbiology. He also participated in an MBA course at the Graduate School for Business Administration Zurich.

Dr. Peter Halbherr has been with InnoMedica since 2001 and a member of the Board since 2002. As a business and personnel consultant in the pharmaceutical, IT and financial sector, Dr. Halbherr provides expertise in developing companies and ac-cess to a valuable network of executives, start-ups and financing.

Dr. Halbherr founded the consulting firm IPAG Inter Personal AG in 1988, which is active in management selection and management consultancy. Under his direction IPAG Inter Personal AG provided the initial funding for InnoMedica and served as in-cubator for the Talidox project. He is partner of BTS Business Technology & Services GmbH, which is active in software for Business Administration. Dr. Halbherr developed sqlFinance an Enterprise Resource Planning software, which InnoMedica uses today for accounting, payroll, purchasing and delivery/sales as well as for pharmaceutical GMP production.

Dr. Halbherr’s doctoral dissertation on career patterns, a DESS in Industrial Psychol-ogy, was a research project on careers and corporate culture in Paris (1979 – 1983, published as IBM - Mythe et Mythe et Réalité) resulted in a Dr. phil. et phil. degree from the Universities of Zurich and Paris. Previously, he studied psychology and graduated from the University of Zurich.

Dr. Noboru Yamazaki was elected at the 2013 Annual General Meeting to the Board of InnoMedica. His years of research experience in the field of active targeting and his solid experience in patent applications are key to the success of InnoMedica’s Talidox project.

He founded the company Yamazaki-DDS Co., Ltd. to develop new applications with an active targeting drug delivery system. This new technology results from his research while working as group leader of the NanoBio-Medicine Technology Laboratory at the Nanotechnology Research Institute of the National Institute of Advanced Industrial Science and Technology (AIST) in Japan. Dr. Yamazaki worked with scientists from the Chemistry Department of the University of Colorado and the Max Planck Institute of Experimental Medicine and was Director of research grants at the International Hu-man Frontier Science Program Organization. After receiving his PhD in Biology from the University of Hamburg and his postdoctoral research at Mitsubishi Kasei Institute of Life Sciences as Research Officer of the Industrial Products Research Institute, he began his career at AIST as Head of Materials Design Laboratory.

Board of directors

Dr. sc. nat., ETH Zurich Chairman of the Board

Dr. phil. et phil., Universities of Zurich and ParisDelegate, General Manager

Dr. rer. nat. Chief Technology Officer

Manuel C. Frick was elected by the shareholders of InnoMedica as an additional member of the Board of Directors at the 2017 Annual General Meeting. Mr. Frick is an internationally active lawyer and complements the Board of Directors of InnoMedica with his legal expertise, in particular in contract law, European law, procedural law and intellectual property. He was admitted to the bar of the Canton of Bern in 1992, subsequently obtained a diploma in European law from the University of Lausanne and completed his Master of Law (LL.M) at Duke University Law School Durham in North Carolina in 1995. Manuel Frick is a member of the Small Burger Council of the Burgergemeinde Bern and has been Chairman of the Bank Council of DC Bank Bern since 2013. He is also a member of various other boards of directors.

Executive Board

Pascal Halbherr, elder son of Dr. Peter Halbherr, Head of Production, began work-ing at InnoMedica in Autumn 2012.

His interest in the latest research in biochemistry and his readiness to explore novel concepts led to the launch of the collaboration with Dr. Yamazaki and form the starting point of the Talidox project.

Along with Stéphane Gumy, he developed the GMP production at the Marly Innovation Center and adapted the production processes from pure research to industrial scales. He graduated from the University of Bern with a Bachelor’s degree in Biochemistry and a Master’s degree in Immunology (Thromboxane A2 acts as tonic immunoregu-lator by preferential disruption of low-avidity CD4+ T cell-dendritic cell interactions).

Dr. Stéfan Halbherr, younger son of Dr. Peter Halbherr, has been working at In-noMedica since 2013 as Head of Research & Development. He provides experience in immunology and has been a scientific consultant for the Talidox project from the very beginning. He is the driving force which advances the optimization of the product and his creative approach to research yields steady development progress. He is listed as inventor in the new patent application for Talineuren. After his Master’s degree in Bio-chemistry and Immunology at the University of Bern, Stéfan Halbherr received his PhD at the Institute of Virology and Immunoprophylaxis IVI from the University of Bern for his research on Development of a high quality vaccine against avian influenza.

Dr. Jonas Zeller joined InnoMedica in 2013 as Head of Finance and Administration. He has experience in Financial Management, and is a lecturer of Business Valuation at the University of Bern. Jonas Zeller also teaches at the Bern-Rochester Executive MBA. He obtained a doctorate from the Institute of Financial Management at the Uni-versity of Bern, where his research examined the interaction between age and eco-nomic efficiency of enterprises. Prior to his doctoral thesis, he worked as an analyst in the Economic Research Department at Credit Suisse in Zurich. His graduate studies took place at the University of Bern and the Simon Graduate School of Business at the University of Rochester in New York.

LL.M. Attorney Member of the Board

MSc Biochemistry, University of Bern Manufacturing, Project Leader

PhD, University of Bern Research & Development

Dr. rer. oec., University of Bern Finance & Administration


Andrea Zurkirchen became part of the InnoMedica team in summer 2012 due to her consulting role with IPAG Inter Personal AG and the structuring of the merger with Yamazaki-DDS Co., Ltd. She gained experience in Personnel Management and Admin-istration, as well as Communications, Marketing and Sales, through her work with IPAG Inter Personal AG and BTS Business Technology & Services GmbH. As Chief of Staff at InnoMedica, she is responsible for the organisation and legal implementation of the financing rounds, manages shareholder contacts and is also responsible for external communication in addition to her personnel tasks. She studied Psychology at the Uni-versity of Zurich, specializing in Biopsychology and Behavioral Therapy. In her thesis she examined the connection between psychological and biological reactions to stress.

Stéphane Gumy is employed since spring 2014 as Qualified Person at InnoMedica, after an initial phase as a consultant. He provides knowledge in quality assurance and control, production and process development. Stéphane Gumy has over 18 years of experience in the pharmaceutical, biopharmaceutical and medical devices industry, having held senior positions at SMEs and also international companies (including Cru-cell, UFAG laboratories, Berna Biotech and Baxter). Since 2007, he has worked as an independent consultant with PMS Process Management System, which he has headed since 2013. Stéphane Gumy graduated in Chemistry (University of Applied Sciences FH Fribourg) and lectures in various pharma-specific modules at ARIAQ.

lic. phil., University of Zurich Communication, HR, Legal & Compliance

Chemist FH, Fribourg Qualified Person

Staff

Dr. oec., University of Zurich Financial Advisor

Dr. med., University of Basel Medical Advisor

Consultants

Dr. Philipp Halbherr makes his professional experience and knowledge as Financial Advisor available to InnoMedica. He worked for the Zürcher Kantonalbank until his retire-ment in 2014; 2002 to 2008 as Chief Financial Officer and later as Head of Business Unit Institutionals and Multinationals. From 2005 to 2014 he was a member of the Executive Board. He has represented the Cantonal Banks on the Board of SIX Group AG from 2008 to 2016, and since 2014 he has been head of the Education and Knowledge Transfer Advisory Board of the Swiss Finance Institute. Since 2017, he has been a member of the Executive Board of the Swiss Bankers Association as Head of Retail Banking and Capital Markets.

Philipp Halbherr studied Economics at the University of Zurich, where he also received his doctorate. Prior to joining the Zürcher Kantonalbank in 1989, he worked as program leader on National Research Program no. 9 economic development of the Swiss National Science Foundation and spent two years as a visiting scholar at Stanford University, CA, USA.

Dr. Denis Bron has served as Medical Advisor to InnoMedica since 2005. He pro-vides access to a broad network in the medical sector as well as experience in dealing with doctors and hospitals. Dr. Bron also holds an earlier patent based on a targeting approach for pharmaceutical active substances which he introduced in 2010 into the company. Dr. Bron is chief of Aviation Medicine for the Air Force of the Aeromedical Institute FAI and directs the Aeromedical Centre (AeMC) in Dübendorf. He previously worked in the field of neurology at Harvard Medical School in Boston, the University Hospital Basel, and the Cantonal hospital in Aarau. Dr. Bron graduated from the Univer-sity of Basel in 1997 with a degree in medical studies. In addition to his training in the hospital, he holds the certificate of EMG-competence, completed additional leadership courses and graduated in 2013 as a European Human Factor specialist.


Vanessa AckermannOffice, Legal & Compliance MLaw, University of Bern (Criminal registration of stalking in Switzerland)

Silvana BaselgiaMarketing Bachelor in Business Administration and MSc Neuropsychology, University of Zurich (Flow of activa-tion from V1 to frontal cortex in humans - an EEG study)previously: Head of Business Development

Dr. Christian BaumgartnerMedical Affairs Dr. med. (Risk selection in compulsory health insurance); MSc Econ., University of Bern (Abolition of contractual obligation in compulsory health insurance) previously: Surgical resident in Langenthal, Medical & Regulatory Advisor at GlaxoSmithKline

Urs BretscherInformation Technology lic. oec. publ. and dipl. Business Informatics, University of Zurichpreviously: Head of Information Technology Swatch Group, CIO Marlox Group, Selecta; with Dr. Peter Halbherr partner of BTS (Busniess Software)

Dr. Patrick BuschorTranslational Research & Quality Assurance PhD in Immunology Universities of Bern (Targeting Fc receptors on allergic effector cells)previously: Scientific Assistant at the University Hospital for RIA, Bern

Daniel FalleggerProduction Engineering Master of Molecular Life Science and Biochemistry, University of Bern (Intracellular Traffic-ing of minute virus of mice [MVM])previously: Sales Representative for Life Science Products

Dr. Petra GottierQuality Control & Analytics MSc Pharm., University of Basel; PhD in Biochemistry and Molecular Biology, Uni-versity of Bern (Cardiolipin Synthesis in Trypanosoma brucei: Investigation of the biochemical properties of a potential drug target)

Lisa HalbherrRegulatory Affairs & Registration MSc Neuropsychol-ogy, University of Zurich & Beth Israel Deaconess Medi-cal Center, Boston (Language processing and the mir-ror neuron system: a Transcranial Magnetic Stimulation study); International MBA, IE Instituto de Empresa Ma-drid (Introduction of an Entreprise Resource Planning System at InnoMedica – make or buy?)previously: Project Manager Market Research

Team

Andreas InderbitzinTechnical Engineering dipl. Machine Engineer, ETH Zu-rich (Fluid Machinery and Plant Engineering)previously: Sales and Project Engineer Filter & Ventila-tion Technology

Andreas KönigChemical Synthesis & Clean Room Operations Master of Molecular Science and Chemistry, Univerity of Bern; PhD candidate at University of Fribourg (Flow Photo-chemistry and Effort towards the Synthesis of the Whisky Lactone).

Dr. Christoph MathieuQuality Control & Analytics PhD Molecular Life Sci-ences, University of Bern (Functional characterization of amino acid transporters in Trypanosoma brucei brucei.)

Roman OdermattAccounting, Financial Analysis & Product Management B.A. HSG; Master in Business Administration, University of Bern and Université Lausanne (Analysis Activities in the Early Stages. Practice and Effect of Analysis Tech-niques: A Cross-Sectional Survey on Start-Ups)previously: trustee consultant, staff member of a major Swiss bank and journalist

Dr. Camille PeitschResearch & Development, Product Management PhD in Biochemistry and Molecular Biology, University of Bern (Structural Changes During Exocytosis In A Cell-Free System Using Cryo-Electron Tomography)

Dr. Stefan PeterliSupply Chain PhD in Organic Chemistry, Universität Basel (Design, Synthesis and Biological Evaluation of Se-lective Inhibitors of Epidermal Growth Factor Receptor Protein Tyrosine Kinase – EGF-R PTK)previously: Managing Director, Head Sales & Business De-velopment, Consultant

Anna RothBusiness Application Engineering BSc Business Infor-matics, University of Bern (Employee motivation. Litera-ture overview on findings in behavioural economics)

Dr. Fabiola SchorerGMP Quality Design PhD in Immunology, University of Bern (Innate Immune System Crosstalk: Eosinophils Me-diate Immune Modulation of Dendritic Cells through Exo-somes as Shuttle Vectors of miRNA)

Dr. Florian WeissProcess Engineering & Production PhD in Nano-Sci-ence, University of Basel, Biomaterials Science Center (Fabrication and Characterization of Nanometer Thin Films for LowVoltage DEAs)


Finances

Financial planning

InnoMedica uses different instruments for financial

control. In the short term, liquidity planning is the

most important instrument. As part of liquidity plan-

ning, InnoMedica prepares a monthly financial fore-

cast which identifies potential liquidity bottlenecks at

an early stage and continuously monitors cost drivers

in operating business by means of sensitivity analysis.

For long-term planning, InnoMedica uses a financial

plan (Table 4) which reflects management’s current

expectations based on the latest information from

research, development, market environment and

stakeholders. The following considerations have been

taken into account in the current planning:

Budgeting Talidox

Timeline: Talidox uses an registered active substance

with a known profile of effects and side effects. The

essential innovation is the targeted modification of

the drug distribution in the body of the cancer pa-

tient. Swissmedic therefore does not classify Talidox

as a new drug, but as a known substance with inno-

vation, which significantly accelerates the execution

of the clinical study and the registration as opposed

to new substances. The classification as a known

substance with innovation is a decisive advantage

for the clinical development of Talidox, because the

assessment does not refer to the substantial medical

potential of the drug, but merely covers the risk as-

sessment as part of the approval procedure.

As soon as the therapeutic benefit of a new drug

exceeds the previous therapy in a clinically relevant

form and is already assessed as likely without evalu-

ation of the detailed data, Swissmedic has the option

of a shortened approval procedure. If the clinical rel-

evance of Talidox becomes evident from the results

of phase II, a provisional authorization can be applied

for. In view of this, InnoMedica expects the clinical

development and marketing approval of Talidox to

take approximately two years. Since InnoMedica has

completed the preparations for submission of the ap-

plication to Swissmedic, clinical phase I is expected

to start in June or July 2018. The aim is therefore to

obtain marketing approval by mid 2020. Detailed con-

siderations on Talidox’ clinical development strategy

are presented in the product brochure.

Pricing: The pricing of new drugs depends on the

added therapeutic value and the prices of compara-

ble drugs. Price analysis of the currently approved

nanoparticle therapies for clinical use in oncology

shows that the costs per patient and year for the

most relevant comparative drugs of Talidox (Caelyx,

Myocet, Kadcyla, Zevalin) are between CHF 20,000

and CHF 25,000. The success drug Abraxane is some-

what cheaper at around CHF 10,000 per patient per

year. However, there are also outliers such as Adcetris

with costs of over CHF 100,000, and the newer immu-

notherapeutic products are often significantly higher.

Although an improvement in the therapeutic bene-

fit is expected for Talidox, the targeted price of CHF

23,000 is in the range of the most significant compar-

ative drugs. This should facilitate price negotiations

with the authorities.

The margin of the specialist trade is then deducted

from the CHF 23,000 in accordance with the margin

and discount regulations. For the most relevant com-

petitors of Talidox in the price segment of CHF 20,000

to CHF 25,000, this margin averages 14 percent. Inno-

Medica therefore uses the introductory price less the

retail margin of 14 percent to estimate sales.

Sales: The comparatively moderate introductory

price helps to apply the therapy to a relatively large

number of patients fairly quickly. InnoMedica plans

to treat up to 2,500 patients per year with Talidox in

Switzerland and Germany in 2020. Expansion within

Europe will allow the treatment of 7,500 patients in

2021 and 14,000 patients in 2022.

Revenue estimate: Taking all this information into

account, InnoMedica’s sales can be estimated for the

years 2020 to 2022. They will grow from around CHF

50 million in the year of approval to around CHF 210

million in the year 2022. The drug Abraxane will be

used to check the plausibility of this sales estimate.

Despite the lower price, Abraxane achieved sales of

USD 134 million in the year of registration. In the third

year after approval, sales already amounted to USD

325 million. Since Talidox’ primary market will not be

the US but Europe, somewhat more moderate sales

growth is expected compared to Abraxane.

Production: A key prerequisite for achieving the

projected sales is the build-up of delivery capacity.

This is why InnoMedica plans an investment rich ex-

pansion in production. The production costs for the

treatment of the first patients in phase I of the clinical

study still amount to around CHF 90,000 per patient.

With growing production volumes, economies of scale

can progressively be made use of. As a result of the

expansion, costs will continuously fall to CHF 4,000

per patient by the time of marketing approval, which

still accounts for around 25 percent of sales. Over the

next two years, production costs can be further re-

duced to less than CHF 2,400 per patient in 2022 and

will then still account for around 16 percent of sales.

The current production facilities with Clean Rooms I

and II can cover an estimated volume of almost 7,500

patients per year with additional investments of ap-

proximately CHF 4 million. InnoMedica estimates that

this capacity will be reached in 2021. Thereafter, an

expansion in Marly or at another location becomes

necessary. Hence, investments totalling CHF 16.5 mil-

lion are budgeted for an expansion of production ca-

pacity between 2020 and 2022. Binding plans already

exist for these expansions with the Marly Innovation

Center. All investments from 2020 onwards are to be

covered by Talidox’ revenues.

Research and development, clinical phase: The

largest budget item in the R&D budget is the expen-

diture for clinical studies. In phase I, this amounts to

around CHF 36,000 per patient treated. This amount

is charged by SAKK as a lump sum per patient. In

phase II, the costs are reduced to CHF 15,000 per

patient. As a tenfold increase in the number of pa-

tients treated is planned, clinical trial expenditures

of CHF 4.56 million in the year 2019 will be around

four times higher than in the year 2018, and the to-

tal R&D expenditures up to the marketing approval

of Talidox are budgeted at CHF 8.23 million. Despite

continued strong growth in development expendi-

ture, this only makes up around 7 percent of sales.

Research expenditures can be kept comparatively

moderate by InnoMedica realizing numerous re-

search projects in cooperation with national and in-

ternational universities, which co-finance part of the

research expenditures. Once the break-even point

has been reached, further expansion of research

and development is planned.

Finance, administration, registration, sales: These

costs are affected by the personnel resources re-

quired to set up the sales structures (including reg-

istration with the authorities) in Switzerland and Ger-

many from 2020 on. For this reason, these costs will

rise sharply from CHF 3 million to CHF 18 million in

2019, but will remain moderate overall at around CHF

6,000 per patient and will be limited to CHF 3,400

per patient in 2022.

Budgeting Talineuren

Timeline: Preclinical development of Talineuren is

relatively advanced. InnoMedica expects to complete

the preclinical phase with the toxicology study by

spring 2019 and treat the first Parkinson’s patients in

clinical trials starting in summer 2019. In neurology,

the need for effective therapies is particularly acute

and the new drug is easy for patients to administer

due to its oral form. Therefore, rapid patient recruit-

ment can be expected during the clinical phase. Con-

sidering the expected high medical need for a therapy

like Talineuren, InnoMedica is aiming for an accelerat-

ed registration procedure. The first revenues from the

sale of Talineuren can be expected after 2021 through

provisional approval.

Pricing: With the approval of the disease-modifying

treatment approach, Talineuren is opening up a new

therapeutic field in Parkinson’s disease. This makes

cross-comparison with other drugs difficult for pric-

ing purposes. However, a cost calculation shows that

- due to comparatively high raw material costs - the

provisional introduction price for Talineuren will tend

to be high. With a price of CHF 150 per daily dose,

continuous treatment will result in annual sales per

patient of CHF 54,750, which will successively be re-

duced to a level of around CHF 25,000 per patient per

year at a later stage through substantial investments

in vertical integration, preferably with the involve-

ment of partner companies from the supply chain.

Sales: The first sales of Talineuren at the introductory

price of CHF 54,750 are aimed at self-paying patients.

A reimbursement by the insurance company will only

be possible for larger volumes at a later point in time.

With a corresponding proof of efficacy, InnoMedica

assumes that about 1,000 or 7 percent of all Parkin-


The preclinical results of the Talidox and Talineuren products as well as the initial investigations

into other pipeline products are convincing. It is important to push ahead with the scale-up in

production and to tackle the necessary expansion of the infrastructure.

Forward Strategy

son’s patients in Switzerland will be treated with Tali-

neuren. A Europe-wide approval is planned for 2022.

Due to the high price for the time being, InnoMedica

expects around 3,000 patients to be treated in the

first year of registration in Europe. These initial sales

will generate increasing funds that will allow further

investments in the scale-up as well as in the supply

chain and a gradual reduction in prices.

Revenue estimate: Based on the price and the num-

ber of patients treated, InnoMedica estimates sales of

around CHF 55 million in 2021 and CHF 164 million in

the year 2022. According to the margin and discount

regulations, the margin for the specialist trade is 9

percent. This results in sales revenues for InnoMedica

of CHF 50 million in 2021 and CHF 150 million in 2022.

Production: In the production of Talineuren there are

three decisive differences to the production of Tali-

dox. The requirements of good manufacturing prac-

tice (cGMP) for orally administered drugs are less

demanding than for intravenous drugs. Since oral

administration is planned for Talineuren, production

will be less complex than with Talidox. The second

difference is in commodity prices. These are signifi-

cantly higher for Talineuren. Already the two main

components of the drug are estimated to cost approx-

imately CHF 8,200 per patient per year in the initial

phase. With the market launch and the corresponding

increase in purchasing volumes, InnoMedica expects

a price reduction to CHF 7,700 in the year 2021 and

later CHF 6,000 in the year 2022. Further significant

economies of scale are only possible with major in-

vestments in an advanced expansion phase. The third

difference compared to the production of Talidox is

the number of required packaging units per patient.

Talineuren requires around 15 times more vials per

patient per year. This leads to greater workload, es-

pecially in filling, which can, however, be limited by

suitable automation. Overall, InnoMedica estimates

production costs of Talineuren of around 31 percent

of sales revenue to be approximately twice as high as

for Talidox.

Research and development, clinical phase: Since

numerous findings from the development of Talidox

can be used in the development of Talineuren, the

R&D budget is comparatively moderate. Besides Par-

kinson’s, Talineuren may also be able to treat other

neurological conditions, which is why research efforts

in this direction will be stepped up after marketing ap-

proval. From 2021 on, InnoMedica plans an R&D bud-

get for Talineuren in the same amount as for Talidox.

Finance, administration, registration, sales: Inno-

Medica anticipates slightly lower costs for the sale of

Talineuren than for Talidox at 18 percent compared to

24 percent of sales revenue, as the concentration of

competence centers in neurology is even higher than

in oncology and because the alternative treatment

options for Parkinson’s patients are scarcer than for

cancer patients.


Income Statement

Talidox Division 2017 2018 2019 2020 2021 2022

Number of patients (clinical trials) Number of patients (market) Price/treatment (CHF) Margin (retail price vs. factory selling price)

30 305 5252,500

23,00086%

6507,500

23,00086%

80014,00017,500

86%

Earnings 49,450,000 148,350,000 210,700,000

Production R&D expenditures Clinical trials Finance/admin./sales/registration Depreciation (20%) Employees manufacturing Employees R&D, clinical trials Employees finance/admin./sales/registration

1,392,996773,887116,209744,304132,931

1066

2,654,5241,061,8101,089,1021,357,256

189,7451678

6,000,0001,500,0004,575,0003,000,000

851,796241012

12,000,0003,000,0005,250,000

18,000,0001,381,437

401560

25,000,0004,000,0006,500,000

35,000,0001,805,149

7118

108

35,000,0007,000,0008,000,000

50,000,0002,544,119

10025

143

Earnings 3,160,327 6,352,435 15,926,796 39,631,437 72,305,149 102,544,119

EBIT -3,160,327 -6,352,435 -15,926,796 9,818,563 76,044,851 108,155,881

Talineuren Division 2017 2018 2019 2020 2021 2022

Number of patients (clinical trials) Number of patients (market) Price/treatment (CHF) Margin (retail price vs. factory selling price)

60 200 3501,000

54,75091%

5503,000

54,75091%

Earnings 49,822,500 149,467,500

Production R&D expenditures Clinical trials License fees Finance/admin./sales/registration Employees manufacturing Employees R&D, clinical trials Employees finance/admin./sales/registration

200,000500,000

100,000141

1,500,000700,000

1,000,000

500,000553

4,600,0001,700,0002,000,000

2,000,000998

25,000,0004,000,0003,500,0002,366,569

14,000,000422047

47,000,0007,000,0005,500,0007,099,706

27,000,000673183

Expenditures 800,000 3,700,000 10,300,000 48,866,569 93,599,706

EBIT -800,000 -3,700,000 -10,300,000 955,931 55,867,794

Balance Sheet

Year 2017 2018 2019 2020 2021 2022

Cash and cash equivalents Manufacturing facilities Subsidiaries (YDDS)

7,226,958531,723200,000

31,611,044758,978200,000

10,187,8403,407,183

200,000

8,969,2765,525,746

200,000

84,080,3579,220,597

200,000

245,692,27014,176,478

200,000

Total equity 7,958,681 32,570,022 13,795,022 14,695,022 93,500,954 260,068,747

Liabilities Share capital Reserves from capital contributionsOther reserves Previous years Annual results

247,8841,246,728

13,265,7311,723,181

-5,364,516-3,160,327

1,400,00044,686,491

2,160,809-8,524,843-7,152,435

1,400,00044,686,4913,012,605

-15,677,278-19,626,796

1,400,00044,686,4914,394,041

-35,304,074-481,437

1,400,00044,686,491

6,199,191-35,785,51077,000,782

1,400,00044,686,4918,743,310

41,215,272164,023,674

Total liabilities 7,958,681 32,570,022 13,795,022 14,695,022 93,500,954 260,068,747

Remarks on the balance sheet: Capital increases:

Number of newly issued sharesPrice per share

75,000102.75

153,272206.00

Total capital increase 7,706,250 31,574,032

Cash Flow

Year 2017 2018 2019 2020 2021 2022

EBIT (cumulative) + Depreciation

-3,160,327132,931

-7,152,435189,745

-19,626,796851,796

-481,4371,381,437

77,000,7821,805,149

164,023,6742,544,119

Operative cash flow -3,027,396 -6,962,691 -18,775,000 900,000 78,805,931 166,567,794

- Investments 346,335 417,000 3,500,000 3,500,000 5,500,000 7,500,000

Free cash flow -3,373,731 -7,379,691 -22,275,000 -2,600,000 73,305,931 159,067,794

Changes equity Changes in cash

6,641,3943,267,663

32,011,66124,631,970

851,796-21,423,204

1,381,437-1,218,563

1,805,14975,111,080

2,544,119161,611,913

Developments cash 6,979,074 31,611,044 10,187,840 8,969,276 84,080,357 245,692,270

Financial Requirements

The financial planning identifies an ongoing financing

requirement that extends into the year 2020. The

cash flow statement (Table 4) shows negative free

cash flows totaling CHF 32.2 million for the years 2018

to 2020.

The planned capital increase from March 2018 in the

amount of CHF 31.6 million will cover this financing re-

quirement from the second quarter of 2018 until the

break-even. Liquid assets never fall below the CHF 8.9

million threshold.

Table 4: Financial planning until the year 2022 (income statement, balance sheet and cash flow). For the year 2017 effective values are given (italic).


Financing

Financing model

Solid financing is particularly important for start-up

companies in the pharmaceutical industry. Almost all

medical development projects are characterized by an

above average length of investment period compared

to start-up projects in other industries. Not only is the

investment period particularly extended but also the

necessary investments are above average. A look at

the statistics shows that since 2013, start-ups in on-

cology alone have raised USD 21.5 billion or an annual

average of USD 3.6 billion in new capital worldwide.

With an average of 190 financing rounds per year, this

results in an average financing volume of USD 19 mil-

lion. The high capital requirement is due to the high

demands placed on drug development by the regula-

tory authorities and by patients and physicians.

Financing is usually divided into several steps so that

investors have the possibility to check the achieve-

ment of the financed milestones. The capital is often

invested by institutional venture capitalists, parti-

cularly in the U.S. market. Experts agree that invest-

ment volumes in Switzerland, on the other hand, are

significantly below actual demand. The total risk cap-

ital available in Switzerland is less than 0.04 percent

of gross domestic product. In the U.S. or Israel, this

proportion is ten times higher (Figure 13).

InnoMedica took these circumstances into account

when choosing the financing model. The objectives

for a successful financing strategy were defined at

the beginning of the project as follows:

• Alternative sources of financing are to be made

accessible due to the limited availability of risk cap-

ital. The entrepreneurial risks are to be presented

to the investors in an comprehensible manner and a

certain resilience is to be built up in the event of im-

ponderables. The development of new drugs always

involves considerable risks, especially in the initial

phase.

• InnoMedica shall preferably remain independent

as a company and be able to make the strategical-

ly best decisions free of binding interests. Indepen-

dence is an essential element to fully exploit the

potential of a technology platform. If the platform

is in the hands of a large pharmaceutical company,

the scope of application is likely to be limited to the

product portfolio of the corresponding owner. How-

ever, an independent company can realize the most

valuable applications in terms of medical potential

with different development partners.

• The investor base should be supported by a broad

public from the start. With an attentive public,

particular interests cannot be easily enforced. In a

Israel

Ireland

Latvia

United Kingdom

Netherlands

Slovak Republic

Poland

Canada

South Africa

Spain

Denmark

Norway

Austria

Slovenia

Czech Republic

United States

Finnland

France

Estonia

BelgiumJapan

Portugal

Russian Fe

deration

Korea

Sweden

New Zealand

Germany

Hungary

Australia Ita

ly

Luxemburg

Greece0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

Invested risk capital as % of GDP (Figure 13)

Seed/start-up/early stage Later stage venture Total

Switzerland

public company, the interests of the founders and

the shareholders who joined later can also be best

combined and integrated into a long-term strategy.

• Securitization must be adapted to these require-

ments. This includes in particular a freely tradable

share with a ticker registered with SIX.

• Dilution should be kept to a minimum so that inves-

tors have the opportunity to exercise their subscrip-

tion rights in the event of capital increases. A small

dilution is also an essential prerequisite for avoiding

a quick takeover by a larger group.

In order to meet these requirements, InnoMedica has

done pioneering work in the field of corporate financing:

Alternative sources of financing: In addition to in-

stitutional venture capitalists, mainly successful en-

trepreneurs have risk-bearing capital. The regular

flow of income from their entrepreneurial activities

enables them not only to invest in new projects, but

in many cases also to participate in several financ-

ing rounds. Entrepreneurs therefore are represented

above-average in InnoMedica’s shareholder base.

Independence: The safest way to maintain indepen-

dence is to involve a broad public in the sharehold-

er base. For this reason, InnoMedica addressed the

public with its financing rounds at a very early stage

in the company’s development. The public capital in-

creases have met with great interest among numer-

ous private investors, in many cases even in the direct

vicinity of employees. In order to meet the increased

transparency requirements of this group of investors,

InnoMedica issues a prospectus, documents the prog-

ress of the project in detailed investment documents

and voluntarily undergoes an extended (so-called or-

dinary) audit by PricewaterhouseCoopers.

Broad support: InnoMedica can now count on the

support of more than 450 shareholders. The effi-

cient processing of capital increases with this con-

siderable number of shareholders requires the use

of a paperless digital share. InnoMedica was the first

pharmaceutical start-up in Switzerland to successfully

implement this type of settlement as a pioneer in a

demanding regulatory environment. Partly because of

its experience with InnoMedica, Credit Suisse included

the digital share in its start-up financing offer in 2017.

In order to avoid conflicts of interest within the share-

holder base, InnoMedica has in the securitization

always restricted itself to a single share category – a

freely tradable bearer share. No shareholder achieves

a majority in the company on his own. Dr. Peter Halb-

herr, who initiated the entire restructuring of Inno-

Medica from a financial company to today’s start-up

with the liposomal transport system and acts as Gen-

eral Manager, holds the largest portion of shares at

24 percent.

Dilution: The claim of low dilution requires a financ-

ing model with comparatively small increase steps.

This allows the investor to monitor the success of

his investment on a regular basis and to maintain its

value to the maximum. Furthermore, cost awareness

within the company is maintained at all times.

11

10

9

8

7

6

5

4

3

2

1

0

June 2013

Febru

ary 2014

October 2014

May 2015

May 2016

May 2017

New

cap

ital

(in

CH

F m

illio

n)

46.0057.50

68.50

102.75

14.5011.50

Issue price and new capital from previous financing rounds (Figure 14)

206.00

May 2018

11

New capital Share price (CHF)


Financing to date Date Number of shares

Share price

(CHF)

Total capital(CHF)

Total shares (CHF)

Valuation(CHF million)

Capital increase June 2013 54,100 11.50 622,150 1,054,100 12.1

Capital increase February 2014 45,900 14.50 665,550 1,100,000 16.0

Sale of treasury shares

October 2014 15,000 46.00 690,000 1,100,000 50.6

Capital increase May 2015 23,169 57.50 1,332,217 1,123,169 64.6



Total 261,728 14,342,459

Previous financing rounds

With this financing model, InnoMedica has raised a

total of CHF 14.3 million in six financing rounds since

2013 (Figure 14). Table 5 provides detailed information

on the individual financing steps and shows the devel-

opment of the company value.

Of the CHF 14.3 million raised, InnoMedica invested

approximately CHF 7.3 million in the development of

Talidox and Talineuren by the end of 2017. The most

important milestones achieved are:

• Development of the new liposomal cancer drug Ta-

lidox and completion of preparations for the phase

I clinical trial.

• Establishment of a Swissmedic GMP-certified pro-

duction plant in Marly with scale-up for the industri-

al production of Talidox.

• Development of the new drug Talineuren for Parkin-

son’s disease and start of preclinical studies.

• Application for a patent to protect intellectual prop-

erty on the use of the liposomal transport system to

cross the blood-brain barrier.

• Financing of six capital increases.

• Expansion of the infrastructure in Marly: clean room,

engineering room, offices, pharmaceutical logistics

and storage room as well as planning of a larger au-

tomated production facility.

• Building a team of 22 employees, all with higher ed-

ucation diploma (chemistry, biochemistry, biology,

psychology, business administration, etc.).

These goals were met comparatively cost-efficient-

ly due to the high level of cost awareness. A global

comparison with companies that are also building a

technology platform and whose lead compound in on-

cology is evaluated in late pre-clinical phase or clini-

cal phase I shows the following: of a total of 14 peer

companies, only one raised less capital than Inno-

Medica with USD 8 million. The average is a substantial

amount of USD 69 million of invested capital, which

is necessary to bring a first lead compound based on

a technology platform into early clinical evaluation.

Equity structure

InnoMedica is financed exclusively with equity. There

is only one category of shares: the bearer share with

the ticker CH0011082366 and no options, partici-

pation certificates or any other type of off-balance-

sheet securities are outstanding.

As a result of the Act on Shareholders’ Notification,

which came into effect on July 1st, 2015, all holders of

unlisted shares are subject to notification. The corre-

sponding law article reads: Whoever acquires bearer

shares of a company whose shares are not listed on a

stock exchange must report the acquisition, his first

and last names or his company name and address to

the company within one month. Although InnoMedica

is not listed on a stock exchange, it has a digital share

and a global certificate deposited with SIX. In cooper-

ation with the auditors it has been made possible that

InnoMedica’s shareholders are exempt from the stat-

Previous financing rounds of InnoMedica (Table 5)

Independence of the Company

With at least 467 shareholders, InnoMedica is supported by a broad

shareholder base. 72.1 percent of the company is owned by employees,

the shareholder pool and the Board of Directors.


utory reporting requirement and the intermediated

securities are considered “listed” in this sense. This

precedent case with regard to the implementation of

the FATF has the consequence that not all sharehold-

ers are known to InnoMedica.

Overall, InnoMedica knows the respective owners of

96 percent of the shares. The shares are distributed

among at least 467 shareholders from at least 10 na-

tions. Table 6 provides detailed information about the

shareholder structure of InnoMedica.

In order to stabilize InnoMedica in its dynamic devel-

opment phase, the largest shareholders have joined

in a shareholder pool as early as 2013. At that time,

this pool comprised 713,300 shares or 68 percent

of the company. The pool members have decided to

make 10 percent of their shares available for a man-

agement buy-in program in 2014 and 2017. Under this

program, 57,960 shares were issued to management

at a discount until the end of 2017. The price was ad-

justed to the lower purchasing power due to the mod-

erate salary level of the employees.

More than one third of the shares are in free float.

The employees hold about 10 percent of the company.

This results in a free float of almost one half.

Information on InnoMedica’s capital structure (Table 6)

Capital structure 12/31/2017: 100 percent equity

Number of shares outstanding 1,246,728

Share capital (fully paid-in) CHF 1,246,728

Authorized capital further 153,272 shares with a nominal value of CHF 1

Categories of shares All outstanding shares are dividend-bearing bearer shares

Stock trading Off-exchange OTC, ISIN: CH 10011082366Shareholder structure Name Number of shares Percentage

12/31/2017 Pool shares 643,590 51.6% Dr. Peter Halbherr 300,723 24.1% Dr. Herbert Früh 116,115 9.3% Familie Yamazaki 143,619 11.5% Dr. Denis Bron 46,988 3.8% Pascal Halbherr 36,145 2.9% Free Float 601,510 48.3% Employees, Board 133,656 10.7% Rest of free float shares 467,854 37.6% Treasury shares (InnoMedica) 1,628 0.1% Total 1,246,728 100.0%

Named shareholders form a pool united under a shareholders agreement. The pool members have a mutual right of first refusal. Pur-pose: a stable company in the long term and securing independence. Two times 10 percent of the pool shares (as of 2014 and 2017) were offered to employees for purchase as part of a 5-year management buy-in.

Capital increase and company valuation

In order to finance the next milestones, InnoMedica

plans a capital increase of CHF 31.6 million with a pub-

lic offer from March 26th to May 31st, 2018. The public

offering is addressed to a broad public and asks for

a minimum subscription of 75 shares or CHF 15,450.

As a result of the oversubscribed capital increase in

2017, InnoMedica allowed major investors to apply

for subscription rights in the run-up to the capital

increase until March 19th, 2018. Investors subscribing

for tranches of at least 500 shares benefit from a

guaranteed full allocation via the subscription rights

of the pool shareholders. Subscription requests with-

in the scope of the public offer can be placed with

InnoMedica handing in a completed subscription form

and depositing the payment of the corresponding

amount on a blocked account. After May 31st, 2018,

the shares will be allocated by the Board of Directors

and delivered to the investors.

The share price for the 2018 capital increase was

set by the Board of Directors at CHF 206 per share

based on the company valuation. Thus, a maximum

of 153,272 shares will be issued for purchase. Inno-

Medica already has authorized capital in this amount

available for this purpose. Detailed information on

the issue can be found in the prospectus.

The valuation considerations made for the determi-

nation of the subscription price include the following

elements:

Risk considerations: The development of a technol-

ogy platform with pipeline projects in several appli-

cation areas is subject to a significantly lower risk

than drug development with new molecules or active

agents. For a valuation using comparables, this cir-

cumstance must be taken into account when select-

ing the reference group.

Potential: Compared to conventional drug develop-

ment, technology platforms are generally considered to

have greater medical and thus also commercial poten-

tial. This fact should also be taken into account in the

comparative assessment.

In the valuation of unlisted early-stage companies,

the fundamental question of effective value arises.

A proven approach defines the most objective range

possible within which the company value is to be

determined. Ideally, different established valuation

models are used. InnoMedica’s company valuation is

based on two valuation models: valuation using com-

parables and a discounted cash flow (DCF) approach.

When using comparables, the company’s own value

is set in relation to the value of similar companies

whose value has become known through recent trans-

actions. Based on data from twenty databases and

numerous research reports, the comparable compa-

nies were selected on the basis of the following criteria:

• Companies must have a proprietary technology plat-

form that can provide new and improved therapies

for various diseases.

• The main application must be in cancer treatment.

• The main application is in the late preclinical or clini-

cal phase.

• The companies do not yet generate any turnover.

All companies that meet the criteria described above

are summarized in Table 7.


Preclinical phase (mean:433 | median: 487)

Company Platform Area of application Company valuation (in m. USD)

cCam Platform for checkpoint inhibitors; Anti-CEACAM1 Immunotherapy 605

Codiak Exosomes therapeutics platform; DNA and RNA transfer Drug delivery system 400.5

Dutalys DutaMab platform; bi-specific antibodies Immunotherapy 489

EngMab Bi-specific T-cell antibody platform; BCMA targeting Immunotherapy 600

Evox Exosomal platform for nucleic acid and protein delivery (early stage) Drug delivery system 21.2

Flexus IDO/TDO platform; IDO/TDO-antagonists Chemotherapy 1,250

Quanticel Application of single cell genomic analysis to human carcinoma Drug delivery system 485

Clinical phase I (mean:433 | median: 487)


Kolltan Anti-RTK antibody platform; block ErbB3 and TAM Immunotherapy 235

Kymab Bi-specific antibody platform; Vaccine and Kymouse platform Immunotherapy 600

OncoEthix Anti-BET platform; Anti-BET Bromodomain proteins 2/3/4 Chemotherapy 375

Tensha BET inhibitor and protein degradation platform Chemotherapy 535

Tolero Platform for protein kinase inhibitors; CDK9 inhibitor Chemotherapy 780

TP Therapeutics Precision medicine targeting oncology drivers Chemotherapy 562.5

Clinical phase II or III (mean:433 | median: 487)


Acerta Covalent binding platform; BTK antagonism Chemotherapy 7,500

Comorant HuMax platform; complementary immuno-oncology Immunotherapy 520

Ganymed IMAB platform; cancer targeting selectivity Immunotherapy 1,398

Stemcentrix Anti-cancer stem cell platform Immunotherapy 10,200

Astex Fragment-based pyramid drug discovery Drug delivery system 886

Celator Proprietary CombiFlex nanotherapy liposome platform Drug delivery system 1,500

Ablynx Multi-nanobody (antibody fragment) linkage for multi targeting Immunotherapy 4,500

Molecular Partners

DARPin platform Immunotherapy 580

BioClin Growth factor receptor for R&D platform Immunotherapy 75

Company valuations of comparables (Table 7)

The analysis shows that the preclinical companies

have a mean valuation of USD 433 million and a me-

dian of USD 487 million. The corresponding figures

for phase I companies are USD 505 million and USD

535 million, respectively, representing a 16 percent

and 9 percent increase in value from the preclinical

phase to clinical phase I. This moderate increase in

value may seem surprising at first glance, but is due

to the fact that the efficacy of a new treatment only

becomes the focus of drug development from phase II

onwards. Consequently, the valuations of companies

that are already in phases II and III are higher by a

factor of 6 (mean) or 2.3 (median).

An analogous performance can also be expected at

InnoMedica in the event of success. The transition to

the clinical phase is also a relatively moderate step

for InnoMedica from an evaluation point of view. Only

the results of the phase II study should be much more

value-driving, when it will become apparent to what

extent the liposomal packaging can influence the

therapeutic performance of chemotherapy.

The second valuation method using DCF is based on the

forecast of free cash flows listed in Table 4 and a dis-

count rate of 35 percent per year. From 2022, a 10-year

growth period with a competitive advantage and an an-

nual growth rate of 10 percent is expected. The residual

value estimate is based on an annual growth rate of 3

percent. The formally estimated company value accord-

ing to this method prior to the capital increase amounts

to CHF 260 million. This value is below the level of the

comparable companies and marks the lower end of the

range of possible valuations. The Board of Directors has

decided to place the issue price at the lower end of this

range, as the investment climate for risk capital in Swit-

zerland is rather conservative and the valuation should

be attractive. It should also be noted that the financing

round is comparatively large by Swiss standards. Inno-

Medica’s current financing round would have ranked

among the five largest in Switzerland in 2017.

Capital allocation

Two thirds of the capital raised will be used by Inno-

Medica for the clinical development of Talidox and

one third for the preclinical and early clinical develop-

ment of Talineuren.

20.6 million for Talidox: Talidox is to be brought to

market maturity with the capital raised. Most of the

CHF 20.6 million of new capital will be invested in

the construction of a large production plant with the

corresponding capacity. In principle, the construction

and commissioning of industrial production could

also be postponed until the clinical results are known.

However, hesitation in this case can endanger the en-

tire project, particularly in the expectation of positive

results with a relatively low translational risk. Setting

up an industrial production is usually time consuming.

As the example of Janssen-Cilags Caelyx’s delivery

bottlenecks has shown, the interruption in the sup-

ply of a cancer drug in high demand leads to major

problems in the daily treatment of patients. Doctors

are forced to switch to other drugs and use alterna-

tive treatment methods. For this reason, InnoMedica

plans to expand production simultaneously with Tali-

dox’ clinical studies and without further delay.

Infrastructure investments at the production site in

Marly will amount to about CHF 3.92 million until Tali-

dox enters the market. Other production costs in the

corresponding period amount to CHF 8.65 million,

mainly due to the expansion of higher production

capacity. In addition to the recruitment and training

of personnel, test runs on the large production plant

are cost intensive in the initial phase. Other import-

ant items in production are the commissioning of an

automated filling plant, a high purity water plant and

investments in automation.

The second major cost factor in the development

of Talidox are the clinical trials. The budgeted costs

amount to CHF 5.66 million until market entry.


CHF 4.36 million will be used for finance, administra-

tion, registration and preparation of sales. While costs

in this area will remain moderate in 2018, increased ex-

penses are to be expected with regard to registration.

CHF 2.56 million is reserved for research. In particular,

analysis of possible indications and combination ther-

apies are to be made and the further development of

the second generation of Talidox is to be advanced.

The total of the items listed amounts to CHF 25.13 mil-

lion, CHF 1.05 million for the phase I clinical trial and

CHF 3.5 million for the construction of the production

plant already financed by earlier capital increases.

CHF 11.0 million for Talineuren: The budget of CHF

11 million should bring Talineuren into the clinical

phase. Expenditure totalling CHF 800,000 is planned

for 2018, mainly in the context of preclinical studies.

Following the start of the phase I clinical trial in 2019,

expenditure will shift to clinical studies and the pro-

duction of Talineuren. A total of CHF 2.5 million of the

3.7 million is allocated to these two items. This leaves

CHF 6.5 million for further clinical development in

2020. The CHF 10.3 million budgeted in the financial

plan for 2020 will be co-financed as of mid-year by

the revenues of Talidox’ sales.

Risk management

The development and market launch of new drugs in-

volves considerable risks. InnoMedica also continues

to face substantial risks. The most important challen-

ges InnoMedica is currently confronted with are as

follows:

• Production of Talidox for clinical trials according to

the scale-up concept and GMP protocol

• Confirmation of efficacy and improved side-effect

profile in clinical trials

• Market approval in Switzerland and other markets

• Development of organization and structures for the

distribution or license agreements

InnoMedica operates a corresponding risk manage-

ment system to identify, limit and monitor potential

risks. The most important sector-specific risks and the

measures taken by InnoMedica to limit them are pre-

sented below. The remaining residual risk is discussed.

However, InnoMedica’s internal risk management is

much more comprehensive and detailed and is re-

viewed annually by the external auditor Pricewater-

houseCoopers.

The diversification of the product pipeline with the

development of Talineuren for neurodegenerative dis-

eases has made a significant contribution to reducing

the overall risk of InnoMedica. However, marketing

approval of Talidox remains a priority for InnoMedica.

Product related risks

A drug is manufactured in the laboratory based on

scientific findings, tested in preclinical trials and

then applied in human clinical trials for the first time.

Risks include the solidity of the theoretical basis

used, the practical implementation of the drug as a

prototype, the initial testing in animal experiments

and the so-called translation from animal to human.

A disease such as cancer or Parkinson’s can never be

completely imitated in animals. The basic concept of

the animal model is therefore always of limited infor-

mative value. The choice of mouse models and tumor

types brought the testing of Talidox as close to the

human organism as possible and the most commonly

used comparative drugs were tested simultaneously.

This allowed comparisons to be made with regard to

efficacy and side effects. An extensive toxicity study

has been able to show that Talidox has better results

with regard to side effects than comparable products.

InnoMedica also uses animal models for the Parkin-

son’s drug Talineuren, which have already provided

the preclinical data for the translation of the active

Product design and translation risk

Shortcomings in the conception of the product and the design of

the prototype can endanger performance in clinical use: lack of

effect, unexpected side effects.

Intervention

Research and Analytics

The development of the products is based on a solid knowledge

of today’s research. The production of the prototypes is inno-

vative and partly also protected by patents. Modern analytics

identify the key properties of the products and perform product-

related quality control to detect possible impurities or deviations.

Preclinical studies

In the animal model, the product is tested for expected effects

and side effects until stable replicable results are achieved.

Toxicological testing

The maximum dose in animals is determined and a maximum

dose in humans is estimated on the basis of translation experi-

ence. Unexpected side effects are also examined.

Clinical study

The first use in the patient takes place under controlled condi-

tions and with close supervision. Possible side effects are detected

early and the maximum dose and optimal dose in humans are de-

termined. Only then do studies follow to test the medical effect.

Residual risk:

This multi-stage and cautious introduction of the product in hu-

man use reduces the risk, but it can never be completely elimi-

nated. Since Talidox is a «known substance with innovation», the

risk regarding efficacy and side effect profil is also rather low.

The probability is high that unresolved problems would have be-

come apparent in the preclinical phase and the toxicology study.

The development of Talineuren is less advanced and important

insights into the new pipeline product still have to be gained from

further preclinical studies before translation can be considered.


substance GM1 into humans. Both liposomes with do-

xorubicin and the active substance GM1 have thus al-

ready been successfully translated from the animal

models used to humans, which significantly reduces

the risk of translation.

The use of already approved active substances, which

are packaged in InnoMedica’s liposomes, allows con-

clusions to be drawn regarding themost promissing

indications when designing the clinical study. Talidox

is expected to achieve good results in tumors that re-

spond to medicines containing doxorubicin and Tali-

neuren will fundamentally improve the use of GM1 in

the treatment of Parkinson’s disease.

The probability of product related risks occurring was

significantly reduced by the results of the preclinical

studies and the toxicity study with Talidox. However,

even a relatively low overall residual risk can still have

far reaching consequences for InnoMedica. However,

the measures taken by InnoMedica and the step-by-

step approach will limit this risk. The confidence of

the SAKK oncologists regarding Talidox and the re-

sponse of the neurologists regarding Talineuren are

a further sign that the product risks are also consid-

ered relatively low based on the practical experience

of the doctors.

Production related risks

The highest quality demands are placed on the manu-

facturing process of a drug. These relate to the indivi-

dual production steps, the production infrastructure,

the equipment, raw materials and other materials

used as well as their suppliers and also the employees

and their behaviour at work. A particular risk in this

area is the increase in production volume due to

changes in processes during scale-up. Therreby, the

properties of the product must remain unchanged

even with larger quantities. Even small deviations in

the product properties could have a major impact on

the efficacy/side effect profile, especially in liposomal

technology.

A further significant risk is the warranty of a flawless

drug without contamination by particles or bacteria.

Contamination can be caused by defective raw mate-

rials, defective other materials, human error or im-

pure production facilities. Intravenous administration

bypasses many natural protective mechanisms of the

human body. A contaminated product could cause dam-

age to the patient’s health. In order to guarantee the

safety of the medication, InnoMedica must know the

product properties exactly and must not release any

medication with deviations outside the tolerance va-

lues.

Production related risks

Sources of interference can affect the quality of the product:

Defects in the raw materials or other materials used, errors in

the procedures used, malfunctions of the equipment, employee

errors at work, increase in production volumes.

Interventions

Internal quality management

Every pharmaceutical company must have a high level of qua-

lity management. In Quality Control, all essential properties of

the product are controlled according to specifications during as

well as after production. Quality Assurance guarantees that all

production steps and use of devices are carried out according to

precise instructions and recorded in a protocol.

GMP-Production

Production and quality management are carried out in accor-

dance with GMP (Good Manufacturing Practice). The GMP guide-

lines include a collection of proven regulations according to

which pharmaceutical production must be carried out.

Inspection Swissmedic

Production is regularly inspected by Swissmedic and thereafter

approved. Shortcomings may be objected to and the authoriza-

tion may be withdrawn temporarily or indefinitively.

Tracking

The path of the purchased raw materials through the various

processing steps to the final product is precisely recorded. This

way, if defects are detected later on, it is possible to immediately

determine which products are affected and have to be withdrawn

from the market. Tracking is therefore a measure to limit dam-

age if a problem with a raw material actually occurs despite all

controls.

Residual risk

Even in the environment of official controls and despite careful

quality management, errors cannot be ruled out completely, but

they occur very rarely.

At the beginning of the development of a drug, the

production of the product is tested on a small scale.

In order to be able to produce the quantity required

for market entry on an industrial scale, the produc-

tion capacity must then be substantially increased

by means of a scale-up. This includes a new dimen-

sion of raw material volumes and processes with

larger machines as well as new regulatory require-

ments. However, the technology used for the pro-

duction of liposomes does not behave identically in

the processing of different amounts and must there-

fore be specifically adapted in order to be able to

ensure an identical endproduct. In contrast to con-

ventional drugs, the challenges of scale-up for bio-

and nanotechnology products are technically more

demanding. Scale-up problems can lead to delays,

higher production costs and thus margin erosion.

The production of InnoMedica meets the good man-

ufacturing practice (GMP) required by the regula-

tors. These internal guidelines, developed and doc-

umented according to standards, serve the quality

assurance of production processes and raw materi-

als. InnoMedica thus has a quality management sys-


tem certified by Swissmedic to guarantee product

quality. InnoMedica also takes responsibility for the

administration of Talidox to the first trial patient.

Dr. med. Christian Baumgartner (Medical Affairs)

and Dr. Patrick Buschor (Translational Research and

Quality Assurance) will be on site in the initial phase

of the phase I clinical study in order to instruct the

medical staff and monitor compliance with the qual-

ity regulations in the hospital and during transport.

This agreement was reached with the hospitals in-

volved in the clinical study and with SAKK to increase

patient safety. Finally, patient insurance helps to

compensate for possible health damage to patients

by participating in the clinical study and to ensure

reimbursement of the treatment costs incurred by

the volunteers.

The residual risk is considered low. In the future,

the production of Talidox as well as Talineuren will

be gradually transferred to an automated industrial

production. Developing the drugs into larger batch-

es with the same product properties presents ma-

jor challenges. With the measures already initiated,

InnoMedica is already able to supply the planned

quantities for larger studies in Switzerland. Inno-

Medica has started the expansion of the new produc-

tion facilities, which will allow larger production vol-

umes and thus also access to the European market.

Regulatory risks

Before a new drug can be tested in humans in Swit-

zerland, Swissmedic as the competent authority must

examine the data available on the drug. The focus of

interest is on preclinical data on efficacy and tolera-

bility as well as proof of pharmaceutical quality. In-

noMedica has received an operating license from the

authorities for the production of drugs according to

Good Manufacturing Practice (GMP). The qualifica-

tion is valid until 2019, whereby the risk of subse-

quent withdrawal of the licence due to unsuccessful

recertification is to be regarded as low.

Approval to conduct clinical studies with Talidox and,

at a later date, with Talineuren should not be an obs-

tacle either. However, a delay due to additional re-

quirements in the form of the submission of further

required data is a quite possible scenario. In fact, it

is rather rare that the authority approves an appli-

cation for a clinical trial at the first attempt. Fulfilling

Regulatory risks

In addition to the official approval of the production facility,

the use of a medical product in patients must in particular

be approved by the competent authority of the respective

region (in Switzerland the Swissmedic, in the USA the FDA,

in the EU the EMA).

Interventions

Consultation Swissmedic

Swissmedic can be consulted by the company, if decisive

questions come up, and will provide a binding answer. This

process can significantly reduce regulatory risk. InnoMedicas

Talidox has been classified by SwissMedic as a «known sub-

stance with innovation» and is thus subject to a simplified

testing procedure.

Collaboration with physicians

SAKK has a lot of experience in conducting clinical studies.

Since the oncologists of SAKK have taken on the manage-

ment of the phase I study, InnoMedica can integrate this ex-

perience into the planning and execution of the study as a

start-up. Preclinical neurologists are also consulted during

the development of Talineuren in order to better assess the

needs of the market.

Pharmaceutical Quality Dossier (PQD) and

Investigator’s Brochure (IB)

The PQD and the IB to be submitted to Swissmedic within the

framework of the study approval are checked in advance by

SAKK. This allows to clarify many questions regarding the

requirements to be fulfilled at an early stage.

Residual risk

The regulator is unlikely to raise any fundamental objections

to the product or the clinical study. With a «known substance

with innovation» InnoMedica is moving in well-known territo-

ry. The degree of innovation is high for the patient, but much

of the drug is already familiar to the regulator. Nevertheless,

the remaining regulatory residual risk is comparatively high.

Even with minor objections, the regulator may cause serious

delays at InnoMedica with relatively high cost consequences.

the supplementary requirements introduced by the

regulator can be costly. Studies or analysis may be

required and may involve the participation of external

partners. For a phase I clinical study, however, the man-

ufacturer does not yet have to meet the full require-

ments of a market launch. Nevertheless, in the case

of Talidox, the basic requirements for intravenous ad-

ministration must be met.

In order to reduce the probability of time-consuming

and costly subsequent submissions for the study per-

mit, InnoMedica has already asked for scientific ad-

vice before submission to the regulator. For the

submission Swissmedic confirmed the central as-

sumption regarding the classification of Talidox as a

«known substance with innovation», which is reflect-

ed in the structure of the Pharmaceutical Quality Dos-

sier (PQD). In addition, the SAKK, which is responsible

for the study management, has partly prepared the

documents to be submitted itself and contributed its

many years of experience to the documents provided

by InnoMedica.

The residual regulatory risk for InnoMedica is never-

theless comparatively high, as even small, in principle

easily fulfilled requirements by the regulator can lead

to high cost consequences and major delays. The fact

that regulatory risks in Switzerland are high is also

reflected in the 75 percent decline in phase I clinical

trials over the last 10 years.

Financial risks

Start-ups generally face the challenge of maintaining

their liquidity through investors due to a lack of fi-

nancial income. If a start-up company grows too fast,

a liquidity bottleneck becomes a major risk, often to

the detriment of shareholders willing to take risks,

who often have to accept a significant dilution of

their stocks. Especially in the pharmaceutical sector,

where development often takes 10 years and more, it

is therefore important that a start-up company ob-

tains financing in time. At the same time, there must

always be a plan to continue the project with limited

resources and overcome a crisis.

InnoMedica has a careful financial planning and a

high-quality risk controlling system, which is reviewed

by PricewaterhouseCoopers as part of the ordinary

audit. Financial planning includes various scenarios

Financial riskDue to the long development phase and the costly market

launch, the path to break-even is particularly long for pharma-

ceutical companies, which places high demands on the procure-

ment of risk-bearing capital.

Interventions

Thorough financial planning

The clinical studies in the hospitals account for a significant

share of the costs. In order to carry out the studies the financ-

ing of the studies as well as production and continuation of the

company and the availability of funds for the most important

investments are secured in advance.

Careful contract management

In optimism, some start-ups enter into long-term commitments

that tie up large amounts of cash and cannot be adjusted if

the initial conditions change. The contracts at InnoMedica are

therefore agreed in such a way that the company’s ability to

react is maintained in any case.

Economical use of funds

In the beginning, the available financial resources of a start-

up company are often limited. The more the drug develop-

ment advances, the more money flows to the company from

investors. This scarce resource is slightly overestimated and if

salaries are too high, there is a lack of money for the necessary

investments. The management of InnoMedica is committed to

the economical use of capital and the maintenance of employee

motivation through participation programs.

Milestone financing

By overestimating existing reserves, start-ups are often re-

financed too late and at unattractive conditions. InnoMedica

maintains a good relationship with a broad circle of investors

and regularly carries out capital increases in relatively small

steps.

Residual risk

Careful financial planning and economical use of the capital

procured can significantly reduce the financial risk and prevent

a liquidity bottleneck to a large extent. However, InnoMedica’s

capital requirements call for the participation of numerous pri-

vate and institutional investors, who have to be convinced conti-

nuously through to the performance record presented.


with different growth rates and separate reporting of

cost intensive special projects such as the implemen-

tation of the phase I clinical trial. The security of the

existing cash and cash equivalents is guaranteed by

risk-limiting measures agreed with the bank and the

audit of expenditure and contractual agreements by

the finance department.

Should refinancing still be necessary at short notice,

InnoMedica can react quickly if necessary with now

467 shareholders and a network of business partners

such as banks or private individuals. A good relation-

ship with the shareholders is key. In six financing

rounds so far InnoMedica was able to convince with

the presented performance record and to date has

raised funds totalling CHF 14.3 million. The last capi-

tal increase was clearly oversubscribed and the funds

for the implementation of the phase I clinical trial are

available, as they were procured in a separate project

specifically for this purpose. With cash and cash equi-

valents of around CHF 7 million at the end of 2017, In-

noMedica also has the necessary financial resources

to ensure the company’s ongoing operations for the

time being. However, the capital requirement remains

high. A further capital increase of CHF 31.6 million will

be made to carry out the clinical studies, make the

necessary investments in the production, mainten-

ance and expansion of operations and staff, and fur-

ther develop the second product, Talineuren.

Personnel risks

The progress of the Talidox project, the extension of

InnoMedica’s pipeline and the expansion of produc-

tion capacity and completion of the GMP production

site for the clinical phase have increased personnel

expenses. The development of a company involves a

significant change in structural and communicative

processes. InnoMedica’s future growth will be signifi-

cantly influenced by how efficientely existing projects

can successfully be brought to market. The compe-

tence and commitment of the employees in all areas

are decisive for the success of the company.

Employee resignations can cause a loss of profes-

sional competence that can only be replaced with

difficulty or not at all. This applies in particular to

research and development, but also in part to pro-

duction. InnoMedica has sound documentation in all

these areas, but this cannot replace the key persons

Personnel risks

Innovation and entrepreneurship are closely linked to key people,

but also to the mentality of the entire team. The start-up idea

must be supported by the entire management and recognized

as a decisive success factor. Both individual exits and changes in

corporate culture can slow down the momentum, lead to friction

losses, delays and, possibly, even to the failure of the project.

Interventions

Preserve the start-up character of the company

Great innovative power is only possible in a corresponding cor-

porate culture. InnoMedica has a young team that dares to face

difficult medical challenges and to find new answers.

Preserve key persons

Not only because of their special expertise and experience, but

also because of their function in the team, key people are deci-

sive for entrepreneurial success. InnoMedica creates conditions

in which young people can develop their talents and break new

ground. As a team they cultivate the exchange of ideas and to-

gether they achieve the realization of the projects.

Recognizing leadership potential

The ability to motivate and lead employees can often be recog-

nised at an early stage. InnoMedica has a lot of experience in

recruiting talents and young executives with development poten-

tial. At the team or project level, good leadership is recognizable

and later implemented at the higher management level.

Employee participation

Employees shall participate in the success of the company

through the acquisition of shares. Prices must be set in such a

way that employees do not find it difficult or even impossible to

acquire their own shares due to the success of their work and the

associated increase in share prices.

Preserving private networks

Numerous well-known Swiss companies, also in the pharmaceu-

tical industry, have been associated with the founding families

for many years. This ensures continuity, especially at the Board

of Directors level, and in many cases prevents the early sale of

the company.

Residual risk:

In a start-up company, certain personnel risks cannot be avoided.

Entrepreneurs and innovators are important and their spirit is

supported by the whole team. It is crucial for stability to recog-

nize leadership potential among the younger generation at an

early stage and to develop it through the gradual transfer of re-

sponsibility at all levels.

and their ability to innovate. Even with a non-compe-

tition clause, a migration to the competitor can only

be prevented to a limited extent. Leavers can have a

significant impact on the performance and producti-

vity of a team. The reduced functionality of the team

can in turn lead to delays and potentially high costs.

A particular problem is the quality of the decisions

made. In a company, wrong decisions often only be-

come evident after some time, but in certain cases

they can no longer be easily corrected. At most, lost

time, incorrectly invested capital and no longer avail-

able human resources weigh heavily. High demands

are therefore placed on the quality of communication

and management, all the more so as many decisions

have to be made in the environment of a sophisticat-

ed and innovative technology. Decisions must com-

bine new ideas of the younger generation with the

experience of older entrepreneurs. This requires a

certain willingness to take risks, to break new ground

and to create an environment in which innovation is

possible at all. Important factors for this are trust and

creativity. Factors that are directly opposed to the de-

sire for safety and control.

Innovative and entrepreneurial thinking is not only

brought in by key people, but in the best case by the

whole team. It is challenging to build such a corporate

culture and maintain a start-up dynamic and innova-

tive strength. It is crucial that the start-up idea is fully

supported by management and the entire team and

recognized as a key element for success.

Many of InnoMedica’s employees are connected to the

company through family affiliation and long-standing

private acquaintances. However, this core is open and

accessible to other employees, who together form a

determined and well-functioning team. Many of the

employees have a high intrinsic motivation. They

are familiar with cancer and chemotherapy or neu-

rodegenerative diseases from their immediate family

or friends and are ready to make a major effort to

improve treatment options. They not only share the

confidence in InnoMedica’s innovative strength, but

also in its ability to build its own production facilities

and bring the product to the patients.

So far, this energy and dynamism has also been main-

tained in an environment of substantial personnel

growth and high pressure to achieve InnoMedica’s

goals. This is also evident from the fact that no em-

ployees have left the company since autumn 2015.


Talidox about to Enter the Clinic

The Board of SAKK has made the unanimous decision to definitively conduct the

clinical study with Talidox. With SAKK, InnoMedica has an experienced partner at its

side in the planning and implementation of clinical studies.

Outlook

Last year InnoMedica successfully completed the pre-

clinical phase of Talidox with the positive toxicological

data and finalized the documentation for the appli-

cation to Swissmedic for the implementation of the

phase I clinical trial. As soon as Swissmedic gives its

approval, the SAKK oncologists can start recruiting

patients for the multicentre study in the five Swiss

hospitals. If the good preclinical results on the effi-

cacy of Talidox are confirmed and there are no side

effects such as hand-foot syndrome in the treatment

of patients, as in the animal studies, Talidox could re-

volutionize today’s treatment options with chemo-

therapeutic drugs.

Other cytostatic drugs could also benefit from the li-

posomal packaging. Initial preclinical studies with the

active substance docetaxel have shown impressively

that InnoMedica’s nanotechnology transport system

can also encapsulate this active substance, optimiz-

ing its distribution in the body, and thus its efficacy.

Looking at currently used medical agents whose med-

ical effect, but also side effect profile, could benefit

from liposomal formulation and whose patent pro-

tection will expire in the next few years, InnoMedica

has a broad portfolio of potential pipeline products.

But even drugs that despite good medical effects

have never received approval due to intolerable side

effects could possibly once more become interesting

for medical use thanks to a liposomal formulation.

InnoMedica was able to show that liposomal nano-

technology is not only limited to applications in on-

cology, but also has the potential to fundamentally

improve today’s therapeutic possibilities in other

medical areas. The development of a new liposome

that crosses the blood-brain barrier opens up the

market for neurodegenerative diseases to InnoMe-

dica. Talineuren is now to be developed as a first appli-

cation for the treatment of Parkinson’s patients. How-

ever, the regenerative approach could also be used

for other neurodegenerative diseases and thus give

new hope to patients with, for example, Huntington’s

disease who currently have no effective medication

at all available for treatment.

In numerous systematic investigations of the surface

structures of liposomes, various prototypes have

presented themselves, which address specific tis-

sue properties and could thus also achieve decisive

therapeutic improvements in other areas such as the

widespread disease arteriosclerosis. This illustrates

the large capability of InnoMedica’s liposomal nano-

technology but also the responsibility towards future

patients.

Since InnoMedica does not develop new active sub-

stances, but improves the biodistribution of estab-

lished agents with its technology platform, one can

assume a lower translation risk as well as simplified

conditions in the approval process.

These promising results notwithstanding, caution

may advise holding off the initiation of further invest-

ments, particularly for production, until the results of

Talidox’s phase I and IIa clinical trials are in. However,

this could easily lead to a delay of more than 2 years:

If the expansion of production is only begun after the

clinical studies, new processes will have to be devel-

oped for the new volumes and new employees recruit-

ed and instructed in the manufacturing processes.

If a pharmaceutical start-up wants to be successful, it

cannot work in this manner but it must be able to rely

on the scientific knowledge gained. This includes not

only the preclinical studies and the investigations on

biodistribution, but also in-house analytics, with which

the essential product properties can be identified

and tested. If these results are convincing, as in the

present case, then the scale-up in production must be

pushed forward and the necessary expansion of the

infrastructure tackled. This way the available time can

be used productively and the company is prepared to

actually meet a possible demand. Also technical ques-

tions related to scale-up can be carefully elaborated

and, if necessary, new solutions can be found.

So far, InnoMedica has pushed ahead with the pre-

clinical and clinical development of Talidox in parallel

with the development of the industrial infrastructure.

This strategy has had a positive impact on progress.


The production soon delivered liposomes of a quality

that could not previously be achieved in the labora-

tory. At the same time, the laboratory came up with

new proposals for prototypes that have led to an at-

tractive pipeline in oncology, but also for the treat-

ment of neurological diseases. In all these indications,

however, industrial feasibility and its impact on costs

and drug prices must be kept in mind throughout the

entire development process.

InnoMedica was able to find a long-term agreement

with the Marly Innovation Center (MIC) without tying

up disproportionate financial resources. This is a very

good starting point for the planned expansion of In-

noMedica’s infrastructure. The MIC has large space

reserves, allowing the company to grow rapidly on

its own. In a best case scenario, an increase in pa-

tient numbers will lead to an accellerated increase

in demand and, due to this high demand, to faster

approval.This however, is only possible if production

has reached the necessary level of maturity by that

point in time and can supply the necessary quantities

and the required quality of Talidox, as well as later on

Talineuren.

Start-up companies are often regarded as only con-

ceptual innovators who develop new approaches

in the laboratory and then integrate them into the

proven production and sales structures of a group.

InnoMedica’s technology platform with the liposo-

mal transport system presents a more complex chal-

lenge. Production cannot easily be transferred to a

larger company. This company would also have to

create the infrastructure for liposome production

first and familiarize itself with the new methods. For

a fast progress it is therefore better to develop in-

house production with the necessary specialization.

Although these investments are expensive, they also

give the company value for money by enabling not

only high productivity, but also securing the neces-

sary expertise long-term.

All these considerations require a timely increase in

capital and reaching out to investors once more. It

may be the last opportunity for the investor to ac-

quire shares outside of free trading. The investor

bears the risk of the results of the phase I and IIa clini-

cal trials, which are not yet available, but also bene-

fits from prices that, driven by study results, may la-

ter rise substantially. As a reader of the business plan,

like InnoMedica, the investor can base his decision on

the scientific results. A residual risk remains for all

parties. This risk however, is offset by the prospect

of not only participating in InnoMedica’s earnings in

the event of success, but also of having made a sig-

nificant contribution to improving medical treatment

options by financing the further development of the

liposomal technology platform – in a first step with

Talidox in cancer therapy, but also with subsequent

pipeline products such as Talineuren.

What began in a basement laboratory is now being pursued by 22 employees whose

entrepreneurial spirit and commitment make InnoMedica’s innovations possible.

Team

InnoMedica Holding AG

Zug – Switzerland

Branch Office Bern

Gesellschaftsstrasse 16

CH-3012 Bern

Contact

+41 (0)44 383 88 22

[email protected]

www.innomedica.ch

The English version of InnoMedica’s Business Plan March 2018 was translated from the original German version which shall be binding in case of disparities.