Molecular Medicine : Board of Directors examined the business performance and approved the first nine months financial report ended at September 30th, 2017

PRESS RELEASE

The Board of Directors examined the business performance and approved the first nine months financial report ended at September 30th, 2017:

• Strong improvement in Financial results with respect to the first nine months of 2016:

  • Revenues from sales up to +22.4%

  • Operating result and result of the period improve respectively of

    +43.9% and +43.2%

  • Positive net financial position of Euro 17,4 million

• Important goals in market access of Zalmoxis reached thanks to license and distribution agreements signed with Dompé farmaceutici for Europe, Megapharm for Israel and TTY Biopharm Company for certain Asian Countries; interactions progressing with national Authorities for Marketing Authorization, pricing and reimbursement

• Expansion of client portfolio for GMP production collaborations by signing new development and manufacturing service agreements with Rocket Pharma e Cellectis

  Important results occurred after the financial period

• Promising pre-clinical data on CAR-CD44v6 safety profile presented at the international congress "COSTEM" in Berlin

FROM GENES TO THERAPY

MOLMED S.p.A.

Via Olgettina, 58 ‐ 20132 Milan, Italy | Phone [phone] ‐ Fax [phone] [e-mail] ‐ www.molmed.com

Share capital € 20.949.084,36 fully paid ‐ Office of Milan Company Registry number 1506630 ‐ Tax identification number 11887610159

(a) (b)

3rd quarter	3rd quarter	01.01.2017 -	01.01.2016 -
(amounts in Euro thousand)	2017	2016	30.09.2017	30.09.2016

Variation (a-b) Variation %

Operating revenues	6,226	3,680	15,641	13,901	1,740	12.5%
Revenues	6,001	3,526	14,936	12,207	2,729	22.4%
Other revenues	225	154	705	1,694	(989)	(58.4%)
Operating costs	7,633	9,553	23,549	28,010	(4,461)	(15.9%)
Operating result	(1,407)	(5,873)	(7,908)	(14,109)	6,201	43.9%
Net financial income & charges	(172)	(14)	(193)	(157)	(36)	(22.9%)
Result for the period	(1,579)	(5,887)	(8,102)	(14,266)	6,165	43.2%

(amounts in Euro thousand)

September 30, 2017 De cem ber 31,

2016 Variation (a-b)

Variation % (a) (b)

Net Financial Position 17,423 19,702 (2,279) (11.6%)

Milan, November 6, 2017 - The Board of Directors of MolMed S.p.A. (Milan: MLM), met today under the chairmanship of Professor Claudio Bordignon, reviewed and approved interim financial results at September 30th, 2017.

Commenting on the business performance Riccardo Palmisano, MolMed's Chief Executive Officer, said: "During the first nine months of 2017 the Company took the necessary steps to exploit the important results achieved in 2016 and continued to focus its efforts on pursuing the goals set. We are proud to say that both pillars on which MolMed's growth strategy stands - development of proprietary R&D products and high added value GMP services - have been bolstered. With regards to Zalmoxis®, based on the Conditional Marketing Authorization (CMA) granted by EMA in 2016, major distribution and marketing contracts were entered into with noteworthy partners such as Dompé, Megapharm and TTY, while market access activities continued.

Additionally, pre-clinical development activities on our immuno-gene therapy project CAR CD44v6 generated significant new and positive data regarding the safety profile of our product in in vivo models, which were presented at the 4thInternational Congress on Stem Cell Transplantation and Cellular Therapies - COSTEM (Berlin, October 26-29). In addition to the excellent results achieved, both in in vitro and in vivo pre-clinical models confirme a high level of efficacy against leukaemia and a series of solid tumours which express CD44v6.

On development and manufacturing services for third parties, after extending the scope of the contract with GSK and signing a collaboration agreement with Genenta in 2016, MolMed entered in 2017 in major strategic agreements with Rocket Pharma and Cellectis, active in two key areas, namely rare diseases and CAR therapies, in which cell and gene therapies concentrate their pledges to improve the life of patients with, as yet, unmet medical needs.

Finally, we are extremely pleased with the significant improvement in the financial results, which show a reduction in losses of more than 43% over 2016. This goal was achieved thanks to an increase in sales revenues, having found innovative partners synergic with our corporate strategy, but also due to substantial operating cost containment resulting from the increased focus that the Company is pursuing day after day.

FROM GENES TO THERAPY

All the positive results achieved so far this year seem to confirm that we have chosen the right path to ensure the future growth of MolMed and maximize the company's assets".

Main events occurred in the first nine months of 2017

Zalmoxis: during the first nine months of 2017 the Company continued activities focused on the access to the European market. Following the initiation of the formal procedure in Italy, by filing the related dossier for pricing & reimbursement definition, in December 2016, the Company met with AIFA's scientific and technical commission (CTS) and answered to the AIFA Commission for Pricing and Reimbursement clarification requests, getting ready for the upcoming negotiation. Furthermore MolMed moved forward with Dompé farmaceutici, licensee for the European area, the preparation of both the dossiers for pricing & reimbursement request to German and French Authorities and accelerated preparatory activities for negotiations in other major European countries.

With regard to the commercialization of Zalmoxis outside the European borders, in April MolMed and Megapharm Ltd. signed a distribution and license agreement defining all terms and conditions for the supply, registration, promotion and distribution of Zalmoxis in Israel. In accordance with this agreement, Megapharm will distribute and market Zalmoxis in Israel, once approved by the Israeli Ministry of Health (MOH) and included in the Israeli National Health Basket of drugs by the MOH. Furthermore, Megapharm will be responsible for conducting all regulatory activities after marketing authorisation in Israel, including market access and price & reimbursement in the Country.

In the same field, in June 2017 MolMed and TTY Biopharm Company Ltd signed an exclusive license and distribution agreement defining all terms and conditions to import, use, market, sell and/or distribute the product in Taiwan, Hong Kong, Singapore, Thailand, Philippines, Vietnam and Malaysia. Under the terms and conditions of the agreement, TTY shall be responsible for the application of Marketing Authorization of Zalmoxis in the interested territories and will perform further clinical studies if needed to obtain regulatory approval, and will conduct all regulatory activities consequent to marketing authorization, including market access and pricing & reimbursement. Additionally, TTY could promote the enrolment of patients in the TK008 phase III trial by the compassionate use of Zalmoxis. In this case, TTY will be responsible for the accrual of the clinical centers and of the interaction with the local health Authorities of the Countries involved.

Thanks to rights conferred to TTY, MolMed might receive an upfront payment, potential regulatory and sales milestone payments up to Euro 13.5 million, as well as royalty payments in the range of 10% to 20% on annual net sales generated in each country covered by the agreement.

On July 2017 MolMed and Dompé farmaceutici S.p.A. entered into a 15 year exclusive license and distribution agreement granting Dompé the exclusive right and obligation to conduct all activities aimed at promoting, marketing, exploiting, distributing and selling Zalmoxis in all member countries of the current European Economic Area (EEA), UK after Brexit included, and an option right for Australia, Switzerland and Turkey.

Under the terms and conditions of the license and distribution agreement Dompé shall also perform and/or complete market access activities and take care of negotiating pricing and reimbursement of Zalmoxis in each interested Country other than Italy. MolMed will be responsible for performing market access activities, pricing and reimbursement negotiations in Italy, maintaining the Conditional Marketing Authorization and complying with the post approval commitments imposed by EMA in order to obtain full Market Authorization for Zalmoxis.

FROM GENES TO THERAPY

Concurrently with the execution of the aforementioned contract, MolMed and Dompé signed a manufacturing and supply agreement pursuant to which MolMed will be responsible for production, supply and delivery of Zalmoxis to the final users in all countries, and Dompé will recognize an amount proportional to the reimbursed price of the product.

On the basis of the license and distribution agreement, MolMed might receive, in addition to the purchase price, up to euro 43.5 million, of which up to euro 12.5 million as contributions in the 2017 - 2020 timeframe, and up to euro 31 million as sales milestones, depending on annual net sales generated in each country covered by the agreement.

NGR-hTNF: after EMA validation, on December 23rd, 2016, of a CMA request filed by MolMed on December 6th, 2016, as second-line treatment for adult patients affected by malignant pleural mesothelioma with disease progressing within 6 months from end of first-line treatment, EMA started the dossier evaluation procedure and appointed, in the first quarter of 2017, Rapporteur and Co-Rapporteur in charge of the CMA procedure, and CHMP adopted the first List of Questions (LoQ), at day 120. Following the interactions in the second quarter with the EMA, during which certain issues related to the list of questions formulated in the LoQ were discussed, MolMed decided to withdraw the CMA application, having come to the conclusion that it did not have enough time to complete activities aimed at obtaining data on production and control of the product, in the timeframe granted by the CMA Competent Authority.

CAR CD44v6: During the first nine months of 2017, based on the pre-clinical data collected, which confirmed the efficacy and safety profile in leukemia and solid tumors, the pre-clinical research and development activities continued on the immune proprietary project-gene therapy CAR CD44v6 in order to enhance its specificity, accurately outline potential and place in therapy, and define the development path for trials in man.

In fact, at the 22nd annual Congress of the European Hematology Association (Madrid, 22-25 June 2017) Dr. Attilio Bondanza, Head of the Innovative Immunotherapy Unit at the Department of Immunology, Transplantation and Infectious Diseases at the San Raffaele Hospital (Milan) Medical Institute, provided new safety in-vitro data on the CAR-CD44v6 during an oral session titled "Hematology-in-Focus: New strategies in cellular therapy to prevent relapse of acute leukemia".

In particular, Dr. Bondanza's data focused on the safety profile of CD44v6 CAR-T cells showing how, although expressing the CD44v6 target at detectable levels, keratinocytes are highly resistant to CAR-T cell killing. These data suggest a wide enough therapeutic window for exploiting the antitumor activity of CD44v6 CAR-T cells, without incurring in relevant skin toxicity.

Finally during the first quarter of 2017, with the kick-off meeting held in Milan on 27-28 February 2017 the EURE-CART project (EURopean Endeavour for Chimeric Antigen Receptor Therapies) got underway. To carry out this project, a consortium of nine partners from five different EU countries, coordinated by MolMed, was formed. EURE-CART project's main object is to conduct a multicenter, first-in-man Phase I/IIa clinical trial to demonstrate the safety and the efficacy of CD44v6 CAR T-cell immunotherapy in acute myeloid leukemia and multiple myeloma.

In the meetings held in June and September by the Steering Committee of EURE-CART, the progress of the project was verified in line with the planned timings.

Development and GMP manufacturing activities: in the first nine months of 2017 activities with third parties (GSK, Telethon and Genenta) on therapeutics covered by existing collaborations proceeded as

FROM GENES TO THERAPY