DGAP-News: PAION AG REPORTS RESULTS FOR THE FIRST HALF-YEAR

DGAP-News: PAION AG / Key word(s): Half Year Results PAION AG REPORTS RESULTS FOR THE FIRST HALF-YEAR 2016 10.08.2016 / 07:30 The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- PAION AG REPORTS RESULTS FOR THE FIRST HALF-YEAR 2016 - Positive remimazolam headline data in pivotal U.S. Phase III study for procedural sedation during colonoscopy - License agreement with Cosmo Pharmaceuticals (Cosmo) for development and commercialization of remimazolam in the U.S. - Cash and cash equivalents of EUR 32.1 million as of 30 June 2016 and Cosmo upfront payment of EUR 10 million received in July 2016: Sufficient to complete ongoing U.S. Phase III development of remimazolam; if all activities progress as planned, no additional funding is needed to bring remimazolam to the U.S. market - Conference call (in English) today at 2:00 pm CEST (1:00 pm BST/8:00 am EDT) Aachen (Germany), 10 August 2016 - The specialty pharmaceutical company PAION AG (ISIN DE000A0B65S3; Frankfurt Stock Exchange, Prime Standard: PA8) today reports its consolidated financial results according to International Financial Reporting Standards (IFRS) for the six months ended 30 June 2016. In the first half of 2016, revenues were EUR 0.2 million, mainly resulting from the U.S. license agreement for remimazolam entered into with Cosmo. Research and development expenses amounted to EUR 12.2 million, a slight increase compared to the first half of 2015, mainly related to the U.S. Phase III program for remimazolam. General administrative and selling expenses increased to EUR 3.3 million compared to the prior-year period (EUR 2.7 million) mainly due to financing activities. Net loss was EUR 13.2 million for the first half-year 2016 compared to EUR 11.3 million for the prior-year period. Cash and cash equivalents were EUR 32.1 million as of 30 June 2016, compared to EUR 32.7 million as of 31 December 2015. Based on current planning, PAION believes that cash and cash equivalents together with the EUR 10 million upfront payment received from Cosmo in July 2016 will enable PAION to complete the ongoing U.S. Phase III development for remimazolam including the preparation of filing. Should development, filing and approval go according to plan, PAION will not need additional funding to bring remimazolam to the U.S. market including bearing all the costs for development and preparation of filing. Dr. Wolfgang Söhngen, CEO of PAION AG, commented: "We have had significant achievements in the first half of 2016, highlighted by positive headline results in our first U.S. Phase III trial with remimazolam and an important U.S. licensing deal. We are now in a much stronger financial position to complete Phase III development in the U.S. We expect to be very busy in the second half of the year as we advance our clinical development work in the U.S. We also look forward to the presentation of more detailed data from the first U.S. Phase III trial with remimazolam in procedural sedation in scientific publications later this year." Development and Commercialization Activities In the first half of 2016, PAION focused on advancing its Phase III program for the development of remimazolam in procedural sedation in the U.S. U.S. The patient recruitment in the first U.S. Phase III study was completed in April 2016, and in June 2016, PAION announced that remimazolam has met its primary efficacy endpoint in the first study of its pivotal U.S. Phase III program in patients undergoing procedural sedation. The study enrolled a total of 461 patients at 13 U.S. sites and was designed to evaluate the efficacy and safety of remimazolam compared to placebo (with midazolam rescue) in patients undergoing colonoscopy. Sedation was provided under the supervision of the endoscopist. The primary outcome measure, success of the procedure without requirement for rescue sedation, was reached in 91.3% of the patients in the remimazolam arm and in 5.0% in the placebo (including midazolam rescue) arm. The safety profile of remimazolam was consistent with that observed in previous studies. This study also included an open label arm in which midazolam was dosed according to U.S. label. Evaluation of the full data set is ongoing and is supposed to be presented in an appropriate scientific, peer-reviewed format in autumn 2016. The U.S. Phase III program also includes a second confirmatory, prospective, double-blind placebo-controlled, randomized, multi-center open label vs. midazolam trial in 420 patients undergoing bronchoscopies, a smaller safety trial in 75 high-risk patients (double blind vs. placebo and open label vs. midazolam) undergoing colonoscopies, and in addition four ongoing Phase I trials for the purpose of further supporting remimazolam's safety profile. In June 2016, PAION entered into an investment and a U.S. license agreement with Cosmo. In the course of the license agreement, Cosmo received an exclusive license for the development and commercialization of remimazolam in the U.S, and bears all future cost for market authorization and sales and distribution of remimazolam. PAION remains responsible for and bears the cost associated with the completion of the ongoing U.S. clinical development program in procedural sedation. PAION received an upfront payment in the amount of EUR 10 million after the balance sheet date and is eligible for further payments of up to EUR 42.5 million depending on the achievement of certain regulatory milestones in the U.S., as well as tiered royalties upon commercialization ranging from 20% to 25% of the net sales (which may be adjusted under certain conditions but not to below 15%). In the course of the investment agreement, Cosmo has committed to invest an amount of EUR 10 million in PAION shares which are subject to a 12-month lock-up period upon purchase. In June 2016, Cosmo already invested an amount of EUR 9.6 million in a private placement; the remaining EUR 0.4 million will be invested at a later date. EU In February 2016, PAION decided to discontinue a confirmatory EU Phase III study with remimazolam in patients undergoing major cardiac surgery. Due to the complex study design, the trial faced recruitment challenges. Despite intense efforts to accelerate patient recruitment, the trial proved to be difficult to implement. PAION is currently evaluating how to resume the clinical development in the EU. Japan In January 2016, PAION held a pre-NDA meeting with the Japanese Pharmaceuticals and Medical Devices Agency (PMDA). The PMDA stated that they considered the non-clinical and clinical data package for remimazolam to be complete for filing for the indication "Induction and maintenance of general anesthesia". The PMDA previously had confirmed that both the raw materials produced by PAION in Europe as well as the finished formulation of remimazolam fulfilled the requirements for filing in Japan. Outlook Due to the significant impact of the Cosmo license and investment agreements on PAION's net assets, financial position and results of operations, PAION has revised its 2016 financial outlook that was given on 22 March 2016. Development and Commercialization Activities PAION's major goals for the remainder of 2016 are the continuation of the ongoing Phase III development program with remimazolam in the U.S. and the implementation of the cooperation with Cosmo, including the necessary know- how transfer. In addition, the focus remains on production development for remimazolam, in particular the validation of the production at market scale. PAION expects its other regional partners to continue their remimazolam development activities. Subject to completing ongoing U.S. development activities and the associated know-how transfer to Cosmo, PAION intends to resume development activities for remimazolam in the EU. The next step is to re-evaluate the studies already conducted in general anesthesia. Along these lines, in close collaboration with key opinion leaders in the EU, PAION is analyzing the design and feasibility of a new development program as a basis for discussion with the European Medicines Agency (EMA). PAION currently plans to commercialize remimazolam itself in the EU but is also open to discuss EU partnerships that are value-creating for its shareholders. For all regions outside the U.S. and the EU, it is planned to enter into license or distribution agreements. Following the positive pre-NDA meeting with the Japanese authority in the beginning of 2016, in which the details of a market approval for remimazolam were outlined, PAION is continuing partnering discussions with potential licensees and is also evaluating the option of filing for market approval itself alternatively. A Japanese dossier could serve as a reference dossier for approval in certain other markets. Patient recruitment for the ongoing U.S. Phase III bronchoscopy trial, which marks the completion of PAION's U.S. clinical development program in procedural sedation, has been slower than anticipated and is now expected to be completed in the second quarter of 2017. PAION is continuously implementing measures to accelerate patient recruitment of this study. How soon after completion of the clinical development program filing for approval is possible, is subject to ongoing discussions with Cosmo, who are responsible for all approval activities in the U.S. Financial Outlook PAION expects revenues of approximately EUR 4 million in 2016, which is the portion of the EUR 10 million upfront payment received from Cosmo that will be recognized as revenues in 2016. The remaining approximately EUR 6 million will presumably be recognized as revenues in 2017. This financial outlook assumes that no further license agreements are entered into during 2016. Due to the ongoing clinical development of remimazolam, PAION expects R&D expenses to be between EUR 24 million and EUR 27 million depending on the progress of the development. Income from tax credits on parts of the research and development expenses from British tax authorities is expected to be between EUR 4 million and EUR 4.5 million. General administrative and selling expenses are expected to amount to approximately EUR 5.5 million. Net loss is expected to be between EUR 21.5 million and EUR 24 million, a decrease compared to the previous year (2015: EUR 28.2 million). This outlook assumes that development activities for remimazolam in the U.S. will progress as expected. If not, a significant portion of these costs would instead be expected to occur during 2017. Expense forecasts are also based on the current status of discussions with the U.S. Food & Drug Administration (FDA). Although PAION does not currently anticipate that this will occur, costs could be higher than planned and lead to a delay in approval should the FDA impose additional requirements for filing for market approval. Based on current plans, PAION believes that cash and cash equivalents of EUR 32.1 million as of 30 June 2016, together with the EUR 10 million upfront payment received from Cosmo in July, will enable PAION to complete ongoing Phase III development including the preparation of filing of remimazolam in the indication procedural sedation in the U.S. Thereafter, PAION expects to receive milestone payments from Cosmo and, once remimazolam is approved, royalties on net sales. Should development, filing and approval go according to plan, PAION will not need additional funding to bring remimazolam to the U.S. market including bearing all the costs for development and preparation of filing. Regarding the markets in the EU, PAION is currently evaluating how to resume the clinical development of remimazolam. For such a development in the EU, additional funding would be needed. The amount will only be specified after the currently ongoing evaluation of a potential new development program has been finalized. ### Key Consolidated Financial Figures, IFRS <pre> (all figures in Q2 2016 Q2 2015 H1 2016 H1 2015 KEUR thousand unless otherwise noted) Revenues 195 6 198 39 Research and -5,653 -6,217 -12,155 -11,980 development expenses General -2,070 -1,387 -3,250 -2,724 administrative and selling expenses Result for the -6,474 -6,637 -13,203 -11,340 period Earnings per share -0.13 -0.13 -0.26 -0.22 in EUR for the period (basic) Earnings per share -0.13 -0.13 -0.26 -0.22 in EUR for the period (diluted) H1 2016 H1 2015 Cash flow from -9,606 -12,033 operating activities Cash flow from -138 -5 investing activities Cash flow from 9,185 22 financing activities Change in cash and -576 -11,951 cash equivalents Average number of 39 27 employees in the Group 30 June 2016 31 Dec. 2015 Intangible assets 2,836 3,362 Cash and cash 32,104 32,680 equivalents Equity 31,360 35,562 Non-current 36 6 liabilities Current liabilities 7,151 7,900 Balance sheet total 38,547 43,468 </pre> The full half-year financial report will be available as of 10 August 2016 on PAION's website at http://www.paion.com/media-and-investors/ investorcenter/financial-reports/. Earnings call and webcast Conference call and webcast In addition to the publication of results, the Management Board of PAION AG will host a conference call (conducted in English) on 10 August 2016 at 2 p.m. CEST (1 p.m. BST, 8 a.m. EDT) to present the financial results of the first half-year 2016 and provide a pipeline and strategy update and financial outlook. To access the call, please dial: * Germany +49 (0) 69 7104 45598, * UK +44 (0) 20 3003 2666 and * U.S. +1 212 999 6659 * Other countries: please use the UK number When prompted, you will be asked to give the password "PAION". The conference call will be supplemented by a webcast presentation which can be accessed during the call under the following link: https://paion- events.webex.com/paion-events/j.php?MTID=md2ff41fad5ab42f67244b963f5b4b280. About PAION PAION AG is a publicly listed specialty pharmaceutical company developing and aiming to commercialize innovative drugs to be used in out-patient and hospital-based sedation, anesthesia and critical care services. PAION's lead compound is remimazolam, an intravenous, ultra-short-acting and controllable benzodiazepine sedative/anesthetic drug candidate. Currently, remimazolam is in active Phase III clinical development for use in procedural sedation in the U.S., where PAION is focusing all its business and financial resources on successfully completing its ongoing clinical development program in procedural sedation. Outside the U.S., PAION has so far focused on the development of remimazolam in the indication general anesthesia. Development of remimazolam in the indication intensive care unit (ICU) sedation is also part of the longer term life-cycle plan for remimazolam. Remimazolam is partnered in the U.S., Canada, China, Russia (CIS), Turkey, the MENA region, and South Korea. PAION is headquartered in Aachen (Germany) with further sites in Cambridge (United Kingdom) and New Jersey (USA). PAION's vision is to become an acknowledged "PAIONeer" in sedation and anesthesia. Contact Ralf Penner Director Investor Relations / Public Relations PAION AG Martinstrasse 10-12, 52062 Aachen - Germany Phone +49 241 4453-152 E-mail r.penner@paion.com http://www.paion.com Disclaimer: This release contains certain forward-looking statements concerning the future business of PAION AG. These forward-looking statements contained herein are based on the current expectations, estimates and projections of PAION AG's management as of the date of this release. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors. Should actual conditions differ from the Company's assumptions, actual results and actions may differ materially from any future results and developments expressed or implied by such forward- looking statements. Considering the risks, uncertainties and other factors involved, recipients should not rely unreasonably upon these forward- looking statements. PAION AG has no obligation to periodically update any such forward-looking statements to reflect future events or developments. --------------------------------------------------------------------------- 10.08.2016 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de --------------------------------------------------------------------------- Language: English Company: PAION AG Martinstr. 10-12 52062 Aachen Germany Phone: +49 (0)241-4453-0 Fax: +49 (0)241-4453-100 E-mail: info@paion.com Internet: www.paion.com ISIN: DE000A0B65S3 WKN: A0B65S Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange End of News DGAP News Service --------------------------------------------------------------------------- 490799 10.08.2016