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Cleveland inks funding deal for Panacela unit with Russia's RUSNANO

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Drug company Cleveland BioLabs (NASDAQ:CBLI) Monday entered into an agreement with Russia's RUSNANO to provide
funding for Cleveland's new subsidiary, Panacela Labs, which will develop a portfolio of new pre-clinical drug
candidates.

RUSNANO is a $10 billion state-owned Russian Federation fund with a mission to support high-tech and nanotechnology.

Immediately after the closing, Cleveland BioLabs will have an initial ownership stake of approximately 55% in
Panacela.

Under the terms of the agreement, RUSNANO will invest up to $26 million over a four-year period, with an initial
investment of $9 million financed upon closing of the agreement and three subsequent investments to be made upon
achievement of development milestones and attraction of new investments to the project.

Cleveland BioLabs and three other intellectual property owners, Roswell Park Cancer Institute, Cleveland Clinic
Foundation and Children's Cancer Institute Australia, will transfer intellectual property rights related to a
specific portfolio of compounds to Panacela Labs.

Cleveland BioLabs' president and CEO, Michael Fonstein, said: "The Panacela joint venture is in line with our
strategy of creating separate, independently funded entities to develop our broad pipeline of drug candidates."

RUSNANO managing director, Dmitry Lisenkov, added: "The biopharmaceutical industry is one of the core activity areas
for RUSNANO, so we appreciate the opportunity to partner with CBLI, one of the most promising research and
development biotechnology companies.

"Our joint venture, Panacela, will bring top global expertise to Russia to develop economically effective and
socially important pharmaceuticals for the Russian and worldwide market."

Cleveland BioLabs will also contribute $3 million as an initial investment. Cleveland BioLabs and RUSNANO will also
be granted warrants, providing options to increase their investment at two and four years following initial
investment. The transaction is scheduled to close on or around September 30.

A portfolio of five promising drug candidates developed under the guidance of the chief scientific officer of
Cleveland, Andrei Gudkov, and senior vice president of Basic Science at Roswell Park Cancer Institute, will be
transferred to Panacela.

The drug candidates are Mobilan, an adenoviral vector based pharmaceutical inducing an immune response to cancer;
Revercom, an agent that increases the effectiveness of established chemotherapy; Xenomycins, a family of compounds
for both topical and systemic anti-infective treatment; Antimycons, a series of inhibitors of the oncoprotein Myc,
one of the most universal cancer treatment targets; and Arkils, androgen receptor inhibitors of a new type being
developed as a prostate cancer treatment, which is ready for hit-to-lead optimization studies.

Development of these compounds will be undertaken through an innovative approach, which will first seek licensure
and approval of Panacela drugs in the Russian Federation.

Following the introduction of these compounds into clinical practice in Russia, Panacela intends to pursue licensure
and approval in other global markets, including the United States, with significantly reduced risks.

Shares in Cleveland Biolabs were up 4% at $2.40 Monday afternoon.

Quick facts: Cleveland BioLabs

Price: 2.48 USD

NASDAQ:CBLI
Market: NASDAQ
Market Cap: $32.04 m
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