OMH Osmetech

    RNS Number : 2991D
  Osmetech PLC
  12 September 2008
   

    THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWSWIRE SERVICES OR OTHERWISE FOR DISTRIBUTION IN THE UNITED STATES

    12 September 2008
    Osmetech plc ("Osmetech" or the "Company")
    Proposed issue of American Depositary Shares and new Ordinary Shares and proposed listing of American Depositary Shares on NASDAQ Global
Market
    The Company has today announced that it proposes, subject to shareholder approval, to undertake an issue of American Depositary Shares
(ADSs) and obtain a listing of such shares on the NASDAQ Global Market through a Level III American Depositary Receipt program ("ADS
Issue").  Each Osmetech ADS is expected to represent 35 new ordinary shares as traded on the AIM Market of the London Stock Exchange. The
proposed trading symbol for Osmetech's ADR is OSMH. In connection with the offering, the Company is also proposing to issue further new
ordinary shares to institutional investors in Europe which may include certain existing institutional shareholders of the Company.
    The Company has filed a registration statement with the US Securities and Exchange Commission (the "SEC") and has applied to have the
ADSs listed on NASDAQ. The registration statement can be viewed on the Company's website at www.osmetech.com and at the SEC website at
www.sec.gov.  
    Lazard Capital Markets is acting as sole bookrunner in respect of the offering and Canaccord Adams is acting as co- lead manager. 
Osmetech has appointed The Bank of New York Mellon as the depositary bank for the ADS Issue.
    James White, Chief Executive, Osmetech plc, said:
    "A NASDAQ listing would mark another important step in Osmetech's development. Osmetech is now based in the US and we are prioritising
our commercialisation strategy on the major opportunities in the US molecular diagnostics market as we roll out our new FDA cleared eSensor
XT-8 platform. It is a logical progression for Osmetech to increase its exposure in the US and improve our access to the US capital
markets."
    It is currently anticipated that the offering will be targeted primarily at investors resident in the US in the form of ADSs evidenced
by American Depositary Receipts.  The price at which the new ordinary shares (and ADSs) will be issued, and the number of new ordinary
shares (and ADSs) that will be issued pursuant to the offering, is not yet determined.  Whilst the registration statement filed with the SEC
in respect of the ADS Issue contains a required indicative pricing range given as $7 to $9 per ADS (equivalent to 11.4p to 14.7p per new
Ordinary Share), the Directors will be seeking authority to issue the new ordinary shares (and ADSs) outside this range should the need
arise. The actual price at which the new ordinary shares (and ADSs) are issued will be determined by reference to the closing price of the
ordinary shares on AIM on the date the offering is priced, prevailing market conditions and other factors and will be determined by
agreement between the Company, Lazard Capital Markets and Canaccord Adams.
    The maximum number of new ordinary shares that the Company proposes to issue pursuant to the offering is not expected to exceed
221,375,000 new ordinary shares ("New Ordinary Shares"), although the Directors reserve the right, if they believe it is in the best
interests of the Company and shareholders, to issue a further 20,312,000 new ordinary shares pursuant to the authority granted to them at
the last annual general meeting of the Company.  In the event that all of the New Ordinary Shares (which includes any new ordinary shares
issued pursuant to any over-allotment option granted to Lazard Capital Markets and Canaccord Adams), were to be issued pursuant to the
offering at the mid point of the price range, this would raise approximately �25 million ($43.9 million) for the Company (net of estimated
expenses), and such shares would represent an increase of 109 per cent. in the current issued ordinary share capital of the Company. There
is no minimum number of new ordinary shares that the Company may issue pursuant to the offering. The New Ordinary Shares will rank pari passu with the current issued ordinary shares of the Company. 
    The mechanics of a US offering of ADSs are such that it cannot easily be made in association with a rights issue or similar pre-emptive
offer of securities. Therefore, in order to effect the ADS Issue, the Company is proposing that the offering is made on a non pre-emptive
basis and accordingly is conditional upon shareholders resolving to disapply statutory pre-emption rights at an extraordinary general
meeting of the Company ("EGM") which is being convened for 1 October 2008.  The Company has received letters of intent from certain
shareholders indicating that it is their present intention to vote in favour of the resolution to be proposed at the EGM. In aggregate,
these shareholders hold 56,580,760 ordinary shares representing approximately 27.8 per cent. of the current issued share capital of the
Company.
    The Company anticipates that the price and actual number of New Ordinary Shares issued, will be determined, assuming shareholders
approve these proposals, shortly following the EGM. It is proposed that admission of the New Ordinary Shares to trading on AIM and
completion of the ADS Issue and the listing on NASDAQ will also take place shortly following the EGM.  An announcement will be made by the
Company when the price at which the New Ordinary Shares will be issued and the number of New Ordinary Shares to be issued has been
determined.  An expected timetable of principal events is set out at the end of this announcement.  The listing on NASDAQ, if completed,
will not affect a shareholders' ability to trade the ordinary shares on AIM. Furthermore, existing holders of ordinary shares will generally
be entitled to deposit their ordinary shares with the Bank of New York Mellon as depositary and be issued ADSs represented by ADRs if they
so choose, which will then enable them to trade the ADSs on NASDAQ. 
    As a consequence of the listing on NASDAQ, the Company will become a public company in the US, subject to the full registration and
reporting requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (together, the "US
Securities Laws") applicable to issuers incorporated outside the US which are referred to as "foreign private issuers". Such registration
and reporting requirements include filings with the SEC, such as the initial registration statements on Form F-1 and Form F-6, subsequent
annual reports on Form 20-F and current reports on Form 6-K in respect of material information made public in the UK and the US. These
reports will be publicly available on the SEC's website from the time of filing. Additionally, the Company will have to comply with
substantive provisions of the US Securities Laws.
    In order to continue developing the group's molecular diagnostics business, the Company will require additional working capital. The
Directors have considered various funding options, and has concluded that, at its current stage of development, equity rather than debt
financing is more appropriate for the Company. 
    Osmetech's operations are now entirely based in the US. The global molecular diagnostics market and the knowledge and understanding of
healthcare technology companies is heavily centred on the US where there is a greater willingness to fund companies at Osmetech's stage of
development. The Directors believe that there may be greater interest in the Company from investors in the US than there is in Europe and
that there will be greater demand for the Company's securities in the US than there is in Europe. The Directors also believe that there is a
general reluctance on the part of US investors to invest in UK companies of the size and profile of Osmetech unless they have a trading
facility in the US.
    Furthermore, a significant number of emerging healthcare technology companies trade on NASDAQ and the Directors believe that there is a
greater knowledge and understanding of those companies in that market. In addition, the Directors believe that this trading facility should
raise the profile of the Company amongst the investor community in the US and with potential strategic partners. The Company is therefore
anticipating that a trading facility on NASDAQ will ultimately provide greater liquidity in the ordinary shares and the demand for the
Company's ADSs from a US listing and a stronger knowledge base in the US will support a higher valuation for the Company.
    The Company has therefore decided to principally target this fundraising at US investors through the ADS Issue and the listing on NASDAQ
whilst at the same time making some of the new ordinary shares available to institutional investors who may be restricted from participating
in the ADS Issue or would prefer to invest directly in new ordinary shares. However, the Directors reserve the right to abandon the ADS
Issue and listing on NASDAQ and instead issue the New Ordinary Shares solely to institutional investors in Europe.
    Revenues in the six months ended 30 June 2008 were �127,994 and increased by 83% over revenues of �70,061 for the corresponding period
in 2007. Revenues were principally from sales of the Company's eSensor Cystic Fibrosis Carrier Detection Test for use on the eSensor 4800
System. The Company had 10 eSensor 4800 Systems in commercial use at customer sites as of 30 June 2008.  
    In July 2008, the Company received 510(k) clearance from the US food and Drug Administration for the Company's eSensor XT-8 System and
the related eSensor Warfarin Sensitivity Test.  For the next twelve months, the Company expects further growth in product revenues, both
from sales of its eSensor Warfarin Sensitivity Test and the continued sales of its eSensor Cystic Fibrosis Carrier Detection Test.
    The balance of cash and cash equivalents was �13,910,710 as of 31 December 2007 and declined to �6,676,043 as of 30 June 2008. Net
decrease in cash and cash equivalents in the six months ended 30 June 2008 was �7,234,667, reflecting the ongoing expenditures relating to
the development of the eSensor XT-8 System and related tests, as compared to net cash generated from operations of �12,989,194 in the six
months ended 30 June 2007, which reflects the proceeds of the sale of the Company's blood gas analyzer business. 
    The Company intends to use the net proceeds of the fundraising for the following purposes:
�         approximately �11.4 million ($20 million) for the development of a broad menu of tests for its eSensor XT 8 System, focusing on
additional tests using established or scientifically validated biomarkers for detecting human genetic markers, infectious diseases and
cancer;
�         approximately �2.8 million ($5 million) to continue to enhance the capabilities of its eSensor platform, including by developing
sample processing improvements and/or automated instrument solutions with sample-to-answer capabilities and by developing smaller and more
portable instruments that may allow for point-of-care testing;
�         approximately �2.8 million ($5 million) to fund additional sales, marketing and service personnel and marketing initiatives in
connection with future test and system product launches; and
�         the remainder for additional working capital and other general corporate purposes, to explore opportunities to expand its current
business through strategic alliances and licenses with, or acquisitions of, other businesses, products or technologies and the costs of
operating as a public company, although the Company currently has no agreements or commitments for any specific acquisitions.
    A circular ("Circular") is today being posted to the shareholders of the Company to convene an EGM of the Company for 1 October 2008 at
which a resolution will be proposed to approve the offering. 
    The Company is also proposing to amend the Osmetech plc 2003 US Equity Compensation Plan US Plan primarily to bring it into line with
current US law and practice.  In addition, the maximum number of ordinary shares that may be issued pursuant to the US Plan is proposed to
be increased from 13 million to 60 million. The total number of options over ordinary shares outstanding at 30 June 2008 under all of the
Company's share option arrangements was 30,498,838, representing approximately 15.1 per cent. of the issued ordinary share capital of the
Company.  
    Upon the completion of the listing on NASDAQ it is proposed that further option grants will be made to certain key employees at an
exercise price equal to the fair market value of an ordinary share (or ADS), on the date of grant. Following these option grants, the total
number of options outstanding over ordinary shares following the fundraising is not expected to significantly exceed 15 per cent. of the
enlarged issued ordinary share capital. 
    A copy of the Circular, together with the notice of EGM, will be available on the Company's website www.osmetech.com later today.
    Expected Timetable of Principal Events
 Latest time and date for receipt of forms of            11 a.m. on 29
 proxy for EGM                                          September 2008
 Extraordinary General Meeting                    11 a.m. on 1 October
                                                                  2008
 Announcement of the price and the number of            3 October 2008
 New Ordinary Shares to be issued pursuant to   
 the offering (Note 1)                          
 Admission and commencement of dealings in New          8 October 2008
 Ordinary Shares on AIM (Note 1)                
 American Depositary Shares listed on the               8 October 2008
 NASDAQ Global Market (Note 1)                  
 Note 1.    These timings are indicative only   
 and are subject to change.                     

    Enquiries:
    Osmetech plc                                                   +44 (0)207 849 6027
    James White, Chief Executive Officer
    David Sandilands, Chief Financial Officer
    Madano Partnership                                        +44 (0) 207 593 4000
    Matthew Moth, Mark Way
    Canacccord Adams Limited                            +44 (0) 207 050 6500
    Robert Finlay
    L. Warren Pimm
    Lazard Capital Markets LLC
    David McMillan                                                  +1 212 632 6719
    This announcement shall not constitute an offer to sell or the solicitation of an offer to buy New Ordinary Shares or ADSs or any other
security in the United States or in any such jurisdiction in which any such offer, solicitation or sale would be unlawful. New Ordinary
Shares or ADSs or other securities may not be offered or sold in the United States absent registration or an exemption from registration. 
The public offering of such securities to be made in the United States will be made by means of a prospectus that forms a part of a
registration statement filed by the Company with the US Securities and Exchange Commission and no sales of such securities shall be made nor
offers to buy be accepted until such registration statements are declared effective. A copy of the offering document may be obtained from
the Company that will contain detailed information about the Company and its management, as well as the Company's most recent audited
financial statements. 
    About Osmetech plc
    (www.osmetech.com)
    Osmetech plc is a fast developing, international diagnostics business with operations in Boston and Pasadena in the US, serving the high
growth molecular diagnostic market targeting hospitals and reference laboratories. Osmetech has rights to a strong portfolio of over 200
issued and pending patents and has launched its first generation eSensor 4800 platform, an electrochemistry-based array system, together
with an FDA cleared in vitro diagnostic test for Cystic Fibrosis carrier detection. In July 2008, Osmetech received FDA clearance for its
second generation eSensor XT-8 molecular diagnostics platform and Warfarin Sensitivity Test.

This information is provided by RNS
The company news service from the London Stock Exchange
 
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