TIDMRLM
RNS Number : 5001R
Realm Therapeutics PLC
22 September 2017
The 'Proposed Placing to raise GBP19.3 million ($26 million) and
Notice of General Meeting' announcement for Realm Therapeutics plc
released last night, 21 September 2017 at 18:01, RNS number '4972R'
has been re-released in the interest of market clarity. The
announcement text is reproduced in full below.
THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, RELEASE OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO OR FROM THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH
SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. THIS
ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE AN OFFER OR AN INVITATION TO ACQUIRE OR DISPOSE OF ANY
SECURITIES. ATTENTION IS ALSO DRAWN TO THE IMPORTANT NOTICE AT THE
OF THIS ANNOUNCEMENT.
Realm Therapeutics plc
("Realm Therapeutics", "Realm" or the "Company")
Proposed Placing to raise GBP19.3 million ($26 million) and
Notice of General Meeting
Capitalised terms in this announcement have the same meaning as
in the Circular being published in conjunction with the proposed
placing (unless otherwise indicated) and such terms are also
defined below.
21 September 2017 - Realm Therapeutics plc (AIM: RLM), a
clinical stage biopharmaceutical company focused on leveraging its
proprietary immunomodulatory technology, is pleased to announce
today that it has successfully secured funding commitments to raise
gross proceeds of approximately GBP19.3 million ($26 million)
through a proposed placing (the "Placing") with new and existing
investors, including several healthcare specialist funds based in
the US and UK. The Placing is conditional upon shareholder approval
and a circular setting out details of the Placing (the "Circular")
and to convene a general meeting to seek approval for the
transaction (the "General Meeting") will be available on the
Company's website shortly and is expected to be posted to
Shareholders later today.
Highlights
-- Net proceeds of the Placing, approximately GBP17.6 million
($23.8 million) will be used primarily to advance the Company's
drug development programmes and for general corporate purposes
including:
o Further advancing our PR022 atopic dermatitis clinical
programme beyond Phase IIa, but results of initial trials in PR022
and PR013 will drive prioritisation among these two lead
indications
o Conducting a Phase II proof of concept study in Acne Vulgaris,
with PR023 a topical formulation in early development
o Further evaluating the Company's high concentration
hypochlorous acid formulations for application in potential
pipeline candidates, including psoriasis and dry eye
-- Participating in the Placing are US and UK healthcare
specialist funds, and new shareholders to Realm, including OrbiMed,
BVF Partners LP, RA Capital Management, Abingworth BioEquities
Master Fund Ltd and Polar Capital
-- Charles Spicer, Non-Executive Chairman of the Company, and
Alex Martin, CEO of the Company, will both participate in the
Placing
Alex Martin, Chief Executive Officer of Realm Therapeutics,
said:
"We are extremely pleased with the GBP19.3 million ($26 million)
investment commitment from some of the world's leading healthcare
investors to advance our lead programmes in Atopic Dermatitis and
Allergic Conjunctivitis and our additional pipeline. Their interest
is a strong vote of confidence in our plans, our programmes, and
our team, and we look forward to updating the market upon
successfully closing the financing."
Charles Spicer, Non-Executive Chairman of Realm Therapeutics
added:
"The Board would like to thank both the proposed new and our
existing shareholders for their support of Realm. This impressive
syndicate of sector specialists in the financing attests to the
potential value of our programmes. Realm remains focused on
developing our two lead candidates while also seeking to prioritise
further indications in which our proprietary technology may offer
promising potential treatment to patients."
The Placing, which was oversubscribed prior to allocation, will
raise gross proceeds of approximately GBP19.3million ($26 million)
through the issue of approximately 66.4 million Units at a price of
29 pence per Unit (each comprising one Placing Share and one
Warrant to subscribe for 0.4 ordinary shares). The Placing Price
represents the average closing bid price of an Ordinary Share
during the five trading days to 19 September 2017, being the last
practicable date prior to investors signing their binding Placing
commitments. Each Warrant carries an exercise price per Warrant
Share of 58 pence, being 200% of the Issue Price and a term of 2.5
years. The Placing Shares are expected to be admitted to trading on
AIM at 8.00 am. on 10 October 2017 (with Warrant certificates
delivered on or around 17 October 2017).
MTS Securities, LLC is acting as the US placement agent and N+1
Singer is acting as the UK broker and nominated adviser in
connection with the Placing.
The Placing is conditional upon, amongst other things, approval
by existing shareholders at the General Meeting expected to be held
at 10.00 am on 9 October 2017 at the offices of CMS Cameron McKenna
Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N
6AF. An extract from the Circular to Shareholders is set out below
and the full Circular will be available at the Company's website:
www.realmtx.com shortly and is expected to be posted to
Shareholders later today. This announcement should be read in
conjunction with the Circular in its entirety, which will contain
further details on the terms of the Placing and related
matters.
Additionally, the Company is proposing to adopt new Articles to
facilitate the potential issue of American Depositary Shares
(ADSs), in the event that the Company pursues a US listing at some
point in the future, and to reflect certain updates in applicable
law and changes to best practice.
Enquiries:
+44 (0) 20 3727
Realm Therapeutics plc 1000
Alex Martin, Chief Executive Officer
Marella Thorell, Chief Financial
Officer and Chief Operating Officer
+44 (0) 20 3727
FTI Consulting 1000
Simon Conway / Mo Noonan
N+1 Singer (Nominated Adviser +44 (0) 20 7496
& Broker) 3000
Aubrey Powell / Lauren Kettle
MTS Securities, LLC (US Placement
Agent) +1 212 887 2100
Ravi Mehrotra/Mark Epstein
This announcement is released by Realm Therapeutics plc and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 ("MAR"), encompassing
information relating to a proposed placing described herein, and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of the Company by Alex Martin, Chief Executive Officer, and
Marella Thorell, Chief Financial Officer and Chief Operating
Officer.
About Realm Therapeutics
Realm Therapeutics is a clinical-stage biopharmaceutical company
focused on developing novel immunomodulatory therapies to protect
and improve the lives of adults and children. The Company has
initiated drug development programmes, based on its proprietary
hypochlorous acid technology at high concentrations. The Company
believes its formulations have novel immunomodulatory activity with
potential application for the treatment of diseases in a number of
therapeutic areas, including Dermatology and Ophthalmology.
About Atopic Dermatitis (AD)
AD, a serious form of eczema, is a chronic, relapsing,
inflammatory disease characterised by itchy, inflamed skin, which
poses a significant burden on patients' quality of life and on the
overall health care system. Patients with AD have impaired function
of their skin barrier, and this, combined with skin damage as a
result of the intense itching and scratching associated with the
disease, makes them at risk for secondary infections due to
colonisation with pathogenic bacteria (particularly Staphylococcus
aureus) and changes in the skin microbiome. AD affects up to 20% of
children and up to 3% of adults and prevalence numbers continue to
increase.
About Allergic Conjunctivitis (AC)
AC is an inflammatory disease of the conjunctiva, the membrane
covering the white part of the eye, caused primarily from a
reaction to an allergen such as pollen, or pet dander, or other
environmental antigens, and affects up to 40% of the United States
population and up to 20% of the population of Europe and Japan,
including children. This inflammation results in redness, acute
itching, tearing and associated nasal symptoms. Approximately 30%
of AC patients do not adequately respond to the current standard of
care.
About Acne Vulgaris
Acne vulgaris is the most common chronic skin condition in the
U.S., affecting approximately 45 million people, or 14% of the
population. The disease can range from mild to severe cystic acne
and is associated with significant physical and psychosocial
effects on quality of life, including permanent scarring,
depression and anxiety. The two main factors involved in the
development of acne are clogged pores and/or the presence of
bacteria, leading to irritation, lesions and inflammation.
Certain statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties, and other factors, some
of which are beyond the Company's control, are difficult to
predict, and could cause actual results to differ materially from
those expressed or forecasted in the forward-looking statements.
The Company cautions shareholders and prospective shareholders not
to place undue reliance on these forward-looking statements, which
reflect the view of the Company only as of the date of this
announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the
statements are made. The Company will not undertake any obligation
to release publicly any revisions or updates to these
forward-looking statements to reflect events, circumstances, or
unanticipated events occurring after the date of this announcement
except as required by law or by any appropriate regulatory
authority.
IMPORTANT INFORMATION
The Circular is not an offer of securities for sale in the
United States. The securities being offered by the Company may not
be offered or sold in the United States absent registration or an
exemption from registration. The offering of securities described
in the Circular has not been and will not be registered under the
United States Securities Act of 1933, and accordingly, any offer or
sale of the securities may be made only in a transaction exempt
from the registration requirements of the Securities Act.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Placing and 21 September 2017
publication of the Circular
Latest time and date for receipt 10.00 am on 5 October
of completed Forms of Proxy to 2017
be valid at the General Meeting
10.00 am on 9 October
General Meeting 2017
Announcement of results of General 9 October 2017
Meeting
Admission and commencement of dealings 8.00 am on 10 October
in the Placing Shares on AIM 2017
Placing Shares in uncertificated 10 October 2017
form to be credited to accounts
in CREST
Despatch of definitive share certificates by 17 October 2017
for Placing Shares in certificated
form (if required)
Despatch of definitive certificates by 17 October 2017
for Warrants
NOTES
(1) References to time in the Circular are to London time unless
otherwise stated.
(2) Each of the times and dates in the above timetable are
subject to change. If any of the above times and/or dates change,
the revised times and/or dates will be notified to Shareholders by
announcement through a Regulatory Information Service.
(3) All of the events listed in the above timetable subsequent
to the General Meeting are conditional on the approval of the
Resolutions at the General Meeting.
(4) The Warrants will not be separately admitted to trading on
AIM, but the Warrant Shares which will arise following any valid
exercise of Warrants will be admitted to trading as part of the
Company's single class of shares admitted to trading on AIM or the
relevant exchange on which the Company's shares are traded at the
time the Warrants are exercised.
KEY STATISTICS
Number of Ordinary Shares in issue(1) 50,165,432
Number of Placing Shares 66,396,485
GBP19.3
million
Proceeds of the Placing (before expenses) ($26 million)
Net proceeds of the Placing receivable GBP17.6
by the Company(2) million
Percentage of Enlarged Share Capital represented
by the Placing Shares 57.0%
Maximum number of Warrant Shares arising
from potential exercise of the Warrants(3) 26,558,600
Maximum number of Ordinary Shares in issue
following the Placing and maximum potential
exercise of all Warrants 143,120,517
Maximum percentage of Enlarged Share Capital,
inclusive of maximum number of Warrant
Shares, represented by the Warrant Shares(3) 18.6%
Maximum percentage of Enlarged Share Capital,
inclusive of maximum number of Warrant
Shares, represented by the New Shares(3) 64.9%
Number of Ordinary Shares in issue immediately
following the Placing 116,561,917
Market capitalisation of the Company immediately GBP33.8
following the Placing at the Issue Price million
NOTES
(1) As at 20 September 2017, being the latest practicable date
prior to the publication of the Circular.
(2) Net proceeds are stated after deduction of estimated total
expenses of approximately GBP1.6 million.
(3) Assumes all Warrants are exercised and no further issue of
shares between Admission and the date of exercise. The percentage
of the Enlarged Share Capital represented by the Warrant Shares
arising will be lower than the maximum to the extent that the
Company issues additional Ordinary Shares in the future and to the
extent that the Warrants are not exercised.
EXCHANGE RATES
The rates of exchange used throughout the Circular, unless
otherwise stated, are US$1.35: GBP1.00 and GBP0.74: US$1.00 being
the closing rates on 19 September 2017, the latest practicable date
prior to the publication of the Circular.
LETTER FROM THE CHAIRMAN
Introduction
The Company announced today that it has raised, subject to
certain conditions, GBP19.3 million ($26 million) (before
expenses), by way of a placing of 66,396,485 Units at a placing
price of 29 pence per Unit. Each Unit comprises one Placing Share
and one Warrant.
The Placing comprises a UK Placing and a US Placing. The US
Placing is being directed primarily at US Purchasers but also
includes some non-US participants, and the Placing Shares to be
issued thereunder will be admitted to trading on AIM on Admission.
N+1 Singer is acting as UK broker for the Company and MTS
Securities, LLC is acting as US placement agent. Charles Spicer,
Non-Executive Chairman of the Company, and Alex Martin, CEO of the
Company, are both participating in the Placing, which is not
underwritten.
The net proceeds of the Placing will be used primarily to
advance the Company's drug development programmes and for general
corporate purposes. The Company's initial development focus is on
PR022 for Atopic Dermatitis (AD) and PR013 for Allergic
Conjunctivitis (AC). The intent is to utilise the proceeds to enter
the next stage clinical trial for AD (a Phase IIb trial) and to
complete a Phase II proof of concept study in Acne Vulgaris, with
PR023, a topical formulation in early development. A portion of the
proceeds is also expected to be utilised to further evaluate the
Company's high concentration hypochlorous acid formulation for
application in potential pipeline candidates, which may include
psoriasis and dry eye.
Each Warrant will be exercisable into 0.40 of a Warrant Share
(rounded up to the nearest whole share for the purposes of
determining the number of Warrant Shares issuable upon exercise),
at an exercise price per Warrant Share of 58 pence, being 200% of
the Issue Price. Further particulars of the Warrants including the
conditions under which they may be exercised are provided at
paragraph 5 of this Part I and in paragraph 5 of Part III of the
Circular. The Warrants will not be separately admitted to trading
on AIM, but the new Warrant Shares will, following valid exercise
of the Warrants in accordance with the terms of the Warrant
Instrument, be admitted to trading as part of the single class of
shares admitted to trading on AIM or the relevant exchange on which
the Company's shares are traded at the time of issuance.
The UK Placing and the US Placing are conditional, inter alia,
upon the passing by the Shareholders of the Resolutions at the
General Meeting, including special resolutions which will give the
Company the required authority to dis-apply statutory pre-emption
rights in respect of the allotment of the New Shares and to
authorise the adoption of the New Articles, conditional on
Admission. Subject to all relevant conditions being satisfied (or,
if applicable, waived), it is expected that the Placing Shares will
be admitted to trading on AIM on or around 10 October 2017 (with
Warrant certificates delivered on or around 17 October 2017).
The purpose of this letter is to outline the reasons for the
Placing and to explain why the Board considers the proposals
described in the Circular to be in the best interests of the
Company and Shareholders as a whole, and why the Directors
recommend that you vote in favour of the Resolutions, as they
intend to do in respect of the Ordinary Shares owned by them, in
order to give effect to the Placing.
Background to and Reasons for the Placing
As part of a comprehensive strategic review, the Company worked
with a leading pharmaceutical consulting firm and influential key
opinion leaders to assess unmet medical needs with considerable
commercial value suitable for the development of a product pipeline
based on its proprietary immunomodulatory technology. This review
led to the Company embarking on a new strategic focus,
repositioning itself as a biopharmaceutical company. In early 2016,
the Group confirmed its drug development programmes, based on its
proprietary technology for generating hypochlorous acid at high
concentrations, were initially focused in Dermatology and
Ophthalmology. Realm's two lead candidates are PR022, for the
treatment of Atopic Dermatitis (AD), and PR013, for the treatment
of Allergic Conjunctivitis (AC). The development programme for each
lead candidate is reviewed below.
Atopic Dermatitis
In early 2017, the Company filed an Investigational New Drug
(IND) application with the US Food and Drug Administration (FDA)
for PR022. PR022 is the first candidate in a new class of
anti-inflammatory / immunomodulatory topical gels for the treatment
of AD, containing a high, stable concentration of hypochlorous acid
as the active ingredient.
The FDA has allowed the Company's IND application for a Phase II
clinical trial with PR022 for AD to proceed. The trial will be a
randomised, double-blind, vehicle-controlled, multicentre,
parallel-group study to assess the safety and efficacy of multiple
doses of PR022 in 120 adult patients with mild-to-moderate AD and
will be conducted in the US. The Company expects to begin the trial
in Q4 of this year, with the high-level readout on the study
expected in mid-2018.
Based on current timelines and plans, the Company has sufficient
cash to fund the initial Phase II study in AD. Pending results of
this study, the clinical development plan involves a Phase IIb
study similar in size and scope to the initial Phase II study to
include adolescents, which is expected to be funded with a portion
of the proceeds of the Placing.
The Company has demonstrated that PR022 is associated with a
statistically significant therapeutic effect in pre-clinical models
of AD, including down modulation of key pro-inflammatory cytokines
and reduced expression of Th2 cytokines, IL- 4, IL- 13 and IL- 31,
as well as TARC (thymus and activation regulated chemokine) and
TSLP (thymic stromal lymphopoietin), which are all linked to the
signs and symptoms of the disease. Importantly, these results are
delivered without the typical negative effects of commonly used AD
immunomodulatory or immunosuppressant drugs, including
corticosteroids, suggesting an advantageous safety profile for
PR022. Another study addressed the significant anti-itch properties
of PR022, including a possible neuronal effect, as demonstrated in
pre-clinical models of AD through research conducted by Dr.
Wolfgang Bäumer at North Carolina State University. Another study
further elucidates the molecule's unique mechanism of action as an
NF-<KAPPA>B inhibitor via I<KAPPA>B<ALPHA> as
shown by in vitro studies conducted by Realm's scientific team.
If successful in subsequent Phase II and pivotal clinical
trials, and subject to receiving regulatory approval, Realm
believes that peak year sales for PR022 could potentially reach or
exceed $1.0 billion in the US market alone, based on market
analysis and Company estimates. This includes use of the product in
the treatment of both adult and paediatric patients with
mild-to-moderate disease.
Allergic Conjunctivitis
In August of this year, the Company submitted an IND application
to the FDA for PR013, a novel potential treatment for AC. In
September, the Company announced that the FDA had permitted Realm's
IND application for PR013 to proceed into a Phase II clinical trial
for patients aged 10 years and older with AC. Based on current
timelines and plans, the Company has sufficient cash to fund this
initial Phase II study. The Phase II AC trial will be a
multi-centre, double-blind, randomised evaluation of the
effectiveness of PR013 topical ophthalmic drops compared to vehicle
for the treatment of AC using a modified Conjunctival Allergen
Challenge Model (Ora- CAC(R)) in approximately 90 patients
conducted in the US. For the past three decades, the Ora- CAC(R)
model has been the accepted standard for the successful development
of novel treatments for AC in the US. The majority of FDA approved
treatments for AC used the Ora- CAC(R) model as the basis for their
approval. If a certain level of clinical efficacy is demonstrated
in the Phase II trial, it could become one of the Company's two
pivotal trials needed for approval. Estimated peak annual sales
potential in this indication is approximately $400 million in the
US, based on market analysis and data from pre-clinical models.
PR013 is a proprietary topical formulation, in which the active
moiety is a patented high concentration of hypochlorous acid,
offering a differentiated mechanism of action for the treatment of
a significant disease. As previously announced, the Company has
shown that PR013 is associated with a statistically significant
therapeutic effect on hyperemia (ocular redness) in pre-clinical
models of AC, superior to olopatadine (0.1%) and similar to
prednisolone (1%). The Company has also shown that the active
moiety in PR013 (which is the same active moiety in PR022) is
associated with a statistically significant down modulation of key
pro-inflammatory cytokines and reduced expression of Th2 cytokines,
IL- 4, IL- 13, as well as IL- 31 and TSLP, which are associated
with itch as AC and AD have similar etiology.
Acne Vulgaris and Other Pipeline Candidates
In addition to AD and AC, the Company believes there may be
potential application for its high-concentration hypochlorous acid
formulations in other areas of Dermatology and Ophthalmology. While
current resources are focused on the AD and AC programmes, a
portion of the Placing net proceeds would be used to further
elucidate these potential pipeline applications.
Pending the completion of the Placing, an initial proof of
concept trial is planned in Acne Vulgaris. Acne Vulgaris is the
most common chronic skin condition in the US, affecting
approximately 45 million people, or 14% of the population. The
disease can range from mild to severe cystic acne and is associated
with significant physical and psychosocial effects on quality of
life, including permanent scarring, depression and anxiety. The two
main factors involved in the development of Acne Vulgaris are
clogged pores and/or the presence of bacteria, leading to
irritation, lesions and inflammation. As a result of the
anti-inflammatory and anti-bacterial elements of hypocholorus acid,
the Company believes it may offer a promising treatment for Acne
Vulgaris. PR023, a topical formulation intended for the Acne
Vulgaris trial, is in early development. It is expected that the
PR022 IND, which has been cleared by the FDA to enter the clinic in
Phase II, can be leveraged and therefore the Company intends to
file an IND for PR023 in late 2018 and enter the clinic shortly
thereafter, pending FDA clearance.
Reasons for the Placing
Whilst the Company has sufficient resources to fund its initial
Phase II studies in AD and AC, without further capital, Realm would
not be able to advance its lead programmes beyond their currently
funded horizon or further develop its pipeline. Having considered a
variety of options for funding, the Board believes that the Placing
is in the best interests of Shareholders in order to provide
further cash resources to advance its lead programmes and other
potential applications of the Company's hypochlorous acid
formulations. Having capital at the time of data readouts on its
initial AD and AC trials will allow the Board greater flexibility
when considering options for the Company's clinical development
programmes, pending the results of the studies, and to determine
the best route to creating potentially significant additional value
for Shareholders - which may be through advancing development of
current or additional pipeline candidates or potentially partnering
some or all of them. Furthermore, the introduction of new investors
into the Company via the Placing, in particular US and UK
specialist healthcare funds such as OrbiMed, which is the lead US
Purchaser, BVF Partners LP and RA Capital Management, as well as
international investment groups with a focus on the healthcare
sector such as Abingworth BioEquities Master Fund Ltd, and Polar
Capital, is expected to provide additional opportunities for
further investment. In addition, these investors with international
experience will facilitate continued discussions as to the best
exchange or exchanges on which to trade the Company's shares and
access capital to fund future clinical development.
Use of Proceeds
The net proceeds of the Placing are expected to be GBP17.6
million (US$23.8 million). The results of the initial Phase II
trials in AD and AC will ultimately inform the prioritisation of
further investments in these programmes. However, the Company
currently intends to utilise the funds to support a Phase IIb study
in AD and a proof of concept study in Acne Vulgaris. Furthermore, a
portion of the proceeds are expected to be used for general
Research and Development work related to formulations and
manufacturing enhancements along with further evaluation and
development of the Company's pipeline candidates through additional
scientific and other research and for general operating
purposes.
Principal Terms of the Placing
The Company has conditionally raised a total of approximately
GBP19.3 million ($26 million) (before expenses) by the Placing of
66,396,485 Units at the Issue Price to the Placees. Each Unit
comprises one Placing Share and one Warrant over 0.40 of a Warrant
Share. Further details of the Warrants are provided in paragraph 5
of this Part I.
The US Placing is conditional, inter alia, upon (including
certain customary conditions for a transaction of this nature):
(i) the passing of the Resolutions (except for Resolution 5);
(ii) the receipt of a certificate from the Company signed by its
Chief Executive Officer confirming that the representations and
warranties of the Company in the Purchase Agreement are true and
correct in all material respects (except those that are qualified
by materiality, which shall be true and correct in all respects) as
of the date of the Purchase Agreement and as of Admission (except
for representation and warranties that speak as of a specific date,
which shall be true and correct in all material respects (or all
respects, as the case may be) as of such date), and that all
obligations, covenants and agreements of the Company or any of its
subsidiaries required to be performed prior to Admission have been
performed;
(iii) the Company and each of the US Purchasers signing the Registration Rights Agreement;
(iv) the Company and OrbiMed signing the Relationship Agreement; and
(v) Admission.
If any of the above US conditions are not satisfied or waived
(where capable of waiver), the US Units will not be issued and all
relevant monies received from the investors in the US Placing will
be returned to them (at the risk of these investors and without
interest) as soon as possible thereafter.
The UK Placing is conditional, inter alia, upon:
(i) the passing of the Resolutions;
(ii) the Placing Agreement not having been terminated in
accordance with its terms prior to Admission;
(iii) written confirmation from the Company that, as far as it
is aware (having made reasonable enquiries of the Directors), there
is no fact, matter or circumstance existing which would allow the
US Purchasers to terminate the Purchase Agreement; and
(iv) Admission.
If any of the above UK conditions are not satisfied or waived
(where capable of waiver), the UK Units will not be issued and all
relevant monies received from the investors in the UK Placing will
be returned to them (at the risk of these investors and without
interest) as soon as possible thereafter.
The Company has agreed not to issue any Ordinary Shares and the
Directors and Dr. Christian Peters, the Company's Chief Medical
Officer, have agreed not to sell any Ordinary Shares, in each case
for 180 days from Admission, subject to customary exceptions,
including in the case of the Company the issue of Ordinary Shares
to satisfy share options and the Square 1 Warrant.
The New Shares when issued will be issued free of all liens,
charges and encumbrances and will, when issued and fully paid, rank
pari passu in all respects with the Existing Ordinary Shares.
Application will be made to the London Stock Exchange for the
admission of the Placing Shares to trading on AIM. It is expected
that Admission will occur and that dealings in the Placing Shares
will commence at 8.00 am on 10 October 2017, at which time it is
also expected that the Placing Shares will be enabled for
settlement in CREST. Upon Admission a block listing application
will be made in respect of the Warrant Shares, up to the maximum
permitted to be block listed under AIM rules and the Company's
existing blocklistings, for the purpose of admitting Warrant Shares
to trading on AIM in due course.
Shareholders in the Company who are not participating in the
Placing or are not participating in the Placing proportionate to
their existing shareholding will have their interest in the Company
significantly diluted as a consequence of the issue of the New
Shares.
Further information relating to the Placing Agreement, the
Purchase Agreement and the Placement Agent Agreement is provided in
paragraphs 3, 4 and 6 of Part III of the Circular.
Warrants
Each Warrant will be exercisable into 0.40 of a Warrant Share,
at an exercise price per Warrant Share of 58 pence, being 200% of
the Issue Price. No Placee will be issued with a Warrant to acquire
a fraction of a Warrant Share. Instead Warrants will be rounded up
to the nearest whole Warrant Share.
Each Warrant is exercisable during the period commencing on
Admission and ending on 9 April 2020. The Warrants shall be
exercised in cash. It is expected that the proceeds of such
exercise payable to the Company will be further utilised for the
development programmes of the Company from time to time and for
general corporate purposes.
The terms of the Warrants include adjustment provisions should
the Company undertake certain transactions such as share
subdivisions or consolidations as well as dividends or other
distributions payable in Ordinary Shares. In addition, if the
Company is acquired there are obligations on the acquirer to
provide appropriate alternate warrants determined in accordance
with a Black-Scholes valuation provision. Under certain
circumstances, Warrantholders can require that the acquirer of the
Company makes a cash payment to the Warrantholders in lieu of
alternate warrants based on a Black-Scholes valuation of the
Warrants at the time of the Acquisition.
A block listing application will be made to the London Stock
Exchange for that portion of the 26,558,600 Warrant Shares that is
permitted to be blocklisted under the AIM Rules and the Company's
current block listing, to be admitted to AIM in connection with the
prospective issue of the Warrant Shares. Once applied for, these
new Ordinary Shares will be issued from time to time pursuant to
the valid exercise of the Warrants.
Further information relating to the Warrants and the Warrant
Instrument is provided in paragraph 5 of Part III of the
Circular.
OrbiMed Relationship Agreement
Immediately upon Admission, OrbiMed is expected to own 21.9% of
the Enlarged Share Capital and to hold Warrants over 10,214,844
Warrant Shares. The Company and N+1 Singer will therefore enter
into the Relationship Agreement with OrbiMed to regulate its
relationships with this investor from Admission and to limit its
influence over the Group's corporate actions and activities and the
outcome of general matters pertaining to the Group. The obligations
and restrictions on OrbiMed will terminate upon OrbiMed (or any of
its associates) ceasing to control at least 15% of the Ordinary
Shares or the Ordinary Shares ceasing to admitted to AIM. Further
information relating to the Relationship Agreement is provided in
paragraph 8 of Part III of the Circular. The Relationship Agreement
will become effective on Admission.
New Articles
In order to facilitate a US Registration, if the Directors
decide to do so in the future, it is proposed that the Company will
adopt the New Articles at the General Meeting conditional upon the
relevant special resolution being passed. The New Articles add
provisions facilitating arrangements in connection with the
potential issue of American Depositary Shares (ADSs).
The Company's articles of association were last updated in 2010.
The opportunity is now being taken to also amend the articles of
association in order to reflect certain updates in applicable law
and changes to best practice.
Details of the principal changes being proposed are set out in
paragraph 9 of Part III of the Circular.
A copy of the New Articles is available on the Company's website
at www.realmtx.com. Hard copies of the New Articles (and a
comparison of changes to the existing articles of association) are
available at the Company's registered office from today until the
close of the General Meeting.
Current Trading and Prospects
The Company today issued a clinical development update and
announced its interim financial results for the six months ended 30
June 2017. As at 30 June 2017, cash and cash equivalents were $15.6
million (as at 31 December 2016: $21.4m) and the Company had no
debt.
Total cash used by the Group during the six months ended 30 June
2017 was $5.9 million, primarily driven by investments in Research
and Development, the pay-down of $1.8 million in liabilities
related to the sale of the Supermarket Retail business, which was
completed in October 2016, and general operations. During H1 2017,
Research and Development spend was focused on formulation and
clinical development related to the manufacturing development of
PR022 and PR013 and toxicology and other studies to support the
Company's two IND submissions. During H1 2016, Realm used $2.7
million of cash comprising $2.2 million for Continuing Operations
(driven by the Company's investment in Research and Development)
and the balance for Supermarket Retail/Discontinued Operations.
Royalty revenue increased to $0.6 million (H1 2016: $0.3m) due
to higher sales and contract minimums from a distribution
arrangement for the Company's Wound Care product. Other revenue was
nil in H1 2017 (H1 2016: $0.1m). Operating expenses for the
Continuing Operations* increased to $4.6 million (H1 2016: $3.1m).
This was driven by increased investments in research, formulation
and clinical development and regulatory activities in support of
the Company's two INDs of $3.0 million (H1 2016: $1.6m) and flat
spending in General and Administrative expenses of $1.6 million (H1
2016: $1.5m). EBITDA** loss for the Continuing Operations* for H1
2017 was $3.8 million (H1 2016 loss: $2.5m) following increased
investments in Research and Development.
The Company's Supermarket Retail business, presented as
Discontinued Operations, was sold on 7 October 2016. For the six
months ended 30 June 2016, Supermarket Retail revenue was $10.8
million, operating expenses were $3.5 million and EBITDA** profit
was $1.5 million.
The Company intends to use the net proceeds of the Placing to
advance its drug development programmes and for general corporate
purposes.
* Continuing Operations comprise the Group's drug development
activities, Wound Care business and the costs of operating the
Company. As at 30 June 2016 and 31 December 2016, the Company's
Supermarket Retail business was presented in the financial
statements as Discontinued Operations.
** Earnings before interest, tax, depreciation, and share based
payment expense (EBITDA).
Conditional Registration Rights
If, at its sole discretion, the Company opts to list Ordinary
Shares or ADSs for trading on a Trading Market in the United
States, the Company has agreed in the Registration Rights Agreement
to (i) file a registration statement with the US Securities and
Exchange Commission (SEC) covering the resale of the New Shares
(together, and as may be reduced by securities sold in a registered
offering or those sold or saleable pursuant to an exemption from
registration without volume or manner-of-sale restrictions, the
"Registrable Securities") pursuant to a registration statement
under the Securities Act (a "Registration Statement") within 30
days of the later of such listing or expiration or termination of
the lockup period for any firm commitment registered public
offering of such securities undertaken in conjunction with such
listing (if applicable), (ii) use its commercially reasonable
efforts to have such Registration Statement declared effective as
promptly as practicable thereafter and in any case not later than
45 days following the filing thereof (or 75 days if the SEC reviews
the Registration Statement), (iii) maintain the effectiveness of
the Registration Statement until the earlier of all securities
registered thereby ceasing to constitute Registrable Securities or
the third anniversary of the effective date of the Registration
Statement and (iv) satisfy the current public information
requirement pursuant to Rule 144(c)(1) under the Securities Act.
The Company has agreed to pay liquidated damages to holders of
Registrable Securities in the event that it fails to satisfy the
aforementioned obligations in amount up to 5% of the value thereof
paid by such holder.
Further information relating to the Registration Rights
Agreement is provided in paragraph 7 of Part III of the
Circular.
Share Options
The Company currently operates the Realm Therapeutics plc
Executive Omnibus Incentive Plan 2006 and the Realm Therapeutics
plc Executive Omnibus Incentive Plan 2016 (the "Plans"). As
permitted under the terms of the Plans and as approved by the
Directors, the number of Ordinary Shares currently under option
will be increased by a total of approximately 5,087,675 Ordinary
Shares such that each optionholder's percentage of the Enlarged
Share Capital would be the same as it is in respect of the current
Ordinary Share capital of the Company. Option exercise prices,
vesting terms and expiry dates would remain unchanged.
In light of the new technology development focus of the Company,
the Board intends to undertake a review, within the next six
months, of equity compensation plans and practices for employees
and Directors of the Company, benchmarking against similar stage
companies in the sector in which the Company operates. Particular
focus will be on target equity incentive levels and equity plan
limits with input sought from the Company's major Shareholders.
Recommendations for changes to the Company's equity plans, if any,
will be considered in due course.
Risk Factors and Additional Information
The attention of Shareholders is drawn to the risk factors set
out in Part II and the additional information set out in Part III
of the Circular. Shareholders are advised to read the whole of the
Circular and not rely solely on the summary information presented
in this letter.
General Meeting
The Directors do not currently have authority to allot all of
the New Shares and, accordingly, the Board is seeking the approval
of Shareholders to allot such shares at the General Meeting.
A notice convening the General Meeting, which is to be held at
the offices of CMS Cameron McKenna Nabarro Olswang LLP at Cannon
Place, 78 Cannon Street London EC4N 6AF at 10.00 am on 9 October
2017, is set out at the end of the Circular. At the General
Meeting, the following Resolutions will be proposed:
-- Resolution 1 which is an ordinary resolution to authorise the
Directors to allot Ordinary Shares up to an aggregate nominal
amount of GBP19,254,981, being equal to 66,396,485 Placing Shares
(i.e. the maximum number of Placing Shares available under the
Placing).
-- Resolution 2 which is an ordinary resolution to authorise the
Directors to issue Warrants to subscribe for Ordinary Shares up to
an aggregate nominal amount of GBP2,655,860, being equal to
26,558,601 Ordinary Shares (i.e. the maximum number of Ordinary
Shares that could be allotted pursuant to the exercise of the
Warrants).
-- Resolution 3 which is conditional on the passing of
resolution 1 and is a special resolution to authorise the Directors
to allot and issue 66,396,485 Placing Shares pursuant to the
Placing on a non pre-emptive basis.
-- Resolution 4 which is conditional on the passing of
resolution 2 and is a special resolution to authorise the Directors
to allot and issue Warrants to subscribe for 26,558,601 Ordinary
Shares on a non pre-emptive basis.
-- Resolution 5 which is a special resolution to adopt the New Articles.
The authorities to be granted pursuant to resolutions 1, 2, 3
and 4 shall expire at the conclusion of the Annual General Meeting
of the Company to be held in 2018 (unless renewed, varied or
revoked by the Company prior to or on that date) and shall be in
addition to the Directors' authorities to allot relevant securities
and disapply statutory pre-emption rights granted at the Company's
Annual General Meeting held on 6 June 2017.
Action to be Taken in Respect of the General Meeting
Enclosed with the Circular is a Form of Proxy for use by
Shareholders at the General Meeting. Whether or not you intend to
be present, you are requested to complete and return the Form of
Proxy in accordance with the instructions printed thereon and
either (a) deposit the completed Form of Proxy at the Company's
registrars, Equiniti, Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA, (b) lodge the completed Form of Proxy using the
CREST Proxy Voting Service or (c) lodge the completed Form of Proxy
electronically by visiting www.sharevote.co.uk, in each case so
that it is received no later than 10.00 am on 5 October 2017. For
further details please see the notes to the notice of General
Meeting set out at the end of the Circular. The appointment of a
proxy will not preclude you from attending the General Meeting and
voting in person if you wish to do so (and you are so
entitled).
Related Party Matters
The following Directors and current Shareholder, who is a
related party as a result of owning more than 10% of the Company's
outstanding share capital, have agreed to participate in the
Placing:
-- Charles Spicer has agreed to subscribe for 86,207 Units
pursuant to the Placing. Following Admission, Mr Spicer will have a
shareholding of 273,930 Ordinary Shares, representing 0.24% of the
Enlarged Share Capital.
-- Alex Martin has agreed to subscribe for 148,115 Units
pursuant to the Placing. Following Admission, Mr Martin will have a
shareholding of 248,115 Ordinary Shares, representing 0.21% of the
Enlarged Share Capital.
-- Sussex Trading Company Limited has agreed to subscribe for
827,586 Units pursuant to the Placing. Following Admission, Sussex
Trading Company Limited will have a shareholding of 5,923,880
Ordinary Shares, representing 5.08% of the Enlarged Share
Capital.
The participation of each of Charles Spicer, Alex Martin and
Sussex Trading Company Limited in the Placing is in each case a
related party transaction under AIM Rule 13 requiring consideration
by the Independent Directors having consulted with the Company's
nominated adviser.
The Independent Directors, having consulted with N+1 Singer,
consider the terms of the participation of each of Charles Spicer,
Alex Martin and Sussex Trading Company Limited to be fair and
reasonable insofar as Shareholders are concerned.
Directors' Recommendations and Voting Intentions
The Board considers the Placing to be in the best interests of
Shareholders as a whole and accordingly recommends that
Shareholders vote in favour of the Resolutions to be proposed at
the General Meeting. All the Directors with beneficial interests in
the Ordinary Shares of the Company intend to vote in favour of the
Resolutions in respect of their own beneficial holdings, amounting
to an aggregate of approximately 6.3 million Ordinary Shares
representing approximately 12.6% of the issued Ordinary Share
capital of the Company. In addition, Shareholders who are not
Directors, who in aggregate own approximately 27.5 million Ordinary
Shares representing approximately 54.8% of the issued Ordinary
Share capital of the Company have expressed their support for the
Placing and are therefore expected to vote in favour of the
Resolutions.
Yours faithfully,
Charles Spicer
Chairman
DEFINITIONS
"Abingworth" Abingworth BioEquities Master
Fund Ltd (acting through
its manager, Abingworth
LLP)
"Acquisition" in relation to the Warrants,
a transaction which, inter
alia, will result in all
or substantially all of
the Company's assets or
a majority of the Ordinary
Shares being acquired by
a third party
"Act" the Companies Act 2006
"Admission" the admission of the Placing
Shares to trading on AIM
following completion of
the Placing
"ADSs" American Depositary Shares
each of which will consist
of a fixed number of Ordinary
Shares or a right to receive
a fixed number of Ordinary
Shares
"AIM" the market of that name
operated by the London Stock
Exchange
"AIM Rules" the AIM Rules for Companies
issued by London Stock Exchange
plc (as amended from time
to time)
"BVF" BVF Partners LP
"Circular" the Circular which for the
avoidance of doubt does
not comprise a prospectus
(under the Prospectus Rules)
or an admission document
(under the AIM Rules)
"Company", "Realm" or "Group" Realm Therapeutics plc,
a company incorporated and
registered in England and
Wales under the Companies
Act 1985 with registered
number 05789798
"CREST" the system for paperless
settlement of trades in
securities operated by Euroclear
"Directors" or "Board" the directors of the Company
as at the date of the Circular,
whose names are set out
on page 6 of the Circular
"Enlarged Share Capital" the issued Ordinary Share
capital of the Company following
Admission
"Euroclear" Euroclear UK & Ireland Limited
"Exempt Placement" an exempt placement of the
Company's securities in
accordance with Regulation
D and/or Regulation S
"Existing Ordinary Shares" the Ordinary Shares in issue
at the date of the Circular
"FCA" the Financial Conduct Authority
of the United Kingdom
"FDA" the US Food and Drug Administration
"Form of Proxy" the enclosed form of proxy
for use by Shareholders
in connection with the General
Meeting
"FSMA" the Financial Services and
Markets Act 2000 (as amended)
"General Meeting" the general meeting of Shareholders
to be held at the offices
of CMS Cameron McKenna Nabarro
Olswang LLP, Cannon Place,
78 Cannon Street, London
EC4N 6AF at 10.00 am on
9 October 2017, notice of
which is set out in Part
V of the Circular, or any
reconvened meeting following
any adjournment thereof
"Group" the Company and its subsidiaries
"IND" an Investigational New Drug
application
"Independent Directors" the Directors independent
of the transaction in question
"Issue Price" 29 pence per Unit which
is comprised of 28 pence
for each Placing Share and
1 penny for each Warrant
"London Stock Exchange" London Stock Exchange plc
"Market Abuse Regulation" Market Abuse Regulation
(EU 596/2014)
"MTS Securities, LLC" MTS Securities, LLC, the
Company's placement agent
based within the US in accordance
with Regulation D
"N+1 Singer" Nplus1 Singer Advisory LLP,
together with its associate
Nplus1 Singer Capital Markets
Limited, acting as UK broker
to the Placing and as nominated
adviser and UK broker to
the Company
"New Articles" the new articles of association
of the Company proposed
to be adopted at the General
Meeting
"New Shares" the Placing Shares and the
Warrant Shares (to the extent
the Warrants are exercised)
"Official List" the official list of the
FCA pursuant to Part VI
of FSMA, as amended from
time to time
"OrbiMed" OrbiMed Private Investments
VI, LP (acting through its
general partner, OrbiMed
Capital GP VI LLC, acting
through its managing member,
OrbiMed Advisors LLC)
"Ordinary Shares" ordinary shares of 10 pence
each in the share capital
of the Company
"Placees" the investors subscribing
for Units
"Placement Agent Agreement" the placement agent engagement
relating to the US Placing
between the Company and
MTS Securities, LLC, a summary
of which is included in
paragraph 6 of Part III
of the Circular
"Placing" the conditional placing
of the Units on the terms
and subject to the conditions
of the Placing Agreement
"Placing Agreement" the agreement relating to
the Placing entered into
between the Company and
N+1 Singer a summary of
which is included in paragraph
3 of Part III of the Circular
"Placing Shares" up to 66,396,485 new Ordinary
Shares to be issued pursuant
to the Placing (excluding
the Warrant Shares)
"Prospectus Rules" the rules made under Part
VI of FSMA in relation to
offers of securities to
the public and admission
of securities to trading
on a regulated market
"Purchase Agreement" the securities purchase
agreement relating to the
US Placing entered into
between the Company and
the US Purchasers, a summary
of which is included in
paragraph 4 of Part III
of the Circular
"Registration Rights Agreement" the registration rights
agreement, relating to rights
arising following a potential
US Registration, between
the Company and the US Purchasers,
a summary of which is included
in paragraph 7 of Part III
of the Circular
"Regulation D" Regulation D under the Securities
Act
"Regulation S" Regulation S under the Securities
Act
"Regulatory Information has the meaning given in
Service" the AIM Rules
"Relationship Agreement" the relationship agreement
to be entered into between
the Company, N+1 Singer
and OrbiMed to regulate
the Company's relationship
with OrbiMed, a summary
of which is included in
paragraph 8 of Part III
of the Circular
"Resolutions" the ordinary resolutions
and special resolutions
to be proposed at the General
Meeting, as set out in the
notice of General Meeting
in Part V of the Circular
"Restricted Jurisdiction" United States, Canada, Australia,
Japan or the Republic of
South Africa and any other
jurisdiction where the extension
or availability of the Placing
or distribution of the Circular
would breach any applicable
law
"SEC" U.S. Securities and Exchange
Commission
"Securities Act" the US Securities Act 1933,
as amended
"Shareholders" the holders of Ordinary
Shares
"Square 1 Bank" Square 1 Bank, a company
incorporated and registered
in North Carolina, United
States which entered into
a credit agreement with
the Company in December
2013
"Square 1 Warrant" a warrant instrument issued
by the Company in December
2013 pursuant to which Square
1 received 154,229 warrants
to subscribe for Ordinary
Shares
"Trading Market" whichever of the New York
Stock Exchange, the NYSE
American, the NASDAQ Global
Select Market, the NASDAQ
Global Market or the NASDAQ
Capital Market on which
the Ordinary Shares or ADSs
are listed or quoted for
trading upon the US Registration
"UK" or "United Kingdom" the United Kingdom of Great
Britain and Northern Ireland
"UK Placing" the conditional placing
of UK Units by N+1 Singer
(which, for the avoidance
of doubt, does not include
the US Units to be subscribed
for by the US Purchasers)
on the terms and subject
to the conditions of the
Placing Agreement
"UK Units" Units to be issued under
the UK Placing
"Unit" a unit comprising one Placing
Share and one Warrant
"US" or "United States" the United States of America,
its territories and possessions,
any State of the United
States and the District
of Columbia
"US Placing" the conditional placing
of US Units by MTS Securities,
LLC (which, for the avoidance
of doubt, does not include
the UK Units to be placed
by N+1 Singer under the
Placing Agreement) on the
terms and subject to the
conditions of the Purchase
Agreement and the Placement
Agent Agreement
"US Purchasers" the US and certain non-US
persons acquiring Units,
the US persons all being
"accredited investors" within
the meaning of Rule 501(a)
of Regulation D
"US Registration" the possible registration
by the Company, at its sole
discretion, under the Securities
Act and the rules and regulations
promulgated thereunder and
applicable state securities
laws of Ordinary Shares
or ADSs on a Trading Market
"US Units" Units to be issued under
the US Placing
"Warrantholders" the holders of the Warrants,
each being referred to as
a "Warrantholder"
"Warrant Instrument" the warrant instrument to
be entered into in respect
of the Warrants, a summary
of which is included in
paragraph 5 of Part III
of the Circular
"Warrant Shares" up to 26,558,600 new Ordinary
Shares which are the subject
of the exercise of the Warrants
"Warrants" the 66,396,485 warrants
to subscribe for 0.40 of
an Ordinary Share each,
constituted by the Warrant
Instrument as more particularly
described in paragraph 5
of Part I of the Circular
and paragraph 5 of Part
III of the Circular
All references in the Circular to "GBP", "pence" or "p" are to
the lawful currency of the United Kingdom, all references to "US$"
or "$" are to the lawful currency of the United States.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEMMGZLNMLGNZM
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September 22, 2017 02:00 ET (06:00 GMT)
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