RNS No 7985m
THERAPEUTIC ANTIBODIES INC
26th October 1998
Therapeutic Antibodies Inc
("Therapeutic Antibodies" or the "Company" or the "Group")
#11.5 million refinancing involving the issue of 28,690,561 new shares
The directors of Therapeutic Antibodies (the "Directors") announce an #11.5
million refinancing ("Refinancing") involving the issue of 28,690,561 new
shares of common stock of the Company ("New Shares"). The refinancing will
consist of:
* the placing of 21,300,000 New Shares (the "Placing") at a price of 40p per
share to raise #7.5 million net of expenses, which has been fully
underwritten by Panmure Gordon & Co. Limited ("Panmure Gordon");
* the conversion of US$2.9 million of loan notes into 4,394,869 New Shares;
and
* the conversion of US$2.0 million of Series A Preferred Stock into 2,995,692
New Shares.
The Placing is conditional upon the approval by shareholders of an increase in
the authorised share capital of the Company, which is to be proposed at a
special meeting of shareholders to be held on 6 November 1998. Application
has been made to the London Stock Exchange for the admission to the Official
List of all of the New Shares being issued in connection with the refinancing.
It is expected that dealings in the New Shares will commence on 9 November
1998. Admission to the Official List of all the New Shares to be issued has
been sponsored by The British Linen Bank Limited.
Stuart Wallis, Chairman said:
"I am very pleased with the result of the refinancing despite the very
difficult market conditions in which we find ourselves and I believe that this
fund raising will prove to be a turning point in the Company's history. Given
the strength of our technology and product portfolio and having seen the
capability of the management team, I look forward to the future with
confidence".
26th October 1998
Contacts:
Therapeutic Antibodies
Stuart Wallis, Chairman
0171 553 1483 0171 606 8637
Andrew Heath, Chief Executive
0171 606 8637
The Maitland Consultancy
William Clutterbuck/Laura Frost
0171 379 5151
Panmure Gordon & Co. Limited
Christopher Collins
0171 638 4010
The British Linen Bank
Anthony Brown
0171 710 8800
INTRODUCTION
The Directors announce an #11.5 million refinancing of the Group involving the
issue of 28,690,561 New Shares. The refinancing will consist of the
placing of 21,300,000 New Shares at a price of 40p per share and the
conversion of US$2.9 million loan notes and Series A Preferred Stock issued by
the Company into 7,390,561 New Shares at 40p per share and the deferment of
the repayment of a loan of US$0.5 million until 31 December 2000.
The Placing will raise approximately #7.5 million, net of expenses and has
been fully underwritten by Panmure Gordon and sponsored by The British Linen
Bank. In addition, the Group has entered into agreements with the holders of
US$2.0 million of the Subordinated Promissory Notes issued between June and
August 1998 ("1998 Notes") to convert these, together with US$82,552 of
accrued interest, into 3,068,888 New Shares at the Placing Price, and is
negotiating with two officers of the Company to convert US$375,000 of the 1998
Notes with accrued interest of US$24,811 into 589,170 New Shares at the
Placing Price and US$0.5 million of US$1 million of loan notes issued by the
Company in 1996 into 736,811 New Shares at the Placing Price. The repayment
of the remaining US$0.5 million will be deferred until 31 December 2000.
Furthermore, Panmure Gordon has conditionally exercised its conversion rights
over the US$2.0 million Series A Preferred Stock, issued to it in September
1998, to convert it into 2,995,692 New Shares at the Placing Price. Under the
terms of the Series A Preferred Stock, upon such conversion, Panmure Gordan
will receive a warrant to purchase an additional 200,000 Shares, exercisable
at the Placing Price.
The proceeds of the Placing will allow the Group to continue in operation and
will be used primarily to fund the ongoing development of the Group's
products, and to repay the remaining US$1.65 million of the 1998 Notes. The
Directors believe that following this fundraising the Group will have
sufficient funds to reach the commercial launch of several of its products,
and accordingly bring the Group to the point at which its revenues can sustain
ongoing product development. The Group is dependent, in particular, on
reaching a substantial proportion of its development milestones and/or
entering into commercial collaborations in order to reach this point, both of
which the Directors believe will be achieved.
In order for the Placing to proceed, it is necessary to obtain Shareholders'
approval to increase the authorised share capital of the Company which will be
sought at a Special Meeting of Shareholders to be convened on 6 November 1998.
A proxy statement is today being sent to all shareholders on the register on
16 September 1998.
Therapeutic Antibodies is a biopharmaceutical group specialising in the
research, development and production of polyclonal antibodies for the
treatment of disease and life threatening conditions for which satisfactory
therapies have, generally, not previously existed. Therapeutic Antibodies has
developed systems for the production and purification of polyclonal antibody
products.
The Group has undergone a period of restructuring over the last few months
following a strategic review of its business. Dr Andrew Heath was appointed as
Chief Executive Officer and Vice Chairman in February 1998. Dr Heath has
significant commercial experience in the pharmaceutical industry, with
previous positions at Glaxo plc and Astra AB. On 1 September, 1998 Mr Stuart
Wallis was appointed as non-executive Chairman. Mr Wallis has extensive
experience in building shareholder value. He was previously CEO of the
pharmaceutical group Fisons and has held a number of senior management and
board positions in a range of industries. Mr Wallis' appointment coincided
with the restructuring of the Company's Board.
As part of the strategic review the Directors consider that moving the Group's
ultimate holding company from a US domicile to a UK domicile will provide a
benefit for Shareholders as a whole and consequently intend to undertake a
corporate reorganisation. Further details are set out below.
The Company has also completed a strategic review of its product development,
research and other activities. This has resulted in a more focused product
portfolio. Through its previous research and development and associated
investment the Group has a highly developed and flexible technology platform
and advanced production facilities which have together been used to develop a
range of products. The strategic review has focused on using these strengths
to target near term and mid term goals. In the near term, Therapeutic
Antibodies' resources are primarily focused on CroTAb and the Searle Project,
from which the Directors anticipate revenues in 1999, and on DigiTAb, which
the Directors expect to be marketed in 2000. The Directors believe that these
products will produce significant revenues for Therapeutic Antibodies by early
2001. In the mid term, the Directors anticipate the launch of TriTAb and the
Company's anti-TNF antibody, CytoTAb, for the first of several indications.
Focusing on Therapeutic Antibodies' development program has led to the
cessation of some basic research activities and certain clinical trial
programs including research into the application of CytoTAb to treat the
symptoms of sepsis syndrome. This refined focus will lead to a reduction in
the Group's cash outflow and the introduction of new indications for CytoTAb.
The Directors believe that these new indications could lead to an eventual
partnership with a major pharmaceutical company.
In October 1997 Altana Inc. ("Altana") and Therapeutic Antibodies entered into
an agreement whereby, upon receipt of regulatory approvals, Altana will market
three of Therapeutic Antibodies' products, CroTAb, DigiTAb and TriTAb in the
US. A Product License Application ("PLA") for CroTAb, the Group's rattlesnake
antivenom, was submitted to the FDA in April 1998 and the Directors anticipate
that a US product licence should be approved in mid-1999. Subject to such
approval, the Directors expect that CroTAb will be launched by Altana during
the third quarter of 1999.
In May 1998, G.D. Searle & Co. ("Searle") entered into a collaboration and
production agreement with Therapeutic Antibodies for the production of a
polyclonal antibody product against an unnamed target molecule specified by
Searle. The Company was selected by Searle from a broad field of antibody
speciality companies. Therapeutic Antibodies will be responsible for the
development, manufacture and FDA registration of the product. The Directors
are highly encouraged by the endorsement Searle has made in Therapeutic
Antibodies' platform technology, product development and manufacturing
capabilities.
PROGRESS SINCE THE FLOTATION
Since its admission to the Official List in July 1996 the Group has achieved a
number of significant clinical, commercial and strategic milestones:
* Appointment of Global Operations Director, October 1998 - James Christie
joined the senior management team as Director of Global Operations reporting
directly to Andrew Heath. Mr Christie joins following more than three years as
Director of Operations at Centocor B.V.
* Subscription of US$2 million of Series A Preferred Stock by Panmure Gordon,
September 1998 - Panmure Gordon subscribed for US$2 million of Series A
Preferred Stock in order to cover the Company's short-term financial
requirements whilst the Placing is completed.
* Appointment of new Chairman and Board restructuring, September 1998 - Stuart
Wallis joined the Company as non-executive Chairman. Mr Wallis has held a
number of senior management and board positions in a range of industries and
has acted as a consultant to the Company since June 1998. The Company also
announced the restructuring of its Board under which seven directors resigned.
* FDA acceptance of CroTAb submission, June 1998 - The FDA accepted for review
Therapeutic Antibodies' PLA and Establishment Licence Application ("ELA") for
CroTAb.
* Execution of Searle collaboration agreement, May 1998 - Therapeutic
Antibodies signed a collaboration agreement with Searle for the
identification, development and commercial launch of a new antibody based
drug. Under the agreement Searle will pay the Company US$8 million subject to
the achievement of certain milestones together with revenue on the eventual
supply of products. Following commercial launch, Therapeutic Antibodies will
be responsible for the ongoing supply of product and will receive a profit
share, while Searle will hold worldwide rights to marketing, distribution and
sales.
* Commencement of TriTAb clinical trials, February 1998 - A Phase I/II
clinical study began under an Investigator IND for TriTAb, the results of
which are expected by mid 1999.
* Appointment of new CEO, February 1998 - Andrew Heath, MD PhD joined the
Company as Chief Executive Officer and Vice Chairman. Dr Heath has
considerable experience in the pharmaceutical industry including expertise in
the areas of product development and marketing.
* CytoTAb in acute graft versus host disease, January 1998 - The FDA cleared
an Investigator IND enabling the commencement of a pilot study of CytoTAb for
the prevention of acute Graft versus Host disease following marrow or blood
stem cell transplants.
* Completion of DigiTAb pivotal trial enrolment, December 1997 - The Company
completed pivotal trial enrolment in a study comparing DigiTAb to the
commercially available product, Digibind.
* Execution of Altana marketing and distribution agreement, October 1997 -
Therapeutic Antibodies and Altana signed a marketing and distribution
agreement covering rights in the US to CroTAb, DigiTAb and TriTAb. Altana
agreed to pay Therapeutic Antibodies up to US$10 million upon the achievement
of certain milestones culminating with FDA approvals of the three products. In
addition, assuming such FDA approvals are granted, the Directors estimate that
under the terms of the agreement Altana will pay the Company US$13 million in
royalties in respect of the US distribution rights to CroTAb, DigiTAb and
TriTAb during the first three years after the respective products are first
sold.
* Completion of CytoTAb Severe Malaria Phase I Trial, March 1997 - The Company
announced the completion of its Phase I clinical trial in severe malaria. A
Phase II study for this indication commenced in August 1997 and a report is
expected by mid 1999.
* Execution of FH Faulding Malaria Agreement, October 1996 - FH Faulding
entered into an agreement with the Company to provide financial support for
clinical trials studying CytoTAb for the treatment of cerebral malaria.
Additionally, FH Faulding agreed to seek registration and marketing approvals
for this indication in Thailand.
REVISED STRATEGIC FOCUS
The Company has carried out a strategic review of its business and implemented
a number of important changes commencing with the appointment of Dr Andrew
Heath in February 1998. The Board recognised that the Company required a Chief
Executive with commercial experience in the pharmaceutical industry to take
the Group forward as it approached commercial launch of its first major
product, CroTAb, and to manage ongoing research and development. Dr Heath, a
native of England, holds a degree in pharmacology from the University of
London and an MD and a PhD from Sweden's Gothenburg University. He has
considerable experience in the pharmaceutical industry with Glaxo plc and
Astra USA Inc. At Astra he was responsible for more than 650 sales and
marketing professionals in the US as Vice President Marketing and Sales. He
moved to Therapeutic Antibodies from the position of CEO at AeroGen Inc, a
privately held drug delivery company.
On 1 September, 1998 Stuart M. Wallis accepted the appointment as
non-executive Chairman of the Company. Mr Wallis, age 53, has held a number of
senior management and board positions in the publishing, packaging and
pharmaceutical industries. He has been instrumental in revitalising companies
and significantly increasing shareholder value. Mr Wallis currently holds a
number of public company chairmanships including Seton Scholl Healthcare plc,
John Mansfield Group plc, a timber business, LLP Group plc, a publisher and
Yorkshire Group plc, a chemical producer. In 1994, Mr Wallis was appointed CEO
of the pharmaceutical group Fisons, which was sold fourteen months following
his appointment with an increase in market capitalisation from #700 million to
#1.8 billion. In December 1995 Mr Wallis led the buyout of the LLP Group plc
for #82.5 million from Lloyd's of London.
Mr Wallis' appointment to the Company's Board of Directors coincided with a
restructuring of the Board, which is expected to continue with the appointment
of a new Finance Director who will be based in London.
The strategic review has also focused on the Group's research and development
activities with the objectives of targeting near and mid term commercially
viable opportunities, managing its cash resources by reducing the cash outflow
and increasing contract and product revenue.
As a part of the refocusing of the Group and the Board restructuring, the
Company intends to sell certain non-essential assets associated with the
Group's UK farming activities as well as the Group's contract antiserum
business (for research and diagnostic purposes) to a company which is majority
owned by Professor John Landon, a former Director. The Directors anticipate
that the agreement will include a licence to use the Company's proprietary
technology for diagnostic and research contract antiserum sales, as well as
for the development of certain therapeutic products, although the Directors
expect that the Company will retain all commercial rights to such products.
Once the terms of the disposal are agreed, the Directors intend to circulate a
proxy statement to Shareholders convening a Special Shareholder Meeting at
which Shareholder approval for this transaction will be sought.
As a result of the strategic review, Therapeutic Antibodies' Phase IIb
clinical trial in sepsis syndrome was discontinued because of the Directors'
perception of the commercial risk which it posed to the Company. The nature of
the progression of sepsis syndrome and patient's diagnosis is such that the
number of patients required to prove efficacy must be very large. Over the
last few years, and in particular since the Company's flotation, there have
been several notable failures by other companies of products designed to treat
sepsis syndrome. As a result, potential marketing partners, in particular
major pharmaceutical companies, have become reluctant to enter into licensing
agreements in this area without pivotal clinical trial data proving efficacy.
Providing this efficacy data would require a very substantial financial
investment by the Company in a large scale Phase III clinical trial. The Board
considered that continuing to pursue this particular application of CytoTAb no
longer represented an appropriate use of the Company's capital at this stage
of the Company's development and therefore discontinued the trial. The data
from the patients enrolled will be analysed and the results of the trial will
be available by early 1999. Therapeutic Antibodies would welcome a
collaboration agreement in relation to the application of CytoTAb to sepsis
syndrome if a major pharmaceutical company was prepared to fund further
trials, although there are none in contemplation at present, and the Company
is not actively seeking such agreement.
Through the sepsis syndrome and other trials, the Group has developed a
significant understanding of the efficacy of CytoTAb in neutralising tumour
necrosis factor alpha ("TNF"). This has enabled the Group to carry out further
research to explore applications of CytoTAb in relation to other indications
including Crohn's disease, bypass surgery, acute graft versus host disease,
and cerebral malaria. Each of these indications is described in greater detail
below. The Directors believe that research and development efforts in these
indications would constitute a more appropriate use of the Group's resources.
Clinical trial results in initial studies should be available relatively
quickly since it is anticipated that small numbers of patients will be
required to provide proof of concept because the patient populations are
relatively homogenous and the onset of elevated concentrations of TNF can be
readily predicted. Results from the studies could be used to attract
additional strategic partners to fund further clinical development, marketing
and distribution of products for these indications.
The Directors intend to continue to pursue the Group's remaining development
programmes, with additional emphasis being given to bringing CroTAb, DigiTAb,
TriTAb and the Searle product to market as rapidly as possible.
PRODUCT DEVELOPMENT PORTFOLIO
CROTAb CroTAb is the Group's product for the treatment of bites from North
American crotalids (such as the rattlesnake). Clinical trials of CroTAb were
completed in 1997 and the Company submitted its PLA and ELA to the FDA in
April 1998. In June 1998 the FDA accepted the applications for filing and the
product will receive a standard twelve month review by the FDA. Consequently,
the Directors believe that this product should be approved for sales in mid
1999. Under the Altana Agreement, Altana will distribute this product within
the US, primarily to hospital emergency rooms. In 1994 CroTAb was granted
orphan drug status by the FDA and will therefore receive 7 years of marketing
exclusivity if the product licence application is approved.
Based on preclinical tests conducted by the Company, CroTAb has been shown to
be, on average, over 5 times more potent on a weight for weight basis than the
existing commercially available equine derived antivenom. Whilst the Group has
commenced but not completed comparative clinical studies of CroTAb with the
marketed product, the Directors believe that the safety profile will be seen
as superior to the existing antivenom, which has a high incidence of serious
side-effects. Based on the Company's experience with ViperaTAb and the nature
of the product currently available, the Directors consider that CroTAb may be
able to achieve significant market share.
DIGITAb - Therapeutic Antibodies has developed DigiTAb for treating digoxin
intoxication. Digoxin is the most commonly prescribed form of digitalis which
has been in use worldwide for many years to treat a range of cardiac
conditions. However, digoxin has a narrow therapeutic range and can cause
life-threatening toxicity as a result of both acute overdose and chronic
poisoning when taken in excess. The Directors estimate that 7,500 cases of
digoxin toxicity occur annually in the US and Europe with the majority in the
US.
In 1986, Wellcome introduced a specific sheep-derived polyclonal antibody
product, Digibind, to treat life-threatening digoxin intoxication. DigiTAb
will therefore be competing directly with a similar established product in
this market.
Therapeutic Antibodies completed enrolment for the pivotal clinical study for
DigiTAb in December 1997, being a study in normal volunteers comparing DigiTAb
to Digibind. The Directors expect that the Company will announce the results
from this study in the last quarter of 1998. The data from this study, in
conjunction with data obtained from an ongoing study of DigiTAb in overdose
patients in the US and Europe, is expected to be submitted to the FDA in a PLA
by mid 1999. This product will be marketed in the US under the Altana
Agreement.
TRITAb - Therapeutic Antibodies is developing TriTAb to treat tricyclic
antidepressant ("TCA") toxicity. TCAs, a family of structurally related
compounds used in the treatment of depression, are one of the main causes of
poisoning by drug overdose in the US and Europe. So far as the Directors are
aware, no specific antidote for TCA poisoning is currently commercially
available. Despite the introduction of safer non-TCA antidepressant drugs,
TCAs, as a group, continue to hold a large share of the antidepressant market.
TCAs are typically generic, and, consequently, are much less expensive than
the newer antidepressants. As a result, the Directors believe that TCAs are
likely to remain in use for some time. The Directors estimate that TCA
poisoning cases total 60,000 per year in the US and in Europe.
On the basis that preclinical tests demonstrated TriTAb to be effective in
reversing TCA toxicity, a Phase I/II clinical study was initiated under an
Investigator IND by Dr Richard Dart of the Rocky Mountain Poison and Drug
Center. The first overdose patient in this pilot study was treated in June
1998 and patient enrolment continues. The results of this study are expected
to be announced by mid 1999. The Company plans to submit an IND to the FDA and
expects to commence a Phase II/III clinical study in overdose patients by mid
1999. This product will also be marketed in the US under the Altana Agreement
and will be targeted to hospital emergency rooms. The Directors are not aware
of any other competitive commercial efforts in this field and therefore
believe that, subject to receipt of FDA approval, TriTAb should be able to
achieve a substantial penetration of this market.
SEARLE PROJECT - In May 1998, Searle entered into a research collaboration
with the Company for the development, production and distribution of a new
antibody based drug for a target indication specified by Searle. The target
indication has not been publicly disclosed. Therapeutic Antibodies will be
responsible for the development, manufacture and FDA registration of a
polyclonal antibody for the target indication. The Directors consider this to
be a significant milestone for Therapeutic Antibodies, as the Company was
selected from a broad field of antibody speciality companies as having the
expertise, speed and capability for the development and commercial launch of
this antibody product.
CYTOTAb - CytoTAb has been shown to be safe and effective in neutralising TNF
through work carried out to date by the Company. The Directors believe that
the safety profile of CytoTAb will be further documented from the data of the
81 patients enrolled in the Phase IIb sepsis study. It is expected that the
results of this study will be available by early 1999 and will provide a
greater understanding of the clinical effectiveness of CytoTAb. This study was
closed in June 1998 prior to completion of enrolment, following a strategic
review of the Company's CytoTAb programme.
The Directors believe that research and development efforts in the following
disorders would constitute a more appropriate use of the Group's resources.
Clinical trial results in initial studies could be available relatively
quickly since it is anticipated that small numbers of patients will be
required to provide proof of concept because the patient populations are
relatively homogenous and the onset of elevated concentrations of TNF can be
readily predicted. The Company is now pursuing a combination of existing
studies in CytoTAb along with several new indications, which are described
below:
* Cerebral Malaria - Severe cerebral malaria is associated with mortality and
elevated concentrations of TNF. Therapeutic Antibodies is investigating the
use of CytoTAb in mitigating the morbidity and mortality and the possible
complications of treating cerebral malaria. Therapeutic Antibodies completed
its Phase I study in June 1997 conducted in 28 severely ill patients suffering
from malaria. This study met its objectives and demonstrated a reduction in
the levels of TNF. In early 1998, the Company launched an expanded 100 patient
Phase II clinical trial in Thailand. Enrolment was completed in September 1998
and results of this study are expected by mid 1999.
* Bypass Surgery - There is data to indicate that TNF levels in the plasma are
elevated in patients undergoing cardiac surgery involving cardiopulmonary
bypass. This is due to the tendency of the cardiac bypass machine to induce an
inflammatory response. This response may contribute to cardiac dysfunction
leading to increased post surgical morbidity and mortality. The Directors
believe that CytoTAb could reduce the incidence of these surgical side
effects, making the procedure safer and less expensive. The Company is
planning a pilot clinical study in patients undergoing the coronary artery
bypass graft ("CABG") procedure with Dr George Letsou and Dr Douglas Mann at
Baylor College of Medicine in Houston, Texas, who will submit an Investigator
IND this year and upon approval from the FDA, will begin enrolment of
patients. The Directors estimate that approximately 365,000 patients per year
in the US and 185,000 patients per year in Europe undergo the CABG procedure,
during which cardiopulmonary bypass is required.
* Crohn's Disease - The Company is currently planning a Phase I study of
CytoTAb in Crohn's disease. The symptoms of this disease include abdominal
pain, frequent and protracted diarrhoea, fever, malaise, chronic fatigue and
signs and symptoms of nutritional deficiency. It is estimated that there are
at least 400,000 people with this disease in the US and Europe. The
relationship of TNF to the clinical complications of this disease has recently
been recognised with the FDA's approval of Centocor Inc.'s product Remicade.
This product is a monoclonal antibody and was recommended by the FDA to be
restricted initially to short term use only. The Directors believe that
CytoTAb will result in a greater neutralisation of TNF, and will have a
similar safety profile. The Company plans to submit an IND to the FDA later
this year, and hopes to begin the Phase I study in the first quarter of 1999.
* Acute graft versus host disease - In January 1998 the FDA cleared an
Investigator IND that was submitted by the University of Texas, M.D. Anderson
Cancer Center in Houston, Texas, to carry out a pilot study of CytoTAb in
acute graft versus host disease. The intention is to use CytoTAb to counteract
the cytokine storm associated with an immune reaction in some cancer patients
who receive bone marrow transplants. The data from a subset of patients
enrolled in this study is currently being analysed and further work will be
dependent upon positive results. However, progress will be dependent upon
other CytoTAb programmes which the Directors believe have a greater commercial
potential in the short term and which therefore carry a greater priority for
the Group's capital and resources. The Directors believe this indication
represents an attractive niche market, given that no proven alternative
treatments are commercially available.
POLONGATAb - PolongaTAb is an antivenom for the Sri Lankan Daboia russelli
("Russell's viper"). The pivotal clinical study for this product was completed
in December 1997 and the Company is currently working in collaboration with FH
Faulding to begin preparation of the registration application for the approval
of this product in certain Southeast Asian markets.
LAUNCHED PRODUCTS
VIPERATAb - Therapeutic Antibodies produces and sells ViperaTAb to treat
bites from the European Vipera berus ("common adder") snake. This product is
currently being sold on a named patient basis in Sweden, Norway, Finland and
Denmark under an agreement with Swedish Orphan. Furthermore, the Group
supplies ViperaTAb to the US Department of Defense. ViperaTAb has been shown
to be over eight times more potent on a weight for weight basis than an
equine-derived antivenom available in Europe. ViperaTAb rapidly achieved a
market share of 80% in Sweden following its launch in 1995. The Directors
intend to pursue extension of the product's approval throughout the European
Union when the Group's resources permit.
ECHITAb - EchiTAb is sold by Therapeutic Antibodies as an antivenom against
the West African Echis ocellatus ("carpet viper") snake. Therapeutic
Antibodies has entered into an agreement with the Federal Ministry of Health
on behalf of the Nigerian Government under which the Nigerian Government has
contributed to the costs of development and clinical trials of EchiTAb. The
Company has supplied the Nigerian Government with this product since 1996.
INTELLECTUAL PROPERTY
Therapeutic Antibodies' policy is to rigorously protect and defend the
intellectual property associated with its technology and products. The Company
seeks and enforces patents and trade mark registrations whenever the Directors
feel appropriate. Therapeutic Antibodies' patent attorneys conduct regular
searches for third party patents and patent applications which may impinge
upon Therapeutic Antibodies' activities, following which the Group takes
appropriate steps to protect its competitive position.
The Directors believe that sufficient steps have been taken to ensure that
trade secrets, such as animal husbandry techniques and processes unique to
large-scale production of polyclonal antibodies, are protected and remain
confidential.
Therapeutic Antibodies has refined the production and purification of
polyclonal antibodies and has developed extensive proprietary knowledge in
this area, combining scientific, veterinary and large-volume processing
skills. Therapeutic Antibodies has applied for and in certain cases has been
granted patents which cover several key aspects of the relevant techniques.
Obtaining patent protection involves disclosure to the public (and
competitors) of the invention which is the subject of the patent. Therapeutic
Antibodies believes that the publication of certain key parts of its
production process would be detrimental to its business and has therefore
taken the decision to protect such processes as confidential know-how.
Therapeutic Antibodies has implemented policies and procedures designed to
protect such proprietary information.
Patents
Where appropriate Therapeutic Antibodies is pursuing a multinational patent
strategy for the protection of intellectual property associated with its
technology and products. Therapeutic Antibodies holds the following granted
patents:
* a US patent in respect of an antidote to poisoning with tricyclic
antidepressants (no international equivalent);
* European, UK, Australian and Russian Federation patents on the use of mixed
monospecific antivenoms;
* a US patent on the isolation and purification of Fab fragments;
* European, UK, Australian and New Zealand patents with claims to Fab
fragments of anti-TNF antibodies for use in medicine; and,
* a US patent for a method of preparing Fab fragments from whole blood in a
closed sterile environment.
Therapeutic Antibodies is pursuing the following patent applications:
* various steps in the process of production and purification of polyclonal
antibodies;
* the use of mixed monospecific antivenoms in other territories (including the
US);
* the superiority of anti-TNF Fab fragments relative to other antibody
fragments or intact antibodies; and,
* the superiority of Fab fragments to antivenoms relative to other antibody
fragments or intact antibodies.
Trademarks
The Directors are conscious of the importance of branding its healthcare
products on a worldwide basis and consider trademarks provide a valuable
commercial asset. Where appropriate, Therapeutic Antibodies has pursued a
multi-national trademark strategy and has:
* registrations of the TAb mark in the US and various other countries;
* registrations of the CytoTAb, ViperaTAb, DigiTAb and TriTAb marks in various
countries worldwide; and
* a registration of the CroTAb mark in the US.
Attempts to register the DigiTAb mark in certain territories such as Germany,
Denmark, Canada and Australia were unsuccessful due to pre-existing similar
registrations. Oppositions have been filed against applications to register
TAb in the United Kingdom and Japan. The Company has responded to these
oppositions but no decision has yet been made by the respective trademark
registries.
Third Party Rights
There are two European patents, both in the name of Rockefeller University,
which may affect CytoTAb (patent numbers EPO 101 681B and EPO 212 489).
Opposition to these European patents has been filed by the Company on various
grounds including lack of patentability. If valid as granted, these European
patents could be used to attempt to limit Therapeutic Antibodies' freedom to
use anti-TNF antibodies, and therefore Therapeutic Antibodies' ability to
market CytoTAb in certain European countries. The provisional (although
non-binding) opinions of the Oppositions Division of the EPO in relation to
the oppositions are favourable to Therapeutic Antibodies being of the view
that neither patent is valid. The Company will continue to oppose the patents
until a final decision is reached, expected in the case of the first patent by
December 1998 and in the case of the second patent by the end of 1999.
Patent rights related to those European patents referred to in the previous
paragraph also exist in the US, Canada, Australia and Japan. The Directors are
of the opinion that, due to the precise nature of these patent rights in
Australia and the US, commercial exploitation of CytoTAb in these territories
will not infringe any valid claims of these patents. Therapeutic Antibodies
has itself applied for specific patents covering the use of Fab fragments of
anti-TNF antibodies, and the preparation techniques for the antisera.
A European patent has recently been granted which includes claims relating to
the purification of antivenoms and the resulting purified antivenoms and
which, if valid, could be used to attempt to limit exploitation of Therapeutic
Antibodies' antivenom products. The Company has been advised by one of its
patent attorneys, Carpmael & Ransford, that to the extent it is alleged any of
the Company's mixed monospecific antivenom products fall within the scope of
the claims of the patent, there are reasonable grounds to argue the claims are
invalid. The Company therefore intends to oppose the patent.
A broadly equivalent patent has been granted in Australia and the US but the
claims of these patents are more limited than those of the European patent.
The Directors have been advised and are confident that exploitation of
Therapeutic Antibodies' antivenom products in these territories will not
infringe the granted patent.
PRINCIPAL LICENSING AGREEMENTS AND OTHER COLLABORATIVE AGREEMENTS
To market its products the Group has already secured, and intends to secure
further collaborative agreements with pharmaceutical companies and other
entities with established distribution capabilities. The following is a
summary of agreements that have already been entered into:
G.D. Searle & Co.
In May 1998, Searle, the pharmaceutical division of Monsanto Co., entered into
an agreement with the Company involving a research collaboration for the
development, production and distribution of a new polyclonal antibody-based
drug for a target indication nominated by Searle. Searle has forecast that it
will make payments under the terms of the agreement of US$8 million subject to
the attainment of certain research and development milestones and the sale of
the product. A first milestone payment of US$1 million was paid to Therapeutic
Antibodies upon signing for this project. Searle is granted an exclusive
licence to use, distribute and sell the product worldwide, while revenues from
successful commercialisation will be shared between the companies.
Altana Agreement
In October 1997, Altana entered into an agreement with the Company providing
Altana with exclusive US distribution rights for CroTAb, DigiTAb, and TriTAb.
Under the agreement terms, Altana expects to pay US$23 million in milestone
and bonus payments. The agreement specifies that Therapeutic Antibodies will
receive up to US$10 million in payments upon the achievement of certain
milestones, of which US$2.5 million has been received to date. The Directors
estimate that the Company also may receive royalty payments of US$13 million
tied to the first three years of sales of products following FDA approval.
Swedish Orphan
In January 1990, Swedish Orphan entered into an agreement with the Company,
whereby Swedish Orphan was appointed as exclusive sales representative to
market ViperaTAb in certain territories. The agreement was subsequently
amended to include CroTAb and other antivenom products, and DigiTAb and
TriTAb. The territories are currently Sweden, Norway, Denmark, Finland and the
UK.
FH Faulding & Co. Ltd
In September 1995, FH Faulding entered into an exclusive distribution
agreement with the Company. Under the agreement terms, FH Faulding received
the right to obtain approval and to distribute DigiTAb, TriTAb and PolongaTAb
in Australia, New Zealand and certain Southeast Asian countries.
In October 1996, FH Faulding entered into an agreement with the Company for FH
Faulding to fund clinical trials and to seek registration and marketing
approvals for CytoTAb for treatment of cerebral malaria in Thailand and other
countries in Southeast Asia. Subject to receipt of all necessary approvals, FH
Faulding has been granted an exclusive option for ninety days after issuance
of such regulatory approvals to enter into a ten-year distribution and
profit-sharing agreement based upon commercial terms specified in the October
1996 agreement.
In June 1997, the Company entered into binding heads of agreement with FH
Faulding to vial, lyophilise and package CroTAb. A definitive agreement,
containing additional terms and conditions, is being negotiated.
Federal Ministry of Health of Nigeria
In August 1995 the Company entered into an agreement with the Federal Ministry
of Health on behalf of the Nigerian Government under which the Nigerian
Government has contributed to the costs of development and clinical trials of
EchiTAb, and undertook to purchase a minimum of 10,000 vials of antivenom. A
royalty of 15% is payable to the Nigerian Government on sales of EchiTAb
outside Nigeria.
Academic and Clinical Affiliations
A proportion of the Group's research and development and product testing
activities are carried out through affiliations and consulting arrangements
with clinical research organisations and scientists at academic institutions
in the United Kingdom, Scandinavia and North America. Research and development
and product testing have been carried out in conjunction with the Medical
College of St. Bartholomew's Hospital, the Karolinska Institute, the
University of Arizona and Vanderbilt University Medical Center. These include
arrangements in respect of preclinical and clinical research, consultancy,
patents, royalties and facility leases. Where appropriate the Group has
entered into formal agreements with such third parties which ensure ownership
of any intellectual property rights arising out of such arrangements vests
with the Group.
FINANCIAL POSITION OF THE COMPANY AND DETAILS OF THE PLACING
The #11.5 million refinancing is being arranged by way of the Placing, the
conversion of the Series A Preferred Stock and the conversion of US$2.9
million of debt to equity.
The Placing consists of 21,300,000 New Shares which are to be subscribed
by institutional and other investors at the Placing Price of 40p per share to
raise approximately #7.5 million net of expenses and has been fully
underwritten by Panmure Gordon. Panmure Gordon entered into a bridging equity
round of finance in September 1998 and has exercised its right to convert the
US$2 million Series A Preferred Shares, plus accrued and unpaid dividends into
2,995,692 New Shares, conditional upon Admission.
The Group has entered into agreements with holders of US$2.0 million of the
1998 Notes to convert these together with US$82,552 of accrued interest into
3,068,888 Shares at the Placing Price. In addition the Group is negotiating
with two officers of the Company to convert US$375,000 of the 1998 Notes with
accrued interest of US$24,811 into 589,170 New Shares at the Placing Price and
with one officer to convert US$0.5 million of US$1 million of loan notes into
736,811 Shares at the Placing Price; the remaining US$0.5 million previously
due for repayment in December 1998 will be repaid in December 2000.
The Company will use the proceeds of the Placing to develop the Group's
products and in addition to reduce Group indebtedness. The Group has
historically financed a proportion of its capital expenditure by the use of
debt and leasing finance. The Directors intend to continue to use debt and
lease finance for future capital expenditure and believe that such finance
will be available.
The Company will require the approval of Shareholders at a special meeting to
approve an increase in the Company's authorised share capital. A proxy
statement will today be sent to all shareholders convening a meeting on 6
November 1998 and seeking their approval of such an increase. As the Company's
current authorised share capital does not provide a sufficient number of
Shares for issue in the Placing and the Conversion, the completion of the
Placing is conditional upon the receipt of such approval.
The New Shares are being issued at a discount of 52.9 per cent to the
mid-market price of the Shares as reported on the London Stock Exchange
Official Daily List at the close of business on 23 October 1998. Subscribers
for the New Shares could not be procured at a level in excess of that price.
The Placing has been fully underwritten by Panmure Gordon. The Directors are
of the opinion that following this fundraising the Group will have sufficient
funds to allow it to continue in business and to reach the commercial launch
of several of its products, and accordingly bring the Group to the point at
which its revenues can sustain ongoing product development. The commercial
launch of products is dependent upon satisfactory clinical and regulatory
development and, in the case of those products which do not yet have marketing
partners, upon entering into commercial collaborations, both of which the
Directors believe will be achieved. The Directors have exhausted all other
methods of suitable financing and believe that the Placing at this price is
the only method by which the Company is able to raise the funds required for
its continued operations. Unless the increase in the Company's authorised
share capital is approved by the Shareholders at the Special Meeting, the
Placing cannot be completed, as it is conditional upon such increase and the
Company will not have sufficient funds to continue operations. The Directors
believe that in the absence of the Placing they would have to take action to
protect the Company from its creditors through formal insolvency proceedings,
or pursue alternative courses of action which may result in there being
negligible remaining shareholder value.
It is expected that admission of the New Shares to the London Stock Exchange
will become effective on 9 November 1998.
CORPORATE REORGANISATION
The Directors intend to move the Group's ultimate holding company from a US
domicile to a UK domicile. The Directors believe that this will make the
Company's shares more attractive to certain institutional investors. The
Directors intend to proceed with this reorganisation if they are satisfied
that the mechanism used will be tax efficient for both the Company and its
Shareholders as a whole. The Directors anticipate despatching a circular to
Shareholders before the end of this calendar year, setting out the procedure
for the reorganisation, and seeking Shareholder approval.
END
MSCAILFTIILRFAT
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