RNS Number:3132F
Tepnel Life Sciences PLC
15 June 2001
15 June 2001
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION IN WHOLE OR IN PART IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR THE REPUBLIC OF IRELAND
TEPNEL LIFE SCIENCES Plc ("the Company")
Proposed Placing and Open Offer to raise approximately #8.05 million and
transfer from
the Official List to AIM
Tepnel Life Sciences, a provider of nucleic acid purification solutions to the
BioMedical Research Market, announces that it proposes to raise approximately
#7.45 million net of expenses and to transfer from the Official List to AIM
Highlights
* Placing and Open Offer to raise approximately #7.45 million net of
expenses by way of a Placing and Open Offer of New Ordinary Shares at 20p
per share. The Placing and Open Offer are to be fully underwritten by Old
Mutual Securities.
* Company transferring from the Official List to AIM.
* Proceeds to be used to continue and accelerate the commercialisation of
its nucleic acid purification technology.
* Acquisition of the business of a medicine testing laboratory from the
Royal Pharmaceutical Society of Great Britain.
Ben Matzilevich, Chief Executive of Tepnel Life Sciences Plc, commented "With
our first automated plasmid purification system expected to be launched later
this year, the funds we raise will enable the company to accelerate the
development and commercialisation of our automated drug development and
genetic analysis systems. Going forward, we intend to develop an automated
system for the purification of RNA and to broaden our product offering of
manual nucleic acid purification kits and contract services.
We believe that our combination of dedicated instrument systems, manual kits
and contract services will allow Tepnel to effectively penetrate the rapidly
growing markets we are targeting."
Further enquiries:
Tepnel Life Sciences 0161-946-2200
Mike Billingham, Commercial Director
Carol Smith, Marketing Communications Manager
Hudson Sandler 020-7796-4133
Piers Hooper
Jessica Rouleau
Old Mutual Securities 020-7002-4600
Guy Peters
Tepnel life sciences plc
PROPOSED PLACING OF 14,266,750 ORDINARY SHARES AT 20p PER SHARE
PROPOSED OPEN OFFER OF 25,994,499 NEW ORDINARY SHARES AT 20p PER SHARE ON THE
BASIS OF
1 NEW ORDINARY SHARE FOR EVERY 2 EXISTING ORDINARY SHARES
CANCELLATION OF LISTING ON THE OFFICIAL LIST AND ADMISSION TO AIM
Introduction
The Board announces that Tepnel Life Sciences proposes to transfer from the
Official List to AIM, and to raise approximately #8.05 million gross (#7.45
million net of expenses of approximately #600,000) by way of a Placing and
Open Offer of 40,261,249 New Ordinary Shares at 20p per share. The Placing and
Open Offer has been fully underwritten by Old Mutual Securities.
The Placing and Open Offer is conditional, inter alia, upon the approval of
Shareholders. Resolutions to increase the Company's authorised share capital
and to give the Directors the necessary authority to issue, inter alia, the
New Ordinary Shares in connection with the Placing and Open Offer, will be
proposed at the EGM. If shareholders approve the Proposals and the Resolutions
are duly passed, the Company will cancel its listing on the Official List and
dealings in the Company's Existing Ordinary Shares and New Ordinary Shares
will commence on AIM, which is expected to be at 8.00am on 16 July 2001. AIM
was introduced by the London Stock Exchange in June 1995 to meet the demand
for a suitable market for smaller, young and fast growing companies. The Board
considers that the Company's future strategy will be better served by
admission to AIM.
The New Ordinary Shares will represent approximately 44.5 per cent. of the
enlarged issued ordinary share capital of the Company on Admission and will
rank pari passu in all respects with the Existing Ordinary Shares.
Principal Activities
Tepnel Life Sciences' principal activity is the development of automated
systems for the isolation and purification of nucleic acids for the BioMedical
research market. The Company is taking a ''Tri-Polar'' approach to the market
on three levels through:
* the development of dedicated automated systems for DNA purification;
* marketing and further developing its existing range of manual bench-top
kits for DNA purification; and
* by offering a broad range of outsourced DNA purification, genotyping and
associated services to customers.
DNA is the genetic code for all living organisms and is playing an
increasingly important role in the diagnosis of disease and the drug
development process. RNA is the messenger molecule involved in the process of
translating the DNA code into proteins that are involved in the function of
living organisms. Nucleic acids is the term used to describe DNA, RNA or both
collectively. Once purified, nucleic acids can be used for genetic analysis,
drug research, gene expression analysis and is also studied by life science
researchers.
Founded in 1992 to commercially exploit DNA technology generated at UMIST
(University of Manchester Institute of Science and Technology), Tepnel Life
Sciences has since acquired and developed a number of chemistries. An
additional chemistry has been licensed to the Company on an exclusive basis.
This chemistry employs particular resins that bind impurities producing high
quality DNA. Based on this and other intellectual property, the Company's
strategy is to develop a range of automated systems for the BioMedical
research industry, to further develop its range of manual kits, and to offer
contract services to industry participants who require an outsourced solution.
The Company's products are described in more detail below.
Tepnel Life Sciences also utilises further chemistries and licensed-in
antibodies to develop assays for the testing of food products, to test for
GMOs and to undertake other commercially viable tests. Tepnel Life Sciences
also provides a broad range of testing kits and services for the AgBio market.
Products and Services
The Board's intention is to enable the Company to provide a variety of
products and services for the automated and manual purification of nucleic
acids to pharmaceutical and other BioMedical researchers world-wide.
Management believes that this Tri-Polar combination of dedicated instrument
systems, application specific manual kits and contract services will allow
Tepnel Life Sciences to effectively penetrate its target markets.
Automated Systems for Nucleic Acid Purification
Tepnel Life Sciences is currently developing three automated systems for its
target markets:
* a plasmid purification system for the BioMedical research market;
* a drug development system for the Pharma/Biotech market; and
* a genetic analysis system for genetic screening.
These systems are at varying stages of development, with the most advanced
being the plasmid purification system intended for launch in the autumn of
2001. The directors believe that this system has a number of competitive
advantages over other products currently available on the market. Advantages
include yield, purity, the ability to process up to 96 samples in
approximately two hours and complete ''walk away'' automation of the sample
purification process. The plasmid purification system integrates specific
reagents developed by the Company, with an automated instrument, which
produces a higher quality output, for instance DNA of higher purity, than
manual systems of purification.
The drug development and genetic analysis systems, to purify nucleic acid from
blood, cultured cells and a range of other starting materials are currently in
development and preliminary data supports the potential of these instrument
systems. These systems are designed to process large numbers of samples in a
short period of time with full automation.
In addition to these systems, the Company is developing chemistries that will
enable the purification of RNA from a variety of cell types. Once developed,
these chemistries will be integrated into either existing or new,
RNA-specific, automated systems. The market for these types of automated
systems is driven by the need to purify RNA from increasing numbers of samples
because of advances in research into the human genome, gene therapy, medical
diagnostics and pharmaceutical drug discovery.
Manual Kits for Nucleic Acid Purification
Tepnel Life Sciences currently has 12 DNA extraction and purification kits on
the market, which can be used for work with blood, cultured cells, plant, soft
/hard tissue and yeast. Additional kits and applications are currently under
development. The Company sells these kits directly in the UK and through an
exclusive global distribution agreement with Amersham Pharmacia Biotech to the
life sciences research market.
Contract Services
Tepnel Life Sciences provides a range of DNA testing and analytical services
for the life sciences research, pharmaceutical and food testing markets.
Services fall into three categories: nucleic acid purification/genotyping,
drug analysis and food testing. This part of the business has been showing
strong growth over the last 12 months and has met management expectations of
sales and market penetration.
Channels to Market
The Company is creating global channels to market through which it will be
able to sell its automated systems and accompanying reagents, manual kits and
contract services. The Company is establishing a multi-tiered capability
through the use of local distributors or direct sales as appropriate.
The Market
The global market for nucleic acid purification was estimated to be greater
than $500 million in 2000 (Source: Sam Williams, Robertson Stephens - March
2000). By 2005, it is estimated that this market will grow to approximately $1
billion (Source: Sam Williams, Robertson Stephens - March 2000). Growth in the
market is being driven, inter alia, by the need to understand genetic
variation in human disease and the human genome project. These advances are
stimulating significant expansion in gene therapies, drug discovery programmes
and other clinical activities. As the need for purified nucleic acid samples
increase, the Directors believe that there will be a corresponding requirement
for fully automated purification. Another market factor is the increasing
demand by the pharmaceutical industry for outsourced DNA purification from
various tissue samples and cultured cell lines. The Directors believe that the
combination of these trends reinforces the logic of the Company's Tri-Polar
approach of providing automated services, manual kits and contract services,
leaving the customer to choose which product or service best suits their
specific requirements.
The growth in this sector for nucleic acid purification has attracted interest
from companies operating in the Biomedical research market. For example, the
Company anticipates competition from Qiagen, Beckman, Coulter Instruments and
other established companies in the sector.
Intellectual Property
Tepnel Life Sciences' intellectual property portfolio comprises pending and
granted patents in the US and Europe, and elsewhere, registered trade marks,
know-how and licences. Tepnel Life Sciences has six patent families, covering
nucleic acid amplification, detection and purification that include US and
European granted applications. The Company has a further five patent families
where the applications are pending and intends to pursue patent protection in
the US, Europe and Far East. The Company aims to file new patent applications
and to licence additional technologies where required. The Company's business
is dependent on this intellectual property.
Potential Contract Services Acquisition
The Company has entered into an agreement to acquire the business of a
medicine testing laboratory ("MTL") based in Edinburgh (the "Business") from
the Royal Pharmaceutical Society of Great Britain. The agreement to acquire
the Business (the "MTL Agreement") was entered into on 14 June 2001.
Completion of the MTL Agreement is conditional upon the Company raising at
least #8,000,000 through the Placing and Open Offer, the Resolutions being
passed and Admission. The completion date is 16 July 2001, subject to the MTL
Agreement becoming unconditional. The consideration payable under the MTL
Agreement is #550,000 in total, of which #275,000 is to be satisfied in cash
on completion, and #275,000 is to be satisfied by the issue of Ordinary Shares
on completion. The Company has undertaken to obtain a valuation report
pursuant to section 103 of the Act, satisfying the requirements of section 108
of the Act, before the allotment of such consideration shares. Although the
Company is not aware of any reason why this report may not be obtained, there
is no certainty that such report will be forthcoming.
In addition, the MTL Agreement provides for the Company to enter into a lease
(the "MTL Lease") on completion for an initial period of one year over
premises at 34 York Place, Edinburgh, at an initial rent of #42,000 for the
first 12 months, increasing to #50,400 per annum thereafter.
Tepnel Life Sciences' acquisition of the Business, which was founded over 20
years ago, adds significant turnover to the Group. The Business supports the
Company's Tri-Polar approach by providing access to major international
pharmaceutical customers for the sale of contract services, DNA purification
kits and automated systems. The combination of DNA purification products and
services coupled with the chemical analysis capabilities of MTL, provides
certain skills and resources to meet the increasing outsourcing demands of the
pharmaceutical industry. The Company estimates the value of the assets of the
Business as at 14 June 2001 to be approximately #445,871 and the Business made
losses of #104,249 in the year ended 31 December 2000.
Reasons for the Placing and Open Offer and Use of Proceeds
Tepnel Life Sciences is seeking to raise approximately #8.05 million gross
under the Placing and Open Offer (#7.45 million, net of expenses of
approximately #600,000) in order to continue and accelerate the
commercialisation of its nucleic acid purification technology. In particular,
the Company is seeking to raise new funds to:
* launch the automated plasmid purification system;
* accelerate the development and commercialisation of the automated drug
development and genetic analysis systems;
* develop automated systems for the purification of RNA;
* broaden the product offering of manual nucleic acid purification kits;
* expand the Company's sales and marketing activities;
* consolidate and expand Tepnel Life Sciences' contract services business;
* repay the outstanding element of approximately #800,000 of an existing
facility made available to the Company by BF Finance Limited; and
* provide working capital for the Group.
Current Trading and Future Prospects
In the six months ended 31 December 2000, Tepnel Life Sciences' turnover
increased over 40 per cent to #729,000 (1999: #518,000). The key growth areas
during this period include the sale of DNA purification kits, nucleic acid
purification and GMO testing services. The loss before tax increased to #
1,209,000 (1999: #987,000) due in large part to investment in research and
development, primarily in automated systems development. Whilst the Company
continues to control costs, these expenditures were necessary in order to
develop the Company's automated DNA purification systems. As a result, the
loss per share increased to 2.3p (1999: 2.0p).
The Board is confident that the core businesses will continue to show revenue
growth into the foreseeable future. Following the proposed launch of the
automated plasmid system later this year, the management anticipates a steady
growth of sales from the automated purification systems business, associated
consumables and services.
Admission to AIM
The Company is currently listed on the Official List. As part of the
Proposals, the Company has given notice to cancel its listing on the Official
List and has applied for its Ordinary Shares to be admitted to AIM. AIM is a
market designed primarily for smaller and growing companies.
The listing of the Company's Existing Ordinary Shares is anticipated to be
cancelled on 16 July 2001, being not less than 20 business days from the date
of this announcement, subject to the passing of the Resolutions and the
Placing Agreement not being terminated. Admission is expected to take place on
16 July 2001. However, if the Resolutions are not passed, the Company will
remain on the Official List.
Terms of the Placing and Open Offer
The Company proposes to issue 40,261,249 New Ordinary Shares by way of a
Placing and Open Offer. Of these, 14,266,750 New Ordinary Shares have been
conditionally placed firm with institutional investors and certain Directors
by Old Mutual Securities at the Offer Price, including 42,575 New Ordinary
Shares which certain of the Directors have irrevocably undertaken not to take
up under the Open Offer and 25,994,499 New Ordinary Shares which have been
conditionally placed with institutional and other investors by Old Mutual
Securities at the Offer Price subject to recall to satisfy valid applications
by Qualifying Shareholders under the Open Offer. In addition, certain
Directors have irrevocably undertaken to take up 30,750 New Ordinary Shares in
aggregate under the Open Offer. In order to provide Qualifying Shareholders
with the opportunity to acquire New Ordinary Shares at the Offer Price, the
Directors have arranged for Old Mutual Securities to invite applications from
Qualifying Shareholders for New Ordinary Shares at 20p per share on the basis
of:
1 New Ordinary Share for every 2 Existing Ordinary Shares
held at the close of business on the Record Date and so in proportion for any
other number of Existing Ordinary Shares then held. Fractions of New Ordinary
Shares will not be allotted to Qualifying Shareholders but will be aggregated
and sold pursuant to the Placing Agreement for the benefit of the Company. The
New Ordinary Shares will, when issued and fully paid, rank pari passu in all
respects with the Existing Ordinary Shares.
The Placing and the Open Offer are conditional on, inter alia, the passing by
Shareholders at the EGM of the Resolutions. Dealings in the New Ordinary
Shares are expected to commence on 16 July 2001.
Irrevocable Undertakings
Peter Raymond (Chairman), has irrevocably agreed to subscribe for 12,500 New
Ordinary Shares under the Open Offer. Mr. B. Matzilevich (chief-executive),
has irrevocably agreed to subscribe for 500,000 New Ordinary Shares under the
Placing. Mr. J S. S. W. Lee (finance director) has irrevocably agreed to
subscribe for 5,000 New Ordinary Shares and Dr. P. E. Highfield (director) has
irrevocably agreed to subscribe for 5,000 New Ordinary Shares each
representing part of his entitlement under the Open Offer. Mr. I. A. Craig
(director) has irrevocably agreed to subscribe for 25,000 New Ordinary Shares
representing all of his entitlement under the Open Offer and an additional
16,750 New Ordinary Shares under the Placing.
Each of the Directors has undertaken to vote in favour of the Resolution set
out in the notice of Extraordinary General Meeting in respect of his entire
beneficial shareholding, amounting in total to 146,650 Existing Ordinary
Shares (representing approximately 0.28 per cent of the Existing Ordinary
Shares).
Tax Clearances
The Company has received provisional EIS approval from the Inland Revenue that
an investment in the Company should be a qualifying investment for purposes of
the Enterprise Investment Scheme, Corporate Venturing Scheme or for Venture
Capital Trust investors, once the Company is admitted to AIM.
This announcement is issued by Tepnel Life Sciences Plc and the Directors of
Tepnel Life Sciences Plc are the persons responsible for the information
contained in this announcement. Old Mutual Securities, a division of Old
Mutual Securities Limited, which is regulated by The Securities and Futures
Authority Limited, has approved this announcement for the purposes of section
57 of the Financial Services Act 1986. Old Mutual Securities is acting
exclusively for Tepnel Life Sciences Plc and for no-one else in relation to
the Proposals and will not be responsible to any other person for providing
the protections afforded to its customers or for providing advice in relation
to the Proposals. The contents of this press announcement do not constitute an
offer or invitation to acquire shares Tepnel Life Sciences Plc and is not for
distribution in the United States, Canada, Australia, Japan or the Republic of
Ireland.
Expected timetable of principal events 2001
Record Date for the Open Offer close of business
on 8 June 2001
Latest time and date for splitting of Application Forms (to 3.00p.m. on 3 July
satisfy bona fide market claims) 2001
Latest time and date for receipt of Application Forms and 3.00p.m. on 5 July
payment in full under the Open Offer 2001
Latest time and date for receipt of Forms of Proxy for the 11.00a.m. on 7 July
EGM 2001
Extraordinary General Meeting 11.00a.m. on 9 July
2001
Cancellation of listing on the Official List 8.00a.m. on 16 July
2001
Admission and dealings expected to commence in Existing 8.00a.m. on 16 July
Ordinary Shares and New Ordinary Shares on AIM 2001
CREST member accounts credited 16 July 2001
Definitive certificates for New Ordinary Shares despatched by 20 July 2001
Definitions
The following definitions apply throughout this announcement unless the
context otherwise requires:
''Act'' the Companies Act 1985 (as amended)
''Admission'' the admission of the New Ordinary Shares to trading on AIM
becoming effective in accordance with the AIM Rules
''AIM'' the Alternative Investment Market of the London Stock Exchange
''AIM Rules'' the AIM admission rules published by the London Stock Exchange
''Board'' or '' the directors of the Company
Directors''
''Company'' or Tepnel Life Sciences Plc
''Tepnel Life
Sciences''
''Existing the 51,988,999 Ordinary Shares in issue at the of this
Ordinary announcment
Shares''
''Extraordinary the extraordinary general meeting of the Company to be held at
General the offices of Old Mutual Securities, Old Mutual Place, 2
Meeting''or '' Lambeth Hill, London EC4V 4GG at 11.00a.m. on 9 July 2001
EGM''
''Firm Placed 14,266,750 New Ordinary Shares
Shares''
''Group'' Tepnel Life Sciences and its subsidiary undertakings
''London Stock London Stock Exchange Plc
Exchange''
''New Ordinary the 40,261,249 new Ordinary Shares which are the subject of the
Shares'' Placing and Open Offer and the 1,375,000 new Ordinary Shares to
be issued in connection with the Acquisition
''Offer Price'' 20p per New Ordinary Share
''Official the Official List of the UK Listing Authority
List''
''Old Mutual Old Mutual Securities Limited
Securities'' or
''OMS''
''Open Offer'' the conditional invitation by Old Mutual Securities on behalf
of Tepnel Life Sciences, to Qualifying Shareholders to
subscribe for up to 25,994,499 of the New Ordinary Shares
''Ordinary ordinary shares of 1p each in the share capital of the Company
Shares''
''Overseas shareholders who are resident in, or citizens of, countries
Shareholders'' other than the UK
''Placing'' the conditional placing by Old Mutual Securities of 14,266,750
New Ordinary Shares pursuant to the Placing Agreement
''Placing the conditional agreement made between Old Mutual Securities,
Agreement'' the Company and the Directors setting out the terms of the
Placing
''Proposals'' together the Placing and Open Offer and the move by the Company
from the Official List to AIM
''Qualifying shareholders on the register of members of the Company on the
Shareholders'' Record Date other than certain Overseas Shareholders
''Record Date'' the record date for the Open Offer, being the close of business
on 8 June 2001
''Resolutions'' the resolutions to be proposed at the EGM to, inter alia, grant
the Directors the necessary authorities to effect the Placing
and Open Offer
''Shareholder holder(s) of Ordinary Shares
(s)''
''Share Option the Tepnel Life Sciences Executive Share Option Schemes, the
Schemes'' Tepnel Life Sciences PLC 1998 Executive Share Option Scheme,
the Tepnel Life Sciences PLC 1998 Inland Revenue Approved
Savings Related Share Option Schemes and the Tepnel Life
Sciences Option Deed in relation to Mr. B. Matzilevich
''UK'' the United Kingdom of Great Britain and Northern Ireland
''United the United States of America, its territories and possessions,
States'' or '' any State of the United States of America and the District of
US'' Columbia
Glossary of Terms
AgBio the application of the latest biological techniques to
agricultural products
assay a procedure carried out on the material of interest to measure
or determine the presence or absence of an attribute of
relevance
automated an automated solution to a manual process which in the case of
systems the Company's automated systems is a combination of
instrumentation, chemical reagents, plastic disposable units and
software that can carry out a series of steps in a programmed
fashion
BioMedical the application of the latest biological techniques to medical
research and treatment. This includes gene therapy, genetic
analysis, drug discovery and development
biotechnology a set of biological techniques developed through research
cultured cell pure populations of eukaryotic cells grown outside the body in
lines plastic vessels in the presence of a nutrient liquid
DNA deoxyribonucleic acid, the chemical that carries the genetic
information of living organisms
DNA the separation of the DNA from all the other materials present
purification in a sample such as proteins, fats and carbohydrates. Pure DNA
can be used for a wide range of analytical techniques in
research and clinical practice
eukaryotic cells having a nucleus separated from the cell cytoplasm by a
cells nuclear membrane and the genetic material borne on a number of
chromosomes
gene the fundamental, physical and functional unit of heredity which
is an ordered sequence of nucleotides located in a particular
position on a particular chromosome that encodes a specific
functional product
gene the analysis of the process whereby genes are transcribed into
expression mRNA and then translated into protein and those that are
analysis transcribed into RNA
genetic genetic screening and/or genetic testing
analysis
genetic screening for genes that might, for example, suggest
screening pre-disposition to disease genetic testing for particular genes
genome the collection of genes that make up a complete organism; the
human genome consists of all the genes found in human beings
genotyping the process whereby the DNA from a sample (individual patient or
cell line) is characterised for the presence or absence of
markers associated with the genome. This can be referred to as a
''genetic fingerprint''
GMO genetically modified organism; an organism whose genome has been
altered by the introduction, removal or re-arrangement of genes,
for example, used for plant strains that have had non-plant DNA
introduced
human genome an international endeavour to determine the complete DNA
project sequence of human beings with the goal of identifying all the
different genes and their role in biology
life sciences research carried out to study problems in life science, which
research includes the disciplines of biology, molecular biology,
biochemistry, botany, genetics and zoology amongst others
mRNA the type of RNA that acts to carry the genetic information in a
form that can be converted into protein
nucleic acids DNA and RNA
nucleotide a sub-unit of DNA or RNA
plasmid a small piece of DNA that grows inside a bacterial cell.
Plasmids are used as vehicles that carry non-bacterial DNA
within the bacteria.
pharmaceutical of, or relating to, the preparation of drugs and medicines
Pharma/Biotech pharmaceutical/biotechnology
RNA the chemical that is produced from genes and plays an important
ribonucleic role in protein synthesis and other chemical activities of a
acid cell
END
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