Conditional Investment & Noti

RNS Number : 8435N

e-Therapeutics plc

25 February 2009

 



Press Release

25 February 2009

e-Therapeutics plc

('e-therapeutics' or the 'Company')

Conditional Investment and Notice of General Meeting

e-Therapeutics raises £1,999,990 through a private placing and issue of Loan Notes, subject to the satisfaction of certain conditions

e-Therapeutics is pleased to confirm today that it has executed a placing agreement made between (i) the Company; (ii) the Directors of the Company; (iii) Octopus Investments Nominees Limited; (iv) the Funds (as defined therein) and (v) Octopus Ventures Limited ('Octopus'), pursuant to which Octopus, or its related investment funds, will, subject to certain conditions, subscribe for a minimum of 1,000,000 ordinary shares at a price of 30 pence per ordinary share (the 'Placing Price') (the 'Placing Shares') and up to £1,700,000 worth of loan notes, together with associated warrants, on the terms set out below, to raise £1,999,990 before expenses (the 'Fundraising').

The issue of the Placing Shares is subject to shareholder approval, and accordingly, a circular will be dispatched to shareholders on or around 25 February 2009 to convene a General Meeting of the Company at 10.30 am on 16 March 2009 at the Company's registered office, Holland Park, Holland Drive, Newcastle upon Tyne, NE2 4LZ. A copy of the circular will be available from the date of dispatch on the Company's website www.etherapeutics.co.uk.

Subscription Amount

As set out above, pursuant to the Placing Agreement, Octopus and/or its related investment funds, will, subject to certain conditions, subscribe for a minimum of 1,000,000 ordinary shares at a price of 30 pence per ordinary share and up to £1,700,000 worth of Loan Notes, together with associated warrants, to the effect that Octopus and its related funds invest a total amount of £1,999,990 in the Company. If further placees are successfully identified on or before 16 March 2009, Octopus will then subscribe for a lower number of Loan Notes and Ordinary Shares in order that the new placees can subscribe for more placing shares without taking the total investment amount over £1,999,990. The exact proportion of Placing Shares, Warrants and Loan Notes will therefore be confirmed on or around 16 March 2009.

Conditions

The Fundraising is subject to certain conditions, including, inter alia (i) the Resolutions (set out below) being passed at the general meeting of the Company; (ii) the Company being in receipt of a letter from HM Revenue and Customs confirming that the Company qualifies for Enterprise Investment Scheme ('EIS') relief and Venture Capital Trust ('VCT') relief; (iii) certain existing shareholders of the Company entering into a Lock In/ Orderly Marketing Agreement; and (iv) that the Placing Shares are admitted to trading on AIM (together the 'Conditions').

Purpose of the Fundraising

The Company continues to make progress with its strategy to exploit a major opportunity in the pharmaceutical market. The phase IIa clinical testing of the Company's asthma and depression candidates has now been completed, and reported. The results support the therapeutic attributes that the Company's drug discovery system predicted for each candidate, drug attributes that represent a potentially new treatment capability in each disease. The Directors believe that the results further verify the capabilities of the Company's proprietary drug discovery technology.

In addition, the UK and global biotechnology community has been badly affected by the turbulence in world financial markets, which has manifested itself in a shortage of capital and diminished valuations. This has created an opportunity for acquisition and consolidation in the sector. The Directors believe that the ability of the Company's drug discovery technology to assess drug candidates for efficacy and safety ahead of clinical data is a unique advantage, which the Directors intend will be exploited to evaluate potential acquisition opportunities.

The Fundraising should provide the Company with the necessary capital to allow it to continue with the exploitation of these opportunities, and they carry the following key benefits:

• Working capital to continue to build value in the business and develop the pipeline of existing and forthcoming drug candidates.

• The opportunity to make acquisitions of quality companies and/or drug candidates. 

The development and commercialisation of the Company's candidates that have clinical data will be supported initially by licences to pharmaceutical partners operating in smaller pharmaceutical markets. These smaller out-licences are designed to bring the dual benefits of providing further late-stage clinical evidence on the clinical properties of the Company's candidates at lower cost to the Company, and a defined route to markets with worthwhile potential sales revenue

Terms of the Loan Notes

The Loan Notes are repayable in full on the date being five years after the date of issue, although they may be repaid in whole or in part earlier at the Company's discretion.  The Loan Notes bear interest at the rate of 12 per cent per annum, payable at six monthly intervals and are secured by a floating charge over certain intellectual property rights of the Company. The floating charge created by the charge will be capable of being converted into a fixed charge upon the occurrence of certain events including the failure of the Company to pay amounts due in respect of the Loan Notes when due and in the event of insolvency proceedings being instituted.

In addition, the subscribers to the Loan Notes will be issued with warrants over a maximum of 5,666,667 Ordinary Shares. The number of warrants to be issued will be reduced if the amount of Loan Stock subscribed for also reduces. These warrants can be exercised at any time for a period of 5 years from the date of issue and are exercisable at the Placing Price. It is agreed that if any further new Ordinary Shares are issued at a price below the Placing Price at any time before the date that the Warrants expire, the exercise price of the Warrants will be reduced accordingly. 

General Meeting

A further announcement will be made when the notice of General Meeting has been dispatched.

Admission

Subject to the Conditions being met, application will be made to admit the Placing Shares to trading on AIM and dealings in the Placing Shares are expected to commence on or around 17 March 2009. A further announcement will be made at that time.

The Placing Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares in issue including the right to receive dividends and other distributions declared following their issue.

About Octopus Ventures Limited (www.octopusventures.com)

Octopus Ventures Limited is a subsidiary of Octopus Investments Limited and is a venture capital company with support from a dedicated Octopus Investor Group. 

About Octopus Investments Limited (www.octopusinvestments.com)

Established in 2000, Octopus Investments is one of the UK's fastest growing alternative investment specialists, providing investors with access to a growing range of innovative investment products including venture capital trusts, enterprise investment schemes, inheritance tax solutions, business property relief products and a range of UK equity OEICs. 

Enquiries:

John Cordiner, e-Therapeutics plc	Tel: [phone]
Katy Mitchell/David Youngman  WH Ireland Limited	Tel: [phone]

Media enquiries for e-Therapeutics:

Abchurch	www.abchurch-group.com [phone]
Heather Salmond [e-mail]	[phone]
Stephanie Cuthbert [e-mail]	[phone]
Simone Alves [e-mail]	[phone]

Media Enquires for Octopus:

Octopus Investments Ltd: Rob Forbes, Head of PR	Tel: [phone] Email:  [e-mail]
The Millbrook Partnership: Michaela Hopkins/Emily Bastin	Tel: [phone] Email:  [e-mail]

About e-Therapeutics

e-Therapeutics plc is a drug discovery and development company. It has developed proprietary computational systems to swiftly and accurately analyse and predict how medicines interact with cells in the body. This optimises the probability of identifying drug candidates with desirable efficacy and low toxicity. The Company applies its novel, systematic approach in three areas of activity: 

	Discovery of new de-risked drugs;
	Discovering novel uses for existing drugs; and
	Analysis of the interactions between different drugs.

Amongst e-Therapeutics' pipeline of compounds in development are an oral asthma treatment in Phase II clinical trials, a novel-mechanism antidepressant, also in Phase II clinical trials, novel antibiotics that have been shown to kill the 'superbug' MRSA, and a novel cancer chemotherapy that has been shown to kill malignant cells at safe doses in a very short time. The Company is currently in negotiations with a number of pharmaceutical companies and is progressing the preclinical and clinical development of these products. 

For further information on e-Therapeutics visit .

 

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