Business Update

RNS Number : 3750A

Epistem Holdings plc

07 June 2016

 

RNS Press Release

For release: 7 June 2016

Business Update

New £2.5 m Cornerstone Investor Identified

and

Agreement Reached to Defer Maturity of $8m Bond to July 2021

Epistem Holdings Plc (LSE: EHP), the molecular diagnostics, personalised medicine and biotechnology company, today provides a business update following the publication of the Company's interim results on 31 March 2016 ("Interim Results").

The Interim Results confirmed that the Company had been holding discussions with shareholders and other investors with regards to securing equity funding of approximately £6.5m (before expenses) to broaden the portfolio of Genedrive® tests, to undertake clinical trials to expand market entrance, to fund increased commercialisation and business development activities as well as broadening the Company's infrastructure to support anticipated growth in its molecular diagnostics business. At that time, the Company had received non-binding indicative support from a number of existing shareholders and non-holders for the proposed equity raise. However, selected shareholders and potential investors had expressed a desire that as part of an equity financing the Company extend the maturity date of an $8m bond as detailed below.

New £2.5m Cornerstone Investor and Re-Engagement with Shareholders and Potential Investors in Connection with Equity Raise

Having secured an agreement to defer maturity of the bond (as detailed below), the Company and its brokers will shortly be re-engaging with shareholders and other potential investors in order to seek to close the proposed equity raise. The Company is pleased to announce that it has recently received a non-binding investment committee approved commitment from Calculus Capital, a leading UK based VCT and EIS investor, to subscribe for £2.5m out of the proposed £6.5m equity issue at an indicative issue price of between 70p and 80p per share. The Company and its brokers approached Calculus Capital, which has a strong track record in the healthcare sector, subsequent to the release of the Company's Interim Results and this support is therefore incremental to that which the Company had identified at the time of the Interim Results.  This new cornerstone potential investment gives the Company confidence that the equity raise will be successfully closed in the near future. A number of the Company's Directors have also recently indicated their intention to participate in the proposed equity fundraising.

Genedrive® TB

The Company announced delivery of its Genedrive® TB test into India on 18 April 2016, with the product marketed by Epistem's partner Xcelris Labs under a licence from the Drug Controller General of India (DCGI). The product became available in-country at the beginning of May and Xcelris Labs began appointing sub-dealers to selectively access the market.

Dr Bhavini Shah, who heads TB testing services at Supratech Inc, India ("Supratech"), has confirmed that in a recently initiated device performance study being conducted with Epistem at Supratech, over 200 patient tests have now been performed using the Genedrive® TB system and she is pleased with the device's performance.

Dr Shah said: "The results are fully aligned to the Company's DCGI performance claims. These results show that Genedrive® offers an acceptable, low cost and accessible alternative for facilities without the sophisticated infrastructure and equipment which we have in our main laboratory."

Agreement to Defer Bond Maturity Date

In order to align Company and shareholder requirements, the Company and the Global Health Investment Fund ("GHIF") have now entered into an agreement to amend and restate certain terms of the GHIF $8m bond ("GHIF Bond"), subject to and conditional upon, amongst other things, the successful completion of an equity fundraising in an aggregate amount of not less than £6m and at a share price of not less than 70p per Ordinary Share on or before 31 July 2016. Pursuant to the heads of agreement, the maturity date of the GHIF Bond shall be extended by two years to 21 July 2021.*

GHIF is supportive of Epistem and believes Genedrive® has the potential to support the diagnostic testing needs of significant numbers of patients across the world for a wide range of infectious diseases.

Services Business

The Company's operations in pharmacogenomics, contract research services and novel therapies are largely unrelated to the Company's primary diagnostics activities and the Company announced in its Interim Results an intention to undertake a review of the strategic options for these businesses to help transform Epistem into a focussed molecular diagnostics company. The Board has since run a process to select advisers and Northridge Advisory has been appointed to complete a strategic review for the purposes of evaluating potential options for these businesses.

Trading Update

The Company has continued to trade in line with the Board's expectations and expects to report revenues of between £4.6m and £5.0m for the year ending 30 June 2016 (2015: £4.5m).  Unaudited cash balances as at 31 May 2016 were £1.2m which the Board believes will fund the Company into the middle of Q3 2016.

David Budd, CEO of Epistem, commented: "Genedrive® offers a disruptive diagnostic platform designed to bring the power of central laboratory molecular diagnostics to a Point-of-Care setting in a device with a lower cost and time to result than molecular diagnostic alternatives. We believe the initial market for our TB test in India offers very attractive growth opportunities and are encouraged by early progress since commercial launch. The results we are seeing in our KOL studies reinforce our belief in the potential for Genedrive® to aid TB detection in India by extending the reach of modern molecular diagnostics beyond large hospital settings.

"The restructuring of the GHIF bond and identification of a £2.5m cornerstone investor put us in a strong position to raise the funds necessary to build on the progress made in TB and HCV and to exploit the substantial opportunities that Genedrive® offers."

* The GHIF Bond will be split into two tranches with the first tranche of $2m having a conversion price of 150p per Ordinary Share and the conversion price for the second tranche of $6m remaining at 489p per Ordinary Share; the Company will have the option to convert the first tranche of $2m into new Ordinary Shares in circumstances where the average closing price of the Company's Ordinary Shares is greater than or equal to £2.50 per Ordinary Share for a prior period of 20 consecutive days; and for subsequent interest periods until and including 21 January 2019 the Company may elect (by giving not less than 30 days' notice to GHIF prior to each interest payment date) to pay none or a portion of the 5 percent interest payable semi-annually on the accrued and outstanding principal amount of the GHIF Bond and instead capitalise and compound all outstanding interest due until the earlier of the date on which the GHIF Bond becomes redeemable or convertible into Ordinary Shares.

- Ends -

For further details please contact:

Epistem Holdings Plc

David Budd: CEO                                                                                                      [phone]

John Rylands: Finance Director

Peel Hunt LLP

James Steel                                                                                                               [phone]

Oliver Jackson

Jock Maxwell Macdonald / Sohail Akhbar (ECM)

Consilium Strategic Communications

Chris Gardner                                                                                                           [phone]

Laura Thornton

[e-mail] 

Notes to Editors

About Epistem

Epistem is a personalised medicine and biotechnology company developing innovative molecular diagnostics and biomarkers alongside providing contract research services to drug development companies. Epistem's Genedrive® is a next-generation Point of Care molecular diagnostic system providing a low cost, rapid, versatile, simple to use and robust diagnostics platform for the diagnosis of infectious diseases and for use in patient stratification (genotyping), pathogen detection and other indications. Genedrive® aims to provide a 'gold standard' identification of Tuberculosis & antibiotic resistance. The World Health Organisation (WHO) has publicly recommended that nations incorporate new rapid and molecular tests for Tuberculosis into their disease testing programs. The Genedrive® platform and its first Tuberculosis test has been launched in India. Further details can be found at: www.epistem.co.uk and www.genedrive.com

 

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