26th Apr 2016 11:38
LONDON (Alliance News) - With the financial backing of directors led by Chief Executive Officer Ian Garland and major institutional shareholders Invesco Asset Management Ltd and Woodford Investment Management LLP, AIM-listed pharmaceutical company Vernalis PLC is raising GBP40 million by selling new shares.
The money will be used to fund a roll-out plan for its Tuzistra XR US prescription cough cold product, the re-introduction of its Moxatag tonsillitis treatment, and planned launches of its remaining four US cough cold programmes under development with Tris.
In a statement, Vernalis said it will issue 80.0 million new shares at 50 pence to raise the money. That will bring its total number of shares trading on the stock exchange to 525.1 million, with the placing shares representing roughly 15% of that figure. The stock was up 0.3% at 50.12 pence on Tuesday afternoon.
Invesco, which already holds 158.2 million shares in Vernalis, is subscribing for 36.2 million shares. The subscription will see Invesco's voting rights in Vernalis rise to 37.03% from 35.55%.
Although such an acquisition of shares would under stock exchange rules typically force Invesco to make a takeover offer for Vernalis, Woodford and GAM International Management Ltd, together in command of 52.52% of voting rights independent of Invesco, consented to the removal of that requirement in relation to the placing.
Woodford, with a holding of 115.5 million shares including voting rights over about 110.0 million, is subscribing for an additional 29.6 million shares.
CEO Garland is subscribing for 100,000 shares, increasing his total holding to 804,857 shares. His total holding will equate to 0.15% of Vernalis shares in issue, down from 0.16% previously.
Chairman Peter Fellner is subscribing for 20,000 shares, which will add to the 250,000 he already had, while Chief Financial Officer David Mackney is buying 50,000 shares to increase his total to 415,203.
Nigel Sheail, a non-executive director, is buying 52,838 shares to take his total to 346,838. Carol Ferguson, another non-executive director, will see her total increase to 156,212 after subscribing for 28,000 shares.
Neither Ian Gilham nor Lisa Schoenberg - two non-executive directors - owns shares in Vernalis. They are not subscribing for any stock in the placing.
"We are emerging from the first cough cold season of selling Tuzistra XR with the product gaining commercial traction steadily, despite a mild US cough cold season," Garland said in a statement. "With launch data now in hand, we expect the net proceeds of the placing together with our existing cash resources will provide sufficient working capital to support the planned roll-out of the other products in this franchise."
According to Vernalis, US prescription cough cold treatments represent a USD3.0 billion market, of which the company expects to gain a "modest share". The company said its cash burn has increased as expected amid continued investment in launching its products in the US.
Vernalis had cash resources of GBP54.0 million and no debt at the end of 2015. The company said it saw a "substantial increase" in its cash burn in the six months ended December 31, being GBP10.6 million during the period, and expects an increased level in the remainder of its financial year ending June 30.
"This first half run rate provides a reasonable guide for anticipated costs in the second half of the 2016 financial year for research and development and general and administration expenses, but first half sales and marketing expenses only had four months of sales force costs included and so the sales and marketing expenses will increase for the second half of the 2016 financial year," Vernalis said.
Shareholders are due to vote on whether the fundraising should go ahead at a meeting scheduled for May 12. Invesco, Woodford and GAM have already voted to approve the move. The trio controls nearly 70% of the existing shares.
Canaccord Genuity and Shore Capital are acting as joint bookrunners in connection with the placing. Canaccord Genuity is also nominated adviser to the company.
By Samuel Agini; [email protected]; @samuelagini
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