23rd Aug 2006 07:01
ISIS Resources PLC23 August 2006 For publication in the United Kingdom only. Not for release, publication or distribution in or into any other jurisdiction including the United States, Canada, Australia, South Africa, the Republic of Ireland or Japan. Isis Resources plc Proposals relating to the acquisition of Rhinopharma Limited, a placing to raise£2.04 million, a change of name to Verona Pharma plc and re-admission to trading on AIM The Directors of Isis Resources plc ("Isis Resources" or the "Company") announcethat the Company has conditionally agreed to acquire the entire issued sharecapital of Rhinopharma Limited ("Rhinopharma"), a private drug discovery companyfocused on the discovery and development of new therapeutic drugs for thetreatment of allergic rhinitis (hay fever) and other chronic respiratory andinflammatory diseases. The total consideration for the Acquisition is £1.52million to be satisfied by the issue of the 38,000,000 Consideration Shares at 4pence per share. In conjunction with the Acquisition, the Company intends to raise approximately£2,043,000 (before expenses) through the issue of 51,075,000 Placing Shares at 4pence per share. The Placing is conditional upon, inter alia, completion of theAcquisition and Re-Admission. Following the Acquisition, the Company's strategy will be to discover earlystage intellectual property, and develop through to clinical proof of conceptnew therapeutic drugs for the treatment of allergic rhinitis and other chronicrespiratory and inflammatory diseases. The Independent Expert's Report prepared for the Company, and included in theAdmission Document, indicates that the lead drug development programme beingpursued by Rhinopharma (the RPL554 programme) represents one of the mostpromising developments in rhinitis and asthma research for many years. TheIndependent Expert's Report attests to the significant experience of theRhinopharma founders in drug discovery and development and endorses thescientific and commercial strategies adopted by Rhinopharma. On completion of the Acquisition, it is intended that the name of the Companywill be changed to Verona Pharma plc to reflect the new focus on thepharmaceuticals industry. In addition, Craig Burton and Josef El-Raghy haveagreed to step down from the Board and Clive Page, Michael Walker, Claire Polland Trevor Jones will be appointed to the Board. Further details of which areset out below under the heading "Changes to the Board". Due to the size of the Acquisition in relation to the Company and the fact thatthere will be a fundamental change in the Company's business and board ofDirectors, the Acquisition is classified as a reverse takeover of the Companyunder the AIM Rules and therefore requires the approval of Shareholders at anextraordinary general meeting of the Company to be held on 18 September 2006 ("EGM"). Subject to the passing of the necessary resolutions at the EGM, trading in theExisting Ordinary Shares will be cancelled and it is expected that the EnlargedShare Capital will be admitted to trading on AIM on 19 September 2006. The Admission Document, which contains notice of the EGM to be held on 18September 2006, is being posted to Shareholders today. Copies of the AdmissionDocument are available from today for a period of one month after Re-Admissionfrom the offices of Watson Farley & Williams, 15 Appold Street, London EC2A 2HB.As the document is now available, the Company anticipates that dealings in theCompany's ordinary shares will be restored at 7.00 a.m. today. This summary should be read in conjunction with the information which follows. Enquiries: Isis Resources plc 00 61 417 006 182Claire Poll Rhinopharma Limited 07971 504 931Professor Clive Page Hanson Westhouse LLP 020 7601 6100Tim FeatherRichard Morrison Background to the Acquisition Isis Resources was admitted to trading on AIM on 30 March 2005 as an investingcompany with a strategy of undertaking investments in the natural resourcessector. The Existing Directors reviewed a number of natural resourceopportunities and, in each case, concluded that the proposition did not offer anappropriate level of return for the risk to be assumed. Consequently, theExisting Directors reviewed the investment strategy and widened the range ofpotential investments. Having identified Rhinopharma and considered thereputation and track record of its founders, the Existing Directors formed theview that the Acquisition would offer the potential for major growth inshareholder value. Rhinopharma Rhinopharma is a private drug discovery company established in Vancouver, Canadain April 2004, focused on the discovery and development of new therapeutic drugsfor the treatment of allergic rhinitis (hay fever) and other chronic respiratoryand inflammatory diseases. Rhinopharma is currently developing a long-acting mixed bronchodilator/anti-inflammatory drug (belonging to a class of drugs known as aphosphodiesterase, PDE 3/4 inhibitor) that could be rapidly brought to clinicalproof of concept for the treatment of allergic rhinitis and then be subsequentlydeveloped for the treatment of asthma and chronic obstructive pulmonary disease(COPD). A longer term focus of Rhinopharma is to apply new synthetic andanalytical chemical techniques to develop polysaccharide drugs which may be usedin the treatment of a wide range of respiratory and inflammatory diseases. The principal scientific founders of Rhinopharma are renowned worldwide fortheir expertise in drug discovery and development. Professor Michael Walker wasthe founder of the business that became Cardiome Pharma Corp., a company listedon the Toronto and NASDAQ Stock Exchanges with a market capitalisation ofapproximately Can$690 million. Cardiome's anti-arrhythmic drug has recentlycompleted Phase III clinical trials and is currently the subject of a New DrugApplication filed with the US Food and Drug Administration. Professor Clive Page is internationally recognised as an expert in thepharmacology of drugs for the treatment of respiratory and inflammatory diseasesand is one of the inventors of the polysaccharide technology being developed byRhinopharma. Rhinopharma's strategy has been to derive maximum value from its intellectualproperty assets and resources whilst reducing business risk. The drugdevelopment programmes pursued by Rhinopharma have a relatively rapid route tomarket, such as in allergic rhinitis, and are targeted at markets in which thereis significant demand but no ideal treatments. Rhinopharma operates a businessmodel which involves outsourcing much of its R&D to clinical research andcontract manufacturing organisations. In addition, Rhinopharma intends toout-license its drug development programmes to commercial development partnersafter Phase II clinical proof of concept trials, or earlier, depending on theprogramme concerned, the level of interest from potential partners andcommercial terms achievable. Changes to the Board To reflect a change of focus of its activities, following the Acquisition, theCompany will have a strong, expert Board and management team with an appropriatemix of scientific, pharmaceutical, commercial and financial expertise. CraigBurton and Josef El-Raghy will resign as directors of the Company and ProfessorClive Page, Professor Michael Walker, Claire Poll and Professor Trevor Joneswill be appointed as directors of the Company. Professor Clive Page, a founder of Rhinopharma who will be appointed Chairman ofthe new Board, is an internationally recognised expert in the pharmacology ofdrugs for the treatment of inflammatory diseases. Professor Michael Walker,another founder of Rhinopharma who will be appointed Chief Executive Officer,was the founder of the business that became Cardiome Pharma Corp., whoseanti-arrhythmic drug is currently the subject of a New Drug Application in thearea of lung disease and inflammation. Claire Poll will be appointed as anexecutive director, she has over 15 years experience as a legal and corporateexecutive for start-up and mature companies. Professor Trevor Jones will beappointed as a non-executive director, he is a visiting professor at King'sCollege, London, a director of Allergan and senior R&D adviser to Esteve (SA)Spain and Servier (France). In 2005, he was the winner of the SCRIP Life TimeAchievement award for his contribution to the pharmaceutical sciences andindustry and in 2003 he was awarded a CBE for services to the pharmaceuticalindustry. Principal Terms of the Acquisition Under the terms of the Acquisition Agreement, the Company has agreed to acquirethe entire issued share capital of Rhinopharma for a total consideration of£1.52 million to be satisfied by the issue of the 38,000,000 ConsiderationShares to the Vendors at 4 pence per share which will be issued on Completion. The Consideration Shares will be issued credited as fully paid and, immediatelyfollowing Re-Admission, will represent approximately 26.3 per cent. of theEnlarged Share Capital. Details of the Placing The Company is proposing to raise £2,043,000, before expenses, through aconditional placing by Hanson Westhouse of 37,325,000 Placing Shares pursuant tothe Placing Agreement and subscriptions for 13,750,000 Placing Shares pursuantto the Overseas Subscription Agreements, in each case at the Placing Price. The Placing Shares will represent approximately 35.4 per cent. of the EnlargedShare Capital immediately following Re-Admission. The City Code At present, the City Code does not apply to the Company on the basis that theCompany's place of central management and control is not in the UK, the ChannelIslands or the Isle of Man. There are provisions in the Articles which state that, if at any time when theCity Code does not apply to the Company, a person (together with any personsheld to be acting in concert with him) acquires shares in the Company whichwould have obliged them to extend an offer (a "mandatory offer") to the holdersof all shares in the Company had the City Code applied, the directors have thediscretion to disenfranchise such person until a compliant mandatory offer ismade. As the Existing Directors are recommending the Acquisition, they do notpropose to use this discretion afforded by the Articles. Following the appointment of the New Board, the Company will be centrallymanaged and controlled in the UK and the City Code will apply to the Companyfrom that time. Under the City Code, when any person acquires an interest in shares which, whentaken together with shares in which persons acting in concert with him areinterested, carry 30 per cent. or more of the voting rights of a company whichis subject to the City Code, such person or persons, is or are normally requiredto make a general offer to all other shareholders in that company to acquiretheir shares. Similarly, when any person, together with persons acting inconcert with him, is interested in shares which in aggregate carry not less than30 per cent. but does not hold more than 50 per cent. of the voting rights ofsuch a company, a general offer will normally be required if any further sharesare acquired. An offer must be in cash and at the highest price paid, withinthe preceding 12 months, for any interest in shares in the company by the personrequired to make the offer or any person acting in concert with him. Existing and future Shareholders should be aware that a person or group ofpersons acting in concert may come to hold 30 per cent. or more of the Company'svoting rights following completion of the Proposals. However, as the City Codeis not applicable at the time of the Proposals, there will be no requirement fora mandatory offer to be made as a consequence of such acquisition of shares, butthe provisions of the City Code will apply in respect of the acquisition of anyfurther interests in shares. The City Code is designed principally to ensurethat shareholders are treated fairly and are not denied an opportunity to decideon the merits of a takeover and that shareholders of the same class are offeredequivalent treatment by an offeror. The City Code also provides an orderlyframework within which takeovers are conducted. In addition, it is designed topromote, in conjunction with other regulatory regimes, the integrity of thefinancial markets. The City Code is not concerned with the financial or commercial advantages ordisadvantages of a takeover. These are matters for the Company and itsshareholders. Nor is the City Code concerned with those issues, such ascompetition policy, which are the responsibility of government and other bodies. Following completion of the Acquisition and the Placing and assuming theexercise of all options held by members of the Concert Party, and that no otheroptions are exercised, the Concert Party's interest in the Company wouldrepresent, in aggregate, 17.20 per cent. of the voting rights attached to theCompany's issued ordinary share capital. The interests of the Concert Party in the share capital of the Company will beas follows: Name No. of Shares No. of Options Total Per cent*. Lewis Choi 620,408 - 620,408 0.42Len Cuthbert 1,209,796 - 1,209,796 0.82Danny Lowe 2,419,592 - 2,419,592 1.63Clive Page 5,649,846 2,000,000 7,649,846 5.16Yvette Paton 2,419,592 - 2,419,592 1.63David Saint 5,643,648 - 5,643,648 3.81Michael Walker 5,643,651 2,000,000 7,643,651 5.16Nelson River Resources Limited 1,209,796 - 1,209,796 0.82 24,816,329 4,000,000 28,816,329 * Upon completion of the Acquisition and Placing and assuming the exercise ofall options held by members of the Concert Party and that no other options areexercised. Lock-ins and Orderly Market Arrangements The Proposed Directors, their related parties and applicable employees (asdefined in the AIM Rules) and certain other shareholders including the membersof the Concert Party whose interests in the Company will amount to 24.83 percent. of the Enlarged Share Capital on Re-Admission, have undertaken: 1. not to dispose of any interest in their Ordinary Shares for a period of 12 months following Re-Admission (the "Lock-in Period") in accordance with Rule 7 of the AIM Rules, except in the very limited circumstances allowed by the AIM Rules; and 2. not to dispose of their Ordinary Shares at any time during the period of 12 months following the expiry of the Lock-in Period except in certain circumstances, unless they do so through Hanson Westhouse (or the Company's broker from time to time, or in the case of Len Cuthbert and Nelson River Resources Limited, the company through which Kirk Fyffe holds his interest, through Haywood Securities (UK) Limited due to Canadian Securities regulations on brokers dealing in shares) provided that, inter alia, such disposal is effected at a competitive price and that the relevant commission and fee to be charged is competitive with those charged by other reputable brokers. Further details of the lock-ins and orderly market arrangements are set out inparagraph 8.7 of Part VI of the Admission Document. Extraordinary General Meeting Set out in the Admission Document is a notice convening the EGM, which is to beheld at 3 p.m. (Perth time) on 18 September 2006 at the offices of VeronaCapital Pty Ltd, Ground Floor, 8 Colin Street, West Perth WA 6005 and, by videolink, at the Company's registered office at Adderbury Hill Barn, Milton RoadAdderbury, Oxon OX17 3HN at 8 a.m. (London time) on 18 September 2006. The resolutions to be proposed at the EGM will be as follows: 1. to approve the Acquisition as a reverse takeover for the purposes of Rule 14 of the AIM Rules; 2. to authorise the Directors pursuant to section 80 of the Act to allot relevant securities, including, inter alia, the New Ordinary Shares; 3. to authorise the Directors pursuant to section 95(1) of the Act to allot relevant securities for cash as if the statutory pre-emption rights set out in section 89 of the Act did not apply to such allotment; and 4. to change the name of the Company to Verona Pharma plc. EGM resolutions (1) and (2) will be proposed as ordinary resolutions whileresolutions (3) and (4) will be proposed as special resolutions. Resolutions(1) to (3) are conditions of the Proposals and the Proposals will only proceedif each of these resolutions is passed. Appendix In this announcement, unless the context requires otherwise, the words andexpressions set out below shall bear the following meanings. DEFINITIONS "Acquisition" the proposed acquisition of the entire issued share capital of Rhinopharma pursuant to the Acquisition Agreement "Acquisition Agreement" the conditional agreement dated 23 August 2006 between the Vendors and the Company relating to the Acquisition as described in paragraph 8.6 of Part VI of the Admission Document "Act" the Companies Act 1985, as amended "Admission Document" the admission document of the Company dated 23 August 2006 "AIM" the market of that name operated by the London Stock Exchange plc "Articles" the Articles of Association of the Company "City Code" the City Code on Takeovers and Mergers "Company" Isis Resources plc and, where the context requires, its subsidiary undertakings on Re-Admission "Completion" completion of the Acquisition in accordance with the Acquisition Agreement "Concert Party" Lewis Choi, Len Cuthbert, Danny Lowe, Clive Page, Yvette Paton, David Saint, Michael Walker and Nelson River Resources Limited "Consideration Shares" the 38,000,000 new Ordinary Shares to be allotted and issued to the Vendors pursuant to the Acquisition Agreement "Directors" the Existing Directors and the Proposed Directors "Enlarged Share Capital" the Ordinary Shares in issue immediately following Re-Admission "Existing Directors" or "Board" the existing directors of the Company whose names are set out on page 3 of the Admission Document "Existing Ordinary Shares" the 50,200,000 Ordinary Shares in issue at the date of the Admission Document "Independent Expert's Report" the Independent Expert's Report prepared by Dr. Gunnar Aberg set out in Part IV of the Admission Document "New Board" the Proposed Directors "New Ordinary Shares" the Consideration Shares and the Placing Shares "Ordinary Shares" ordinary shares of £0.001 each in the capital of the Company "Overseas Subscription Agreements" The conditional agreements dated on or around 23 August 2006 between the Company and certain overseas investors further details of which are set out in paragraph 8.8 of Part VI of the Admission Document. "Placees" the subscribers for Placing Shares pursuant to the Placing "Placing" the conditional placing by the Company of the Placing Shares at the Placing Price to the Placees "Placing Agreement" the conditional agreement dated 23 August 2006 between the Company, Hanson Westhouse, the Existing Directors and the Proposed Directors relating to the Placing and Re-Admission, further details of which are set out in paragraph 8.5 of Part VI of the Admission Document "Placing Price" 4 pence per Placing Share "Placing Shares" the 51,075,000 new Ordinary Shares being issued by the Company pursuant to the Placing "Proposals" the Acquisition, the Placing and Re-Admission "Proposed Directors" the proposed directors of the Company following Re-Admission whose names are set out on page 3 of the Admission Document "Re-Admission" the re-admission of the Existing Ordinary Shares and admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules "Shareholders" holders of Ordinary Shares "Vendors" the holders of all the issued shares in the capital of Rhinopharma "Hanson Westhouse" Hanson Westhouse LLP GLOSSARY OF TECHNICAL TERMS "allergic rhinitis" commonly known as hay fever, a collection of symptoms, predominately in the nose and eyes, that occur after exposure to airborne particles of dust, dander or the pollens of certain seasonal plants in people who are allergic to these substances "anti-arrhythmic drug" a drug used to treat an abnormal hear rhythm "chronic" being long-lasting and recurrent or characterised by long suffering "COPD" chronic obstructive pulmonary disease, a condition characterised by destruction and progressive loss of elasticity of lung tissue, of which a substantial part is the presence of bronchitis "pharmacology" the study of drugs and their origin, nature, properties and effects upon living organisms "Phase I clinical trial" the assessment of the safety of a biologically active substance or drug in a small group of healthy volunteer subjects "Phase II clinical trial" the assessment of a drug in a large group of patients to determine the does range and preliminary and safety efficacy compared to an inactive treatment such as the placebo ("sugar pill") "Phase III clinical trial" the assessment of a drug in a large group of patients with various characteristics to determine the dose range and efficacy compared to standard therapy "phosphodiesterase" or "PDE" a family of enzymes found in various cells in the body and includes phosphodiesterase 3, being predominately in airway smooth muscle and phosphodiesterase 4, which is mainly found in inflammatory cells "polysaccharides" sugars or carbohydrates made up of more than one sugar unit (monosaccharide" "proof of concept" preclinical or clinical results such as those obtained from Phase I or II clinical trials that demonstrate that a candidate drug treatment is effective "R&D" research and development "respiratory" related to breathing or the lungs "therapeutic" referring to the cure or management of a disease This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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