14th Oct 2005 11:23
Evolutec Group PLC14 October 2005 For immediate release 14 October 2005 EVOLUTEC GROUP PLC ("Evolutec" or the "Company") FUNDRAISING OF £10 MILLION Evolutec Group plc (AIM: EVC), a biopharmaceutical company developing smallprotein therapeutics for allergy, inflammation and auto-immune diseases, ispleased to announce a fundraising, subject to certain conditions, of £10 millionat 160p per share, to be fully underwritten by Robert W. Baird. Highlights • The fundraising follows the positive Phase II result, announced on 20 September 2005, of Evolutec's lead molecule, rEV131, in allergic rhinitis (hay fever). • The majority of the funds from the placing will be used to further develop rEV131, the Company's primary asset. In particular, the funds raised will cover the cost of an extensive follow-up Phase II rhinitis trial using a multi-dose device. • A smaller portion of the funds raised will be invested in rEV576, the Company's second molecule. The Directors believe that rEV576 has significant potential in a number of acute and chronic conditions ranging from the orphan indication myasthenia gravis, to acute myocardial infarction (heart attack), and rheumatoid arthritis. • The placing is expected to complete on 11 November 2005, subject to approval at Extraordinary General Meeting convened for 11.00 a.m. on 9 November 2005. Mark Carnegie Brown, Evolutec's Chief Executive, said: "We are extremely pleasedwith existing and new institutional support on this placing. This supportunderlines the compelling results with our lead molecule rEV131 in rhinitis andthe progress made with the development of our portfolio." For further information: Evolutec + 44 (0) 118 922 4480 Mark Carnegie Brown, Chief Executive OfficerNicholas Badman, Chief Financial Officerwww.evolutec.co.uk Robert W. Baird +44 (0) 20 7488 1212Shaun Dobson/Xavier de Mol Buchanan Communications +44 (0) 20 7466 5000Mark Court/Tim Anderson/Mary-Jane Johnson Notes for Editors: About Evolutec Evolutec, which is based in Reading, UK, is a clinical stage biopharmaceuticalcompany with a focus on allergy, inflammation and auto-immune diseases. The Company has just completed a positive 112 patient proof of concept Phase IIclinical trial with rEV131, its lead molecule, in allergic rhinitis. TheCompany had previously demonstrated clinical activity against the symptoms ofrhinitis when rEV131 was delivered as an eye drop. Evolutec intends to carry outadditional proof of concept Phase II trials with rEV131 in post-cataract surgeryand dry eye. Positive preclinical data has also been generated in asthma.rEV131 is a histamine binding protein and is understood to be the only moleculecurrently in clinical trials that impacts the recently discovered H4 receptor, areceptor implicated in many forms of inflammatory disease. The Company has a further two molecules in preclinical development. rEV576, acomplement inhibitor that was very effective in a preclinical model ofmyasthenia gravis, and rEV598, which is being evaluated in carcinoid syndromeand CINV (chemotherapy-induced nausea and vomiting). Evolutec is working withMerial to develop anti-tick and anti-tick borne disease vaccines. Evolutec was founded in 1998 to exploit research carried out by the NaturalEnvironment Research Council. Evolutec's drugs were first isolated from thesaliva of ticks but are now manufactured by bacterial fermentation procedures.The tick remains undetected by its hosts, including humans, by injecting anarray of molecules that suppress normal defence mechanisms. These stealthmolecules have evolved over millions of years to enable the tick to take a bloodmeal from its host. Evolutec employs the tick's evolutionary stealth technologyto offer the potential of treating human diseases. Safe Harbour statement: this news release may contain forward-looking statementsthat reflect the current expectations of the Company regarding future events.Forward-looking statements involve risks and uncertainties. Actual events coulddiffer materially from those projected herein and depend on a number of factorsincluding the success of the Company's research strategies, the applicability ofthe discoveries made therein, the successful and timely completion of clinicalstudies, the uncertainties related to the regulatory process, the successfulintegration of completed mergers and acquisitions and achievement of expectedsynergies from such transactions, and the ability of the Company to identify andconsummate suitable strategic and business combination transactions. Evolutec Group plc Fundraising of £10 million Placing of 1,575,625 VCT Shares and 4,674,375 Ordinary Placing Shares at 160p per share 1. Introduction The Board announced today that Evolutec has agreed, subject to certainconditions, to raise approximately £9.2 million, net of expenses, by way of aplacing of the VCT Shares and a placing of the Ordinary Placing Shares. Furtherdetails of the Placings, which have been fully underwritten by Robert W. Baird,are set out below. The necessary authorities required for the allotment of Placing Shares pursuantto the Placings will be sought at an Extraordinary General Meeting convened for11.00 a.m. on 9 November 2005. The purpose of this document is to provide youwith information on the Placings and to convene the EGM at which your approvalwill be sought for the Resolutions, as set out in the notice of EGM. Definitions used in the circular to shareholders in connection with the Placingsapply herein unless otherwise stated or inconsistent herewith. 2. Background to and reasons for the Placings The Group intends to raise £10 million from placings of the VCT Shares and ofthe Ordinary Placing Shares. Evolutec is a research and development based biopharmaceutical business with afocus on allergy, inflammation and auto-immune diseases. Evolutec expects toincur further losses until revenues from royalty income, milestone receipts andproduct sales exceed expenditure on the research and development portfolio (aswell as overheads and administrative costs). Evolutec has three molecule candidates, one in clinical development and two atthe preclinical stage as well as a vaccine technology. The animal uses of thevaccine technology have been partnered with Merial Inc. ("Merial"). Evolutec's lead molecule, rEV131, has recently achieved a positive result in aPhase II clinical trial in allergic rhinitis (hay fever). This result iscompelling because, in addition to delivering the primary endpoint of the trial,rEV131 showed a rapid onset of action as well as efficacy against congestion andmucus production, the most difficult to treat symptoms of rhinitis. Evolutec'ssecond molecule, rEV576, recently showed a high degree of efficacy in apreclinical trial of the autoimmune disease myasthenia gravis. On the basis ofthe data generated, Evolutec believes that rEV576 may have potential in bothacute and chronic inflammatory conditions that are mediated by complement.Evolutec's third molecule, rEV598, is being evaluated in carcinoid syndrome andchemotherapy induced nausea and vomiting. Based on a positive outcome from aninitial trial in cattle, Merial has decided to continue its evaluation ofEvolutec's vaccine technology against tick-borne diseases. The Board believes that, following the Placing, the Company will be in astronger position to capitalise on the development of its molecules, and inparticular rEV131. It is intended that the majority of the funds from thePlacing will be used to further develop rEV131, the Company's primary asset. Therest of the proceeds from the Placing will be used to develop the Company'spipeline of products. In particular, Evolutec is seeking the additional funds in order to: O Compile a comprehensive Phase II data package for rEV131 in rhinitis -Evolutec's strategy is to find a partner to undertake the final stages ofclinical development and marketing of rEV131 in the respiratory area. Rhinitis,which represents a US$6 billion market, is the lead indication. In addition, theCompany intends to leverage the preclinical data for rEV131 in asthma, whichrepresents an US$11 billion market, and acute respiratory distress syndrome. The funds will cover the cost of further extensive Phase II studies in rhinitis,as well as concurrent safety and metabolism studies. This second Phase IIrhinitis trial will use a multi-dose device and will also examine the durationof action and the onset of action of rEV131. On the manufacturing side, thefunds will pay for multiple batches of drug substance to be produced accordingto current good manufacturing practice ("cGMP"). This will also provide materialfor subsequent Phase III studies. The Directors believe that the follow-up Phase II rhinitis result, together withthe metabolism and safety data will represent a comprehensive Phase II datapackage upon which to base subsequent partnering negotiations. O Progress rEV131 in the ophthalmic area - Evolutec is looking to retain themarketing rights to rEV131 in specialist markets such as ophthalmology. Theadditional funds sought will cover the investment required for more extensivePhase II trials in dry eye and post-cataract surgery. O Accelerate the preclinical development of rEV576 - The Directors believethat rEV576 has significant potential in a number of acute and chronic areasranging from the orphan indication myasthenia gravis, which there are some36,000 cases in the US, to acute myocardial infarction (heart attack), of whichthere are 1 million cases in the US each year, and rheumatoid arthritis, aUS$13.5 billion market. Evolutec intends to invest in the outsourced developmentof a cGMP manufacturing process for rEV576 to provide material for preclinicaland clinical trials. The Company will carry out an extensive preclinicalprogramme in 2006 to evaluate fully the potential of rEV576 and selectappropriate indications for the clinic. 3. rEV131 development The Board announced on 20 September 2005, ahead of schedule, a positive clinicaltrial result for its lead molecule, rEV131, in a 112 patient Phase II study inallergic rhinitis (hay fever). The Company had previously demonstrated clinicalactivity against the symptoms of rhinitis when rEV131 was delivered as an eyedrop. rEV131 is a recombinant version of a naturally occurring molecule identified inticks; parasites whose saliva contains immuno-suppressive and immuno-modulatorymolecules. This Phase II dose ranging study of rEV131, which involved rEV131administered as a nasal spray, was undertaken at two clinical centres in SanAntonio, Texas. The trial was conducted in accordance with the FDA's guidancefor industry recommendations. The trial comprised four groups of 20 patients (16 active, 4 placebo), with theactive patients on ascending single doses of rEV131, followed by a fifth groupof 32 patients (16 active, 16 placebo) at the optimum dose. A ragweed pollenextract was administered 30 minutes following the dosing of rEV131. The trialmet its primary endpoint, a statistically significant difference in the mean sumof symptom scores at 15 minutes post allergen challenge versus placebo inpatients who completed the trial according to the protocol. This result showsthat rEV131 has an onset of action of 45 minutes or less, which is quicker thansteroid nasal sprays which have an onset of action of approximately 8 hours. The main effects of rEV131 were against congestion and mucus production,symptoms that patients find the most problematic and which are not welladdressed by oral antihistamines. There were no significant adverse effects andrEV131 was comfortable and well tolerated. rEV131 has therefore shown a dose related drug effect, which has enabledEvolutec to select the optimum dose for further work to determine the onset ofaction and the duration of effect. Evolutec intends to carry out additional proof of concept Phase II trials withrEV131 in post-cataract surgery and dry-eye. 4. The Placings The Company announced today that it was raising approximately £9.2 million, netof expenses, through the placing of 1,575,625 VCT Shares and 4,674,375 OrdinaryPlacing Shares. The Placing Shares will rank in full for all dividends andotherwise pari passu with the existing Ordinary Shares. It is expected that the VCT Shares will be admitted to trading on AIM on 10November 2005 and that the Ordinary Placing Shares will be admitted to tradingon AIM on 11 November 2005. The Placings, which have been fully underwritten byRobert W. Baird, are conditional, inter alia, upon: O the approval of the Resolutions at the EGM; O the Placing Agreement becoming unconditional in all respects and not havingbeen terminated in accordance with its terms; O Admission of the Placing Shares. In order to ensure certainty, to broaden the institutional shareholder base andto minimise transactional costs, the Placing Shares are being offered to anumber of existing and new institutional shareholders. The Placings are to be effected on behalf of the Company by Robert W. Baird onthe terms of the Placing Agreement. The Placing Agreement provides for Robert W.Baird to use its reasonable endeavours to procure subscribers for the PlacingShares, or failing which, to subscribe for such Placing Shares itself. Theseobligations are subject to certain conditions including those listed above. The Placing Shares represent approximately 26.5 per cent. of the enlarged issuedordinary share capital of the Company following the Placings. 5. Directors' Shareholdings Current Interests Interests after PlacingDirector Number of Percentage Number of Percentage of Ordinary of Issued Ordinary Issued Shares Ordinary Shares Ordinary Share Share Capital Capital David Bloxham 117,858 0.68 126,608 0.54%Mark Carnegie Brown 50,714 0.29 63,214 0.27%Nicholas Badman 56,429 0.33 68,929 0.29%John Burke 129,914 0.75 192,414 0.82%Graeme Hart 138,739 0.80 208,739 0.88% The Directors have agreed to subscribe for an aggregate of £0.27 million for166,250 Ordinary Placing Shares at the Placing Price. The beneficial andnon-beneficial interests of the Directors (not including unexercised optionsover the Ordinary Shares) on the date of this document and following the Placingare set out below: 6. Extraordinary General Meeting and action to be taken A notice convening the EGM to be held at 100 Longwater Avenue, Green Park,Reading, Berkshire RG2 6GP at 11.00 a.m. on 9 November 2005 has been sent toshareholders. The Resolutions to be proposed at the EGM are to empower theDirectors to allot equity securities for cash and to do so otherwise than inaccordance with the Shareholders' statutory pre-emptory provisions, as set outin the Act, in connection with - inter alia - the Placings. The authority given to the Directors to allot further shares in the capital ofthe Company requires the prior authorisation of the Shareholders at a generalmeeting under section 80 of the Act. Upon the passing of Resolution 1 andfollowing completion of the Placings the Directors will have authority to allotcertain of the unissued ordinary share capital up to an aggregate nominal amountof £778,500, representing approximately 33 per cent. of the issued ordinaryshare capital of the Company as enlarged by the issue of the Placing Shares.This authority will expire immediately following the annual general meeting ofthe Company in 2006. Upon the passing of Resolution 2 and following completion of the Placings, theDirectors will have the power under section 95 of the Act to allot, for cash,Ordinary Shares up to a maximum aggregate nominal amount of £235,909.06,representing approximately 10 per cent. of the issued ordinary share capital ofthe Company as enlarged by the issue of the Placing Shares, without beingrequired first to offer such securities to Shareholders in accordance with thestatutory pre-emption rights. This authority will expire immediately followingthe annual general meeting of the Company in 2006. While the Directors have no present intention to allot any Ordinary Sharespursuant to the authorities proposed to be granted to them at the EGM, save forthe allotment of the Placing Shares, the rights described above would provideflexibility for raising additional funds or making acquisitions should suitableopportunities arise. A form of proxy for use by Shareholders in connection with the EGM is enclosedwith this document. Whether or not you propose to attend the EGM in person, youare requested to complete the form of proxy in accordance with the instructionsprinted on it and to return it to the Company's registrars, Capita Registrars,The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible andin any event so as to arrive no later than 11.00 a.m. on 7 November 2005.Completion and return of the form of proxy will not preclude you from attendingthe EGM and voting in person should you so wish. 1. Recommendation The Directors consider the terms of the Placing to be fair and reasonableinsofar as the Shareholders are concerned and in the best interests of theCompany; and accordingly recommend that you vote in favour of the Resolutions atthe EGM as they intend to do in respect of their own holding of Ordinary Shares,representing 493,654 Ordinary Shares, being 2.8 per cent. of the current issuedordinary share capital. This announcement shall not constitute or form any part of any offer orinvitation to subscribe for, underwrite or otherwise acquire, or anysolicitation of any offer to purchase or subscribe for, securities including inthe United States. This announcement does not constitute an offer of securities for sale in theUnited States. Neither this announcement nor any copy of it may be taken ordistributed into the United States or distributed or published, directly orindirectly, in the United States. Any failure to comply with this restrictionmay constitute a violation of US securities laws. The securities referred toherein have not been and will not be registered under the Securities Act, andmay not be offered or sold in the United States unless they are registered underthe Securities Act or pursuant to an available exemption therefrom. No publicoffering of securities of the Company is being made in the United States. This announcement does not constitute an offer to sell or the solicitation of anoffer to buy, subscribe or otherwise acquire Placing Shares or other shares inthe Company in Canada, Australia, Japan, the Republic of Ireland or in anyjurisdiction in which such offer or solicitation is unlawful and the informationcontained herein is not for release, publication or distribution in whole or inpart in or into Canada, Australia, Japan or the Republic of Ireland or in anyjurisdiction in which such publication or distribution is unlawful. The Placing Shares have not been recommended, approved or disapproved by anyUnited States federal or state securities commission or regulatory authority.Furthermore, the foregoing authorities have not confirmed the accuracy ordetermined the adequacy of this announcement. Any representation to the contraryis a criminal offence in the United States. The announcement contains a number of statements relating to the Company thatare considered 'forward looking statements' as defined in the Private SecuritiesLitigation Reform Act 1995 of the United States. Such statements are based oncurrent plans and, information and intentions and certain external factors whichmay be beyond the control of the Company and, therefore, undue reliance shouldnot be placed on them. Forward looking statements speak only as of the date theyare made and the Company undertakes no obligation to update publicly any of themin light of new information or future events. These statements are subject torisks and uncertainties that could cause actual occurrences to differ materiallyfrom the forward looking statements. Robert W. Baird Limited, which is a member of the London Stock Exchange and isauthorised and regulated by the Financial Services Authority, is actingexclusively for Evolutec and no-one else in relation to the Placing and will notbe responsible to anyone other than Evolutec for providing the protectionsafforded to clients of Robert W. Baird Limited nor for providing advice inrelation to the Placing. No representation or warranty, express or implied, ismade by Robert W. Baird Limited as to any of the contents of this announcement. This announcement, which is the sole responsibility of Evolutec, has beenapproved by Robert W. Baird Limited for the purposes of Section 21 of theFinancial Services and Markets Act 2000. Robert W. Baird Limited, which isauthorised and regulated by the Financial Services Authority, is acting as theCompany's financial adviser in connection with the Placing. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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