23rd Mar 2005 07:01
Evolutec Group PLC23 March 2005 For immediate release 23 March 2005 EVOLUTEC GROUP PLC ("Evolutec" or "the Company") £9.5 million Secondary Fundraising Evolutec Group plc (AIM: EVC), a biopharmaceutical company engaged in developingnovel products for the treatment of allergic, inflammatory and autoimmunediseases, is pleased to announce that it has agreed, subject to certainconditions, to raise approximately £9.5 million, net of expenses, by way of aPlacing. Highlights • Evolutec is raising approximately £9.5 million, net of expenses, through the placing of 7,142,858 Placing shares at a Placing price of 140p a share. The Placing is being fully underwritten by Collins Stewart. • The Placing price represents a discount of approximately 21.6 per cent to the closing mid-market price of 178.5p per Ordinary share as at 22 March 2005, the latest practicable date prior to the announcement of the Placing. • The Placing shares are being offered only to a number of new institutions and existing institutional investors to ensure certainty, to broaden the institutional shareholder base and to minimise transaction costs. • The funds raised will be used to fund further clinical studies of the Company's lead compound, rEV131, in rhinitis, post-cataract surgery and dry eye, and to progress the development of rEV598 and rEV576. • Evolutec's Directors have agreed to subscribe an aggregate of £145,000 for 103,571 Placing shares at the Placing price. • The necessary authority required for the allotment of Placing shares pursuant to the Placing will be sought at an Extraordinary General Meeting convened for 11.00am on 20 April 2005. Commenting on the Placing, Mark Carnegie Brown, Evolutec's Chief Executive,said: "I am delighted by the high level of institutional support for thisPlacing, which underlined the progress we have made since joining AIM last year.The additional funds will allow us to accelerate the development of the Companywith the dual objectives of bringing novel medicines to market and buildingvalue for our shareholders." Evolutec is today hosting an R&D review for analysts and institutionalshareholders. The R&D review, which will focus on the Company's clinicaldevelopment programmes, will take place at Buchanan Communications, 107Cheapside, London EC2V 6DN, from 3.30pm to 5.30pm. Speakers will include theCompany's management and also Professor Mark Abelson, lead clinician and SeniorClinical Scientist at Schepens Eye Research Institute, Associate ClinicalProfessor at Harvard Medical School and President, Opthalmic ResearchAssociates, Inc. For further information: Evolutec 01865 784070Mark Carnegie Brown, Chief Executive OfficerNicholas Badman, Chief Financial Officerwww.evolutec.co.uk Collins Stewart 020 7523 8350Chris Howard Buchanan Communications 020 7466 5000Mark Court/Tim Anderson/Mary-Jane Johnson Notes for Editors About Evolutec Evolutec, which is based in Oxford, UK, is a clinical stage biopharmaceuticalcompany with a focus on allergy, inflammation and auto-immune diseases. The Company's lead product, rEV131, is a histamine-binding protein that hasprogressed to phase II trials in allergic conjunctivitis, rhinitis and ocularinflammation. Positive pre-clinical data has also been generated in asthma.rEV131 is understood to be the only product currently in clinical trials thatimpacts the recently discovered H4 receptor, a receptor implicated in many formsof inflammatory disease. The Company intends to carryout proof of concept phaseII clinical trials with rEV131 in allergic rhinitis and post-cataract surgery in2005. The Company has a further two products in pre-clinical development, rEV598 whichis being evaluated in carcinoid syndrome and CINV (chemotherapy-induced nauseaand vomiting), and rEV576, a complement inhibitor. 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. The tick remains undetected by its hosts, including humans, byinjecting an array of molecules into the skin that suppresses normal defencemechanisms. These stealth molecules have evolved over millions of years toenable the tick to take a blood meal from its host. Evolutec employs the tick'sevolutionary stealth technology to offer the potential of treating humandiseases. Evolutec Group plc ("the Company" or "Evolutec") Proposed £9.5 million Placing Background to and reasons for the Placing Evolutec is a research and development based biopharmaceutical business whichexpects to incur further losses until revenues from royalty income, milestonereceipts and product sales exceed expenditure on the product portfolio (as wellas overheads and administrative costs). As a result, the Directors believe it isnecessary and in the best interests of the Company to raise extra funds in orderto fund further clinical studies of its lead compound, rEV131, in rhinitis,post-cataract surgery and dry eye (as discussed in further detail in paragraph 3below) and to provide additional finance so that Evolutec can progress thedevelopment programmes with rEV598 (a serocalin) and rEV576 (a complementinhibitor) during 2005. The Company will then be in a position to selectclinical indications for these development candidates in the next 12 to 18months to create a portfolio of opportunities in different therapeuticindications. This is in accordance with the Company's stated ambitions. The Directors believe that the Company would benefit from access to additionalcapital to fund further clinical studies of its lead compound rEV131. The Boardhas therefore concluded terms for the raising of additional funds in order tostrengthen the Company's balance sheet and to provide it with additional workingcapital. In order to ensure certainty, to broaden the institutional shareholder base andto minimise transaction costs, the Placing shares are only being offered to anumber of new and existing institutional shareholders. The Placing Price represents a discount of approximately 21.6 per cent. to theclosing mid-market price of 178.5p per Ordinary Share as at 22 March 2005, thelatest practicable date prior to the announcement of the Placing. rEV131 development Evolutec's clinical development programmes for rEV131 in rhinitis andpost-cataract surgery are on track to deliver results by the end of 2005, asdiscussed at the time of the Company's admission to AIM in August 2004. Inaddition, dry eye has been selected as a third indication for rEV131. In rhinitis, a nasal safety programme has been completed and a nasal deliverydevice has been selected. An IND was submitted to the FDA on 14 February 2005,outlining a dose ranging efficacy and safety rhinitis trial. Following positivepreliminary discussions with the FDA, it has been decided to increase the numberof patients from 80 to 112 to allow an extra cohort of patients to be tested atthe optimal dose. This will increase the power of the study. A positive result in a model of ocular inflammation was obtained in the latterpart of 2004, which confirms the potential of rEV131 in post-cataract surgery.Despite the small scale of the study the higher dose of rEV131 showed astatistically significant improvement over the standard steroid treatmentprednisolone. The dry eye market is estimated to be worth in excess of $1 billion in the USalone. It represents an exciting potential commercial opportunity for Evolutecwhich intends to retain marketing rights using a specialist sales forcetargeting ophthalmologists. Cambrex has been selected to manufacture rEV131 for planned Phase III clinicaltrials and subsequent marketing. REV131 has been manufactured to date accordingto Good Laboratory Practice ("GLP") standards for the Phase II clinical trials.The current GLP process produces good yields of rEV131. The agreement withCambrex covers process development work, during which Cambrex will develop arobust, scaleable, current Good Manufacturing Practice ("cGMP") process forpurified rEV131, with the goal of optimising the process yield. The agreementthen provides for Cambrex to scale-up the cGMP process. The investment in cGMPmanufacturing with Cambrex gives Evolutec control of the production of rEV131.This is important as it means that Evolutec can produce rEV131 for own sales inchosen specialist indications and markets. Financial The results for the 18 month period to 31 December 2004 were announced on 3March 2005. The Annual Report and Accounts for the year ended 31 December 2004was issued on the same day. These documents contain a full review of theCompany's business, as well as the details of Evolutec's progress sinceadmission to AIM in August 2004. Copies of the Annual Report are available onthe website of the Company. Evolutec raised £5.1 million (net of expenses) via a placing on AIM in August2004. The operating loss for the 18 month period to 31 December 2004 was £2.5million (12 months to 30 June 2003: operating loss of £1.1m). Evolutec had cashand short-term investments of £3.9 million as at 31 December 2004. This cash issufficient to pay for the initial rhinitis and post-cataract surgery trials andpart of the cGMP manufacturing costs but will not cover subsequent trials andthe additional dry eye work. Placing The Company announced today that it is raising £9.5 million, net of expenses,through the placing of 7,142,858 Placing Shares. The Placing Price represents adiscount of approximately 21.6 per cent. to the closing mi-market price of178.5p per Ordinary Share as at 22 March 2005, the latest practicable date priorto the announcement of the Placing. The Placing Shares will rank in full for alldividends and otherwise pari passu in all respects with the existing OrdinaryShares. It is expected that the New Ordinary Shares will be admitted to trading on AIMon 21 April 2005. The Placing, which has been fully underwritten by CollinsStewart, is conditional, inter alia, upon: • the approval of the Resolutions at the EGM; • the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and • Admission of the Placing Shares. Directors' shareholdings The Directors have agreed to subscribe an aggregate of £145,000 for 103,571Placing Shares at the Placing Price. In respect of the subscription of thePlacing Shares subscribed by the Director's, the Director's have agreed to bebound by a 12 month lock-up agreement. The Directors' beneficial and nonbeneficial interests in Shares (not including unexercised options over Shares)on the date of this announcement and following the Placing are set out below: Director Current Interests Interests after Placing Number of Percentage of Number of Percentage of Shares Issued Share Shares Issued Share Capital Capital David Bloxham 103,572 1.02 117,858 0.68Mark Carnegie Brown 40,000 0.39 50,714 0.29Nicholas Badman 35,000 0.34 56,429 0.33John Burke 101,343 0.99 129,914 0.75Graeme Hart 110,168 1.08 138,739 0.80 Extraordinary General Meeting and action to be taken A notice convening the EGM to be held at 100 Longwater Avenue, Green Park,Reading RG2 6GP at 11.00 a.m. on 20 April 2005 is set out in the circular toshareholders. Resolutions will be proposed at the EGM to authorise the Directorsto allot shares. The Company will despatch the circular to shareholders today. 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 Shareholders vote in favour of theResolutions at the EGM as they intend to do in respect of their own holding ofShares, representing 390,083 Ordinary shares, being 3.82 per cent. of thecurrent issued ordinary share capital. Expected timetable of events Extraordinary General Meeting 11.00 a.m. on 20 April 2005 Admission of the New Ordinary Shares to AIM 8.00 a.m. on 21 April 2005 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 issue or thesolicitation of an offer to buy, subscribe or otherwise acquire Placing Sharesor other shares in the Company in Canada, Australia, Japan, the Republic ofIreland or in any jurisdiction in which such offer or solicitation is unlawfuland the information contained herein is not for release, publication ordistribution in whole or in part in or into Canada, Australia, Japan or theRepublic of Ireland or in any jurisdiction in which such publication ordistribution 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. Collins Stewart Ltd., a division of Collins Stewart Tullet plc, which isauthorised and regulated in the United Kingdom by the Financial ServicesAuthority under the Financial Services and Markets Act 2000, is actingexclusively for the Company in connection with the Placing and no one else andwill not be responsible to anyone other than the Company for providing theprotections afforded to clients of Collins Stewart nor for providing advice inrelation to the Placing or any other matter referred to herein. Collins Stewartcan be contacted at 88 Wood Street, London EC2V 7QR. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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