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Licence Agreemt &Firm Placing &Placing &Open Offer

10th Feb 2012 07:00

RNS Number : 1819X
Vernalis PLC
10 February 2012
 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR SOUTH AFRICA.

 

THE CONTENTS OF THIS ANNOUNCEMENT DO NOT CONSTITUTE OR FORM PART OF AN OFFER OF OR INVITATION TO SELL OR ISSUE OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR ANY SECURITIES FOR SALE IN ANY JURISDICTION NOR SHALL THEY (OR ANY PART OF THEM) OR THE FACT OF THEIR DISTRIBUTION FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH, OR ACT AS AN INDUCEMENT TO ENTER INTO, ANY CONTRACT OR COMMITMENT TO DO SO. THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS FOR THE PURPOSES OF EU DIRECTIVE 2003/71/EC (THE "DIRECTIVE") AND PART VI OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 AS AMENDED. A PROSPECTUS WILL BE PREPARED AND MADE AVAILABLE TO THE PUBLIC IN ACCORDANCE WITH THE DIRECTIVE. RECIPIENTS OF THIS ANNOUNCEMENT WHO INTEND TO PURCHASE SUCH SECURITIES ARE REMINDED THAT ANY SUCH PURCHASE OR SUBSCRIPTION MUST BE MADE SOLELY ON THE BASIS OF THE INFORMATION CONTAINED IN THE PROSPECTUS IN ITS FINAL FORM.

 

THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES, UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION. NO PUBLIC OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE UNITED STATES AND THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES AND THE COMPANY DOES NOT CURRENTLY INTEND TO REGISTER ANY SECURITIES UNDER THE SECURITIES ACT. THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES.

 

 

Vernalis plc

 

Vernalis enters into Licence Agreement with Tris Pharma, Inc.

to develop up to six novel formulations of existing drugs

 

Firm Placing and Placing and Open Offer

to raise approximately £68.5 million gross proceeds

 

Vernalis plc (LSE:VER) ("Vernalis" or the "Company"), announces today that it has entered into an agreement with Tris Pharma, Inc. ("Tris"), a private US specialty pharmaceutical company to develop up to six novel formulations of existing products sold in the US prescription cough/cold market (the "Licence Agreement"). The Licence Agreement is an important next step in executing Vernalis' strategy to become a diversified, profitable and self-sustaining specialty pharmaceutical company. Vernalis also announces that it proposes to raise approximately £65.9 million, net of expenses, by way of an oversubscribed Firm Placing and Placing and Open Offer of 342,528,564 new Ordinary Shares (the "New Ordinary Shares") and to use part of the proceeds to develop products and establish a commercial infrastructure in relation to the Licence Agreement as well as to fund development of other products under new licensing agreements and collaborations with a focus on opportunities in later stages of development.

 

·; 50,000,000 New Ordinary Shares will be issued through the Firm Placing (representing approximately 14.6 per cent. of the total number of New Ordinary Shares) and 292,528,564 New Ordinary Shares will be issued through the Placing and Open Offer (representing the remaining 85.4 per cent. of New Ordinary Shares).

 

·; The Offer Price of 20 pence per New Ordinary Share represents a premium of 2.6 per cent. to the mid-market closing price of 19.5 pence per Ordinary Share on 9 February 2012 (being the last dealing day prior to the date of the announcement of the Firm Placing and Placing and Open Offer).

 

·; Application has been made for the New Ordinary Shares to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 2 March 2012 and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 am on the same day. If, at Admission, less than 25 per cent. of the enlarged issued share capital of the Company is in public hands ("the Free Float obligation"), the Company will seek to cancel its listing of Ordinary Shares on the premium segment of the Official List and remove such Ordinary Shares from trading on the London Stock Exchange's main market for listed securities. In such circumstances, the Board intends to seek the admission of the enlarged issued share capital of the Company to trading on AIM, where no such Free Float obligation applies.

 

·; Nomura Code is acting as sponsor, bookrunner and underwriter to the Company in connection with the fundraising.

 

Highlights

 

·; The Group acquires the exclusive right to market, distribute, offer for sale and sell (either on its own account or by way of sub-licence) products developed by Tris for the prescription cough/cold market in the US, Puerto Rico, Mexico and Canada. The Licence Agreement is an important next step in the execution of Vernalis' strategy to become a diversified, profitable and self-sustaining specialty pharmaceutical company.

 

·; The Group will seek to develop up to six NDAs under the Licence Agreement using an accelerated regulatory path based on bioequivalence that would not require efficacy studies. Except in limited circumstances, all development work will be undertaken by Tris, at its expense, and payments by the Group will be success based after payment of a US$5 million upfront sum.

 

·; Ian Garland, Vernalis' Chief Executive Officer, has significant commercial experience in the US cough/cold market.

 

·; The first NDA under this Licence Agreement could be filed within 12 to 24 months.

 

·; Following approval, each NDA will be transferred to the Group.

 

·; The commercial potential arising from the benefits of convenience and compliance of extended release products has been demonstrated by the sales of Tussionex, an existing extended release formulation for the US prescription cough/cold market.

 

·; The Firm Placing and Placing and Open Offer will raise approximately £65.9million (net of expenses) to develop products and establish a commercial infrastructure in relation to the Licence Agreement. In addition, part of the funds will be used to develop further products under new licensing agreements and collaborations with a focus on opportunities in later stages of development.

 

·; The Firm Placing and Placing and Open Offer, which was oversubscribed, has been fully underwritten by Nomura Code.

 

·; A waiver has conditionally been granted by the Takeover Panel from the usual requirements under Rule 9 of the Takeover Code for a person acquiring an interest in 30% or more of a company to make a general offer to all Shareholders, subject to Independent Shareholder approval.

 

·; A General Meeting to approve the Firm Placing and Placing and Open Offer and other resolutions is to be held on 28 February 2012.

 

 

Ian Garland, Chief Executive Officer of Vernalis, commented:

"Today's announcement represents a very substantial step in Vernalis' transformation into a diversified, profitable and self-sustaining specialty pharmaceutical company. We believe the use of Tris' already commercially validated technology to produce extended release formulations of existing drugs offers a low risk and potentially rapid route to obtain approved products with significant commercial potential in the US prescription cough/cold market."

A meeting and conference call for analysts will be held today at 9.30 a.m. GMT. For details, contact Valerie Mugridge at Brunswick on telephone number +44 (0) 20 7396 5325. An instant replay of the call will be available via Vernalis' website at www.vernalis.com. The webcast replay will be available for 30 days.

 

Expected Timetable of Principal Events

2012

Record Date for entitlements under the Open Offer

5.30 p.m. on 8 February

Ex-entitlement date

10 February

Despatch of Prospectus, Application Forms and Forms of Proxy

10 February

Open Offer Entitlements credited to stock accounts in CREST of Qualifying CREST Shareholders

13 February

Latest recommended time and date for requested withdrawal of Open Offer Entitlements from CREST

4.30 p.m. on 21 February

Latest recommended time and date for depositing Open Offer Entitlements into CREST

3.00 p.m. on 22 February

Latest time and date for splitting Application Forms (to satisfy bona fide market claims)

3.00 p.m. on 23 February

Latest time and date for receipt of Forms of Proxy or submission of proxy votes electronically

11.00 a.m. on 26 February

Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)

11.00 a.m. on 27 February

Results of the Placing and Open Offer announced through an RIS

7.00 a.m. on 28 February

General Meeting

11.00 a.m. on 28 February

Admission and dealings in New Ordinary Shares expected to commence

8.00 a.m. on 2 March

CREST stock accounts expected to be credited for the New Ordinary Shares as soon as possible after

8.00 a.m. on 2 March

Share certificates for New Ordinary Shares expected to be despatched

8.00 a.m. on 9 March

 

Each of the times and dates in the above timetable is subject to change, in which event details of the new times and/or dates will be notified to the Financial Services Authority and the London Stock Exchange and, where appropriate, Shareholders. Please note that any Existing Ordinary Shares sold prior to close of business on 9 February 2012, the last date on which the Existing Ordinary Shares trade with entitlement, will be sold to the purchaser with the right to receive entitlements under the Open Offer.

If you have any questions relating to the procedure for acceptance, please telephone Capita Registrars between 9.00 a.m. and 5.00 p.m. (London time) Monday to Friday (except UK public holidays) on 0871 664 0321 from within the UK or +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers may vary. Calls to the helpline from outside the UK will be charged at applicable international rates.

Different charges may apply from mobile phones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Firm Placing and the Placing and Open Offer nor give any financial, legal or tax advice.

A shareholder circular (which is also a prospectus) containing details of the Firm Placing and the Placing and Open Offer will be posted to shareholders shortly and will be available on the Company's website www.vernalis.com.

 

Enquiries:

 

Vernalis Contacts:

 

Ian Garland, Chief Executive Officer

+44 (0) 118 989 9360

David Mackney, Chief Financial Officer

 

 

 

Nomura Code Securities:

 

Juliet Thompson, Managing Director

+44 (0) 20 7776 1200

 

 

Brunswick Group:

 

Jon Coles

+44 (0) 20 7404 5959

Kristin Shine

 

 

 

Taylor Rafferty:

 

Rob Newman

+44 (0) 20 7614 2900

Faisal Kanth

 

 

 

 

Not for release, publication or distribution directly or indirectly in or into the United States, Canada, Australia, New Zealand, Japan or South Africa.

 

Nomura Code Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Virgil in relation to the Firm Placing and Placing and Open Offer and will not be responsible to anyone other than Virgil for providing the protections afforded to clients of Nomura Code Securities Limited nor for providing advice in relation to the Firm Placing and Placing and Open Offer or any other transaction or arrangement referred to in this document. Nothing in this paragraph shall serve to include or limit any responsibilities or liabilities Nomura Code Securities Limited may have under FSMA or the regulatory regime established thereunder.

 

The contents of this announcement do not constitute or form part of an offer of or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities for sale in any jurisdiction nor shall they (or any part of them) or the fact of their distribution form the basis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment to do so. This announcement is an advertisement and not a prospectus for the purposes of EU Directive 2003/71/EC (the "Directive") and Part VI of the Financial Services and Markets Act 2000 as amended. A prospectus will be prepared and made available to the public in accordance with the Directive. Recipients of this announcement who intend to purchase such securities are reminded that any such purchase or subscription must be made solely on the basis of the information contained in the prospectus in its final form.

 

The securities may not be offered or sold in the United States, unless registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from such registration. No public offering of the securities discussed herein is being made in the United States and the information contained herein does not constitute an offering of securities for sale in the United States and the company does not currently intend to register any securities under the Securities Act. This announcement is not for distribution directly or indirectly in or into the United States.

 

The delivery of this announcement shall not, under any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement nor that the information in it is correct as of any subsequent time.

 

This announcement may contain forward-looking statements that reflect the Group's current expectations regarding future events, including the clinical development and regulatory clearance of the Group's products, the Group's ability to find partners for the development and commercialisation of its products, the Group's liquidity and results of operations, as well as the Group's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the success of the Group's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, the uncertainties related to the regulatory process, the ability of the Group to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of its products, the acceptance of the Group's products by consumers and medical professionals, and the ability of the Group to identify and consummate suitable strategic and business combination transactions.

 

PROPOSED FIRM PLACING AND PLACING AND OPEN OFFER OF342,528,564 NEW ORDINARY SHARES AT A PRICE OF 20 PENCE PER SHARE,RULE 9 WAIVER AND NOTICE OF GENERAL MEETING

1. Introduction

The Company announced today that Vernalis R&D has entered into a licence agreement with Tris Pharma Inc., a US specialty pharmaceutical company, to develop up to six NDAs for novel new formulations of existing products sold in the US prescription cough/cold market (the "Licence Agreement"). The Company also announced today that it proposes to raise £65.9 million, net of expenses, by way of a Firm Placing and Placing and Open Offer and to use part of the proceeds to fund the up-front and potential success-based milestone payments under the Licence Agreement. Further details of the Firm Placing and Placing and Open Offer can be found in paragraph 5 of Part 1 of the Prospectus.

The Firm Placing and Placing and Open Offer is subject to the granting of a Rule 9 Waiver in respect of IAML, an affiliate of Invesco and a major shareholder in the Company. Further details relating to the Rule 9 Waiver and the Takeover Code are given in paragraph 9 of Part 1 of the Prospectus.

The Firm Placing and Placing and Open Offer and the Rule 9 Waiver are conditional on the passing by Shareholders of the Resolutions at the General Meeting, which is being convened for 11.00 a.m. on 28 February 2012. A summary of the principal conditions is set out in paragraph 10.4 of Part 8 of the Prospectus.

The purpose of the Prospectus is:

(a) to provide Shareholders with information about the Firm Placing and Placing and Open Offer and the Rule 9 Waiver;

(b) to explain why the Board considers that the Firm Placing and Placing and Open Offer, the Rule 9 Waiver and the Resolutions are fair and reasonable and are in the best interests of Vernalis, the Independent Shareholders and the Shareholders as a whole;

(c) to explain why the Board unanimously recommends that Shareholders vote in favour of Resolutions 1, 2 and 4 and that the Independent Shareholders vote in favour of Resolution 3 to be proposed at the General Meeting, as they intend to do in respect of their own beneficial holdings; and

(d) to explain why the Company is conditionally seeking Shareholder approval to cancel its current listing on the premium segment of the Official List and to trading on the main market of the London Stock Exchange and apply for admission to AIM without further recourse to Shareholders in the event of a breach of the Free Float obligation upon Admission.

In the event that any of the Resolutions are not passed, the Firm Placing and Placing and Open Offer and the Rule 9 Waiver will not proceed.

The terms and conditions of the Open Offer are set out in full in Part 3 of the Prospectus. The Offer Price represents a 2.6 per cent. premium to the middle market Closing Price of 19.5 pence per Ordinary Share on 9 February 2012 (being the last dealing day prior to the announcement of the Firm Placing and Placing and Open Offer).

The Firm Placing and Placing and Open Offer has been underwritten by Nomura Code subject to the terms of the Placing Agreement.

Shareholders are recommended to read the whole of the Prospectus and not rely on only part of it. In particular, Shareholders are advised to consult the section entitled "Risk Factors" on pages 10 to 25 and the "Glossary" at the end of the Prospectus, which sets out definitions of certain scientific and technical terms.

2. Information and future strategy of the Group

Vernalis' strategy has been to transform its business from a research and development stage company into a significant, diversified, profitable and self sustaining specialty pharmaceutical company.

The first step in that transformation was the re-acquisition of the Menarini frovatriptan royalty rights in March 2010.

The Licence Agreement announced today is an important next step in the execution of that strategy. Under the agreement the Company will work with Tris Pharma Inc., a US specialty pharmaceutical company, (the "Licensor") to develop up to six NDAs for novel new formulations of existing products sold in the US prescription cough/cold market, a market in which the Company's Chief Executive Officer has significant commercial experience. If successful, the Company will establish a US sales and marketing infrastructure to commercialise the approved NDAs, achieve its goal of further diversification and progress towards profitability and becoming self-sustained. The Licensor will seek to develop NDAs under the Licence Agreement using an accelerated regulatory path based on bio-equivalence that would not require efficacy studies. In addition, since the product candidates will be based on existing active pharmaceutical ingredients, the Company believes that the development and regulatory risks are reduced. It is estimated that the first NDA could be filed within 12 to 24 months from commencement of the Licence Agreement. Approvals are typically approximately 12 months following NDA filing. This means the Company could build out its commercial infrastructure and be commercialising approved products in 24 to 36 months.

The Company envisages entering into other licence agreements and collaborations in the future with a focus on opportunities in the later stages of development which provide the potential for medium term commercial revenues. The funds being raised from the proposed Firm Placing and Placing and Open Offer announced today will be used not only to fund the Licence Agreement but also to fund future licence agreements and, if successful, establishing a US commercial infrastructure.

3. Principal terms of the Licence Agreement

As described above, Vernalis R&D has entered into the Licence Agreement with Tris Pharma Inc. to develop up to six NDAs for novel formulations of existing products sold in the US prescription cough/cold market using the Licensor's core extended release formulation technology. The Licensor has one granted US patent and multiple patent applications pending relating to its core extended release formulation technology.

Under the Licence Agreement, Vernalis R&D acquires the exclusive right to market, distribute, offer for sale and sell (either on its own account or by way of sub-licence) products developed pursuant to the Licence Agreement (and, in certain circumstances, further developments thereof) in the prescription cough/cold market in the US, Puerto Rico, Mexico and Canada. The term of the Licence Agreement is a minimum of 20 years determined on a product by product basis in accordance with the terms of the Licence Agreement.

Pursuant to the terms of the Licence Agreement, Vernalis R&D is obliged to pay US$1 million as an upfront payment on execution of the Licence Agreement and a further US$4 million on or before the 60th day following execution of the Licence Agreement. Milestone payments are payable by Vernalis R&D on a product-by-product basis on successful proof-of-concept, on acceptance of NDAs by the FDA and on NDA approval. The total milestone amounts payable per product vary between US$12 million and US$14 million.

The Licence Agreement also provides for the payment by Vernalis R&D of royalties on net sales of products developed pursuant to the Licence Agreement. In certain specified circumstances, part of the milestone payments payable on a particular product can be credited towards royalty payments due on that product. The Licence Agreement provides for the payment of minimum royalties on a product-by-product basis, dependent upon the level of sales of each product and of all products taken together.

Except in limited circumstances, all development work will be undertaken by the Licensor, at its expense, and following approval, the NDA(s) will be transferred to Vernalis R&D. Vernalis R&D has agreed to use commercially reasonable efforts to market and distribute each approved product. Post approval, the Licensor has agreed to use commercially reasonable efforts to manufacture and supply the product, in sufficient quantities to meet market demand.

The parties to the Licence Agreement will establish a joint steering committee to coordinate the activities under the Licence Agreement, including overseeing development and commercialisation of each product.

The Licence Agreement will expire if no products developed under the Licence Agreement achieve NDA approval. The Licence Agreement contains customary termination rights, including in the event of a material breach or insolvency of either party.

The Company is also a party to the Licence Agreement for the sole purpose of providing a guarantee of Vernalis R&D's obligations.

4. The US prescription cough/cold market

The US prescription cough/cold market is a seasonal market which annually totals approximately 35 million prescriptions. The market comprises two key segments: the narcotic cough market which is controlled by the DEA and totals approximately 18 million prescriptions; and the non-narcotic market which totals approximately 16 million prescriptions. Within the narcotic segment, codeine based products account for approximately 13 million prescriptions and hydrocodone products the remaining approximately 6 million prescriptions. The non-narcotic market is dominated by dextromethorphan-based products (approximately 9 million prescriptions) and benzonatate (approximately 6 million prescriptions) with other products totalling approximately 1 million prescriptions. All of the major cough products, except benzonatate which is only used as a single agent, are formulated in combination with anti-histamines, anti-cholinergics, expectorants or decongestants. The total market is dominated by short-acting formulations of generic single agent or combination treatments which are used for the short term treatment of cough and cough/cold. In total, seven product categories account for over 94 per cent. of all cough/cold market prescriptions and the Company is looking to develop long-acting products to address all these product categories.

Tussionex and its one generic formulation are the only approved long-acting liquid prescription cough/cold products on the market. Tussionex is a 12-hour liquid combination product containing hydrocodone and chlorpheniramine, and competes at a premium price in the narcotic cough market segment. There are two hydrocodone based cough/cold product categories that in total account for approximately 5.6 million prescriptions. Approximately one half of these prescriptions are for immediate release products and the other half are for Tussionex. Tussionex, which had 85 per cent. formulary coverage with managed care organisations and the benefits of compliance and convenience offered by extended released products, achieved peak sales in 2008 in excess of US$215 million at an approximate value per prescription of US$60. Given the hydrocodone based product categories only account for 16 per cent. of the total US prescription cough/cold market, there is a significant opportunity for extended release formulations of other product categories, which if priced at a similar level to Tussionex would value the 35.1 million prescription market at over US$2 billion.

The cough/cold market is dominated by immediate release treatments because of the technological difficulties of developing extended release formulations that meet current FDA requirements. For over 24 years, the only approved extended release liquid prescription product for cough/cold was Tussionex, which was originally developed and approved sometime prior to 1962, with the currently marketed formulation gaining NDA approval in 1987. The Licensor has spent nearly 7 years developing technology to formulate extended release products that meet current FDA requirements. In the last 18 months the Licensor's technology has been validated with multiple products approved by the FDA and further products filed with the FDA which are awaiting approval. One such approved product is generic Tussionex and the Licensor currently has approximately 50 per cent. market share of the generic Tussionex market.

The Company has identified two potential competitors that could develop extended release cough / cold products using technology similar to that developed by the Licensor. One potential competitor, the originator of Tussionex, is not, according to publicly available information, actively developing any follow-on products and has not commercialised any new products using its extended release technology since the 1980s. The Company therefore believes that this technology is non-core for this competitor and is an immaterial part of its business. The other potential competitor currently has filed with the FDA a generic version of Tussionex, which has been partnered with a US public company but it has not yet been approved. This other potential competitor had a wider collaboration with the same public company, but this collaboration is now focused solely on generic Tussionex. This other potential competitor does not currently have any products approved using its potentially competing technology and therefore does not have the same FDA validation that the Licensor has obtained through its recent product approvals.

The majority of prescriptions for cough/cold products are written by primary care physicians, paediatricians and nurse practioners. There are approximately 45,000 high prescribers (deciles 6 to 10) of narcotic products with primary care physicians accounting for more than 70 per cent. of the prescriptions written. In the non-narcotic segment there are approximately 29,000 high prescribers with the breakdown between physician specialties predominately dependent upon the age of patients for which each product's use is approved; paediatricians account for more than 60 per cent. of the high prescriber prescriptions for products approved for use in young children, whilst primary care physicians write more than 60 per cent. of the high prescriber prescriptions for those approved products containing narcotic components2. Based upon the Company's analysis of the current top prescribers for each product segment, high prescribers write the majority of their prescriptions for only one cough/cold product, giving each product its own pre-defined target audience among physicians. The Company believes that a portfolio of new extended release products could be promoted to high prescribers with a sales force of between 120-200 sales representatives. Commercial success is not dependent upon successful development of all six novel formulations. The Company anticipates a dual sales strategy under which it will seek to switch existing immediate release prescriptions to extended release versions of the same product and to switch existing immediate release prescriptions to a different extended release product2.

5. Principal terms of the Firm Placing and Placing and Open Offer

The Company has conditionally raised approximately £65.9 million (net of expenses) through the issue of 342,528,564 New Ordinary Shares by way of a Firm Placing and Placing and Open Offer at 20 pence per New Ordinary Share. The Firm Placing and Placing and Open Offer is conditional, amongst other things, on Shareholder approval, which will be sought at the General Meeting.

Firm Placing

The Company has raised approximately £10.0 million (gross) through a Firm Placing of 50,000,000 New Ordinary Shares at the Offer Price. Nomura Code, as agents for Vernalis, have placed the Firm Placed Shares with certain institutional investors. The Firm Placing is not subject to clawback in respect of valid applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer.

Placing and Open Offer

The Company has raised approximately £58.5 million (gross) through a Placing and Open Offer of 292,528,564 New Ordinary Shares at the Offer Price. Nomura Code, as agents for Vernalis, have placed the Placing Shares with further institutional investors subject to the Qualifying Shareholders' right to take up their rights under the Open Offer.

Subject to the fulfilment of the conditions set out below and in Part 3 of the Prospectus, Qualifying Shareholders are being given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at a price of 20 pence per New Ordinary Share on the basis of:

47 New Ordinary Shares for every 16 Existing Ordinary Shares

held by Qualifying Shareholders and registered in their name at the Record Date. Shareholders holding fewer than 16 Existing Ordinary Shares will have no entitlement to subscribe under the Open Offer.

Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Fractional entitlements will be aggregated and will be placed pursuant to the Placing for the benefit of the Company.

The New Ordinary Shares when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid or declared after the date of their issue.

Qualifying Shareholders may apply for any whole number of New Ordinary Shares up to their maximum entitlement which, in the case of Qualifying non-CREST Shareholders, is equal to the number of Open Offer Entitlements as shown on their Application Form or, in the case of Qualifying CREST Shareholders, is equal to the number of Open Offer Entitlements standing to the credit of their stock account in CREST. Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer.

No application in excess of a Qualifying Shareholder's maximum entitlement will be met, and any Qualifying Shareholder so applying will be deemed to have applied for his maximum entitlement only.

The Firm Placing and Placing and Open Offer has been underwritten by Nomura Code subject to certain conditions set out in the Placing Agreement, further details of which are set out in paragraph 10.4 of Part 8 of the Prospectus.

Application has been made for the New Ordinary Shares to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective on 2 March 2012 and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 a.m. on the same day.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 13 February 2012. The Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 13 February 2012. Applications through the means of the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Shareholders should note that the Open Offer is not a rights issue. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be placed pursuant to the Placing for the benefit of the Company.

Pursuant to, and subject to the terms and conditions of, the Placing Agreement, Nomura Code has agreed conditionally to place the Open Offer Shares with certain existing Shareholders and other institutional investors. To the extent that it fails to do so, Nomura Code has agreed to subscribe for the Open Offer Shares at the Offer Price, subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer.

Further information on the Firm Placing and Placing and Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, are set out in the letter from Nomura Code in Part 3 of the Prospectus and, where relevant, in the Application Form.

For Qualifying non-CREST Shareholders, completed Application Forms, accompanied by full payment in accordance with the instructions in paragraph 4(a) of Part 3 of the Prospectus, should be returned by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 27 February 2012. For Qualifying CREST Shareholders the relevant CREST instructions must have settled as explained in the Prospectus by no later than 11.00 a.m. on 27 February 2012.

The Offer Price represents a premium of 2.6 per cent. to the closing middle market price of the Existing Ordinary Shares at the close of business on 9 February 2012 (being the last practicable date before the publication of the Prospectus).

The Firm Placing and Placing and Open Offer is conditional, inter alia, upon:

(i) the passing of the Resolutions;

(ii) Admission becoming effective by not later than 8.00 a.m. on 2 March 2012 (or such later time and/or date as Nomura Code and the Company may agree, not being later than 8.00 a.m. on 16 March 2012); and

(iii) the Placing Agreement becoming unconditional in all respects.

Accordingly, if any of such conditions are not satisfied or, if applicable, waived, the Firm Placing and Placing and Open Offer will not proceed and any Open Offer Entitlements admitted to CREST will thereafter be disabled.

6. Irrevocable commitments from the Directors and IAML

The Directors, who in aggregate hold 407,936 Existing Ordinary Shares representing approximately 0.41 per cent. of the existing issued ordinary share capital of the Company, have irrevocably undertaken to take up their Open Offer Entitlements in respect of an aggregate of 899,945 New Ordinary Shares (£179,989 in aggregate).

In addition, IAML, which holds 42,718,412 Existing Ordinary Shares (representing approximately 42.90 per cent. of the existing issued ordinary share capital of the Company), has committed to take up, in full, its Open Offer Entitlement in respect of 125,485,335 New Ordinary Shares and has agreed to subscribe for a further amount under the Placing, subject to clawback, to satisfy valid applications under the Open Offer, and under the Firm Placing. If the interests of IAML in the Company increase above its existing holding of 42.90 per cent., following the Firm Placing and the Placing and Open Offer, IAML would normally be obliged to make a general offer, pursuant to Rule 9 of the Takeover Code, to all other Shareholders. However, in this instance, the Panel has agreed to waive the obligation to make a general offer that would otherwise arise as a result of IAML subscribing for the Firm Placed Shares and the Placing Shares subject to the approval of the Independent Shareholders on a poll at the General Meeting which will be sought pursuant to Resolution 4. Further information relating to the Rule 9 Waiver from the Panel is set out in paragraph 10 of Part 1 of the Prospectus.

There is no requirement on Vernalis to repay to IAML any of the proceeds of the investment received from IAML.

7. Effect of the Firm Placing and Placing and Open Offer

Upon Admission and assuming no further exercise of options under the Share Schemes, the Enlarged Share Capital is expected to be 442,112,768 Ordinary Shares. On this basis, the New Ordinary Shares will represent approximately 77.5 per cent. of the Enlarged Share Capital. New Ordinary Shares issued through the Firm Placing will represent 11.3 per cent. of the Company's Enlarged Share Capital and New Ordinary Shares issued through the Placing and Open Offer will represent 66.2 per cent. of the Enlarged Share Capital.

Following the issue of the New Ordinary Shares to be allotted pursuant to the Firm Placing and Placing and Open Offer, Qualifying Shareholders who take up their full entitlements under the Open Offer will suffer a dilution of 11.3 per cent. to their interests in the Company. Qualifying Shareholders who do not take up any of their entitlements under the Open Offer will suffer a dilution of approximately 77.5 per cent. to their interests in the Company.

The Listing Rules require, as a continuing obligation to admission of the New Ordinary Shares to the Official List, that at least 25 per cent. of the Enlarged Share Capital remains in public hands (as defined under the Listing Rules) the "Free Float obligation". Depending upon the level of take-up by Qualifying Shareholders of their entitlements to Open Offer Shares, it is possible that there could be a breach of the Free Float obligation.

If sufficient Qualifying Shareholders do not take up their Open Offer Entitlements to the Open Offer Shares, and such Open Offer Shares are placed by Nomura Code pursuant to, and subject to the terms and conditions of, the Placing Agreement, it is possible that less than 25 per cent. of the Enlarged Share Capital could be held in public hands (thereby breaching LR 6.1.19 of the Listing Rules). In this situation the Company will seek to cancel its listing of Ordinary Shares on the premium segment of the Official List and remove such Ordinary Shares from trading on the London Stock Exchange's main market for listed securities. In such circumstances, the Board intends immediately to seek the admission of the Enlarged Share Capital to trading on AIM, where no such Free Float requirement applies.

Shareholder approval of not less than 75 per cent. of holders of Ordinary Shares is required under LR 5.2.5 for the cancellation of the Company's listing. For this reason, approval of Resolution 4 will be sought at the General Meeting in order to authorise the Board to cancel the listing of Ordinary Shares on the premium segment of the Official List, remove such Ordinary shares from trading on the London Stock Exchange's main market for listed securities and facilitate the admission of the Enlarged Share Capital to trading on AIM. This Resolution shall be conditional upon less than 25 per cent. of the Enlarged Share Capital being held in public hands at Admission. If the Company is not in breach of LR 6.1.19 of the Listing Rules at Admission the Board will otherwise seek to maintain the listing on the premium segment of the Official List and the trading of Ordinary Shares on the London Stock Exchange's main market for listed securities.

Following Admission, should less than 25 per cent. of the Enlarged Share Capital be held in public hands, the Company will inform the FSA as soon as practicable that it is in breach of LR 6.1.19 of the Listing Rules and give 20 business days' notice of its intention to move its listing to AIM under AIM's streamlined process for companies that have had their securities traded upon on an AIM Designated Market. It is the Company's understanding that the FSA would not seek to suspend or cancel the listing of the Company's shares on the Official List during the period above of approximately 20 business days, unless there exists a disorderly market in the Ordinary Shares.

There is no guarantee that the Directors would be successful in achieving admission to an alternative exchange or that there would not be a period during which the Enlarged Share Capital will not be admitted to trading on an alternative exchange. If the Enlarged Share Capital is unlisted (or is admitted to trading on an alternative exchange), the ability to buy and sell shares in the Company could be materially restricted.

If the net proceeds of the Firm Placing and Placing and Open Offer had been received at the beginning of 2010, save for any earned interest, there would have been no effect on earnings.

8. Use of proceeds

The Directors expect the net proceeds of the Firm Placing and Placing and Open Offer, approximately £65.9 million, to be used as follows:

- approximately 80 per cent. to develop products and establish a commercial infrastructure in relation to the Licence Agreement announced today; and

- approximately 20 per cent. to develop other products under new licensing agreements and collaborations with a focus on opportunities in later stages of development which provide the potential for medium term commercial revenues.

9. Current trading for Vernalis and prospects for the Group

On 3 August 2011 Vernalis published its Unaudited Interim Financial Statements for the six months ended 30 June 2011, a summary of which is set out below.

- Group revenue of £4.3 million (30 June 2010: £7.2 million), comprising revenue from sales of frovatriptan of £2.1 million and collaboration income (including deferred revenue) of £2.2 million.

- Operating loss of £8.2 million (30 June 2010: £1.1 million), including R&D expenditure of £6.6 million (30 June 2010: £5.8 million).

- Net loss of £7.0 million (30 June 2010: £7.3 million).

- Cash, cash equivalents and held to maturity financial assets as at 30 June 2011 were £27.1 million (30 June 2010: £33.8 million).

On 16 November 2011 Vernalis published its interim management statement, a summary of which is set out below:

- Menarini's year-to-date frovatriptan net sales through to 30 September 2011 were, €18.4m (excluding Germany), 3 per cent. lower than equivalent net sales in the same period of 2010. Including Germany sales, total net sales were €20.5m compared to €23.8m in 2010.

- On 24 August 2011, Vernalis announced it had dosed the first subjects in a Phase I trial of V81444, its adenosine A2A receptor antagonist that may help restore motor function in patients with Parkinson's Disease, without the side effects commonly associated with current treatments. The study continues and results are expected in the first half of 2012.

- On 21 September 2011, Vernalis announced it would receive a £0.3m milestone under its drug discovery collaboration with Lundbeck.

- On 28 September 2011, Vernalis announced positive results from its Phase I trial of V158866, its fatty acid amide hydrolase (FAAH) inhibitor, which has potential application in a wide range of pain indications as well as in other clinical indications. The results confirmed V158866 as a potent inhibitor of human FAAH and identified once daily dosing as the optimal administration regimen for future studies.

- On 3 October 2011, Vernalis announced that it had earned a €0.5m research milestone in one of its drug discovery collaborations with Servier.

Since 16 November 2011, Vernalis announced further newsflow as follows:

- On 12 December 2011, Vernalis announced it had earned a final $1.9 m milestone from Ipsen as a final agreed consideration from the sale of Apokyn and Vernalis' US Commercial Operations announced in June 2008.

- On 19 December 2011, Vernalis announced it had achieved a further research milestone of £0.4 million in its drug discovery collaboration with Lundbeck.

- On 4 January 2012, Vernalis announced a new drug discovery collaboration with Genentech against an undisclosed target.

- On 17 January 2012, Vernalis announced a third three-year joint oncology research collaboration with Servier against an undisclosed target.

Cash, cash equivalents and held to maturity financial assets as at 31 December 2011 were £24.7 million.

Vernalis continues to operate in line with the Directors' expectations and the Directors are confident of the financial and trading prospects of Vernalis and the Group for the current financial year.

10. The City Code on Takeovers and Mergers

The Directors of Vernalis believe that IAML's continued support of the Company and the commitment by IAML to invest in the Firm Placing and the Placing and Open Offer are necessary to ensure both the success of the Firm Placing and Placing and Open Offer and the future of the Company.

IAML's commitment to take up its Open Offer Entitlement and additional New Ordinary Shares in the Firm Placing and the Placing gives rise to certain considerations and consequences under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford to Shareholders are described below.

The Takeover Code is issued and enforced by the Panel. The Panel has been designated as the supervisory authority to carry out certain regulatory functions in relation to takeovers pursuant to the Directive. Its statutory functions are set out in and under Chapter 1 of Part 28 of the Companies Act.

Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined under the Takeover Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company, is normally required by the Panel to make a general offer in cash to the shareholders of that company to acquire the balance of the shares not held by such person or group of persons acting in concert at not less than the highest price paid by him or any persons acting in concert with him for any such shares within the 12 months prior to the announcement of the offer.

In addition, Rule 9 provides that when any person, together with any persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than 50 per cent. of such voting rights, and such person, or any such person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights, that person, together with any persons acting in concert with him, is normally required by the Panel to make a general offer in cash to the shareholders of that company to acquire the balance of the shares not held by such person or group of persons acting in concert at not less than the highest price paid by him or any persons acting in concert with him for any such shares within the 12 months prior to the announcement of the offer.

The Takeover Code also provides that where any person, together with persons acting in concert with him, holds more than 50 per cent. of a company's voting rights, no obligation will normally arise under Rule 9 to make a general offer in cash to all shareholders of that company, save as described below, as a result of any acquisition by such person or any person acting in concert with him of any further shares carrying voting rights in the company. However, the Panel will regard as giving rise to an obligation to make an offer the acquisition by a single member of a concert party of shares sufficient to increase his individual holding to 30 per cent. or more of a company's voting rights, or, if he is already interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of a company, but does not hold shares carrying more than 50 per cent. of such voting rights, an acquisition which increases his shareholding in that company.

For the purposes of the Takeover Code, a concert party arises where persons acting in concert pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of a company or to frustrate the successful outcome of an offer for a company. Control means an interest, or interests, in shares carrying in aggregate 30 per cent. or more of the voting rights of the company, irrespective of whether such interest or interests give de facto control.

If the interest of IAML in the voting rights of the Company following the Firm Placing and Placing and Open Offer were to increase above its current percentage and continue to be above 30 per cent., IAML would normally be obliged to make a general offer, pursuant to Rule 9 of the Takeover Code, to all other Shareholders to acquire their Ordinary Shares. However, in this instance, the Panel has agreed to waive the obligation to make a general offer that would otherwise arise as a result of IAML subscribing for New Ordinary Shares in the Firm Placing and the Placing subject to the approval of the Independent Shareholders on a poll at the General Meeting which will be sought pursuant to Resolution 3. To be passed, this resolution will require the approval of a simple majority of votes cast on that poll. Only Independent Shareholders will be entitled to vote on this resolution.

Following completion of the Firm Placing and Placing and Open Offer, IAML may be interested in shares carrying more than 30 per cent. of the Company's voting share capital, but may not hold shares carrying more than 50 per cent. of such rights. Any further increase in that interest in shares will be subject to the provisions of Rule 9.

For the avoidance of doubt, this waiver, which is valid only for so long as the authority granted pursuant to Resolution 3 remains in force, applies only in respect of increases in shareholdings of IAML resulting from the Firm Placing and the Placing and not in respect of other increases in its holdings. IAML has not taken part in any decision of the Board relating to the proposal to seek a waiver of Rule 9 from the Panel.

11. General Meeting

Shareholders will find set out at the end of the Prospectus a notice convening the General Meeting to be held at Covington & Burling LLP, 265 Strand, London WC2R 1BH on 28 February 2012 at 11.00 a.m. where the following Resolutions will be proposed:

Resolution 1

An ordinary resolution to authorise the Directors to allot relevant securities for the purposes of section 551 of the Companies Act provided that such power be limited to the allotment of the New Ordinary Shares up to an aggregate nominal amount of £3,425,285.64 pursuant to the Firm Placing and Placing and Open Offer.

This Resolution is conditional upon the passing of Resolutions 3 and 4 (but without the requirement for Resolution 4 to become unconditional).

Resolution 2

A special resolution to grant the Directors authority to allot equity securities for cash pursuant to the authority conferred on them by Resolution 1 as if section 561 of the Companies Act did not apply to such allotment provided that such power shall be limited to the allotment of the New Ordinary Shares up to an aggregate nominal amount of £3,425,285.64 pursuant to the Firm Placing and Placing and Open Offer.

This Resolution is conditional upon the passing of Resolutions 1 and 3 and upon such Resolutions becoming unconditional. This Resolution is also conditional upon the passing of Resolution 4 but without the requirement for Resolution 4 to become unconditional.

Resolution 3

An ordinary resolution to approve the Rule 9 Waiver, which will be taken on a poll and in respect of which only Independent Shareholders will be entitled to vote.

Resolution 4

A special resolution to authorise the Board to cancel the Company's listing of Ordinary Shares on the premium segment of the Official List of the FSA, remove such Ordinary Shares from trading on the London Stock Exchange's main market for listed securities and to apply for admission of the Enlarged Share Capital to trading on AIM. This resolution is subject to, and conditional upon, Resolutions 1 to 3 being passed and becoming unconditional and the Company being in breach of the LR 6.1.19 of the Listing Rules at Admission.

The authority and the power described in Resolutions 1 and 2 above will (unless previously revoked or varied by the Company in general meeting) expire on 16 March 2012. The authority and the power described in Resolutions 1 and 2 above are in addition to any like authority or power previously conferred on the Directors.

The ordinary Resolutions 1 and 3 will require a simple majority of those voting in person or on a poll by proxy in favour of the Resolutions. Special Resolutions 2 and 4 will require approval by not less than 75 per cent. of the votes cast by Shareholders voting in person or on a poll by proxy. As described in paragraph 10 above, only Independent Shareholders will vote on Resolution 3.

All resolutions are conditional on the passing of Resolution 4. If Shareholders wish to vote in favour of Resolutions 1, 2 and 3, it is important that they also vote in favour of Resolution 4, otherwise the Firm Placing and Placing and Open Offer may not proceed.

12. Actions to be taken

In respect of the General Meeting

A Form of Proxy for use at the General Meeting is enclosed with the Prospectus. Whether or not a Shareholder intends to be present at the meeting, the Form of Proxy should be completed in accordance with the instructions printed thereon and returned to Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU or submitted electronically through CREST or via www.capitashareportal.com, as soon as possible, but in any event so as to be received by no later than 11.00 a.m. on 26 February 2012. The completion and return, or submission electronically, of a Form of Proxy will not preclude a Shareholder from attending the General Meeting and voting in person, if he so wishes.

In respect of the Open Offer

If a Shareholder is a Qualifying non-CREST Shareholder he will have received an Application Form together with the Prospectus which gives details of his maximum entitlement under the Open Offer (as shown by the number of Open Offer Entitlements allocated to him). If he wishes to apply for Open Offer Shares, he should complete the enclosed Application Form in accordance with the procedure for application set out in paragraph 4(a) of Part 3 of the Prospectus and on the Application Form itself. If a Shareholder does not wish to apply for any Open Offer Shares, he should not complete or return the Application Form. Shareholders are nevertheless requested to complete and return or submit electronically the Form of Proxy.

If a Shareholder is a Qualifying CREST Shareholder he will not have received an Application Form and he will instead receive a credit to his appropriate stock account in CREST in respect of the Open Offer Entitlements representing his maximum entitlement under the Open Offer. Shareholders should refer to the procedure for application set out in paragraph 4(b) of Part 3 of the Prospectus.

The latest time for applications under the Open Offer to be received is 11.00 a.m. on 27 February 2012. The procedure for application and payment depends on whether, at the time at which application and payment is made, a Shareholder has an Application Form in respect of his entitlement under the Open Offer or has Open Offer Entitlements credited to his stock account in CREST in respect of such entitlement. The procedures for application and payment are set out in Part 3 of the Prospectus. Further details also appear in the Application Forms which have been sent to Qualifying non-CREST Shareholders.

Qualifying CREST Shareholders who are CREST-sponsored members should refer to their CREST-sponsors regarding the action to be taken in connection with the Prospectus and the Open Offer.

13. Overseas Shareholders

Shareholders who have registered addresses outside the United Kingdom, who are citizens or residents of countries other than the United Kingdom, or who are holding Ordinary Shares for the benefit of such persons (including without limitation, nominees, custodians and trustees) or have a contractual or legal obligation to forward the Prospectus, the Form of Proxy or the Application Form to such persons, should refer to paragraph 6 of Part 3 of the Prospectus, which sets out the restrictions applicable to such persons. If a Shareholder is an Overseas Shareholder, it is important that he reads that part of the Prospectus. For the avoidance of doubt, Overseas Shareholders who receive the Prospectus and a Form of Proxy in accordance with Rule 9 of the Takeover Code, may vote on the Resolutions set out in the Notice of General Meeting, attached at the end of the Prospectus, by returning the Form of Proxy to the Registrars or submitting a proxy vote electronically through CREST or via www.capitashareportal.com, by no later than 11.00 a.m. on 26 February 2012, despite being unable to participate in the Firm Placing and Placing and Open Offer in accordance with the terms of paragraph 6 of Part 3 of the Prospectus.

14. Dividend policy

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions (if any) declared, paid or made by Vernalis after Admission.

However, it is, at present, intended that no dividends will be paid by Vernalis. Even if future operations lead to significant levels of distributable profits, any earnings, of which there can be no assurance, will be reinvested in the Group's business and no dividends are expected to be paid in the foreseeable future.

15. Additional information

Shareholders are recommended to read all the information contained in the Prospectus and not just rely on the key or summarised information and their attention is drawn to the information set out in Parts 2 to 8 of the Prospectus.

16. Risk factors

Shareholders and investors should consider fully the risk factors associated with the Firm Placing and Placing and Open Offer; the business of the Group; the stock market and share trading. Shareholders' attention is drawn to the section entitled "Risk Factors" set out in pages 10 to 25 (inclusive) of the Prospectus.

17. Taxation

Information about United Kingdom and the United States taxation is set out in paragraphs 14 and 15 of Part 8 of the Prospectus. This information is a general guide only. If a Shareholder is in any doubt as to his tax position, or he is subject to tax in a jurisdiction other than the United Kingdom or the United States, he should consult his own independent professional adviser without delay.

18. Working Capital

The Company is of the opinion that, taking into account existing cash balances and the net proceeds of the Firm Placing and Placing and Open Offer, the Group has sufficient working capital for its present requirements, that is for at least 12 months following the publication of the Prospectus.

19. Recommendations

The Board, which has been so advised by Nomura Code, believes that:

(a) the Firm Placing and Placing and Open Offer;

(b) the Rule 9 Waiver; and

(c) the Resolutions,

are fair and reasonable as far as the Shareholders (and for the purposes of (b) above, the Independent Shareholders) are concerned and are in the best interests of Vernalis and the Shareholders (and for the purposes of (b) above, the Independent Shareholders) as a whole. In providing such advice to the Directors, Nomura Code has taken into account the Directors' commercial assessments.

Accordingly, the Board unanimously recommends that:

(a) Shareholders vote in favour of Resolutions 1, 2 and 4 to be proposed at the General Meeting; and

(b) that Independent Shareholders vote in favour of Resolution 3 to be proposed at the General Meeting,

as they intend to do in respect of their own beneficial holdings amounting (as at 9 February 2012, being the latest practicable date prior to the publication of the Prospectus) to an aggregate of 407,936 Existing Ordinary Shares representing approximately 0.41 per cent. of the current issued ordinary share capital of the Company. The Directors, who are Shareholders, have also irrevocably undertaken to take up their entitlements under the Open Offer, in respect of an aggregate of 899,945 New Ordinary Shares (£179,989 in aggregate).

 

Definitions used in this announcement will have the same meaning as those used in the Prospectus to be sent to Shareholders, unless the context requires otherwise.

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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