18th Nov 2005 07:01
Vernalis PLC18 November 2005 EMBARGOED TO 7AM Not for release, publication or distribution, in whole or in part, in, into orfrom the United States, Canada, Australia and Japan Vernalis plc Proposed acquisition of Cita Proposed Vendor Placing to raise approximately £15.3 million Proposed Placing and Open Offer to raise approximately £42.7 million Vernalis plc ("Vernalis" or the "Company") today announced the proposedacquisition of Cita NeuroPharmaceuticals Inc. ("Cita") for an initialconsideration of U.S.$29.5 million and deferred consideration of up to U.S.$35million (the "Cita Acquisition"). Vernalis will also assume certain of Cita'sliabilities on Completion. The initial consideration will be satisfied by theissue of 26,915,831 million new Ordinary Shares, of which 24,284,984 have beenconditionally placed by Piper Jaffray pursuant a Vendor Placing to realise cashproceeds to the Vendors of approximately £15.3 million (U.S.$26.2 million)(before expenses). In addition, the Company announced its intention to raiseapproximately £42.7 million (before expenses) in a Placing and Open Offer. Key reasons for the Cita Acquisition• Cita's focus on neurology and CNS therapies will strengthen Vernalis'clinical pipeline in its principal area of therapeutic focus;• Cita has a relatively late stage development pipeline that will enhancethe maturity of Vernalis' drug development pipeline behind frovatriptan, withCNP1512 for the treatment of Parkinson's disease being prepared for entry intoPhase III clinical trials in H2 2006 and CNP3381 for the treatment ofneuropathic pain being prepared for entry into Phase II clinical trials in H12006;• Cita's Parkinson's disease programme will in particular strengthenVernalis' existing portfolio in this area following the recent acquisition ofthe rights to market and sell Apokyn(R) in North America;• Cita's product pipeline will potentially provide Vernalis withadditional products to commercialise through its commercial operation in NorthAmerica, assuming these programmes successfully complete clinical trials and areapproved by the relevant authorities; and• Cita is managed as a "virtual" company, outsourcing most of itsresearch and development activities and as a result will not increase theGroup's cash burn significantly other than for the costs directly related to thedevelopment of Cita's clinical drug candidates. Key terms of the Cita Acquisition Vernalis has entered into agreements to acquire the entire issued, and to beissued, share capital of Cita for:• initial consideration of U.S.$29.5 million to be satisfied by the issueof 26,915,831 Ordinary Shares, and• further deferred consideration of up to U.S.$35 million (in shares,cash or by a combination of cash and shares) payable in instalments by Vernalisdependent upon achieving certain milestones in respect of the development ofCita's clinical drug candidates CNP1512 and CNP3381. Vernalis will also assume certain of Cita's liabilities on Completion.The Cita Acquisition is conditional, inter alia, upon the approval ofShareholders. Details of Vendor Placing and Placing and Open Offer• Placing and Open Offer of 67,749,457 Open Offer Shares at 63 pence pershare to raise £42.7 million (before expenses), fully underwritten by PiperJaffray;• Vendor Placing of 24,284,984 new Ordinary Shares at a price of 63 penceper share, fully underwritten by Piper Jaffray to raise £15.3 million (beforeexpenses) for Vendors;• Open Offer Shares (less the Committed Open Offer Shares) have beenconditionally placed with institutional investors subject to clawback to satisfyvalid applications by Qualifying Shareholders under the Open Offer;• Open Offer on the basis of 5 Open Offer Shares for every 16 ExistingOrdinary Shares; and• Vendor Placing Shares have been placed firm with institutionalinvestors. Use of proceedsThe net proceeds of the Placing and Open Offer (after the cost of the CitaAcquisition, the Vendor Placing and the Placing and Open Offer), which willamount to approximately £38.7 million, will allow the Company to fund thedevelopment of Cita's clinical programmes CNP1512 and CNP3381, and invest in themarketing and development of Apokyn(R), the on-market Parkinson's diseaseproduct recently acquired by Vernalis, while having sufficient cash resources tofund the Enlarged Group's other existing business activities beyond the firsthalf of 2007 when a U.S.$40 million milestone payment from Endo is due to bereceived (assuming regulatory approval of frovatriptan for MRM). Extraordinary General Meeting ("EGM")An EGM to, among others, approve the Resolutions to enable the Directors tocomplete the Cita Acquisition Agreements and issue the Consideration Shares,effect the Vendor Placing and issue the Vendor Placing Shares and effect thePlacing and Open Offer and issue the Open Offer Shares, will be held at theoffices of Allen & Overy LLP at One New Change, London EC4M 9QQ on 13 December2005 at 10.00 a.m. Simon Sturge, Chief Executive Officer of Vernalis, commented:"We are pleased to announce both the acquisition of Cita and the strong supportfrom our existing shareholders and new investors to raise £42.7 million and takeup a further £15.3 million in a Vendor Placing. This, in addition to the recentacquisition of Apokyn(R) for the treatment of Parkinson's disease, gives theCompany a broadened portfolio of products on the market and in clinicaldevelopment and is a major step forward in Vernalis' strategy to become a selffunded CNS focused Company. It is now our intention to focus on progressing thecurrent portfolio of compounds in development and to drive product sales. We donot envisage undertaking further corporate transactions in the near future andanticipate that our next major news will come in the form of data from our PhaseIII safety trial with frovatriptan for the short term prophylaxis formenstrually related migraine, with the confirmatory efficacy data and subsequent filing expected in the first half of next year." Enquiries: Vernalis plc +44 (0) 118 977 3133Simon Sturge, Chief Executive OfficerTony Weir, Chief Financial OfficerJulia Wilson, Head of Corporate Communications Piper Jaffray +44 (0) 20 7743 8700David WilsonDavid RasoulyJamie Adams Brunswick +44 (0) 20 7404 5959Jon ColesWendel Verbeek Piper Jaffray Ltd., which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively for Vernalis plc inrelation to the Cita Acquisition (including the Vendor Placing) and the Placingand Open Offer and will not be responsible to anyone other than Vernalis plc forproviding the protections afforded to clients of Piper Jaffray Ltd. nor forproviding advice in relation to the Cita Acquisition (including the VendorPlacing) and the Placing and Open Offer or any other transaction or arrangementreferred to herein. This press announcement has been issued by Vernalis plc and is the soleresponsibility of Vernalis plc. Neither the Vendor Placing nor the Placing and Open Offer are being made,directly or indirectly, in or into the United States or Japan and applicationsin or from the United States or Japan will not be capable of acceptance and willbe deemed invalid (subject to certain exceptions). This announcement may not beissued, mailed or otherwise distributed or sent, through CREST or otherwise, in,into or from the United States or Japan.Neither the Vendor Placing nor the Placing and Open Offer are being made,directly or indirectly, in or into Australia or Canada and applications in orfrom Australia or Canada will not be capable of acceptance and will be deemedinvalid (subject to certain exceptions with respect to Australia). Thisannouncement may not be issued, mailed or otherwise distributed or sent, in,into or from Australia or Canada. This announcement does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to purchase or subscribe for,any securities other than the securities to which it relates or any offer orinvitation to sell or issue, or any solicitation of any offer to purchase orsubscribe for, such securities by any person in any circumstances in which suchoffer or solicitation is unlawful. Neither the delivery of this announcement nor any subscription or sale madeunder it shall, under any circumstances, create any implication that there hasbeen no change in the affairs of the Group since the date of this announcementor that the information in it is correct as of any subsequent time. This announcement may contain forward-looking statements that reflect theGroup's current expectations regarding future events, including the clinicaldevelopment and regulatory clearance of the Group's products and including thatof frovatriptan for menstrually related migraine, the Group's ability to findpartners for the development and commercialisation of its products, the benefitsof reacquiring the rights to frovatriptan in North America and the partnershipwith Endo Pharmaceuticals Inc. on the Group's liquidity and results ofoperations, as well as the Group's future capital raising activities.Forward-looking statements involve risks and uncertainties. Actual events coulddiffer materially from those projected herein and depend on a number of factors,including the success of the Group's research strategies, the applicability ofthe discoveries made therein, the successful and timely completion of clinicalstudies, including with respect to frovatriptan and the Group's other products,the uncertainties related to the regulatory process, the ability of the Group toidentify and agree beneficial terms with suitable partners for thecommercialisation and/or development of frovatriptan and other products, as wellas the achievement of expected synergies from such transactions, the acceptanceof frovatriptan and other products by consumers and medical professionals, thesuccessful integration of completed mergers and acquisitions and achievement ofexpected synergies from such transactions, the ability of the Group to identifyand consummate suitable strategic and business combination transactions. Not for release, publication or distribution, in whole or in part, in, into orfrom the United States, Canada, Australia and Japan Vernalis plc Proposed acquisition of Cita Proposed Vendor Placing to raise approximately £15.3 million Proposed Placing and Open Offer to raise approximately £42.7 million Introduction The Board today announced that it has agreed terms to acquire the entire issued,and to be issued, share capital of Cita, a privately owned, neuropharmaceuticalcompany based and incorporated in the province of Ontario, Canada, focused onthe development and commercialisation of small molecule drug candidates. Theinitial consideration, which will be paid by Vernalis on Completion, isU.S.$29.5 million to be satisfied by the issue of new Ordinary Shares. Vernaliswill also assume certain of Cita's liabilities on Completion. Further deferredconsideration of up to U.S.$35 million is payable in instalments by Vernalisdependent upon achieving certain milestones in respect of the development ofCita's clinical drug candidates CNP1512 and CNP3381. The U.S.$29.5 million (£17.2 million) initial consideration is to be satisfiedby the issue at Completion of 26,915,831 Ordinary Shares (representingapproximately 12.4 per cent. of Vernalis' existing issued ordinary sharecapital) calculated at an issue price of 63.91 pence per new Ordinary Share(being the average Closing Price on the thirty dealing days prior to the date ofthis announcement). Of the shares to be issued as initial consideration, 2,630,847 Ordinary Shareswill be issued to certain Vendors and the remaining 24,284,984 Ordinary Shareshave been conditionally placed by Piper Jaffray at the Offer Price pursuant tothe Vendor Placing to realise cash proceeds payable to certain Vendors of £ 15.3million (U.S.$ 26.2 million) (before expenses). The Cita Acquisition constitutes a class 1 transaction for the purposes of theListing Rules and, as such, requires the prior approval of Shareholders. The Board also announced today the Company's intention to raise approximately £42.7 million (before expenses) by way of a Placing and Open Offer of 67,749,457new Ordinary Shares (representing approximately 31.3 per cent. of Vernalis'existing issued ordinary share capital). Today's announcements follow on from the Company's recent acquisition from Mylanof the exclusive rights to market and sell Apokyn(R), an on-market drugindicated for the acute, intermittent treatment of immobilising OFF episodesassociated with advanced Parkinson's disease, in North America for a one-offcash payment of U.S.$23 million. The net proceeds of the Placing and Open Offer, which will amount toapproximately £ 38.7 million, will allow the Company to fund the development ofCita's clinical drug candidates CNP1512 and CNP3381 and invest in the marketingand development of Apokyn(R), while having sufficient cash resources to fund theEnlarged Group's other existing business activities beyond the first half of2007 when the U.S.$40 million milestone payment from Endo is due to be received,assuming the Company's lead clinical development candidate, frovatriptan, as ashort-term prophylaxis for menstrually related migraine ("MRM"), successfully obtains regulatory approval from the FDA. Qualifying Shareholders can apply for Open Offer Shares on the basis of 5 OpenOffer Shares for every 16 Existing Ordinary Shares held. The Open Offer Shares (other than the Committed Open Offer Shares) have beenconditionally placed by Piper Jaffray with institutional investors subject torecall to satisfy valid applications by Qualifying Shareholders under the OpenOffer. The Vendor Placing Shares have been conditionally placed by Piper Jaffraywith institutional investors and are not subject to the Open Offer. The Placingand Open Offer and the Vendor Placing have been fully underwritten by PiperJaffray. Further details about the Placing and Open Offer and how Qualifying Shareholderscan apply for Open Offer Shares will be set out in the letter from Piper Jaffrayin the Prospectus, and, where relevant, in the Application Form. Each of the Cita Acquisition (including the Vendor Placing) and the Placing andOpen Offer are conditional, inter alia, upon the passing of the Resolutions atthe Extraordinary General Meeting to be held at 10.00 a.m. on 13 December 2005at the offices of Allen & Overy LLP at One New Change, London EC4M 9QQ andAdmission becoming effective. Recent developments and strategic review Vernalis is a specialty pharmaceutical company primarily focussed on drugs forthe treatment of neurology and CNS disorders. It has two marketed products, astrong pipeline of clinical drug candidates and research programmes and a strongmanagement team which has demonstrated its ability to enter into significantlicensing and partnering agreements with major pharmaceutical and biotechnologycompanies. Vernalis was formed from the merger of British Biotech and Vernalis Group plc inSeptember 2003. Following the merger, Vernalis carried out a review of itsoperations and its product portfolio and research programmes as a result ofwhich a substantial restructuring of the Group was carried out and a decisionwas made to focus the Group's investment efforts primarily in the fields of CNSdisorders and oncology. Since then Vernalis has continued to expand its clinical development pipelineand research programmes through in house development and acquisition andcurrently has five products in clinical development and a strong pipeline ofpre-clinical development candidates and research programmes. It has alsosuccessfully taken forward the commercialisation of frovatriptan, reacquiringthe North American rights to frovatriptan and entering into a major licensingagreement with Endo to market frovatriptan in North America. In February 2005Vernalis exercised its option to co-promote frovatriptan with Endo in NorthAmerica following which the Company commenced establishing a commercialoperation in North America. As part of the Company's strategy to build a strongcommercial operation in North America, Vernalis announced on 4 November, 2005the acquisition of the exclusive rights to market and sell Apokyn(R), anon-market drug for the treatment of advanced Parkinson's disease, in NorthAmerica providing its sales force with a second neurology drug to commercialisewhich rapidly advances the Company's North American commercial business plans. Vernalis seeks to progress its product development programmes itself and throughpartnering and licensing agreements with major pharmaceutical and biotechnologycompanies. Through these agreements Vernalis shares future commercial revenuesin return for cash payments and development funding and also seeks to benefitfrom the product development expertise of the relevant partner. Vernalis'management team has demonstrated a strong track record in entering intocommercially attractive licensing and partnering agreements over the last twoyears and the Company currently has agreements with Biogen Idec, Endo, Menarini,Novartis, Reckitt Benckiser and Serono. Having successfully commenced establishing a commercial operation in NorthAmerica and through expanding the Group's on-market products and research anddevelopment pipeline through in house development and acquisitions, theDirectors believe that Vernalis is making good progress towards achieving itsstrategic goal of becoming a sustainable, self-funding, R&D driven specialtypharmaceutical company primarily focused on drugs for the treatment of neurologyand CNS disorders. Reasons for Cita Acquisition The Directors believe that Cita represents an excellent strategic fit forVernalis for the following reasons: • Cita's focus on neurology and CNS therapies will strengthen the Group'sclinical pipeline in its principal area of therapeutic focus;• Cita has a relatively late stage development pipeline. Its lead drugcandidate for the treatment of Parkinson's disease has completed Phase IIclinical trials and is being prepared for entry into Phase III clinical trialsin H2 2006. A second drug for the treatment of neuropathic pain has completedPhase I clinical trials and is being prepared for entry into Phase II clinicaltrials in H1 2006. These programmes will therefore enhance the maturity ofVernalis' drug development pipeline behind frovatriptan, the Company's leaddevelopment programme in Phase III clinical trials as a short-term prophylaxisfor MRM;• Cita's Parkinson's disease programme will, in particular, strengthenVernalis' existing portfolio in this area following the recent acquisition byVernalis of the exclusive rights to market and sell Apokyn(R), an on-marketParkinson's disease drug, in North America. Apokyn(R) is a treatment forpatients with an advanced form of Parkinson's disease while Cita's lead drugcandidate CNP1512 is being developed for patients with a moderate to advancedform of Parkinson's disease. Vernalis also has a Parkinson's disease programme,V2006, which is partnered with Biogen Idec and expected to enter Phase IIclinical trials in H1 2006, which is being developed for the treatment ofpatients with a mild to moderate form of Parkinson's disease;• Cita's product pipeline will provide the Group with additional productsto commercialise through its commercial operation in North America, assumingthese programmes successfully complete clinical trials and are approved by therelevant authorities; and• Cita is managed as a "virtual" company, outsourcing most of itsresearch and development activities. As a result, the Cita Acquisition will notincrease the Group's cash burn significantly, other than for the costs relatedto the development of Cita's clinical drug candidates, and will also allow foran easy integration of Cita's business into Vernalis' existing operations. Information on Cita Background Cita is a privately owned, neuropharmaceutical company based and incorporated inthe province of Ontario, Canada, focused on the development andcommercialisation of small molecule drug candidates. Cita's current clinicaldrug portfolio primarily consists of drugs for Parkinson's disease (CNP1512expected to enter Phase III clinical trials in H2 2006) and neuropathic pain(CNP3381 expected to enter Phase II clinical trials in H1 2006). Cita has 12employees, of which seven are directly involved in the active development of itsclinical drug programmes. CNP1512 for Parkinson's DiseaseCNP1512 is Cita's lead drug for the treatment of Parkinson's disease.Parkinson's disease is a progressive neurological disorder that leads to theloss of dopamine containing neurons in the basal ganglia part of the braincontrolling muscle movement. People with Parkinson's disease often experiencetrembling, muscle rigidity, difficulty walking, and problems with balance andcoordination. Espicom Business Intelligence estimated the 2003 worldwide marketfor Parkinson's disease therapeutics at U.S.$2.2 billion for which, goingforward, CNP1512 would seek to obtain a share following marketing approval. Current Parkinson's disease therapies have a limited ability to provide patientswith reliable, predictable and consistent treatment of disease symptoms. Thecurrent standard of care, in the marketplace for more than 30 years, consistsprimarily of combinations of levodopa (L-dopa) with carbidopa, a decarboxylaseinhibitor. As Parkinson's disease progresses patients may experience frequent OFF episodes.The Directors believe that this is caused in part by poor absorption oflevodopa, as current formulations of the drug are relatively insoluble and maybe delayed in transit through the gastrointestinal tract. The Directors furtherbelieve that there is a significant opportunity to improve the effectiveness oflevodopa therapy by presenting it in a more soluble form (levodopa methyl-ester)which has the potential to be absorbed more rapidly and consistently, and henceto have enhanced clinical effectiveness. CNP1512 is an innovative, patented effervescent formulation combining levodopamethyl-ester, a more soluble form of levodopa, and carbidopa. Based on clinicalevidence, CNP1512 may reduce the periods of time patients suffer from thedebilitating effects of Parkinson's disease, as well as providing a moreeffective method of delivering the drug. 18 small clinical trials, including twoEuropean Phase II clinical trials and a proof of concept study have beencompleted involving levodopa methyl-ester alone or as part of CNP1512. In thesetrials, 696 volunteers and patients have received the drug without anysignificant safety or tolerability issues. These trials achieved statisticalsignificance in respect of the trials' primary endpoint, being faster onset ofaction (8.5 minutes faster activity per dose in patients with 1 or 2 times perday dosing), increased mobility time after each dose (15.4 minutes less OFFepisodes per dose in patients with 1 or 2 times per day dosing), improvedreliability of drug response compared to current levodopa-based drugs (importantin patients with gastrointestinal dysfunctions) and increased water solubilityresulting in an easier mode of administration (effervescent tablet thatdissolves in 3 tablespoons of water). The trials supported regulatory approvalfor the drug in Italy when Chiesi, Cita's licensor, obtained a marketingregistration for the drug for Parkinson's disease patients experiencing motorfluctuations. CNP1512 is approved in Italy for rescue (fast onset) inParkinson's disease. Cita owns the worldwide rights to CNP1512 outside of Italy. The fact thatCNP1512 has already received regulatory approval in Italy indicates a reducedrisk profile. Approximately 65-70 per cent. of total OFF episodes experienced bymost Parkinson's disease patients is attributable to slower onset ofconventional levodopa based therapies. Following Completion, Vernalis plans to initiate a pharmacokinetic study inParkinson's disease patients in order to compare with Sinemet(R) the plasmalevels of levodopa following administration of CNP1512. Sinemet(R) is currentlythe most widely prescribed form of levodopa treatment for Parkinson's diseasepatients in the US. Vernalis also plans to commence Phase III clinical trials inNorth America and in Europe in order to obtain regulatory approval in these keymarkets. The Directors expect that the trials will involve patients in a 6months controlled efficacy trial and 6 months safety extension trial. Vernalisplans to begin these Phase III clinical trials in H2 2006. The primary endpointfor these pivotal trials will be the reduction of total daily OFF episodes. CNP3381 for Neuropathic PainCNP3381 is a novel drug candidate that is being developed for neuropathic pain.Neuropathic pain is an intense and chronic form of pain related to damage tonerves and their signalling processes, rather than acute injuries, that is oftennon-responsive to current drug therapies. Unlike acute pain, neuropathic paindoes not diminish over time and can increase in both intensity and area. Thistype of pain occurs in the course of diabetes, post-herpetic neuralgia(shingles), the side effects of chemotherapy, trigeminal (facial) neuralgia, HIVinfection, and spinal cord injuries. According to Prof K. K. Jain (Pain Therapeutics-Drugs, Markets and Companies,October 2005) the worldwide analgesic market is estimated to be worth U.S.$50.0billion for 2005 and is expected to increase to U.S.$75 billion by 2010. Painmanagement prescription sales were estimated (by Roche Ellis and Jessica Hou ofPharmaceutical Executive) at U.S.$20.6 billion in 2004 and is expected toincrease to U.S.$29.8 billion by 2008. Pain management remains one of the mostwidely researched yet under treated therapeutic areas. Espicom BusinessIntelligence estimated the 2003 worldwide market for drugs approved forneuropathic pain at U.S.$2.5 billion (for which, going forward, CNP3381 wouldseek to obtain a share following marketing approval), despite limited responserates and efficacy, tolerance and dependency issues, and other side effects ofcurrent therapies. The Directors believe that the market for neuropathic painprescription drugs is likely to be greater than it appears as anticonvulsantsand antidepressants are used off-label for this condition. The pain managementmarket has grown significantly in recent years, with increasing demand bypatients, better physician responsiveness, an aging population, increasingnumbers of surgical procedures and the introduction of a multitude of newproducts. The Directors believe that CNP3381 may have a dual mechanism of action, that ofan NMDA antagonist and a MAO-A inhibitor, that controls pain in both theperipheral and central nervous systems and further believe that CNP3381 may havethe ability to reduce both pain signal transmission and the conscious perceptionof pain without many of the limitations and side effects of existing treatments.CNP3381 has undergone preclinical and clinical studies in which it wasdetermined to be safe and well-tolerated. In two proof of concept studiesinvolving a total of 47 subjects, CNP3381 achieved a reduction of the area andintensity of pain reported by volunteers in a model of neuropathic pain.Neuropathic pain is an area where existing therapies may be unsatisfactory dueto non-responders, low efficacy or side-effects. A clinical maximum tolerateddose study in healthy volunteers in Canada has been completed in order toestablish the dose range for Phase II clinical trials. An Investigational NewDrug (IND) application has been opened with the FDA. Following Completion,Vernalis plans to initiate a Phase II clinical trial of CNP3381 in diabeticneuropathic pain patients in H1 2006. The trial will assess safety,pharmacokinetics and preliminary efficacy on multiple doses in the U.S. andCanada and will be randomised and double blind. Licensing and Collaboration AgreementsBoth CNP1512 and CNP3381 were licensed by Cita from Chiesi, a privately-owned,Italy based, European pharmaceutical company. Under these licences dated 29 July 2004 and 14 March 2005 (as amended andrestated on 17 November 2005, conditional on Completion), Cita was grantedexclusive licences (with the right to grant sublicences) to exploit the licensedtechnology throughout the world (except in respect of CNP1512 for Italy whereChiesi retains exploitation rights). The licensed technology includes the patentrights described in the paragraph below headed "Intellectual Property" as wellas information and know-how related to CNP1512 and CNP3381. Under the CNP1512licence agreement Chiesi has certain rights over class C preference shares inthe capital of Cita. Under the Cita Acquisition Agreements, Vernalis has agreedto acquire these rights. Other terms of these licences have been amended andrestated conditional on Completion. The terms of the amended and restatedlicences are reflected in the description below. With respect to the rights to CNP1512, Cita has paid Chiesi an up front fee andwill pay further milestone payments in each case on both submission for andreceipt of regulatory approval for a product containing that compound in eitherEurope or in the United States and royalties on all net sales of the product. With respect to the rights to CNP3381, Cita has paid Chiesi an up front fee andwill pay further milestone payments for any product containing that compoundduring the development programme and on submission for and receipt of regulatoryapproval for a product containing that compound in either Europe or the UnitedStates and royalties on all net sales of the product. For both CNP1512 and CNP3381, additional amounts are payable by Cita to Chiesiif Cita receives payments from any third party partner or sub-licensee withrespect to the development of the compounds. Under the licences, Cita must comply with various diligence obligations withrespect to the development of the licensed compounds and use commerciallyreasonable and diligent efforts to promote any approved product. Cita's failureto fulfil these obligations will not in itself give rise to a right for Chiesito terminate the agreement, but such termination rights may come into effect ifthe relevant failure has been due to Cita's failure to use commerciallyreasonable and diligent efforts. Under both licences, Chiesi retains an option to co-market or co-promote anydeveloped products in a limited number of specified territories. Intellectual Property - CNP1512Cita has licensed a family of patents and patent applications from Chiesi,covering certain pharmaceutical compositions, formulations and methods of theiruse. Pharmaceutical composition patents relate to compositions containingspecific dosages of levodopa methyl-ester and to various combinations oflevodopa methyl-ester and carbidopa or benserazide (the latter being a moleculewith the same effect as carbidopa). Method of use patents cover ways of treatingParkinson's disease by administering levodopa methyl-ester. Patents and patentapplications cover effervescent formulations containing methyl-ester andcarbidopa using various alkaline and acidic components to afford theeffervescent blend. Of the patent portfolio relating to CNP1512, the most important patents areconsidered to be the U.S. and European effervescent formulation patents, whichthe Directors believe will provide protection on the effervescent formulation toat least 2018. - CNP3381A family of patents and patent applications are licensed from Chiesi, coveringpharmaceutical compositions of matter using glycinamide derivatives, such asCNP3381, and their use in the treatment of chronic pain and other neurologicaldisorders, including Alzheimer's disease. Of this patent portfolio relating to CNP3381, the most important patents areconsidered to be the U.S. and European composition of matter patents, which theDirectors believe will provide protection of the drug to at least 2017. Financial Information on CitaA summary of the trading results of Cita for the years ended 30 November 2002,2003 and 2004 and the six months ended 31 May 2005 are summarised below. 6 months ended 31 May Year ended 30 November 2005 2005 2004 2004 2003 2002 £'000(2) CAN$'000 £'000(1) CAN$'000 CAN$'000 CAN$'000--------------- -------- -------- ------- -------- -------- -------- unaudited unauditedTurnover - - - - - -Research anddevelopmentexpenditures (1,439) (3,290) (2,106) (4,787) (4,044) (520)Administrativeexpenses (612) (1,399) (469) (1,067) (1,078) (157)Operating loss (2,051) (4,689) (2,575) (5,854) (5,122) (677)Interestreceivable andsimilar income 1 3 9 21 75 5Non-cashinterestpayable onVenture Debt (1,000) (2,287) (1,155) (2,625) (704) (64)Other interestpayable andsimilarcharges (72) (165) (58) (131) (20) -Loss onordinaryactivitiesbeforetaxation (3,122) (7,138) (3,779) (8,589) (5,771) (736)Tax credit onloss onordinaryactivities 176 402 513 1,166 1,234 81Loss for thefinancial year (2,946) (6,736) (3,266) (7,423) (4,537) (655) (1) The results for the year ended 30 November 2004 have been translated at arate of CAN$2.273/£1.(2) The results for the period ended 31 May 2005 have been translated at a rateof CAN$2.286/£1. Cita has expanded its development pipeline through the license agreements signedin 2004 and 2005 with Chiesi, which has led to an increase in overall researchand development expenditure. Cita has financed its development primarily through the use of venture debtwhich bears non-cash interest typically at high rates, which is reflected in theincreased interest expense recorded. Current Trading and Prospects of Cita During its current financial year, Cita has continued to incur losses, as itapplied its cash resources to continue to develop its clinical developmentpipeline. On 30 September 2005 and on 4 November 2005 Cita obtained CAN$1million and CAN$2.5 million, respectively of further venture debt funding fromVenGrowth and since 31 May 2005, Cita has incurred additional costs ofCAN$584,000 in connection with a potential initial public offering by Cita thatwas terminated as a result of Cita's decision to instead pursue a potential saleto Vernalis. The Directors believe that Cita's development pipeline haspotential to deliver significant value to Shareholders going forward. Cita has financed its activities through debt and has been unable to pay itsdebt as it has become due. However, Cita's shareholders and finance providershave agreed that immediately prior to the acquisition by Vernalis they willconvert their debt to equity and discharge all borrowings of Cita other than aloan from MMV for US$2.5 million. Vernalis has agreed to provide finance to Citafrom the date of signing the Cita Acquisition Agreements to Completion to enableCita to discharge its liabilities as they fall due. Taking account of the netproceeds receivable from the Placing and Open Offer, Vernalis will havesufficient funds to repay the outstanding balance of U.S.$2 million (plusinterest and costs) of Cita's loan from MMV and to carry on the development ofCita's clinical programmes CNP1512 and CNP3381. Principal terms of the Cita Acquisition Pursuant to the Cita Acquisition Agreements, Vernalis will acquire the entireissued, and to be issued, share capital of Cita. The initial consideration,which will be paid by Vernalis on Completion, is U.S.$29.5 million to besatisfied by the issue of new Ordinary Shares. Vernalis will also assume certainof Cita's liabilities on Completion. Further deferred consideration of up toU.S.$35 million is payable in instalments by Vernalis dependent upon achievingcertain milestones in respect of the development of Cita's clinical drugcandidates CNP1512 and CNP3381. The U.S.$29.5 million initial consideration is to be satisfied by the issue atCompletion of 26,915,831 Ordinary Shares (representing approximately 12.4 percent. of Vernalis' existing issued ordinary share capital) calculated at anissue price of 63.91 pence per new Ordinary Share (being Vernalis' averageClosing Price on the thirty dealing days prior to the date of thisannouncement). Of the shares to be issued as initial consideration, 2,630,847 Ordinary Shareswill be issued to certain Vendors and the remaining 24,284,984 Ordinary Shareshave been conditionally placed by Piper Jaffray at the Offer Price pursuant tothe Vendor Placing to realise cash proceeds payable to certain Vendors ofapproximately £ 15.3 million (U.S.$ 26.2 million) (before expenses). Deferred consideration of up to U.S.$35 million is payable by Vernalis in sixequal instalments payable upon the achievement of the following milestones:• enrolment of the first patient into a Phase III study for CNP1512;• the Company reporting that it has sufficient data to support asubmission to the FDA for regulatory approval to market and sell in the USA aproduct comprising CNP1512 for the treatment of Parkinson's disease;• approval by the FDA of CNP1512 for the treatment of Parkinson'sdisease;• the Company reporting that it has sufficient data to justifyprogressing with a Phase II or a Phase III study for CNP3381;• the Company reporting that it has sufficient data to support asubmission to the FDA for regulatory approval to market and sell in the USA aproduct comprising CNP3381 for the treatment of diabetic neuropathic pain; and• approval by the FDA of CNP3381 for the treatment of diabeticneuropathic pain, Alzheimers disease, post operative pain or mixed pain relatedto palliative care.Vernalis has the option to elect to satisfy each payment of deferredconsideration in Ordinary Shares (such number of Ordinary Shares to becalculated using the average Closing Price on the thirty dealing days prior tothe relevant milestone event occurring), in cash or by a combination of cash andOrdinary Shares. The other principal terms of the Cita Acquisition are as follows: •Vernalis has agreed to assume certain of Cita's liabilities onCompletion, including an outstanding U.S.$500,000 withholding tax liabilityand the early repayment of the outstanding balance under a loan to MMV, asdescribed below. Vernalis has also agreed to provide up to U.S.$250,000 perweek to Cita until Completion to fund certain costs associated with CNP1512and CNP3381, including Cita's salaries and overheads during that period(subject to prior approval by Vernalis). Cita's expenditure on such itemsduring the period from signing until Completion will be deducted in equalamounts from the first two milestone payments paid under the CitaAcquisition Agreements;• the consideration payable to certain Vendors will be subject to a netcash adjustment following Completion to the extent that Cita's net cash (lessany liabilities or funding for which Vernalis has agreed to be responsible) ismore or less than zero (as relevant);• the deferred consideration payments will be subject to deduction forwarranty and indemnity claims against certain Vendors;• Vernalis has given certain commitments in respect of its futuredevelopment of CNP1512 and CNP3381;• Vernalis will, on Completion, procure the early repayment of theoutstanding balance of U.S.$2 million (plus interest and costs) of an existingloan from MMV to Cita;• subject to certain limited exceptions, each Vendor allotted in excessof 500,000 Consideration Shares at Completion covenants not to dispose of thoseshares before the earlier of: (i) 30 June 2006; and (ii) the announcement byVernalis of the results of pivotal efficacy studies for Vernalis' frovatriptanMRM prophylaxis development programme other than with Vernalis' prior approvaland through Vernalis' brokers, provided that Vernalis' brokers are able todispose of such shares on commercially reasonable terms;• in the event that the Cita Acquisition does not complete and the CitaAcquisition Agreements terminate in accordance with their terms, Vernalis willbe entitled, on payment of a license fee of U.S.$3 million, to the first rightof offer to license from Cita the right to sell and market in the USA anyproducts arising from CNP1512. The weekly amounts funded by Vernalis to Cita,referred to above, from signing until termination of the Cita AcquisitionAgreements will be treated as prepayments of the U.S.$3 million license fee, ifthat fee becomes payable; and• the Cita Acquisition Agreements are conditional, inter alia, on thepassing of the Resolutions, the Placing and Open Offer Agreement (and,accordingly, the Vendor Placing and the Placing and Open Offer) having becomeunconditional (save for any conditions relating to completion of the CitaAcquisition Agreements or Admission) and not having been terminated inaccordance with its terms and Admission having become effective. Reasons for the Placing and Open Offer In March 2005, Vernalis raised net proceeds of approximately £28.1 million froma placing and open offer to shareholders. As stated at the time, thisfundraising was carried out in order to allow the Company to establish acommercial business in North America, to progress certain of the Company'sexisting development programmes to a more advanced stage before licensing themout, and to provide the flexibility to expand its existing portfolio throughselective and timely acquisition of research and development programmes and/orproducts. In addition, this fundraising put the Company in a stronger financialposition to continue its research and development activities during the periodthrough to the expected regulatory approval, in H1 2007, of its lead clinicaldevelopment programme, frovatriptan as a short-term prophylaxis for MRM,providing ongoing clinical trials are successful and satisfactory to the FDA, atwhich point a U.S.$40 million milestone is due to be received from Endo. Since the fundraising was completed in March 2005, the Company has acquiredIonix, a private UK company, in an all share transaction for an initialconsideration of £12.5 million, acquired the intellectual property, know-how andsome associated assets relating to the oncology target, Pin1, from Pintex, aprivate US Company, for an undisclosed initial cash payment plus additionalmilestone payments and announced on 4 November 2005 that it had acquired theexclusive rights to market and sell Apokyn(R) in North America for a one-offcash payment of U.S.$23 million. In addition, the Company has entered into theCita Acquisition Agreements pursuant to which it has conditionally agreed toacquire Cita. These acquisitions and the associated costs of taking forward theacquired development programmes means the Company no longer has the samefinancial flexibility to itself maintain the development of the new programmesit has acquired through these acquisitions, and in particular those of Cita,while maintaining a strong financial position through to the first half of 2007and the anticipated U.S.$40 million milestone payment from Endo. The netproceeds of the Placing and Open Offer, which will amount to approximately £38.7 million, will allow the Company to fund the development of Cita's clinicalprogrammes CNP1512 and CNP3381 and invest in the marketing and development ofApokyn(R), while having sufficient cash resources to fund the Enlarged Group'sother existing business activities beyond the first half of 2007 when theU.S.$40 million milestone payment from Endo is due to be received, assuming theCompany's lead clinical development candidate, frovatriptan, as a short termprophylaxis for MRM, successfully obtains regulatory approval from the FDA. In particular, the Enlarged Group will use the proceeds of the Placing and OpenOffer: • to continue the development of Cita's clinical programmes CNP1512 andCNP3381 and over the next 18-24 months intends to: - complete a pharmacokinetics study in Parkinson's disease patients in order to compare with Sinemet(R) the plasma levels of levodopa following administration of CNP1512 and commence Phase III clinical trials in North America and Europe in order to obtain regulatory approval for CNP1512 in these key markets; and - complete a Phase II clinical trial of CNP3381 in diabetic neuropathic pain patients; and• to invest in the marketing and development of Apokyn(R) and, inparticular, over the next 18-24 months intends to: - undertake Phase IV studies in relation to the use of Apokyn(R) in Parkinson's disease patients; - accelerate the expansion of the North American commercial operation; and - invest in a marketing programme. Of the net proceeds of approximately £38.7 million, approximately £20 millionwill be used to fund the development of Cita's clinical programmes CNP1512 andCNP3381, approximately £7 million will be invested in the marketing anddevelopment of Apokyn(R), with the remainder being used to restore the workingcapital position of the Company following the recent cash acquisition of Apokyn(R). Reasons for the Vendor PlacingThe Vendor Placing will raise £ 15.3 million (U.S.$ 26.3 million) (beforeexpenses) and has been arranged to enable certain Vendors to realise aproportion of the consideration payable to them at Completion under the CitaAcquisition Agreements in the form of cash. Details of the Vendor Placing Arrangements have been made with Piper Jaffray, as agents for the Company, toconditionally place firm a total of 24.284,984 new Ordinary Shares withinstitutional investors at the Offer Price, raising a total of approximately£15.3 million (U.S.$26.3 million) (before expenses). All of the net proceeds ofthe Vendor Placing will be for the account of certain Vendors under the CitaAcquisition Agreements. The Offer Price represents a discount of 1.6 per cent. to the Closing Price ofan Ordinary Share on 17 November 2005, which is consistent with Listing Rulesrequirements, and accordingly the Directors consider it to be appropriate. The Vendor Placing Shares are not subject to the Open Offer and all of theVendor Placing Shares will be conditionally placed firm with institutionalinvestors by Piper Jaffray on behalf of the Company. The issue of the Vendor Placing Shares (other than Vendor Placing Shares placedin or into the United States) under the Vendor Placing has been fullyunderwritten by Piper Jaffray, subject to certain conditions set out in thePlacing and Open Offer Agreement. To the extent that US placees do not subscribefor any Vendor Placing Shares, these Vendor Placing Shares will be issued to therelevant Vendors at Completion. Details of the Placing and Open Offer Arrangements have been made with Piper Jaffray, as agents for the Company, toinvite Qualifying Shareholders to apply to subscribe for Open Offer Shares atthe Offer Price, on the basis of 5 Open Offer Shares for every 16 Existing Ordinary Shares registered in their name as at the close of business on the Record Date and soin proportion for the number of Existing Ordinary Shares so held. QualifyingShareholders may apply for any whole number of Open Offer Shares up to theirmaximum allocation which, in the case of Qualifying non-CREST Shareholders, isequal to the number of Open Offer Entitlements as shown on their ApplicationForm or, in the case of Qualifying CREST Shareholders, is equal to the number ofOpen Offer Entitlements standing to the credit of their stock account in CREST.Qualifying Shareholders with holdings of Existing Ordinary Shares in bothcertificated and uncertificated form will be treated as having separate holdingsfor the purpose of calculating their entitlements under the Open Offer. The Offer Price represents a discount of 1.6 per cent. to the Closing Price ofan Ordinary Share on 17 November 2005, which is consistent with Listing Rulesrequirements, and accordingly the Directors consider it to be appropriate. Piper Jaffray has placed the Open Offer Shares (less any Committed Open OfferShares) conditionally with institutional investors, subject to recall to satisfyvalid applications by Qualifying Shareholders under the Open Offer. The Placing and Open Offer has been fully underwritten by Piper Jaffray, subjectto certain conditions set out in the Placing and Open Offer Agreement. Application has been made for the Open Offer Entitlements to be admitted toCREST. It is expected that the Open Offer Entitlements will be admitted to CRESTat 8:00 a.m. on 21 November 2005. The Open Offer Entitlements for valid marketclaims only will also be enabled for settlement in CREST at 8:00 a.m. on 21November 2005. Applications through the means of the CREST system may only bemade by the Qualifying Shareholder originally entitled or by a person entitledby virtue of a bona fide market claim. Qualifying non-CREST Shareholders will receive an Application Form which setsout their maximum entitlement to Open Offer Shares as shown by the number ofOpen Offer Entitlements allocated to them. Qualifying CREST Shareholders willreceive a credit to their appropriate stock accounts in CREST in respect oftheir Open Offer Entitlements on 21 November 2005. No Open Offer Entitlementswill be credited to the CREST accounts of CREST Participants who are located inor have registered addresses in the United States, Japan, Canada or Australia. For applications under the Open Offer to be valid, in respect of Qualifyingnon-CREST Shareholders, completed Application Forms and payment in full must bereceived by 11:00 a.m. on 9 December 2005. If you are a Qualifying CRESTShareholder the relevant CREST instructions must have settled as explained inthe Prospectus by no later than 11:00 a.m. on 9 December 2005. The CitaAcquisition, the issue of the Consideration Shares, the Vendor Placing and thePlacing and Open Offer are conditional upon, inter alia, the passing of theResolutions at the Extraordinary General Meeting and Admission becomingeffective. It is expected that Admission will become effective and dealings inthe New Ordinary Shares will commence at 8.00 a.m. on 14 December 2005. The NewOrdinary Shares will, when issued and fully paid, rank pari passu in allrespects with, and carry the same voting rights as, the Existing OrdinaryShares. Related party transactionIt is proposed that Invesco, a subsidiary undertaking of Amvescap (which as at16 November 2005, being the latest practicable date prior to the publication ofthis document, had confirmed to the Company that it was interested inapproximately 27.2 per cent. of the Company's issued ordinary share capital)should participate as a placee in the Vendor Placing. Invesco has given anundertaking under which it has agreed inter alia to subscribe at the Offer Priceunder the Vendor Placing for 7,500,000 new Ordinary Shares (representingapproximately 8.1 per cent. of the New Ordinary Shares the subject of the VendorPlacing and the Placing and Open Offer) conditional, inter alia, upon thepassing of the Resolutions. Invesco has also given an undertaking to participate in the Open Offer to thefull extent of its interest in Ordinary Shares under its management at the timeof receipt of this document and an Application Form (which as at 16 November2005, being the latest practicable date prior to the publication of thisdocument, amounted to 59,058,895 Ordinary Shares, representing 27.2 per cent. ofthe Company's issued ordinary share capital). As a consequence of Invesco's current interest in the Company, its proposedparticipation in the Vendor Placing is a related party transaction for thepurposes of the Listing Rules and therefore requires the prior approval ofShareholders other than Invesco. Invesco will abstain, and has undertaken totake all reasonable steps to ensure that its associates and Amvescap willabstain, from voting on the Related Party Resolution. Current trading and prospects for VernalisOn 22 September 2005, Vernalis announced its interim results for the six monthsended 30 June 2005. During these six months the Company has progressed itsbusiness in all areas. It has made good progress with its clinical developmentpipeline, obtaining positive interim Phase III data from the frovatriptan safetytrial, completing enrolment in the Phase III efficacy trial for frovatriptanagainst MRM and commencing a Phase II clinical trial of V1003 in acutepost-operative pain, a programme obtained through the acquisition of Ionixduring the period. The Company also expanded its research portfolio through theacquisition of intellectual property rights, know-how and some associated assetsrelating to the oncology target Pin1 from Pintex. Following the exercise of itsoption with Endo in February 2005 to co-promote frovatriptan in the US, Vernalishas now also commenced establishing a commercial operation in North America. Since 30 June 2005 Vernalis has continued to incur losses in line with theDirectors' expectations as it continues to progress the development of itsproduct portfolio and research programmes and to establish its commercialoperation in North America. In August 2005 the Company commenced Phase IIclinical trials with V10153 for acute ischaemic stroke and on 4 November 2005,Vernalis announced that it had acquired the exclusive rights to market and sellApokyn(R), an on-market Parkinson's disease drug, in North America from Mylanfor a one-off cash payment of U.S.$23 million. The Cita Acquisition will furtherenhance the Group's later stage clinical development portfolio. The Directors expect that there will be a small improvement in the revenue ofthe Enlarged Group for the second half of 2005 compared to the first half of theyear as it starts to generate sales of Apokyn(R) while expenditure is expectedto increase slightly compared to the first half of the year due to thecompletion of the MRM programme for frovatriptan and as the Company starts topromote Apokyn(R). The Directors expect that the Enlarged Group will continue toincur losses and cash outflows for the foreseeable future. Cash and short term investments amounted to £49.9 million as at 30 June 2005 asannounced in the Company's unaudited interim results for the six months ended 30June 2005. This, together with the net proceeds of the Placing and Open Offer,and after taking account of the costs of the acquisition of Apokyn(R), willallow the Enlarged Group to be well financed to progress its activities. TheDirectors are therefore confident of the financial and trading prospects of theEnlarged Group for the current financial year. The anticipated timescale for news flow for the Enlarged Group's productdevelopment portfolio is summarised below: V2006: File IND prior to Phase II (Biogen Idec) H2 05Frovatriptan: MRM safety data H2 05Frovatriptan: MRM efficacy data H1 06Frovatriptan: MRM regulatory submission H1 06V10153: Completion of Phase IIa in stroke H1 06CNP3381: Start of Phase II in neuropathic pain H1 06V1003: Completion of Phase IIa (Reckitt Benckiser) H1 06CNP1512: Start of Phase III in Parkinson's disease H2 06V24343: Start of Phase I in obesity and related disorders H2 06Apokyn(R) Half yearly sales data H2 06 Expected Timetable of Principal Events 2005Record Date for entitlements under the Open Offer 16 NovemberProspectus, Application Forms (if relevant) and Forms of Proxy 18 Novemberposted to Qualifying ShareholdersOpen Offer Entitlements credited to stock accounts in CREST of 8.00 a.m. on Qualifying CREST Shareholders 21 NovemberRecommended latest time for requesting withdrawal of Open Offer 4.30 p.m. on Entitlements from CREST(1) 5 DecemberLatest time for depositing Open Offer Entitlements into CREST(2) 3.00 p.m. on 7 DecemberLatest time and date for splitting Application Forms (to satisfy 3.00 p.m. on bona fide market claims only) 7 DecemberLatest time and date for receipt of completed Application Forms 11.00 a.m. on and payment in full under the Open Offer or settlement of 9 Decemberrelevant CREST instruction (as appropriate)Latest time and date for receipt of completed Forms of Proxy 10.00 a.m. on 11 DecemberExtraordinary General Meeting 10.00 a.m. on 13 DecemberAnnouncement of the results of the Open Offer 13 DecemberCompletion of the Cita Acquisition 8.00 a.m. on 14 DecemberAdmission and commencement of dealings in New Ordinary Shares 8.00 a.m. on 14 DecemberExpected date on which New Ordinary Shares will be credited to 14 DecemberCREST accounts (Qualifying CREST Shareholders and relevantVendors only)Expected date of despatch of definitive certificates for New by 23 DecemberOrdinary Shares and refund cheques (where appropriate)(Qualifying non-CREST Shareholders only)(1) i.e. if your Open Offer Entitlements are in CREST and you wish to convertthem into certificated form.(2) i.e. if your Open Offer Entitlements are in certificated form and you wishto convert them into uncertificated form in CREST. Vendor Placing and Placing and Open Offer StatisticsOffer Price 63 penceNumber of Existing Ordinary Shares in issue as at 17 November2005 (being the latest practicable date prior to thisannouncement) 216,798,261Number of New Ordinary Shares to be issued:(a) by way of consideration to certain Vendors upon Completion 2,630,847(b) pursuant to the Vendor Placing 24,284,984(c) pursuant to the Placing and Open Offer 67,749,457Number of Ordinary Shares in issue immediately followingcompletion of the Cita Acquisition (including the VendorPlacing) and the Placing and Open Offer 311,463,549Gross proceeds of the Vendor Placing £15.3 millionGross proceeds of the Placing and Open Offer £42.7 millionEstimated proceeds of the Placing and Open Offer to be retained £38.7 millionby the Company net of expenses Enquiries: Vernalis plc +44 (0) 118 977 3133Simon Sturge, Chief Executive OfficerTony Weir, Chief Financial OfficerJulia Wilson, Head of Corporate Communications Piper Jaffray +44 (0) 20 7743 8700David WilsonDavid RasoulyJamie Adams Brunswick +44 (0) 20 7404 5959Jon ColesWendel Verbeek Piper Jaffray Ltd., which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting exclusively for Vernalis plc inrelation to the Cita Acquisition (including the Vendor Placing) and the Placingand Open Offer and will not be responsible to anyone other than Vernalis plc forproviding the protections afforded to clients of Piper Jaffray Ltd. nor forproviding advice in relation to the Cita Acquisition (including the VendorPlacing) and the Placing and Open Offer or any other transaction or arrangementreferred to herein. This press announcement has been issued by Vernalis and is the soleresponsibility of Vernalis Neither the Vendor Placing nor the Placing and Open Offer are being made,directly or indirectly, in or into the United States or Japan and applicationsin or from the United States or Japan will not be capable of acceptance and willbe deemed invalid (subject to certain exceptions). This announcement may not beissued, mailed or otherwise distributed or sent, through CREST or otherwise, in,into or from the United States or Japan. Neither the Vendor Placing nor the Placing and Open Offer are being made,directly or indirectly, in or into Australia or Canada and applications in orfrom Australia or Canada will not be capable of acceptance and will be deemedinvalid (subject to certain exceptions with respect to Australia). Thisannouncement may not be issued, mailed or otherwise distributed or sent, in,into or from Australia or Canada. This announcement does not constitute or form part of any offer or invitation tosell or issue, or any solicitation of any offer to purchase or subscribe for,any securities other than the securities to which it relates or any offer orinvitation to sell or issue, or any solicitation of any offer to purchase orsubscribe for, such securities by any person in any circumstances in which suchoffer or solicitation is unlawful. Neither the delivery of this announcement nor any subscription or sale madeunder it shall, under any circumstances, create any implication that there hasbeen no change in the affairs of the Group since the date of this announcementor that the information in it is correct as of any subsequent time. This announcement may contain forward-looking statements that reflect theGroup's current expectations regarding future events, including the clinicaldevelopment and regulatory clearance of the Group's products and including thatof frovatriptan for menstrually related migraine, the Group's ability to findpartners for the development and commercialisation of its products, the benefitsof reacquiring the rights to frovatriptan in North America and the partnershipwith Endo Pharmaceuticals Inc. on the Group's liquidity and results ofoperations, as well as the Group's future capital raising activities.Forward-looking statements involve risks and uncertainties. Actual events coulddiffer materially from those projected herein and depend on a number of factors,including the success of the Group's research strategies, the applicability ofthe discoveries made therein, the successful and timely completion of clinicalstudies, including with respect to frovatriptan and the Group's other products,the uncertainties related to the regulatory process, the ability of the Group toidentify and agree beneficial terms with suitable partners for thecommercialisation and/or development of frovatriptan and other products, as wellas the achievement of expected synergies from such transactions, the acceptanceof frovatriptan and other products by consumers and medical professionals, thesuccessful integration of completed mergers and acquisitions and achievement ofexpected synergies from such transactions, the ability of the Group to identifyand consummate suitable strategic and business combination transactions. Definitions In this announcement, the following expressions have the following meanings,unless the context otherwise requires: Admission the admission of the New Ordinary Shares (i) to the Official List and (ii) to trading on the London Stock Exchange's market for listed securities becoming effective in accordance with, respectively, LR 3.2.7G of the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards Admission and DisclosureALX ALX PartnershipAmvescap AMVESCAP plcApokyn(R) Apokyn(R)Application the personalised application form accompanying the Prospectus onForm which Qualifying Shareholders may apply for Open Offer Shares under the Open OfferBiogen Idec Biogen Idec Inc.British British Biotech plc, now VernalisBiotechbusiness day a day (excluding Saturdays and Sundays or public holidays in England and Wales) on which banks generally are open for business in London for the transaction of normal banking businesscertificated where a share or other security is not in uncertificated formor incertificatedformChiesi Chiesi Farmaceutici S.p.A.Closing the closing middle market quotation of an Existing Ordinary SharePrice as derived from the daily official list published by the London Stock ExchangeCita Cita NeuroPharmaceuticals Inc.Cita the proposed acquisition by the Company of the entire issued, andAcquisition to be issued, share capital of Cita and rights over the share capital of Cita pursuant to the Cita Acquisition Agreements, as described in the ProspectusCita together the conditional sale agreements dated 18 November 2005Acquisition between the Company and the Vendors which collectively set outAgreements the terms for the Cita Acquisition, further details of which are set out in paragraph 10.3 of Part IX of the ProspectusCommitted Open the Open Offer Shares that Invesco has undertaken to take upOffer Shares under the Placing and Open OfferCommon Parteq Research and Development Innovations, James N. Reynolds,Vendors Brian M. Bennett, Roland J. Boegman, Khem Jhamandas, Gregory J. Thatcher, John Lehmann, Ian Anderson, Graham Strachan, Jean-Paul St. Pierre, Neil Cutler, Carl Cotman, Judith Burgess, Liana Meogrossi, Joy Newsome, Perry Molinoff, Scott Samuel, James Rae, Paul Sekhri, Padmini Singh and Dale St. HilaireCompanies the Companies Act 1985 (as amended)ActCompany or Vernalis plc, registered in England and Wales under numberVernalis 2304992Completion completion of the Cita Acquisition Agreements in accordance with their termsConsideration the 2,630,847 new Ordinary Shares to be allotted to certainShares Vendors at Completion in part satisfaction of the consideration payable to the Vendors at Completion pursuant to the Cita Acquisition AgreementsCREST the relevant system, as defined in the CREST Regulations (in respect of which CRESTCo. Limited is operator as defined in the CREST Regulations)Endo Endo Pharmaceuticals Inc.Enlarged the Group, as enlarged by the Cita AcquisitionGroupExisting the existing Ordinary Shares in issue at the Record DateOrdinarySharesExtraordinary the extraordinary general meeting of the Company convened for theGeneral purpose of passing the Resolutions to be held on 13 DecemberMeeting or 2005, including any adjournment thereofEGMFDA the US Food and Drug AdministrationFinancial The Financial Services AuthorityServicesAuthority orFSAForm of the form of proxy accompanying the Prospectus for use inProxy connection with the EGMFSMA the Financial Services and Markets Act 2000 (as amended)Group Vernalis and its subsidiaries at the date of this announcementInstitutional VenGrowth, MedInnova Partners Inc., Neuroscience DevelopmentVendors Inc., Working Ventures CMDF Queen's Scientific Breakthrough Fund Inc.Invesco INVESCO Asset Management Ltd.Ionix Ionix Pharmaceuticals LimitedListing the listing rules of the FSA relating to admission to theRules Official ListLondon Stock London Stock Exchange plcExchangeManagement Anthony Giovinazzo, Marc de Somer and Brian FieldingShareholdersMenarini Menarini International Operations Luxembourg S.A.MMV MMV Financial Inc.MRM Menstrually related migraineMylan Mylan Pharmaceuticals Inc.New Ordinary together, the Consideration Shares, the Vendor Placing Shares andShares the Open Offer SharesNovartis in relation to the collaboration agreement dated 9 August 2004 means the Novartis Institute for Biomedical Research, Inc., and in relation to the subscription agreement dated 18 December 2003 means Novartis Pharma AGOffer Price 63 pence per New Ordinary ShareOfficial the Official List of the FSAListOpen Offer the conditional invitation set out in Part II of the Prospectus, by Piper Jaffray on behalf of the Company, to Qualifying Shareholders to apply for up to 67,749,457 new Ordinary Shares on a pre-emptive basis on the terms and conditions set out in the Prospectus and, where relevant, in the Application FormOpen Offer an entitlement to subscribe for Open Offer Shares, allocated to aEntitlement Qualifying Shareholder pursuant to the Open OfferOpen Offer the 67,749,457 new Ordinary Shares to be issued by the CompanyShares pursuant to the Placing and Open Offer for which Qualifying Shareholders are being invited to apply under the terms of the Open OfferOrdinary ordinary shares of 5 pence each in the capital of the CompanySharesPiper Piper Jaffray Ltd.JaffrayPlacing the conditional placing of the Open Offer Shares (other than the Committed Open Offer Shares), pursuant to the Placing and Open Offer AgreementPlacing and the conditional placing and open offer agreement dated 18Open Offer November 2005 between the Company and Piper Jaffray relating toAgreement the Vendor Placing and the Placing and Open OfferPintex Pintex Pharmaceuticals Inc.Pin1 an emerging oncology target acquired from Pintex on 31 March 2005Prospectus the document comprising the prospectus and class 1 circular dated 18 November 2005Qualifying Qualifying Shareholders holding Ordinary Shares in uncertificatedCREST formShareholdersQualifying Qualifying Shareholders holding Ordinary Shares in certificatednon-CREST formShareholdersQualifying Shareholders on the register of members of Vernalis at the closeShareholders of business on the Record Date with a registered address outside of the United States, Australia, Canada and Japan, and who are not resident or located in the United States, Australia, Canada or Japan (subject to certain exceptions)Reckitt Reckitt Benckiser Healthcare (UK) LimitedBenckiserRecord Date 16 November 2005, being the record date for the Open OfferResolutions the ordinary and special resolutions to be proposed at the Extraordinary General Meeting, notice of which is set out at the end of the ProspectusRoche F. Hoffman-La Roche Limited and/or its affiliatesSerono Serono S.A.Shareholder a holder of Ordinary Share(s)stock an account within a member account in CREST to which a holding ofaccount a particular share or other security in CREST is crediteduncertificated recorded on the relevant register of the share or securityor in concerned as being held in uncertificated form in CREST, anduncertificated title to which, by virtue of the CREST Regulations, may beform transferred by means of CRESTUnited Kingdom the United Kingdom of Great Britain and Northern Irelandor UKUS, USA or the United States of America, its territories and possessions,United any state of the United States of America and the District ofStates ColumbiaUS$ or $ United States dollarsVendor the conditional placing of the Vendor Placing Shares, pursuant toPlacing the Placing and Open Offer AgreementVendor Placing the 24,284,984 new Ordinary Shares to be issued by the Company atShares Completion pursuant to the Vendor Placing, in part satisfaction of the consideration due to the Vendors at Completion under the Cita Acquisition AgreementsVendors together the Institutional Vendors, the Management Shareholders, the Common Vendors, MMV, ALX and Chiesi being all of the registered holders of the issued, and to be issued, share capital of CitaVenGrowth The VenGrowth Advanced Life Sciences Fund Inc.Vernalis or Vernalis plc, registered in England and Wales under numberthe Company 2304992Vernalis Group Vernalis Group plc (now Vernalis Group Limited), registered inplc England and Wales under number 03137449 For the purposes of this announcement, "subsidiary", "subsidiary undertaking"and "parent undertaking" shall, unless the context otherwise requires, have therespective meanings given to them by the Companies Act. Unless otherwise stated, the Sterling/U.S. Dollar exchange rate applicable toamounts stated in this announcement is £0.5831: $1 being the spot rate ofexchange for the conversion of Pounds Sterling into U.S. Dollars as reported inthe Financial Times (London Edition) as the "closing mid-point" rate fordealings in U.S. Dollars on 17 November 2005 (noting that such report is of theprevious Business Day's trading). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Vernalis PLC