REG - Allergy Therapeutics - Subscription and Debt Financing
29/09/2022 07:00
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RNS Number : 0797B Allergy Therapeutics PLC 29 September 2022
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO
CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE EU
REGULATION 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018, AS AMENDED. IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN
RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT
CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION
OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE
PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF
INSIDE INFORMATION.
Allergy Therapeutics plc
("Allergy Therapeutics" or the "Company")
Subscription to Raise £7 million
Issue of Loan Notes to Raise £10 million
Issue of 33,333,332 Warrants
29 September 2022 Allergy Therapeutics (AIM: AGY), the fully integrated
specialty pharmaceutical company specialising in allergy immunotherapy, today
announces a conditional Subscription by the Subscribers, Southern Fox and ZQ
Capital (acting through its affiliate SkyGem), to raise £7 million at an
Issue Price of 20 pence per Ordinary Share and the issue to the Note
Purchasers, Southern Fox and ZQ Capital, of Loan Notes to raise a further £10
million. In addition, in conjunction with the issue of Loan Notes, the Company
will issue 33,333,332 Warrants to the Note Purchasers to subscribe for new
Ordinary Shares at a Warrant Exercise Price of 30 pence per Warrant.
Net proceeds raised from the Subscription and Debt Financing will be used,
inter alia, to complete the Group's Phase I peanut trial and Grass Phase III
trial following trial design optimisation to increase the chances of success
of these important trials. The Directors believe VLP Peanut, has the potential
to become a best-in-class treatment for peanut allergy with a revenue
potential of more than US$1 billion per annum whilst a successful Grass Phase
III trial presents a significant future opportunity to grow grass allergy
product sales by transitioning from named patient sales to registered product
sales and launch in the United States. The trials are due to commence in 2022.
Pursuant to the terms of Subscription Letters and the Loan Note Agreement and
subject to certain conditions including the passing of the Resolutions at the
General Meeting, the Company has agreed to issue the Subscription Shares and
the Loan Notes to Southern Fox and ZQ Capital (acting through its affiliate
SkyGem in relation to the Subscription).
The Subscription and the Debt Financing are conditional, inter alia, on the
passing of the Resolutions by the Shareholders at the General Meeting, which
it is intended will be convened for 11 a.m. on 17 October 2022. If the
Resolutions are passed, the Subscription Shares are expected to be allotted
after the General Meeting, conditional on Admission, which is expected to
occur on or around 8.00 a.m. on 19 October 2022. Should Shareholder approval
not be obtained at the General Meeting, neither the Subscription nor the Debt
Financing will proceed. Neither the Subscription nor the Debt Financing has
been underwritten.
Set out below in Appendix I is an adapted extract from the draft Circular that
is proposed to be sent to Shareholders which provides further information on
the Company, the Subscription and the Debt Financing. The final Circular,
containing the Notice of General Meeting will be sent to Shareholders and
published on the Company's website on or around 29 September 2022.
The capitalised terms not otherwise defined in the text of this Announcement
are defined in Appendix II and the expected timetable of the principal events
is set out in Appendix III.
Manuel Llobet, Chief Executive Officer at Allergy Therapeutics, commented:
"This raise secures the remainder of the funding of the Phase I PROTECT trial,
and progression into phase II, of VLP Peanut, our peanut allergy vaccine
candidate, and funds the further development of our short-course grass pollen
immunotherapy, Grass MATA MPL. These are two products that have the potential
to become best-in-class allergy treatments and could offer a paradigm shift in
the treatment of allergic disorders. I would like to thank our existing
shareholders, Southern Fox and ZQ Capital, for their ongoing support and their
belief in our pioneering research to deliver transformational outcomes for
allergy patients."
- ENDS -
For further information, please contact:
Allergy Therapeutics
+44 (0) 1903 845 820
Manuel Llobet, Chief Executive Officer
Nick Wykeman, Chief Financial Officer
Panmure Gordon (Nominated Adviser and Broker)
+44 (0) 20 7886 2500
Freddy Crossley, Emma Earl, Corporate Finance
Rupert Dearden, Corporate Broking
Consilium Strategic Communications
+44 20 3709 5700
Mary-Jane Elliott / David Daley / Davide Salvi
allergytherapeutics@consilium-comms.com
(mailto:allergytherapeutics@consilium-comms.com)
Stern Investor Relations, Inc.
+1 212 362 1200
Christina Tartaglia
christina@sternir.com (mailto:christina@sternir.com)
Notes for editors:
About Allergy Therapeutics
Allergy Therapeutics is an international commercial biotechnology company
focused on the treatment and diagnosis of allergic disorders, including
aluminium free immunotherapy vaccines that have the potential to cure disease.
The Group sells proprietary and third-party products from its subsidiaries in
nine major European countries and via distribution agreements in an additional
ten countries. Its broad pipeline of products in clinical development includes
vaccines for grass, tree and house dust mite, and peanut allergy vaccine in
pre-clinical development. Adjuvant systems to boost performance of vaccines
outside allergy are also in development.
Formed in 1999 out of Smith Kline Beecham, Allergy Therapeutics is
headquartered in Worthing, UK with more than 11,000m(2) of state-of-the-art
MHRA-approved manufacturing facilities and laboratories. The Group, which
employs c.600 employees, is listed on the London Stock Exchange (AIM:AGY). For
more information, please see www.allergytherapeutics.com
(http://www.allergytherapeutics.com) .
IMPORTANT NOTICES
This Announcement has been issued by, and is the sole responsibility of, the
Company.
The distribution of this Announcement in certain jurisdictions may be
restricted by law. Accordingly, neither this Announcement nor any other
material relating to the Transaction or other transactions noted in this
Announcement, may be distributed or published in any jurisdiction except under
circumstances that will result in compliance with any applicable laws and
regulations. Persons outside the United Kingdom into whose possession this
Announcement comes should inform themselves about and observe any such
restrictions.
Neither the Loan Notes, the Warrants, or the Subscription Shares nor the Loan
Note Agreement, the Warrant Instrument, the Subscription Letters, the Circular
or other documents connected with the Transaction have been nor will be
registered under the securities laws and regulations of any jurisdiction, in
particular, Australia, Canada, Japan or the Republic of South Africa, and may
not be offered, sold, resold, or delivered, directly or indirectly, within
Australia, Canada, Japan or the Republic of South Africa, or in any
jurisdiction where it is unlawful to do so, except pursuant to an applicable
exemption.
This Announcement (and the information contained herein) does not contain or
constitute an offer of securities for sale, or solicitation of an offer to
purchase securities, in the United States, Australia, Canada, Japan or the
Republic of South Africa or any other jurisdiction where such an offer or
solicitation would be unlawful. The securities referred to herein have not
been and will not be registered under the US Securities Act of 1933, as
amended (the "Securities Act") or with any securities regulatory authority of
any state or jurisdiction of the United States and may not be offered, sold,
resold, or delivered, directly or indirectly, in or into the United States or
to US persons unless the securities are registered under the Securities Act,
or pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, in each case in accordance
with any applicable securities laws and regulations of any state or
jurisdiction of the United States. The securities referred to herein were
offered and sold to non-US persons outside the United States in offshore
transactions within the meaning of, and in accordance with, Regulation S under
the Securities Act. There was no public offer of securities in the United
States.
None of the Loan Note Agreement, the Warrant Instrument, the Subscription
Letters, the Circular or any other document connected with the Transaction
have been or will be approved or disapproved by the US Securities and Exchange
Commission or by the securities commissions of any state or other jurisdiction
of the United States or any other regulatory authority, nor have any of the
foregoing authorities or any securities commission passed comment upon or
endorsed the merits of the offering of the Loan Notes, the Warrants and/or the
Subscription Shares or the accuracy or adequacy of this Announcement, the
Circular or any other document connected with the Transaction. Any
representation to the contrary is a criminal offence.
Panmure Gordon, which is authorised and regulated in the UK by the Financial
Conduct Authority, is acting for the Company in connection with the
Transaction and will not be acting for any other person (including a recipient
of this Announcement) or otherwise be responsible to any person for providing
the protections afforded to clients of Panmure Gordon or for advising any
other person in respect of the Transaction or any transaction, matter or
arrangement referred to in this Announcement. Panmure Gordon's
responsibilities as the Company's nominated adviser and broker under the AIM
Rules for Nominated Advisers are owed solely to the London Stock Exchange and
are not owed to the Company or to any Director or to any other person in
respect of the Transaction.
Apart from the responsibilities and liabilities, if any, which may be imposed
on Panmure Gordon by FSMA or the regulatory regime established thereunder,
Panmure Gordon does not accept any responsibility whatsoever for the contents
of this Announcement, including its accuracy, completeness or verification or
for any other statement made or purported to be made by it, or on its behalf,
in connection with the Company or the Transaction. Panmure Gordon accordingly
disclaims all and any liability whether arising in tort, contract or otherwise
(save as referred to above) in respect of this Announcement or any such
statement.
Neither the content of the Company's website (or any other website) nor any
website accessible by hyperlinks on the Company's website (or any other
website) is incorporated in, or forms part of, this announcement.
The content of this Announcement has not been approved by an authorised person
within the meaning of the Financial Services and Markets Act 2000 (as
amended).
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements" which include all
statements (other than statements of historical facts) including, without
limitation, those regarding the Group's financial position, business strategy,
potential clinical trial outcomes, plans and objectives of management for
future operations, and any statements preceded by, followed by or that include
the words "targets", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "would", "could", "potential" or "similar" expressions or
negatives thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond the Company's control
that could cause the actual results, performance or achievements of the Group
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding the Group's present and
future business strategies and the environment in which the Group will operate
in the future. These forward-looking statements speak only as at the date of
this Announcement. The Company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any forward looking
statements contained herein to reflect any change in the Company's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statements are based unless required to do so
by applicable law or the AIM Rules for Companies.
APPENDIX I
Subscription for 35,000,000 Subscription Shares at an Issue Price of 20 pence
per share
Issue of Warrants to subscribe for 33,333,332 new Ordinary Shares at a Warrant
Exercise Price of 30 pence per Warrant
and
Notice of General Meeting
Introduction
The Company has conditionally raised a total of £17 million (before
expenses), comprising the Subscription by the Subscribers, Southern Fox and ZQ
Capital (acting through its affiliate SkyGem) to raise £7 million at an Issue
Price of 20 pence per share and the issue to the Note Purchasers, Southern Fox
and ZQ Capital, of Loan Notes to raise £10 million. In addition, in
conjunction with the issue of Loan Notes, the Company has agreed to issue to
the Note Purchasers Warrants to subscribe for 33,333,332 new Ordinary Shares
at a Warrant Exercise Price of 30 pence per Warrant.
Net proceeds raised from the Subscription and the Debt Financing will be used
to complete the Group's Phase I peanut trial and Grass Phase III trial
following trial design optimisation to increase the chances of success of
these important trials. The Directors believe VLP Peanut has the potential to
become a best-in-class treatment for peanut allergy with a revenue potential
of more than US$1 billion per annum whilst a successful Grass Phase III trial
presents a significant future opportunity to grow grass allergy product sales
by transitioning from named patient sales to registered product sales and
launch in the United States. The net proceeds raised will also be used to
prepare VLP Peanut IMP batches in preparation for a VLP Peanut Phase II trial
to allow for swift progression to the next stage of clinical development
assuming a positive outcome from the initial trial.
The Subscription is conditional on, inter alia, the passing of the
Subscription Resolutions by the Shareholders at the General Meeting. The
Subscription is also conditional on the passing of the Debt Financing
Resolutions with respect to the Debt Financing. If the Resolutions are passed,
the Subscription Shares are expected to be allotted after the General Meeting,
conditional on Admission, which is expected to occur on or around 8.00 a.m. on
19 October 2022. If the Resolutions are not passed, the Subscription will not
complete.
The Debt Financing is conditional on, inter alia, the passing of the Debt
Financing Resolutions by the Shareholders at the General Meeting. The Debt
Financing is also conditional on the passing of the Subscription Resolutions
with respect to the Subscription and completion of the Subscription, such that
if the Subscription does not complete, the Debt Financing will not complete.
If the Resolutions are passed, the Loan Notes and the Warrants will be issued
after the General Meeting on the Purchase Date, which is expected to be on 28
February 2023. If the Resolutions are not passed, the Debt Financing will not
complete.
Accordingly Shareholders are strongly encouraged to vote in favour of the
Resolutions. The Notice of General Meeting convening a general meeting of the
Shareholders to be held at the offices of Covington & Burling LLP, 22
Bishopsgate, London EC2N 4BQ at 11 a.m on 17 October 2022 for the purposes of
considering and, if thought fit, passing the Resolutions will be included in
the shareholder circular which will be published shortly.
Background to and reasons for the Transaction
Allergy Therapeutics is an international commercial biotechnology company
focussed on the treatment and diagnosis of allergic disorders, including
aluminium free immunotherapy vaccines that have the potential to cure disease.
The Group sells proprietary and third-party products from its subsidiaries in
nine major European countries and via distribution agreements in an additional
ten countries. Its broad pipeline of products in clinical development includes
vaccines for grass, tree and ragweed pollen in addition to a peanut allergy
vaccine. Adjuvant systems to boost performance of vaccines outside allergies
are also in development.
The Group sells both injectable and sublingual (oral) allergen-specific
immunotherapies. The Directors believe the Group's products are differentiated
by their ultra-short and short course treatment nature and vaccine approach.
The Group's existing commercial therapies trade under various brand names
depending on the market, (e.g., Pollinex Quattro, Pollinex, Acarovac,
Polligoid and TA Gräser Top). The Group's therapies that use the MATA MPL
platform are currently sold on a named patient basis pending successful
completion of the Group's Phase III trials and subsequent paediatric trials.
Once these have been completed, the Company expects to be able to register
both the Grass and the Birch MATA MPL products under the TAV (Therapy Allergy
Ordinance) process in Germany (with the potential for regulatory approval in
2025); this should also pave the way forward, after completion of the safety
database, for registration via a Biological License Application (BLA) in the
United States with the potential for regulatory approval in the United States
in 2027 for the Grass product. The therapies that use the MATA platform are
approved in several European countries including Germany.
The Directors believe the Group's VLP Peanut product has the potential to
become a best-in-class treatment with a revenue potential of more than US$1
billion per annum and to provide long-term immune response in comparison to
continual dosing required by other treatments. The vaccine candidate is based
on a subcutaneous application of recombinant peanut allergens coupled with a
state-of-the-art virus-like particle (VLP) platform with the aim of inducing
protective immunity.
The VLP platform has potential in many different disease areas. It is a
sophisticated technology with potential to address unmet needs in cancer,
asthma, atopic dermatitis and psoriasis. Pre-clinical evaluation of the
vaccine candidates is underway with the intention to develop target product
profiles to address unmet needs.
The Group has a strong patent portfolio including protection to 2032 for the
manufacturing of PQ Grass; the patent for VLP Peanut has recently been granted
giving protection until 2035 and, if a further patent is granted, has the
potential to be extended to 2040.
The Group continues to execute on its three-pillar strategy for growth -
expanding in Europe, building a strong pipeline and gaining market entry in
the United States. Recent results demonstrate continued robust performance
with revenues for the year ended 30 June 2022 at £72.8 million, with revenues
coming from Europe, South Korea and Canada. The unaudited operating profit
pre-R&D is £3.4 million for 2022. Cash as at 30 June 2022 was £20.5
million.
The Group has made significant progress with its key pipeline programmes,
Grass MATA MPL and VLP Peanut, with both set to start major clinical trials by
the end of 2022. The Directors believe these high value and differentiated
products underpin future entry into the commercially important US market which
is valued at c.US$10 billion across both allergic rhinitis and food allergies.
VLP Peanut
Peanut allergy remains a growing healthcare problem, affecting an estimated 1
to 3 per cent. of Western societies. On a per-affected basis, peanut allergy
results in 90 per cent. more emergency room costs and an overall cost of
US$2,800 per year. Peanut allergy is disproportionately associated with severe
reactions compared to other allergies.
Clinical development of the Group's innovative peanut vaccine candidate is
based on a subcutaneous application of recombinant peanut allergens coupled
with a state-of-the-art virus-like particle platform with the aim of inducing
protective immunity. VLP Peanut is a next-generation product that, if
successful, the Directors believe has the ability to change the approach to
food allergy treatment addressing a significant opportunity in the US$8
billion food allergy market.
The Group successfully completed an initial evaluation of the VLP candidate in
collaboration with Imperial College London. The ex-vivo biomarker
study demonstrated a significant 24-fold reduction in basophil activation and
histamine release.
Following a successful submission of the Investigational New Drug (IND)
application to the US Food and Drug Administration (FDA), sites for the first
in human Phase I PROTECT trial investigating VLP Peanut, have been established
and the trial sites are being contracted. Dosing in healthy patients is
expected to commence shortly prior to dose escalation in peanut allergic
patients. The Group expects top line data from the PROTECT trial in summer
2023.
The Directors believe this product has the potential to be a ground-breaking,
next-generation immunotherapy for peanut allergy sufferers in comparison to
continual dosing required by other treatments and follows the Groups strategy
of developing ultra-short course treatments for patients that provide a
long-lasting protective immune response. The Directors believe VLP Peanut, has
the potential to become a best-in-class treatment with a revenue potential of
more than US$1 billion per annum.
PQ Grass
Grass pollen is one of the most common causes of seasonal allergic rhinitis in
the Western world. The symptoms caused by allergic rhinitis reduce patients'
quality of life as well as performance at work or school. The World Allergy
Organization estimates that in the United States Allergic Rhinitis affects
between 10 to 30 per cent. of the adult general population and up to 40 per
cent. of children, making it the fifth most common chronic disease. The
Group's Grass MATA MPL is a short course, aluminium-free allergen-specific
subcutaneous immunotherapy (SCIT) that aims to address the cause of symptoms
of allergic rhino conjunctivitis due to grass pollen addressing the US$2
billion worldwide allergic rhinitis market. Of that market, the Directors
believe estimated peak PQ Grass sales could be US$300-400 million per year.
In May 2021, the Group announced completion of the treatment phase in the G309
exploratory field study to evaluate efficacy and safety of Grass MATA MPL. The
results showed a 40 per cent. efficacy rate driven by extended posology and a
reduction in placebo effect via training, US regulators typically look for
approximately 25 per cent. efficacy rate.
Completion of the treatment phase in the G309 study was an important milestone
paving the way for the pivotal Phase III clinical trial (G306) incorporating
learnings from the G309 study. US and EU sites are currently being contracted
ahead of site initiation visits, which are expected to start later this
quarter and results of the G306 study are expected in Q4 2023.
The G306 study is expected to involve approximately 1,200 patients over more
than 100 trial sites in the EU and US. Successful completion of the trial is
expected to enable the Group to register the Grass MATA MPL product under the
TAV (Therapy Allergy Ordinance) process, subject to initiation of a paediatric
trial, in Germany anticipated during 2025 and should also pave the way forward
for registration via a Biological License Application (BLA) in the United
States targeted for 2027 once the safety database is completed.
In the event that the Grass MATA MPL Phase III trial is not successful, it is
likely that the Company would have to withdraw the Grass MATA MPL product from
the market in Germany and Austria which may potentially also impact other
products using the same platform including MATA MPL mixes (grass and tree).
This would have a very significant impact on the Group's sales which would
only be partly offset by patients and prescribers switching to the Company's
approved Pollinex products.
Beyond the progress being made in the Group's peanut and grass allergy
development programmes, preparatory work continues on a future Birch MATA MPL
pivotal field trial (B302) which, subject to funding, would be expected to
start following results from the Grass MATA MPL pivotal trial (G306). The
birch product would form part of the Group's US portfolio, along with a
Ragweed MATA MPL product. A summary of the current and planned clinical trials
is set out below.
Trial Code Patients Purpose If successful
Grass MATA MPL Phase III trial G306 1,200 Field trial to prove efficacy of Grass - Filing in Germany subject to start of Paediatric trial
- Filing in US subject to safety database
Grass MATA MPL placebo extension G306b 500 Requirement before US filing - reduces final number in G307 below - Completion of remainder of safety database (G307) before filing
Grass MATA MPL safety database G307 c.800 FDA requires 1500 patients who have been treated with the product - this is to - Filing product in US with FDA
complete that
Grass MATA MPL Long Term Paediatric Trial G308 c.700 Determine long term effect of treatment on paediatric patients - Filing in Germany once started and one year completed
Birch MATA MPL Phase III B302 c.750 Filed study to prove efficacy of Birch - Subject to starting a Paediatric trial, filing in Germany
VLP Peanut Phase I Trial (PROTECT) P101 66 Trial to determine maximum safe dose - Move to Phase II Dosing trial
VLP Peanut Phase II Trial P201 c.450 Trial to determine optimum dosing level and posology - Move to Phase III efficacy trial
Use of proceeds
The Directors believe that the Group has the opportunity to progress its two
key products through to key inflexion points (including headline data for the
Group's VLP Peanut Phase I trial and Grass MAT MPL pivotal field trial) and to
progress on the Group's mission to transform lives by breaking new ground in
immunology treatment. To support the Group's execution of its strategy, the
Company has conditionally raised £17 million by way of the Subscription and
Debt Financing to further support clinical trial development and on-going
commercial activities. In particular, the Group intends to use the net
proceeds for:
· the balance of Grass MATA MPL G306 pivotal field trial costs. The
Company intends to allow patient numbers to increase to 1,200, which will
reduce the probability of a trial result not reflecting the underlying
performance of the product from 15 per cent. to 10 per cent., thereby
de-risking the trial;
· initial funding of Grass MATA MPL G306b safety data base in relation
to initial preparation for the trial which is due to start in Q3 2023. This
trial reduces the final number of patients needed in the later G307 safety
trial which is the last trial before filing for approval of Grass MATA MPL in
the United States;
· the balance of the VLP Peanut PROTECT Phase I trial starting in H2
2022. As previously announced on 15 July 2022, complete funding of the trial
required further financing;
· IMP batches for VLP Peanut Phase II trial to allow swift progression
to Phase II trial, following a successful Phase I trial;
· funding of fixed costs of R&D; and
· initial funding to prepare for entry into the US commercial market
for Grass.
Current trading and outlook
As announced on 29 September 2022, the Company reported that revenues for the
year ended 30 June 2022 are £72.8 million (2021: £84.3 million) representing
a 14 per cent. reduction on a reported basis. This short-term revenue decrease
is primarily due to the previously disclosed and planned strategic
streamlining of older products to maintain focus on high value and highly
differentiated short course subcutaneous immunotherapy (SCIT) and innovative
allergy treatments. The operating profit pre-R&D was £3.4 million (2021:
£16.9 million) and net loss after tax for the year was £13.8 million (2021:
net profit of £2.9 million).
The Group implemented effective cost controls which, alongside the significant
clinical progress, have partially offset the revenue reduction. The Group
previously announced operating profit pre-R&D for 2022 was impacted due to
last minute delays of goods in supply chain of £1.4 million although this was
offset by lower R&D expenses created by phasing of work on the two key
clinical trials.
With strong performance of the underlying business, the Directors expect sales
to return to their previous near double-digit growth levels in 2023, although
costs are likely to increase further due to inflation and the end of Covid-19
restrictions relating to travel, allowing a return to scientific conference
attendance. There will also be additional investment in the supply chain to
maintain regulatory compliance and future expansion.
The Directors believe that commencement of the upcoming Phase III Grass trial
and Phase I peanut trial represent two key inflections points for potentially
significant value creation for shareholders and look forward to updating
Shareholders in due course.
Details of the Transaction
The Transaction is comprised of (i) the Debt Financing (being the issue of
Loan Notes pursuant to the Loan Note Agreement and the issue of Warrants
pursuant to the Loan Note Agreement and the Warrant Instrument), and (ii) the
Subscription.
The Subscription is conditional on, inter alia, the passing of the
Subscription Resolutions by the Shareholders at the General Meeting. The
Subscription is also conditional on the passing of the Debt Financing
Resolutions with respect to the Debt Financing. If the Resolutions are not
passed, the Subscription will not complete.
The Debt Financing is conditional on, inter alia, the passing of the Debt
Financing Resolutions by the Shareholders at the General Meeting. The Debt
Financing is also conditional on the passing of the Subscription Resolutions
with respect to the Subscription and completion of the Subscription, such that
if the Subscription does not complete, the Debt Financing will not complete.
If the Resolutions are not passed, the Debt Financing will not complete.
Neither the Subscription nor the Debt Financing has been underwritten.
Loan Notes
Pursuant to the terms of the Loan Note Agreement, subject to certain
conditions including the passing of the Debt Financing Resolutions relating to
the issue of the Warrants at the General Meeting, the Company has agreed to
issue the Loan Notes (on a unsecured basis) to the Note Purchasers on the
Purchase Date in the following principal amounts:
· Southern Fox: £5,000,000; and
· ZQ Capital: £5,000,000.
The Loan Notes are repayable in full on the date falling five (5) years after the Purchase Date. Interest shall accrue on the principal amount of the Loan Notes outstanding at the rate of 8.25 per cent. plus the Bank of England Base Rate per annum.
The Company may at any time after the Purchase Date, repay (without penalty) the principal amount of all or a portion of the Loan Notes. The Loan Notes are also repayable on demand, at the option of the Noteholders, in the event of certain standard events of default occurring.
The Loan Notes will be subject to the terms of the Loan Note Agreement,
further details of which are set out in the Circular.
Warrants
Pursuant to the terms of the Loan Note Agreement, subject to certain
conditions including the passing of the Resolutions at the General Meeting,
the Company has agreed to issue Warrants to subscribe for 33,333,332 Ordinary
Shares (representing approximately 4.9 per cent. of the Enlarged Share Capital
following completion of the Subscription) to the Note Purchasers in the
following amounts:
· Southern Fox: 16,666,666 Warrants; and
· ZQ Capital: 16,666,666 Warrants.
The Warrants will be issued simultaneously with the issue of the Loan Notes on
the Purchase Date, which is expected to be on 28 February 2023. The issue of
the Warrants is conditional on the issue of the Loan Notes, such that if the
Loan Notes are not issued in accordance with the terms of the Loan Note
Agreement, the Warrants will not be issued and the whole Debt Financing will
not complete.
The Warrants are exerciseable for a period of five (5) years from the Purchase
Date of the Loan Notes at an exercise price of 30 pence per Warrant (in whole
or in part). The Warrants will be subject to the terms of the Loan Note
Agreement and the Warrant Instrument, further details of which are set out in
the Circular.
Subscription
Pursuant to the terms of the Subscription Letters, subject to certain
conditions including the passing of the Resolutions at the General Meeting,
the Subscribers have agreed to subscribe for an aggregate of 35,000,000
Subscription Shares at an Issue Price of 20 pence per Subscription Share in
the following amounts:
· Southern Fox: 5,000,000 Subscription Shares; and
· ZQ Capital (acting through its affiliate SkyGem): 30,000,000
Subscription Shares.
The Issue Price was determined having regard to market conditions at the time
the Subscription Letters were entered into. The Issue Price of 20 pence
represents a premium of 8.1 per cent. to the prior day's closing price of 18.5
pence per Ordinary Share.
Completion of the Subscription is conditional on, inter alia, the Loan Note
Agreement continuing in full force and effect and not having been terminated
in accordance with its term; the Resolutions in the Notice of General Meeting
being duly passed at the General Meeting; and Admission of the Subscription
Shares becoming effective on or before 8.00 a.m. on 19 October 2022 (or the
date that is three clear business days following receipt by the Company of the
total subscription amounts in accordance with the terms of the Subscription
Letters).
The Subscription Shares will be allotted and credited as fully paid and will
rank pari passu in all respects with the existing Ordinary Shares, including
the right to receive all dividends and other distributions declared, made or
paid on or after the date on which they are issued. No fractions of
Subscription Shares will be issued.
Application will be made to London Stock Exchange for the Subscription Shares
to be admitted to trading on AIM.
Related Party Transaction
The Note Purchasers have agreed to subscribe for Subscription Shares pursuant
to the Subscription and to subscribe for Loan Notes and Warrants in connection
with the Debt Financing in the following amounts:
Shareholder Subscription Shares Loan Notes Warrants
Southern Fox 5,000,000 £5,000,000 16,666,666
ZQ Capital (acting through its affiliate SkyGem in relation to the 30,000,000 £5,000,000 16,666,666
Subscription)
The subscription by Southern Fox and ZQ Capital (acting through its affiliate
SkyGem) for the Subscription Shares pursuant to the Subscription, and the Loan
Notes and the Warrants in connection with the Debt Financing constitutes a
related party transaction for the purposes of the AIM Rules by virtue of
Southern Fox and ZQ Capital (together with its affiliates, SkyGem, ZQ Capital
Limited and Shen Zheqing) being substantial shareholders (within the meaning
of the AIM Rules) of the Company.
Following completion of the Subscription, Southern Fox will have 149,321,539
Ordinary Shares (representing approximately 22.0 per cent. of the Enlarged
Share Capital) and Warrants to subscribe for 16,666,666 Ordinary Shares
(representing approximately 2.5 per cent. of the Enlarged Share Capital).
Following completion of the Subscription, ZQ Capital (taking into account
holdings of SkyGem, ZQ Capital Limited and Shen Zheqing) will have 173,740,037
Ordinary Shares (representing approximately 25.6 per cent. of the Enlarged
Share Capital) and Warrants to subscribe for 16,666,666 Ordinary Shares
(representing approximately 2.5 per cent. of the Enlarged Share Capital).
The Directors consider, having consulted with the Company's nominated adviser,
Panmure Gordon, that the terms upon which Southern Fox and ZQ Capital are
participating in the Subscription and the Debt Financing are fair and
reasonable insofar as the Company's Shareholders are concerned.
Irrevocable undertakings
As at the Last Practicable Date, the Company has received voting irrevocable
undertakings from the following Shareholders to vote in favour of the
Resolutions:
(a) Southern Fox in respect of 144,321,539 Ordinary Shares (representing approximately 22.4 per cent. of the Company's issued share capital as at the Last Practicable Date);
(b) ZQ Capital (including the interests of SkyGem, ZQ Capital Limited and Shen Zhqing) in respect of 143,740,037 Ordinary Shares (representing approximately 22.3 per cent. of the Company's issued share capital as at the Last Practicable Date); and
(c) Abbott Laboratories (including the interests of Abbott Laboratories (Chile) Holdco SPA and Yissum Holdings Limited) in respect of 240,584,571 Ordinary Shares (representing approximately 37.4 per cent. of the Company's issued share capital as at the Last Practicable Date).
As at the date of this Announcement, the Company has therefore obtained
irrevocable undertakings, in aggregate, to vote in favour of the Resolutions
in respect of 528,646,147 Ordinary Shares (representing approximately 82.1 per
cent. of the Company's issued share capital as at the Last Practicable Date).
The irrevocable undertakings cease to be binding and shall lapse if the
General Meeting is not held before 1 November 2022.
APPENDIX II
DEFINITIONS
The following definitions apply throughout this announcement, unless the
context requires otherwise:
"Act" the Companies Act 2006
"Admission" the admission to trading on AIM of the Subscription Shares in accordance with
the AIM Rules, which is expected to take place on 19 October 2022
"AIM" the market of that name operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies and/or the AIM Rules for Nominated Advisers (as
the context may require)
"AIM Rules for Companies" the rules of AIM as set out in the publication entitled "AIM Rules for
Companies" published by the London Stock Exchange from time to time
"AIM Rules for Nominated Advisers" the rules of AIM as set out in the publication entitled "AIM Rules for
Nominated Advisers" published by the London Stock Exchange from time to time
"Business Day" any day (excluding Saturdays and Sundays and public holidays in England and
Wales) on which banks are open in London for normal banking business and the
London Stock Exchange is open for trading
"Company" or "Allergy" Allergy Therapeutics plc, a public limited company incorporated in England and
Wales with company number 05141592
"CREST" the relevant system as defined in the CREST Regulations in respect of which
Euroclear is the operator (as defined in the CREST Regulations) in accordance
with which securities may be held in uncertificated form
"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755), as
amended
"Debt Financing" the unsecured financing of the Company comprised of the issue of the Loan
Notes pursuant to the Loan Note Agreement and the issue of Warrants pursuant
to the Loan Note Agreement and the Warrant Instrument
"Debt Financing Resolutions" the resolutions to be proposed at the General Meeting relating to the Debt
Financing, being the Resolutions 2 and 4, as set out in the Notice of General
Meeting
"Directors" the board of directors of the Company
"Enlarged Share Capital" the 679,104,621 Ordinary Shares in issue immediately following Admission of
the Subscription Shares (assuming no share issuances between the Last
Practicable Date and Admission)
"FSMA" the Financial Services and Markets Act 2000 (as amended)
"General Meeting" the general meeting of the Shareholders of the Company to be held at the
offices of Covington & Burling LLP, 22 Bishopsgate, London EC2N 4BQ at 11
a.m. on 17 October 2022, convened by the Notice of General Meeting
"Group" the Company, its subsidiaries and subsidiary undertakings
"Issue Price" 20 pence per Subscription Share
"Last Practicable Date" 28 September 2022, being the latest practicable date prior to the publication
of this announcement
"Loan Note Agreement" the loan note instrument entered into between the Company and the Purchasers
dated 29 September 2022, pursuant to which the Purchasers have agreed to
purchase the Loan Notes on the terms and conditions set out therein
"Loan Notes" the loan notes in the aggregate principal amount of £10,000,000 to be issued
by the Company pursuant to the Loan Note Agreement
"London Stock Exchange" London Stock Exchange plc
"Note Purchasers" Southern Fox and ZQ Capital, as note purchasers in the Debt Financing
"Noteholders" the holders of the Loan Notes for the time being
"Notice of General Meeting" the notice of General Meeting
"Ordinary Shares" ordinary shares of 0.1 pence each in the capital of the Company
"Panmure Gordon" Panmure Gordon (UK) Limited, a private limited company incorporated and
registered in England with No. 04915201 whose registered office is One New
Change, London, EC4M 9AF, the Company's nominated adviser and broker
"Purchase Date" means the date on which the Loan Notes are to be sold and purchased, which is
expected to be 28 February 2023
"Regulatory Information Service" or "RIS" a regulatory information service operated by the London Stock Exchange as
defined in the AIM Rules for Companies
"Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice
of General Meeting
"Shareholders" and each being individually a "Shareholder" the holders of Ordinary Shares for the time being
"SkyGem" SkyGem Acquisition Limited, an affiliate of ZQ Capital
"Southern Fox" Southern Fox Investments Limited
"Subscribers" Southern Fox and ZQ Capital (acting through its affiliate SkyGem), as
subscribers in the Subscription
"Subscription" the subscriptions for the Subscription Shares by the Subscribers at the Issue
Price pursuant to the Subscription Letters, conditional upon, inter alia, the
passing of the Subscription Resolutions at the General Meeting
"Subscription Letters" the:
(i) subscription letter dated 29 September 2022 between the Company and
Southern Fox pursuant to which Southern Fox agreed to subscribe for 5,000,000
Subscription Shares at the Issue Price; and
(ii) subscription letter dated 29 September 2022 between the Company and
SkyGem pursuant to which SkyGem agreed to subscribe for 30,000,000
Subscription Shares at the Issue Price
"Subscription Resolutions" the resolutions to be proposed at the General Meeting relating to the
Subscription, being the Resolutions 1 and 3, as set out in the Notice of
General Meeting
"Subscription Shares" 35,000,000 new Ordinary Shares to be issued pursuant to the Subscription
"Transaction" means the Debt Financing and the Subscription
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"US" or "United States" the United States of America, its territories and possessions, any state of
the United States and the District of Columbia
"Warrant Exercise Price" the exercise price of the Warrants, being 30 pence per Warrant
"Warrant Instrument" the warrant instrument proposed to be entered into by the Company by way of
deed poll on the Purchase Date, pursuant to which the Company constituted the
Warrants
"Warrants" warrants to subscribe for 33,333,332 Ordinary Shares and which are exercisable
at the Warrant Exercise Price and otherwise in accordance with the terms of
the Warrant Instrument
"ZQ Capital" ZQ Capital Management Limited
All references in this announcement to "£", "pence" or "p" are to the lawful
currency of the United Kingdom.
All references to time in this announcement are to London time.
APPENDIX III
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event Date
Announcement of the Transaction 29 September 2022
Latest time and date for receipt of proxy appointments for the General Meeting 11 a.m. on 13 October 2022
General Meeting 11 a.m. on 17 October 2022
Announcement of the results of the General Meeting 17 October 2022
Admission and commencement in dealings in the Subscription Shares expected to 19 October 2022
commence
CREST stock accounts expected to be credited for Subscription Shares 19 October 2022
Share certificates for Subscription Shares expected to be dispatched Within 10 Business Days of Admission
Purchase Date and issue of Loan Notes and Warrants 28 February 2023
Notes
1. Each of the times and dates set out in the above timetable and
mentioned in this announcement is subject to change by the Company, in which
event details of the new times and dates will be notified to London Stock
Exchange plc and the Company will make an appropriate announcement to a
Regulatory Information Service.
2. References to times in this announcement are to London time unless
otherwise stated.
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