REG - Fusion Antibodies - Placing to raise £1,375,000

Fusion AntibodiesAnnouncement

14/02/2024 07:00

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RNS Number : 0380D  Fusion Antibodies PLC  14 February 2024

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14 February 2024

 

Fusion Antibodies plc

("Fusion" or the "Company")

 

Placing to raise £1,375,000

 

Fusion Antibodies plc (AIM: FAB), specialists in pre-clinical antibody
discovery, engineering and supply for both therapeutic drug and diagnostic
applications, announces that it has conditionally raised £1,375,000 (before
expenses) by way of a placing (the "Placing") of 34,375,000 new ordinary
shares of 4p each in the capital of the Company ("Placing Shares") at a price
of 4 pence per new ordinary share (the "Issue Price").

 

Allenby Capital Limited ("Allenby Capital") is acting as broker in connection
with the Placing. Shard Capital Partners LLP ("Shard") is acting as
sub-placing agent to Allenby Capital. The Placing is not being underwritten by
either Allenby Capital or Shard. The Company also announces the appointment of
Shard as joint broker to Fusion with immediate effect.

 

Key Highlights

 

·    Placing to conditionally raise c. £1,375,000 (before expenses)
through the issue of 34,375,000 Placing Shares at the Issue Price.

 

·    The Issue Price represents a discount of approximately 5.88 per cent.
to the closing mid-market price of an ordinary share in the Company ("Ordinary
Share") on 13 February 2024, being the latest practicable date prior to the
publication of this announcement.

 

·    The issue and allotment of the Placing Shares is conditional, inter
alia, upon the passing of resolutions to authorise such issues and allotments
and disapply pre-emption rights (the "Resolutions") to be put to holders of
Ordinary Shares ("Shareholders") at a general meeting of the Company (the
"General Meeting").

 

·    The General Meeting is to be held at the offices of Fusion Antibodies
at 1 Springbank Road, Springbank Industrial Estate, Dunmurry, Belfast BT17 0QL
at 10.00 a.m. on 5 March 2024 and a circular, including a notice of General
Meeting, will be sent to Shareholders on 15 February 2024.

 

·    The Company intends to issue 1,536,850 new Ordinary Shares (the
"Director Shares") to certain of the directors of the Company at a deemed
subscription price that is equal to the Issue Price in lieu of or in
satisfaction of salary and fees due to them and which shall be issued
immediately following publication of this announcement pursuant to the
authorities previously granted at the Company's annual general meeting held on
27 October 2023.

 

·    As an incentivisation, the Company intends to grant a total of up to
3,790,700 new share options in the Company pursuant to the Fusion EMI and
Unapproved Employee Share Option Scheme to staff and senior management
immediately following the publication of this announcement.

 

·    The Placing is not being underwritten.

 

Fusion Antibodies CEO, Adrian Kinkaid, said: "We are very pleased to have been
able to complete this fundraise in challenging market conditions. We decided
to go ahead with this Placing following the various agreements we signed in
2023 which are laid out below. The net proceeds of this Placing will provide
the Company with increased resources to target additional industry conferences
and customers, generate supporting data for its key platforms and extend its
working capital runway.

 

"We look forward to further updating our Shareholders in due course and would
like to thank them for their continued support."

 

Further details of the Placing, the proposed issuance of the Director Shares
and proposed grant of the share options are set out below.

 

Background to and reasons for the Placing

 

The Company has seen a significant increase in pipeline opportunities
following attendance and marketing activities at certain key industry
conferences and the targeting of new sectors including diagnostics and
veterinary medicine. The Company has been encouraged by the improvement in the
opportunities pipeline despite limited resources following the cost cutting
exercise taken in 2023.  The board of Fusion (the "Board" or the "Directors")
considers that it is in the best interest of the Company and its Shareholders
to conduct the Placing in order to provide the Company with increased
resources to target additional industry conferences and customers, generate
supporting data for its key platforms and extend its working capital runway.

 

The Company's prospects have been improved further by the entry into of an
agreement with the National Cancer Institute ("NCI"), part of the National
Institutes of Health (NIH) in the USA, to validate the OptiMAL® platform, as
announced on 28th November 2023. The NCI is a highly prestigious organisation
and recognises the potential value OptiMAL® offers in therapeutic antibody
discovery, which is potentially very helpful in gaining access to prospective
clients especially in the USA, the Company's biggest single geographic market.
The Company also announced the first customer for its AI/ML-Ab(TM) platform,
demonstrating positive initial traction and a US$650,000 follow-on project
from a US based biotech company. The Directors believe that this follow on
project provides an indicator of the benefits of Fusion's Integrated
Therapeutic Antibody Service (ITAS), having successfully developed a lead
antibody for that client utilising the Company's proprietary affinity
maturation platform, RAMP(TM) in the initial scope of work.

 

In addition, the Company is pleased to announce that it has recently signed a
master services agreement (the "MSA") with a leading global provider of
diagnostics solutions (the "Partner"). The MSA provides a framework under
which it is anticipated that Fusion would provide antibody discovery,
engineering and supply services to the Partner for diagnostic purposes. The
Partner is a blue-chip company in the diagnostics sector, an industry which
the Directors consider has significant potential for Fusion's growth
prospects. Any work undertaken under the MSA will be subject to the receipt of
separate purchase orders from the Partner.

 

Current trading and prospects

 

On 4 December 2023, the Company announced its interims results for the six
months ended 30 September 2023. In that announcement the Company stated that
the Board anticipated that the Company's results to 31 March 2024 ("FY 2024")
would be significantly weighted towards the second half of the year. Since
then, the Board has been regularly reviewing progress against revenue targets
and is encouraged by the following positive indications:

 

·    the substantial growth in the sales opportunities pipeline over the
past nine months, specifically;

o  the total of the opportunities values assigned by the Company to the
pipeline increased threefold during Q3; and

o  the combined value of quotes sent to clients and considered by the Company
to be "live" exceeded £3m as of 12(th) January 2024

 

·    progress being made in identifying sales opportunities in the
identified markets, especially diagnostics and veterinary medicine:

o  three discrete projects for diagnostics were underway in December/January;
and

o  one project for Veterinary Medicine was actively being processed in
December/January

 

·    the willingness of clients to engage and progress projects through
initiation to completion.

 

Based on the Company's recorded revenue for FY 2024 to date, along with
contracted work in progress, the Board has visibility over approximately
£1.15 million of revenue for the full year. The Board considers the sales
opportunity pipeline to be robust and provides sufficient opportunities for
the Company to achieve revenues for FY 2024 in line with current market
expectations.  However, the Board recognises that this will be dependent on
the conversion of certain pipeline prospects into contracted work in an
appropriate timeframe.

 

Use of proceeds

 

The net proceeds receivable by the Company pursuant to the Placing are
approximately £1.24 million. The Company intends to use the proceeds for
general working capital purposes and to invest in the Company's commercial
activities, focusing on increasing its presence in key geographic markets,
such as North America, and industry verticals, such as diagnostic and
veterinary medicine. These markets will be targeted through various marketing
activities including attendance at key industry conferences and follow on
sales trips. Based on the Company's internal estimations, the net proceeds of
the Placing are expected to provide a cash runway into Q2 2025 and the Company
will be seeking to achieve cash neutrality during that timeframe.

 

Details of the Placing

 

The Placing will result in the issue of a total of 34,375,000 Placing Shares
at the Issue Price. The Placing has conditionally raised £1,375,000 before
expenses for the Company.  The Placing Shares will be issued conditional,
inter alia, on the passing of the Resolutions at the General Meeting.

 

The Placing Shares, when issued and fully paid, will rank pari passu in all
respects with the existing Ordinary Shares in issue and therefore will rank
equally for all dividends or other distributions declared, made or paid after
the issue of the Placing Shares.

 

Allenby Capital has entered into a Placing Agreement with the Company pursuant
to which Allenby Capital has, on the terms and subject to the conditions set
out therein, undertaken to use its reasonable endeavours to procure
subscribers for the Placing Shares at the Issue Price. The Placing Agreement
contains certain warranties and indemnities from the Company in favour of
Allenby Capital. The Placing is not being underwritten by Allenby Capital,
Shard or any other person.

 

Proposed Issue of Ordinary Shares to Directors

 

As disclosed in the Company's annual report and accounts for the year ended 31
March 2023 (as announced on 29 September 2023), as part of the cost savings
implemented following the Company's fundraise in May 2023, certain of the
Company's executive directors (being Adrian Kinkaid, CEO and Richard Buick,
CSO) agreed to certain changes in their remuneration structure (which included
taking shares in lieu of cash remuneration) and, as a result, 20% of their
salaries for the eight months commencing 1 July 2023 were deferred.  In
addition, the Company's non-executive directors agreed to forgo all
remuneration that they were entitled to with effect from 1 May 2023.

 

Immediately following the publication of this announcement, the Company
intends to issue and allot new Ordinary Shares to certain of the executive
directors at a deemed issue price equal to the Issue Price representing 50% of
the amounts of their deferred salary, with the balance (totalling £20,224) to
be paid in cash conditional on completion of the Placing. In addition, due to
their ongoing commitments to the Company, the remuneration committee intends
to align the non-executive directors with these executive directors and pay
them their forgone fees in part in new Ordinary Shares at a deemed issue price
equal to the Issue Price, with the remainder of their foregone fees (totalling
£31,250) being paid in cash conditional on completion of the Placing.

 

As a result of the above arrangements, it is anticipated that 1,536,850 new
Ordinary Shares (the "Director Shares") will be issued and allotted to certain
of the directors at a deemed issue price equal to the Issue Price and pursuant
to the authorities previously granted at the Company's annual general meeting
held on 27 October 2023, as follows:

 

 Director        Amount of salary/fees to be received in Director Shares  No. of Director Shares to be issued  Total holding of Ordinary Shares post issue  Percentage of enlarged share capital(1)
 Adrian Kinkaid  £12,017                                                  300,425                              546,272                                      0.90%
 Richard Buick   £8,207                                                   205,175                              905,175                                      1.48%
 Simon Douglas   £12,500                                                  312,500                              668,865(2)                                   1.10%
 Colin Walsh     £22,500                                                  562,500                              2,562,500(3)                                 2.69%
 Matthew Baker   £6,250                                                   156,250                              156,250                                      0.26%

 

(1) Based on the enlarged share capital of the Company following the issue of
the Director Shares but prior to the issue of the Placing Shares.

(2) Excludes Ordinary Shares held by relatives of Simon Douglas.

(3)Includes 600,000 Ordinary Shares held by Walsh Strategic Management
Limited, a company controlled by Colin Walsh and 1,400,000 Ordinary Shares
held by Hamniv (GP) Limited, a subsidiary of Crescent Capital NI Limited
("Crescent Capital"). Colin Walsh is the Chief Executive and founder of
Crescent Capital.

 

A further announcement will be provided following the issue and allotment of
the shares.

 

Proposed grants of new share options

 

In order to incentivise and retain staff and senior management, the Company
intends to grant up to 3,760,700 new share options in the Company (the "New
Options") pursuant to the Fusion EMI and Unapproved Employee Share Option
Scheme (the "Option Schemes") to staff and senior management immediately
following the publication of this announcement. Up to 730,700 of the New
Options will be granted conditional on the surrender of the same number of
existing share options in the Company by option holders.  The New Options are
expected to have an exercise price of 4.25p, being the closing mid-market
price of an Ordinary Share on 13 February 2024, the day prior to the grant. A
further announcement will be made following the grant of the New Options.

 

Admission to trading on AIM

 

Following the issue and allotment of the Director Shares, application will be
made to the London Stock Exchange plc for the Director Shares to be admitted
to trading on AIM ("First Admission"). It is currently anticipated that First
Admission will become effective and that dealings in the Director Shares will
commence on AIM at 8.00 a.m. on or around 19 February 2024.

 

Subject to, inter alia, the approval of the Resolutions, application will be
made to the London Stock Exchange plc for the Placing Shares to be admitted to
trading on AIM ("Second Admission"). Assuming the Resolutions are passed at
the General Meeting, it is anticipated that that Second Admission will become
effective and that dealings in the Placing Shares will commence on AIM at 8.00
a.m. on or around 7 March 2024.

 

Notice of General Meeting

 

A circular including a notice convening a General Meeting of the Company, to
be held at the Company's offices at 1 Springbank Road, Springbank Industrial
Estate, Dunmurry, Belfast BT17 0QL at 10.00 a.m. on 5 March 2024 is expected
to be sent to Shareholders on 15 February 2024. At the General Meeting,
Shareholders will be asked to consider resolutions which, if approved, will
provide the Directors with the authority and power to allot and disapply
statutory pre-emption rights in relation to each of the Placing Shares.

 

Enquiries:

 

 Fusion Antibodies plc                                               www.fusionantibodies.com
 Adrian Kinkaid, Chief Executive Officer                             Via Walbrook PR

 Stephen Smyth, Chief Financial Officer

 Allenby Capital Limited                                             Tel: +44 (0)20 3328 5656
 James Reeve/Vivek Bhardwaj (Corporate Finance)

 Tony Quirke/Joscelin Pinnington (Sales and Corporate Broking)

 Shard Capital Partners LLP
 Damon Heath (Joint Broker)                                          Tel: +44 (0)207 186 9952

 Walbrook PR                       Tel: +44 (0)20 7933 8780 or fusion@walbrookpr.com
 Anna Dunphy                                                         Mob: +44 (0)7876 741 001

 

IMPORTANT NOTICES

 

Notice to Distributors

Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended and as this is applied in the United Kingdom ("MiFID II"); (b)
Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593
supplementing MiFID II and Regulation (EU) No 600/2014 of the European
Parliament, as they form part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended; and (c) local implementing measures
(together, the "MiFID II Product Governance Requirements"), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product Governance
Requirements) may otherwise have with respect thereto, the Ordinary Shares
have been subject to a product approval process, which has determined that
such securities are: (i) compatible with an end target market of retail
investors who do not need a guaranteed income or capital protection and
investors who meet the criteria of professional clients and eligible
counterparties, each as defined in MiFID II; and (ii) eligible for
distribution through all distribution channels as are permitted by MiFID II
(the "Target Market Assessment"). The Ordinary Shares are not appropriate for
a target market of investors whose objectives include no capital loss.
Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Ordinary Shares may decline and investors could lose all or
part of their investment; the Ordinary Shares offer no guaranteed income and
no capital protection; and an investment in the Ordinary Shares is compatible
only with investors who do not need a guaranteed income or capital projection,
who (either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Placing. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, Allenby Capital will only procure investors who meet
the criteria of professional clients and eligible counterparties. For the
avoidance of doubt, the Target Market Assessment does not constitute: (a) an
assessment of suitability or appropriateness for the purposes of MiFID II; or
(b) a recommendation to any investor or group of investors to invest in, or
purchase, or take any other action whatsoever with respect to the Ordinary
Shares. Each distributor is responsible for undertaking its own target market
assessment in respect of the shares and determining appropriate distribution
channels.

 

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would", "could" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that are not
facts. They appear in a number of places throughout this announcement and
include statements regarding the Directors' beliefs or current expectations.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Investors should not
place undue reliance on forward-looking statements, which speak only as of the
date of this announcement.

 

Notice to overseas persons

This announcement does not constitute, or form part of, a prospectus relating
to the Company, nor does it constitute or contain any invitation or offer to
any person, or any public offer, to subscribe for, purchase or otherwise
acquire any shares in the Company or advise persons to do so in any
jurisdiction, nor shall it, or any part of it form the basis of or be relied
on in connection with any contract or as an inducement to enter into any
contract or commitment with the Company.

 

This announcement is not for release, publication or distribution, in whole or
in part, directly or indirectly, in or into Australia, Canada, Japan, New
Zealand or the Republic of South Africa or any jurisdiction into which the
publication or distribution would be unlawful. This announcement is for
information purposes only and does not constitute an offer to sell or issue or
the solicitation of an offer to buy or acquire shares in the capital of the
Company in Australia, Canada, Japan, New Zealand, the Republic of South Africa
or any jurisdiction in which such offer or solicitation would be unlawful or
require preparation of any prospectus or other offer documentation or would be
unlawful prior to registration, exemption from registration or qualification
under the securities laws of any such jurisdiction. Persons into whose
possession this announcement comes are required by the Company to inform
themselves about, and to observe, such restrictions.

 

This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America.  This announcement is
not an offer of securities for sale into the United States.  The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from registration.
No public offering of securities is being made in the United States.

General

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) or any previous announcement made by the Company is
incorporated into, or forms part of, this announcement.

 

Allenby Capital, which is authorised and regulated by the FCA in the United
Kingdom, is acting as Nominated Adviser and Broker to the Company in
connection with the Placing. Allenby Capital will not be responsible to any
person other than the Company for providing the protections afforded to
clients of Allenby Capital or for providing advice to any other person in
connection with the Placing. Allenby Capital has not authorised the contents
of, or any part of, this announcement, and no liability whatsoever is accepted
by Allenby Capital for the accuracy of any information or opinions contained
in this announcement or for the omission of any material information, save
that nothing shall limit the liability of Allenby Capital for its own fraud.

 

Shard, which is authorised and regulated by the FCA in the United Kingdom, is
acting as sub-placing agent to Allenby Capital in connection with the Placing.
Shard will not be responsible to any person other than the Company for
providing the protections afforded to clients of Shard or for providing advice
to any other person in connection with the Placing. Shard has not authorised
the contents of, or any part of, this announcement, and no liability
whatsoever is accepted by Shard for the accuracy of any information or
opinions contained in this announcement or for the omission of any material
information, save that nothing shall limit the liability of Shard for its own
fraud.

 

About Fusion Antibodies plc

 

Fusion is a Belfast based contract research organisation ("CRO") providing a
range of antibody engineering services for the development of antibodies for
both therapeutic drug and diagnostic applications.

 

The Company's ordinary shares were admitted to trading on AIM on 18 December
2017. Fusion provides a broad range of services in antibody generation,
development, production, characterisation and optimisation. These services
include antigen expression, antibody production, purification and sequencing,
antibody humanisation using Fusion's proprietary CDRx (TM) platform and the
production of antibody generating stable cell lines to provide material for
use in clinical trials. Since 2012, the Company has successfully sequenced
and expressed over 250 antibodies and successfully completed over 200
humanisation projects and has an international, blue-chip client base, which
has included eight of the top 10 global pharmaceutical companies by revenue.

 

The Company was established in 2001 as a spin out from Queen's University
Belfast. The Company's mission is to enable pharmaceutical and diagnostic
companies to develop innovative products in a timely and cost-effective manner
for the benefit of the global healthcare industry. Fusion provides a broad
range of services in antibody generation, development, production,
characterisation and optimisation.

 

Fusion's growth strategy is based on combining the latest technological
advances with cutting edge science to deliver new platforms that will enable
Pharma and Biotech companies get to the clinic faster, with the optimal drug
candidate and ultimately speed up the drug development process.

 

 

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