REG - Immupharma PLC - Subscriptions and Placing to raise £3.55 million

ImmuPharmaAnnouncement

20/12/2021 07:00

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RNS Number : 1210W  Immupharma PLC  20 December 2021

20 December 2021

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
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UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
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ImmuPharma PLC

("ImmuPharma" or the "Company")

 

Subscriptions and Placing to raise £3.55 million; Sharing Agreement;

 
to fund Investment in R&D pipeline

 

Company's Partner Alora and two longstanding investors including Lanstead to
participate at an

Issue price of 11p - 80% premium to current share price

 

 

 

ImmuPharma PLC (LSE AIM: IMM), the specialist drug discovery and development
company, is pleased to announce subscriptions and a placing to raise £3.55
million (the "Subscription(s)" and "Placing") through the issue of 32,272,727
new ordinary shares of 10 pence each in the Company ("Ordinary Shares") at a
price of 11 pence per Ordinary Share ("Issue Price") utilising the maximum
amount of existing authorities to allot shares. The Company has also entered
into a sharing agreement ("Sharing Agreement") with Lanstead Capital Investors
L.P. ("Lanstead|").

 

Highlights

 

·    Subscription for 10,909,091 new Ordinary Shares ("the Alora
Subscription Shares") by Alora Pharmaceuticals LLC ("Alora"), the parent
company of Avion Pharmaceuticals LLC ("Avion"), with whom the Company signed a
licence and development agreement in November 2019 for the exclusive rights to
Lupuzor™ in North America (United States), to raise £1.2 million (the
"Alora Subscription").

 

·    Subscription for 20,000,000 new Ordinary Shares (the "Lanstead
Subscription Shares") by Lanstead at an issue price of 11 pence per
Subscription Share to raise £2.2 million (the "Lanstead Subscription").

 

·    Placing of 1,363,636 new Ordinary Shares ("Placing Shares") to raise
£0.15 million (the "Placing").

 

·    The Issue Price represents a 80 per cent. premium to the closing
mid-market price (of 6.1p)  of the Ordinary Shares on 17 December 2021, the
latest business date prior to the Subscriptions and Placing.

 

·    The £2.2 million gross proceeds of the Lanstead Subscription will be
pledged by the Company pursuant to a Sharing Agreement with Lanstead. The
Sharing Agreement, details of which are set out below, entitles the Company to
receive back those proceeds on a pro rata monthly basis over a period of 24
months, subject to adjustment upwards or downwards each month depending on the
Company's share price at the time. The monthly settlement amounts for the
Sharing Agreement are structured to commence approximately two months (or
earlier by agreement with Lanstead) following Admission. The Sharing Agreement
provides the opportunity for the Company to benefit from positive future share
price performance.

 

·    The Company has also agreed to issue to each of the Subscribers and
Placees warrants (on the basis of 2 warrants for each 1 Subscription Share and
Placing Share subscribed). The warrants are exercisable for 10 years at an
exercise price of 11 pence, a 80 per cent. premium to the closing mid-market
price (of 6.1p) of the Ordinary Shares on 17 December 2021. In total
64,545,454 warrants will be issued under the Subscriptions and Placing.

 

·    The proceeds of the Subscriptions, Placing and Sharing Agreement,
will be used primarily to fund:

 

·     Investment into the Company's R&D pipeline;

·     General working capital; and

·     Cash expenses associated with the Subscriptions, Placing and
Sharing Agreement of c.£189k.

 

Commenting on the fundraising, Tim McCarthy, CEO of ImmuPharma said:

 

"Our corporate repositioning since the Board changes in August continues at a
pace. These have been recognised by our long term shareholder Lanstead, a firm
supporter of ImmuPharma since 2016. We are also delighted that our partner,
Alora Pharmaceuticals has also recognised the shift in the Company's
investment and corporate proposition, supporting this fundraising at a
significant premium to our current share price, together with Lanstead and
another longstanding institutional investor. We as a team, remain committed to
reaching key milestones over the next period. This includes taking our lead
product, Lupuzor™ into its pivotal Phase 3 study in 2022, progressing our
further late stage asset, CIDP, where we are now gaining interest from
potential partners to expedite this program and also our earlier stage assets
including BioAMB, within our anti-infective portfolio. We look forward to
sharing further value enhancing newsflow over the next period."

 

Dr Tim Franklin, COO of ImmuPharma, added:

 

"Our partnership with Alora, a dynamic and fast-growing US company, continues
to strengthen and their investment into this Subscription provides a new and
exciting turning point for ImmuPharma. Operationally we can now unlock the
value of our rich product portfolio. We are excited to be working ever more
closely with Alora's team as we move Lupuzor™ forward towards its Phase 3
clinical trial. Overall, our focus remains on   bringing our two late-stage
clinical assets, Lupuzor™, and CIDP, closer to the market whilst progressing
our earlier stage assets."

 

Art Deas, CEO of Alora and Avion, further commented:

 

"We met with ImmuPharma's new management team very recently and were presented
with the corporate re-positioning story, since the new Board was established
in August. Our previous decision to support the Lupus study and our current
decision to invest directly in ImmuPharma, is based on our view that its
portfolio has a number of value rich assets which we believe have significant
commercial potential. Our commitment to further develop Lupuzor™ remains our
key focus. We are however, also very excited about the potential of the other
programs in ImmuPharma's portfolio."

 

Summary background to Avion Pharmaceutical's licensing agreement with
ImmuPharma

 

As previously announced on 28 November 2019, ImmuPharma and Avion signed an
exclusive licence and development agreement and trademark agreement for
Lupuzor™ to continue developing Lupuzor™ and commercialise the product in
the US.  ImmuPharma will receive milestone payments of up to $70 million. A
$5 million milestone payment will be paid on regulatory approval of Lupuzor™
in lupus, and $65 million will be based on achievement of overall sales
targets. ImmuPharma will also receive tiered double-digit royalties up to 17
percent according to pre-specified annual US sales targets.  Avion will also
have the right to explore clinical development for other auto-immune
indications within US territories. Additional milestone payments of $5 million
will be paid to ImmuPharma for each disease indication, outside of lupus,
receiving regulatory approval.

 

Further information on the Alora Subscription and Placing

 

Alora Subscription

 

Following a meeting in the US in December between the new management team of
ImmuPharma and Art Deas, Alora's Founder & CEO, Alora confirmed that it
would like to participate in this Subscription. This investment into
ImmuPharma is based on the potential upside and future value creation of the
key assets in ImmuPharma's portfolio (including Lupuzor™).

 

Alora is subscribing for 10,909,091 Subscription Shares to raise £1.2
million. In addition, Alora will receive 21,818,182 warrants.

 

The Alora Subscription is conditional, inter alia, on Admission.

 

The Alora Subscription Shares will be issued credited as fully paid and will
rank pari passu in all respects with the Company's existing issued Ordinary
Shares.

Placing

 

In parallel, a further longstanding institutional shareholder in ImmuPharma
was approached to gauge their interest in participating in the current funding
round based on the current valuation and potential upside of the business over
the next period. They too indicated their agreement in participating alongside
Alora and Lanstead.

 

In connection with the Placing, the Company has today entered into the Placing
Agreement ("Placing Agreement") pursuant to which Stanford Capital Partners
Limited ("SCP") has agreed, in accordance with its terms, to use reasonable
endeavours to procure subscribers for the Placing Shares. The Placing is not
underwritten.

The Placing Agreement contains certain customary warranties given by the
Company concerning the accuracy of information given in this announcement in
respect of the Placing as well as other matters relating to the Group and its
business.  The Placing Agreement is terminable by SCP and SPARK Advisory
Partners Limited ("SPARK") in certain customary circumstances up until the
time of Admission, including, inter alia, should there be a breach of a
warranty contained in the Placing Agreement which in the opinion of SPARK and
SCP is material in the context of the Placing or a force majeure event takes
place.  The Company has also agreed to indemnify SCP and SPARK against all
losses, costs, charges and expenses which SCP and SPARK may suffer or incur as
a result of, occasioned by or attributable to the carrying out of its duties
under the Placing Agreement.

1,363,636 Placing Shares will be issued to raise £150,000. In addition, the
placee will receive 2,727,272 warrants.

 

The Placing Shares will be issued credited as fully paid and will rank pari
passu in all respects with the Company's existing issued Ordinary Shares.

The Placing is conditional, among other things, upon Admission to AIM becoming
effective and the Placing Agreement not being terminated in accordance with
its terms.

Further information on the Lanstead Subscription

 

Pursuant to the subscription agreement between the Company and Lanstead (the
"Lanstead Subscription Agreement"), 20,000,000 new Ordinary Shares have today
been allotted and will be issued to Lanstead at 11 pence per Lanstead
Subscription Share for an aggregate subscription value of £2.2 million.

 

The Lanstead Subscription proceeds of £2.2 million will immediately following
Admission be pledged to Lanstead under the Sharing Agreement under which
Lanstead will then make, subject to the terms and conditions of that Sharing
Agreement, monthly settlements (subject to adjustment upwards or downwards) to
the Company over 24 months, as detailed below.  As a result of entering into
the Sharing Agreement, the aggregate amount received by the Company under the
Lanstead Subscription and the Sharing Agreement may be more or less than £2.2
million, as further explained below. Notwithstanding the Subscription Price of
11 pence, shareholders should note that the share price of the Company needs
to be on average over the 24 months of the Sharing Agreement at or above the
Benchmark Price of 14.6667 pence per share for the Company to receive at
least, or more than, the gross Subscription of £2.2 million.

 

The Lanstead Subscription Shares will be issued credited as fully paid and
will rank pari passu in all respects with the Company's existing issued
Ordinary Shares.

Application has been made to the London Stock Exchange for admission of the
Lanstead Subscription Shares to trading on AIM ("Admission").  The Lanstead
Subscription is conditional, inter alia, on Admission and there being: (i) no
breach of certain customary warranties given by the Company to Lanstead at any
time prior to Admission; and (ii) no force majeure event occurring prior to
Admission.

 

The Sharing Agreement

 

In addition to the Lanstead Subscription, the Company has entered into the
Sharing Agreement, pursuant to which ImmuPharma will pledge the £2.2 million
gross proceeds of the Lanstead Subscription to Lanstead.  The Sharing
Agreement will enable the Company to share in any share price appreciation
over the Benchmark Price (as defined below).  However, if the Company's share
price is less than the Benchmark Price then the amount received by the Company
under the Sharing Agreement will be less than the gross proceeds of the
Lanstead Subscription which were pledged by the Company to Lanstead at the
outset.

 

The Sharing Agreement provides that the Company will receive 24 equal monthly
settlement amounts (of £91,667) as measured against a benchmark share price
of 14.6667 pence per Ordinary Share (the "Benchmark Price"). The monthly
settlement amounts for the Sharing Agreement are structured to commence
approximately three months (or earlier by agreement with Lanstead) following
Admission.

 

If the measured share price (the "Measured Price"), calculated as the average
of each day's volume weighted share price ("VWAP") of the Company's Ordinary
Shares over a 20 day period prior to the monthly settlement date, exceeds the
Benchmark Price, the Company will receive more than 100 per cent. of that
monthly settlement due on a pro rata basis according to the excess of the
Measured Price over the Benchmark Price.  There is no upper limit placed on
the additional proceeds receivable by the Company as part of the monthly
settlements and the amount available in subsequent months is not affected.
 Should the Measured Price be below the Benchmark Price, the Company will
receive less than 100 per cent. of the monthly settlement calculated on a pro
rata basis and the Company will not be entitled to receive the shortfall at
any later date. As such the final determination of the total amounts to be
received under the Sharing Agreement will only be known after the 24 months
have elapsed.

 

For example, if on a monthly settlement date the calculated Measured Price
exceeds the Benchmark Price by 10 per cent., the settlement on that monthly
settlement date will be 110 per cent. of the amount due from Lanstead on that
date.  If on the monthly settlement date the calculated Measured Price is
below the Benchmark Price by 10 per cent., the settlement on the monthly
settlement date will be 90 per cent. of the amount due on that date. Each
settlement as so calculated will be in final settlement of Lanstead's
obligation on that settlement date.

 

Assuming the Measured Price equals the Benchmark Price on the date of each and
every monthly settlement, ImmuPharma would receive aggregate proceeds of £2.2
million (before expenses) from the Lanstead Subscription and Sharing
Agreement. Examples of the proceeds from the Sharing Agreement to be received
each month, based upon varying levels of average share price in the month, are
shown in the Appendix to this announcement.

The Company will pay Lanstead's legal costs incurred in the Lanstead
Subscription and in entering into the Sharing Agreement and, in addition, has
agreed to issue to Lanstead 1,400,000 new Ordinary Shares ("Value Payment
Shares") in connection with entering into the Sharing Agreement, together with
warrants over 40 million Ordinary Shares with an exercise price of 11 pence
per share. These warrants have an exercise period expiring on the
tenth anniversary of Admission.

In no event will fluctuations in the Company's share price result in any
increase in the number of Lanstead Subscription Shares issued by the Company
or received by Lanstead. The Sharing Agreement allows both Lanstead and the
Company to benefit from future share price appreciation.

 

In total, Lanstead will be issued with 20,000,000 new Ordinary Shares pursuant
to the Lanstead Subscription which, when issued, will equate (together with
the Value Payment Shares) to approximately 7.5 per cent of the Company's
enlarged issued share capital following the Placing and the Subscriptions.

 

No shares, warrants or additional fees are owed to Lanstead at any point
during this agreement other than those disclosed above.

 

The Sharing Agreement is similar to those undertaken by the Company with
Lanstead in February 2016, June 2019 and March 2020. The first two of these
arrangements have completed their settlement periods. The February 2016
agreement yielded a net gain to ImmuPharma of approximately £0.6 million more
than originally subscribed by Lanstead and the June 2019 agreement yielded
approximately £0.9 million less than originally subscribed by Lanstead. The
third arrangement runs to June 2022 and is currently yielding approximately
£0.6 million less than the pro rata amount originally subscribed by Lanstead
on cumulative settlements to date.

 

The Directors believe that the Sharing Agreement provides a number of benefits
to the Company and its shareholders including: the certainty of additional
investment, albeit the quantum is dependent on the Company's share price; the
opportunity to benefit from positive future share price performance; and that
the amount of shares issued is fixed, together with the cost of their issue.

 

 

Related Party Transactions

 

Lanstead is a shareholder in the Company, and is interested in 14,182,329
Ordinary Shares (representing 5.67% of the current issued share capital).
Until 31 December 2020 Lanstead was a substantial shareholder, therefore the
participation by Lanstead in the Lanstead Subscription and Sharing Agreement
constitute related party transactions under the AIM Rules for Companies.

 

Lanstead Subscription and Sharing Agreement

 

The Directors (all of whom are independent of Lanstead), having consulted with
SPARK, the Company's nominated adviser, consider that the terms of the
Lanstead Subscription and the Lanstead Sharing Agreement are fair and
reasonable insofar as the Company's shareholders are concerned.

 

Other Share Issues

 

The Company has issued 90,909 and 1,000,000 new Ordinary Shares ("Fee Shares")
at an issue price of 11 pence per share to SPARK and SCP respectively, in lieu
of fees. The Fee Shares will be issued credited as fully paid and will
rank pari passu in all respects with the Company's existing issued Ordinary
Shares.

Application for admission to trading on AIM, and expected date of Admission

 

Application has been made for the the Lanstead Subscription Shares, the Alora
Subscription Shares, the Placing Shares, the Value Payment Shares and the Fee
Shares to be admitted to trading on the AIM market of the London Stock
Exchange. It is anticipated that Admission to AIM will occur at 8.00am on or
around 23 December 2021.

 

 

Total Voting Rights

Following Admission, the Company's issued share capital will comprise
284,984,933 Ordinary Shares with one voting right each. As the Company does
not hold any shares in Treasury, the total number of voting rights in the
Company is also 284,984,933 and this figure of Ordinary Shares may be used by
shareholders as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to
their interest in, the share capital of the Company under the FCA's Disclosure
Guidance and Transparency Rules.

The allotment of the Lanstead Subscription Shares, the Alora Subscription
Shares, the Placing Shares, the Value Payment Shares and the Fee Shares is
being made pursuant to existing authorities to allot shares and other relevant
securities and to disapply pre-emption rights under section 551 of the
Companies Act 2006, which the Directors were given at the Company's Annual
General Meeting held on 28 June 2021.

L1 and Lind Convertible Security Deeds

On 15 December 2021, ImmuPharma repaid in full the remaining outstanding
balance of $950,000 (plus accrued interest) due to L1 Capital Global
Opportunities Master Fund ("L1"). The Company confirms that both convertible
security deeds with L1 and Lind Global Macro Fund, LP ("Lind") have now been
repaid in full and/or converted.

About Lanstead

 

Lanstead is an institutional investor that since 2007 has provided funding for
ongoing business objectives to listed small and mid-cap growth companies.
Lanstead focuses on equity investments in listed companies with management
teams with a clear growth strategy.

 

Lanstead's extensive experience allows it to invest in most industries,
focusing on providing supportive, longer-term capital that rewards company
growth. Companies with Lanstead on the shareholder register via an equity
placement to Lanstead with an accompanying sharing agreement benefit from a
unique and flexible approach to finance growth. This provides the opportunity
for companies to benefit from additional cash beyond the original placing
proceeds without having to issue additional shares.

 

Further information is available at www.Lanstead.com
(http://www.Lanstead.com)

 

 

Appendix - example of Lanstead Sharing Agreement

 

In relation to each of the months in the 24 month calculation period:

 

Average 20 Day VWAP
 
11.00p                   14.6667p
    18.3334p

 

Benchmark Price
 
14.6667p                   14.6667p
  14.6667p

 

 as % of Benchmark Price
                         75%
 100%                          125%

 

Settlement from Lanstead in the month
  £68,750                      £91,667
       £114,583

 

Proceeds over 24 month period

If Average 20 Day VWAP is at this level

for the entire period
                          £1.65m
   £2.90m                     £2.752m

 

 

 For further information please contact:

ImmuPharma PLC (www.immupharma.com (http://www.immupharma.com) )        + 44 (0) 207 152 4080

 Tim McCarthy, Chief Executive Officer & Chairman

 Lisa Baderoon, Head of Investor Relations & Non-Executive Director      + 44 (0) 7721 413496

 SPARK Advisory Partners Limited (NOMAD)                                 +44 (0) 203 368 3550

 Neil Baldwin

 Stanford Capital Partners (Joint Broker)                                +44 20 3650 3650

 Patrick Claridge

 John Howes

 Bob Pountney

 SI Capital (Joint Broker)

 Nick Emerson                                                            +44 (0) 1483 413500

 

 

 

Notes to Editors

 

About ImmuPharma PLC

ImmuPharma PLC (LSE AIM: IMM) is a specialty biopharmaceutical company that
discovers and develops peptide-based therapeutics. The Company's portfolio
includes novel peptide therapeutics for autoimmune diseases, metabolic
diseases, anti-infectives and cancer. The lead program, Lupuzor™, is a
first-in class autophagy immunomodulator which is in Phase 3 for the treatment
of lupus and preclinical analysis suggest therapeutic activity for many other
autoimmune diseases that share the same autophagy mechanism of action.
ImmuPharma and Alora Pharmaceuticals signed on 28 November 2019, an exclusive
licence and development agreement and trademark agreement for Lupuzor™ to
fund a new international Phase 3 trial for Lupuzor™ and commercialise in the
US.

 

For additional information about ImmuPharma please visit
www.immupharma.co.uk

 

ImmuPharma's LEI (Legal Entity Identifier) code: 213800VZKGHXC7VUS895.

 

 

 

 

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