REG - NetScientific PLC - Acquisition of majority stake in Cetromed

NetscientificAnnouncement

20/12/2021 07:01

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RNS Number : 1089W  NetScientific PLC  20 December 2021

NetScientific plc

("NetScientific", the "Group" or the "Company")

 

Acquisition of majority stake in Cetromed

 

Investment in Cetromed subsidiary FOx Biosystems

 

Acquisition of majority stake in Cetromed

 

NetScientific plc (AIM: NSCI), the international life sciences and
sustainability technology investment and commercialisation group, announces
the acquisition on 17 December 2021 of 75% of the issued share capital of
Cetromed Limited ("Cetromed"), a life sciences holding company with several
portfolio companies spun out of the University of Leuven, Belgium.

 

The acquisition of the majority stake in Cetromed will result in further
internationalisation of NetScientific's portfolio and exposure to a key
European high-tech cluster around University of Leuven, whilst being
consistent with the Group's capital light strategy.

 

The consideration of £192,390 for the acquisition comprises:

(i)           the issue of 146,542 NetScientific new ordinary
shares ("Consideration Shares") valued at £150,000 based on an agreed price
per share of £1.0236, based upon the average of the middle market quotations
between 1 November 2021 and 5 November 2021 (inclusive); and

(ii)          the issue of warrants to subscribe for a further
146,542 NetScientific new ordinary shares at a strike price of £1.30 per
share and exercisable within five years, valued at £42,390.00.

 

Cetromed was a holding company owned by the Azima Trust (through Zahra
Holdings Ltd), the family trust of Farad Azima, the founder and ex-CEO of
NetScientific (who passed away in 2020). The portfolio was formed around
several life sciences investments commercialised out of the Belgium-based K.U.
Leuven, a leading European research institution with strengths in Medical
Technologies, Bio-Sciences and Environment, and others. Its core assets
include:

 

·    FOx Biosystems (5.059% stake) which provides real-time, label-free
analysis technology based on an innovative fibre-optic-based surface plasmon
resonance biosensor, enabling users to generate high quality biomolecular data
such as affinity data, kinetic data and concentration measurements. The stake
was valued at c. €400k at the last investment round of c.€7.91m in 2020.
The company was formed as a spin-out following a sponsored research agreement
with K.U. Leuven that saw Cetromed invest €537k..  The company is backed by
LRM, Heran Partners, K.U. Leuven's Gemma Frisius Fund, and Leuven University.

 

·    DName-iT (61.54% stake) which is developing  biological barcodes to
provide improved quality assurance through the entire genetic testing process.
This technology offers a new level of traceability and quality control to the
workflow of genetic tests based on Next Generation Sequencing (NGS) and
beyond. The previous funding round was £1.3m of which Cetromed invested
£0.8m for its stake in 2015.

 

·   Oncocidia (41.27% stake) which is developing a targeted
radiopharmaceutical cancer treatment, which involves extending the already
successful use of Iodine-131 in treating thyroid cancer, to treat solid
cancers elsewhere in the body.  Cetromed invested £0.2m for its stake in
2015.

 

In the 11 months to 30 November 2021, Cetromed has incurred losses before tax
of approximately £40,000 on nil turnover. On completion, there will be a
write-off of liabilities of £3.4m between Cetromed and Zahra Holdings Ltd,
and as a result net assets on completion will be £0.8m.

 

Investment in Cetromed subsidiary FOx Biosystems

 

In addition, it is also announced that shortly after closing the Group will
advance to Cetromed a secured loan of £200,000, enabling a follow-on
investment of £150,000 by Cetromed into its portfolio company, FOx Biosystems
as part of a €2.63m investment round by FOx Biosystems' investors.

 

The secured loan, which has a floating charge over the assets and carries
interest at 8 per cent per annum, is repayable within three years.

 

Zahra Holdings Limited lock in

 

Zahra Holdings Limited has agreed to lock-in provisions, for a 12-month period
following completion of the acquisition, relating to the Consideration Shares
and the existing 938,952 NetScientific shares held by Zedra Trust Company
(Jersey) Limited. Zahra Holdings Limited and Zedra Trust Company (Jersey)
Limited are Azima Trust companies.

 

Justin Martin from Azima Trust commented:

"The Azima family is pleased that its trustees have been able to arrange the
sale of 75% of the Trust's holding in Cetromed to NetScientific PLC.
NetScientific (in which the Trust retains a significant holding) was founded
by Farad Azima. Farad Azima held the current management of NetScientific in
high regard and, prior to his death, was hoping to merge the Cetromed
technologies with those of NetScientific. The Azima family is delighted that
this aspiration has now been achieved.   It has every confidence that the
NetScientific team will be a reliable steward of the Trust's investment."

 

Thomas van Elzakker, CEO of FOx Biosystems said:

"We very much welcome NetScientific's support (through Cetromed) for FOx
Biosystems and look forward to working with the NetScientific team and its
trans-Atlantic relationships in pursuing our international commercial growth
ambitions."

 

Dr. Ilian Iliev, CEO of NetScientific commented:

"We were delighted to work with the Azima Trust on this opportunity, building
on the founder's legacy. The deal demonstrates NSCI's capital light investment
approach, is additive to NSCI's balance sheet and opens up future
opportunities at minimal cash commitment. In line with our international
approach, it also establishes relationships in a key European high-tech
cluster around the University of Leuven. The co-investment in Fox Biosystems
alongside credible EU VC investors provides further growth potential."

 

John Clarkson, Chairman of NetScientific commented:

"The acquisition of Cetromed, building on the good relationship with the Azima
Trust, is another exciting step in the implementation of our growth strategy.
This judicious investment utilises NetScientific's shares, rather than cash,
to fund this European expansion. We will apply our pro-active management,
structured approach and group synergies to unlock the significant latent
potential and deliver added shareholder value."

 

For more information, please contact:

 NetScientific                                     Via Walbrook PR
 Ilian Iliev, CEO

 WH Ireland (NOMAD, Financial Adviser and Broker)
 Chris Fielding / Darshan Patel                    +44 (0)20 7220 1666

 Walbrook PR
 Nick Rome/ Paul McManus/                          07748 325 236, 07980 541 893

 Nicholas Johnson                                  or 07884 664 686

 

About NetScientific

NetScientific plc (AIM: NSCI) is a holding company, that invests in, develops,
commercialises and realises shareholder value in life sciences/healthcare,
sustainability and technology companies, which offer significant growth
potential predominately in the UK and USA, as well as globally.

 

With the acquisition of EMV Capital in August 2020, the Group doubled its
portfolio from 8 to 17 companies, either through direct subsidiary, balance
sheet investment or capital under advisory, varying from start-up private
companies to publicly listed equities.

 

NetScientific delivers shareholder returns through a proactive and hands-on
management approach to their portfolio companies; identifying, investing in,
and helping to build game-changing companies. The Group targets value
inflection points and the release of value through partial or full exits from
trade sales, public listings, or equity sales. The Company has a strong
transatlantic and growing international presence, providing attractive
expansion prospects.

 

NSCI can deploy a capital-light investment structure; utilising the power of
the PLC Brand, and the NetScientific balance sheet to anchor future
investments and achieve a multiplier effect by attracting 3rd party investment
for the portfolio companies.

 

NetScientific is headquartered in London, United Kingdom, and was admitted to
trading on AIM, a market operated by the London Stock Exchange, in 2013
(website: www.netscientific.net (http://www.netscientific.net/) ).

 

About Azima Trust

 

The Azima Family Trust holds various assets for its beneficiaries, including
Zahra Holdings and a minority shareholding in NetScientific PLC.  Farad Azima
was a successful entrepreneur and a philanthropist. He founded NetScientific
in 2006 with investment from his family's  trusts, and was a member of the
NetScientific Board until 2013. He died in August 2020. Life Sciences were  a
particular interest of Farad's. It is likely that investment in this sector
will continue to be a consideration for his trustees at the Azima Trust.

 

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