Graft Polymer (UK) - Proposed acquisition of Awakn Life Sciences Corp

Solvonis Therapeutics

16/12/2024 07:00

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RNS Number : 1954Q  Graft Polymer (UK) PLC  16 December 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
EU REGULATION 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION WILL BE CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

16 December 2024

Graft Polymer (UK) Plc

("Graft Polymer" or the "Company")

 

Proposed acquisition of Awakn Life Sciences Corp.

 

The board of Graft Polymer (UK) Plc (LON: GPL), an innovative biotechnology
company co-developing therapeutics for mental health disorders, is pleased to
announce that the Company has entered into a binding letter of agreement (the
"LOA") regarding the proposed acquisition of the entire issued share capital
of Awakn Life Sciences Corp. ("Awakn"), a clinical-stage biotechnology company
developing therapeutics for substance use and mental health disorders (the
"Proposed Acquisition").

 

Graft Polymer intends to issue approximately 2,074,378,592 new ordinary shares
of £0.001 each ("Ordinary Shares") as consideration for the Proposed
Acquisition of Awakn (the "Consideration Shares").  The Proposed Acquisition
values Awakn at approximately £4.98 million (CAN$8.89 million) based upon the
closing price of the Ordinary Shares on 13 December 2024, being 0.24 pence per
Ordinary Share (the "Issue Price").

 

The Proposed Acquisition remains subject to a number of conditions, including
the completion of due diligence to the satisfaction of both parties,
regulatory and shareholder approval, as well as the negotiation and entry into
a final definitive agreement (the "Definitive Agreement") and the publication
of a secondary prospectus by Graft Polymer in connection with, inter alia, the
issue of the Consideration Shares.  Accordingly, there can be no certainty
that a Definitive Agreement will be executed or that the Proposed Acquisition
will complete, or as to timing.

 

Further details on the Proposed Acquisition

 

The Proposed Acquisition is subject to and conditional upon the conditions (as
set out below) having been satisfied or waived on or before the date six
months from the date of the LOA, being 15 June 2025 (the "Long Stop Date") or
such later date as agreed to in writing between Graft Polymer and Awakn.

 

Graft Polymer is proposing to acquire all issued and outstanding common shares
(the "Common Shares") in the capital of Awakn, all outstanding restricted
share units ("RSUs") in the capital of Awakn, and all outstanding deferred
share units (the "DSUs") in the capital of Awakn immediately prior to the
completion of the Proposed Acquisition.  Graft Polymer will issue to Awakn
shareholders 46.67 Consideration Shares for every one Common Share held by
them (the "Exchange Ratio").  Based on the same Exchange Ratio, the holders
of DSUs and RSUs will receive 46.67 Consideration Shares for each one DSU and
for each one RSU held by them.

 

The Company expects to issue approximately 2,074,378,592 Consideration Shares
at the Issue Price in satisfaction of the consideration for the acquisition of
the acquisition of all outstanding Common Shares, the DSUs and RSUs expected
to be in issue immediately prior to completion of the Proposed Acquisition.
The Company will not issue fractional entitlements to Consideration Shares and
each Awakn common stock holder, DSU holder and RSU holder will therefore
receive Consideration Shares rounded down to a whole number of Consideration
Shares (as determined by the Company).  The consideration for the Proposed
Acquisition is valued at approximately £4.98 million, or CAN$8.89 million,
based on the Issue Price and using an exchange rate of CAN$0.56:£1.00.

 

It is proposed that holders of all issued and outstanding common share
purchase warrants (the "Warrants") in Awakn shall be exchanged for new
warrants over new Ordinary Shares in Graft Polymer based upon the Exchange
Ratio.  It is intended that Awakn will seek the consent from holders of stock
options to cancel all existing stock options issued by Awakn.

 

It is intended that the Proposed Acquisition will be effected by way of a
Canadian plan of arrangement pursuant to the Business Corporations Act
(British Columbia) (the "Plan of Arrangement").  The Proposed Acquisition
will be subject to, inter alia, the approval of the Plan of Arrangement by
Awakn's shareholders.

 

It is intended that following the successful completion of the Proposed
Acquisition and admission of the Consideration Shares to trading on the Main
Market of the London Stock Exchange and to listing on the equity shares
(transition) category of the FCA's Official List, Awakn will no longer
maintain its quotation on the Canadian Securities Exchange, the FSE or the
OTCQB.

 

The Proposed Acquisition will be conditional on the satisfaction (or waiver)
of certain conditions on or before the Long Stop Date, including:

 

·    the satisfactory completion, by each of the parties to the
transaction, of legal, financial and commercial due diligence;

·    approval of the boards of both Graft Polymer and Awakn of the
definitive transaction documents;

·    the receipt of all necessary regulatory consents and approvals
required for the Proposed Acquisition;

·    the approval of the Plan of Arrangement by the British Columbia
court;

·    the approval of Awakn's shareholders;

·    the consent of holders of stock options in Awakn to the cancellation
of such stock options;

·    obtaining the necessary regulatory approvals of the Financial Conduct
Authority in relation to a prospectus which is required pursuant to the
Prospectus Regulation rules in order for Graft Polymer to issue the
Consideration Shares;

·    the approval of the Company's shareholders, at a general meeting of
the Company (to be convened), of resolutions to provide authority to the
Directors to issue and allot the Consideration Shares, otherwise than on a
pre-emptive basis;

·    the parties agreeing, signing and exchanging the Definitive
Agreement; and

·    the admission of Consideration Shares to trading on the Main Market
of the London Stock Exchange and to listing on the equity shares (transition)
category of the FCA's Official List ("Admission").

 

The Plan of Arrangement is subject to both Awakn shareholder and court
approvals in Canada, which are governed by certain statutory timelines and
processes. Once the Definitive Agreement has been executed it is anticipated
that the Proposed Acquisition will be completed in approximately 60 to 75
days.

 

Potential related party transaction and Director's interest in the Proposed
Acquisition

 

The Company's CEO, Anthony Tennyson, also serves as CEO of Awakn and has a
shareholding in Awakn of 4.85 per cent.  Anthony Tennyson does not have an
interest in the share capital of Graft Polymer.  The corporate board of Awakn
comprises five directors, of which there are 4 independent non-executive
directors.  It is noted that Anthony Tennyson is, nevertheless, a member of
the key management personnel of Awakn and as a consequence could be deemed to
have a significant influence over Awakn.  As Anthony Tennyson is the
Company's CEO he is deemed to be a related party of Graft Polymer.  Anthony
Tennyson will, should the Proposed Acquisition complete, receive approximately
108,400,689 Consideration Shares based upon his current holdings in Awakn
(being valued at approximately, £260,161 based on the Issue Price).

 

Accordingly, Awakn could be considered a related party of Graft Polymer given
that Anthony Tennyson is a member of the key management personnel of Awakn.

 

The Proposed Acquisition could therefore constitute a material related party
transaction for the purpose of Rule 7.3 of the FCA's Disclosure Guidance and
Transparency Rules. This material related party transaction has been approved
by the directors independent of the Proposed Acquisition, being Dennis Purcell
(Chairman) and Nicholas Nelson (Non-Executive Director). Anthony Tennyson
recused himself from the Graft Polymer board's consideration of this
transaction and did not vote on the relevant board resolution.

 

In reaching their decision, the independent Directors considered that the
terms of the Proposed Acquisition were fair and reasonable from the
perspective of the Company and of its shareholders (not accounting for any
person who is a related party).  In particular, the independent Directors
considered the following:

 

·    Awakn's advanced clinical pipeline with medium-term revenue potential
through Awakn's lead programme, AWK-001;

·    complementary expertise and synergies because of both companies'
therapeutic focus on addiction and mental health; and

·    the enlarged group's strengthened position in the UK biotechnology
ecosystem due to a significant proportion of Awakn's research being conducted
in the UK.

 

Information about Awakn

 

Awakn is a clinical-stage biotechnology company developing therapeutics
targeting substance use and mental health disorders. Awakn has a near-term
focus on Alcohol Use Disorder ("AUD"), a condition affecting approximately 29
million adults in the US and approximately 40 million in the US and key
European jurisdictions.

 

Awakn currently has three key research and development programmes with a
significant majority of its activities occurring within the UK. Awakn's three
key research and development programmes are as follows:

 

1.    AWKN-001: an investigational, novel medication-assisted treatment for
severe AUD, targeting the UK market, consisting of racemic ketamine (licensed
medication in the UK, approved for use as an anaesthetic and as an analgesic,
schedule 2 class B) delivered in combination with manualised therapy.
Currently, a phase 3 clinical trial is being undertaken in the UK. The phase 2
trial was 100% funded by the UK Medical Research Council (the "MRC"), part of
the UK's Department of Health. The phase 3 trial is being co-funded by a
partnership between: i) the MRC; ii) the UK National Institute for Health and
Care Research ("NIHR"); and iii) Awakn. The phase 3 trial is being managed by
the University of Exeter's Clinical Trials Unit and is being run in 9 National
Health Trusts in England.

 

2.    AWKN-002: an investigational novel treatment for moderate and severe
AUD targeting the US market, consisting of esketamine (a derivative of
ketamine, and a licensed medication in UK, approved for the treatment of
resistant depression, schedule 2 class B) in an oral thin film plus
psycho-social support.  A phase 1 trial has been completed with phase 2 trial
planning underway.

 

3.    Aminoindane NCE ("new chemical entity") research programme: a
pre-clinical programme developing serotonin, dopamine, noradrenalin targeted
small molecule therapeutics for trauma related mental health disorders, such
as PTSD. Synthesis has been completed by Charnwood Discovery, a provider of
drug discovery services, in the UK, and in vitro screening is being conducted
by Eurofins Discovery, a leading global provider of drug discovery products
and services, in the UK.  In vivo testing has been conducted by the
University of Nottingham. Initial results from the pre-clinical study of
AW21003, a co-lead compound in the aminoindane NCE programme, were announced
by Graft Polymer on 11 December 2024.

 

The most recently published unaudited financial statements for Awakn report
total assets as at 31 October 2024 of CAN$668,812 and total liabilities of
CAN$2,192,164. For the nine months ended 31 October 2024 revenue was
CAN$35,343 and the loss from continuing operations was CAN$1,281,934.
  Further information see: https://awaknlifesciences.com/
(https://awaknlifesciences.com/) .

 

Dennis Purcell, Chairman of Graft Polymer, commented:

"This proposed acquisition marks an important milestone for Graft Polymer as
we broaden our focus to address the pressing global challenges of addiction
and mental health disorders. Awakn's advanced research and clinical programs
offer the potential to develop more effective and accessible treatments for
these critical areas of need. We believe this strategic move will not only
drive value for our shareholders but also contribute meaningfully to improving
the lives of millions impacted by these conditions."

 

Appointment of Financial Adviser

 

Allenby Capital Limited has been appointed as Financial Adviser, in addition
to Broker, to the Company.

 

 

Enquiries:

 

Graft Polymer (UK) Plc

Anthony Tennyson, CEO and Executive Director -
anthonytennyson@graftpolymer.co.uk

 

Allenby Capital (Financial Adviser and Broker) +44 (0) 20 3328 5656

Nick Naylor / Liz Kirchner (Corporate Finance) | Guy McDougall (Sales)

 

 

About Graft Polymer (UK) Plc

 

Graft Polymer (UK) Plc is an innovative biotechnology company focused
on developing intellectual property relating to the treatment of mental
health and substance use disorders, and the co-development of therapeutics for
mental health disorders.  Our mission is to improve outcomes for individuals
suffering from these conditions, with an initial focus on trauma-related
mental health disorders, such as PTSD, which affected approximately 13 million
adults in the U.S. in 2020, with the Company estimating a current affected
population of 20 million across the US, UK and key EU markets.

For more information, please visit www.graftpolymer.co.uk
(http://www.graftpolymer.co.uk) .

 

 

 

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