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2016-10-20

PledPharma announces a guaranteed rights issue of SEK 406 million in order to take PledOx® into phase lll

PledPharma AB
Company Announcement

PledPharma announces a guaranteed rights issue of SEK 406 million in order to
take PledOx® into phase lll

Stockholm, 2016-10-20 07:31 CEST (GLOBE NEWSWIRE) --

Summary

· The board of directors of PledPharma AB (publ) (“PledPharma” or the
“Company”) has, subject to approval by an Extraordinary General Meeting
(“EGM”), resolved to launch a guaranteed Rights Issue of
SEK 406 million (the “Rights Issue”).

· Those who are registered as shareholders in PledPharma on the record
date 11 November 2016 have preferential right to subscribe for 5 new shares per
7 existing shares.

· The subscription price is SEK 20 per share, which results in total
issue proceeds of approximately
SEK 406 million before transaction costs, assuming that the Rights Issue is
fully subscribed.

· The Rights Issue is fully committed through subscription undertakings
by existing shareholders corresponding to 34 percent of the Rights Issue and an
external guarantor consortium.

· The Rights Issue proceeds will primarily be used to develop PledOx®
through pivotal phase III clinical trials to top-line results.

· Shareholders who together hold approximately 54 percent of the votes
in the Company have announced that they are in favor of the Rights Issue and
have undertaken to vote in favor of the Rights Issue at the EGM.

· The board of directors has today announced notice to an EGM, scheduled
to be kept on 7 November 2016.

Background and reason

The board of directors and management of PledPharma have decided to develop the
Company’s lead-candidate, PledOx®, all the way up to market registration. This
implies a change of strategy and that the project will be developed through two
pivotal trials, i.e. the phase III trials that will be the basis for a New Drug
Application (“NDA”) to the Food and Drug Administration (“FDA”) in the US and a
Marketing Authorization Application (“MAA”) to the European equivalent, the
European Medicines Agency (“EMA”). The reason for choosing this path is that
the Company expects to create significantly greater value for its shareholders
than what can be realized through a partnership today. The decision follows an,
over the past year, stronger confidence in the project. In March 2015, top-line
results from the PLIANT trial showed a substantial reduction of neuropathy in
patients that had been treated with PledOx® in combination with chemotherapy.
This was further supported by long-term follow-up data in December 2015 as well
as readout of survival data in May 2016. Furthermore, the Company has through
constructive discussions with several potential partners received feedback that
phase III data is needed. This implies a certain risk, but the Company is of
the opinion that this step facilitates a substantial increase to the value of
PledOx®, both from the value increase that results from completing phase lll
studies, and from the increased proportion of the value that will accrue
PledPharma at the time of out-licensing. The Company has also, in dialogues
with the FDA and the EMA, gained acceptance that phase III trials is the next
step.

From an economic stand point, the decision is supported by the assessment of a
reputable international research house, made after conducting in-depth
interviews with Key Opinion Leaders and representatives of those who pay for
health care. The research house estimates global PledOx® peak sales to USD 1.8
billion[1], corresponding to approximately SEK 16 billion. The estimate is
based on prescription to patients with colorectal cancer that are treated with
the same chemotherapy agents used in PledPharma’s clinical trials. The estimate
does not include patients treated for other cancers.

The pivotal phase III program will consist of two trials and will, in addition
to metastatic colorectal cancer patients, include patients treated adjuvantly
for colorectal cancer. These patients have potential to be cured by surgery and
chemotherapy. The purpose of the PledOx® treatment is to prevent that these
patients get chronic, debilitating, nerve damage.

PledPharma’s aim with developing PledOx® through phase lll is to realize a
higher value for the project, as well as increase the share of value that
accrues the Company in a future out-licensing deal. The progression into phase
III imposes increased and partly new demands on the organization, which means
that the Company intends to recruit senior specialists to oversee the clinical
trials. The implementation of the clinical trials will, however, be outsourced
to a reputable Contract Research Organization. The strategy is not to build a
large organization, but to keep working efficiently.

To carry out the two phase lll trials and bring PledOx® all the way to market
registration is estimated to cost approximately SEK 750 million, of which
approximately SEK 400 million is needed up to readout of top-line results in
2020. Readout of top-line results is done when the patients have completed
chemotherapy and treatment outcome for chronic neuropathies is at hand, but
before various survival data exists. The reason behind the Rights Issue is to
finance the Company until readout of top-line results. The proceeds will
primarily be used to carry out the clinical trials, and the remainder will be
used to cover the running costs until 2020.

After the share issue, the Company will also initiate preparations to apply for
a listing of the shares on the Nasdaq Stockholm's main list.

The Rights Issue

On 19 October 2016 the board of directors resolved, subject to approval by the
EGM, to raise SEK 406 million before transaction costs through a new share
issue with preferential rights for the Company’s existing shareholders. If all
shares are not subscribed for with subscription rights, shareholders and others
have the opportunity to subscribe for the remaining shares without subscription
rights.

If not all shares are subscribed for with support of subscription rights,
firstly shares are allotted to those who also have subscribed for shares by
exercising subscription rights (in case of oversubscription, pro rata to their
subscription with subscription rights), secondly to those who have applied to
subscribe for shares without subscription rights (in case of oversubscription,
pro rata to their number of shares that they have applied to subscribe for),
and thirdly to the guarantors in proportion to their respective underwriting
commitments.

Each existing shares in PledPharma entitles one (1) subscription right. Seven
(7) subscription rights give the right to subscribe for five (5) new shares.
The subscription price is SEK 20 per share, implying that the Rights Issue will
raise approximately SEK 406 million to PledPharma, before transaction costs,
through the issuance of a maximum of 20,277,773 new shares and the share
capital might increase with maximum of SEK 1,067,252.

The record date at Euroclear Sweden AB for participation in the Rights Issue is
11 November 2016.

The subscription period will run from 15 November 2016 until 29 November 2016,
or such later date as the board of directors decides. Subscription rights not
exercised by such date will be void and have no value.

Trading in subscription rights will take place on Nasdaq First North Stockholm
from 15 November 2016 until 25 November 2016.

Subscription undertakings and underwriting commitments

The Rights Issue is covered by subscription undertakings by existing
shareholders corresponding to 34 percent of the Rights Issue, including the
Company’s two largest shareholders, Staffan Persson and Peter Lindell, who have
undertaken to subscribe for shares corresponding to SEK 62 million and SEK 40
million, respectively, of the Rights Issue.

The Company’s chairman Håkan Åström has undertaken to subscribe for his pro
rata share of the Rights Issue, corresponding to SEK 4.2 million. The other
board members as well as the management have also undertaken to subscribe in
the Rights Issue. The board of directors’ and the executive management’s
aggregate subscription undertakings correspond to SEK 6.3 million of the Rights
Issue.

A guarantee consortium consisting of a number of institutional and private
investors have committed to guarantee the remaining amount, subject to
customary conditions.

Shareholders who together hold approximately 54 percent of the votes in the
Company have announced that they are in favor of the Rights Issue and have
undertaken to vote in favor of the Rights Issue at the EGM.

Preliminary timetable for the Rights Issue

7 EGM to approve the Rights Issue resolved by the board of directors
Novembe
r 2016
9 Last day of trading in PledPharma’s shares including the right to
Novembe participate in the Rights Issue
r 2016
11 Estimated date of publication of the prospectus
Novembe
r 2016
11 Record date for participation in the Rights Issue, i.e. shareholders
Novembe registered with shares in PledPharma on this day will receive
r 2016 subscription rights that entitle to participate in the Rights Issue
15 – 25 Trading in subscription rights
Novembe
r 2016
15 – 29 Subscription period
Novembe
r 2016
2 Announcement of outcome of the Rights Issue
Decembe
r 2016

Financial and legal advisors

Carnegie Investment Bank AB acts as financial advisor and Advokatfirman Lindahl
KB acts as legal advisor to PledPharma in connection with the Rights Issue.

For further information, please contact:

Jacques Näsström, CEO, +46 73 713 09 79

Håkan Åström, Chairman of the board, +46 70 374 72 13

For more information about the Company, please visit www.pledpharma.se

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