Netscientific Regulatory News (NSCI)

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."

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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).

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.