Provexis Regulatory News (PXS)

16 Mar 2007 07:01

Provexis PLC16 March 2007 16 March 2007 PROVEXIS PLC ("Provexis" or the "Company") PLACING OF NEW ORDINARY SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING Provexis plc, the nutraceutical company that develops scientifically-provenfunctional and medical foods, announces it proposes to raise approximately£2.15m (before expenses) by way of a conditional placing at a price of 1.5p, toprovide working capital for the development of its patented Fruitflow(R)heart-health technology, as well as advancing its plantain-based technology forthe treatment of Crohn's Disease. Key Highlights • Fundraising of £2.15m (before expenses) by way of a placing of 143,316,664 new Ordinary Shares at a price of 1.5p per share. The Placing is conditional upon approval at an EGM, to be held on 10 April 2007. • £100,000 of temporary funding by way of unsecured loan notes from two existing shareholders, ANGLE Technology Limited and Rising Stars Growth Fund LLP. • Shares conditionally placed by Arbuthnot Securities with existing shareholders, institutional shareholders and certain Directors. • The Company intends to invest the proceeds in: o Development of an advanced format of its Fruitflow(R) heart-health technology, in collaboration with its global branded food partner o Development of new claim areas for Fruitflow(R), including deep vein thrombosis claims o Commencement of trials on its plantain-based technology for the treatment of Crohn's Disease o Potential acquisition of licensing rights for further functional and medical food technologies A circular is expected to be posted to shareholders later today, which willinclude a Notice of Extraordinary General Meeting ("EGM") to be held at 11.00a.m. on 10 April 2007. Subject, inter alia, to the passing of resolutions (the"Resolutions") to be proposed at the EGM, Admission and dealings in the PlacingShares are expected to commence on AIM on 12 April 2007. Dawson Buck, Chairman commented: "We are actively focused on licensing activities for Fruitflow, including ourcurrent collaboration with our major global branded partner and the assessmentof further opportunities with a major international beverage company.Development work is also accelerating on our technology for the treatment ofCrohn's Disease. The Directors believe that shareholder value will be maximisedthrough the discovery, development and licensing of functional and medical foodtechnologies. I would like to thank our existing shareholders and new investorsfor their support." ENQUIRIES Provexis plcStephen Moon, CEO Tel. 0208 392 6634 Arbuthnot SecuritiesTom Griffiths/Richard Johnson Tel. 0207 012 2000 ("PROVEXIS" OR THE "COMPANY") PLACING OF NEW ORDINARY SHARES AND NOTICE OF EXTRAORDINARY GENERAL MEETING 1. Introduction The Company announces that it proposes to raise approximately £2.15 million(before expenses) (the "Placing") by way of a conditional placing of 143,316,664new Ordinary Shares (the "Placing Shares") at a price of 1.5p per share("Placing Price"). Furthermore, the Company has also agreed temporary funding of£100,000 by way of unsecured loan notes from two existing Shareholders, ANGLETechnology Limited ("ANGLE") and Rising Stars Growth Fund LP ("Rising Stars").The net proceeds of the Placing will be used for working capital purposes. The Placing Shares have been conditionally placed with institutional and otherinvestors. Subject, inter alia, to the passing of resolutions (the"Resolutions") to be proposed at an extraordinary general meeting (the "EGM"),Admission and dealings in the Placing Shares are expected to commence on AIM on12 April 2007. The Placing is conditional, inter alia, upon the Shareholders passing theResolutions at the EGM. The Directors have irrevocably undertaken to vote infavour of the Resolutions in respect of 6,983,000 Ordinary Shares, representing,in aggregate, approximately 2.8 per cent. of the Company's issued share capitaland certain other Shareholders have conditionally undertaken to vote in favourof the Resolutions in respect of 120,855,087 Ordinary Shares, representing, inaggregate, approximately 48.1 per cent. of the Company's issued share capital.Therefore, the Company has received in aggregate undertakings to vote in favourof the Resolutions in respect of 127,838,087 Ordinary Shares, representing,approximately 50.9 per cent. of the Company's issued share capital. 2. Background to and reasons for the Placing Background The Company's shares were re-admitted to trading on AIM on 23 June 2005following a reverse takeover. At the same time the Company raised approximately£3.8 million before expenses pursuant to a placing of 67,424,000 ordinary sharesat 5.6 pence per share. The proceeds of the placing were used: to develop theSirco(R) heart-healthy beverage; to develop the Fruitflow(R) heart-healthtechnology and seek an international licensing deal; to continue to develop amedical food for the treatment of Crohn's Disease; and to fund working capital. Provexis is a medical food and functional food company. Functional foods arefood which are consumed for the maintenance of health and have the potential tocarry health claims to this effect. Medical foods are a separately regulatedcategory of products in the US and Europe, based on food but used under thesupervision of a physician. The Company's lead technology, Fruitflow(R), is a patented natural extract fromtomato which has been shown in human trials to reduce the propensity foraberrant blood clotting, typically associated with cardiovascular disease, whichcan lead to heart attack and stroke. The first product to contain this bioactiveis the fruit juice drink Sirco(R). Sirco(R), endorsed by the charity H•E•A•R•TUK was launched on schedule in a major UK supermarket in January 2006. Company Development The Company has successfully expanded Sirco(R) distribution so that it is nowsold in branches of Tesco, Waitrose, Asda and Morrisons supermarkets.Furthermore, the 250ml pack of Sirco(R) is available in a range of high streetand independent health food stores, including branches of Holland & Barrett andJulian Graves. For the six months ended 30 September 2006, sales of Sirco(R)were £430,000. On 9 March 2006, the Company announced that an independent Expert Panel in theUnited States affirmed Fruitflow(R) to be Generally Recognised as Safe ("GRAS"),paving the way for products containing Fruitflow(R) to be marketed in the UnitedStates and Canada. On 8 February 2007, it was announced that the US Food andDrug Administration ("FDA") had no questions regarding the conclusion thatFruitflow(R) is GRAS, clearing the way for products containing Fruitflow(R) tobe marketed in North America. In addition, two scientific papers, which detail the clinical efficacy ofFruitflow(R), were published by the American Journal of Clinical Nutrition("AJCN") on 14 September 2006. The AJCN is internationally recognised as aleading peer-reviewed journal in the nutrition field. This was a key milestonefor the Company and on 24 July 2006, Provexis announced that it had entered intoan Exclusivity Agreement for a period of 12 months with a leading global brandedfood business ("Partner") for the joint development and use of Fruitflow(R).Under the agreement Provexis and its Partner are to develop a second-generationconcentrated format of the Fruitflow(R) product in order to increase itsapplicability across all food, beverage, supplement and medical formats and tomove towards a global licensing agreement. However, on 1 November 2006, it wasannounced that discussions for the licensing of Fruitflow(R) would extend into2007, due to the extension of the technical development timeline. The Company's scientific team has also made significant progress in identifyingin-vitro evidence of the efficacy of Fruitflow(R) for the possible prevention ofdeep vein thrombosis ("DVT") a condition where a blood clot occurs in a deepvein. The condition has been most readily associated with immobilisation duringlong-distance flying, but which can also occur during any long period ofimmobilisation. Provexis has applied for a British priority patent for this newdevelopment and certain international patent applications will be applied for in2007. In addition to the patents and intellectual property for Fruitflow(R) in thecore area of platelet aggregation and the newly identified area of DVT, theCompany has also identified evidence that Fruitflow(R) may reduce certain typesof blood fats further extending the potential heart-health benefit. The Companyhas also applied for an additional patent for this application. The Company continues to make progress in the development of Fruitflow(R) and isworking in close collaboration with its global branded food Partner on thedevelopment of a new Fruitflow(R) format. During 2007 the Company, inconjunction with its Partner, expects to be carrying out two product-specifichuman trials, in addition to developing a supply chain for the new Fruitflow(R)format. Subject to successfully achieving these and other specific technical andcommercial milestones, the Company expects to enter into global licensingdiscussions with the Partner. Further, the Company is currently in discussionwith the Partner to extend the scope of the current collaboration to include thepotential for developing advanced formats of Fruitflow(R) as part of an ongoinginnovation programme. The Company is currently working with a major international beverage company toassess the potential for the launch of a juice drink containing Fruitflow(R) andin addition is seeking potential partners for a venture to develop and launch aproduct for the prevention of DVT. Provexis will also be seeking licencepartners in respect of dietary supplements and medical products in the mediumterm. The Company is committed to the development and exploitation of its interests inplantain-based technology for the treatment of Crohn's Disease and expects humantrials to commence in 2007. The Company has been developing the dossier requiredfor a Clinical Trial Authorisation by the Medicines and Healthcare productsRegulatory Agency ("MHRA"), in addition to sourcing manufacturing capability forthe product and gathering stability data on the product. Outlook and Reasons for the Placing The Directors believe that the Company's longer-term shareholder value will bemaximised by focusing more fully on the discovery, acquisition, development andlicensing of functional and medical food technologies. The Directors aretherefore actively focusing on licensing activities for Fruitflow(R), as well asadvancing the plantain-based technology, together with seeking furthertechnologies to add to the Company's portfolio. The Company will continue toassess all strategic options to underpin the delivery of this strategy. The planned investment in the Company's technologies in addition to the extendedtimeline for the development of the advanced format of Fruitflow(R) has resultedin a requirement for further working capital. The Directors believe it isrealistic to expect significant licensing revenues in the forthcoming fiscalyear, subject to attaining the technical and commercial milestones. Theinvestment in the new Fruitflow(R) format, the development of the DVT technologyand associated health claims, the commencement of plantain-technology trials andthe potential acquisition of licencing rights to new functional or medical foodtechnologies requires further funds and the Company therefore intends to use thenet proceeds of the Placing to provide working capital to deliver theseobjectives. 3. Details of the Placing The Company proposes to raise approximately £2.15 million (before expenses)through the issue of the Placing Shares at the Placing Price. The Placing Pricerepresents a dis2count of approximately 52 per cent. to the closing mid-marketprice of 2.875 pence per Existing Ordinary Share on 15 March 2007, being thelast dealing day prior to the announcement of the Placing. The Placing Shareswill represent approximately 36.3 per cent. of the Company's Enlarged OrdinaryShare Capital. Pursuant to the terms of the Placing Agreement, Arbuthnot, as agent for theCompany, has agreed conditionally to use reasonable endeavours to procuresubscribers for the Placing Shares at the Placing Price. The Placing Agreementis conditional upon, inter alia, the Resolutions being duly passed at the EGMand Admission becoming effective on or before 8.00 a.m. on 12 April 2007 (orsuch later time and/or date as the Company and Arbuthnot may agree, but in anyevent no later than 3.00 p.m. on 14 May 2007). The Placing Agreement containsprovisions entitling Arbuthnot to terminate the Placing Agreement at any timeprior to Admission in certain circumstances. If this right is exercised, thePlacing will not proceed. The Placing has not been underwritten by Arbuthnot. Application has been made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that Admission will becomeeffective and that dealings in the Placing Shares on AIM will commence on 12April 2007. The Placing Shares will rank pari passu in all respects with the Ordinary Sharescurrently in issue, including the right to receive all dividends and otherdistributions declared following Admission. It is expected that CREST accountswill be credited on the day of Admission and that share certificates (whereapplicable) will be despatched by 19 April 2007. As part of the Placing, certain Directors have agreed to subscribe for 4,983,332Placing Shares in aggregate at the Placing Price. This represents approximately3.5 per cent. of the Placing Shares. Under the Placing, Neville Bain hassubscribed for 1,650,000 Placing Shares and Dawson Buck has subscribed for3,333,332 Placing Shares, all at the Placing Price. On completion of thePlacing, Neville Bain will hold 2,097,000 Ordinary Shares, representingapproximately 0.5 per cent. of the Enlarged Ordinary Share Capital and DawsonBuck will hold 3,869,332 Ordinary Shares, representing approximately 1.0 percent. of the Enlarged Ordinary Share Capital. 4. Details of the Loan Notes In order to provide the Company with short term loan funding, two of theCompany's major shareholders, ANGLE and Rising Stars, have provided the Companywith a £100,000 loan in return for the issue by the Company of loan notes (the"Loan Notes") to each of ANGLE and Rising Stars. As at the date of thisannouncement, ANGLE and Progeny in aggregate hold 61,895,643 Ordinary Shares,representing approximately 24.66 per cent. of the Company's existing issuedcapital and Rising Stars holds 58,959,444 Ordinary Shares, representingapproximately 23.49 per cent. of the Company's current issued share capital. The Loan Notes are unsecured and are transferable by the relevant holders of theLoan Notes. The Loan Notes are repayable by the Company on 31 March 2009, butholders of the Loan Notes are entitled to the immediate repayment of theprincipal sum of the Loan Notes (in whole or in part) at any time earlier than31 March 2009 on 15 days' notice in writing to the Company. The Company may repay the principal sum (in whole or in part) at any timeearlier than 31 March 2009 on 15 days' notice to the relevant holders of theLoan Notes. The principal sum of Loan Notes outstanding will become immediatelyrepayable in the case of certain events of default. The Company shall be obligedto pay interest on the principal sum outstanding in respect of each interestperiod (being periods of one month's duration from the date of the Loan Note) at20 per cent. per annum. Subject to a repayment notice having been issued to the Company in accordancewith the terms of the Loan Notes requesting payment on or shortly before thedate of Admission each of ANGLE and Rising Stars shall be entitled to apply anyrepayment proceeds owed to each of them by the Company under the Loan Notes tothe subscription of the appropriate proportion of Placing Shares and the Companyshall be obliged to issue the appropriate proportion of Placing Shares to eachof them in consideration for the settlement of such amounts. Following the passing of the Resolutions at the EGM, each of ANGLE and RisingStars will have the right (but not the obligation) to appoint a representativenon-executive director to the Board of the Company for so long as each on itsown or in the case of ANGLE together with any of its group undertakings holds 10per cent. or more of the issued share capital of the Company. A specialresolution to change the Articles to effect this will be proposed at the EGM. Pursuant to the AIM Rules, the issue of the Loan Notes constitutes a relatedparty transaction, as each of ANGLE and Rising Stars holds more than 10 per centof the Company's issued share capital. The Directors consider, having consultedwith Arbuthnot, that the terms, and the proposed issue, of the Loan Notes toANGLE and Rising Stars are fair and reasonable insofar as Shareholders areconcerned. The Company has agreed to pay to ANGLE plc the amount of £15,000 and to RisingStars the amount of £15,000 as an inducement fee for the advancement of the£100,000 loan. This inducement fee is required to be paid by the Company within10 days of the receipt in cleared funds of the proceeds of the Placing, orwithin 45 days of the loan being advanced, whichever is the earlier. 5. Concert Party At the time of the re-admission of the Company's shares to trading on AIM on 23June 2005 referred to above, the Takeover Panel ruled that the existingshareholders in Provexis Limited constituted a concert party. The aggregateshareholdings of the Concert Party are 149,388,505 Ordinary Shares, representingapproximately 59.51 per cent of the Existing Ordinary Shares. Upon Admission,the Concert Party's aggregate shareholding will amount to 184,388,505 OrdinaryShares, representing approximately 46.76 per cent. of the Enlarged OrdinaryShare Capital. For as long as the Concert Party continues to be acting inconcert, any further increases in its aggregate interest will be subject to theprovisions of Rule 9 of the Takeover Code. 6. Extraordinary General Meeting The EGM will be held on 10 April 2007 at the offices of Arbuthnot at ArbuthnotHouse, 20 Ropemaker Street, London EC2Y 9AR at 11.00 a.m. at which theResolutions will be proposed, inter alia, to permit the issue of the PlacingShares and to change the Articles. END This information is provided by RNS The company news service from the London Stock Exchange