ValiRx Regulatory News (VAL)

11 Sep 2006 07:00

Azure Holdings PLC11 September 2006 Azure Holdings plc Proposed Capital Reorganisation Proposed acquisition of ValiRx Limited Approval of waiver of the obligation to make a mandatory offer under Rule 9 of the City Code on Takeovers and Mergers Admission of the Enlarged Share Capital to trading on AIM Change of name to ValiRx plc and Notices of Extraordinary General Meeting and Class Meetings Azure Holdings plc ("Azure" or the "Company") announces that is has agreed,subject, inter alia, to Shareholder approval, to acquire the entire issued sharecapital of ValiRx Limited ("ValiRx"), a biopharmaceutical development companythat is looking to exploit opportunities in the future healthcare, life sciencesand biopharmaceutical industries. Subject to the approval of the Azure shareholders at an extraordinary generalmeeting of the Company to be held on 2 October 2006, and subsequent to theCapital Reorganisation, the initial consideration for the Acquisition will besatisfied by the issue of 637,500,000 new ordinary shares of 0.2p each ("Ordinary Shares") and additional consideration may be payable by the issue of afurther 150,000,000 Ordinary Shares. It is proposed that, on Admission, Barry Gold will step down as Chairman of theCompany. Dr Satu Vainikka (Chief Executive), Dr Jacob Vincent Micallef (ChiefOperating Officer) and Dr George Stephen Morris (Chief Development Officer) willjoin the board as executive directors. Anthony Roger Moore will becomeNon-Executive Chairman and Kevin John Alexander will be appointed asNon-Executive Director. By reason of the size of ValiRx in relation to Azure and the fundamental changein Azure's business, board and voting control, the Acquisition is classified asa reverse takeover under the AIM Rules and, therefore, requires the approval ofShareholders in general meeting. The Company is also seeking Shareholder approval at the EGM to the waiver of theobligation of the Vendors to make a general offer for the Company under Rule 9of the City Code. Application will be made for the New Ordinary Shares and Consideration Shares tobe admitted to trading on AIM and it is expected that trading will commence on 3October 2006. An admission document setting out details of the Proposals and including thenotices of the EGM and Class Meetings (the "Admission Document") has been postedto shareholders. Further copies of the document are available to the public,free of charge, from the offices of WH Ireland Limited, 11 St James's Square,Manchester M2 6WH. Enquiries: Barry Gold, Azure Holdings plc Tel: 07768 948 928David Youngman, WH Ireland Limited Tel: 0161 832 2174Toby Hall / Jade Mamarbachi, GTH Media Relations Tel: 0207 153 8039 / 8035 Introduction The Company has today announced that it has agreed, subject, inter alia, toShareholder approval, to acquire the entire issued share capital of ValiRx foran initial consideration to be satisfied by the issue of the ConsiderationShares and additional consideration, subject to the achievement of certainmilestones, to be satisfied by the issue of the Deferred Consideration Shares. By reason of the size of ValiRx in relation to Azure and the fundamental changein Azure's business, board and voting control, the Acquisition is classified asa reverse takeover under the AIM Rules and, therefore, requires the approval ofShareholders in general meeting. To complete the Proposals it will also benecessary to give the directors of the Company the required powers andauthorities to allot the Consideration Shares, Deferred Consideration Shares andthe ValiRx Option Shares. The purpose of the Admission Document is to give you details of the Proposalsand to ask you to vote in favour of the Resolutions to be proposed at theExtraordinary General Meeting and the Class Meetings, notices of which are setout at the end of the Admission Document. Background to, and reasons for the Acquisition The Company's trading activities were terminated in January 2003 when its onlyremaining subsidiary, Room Service (UK) Limited, went into voluntaryliquidation. Since this date, the Company has been exploring possible targetswith the view of undertaking a reverse takeover under the AIM Rules. The Directors have identified ValiRx as a target for a reverse takeover. ValiRxoperates within the biotechnology sector and the Directors believe that theAcquisition offers Shareholders an opportunity to gain exposure to this sectorand that the terms of the Acquisition are fair and reasonable and in the bestinterests of the Company and its shareholders. Information on ValiRx ValiRx is a biopharmaceutical development company, which was incorporated on 1June 2006 with the intention of exploiting opportunities in the futurehealthcare, life sciences and biopharmaceutical industries. The directors ofValiRx are Dr Satu Vainikka and Dr George Morris. ValiRx is looking to acquire the rights to developmental products either intherapeutics, with a particular focus on developing products in thebiopharmaceutical sector, or closely related diagnostics. ValiRx has made thefollowing acquisitions that are conditional on Admission: (a) Cronos: ValiRx will acquire 60.28 per cent. of the ordinary share capital ofCronos on Admission. The consideration will be satisfied by the allotment andissue to the shareholders of Cronos of 5,716 ordinary shares of 1p each inValiRx. The Company will also hold an option to acquire from the Cronos MinorityShareholders the balance of 39.72 per cent. of the issued share capital ofCronos for a consideration of either £2,600,000 or the issue of the ValiRxOption Shares, at the Company's option. Cronos is a biopharmaceutical company which owns the world exclusive licences totwo innovative and, in the opinion of the Directors and Proposed Directors,potentially market-changing technologies: • GeneICE drugs, which have the potential to halt the development andgrowth of cancerous cells. The technology also has major applications ininflammatory disease and potentially in inherited genetic conditions. GeneICEcompounds work by shutting down the "harmful" genes that are the root cause ofthese diseases; and • HyperGenomics, a rapid, high-throughput and extremely sensitivegenetic analysis technology that can be used to characterise any particularcell, disease or differentiation state. It has many potential uses, especiallyin the continually growing fields of cancer diagnostics and stem cell qualitycontrol. Cancer Research Technology Limited, a wholly owned subsidiary of Cancer ResearchUK, one of the leading oncology focused technology transfer and developmentcompanies, has partnered with Cronos for the therapeutic development of GeneICE,demonstrating the potential of these therapeutics. The technologies wereoriginally developed at Imperial Innovations, which will become a shareholder inthe Company following the completion of the Acquisition. The GeneICE platform constitutes a completely new class of drugs, which can bedeveloped for a wide range of therapeutic fields. GeneICE therapeutics offer ahigh value opportunity to introduce a revolutionary class of drugs designed totreat a wide range of diseases by gene silencing. It is intended that Cronoswill create value for shareholders by combining a range of products in oncology,whilst seeking to license out the technology and potential future leadcompounds. Innovative, targeted therapies are currently driving the cancermarket and it is estimated that the market share for these therapies will growby in excess of 30 per cent. annually for a number of years. The pharmaceutical industry's shift towards developing targeted therapies hascreated a huge market potential for new diagnostic technologies. Many of the newclasses of drugs under development (including GeneICE) require knowledge of adisease's genetic constitution in order to be effective, and this has generatedthe need for new low cost, high-throughput, and accurate genetic tests. Thereare over 4,000 diseases including cancer, heart disease and risk of strokeswhich could, in principle, be identified and profiled using genetic analysistools; of these, only 300 can currently be tested for using such tools. Thusthere exists a substantial emerging market for further development of diagnostictests based on gene expression analysis. Cronos intends to address this need byusing its proprietary HyperGenomics technology to provide a rapid,cost-effective and sensitive platform that can be used to characterise aparticular cell, disease or differentiation state. In addition to opportunities in the field of diagnostics, HyperGenomics haspotential uses in research and drug development. One area where it may beparticularly suitable is in the emerging but rapidly growing field of stem cellquality control, where it may be used to characterise differentiation states. (b) Morphogenesis: ValiRx will acquire 7.32 per cent. of the ordinary sharecapital of Morphogenesis on Admission. The consideration will be satisfied bythe allotment and issue to vendors of such Morphogenesis shares of 1,657ordinary shares of 1p each in the capital of ValiRx. Morphogenesis is an established biotechnology company developing high valuetherapy products for the treatment of chronic disorders, where products include: • a cancer vaccine product, ready to enter clinical studies; • a cell purification device that is ready for marketing; and • a potentially strong stem cell development programme. Stem cell research is based upon the unspecialised development cells being ableto "renew" through cell division growth. Due to their unspecialised nature,stem cells can be forced to become specialist cells in the right conditions,becoming a cluster of nerve tissue, or heart muscle cells. This ability ishelping fuel science's desire to create cell based therapies to cure, treat andprevent crippling diseases. (c) Other opportunities have been identified by ValiRx. These opportunities willbe complementary and synergistic to the products and technologies of Cronos andMorphogenesis. The management team of ValiRx is experienced in transferring technologies andproducts into the commercial arena and in further developing them for successfulcommercial exits. The Directors and the Proposed Directors intend that followingcompletion of the Proposals the Enlarged Group will, through ValiRx, maximisethe value creation by continuing to expand its products and technologies, whilesimultaneously seeking to license or sell the relevant product on at the mostadvantageous stage (although save as disclosed in the Admission Document, nofirm investment commitments have been made). It is also the intention thatValiRx will provide business development, finance and other centralised servicesin order to create value from the commercialisation of its products andtechnologies. The value for biotech companies which possess novel therapies increases withpassage through preclinical and clinical development. Thus the value achieved onlicensing at early stages of development is a small percentage of the marketpotential as the development risk is high. As the therapy gets closer to market,its value greatly increases. Whilst most of the ValiRx products are at therelatively early stage, the intention is that they will be balanced by productsat a more mature developmental stage. It is also hoped that there can be crossfertilisation of ideas and that early stage products of one company can beactively marketed as tools and solutions within products and technology beingdeveloped by other members of the Enlarged Group, such as Cronos' GeneICEtechnology and its HyperGenomics gene mapping technology. The Directors and Proposed Directors' intention is that the criteria for theEnlarged Group to become involved in future prospects will include one or moreof the following attributes: • high growth potential; • strong intellectual property position; • inventive and innovative products and technologies; • attractive market size; and • exit potential. Information on Cronos Cronos is a biopharmaceutical company, established in 2004, to develop andcommercialise novel and groundbreaking classes of therapeutics and technologiesin order to meet a huge market potential. Cronos' products are based on its twoplatforms, GeneICE and HyperGenomics which are undergoing rapid and costeffective development programmes. Cronos' technologies DNA is the "blueprint of life" and like a blueprint, it must be able to be "read" in order for a product to be made. At any one time around 99 per cent. ofDNA in a cell is tightly packaged into a highly complex structure calledchromatin and cannot be read. The remaining 1 per cent. is unpackaged and opento be read by the cell's internal machinery. The positioning of these open areaswithin the genome is highly dynamic, and changes in order to allow differentgenes to become active. Cronos' two proprietary technology platforms seek toexploit this (epigenetic) property: • GeneICE is a gene-silencing technology which deactivates genes by repackaging specific "open" areas of DNA. DNA repackaging results in gene deactivation because the repackaged areas can no longer be read by the cell's internal machinery. Cronos has developed a rapid and cost-effective development program to bring GeneICE drugs to the marketplace. Initially, it is intended that the focus will be on developing anti-cancer drugs (oncology is a field in which Cronos has considerable core competence) and in addition, licensing or collaborative opportunities will be sought in other therapeutic areas. • HyperGenomics is a tool which analyses genetic activity by detecting the unpackaged (open) areas of the cell's DNA (these occur in areas where genes are "active"). It has many potential applications, particularly in diagnosing and characterising diseases which have a genetic basis, such as cancer. HyperGenomics is based on Polymerase Chain Reaction (PCR), a very widely used process, and the nature of PCR confers it with several key advantages over certain competitors' technologies in terms of cost, speed of operation, accuracy, and repeatability. Unlike "first generation" post-genomic technologies, GeneICE and HyperGenomicsare used to detect and deactivate genes before they can be expressed. This meansthat cells are prevented from reading specific DNA and therefore cannotmanufacture a specific protein, thereby precluding any adverse effects, providedthe system is correctly understood and targeted, a process which is also addedby the use of the hypergenomic approach. As such, they represent a step forwardin the diagnosis and treatment of diseases such as cancer. Following completion of the Proposals, the Directors and the Proposed Directorsintend that risk will be minimised by developing a pipeline of GeneICE drugcandidates which can be advanced at low cost to in vitro proof of principle.Once this has been achieved, the best commercial candidates will be selected forfurther development. It is intended that Cronos will seek to add additionalvalue and further reduce risk by adding other complementary technologies to itsproduct range. This will be achieved by licensing in such opportunities or byentering into co-development agreements. Cronos has already identified apotential candidate and has entered into discussions on a possible agreement. Cronos is looking to implement multiple early stage licensing deals with GeneICEdrugs in the disease areas relevant to each of the licensees. It is intendedthat Cronos will also proceed with its own internal therapeutics programme inthe area of oncology for late stage licensing. Information on Morphogenesis Morphogenesis is an emerging biotechnology and cell therapy company, founded in1995, that develops cell therapy products to treat chronic disorders. Theprototype of Morphogenesis' first product is nearing completion and is intendedto be ready for launch shortly. In addition there are several other products inthe pipeline together with some commercially attractive technologies. Manyproducts and technologies are protected by issued or pending patents andMorphogenesis is placing a priority on continuing to develop and expand itsintellectual property portfolio. Morphogenesis has three major product and technology platforms which aresynergistic and closely related, being: PACS, a device which allows the isolation and purification of adult stem cells.This system is highly specific and allows differential release of multiple celltypes without altering their function or reducing their viability. The devicewill offer features in comparison to currently marketed cell separation systems,directly correlating into a more patient-friendly and accurate procurement ofstem cells. ImmunexFx, a cancer vaccine that will be the first of Morphogenesis' products toenter clinical trials. The ImmunexFx cancer vaccine capitalises on the abilityof bacterial antigens to evoke a strong immune response and the ability of thepatient's immune system to respond to the presence of the bacterial antigens bydirecting the force of the immune system specifically to the tumour. MATCH, an enabling technology designed to facilitate the development oftherapies using stem cells by overcoming the overriding problem of transplantrejection. The ability to transplant cells, tissues or organs is limited by theMajor Histocompatibility Complex (MHC). By limiting the number of MHC mismatchesand providing some "self" MHC antigens, the donor and recipient can be "MATCHed". Since its incorporation, Morphogenesis has focused the majority of its effortson the continued development of its technologies and in the protection of itsintellectual property. In addition to developing its own proprietary technology,it is intended that Morphogenesis will in-license technologies which enhance,complement or otherwise facilitate the commercialisation of existing and relatedproducts. It is intended that other ongoing efforts will focus on the progressof research and development programs, pre-clinical testing, regulatory approvalsand corporate partnerships. Morphogenesis has developed an extensive collection of proprietary products andtechnologies to overcome many major challenges currently facing the cell therapyindustry. Each major platform is currently at a different stage of developmentand has different risk and return characteristics for Morphogenesis'shareholders. Directors and Proposed Directors The Board currently comprises Barry Gold and Gerald Desler. It is proposed that,on Admission, the Proposed Directors will join the Board and Barry Gold willstep down. Directors Mr Barry Gold (age 59), Chairman Barry Gold is a solicitor with experience of acting for and being a director offully listed and AIM quoted companies. He was the senior partner of Gold Mann &Co, a city firm of solicitors, from its founding in 1975 until he retired in1998, remaining as a consultant for a further 3 years. He is currently aconsultant at Manches LLP, a commercial law firm operating in London. Mr Gold isan FA licensed football agent, Chairman of Premier Management Holdings plc and adirector of Matisse Holdings plc, both of which are AIM quoted companies. Mr Gold is standing down from the Board on Admission. Mr Gerald Desler (age 61), Finance Director and Proposed Finance Director Gerald Desler is a chartered accountant, who qualified in 1968 with Stanley ASpofforth & Co., becoming a partner in 1970 and senior partner in 1985. Duringhis time at Stanley A Spofforth & Co. Mr Desler specialised in consultancy work,much of it involving funding and venture capital and was involved in one of thefirst joint ventures in what was then the People's Republic of China in 1980. Heis currently the finance director of Premier Management Holdings plc, an AIMquoted company, Babble.net Group plc, an Ofex quoted company and is companysecretary and financial controller of AIM quoted London Asia Capital plc. Proposed Directors Mr Anthony Moore (age 60), Proposed Non-Executive Chairman Anthony Moore is currently co-chairman of the board and co-chief executiveofficer of MCC and has held these positions since its founding in July 1999. Hisexperience covers private banking, asset management, stock broking andinternational investment banking. Prior to co-founding MCC, he was president and CEO of Los Angeles based NewEnergy Technologies. He previously served as chairman of corporate finance atBarclays de Zoete Wedd in London, where he also held the position of CEO ofGlobal Investment Banking Services and was a member of the Board of BankersTrust International. From 1982 to 1991, he held various senior positions withGoldman Sachs: Head of Investment Banking in Tokyo, Managing Director of GoldmanSachs Asia in Hong Kong and Executive Director responsible for large corporateclients in London. Throughout his career, he has built an extensive network ofsenior level contacts with governments, financial institutions and companiesaround the world. Dr Satu Vainikka (age 39), Proposed Chief Executive Officer Satu Vainikka has extensive experience in the biotechnology industry, technologycommercialisation, equity financing and business management. She initiallytrained as a PhD molecular biologist, and is a biotechnology entrepreneur withseveral years' research experience in oncology with University of Helsinki andICRF (now CRUK), before completing an MBA. Prior to her current role as a CEO of ValiRx, she was a founder, director andCEO of Cronos. Her previous roles include being the founder and CSO of GeneExpression Technologies Ltd and consultancy roles in healthcare technologycommercialisation and entrepreneurship. In her past roles, Dr Vainikka hassuccessfully developed business strategies, negotiated corporate and academiccollaborations and transactions to build high growth portfolios. She has alsobeen successful in applications for grants and raised several rounds of privateequity funding. Dr Jacob Micallef (age 50), Proposed Chief Operating Officer Jacob Micallef originally trained as a physical chemist and has 10 yearsexperience in leading R&D in diagnostics for the World Health Organisation. Healso initiated, established and managed the manufacture of diagnostics withImmunometrics Ltd before completing an MBA at Imperial College. His previousroles include founder and chief operations officer of Gene ExpressionTechnologies Ltd. In this role, he led the development of a chemical synthesisfor GeneICE molecules and was responsible for various functions within Cronos'operations. Dr George Morris (age 50), Proposed Chief Development Officer George Morris has over 20 years experience in biological and medical researchand financial services. Currently he is a director of several biotech companiesand is an adviser to a financial services company. In the past, he has been aCEO, an executive, director and founder of several life sciences companies and aconsultant to, inter alia, Close Brothers and Beeson Gregory and built QuartzCapital Partners' Life Sciences activities. For the majority of his career he has worked in academic and commercialscientific research in the fields of biochemistry and biotechnology with aparticular focus on metabolic systems and their manipulation for medical andother reasons. He is a named author on approximately 50 peer-reviewed papers,numerous abstracts and short reports and a named inventor on multiple patents. Mr Kevin Alexander (age 52), Proposed Non-Executive Director Kevin Alexander is a solicitor and qualified as a member of the New York Bar andspent over 25 years practising law with major law firms in London and in theUnited States. Since leaving full time legal partnership, he has progressedvarious business interests, both in the energy sector and in private equity. MrAlexander currently works part time for MCC. Principal terms and conditions of the Acquisition The Company has conditionally agreed to acquire the entire issued and to beissued share capital of ValiRx. The consideration is to be satisfied by theissue and allotment by the Company of the Consideration Shares. TheConsideration Shares will, when issued, represent 72.02 per cent. of theEnlarged Share Capital. The Consideration Shares will be issued as fully paidand will rank pari passu in all respects with the New Ordinary Shares, includingthe right to receive, in full, all dividends and other distributions thereafterdeclared, made or paid. In addition, the Acquisition Agreement contains provisions whereby up to150,000,000 Deferred Consideration Shares may be issued to members of theConcert Party. The Deferred Consideration Shares will be issued as fully paidand will rank pari passu in all respects with the New Ordinary Shares andConsideration Shares in issue, including the right to receive, in full, alldividends and other distributions thereafter declared, made or paid. Assuming nofurther issue of shares and that all of the Deferred Consideration Shares areissued, the Consideration Shares and the Deferred Consideration Shares will,together, comprise 76.07 per cent. of the then enlarged share capital of theCompany. The entire issued and to be issued share capital of ValiRx is to beacquired pursuant to the Acquisition Agreement and the October AcquisitionAgreement which are conditional inter alia upon: • Admission; • approval by Shareholders of the Capital Reorganisation; • approval by the Shareholders of the Acquisition for the purposes of rule 14 of the AIM Rules; • approval by the Shareholders of the waiver of the obligation of the Vendors to make a general offer for the Company under Rule 9 of the City Code; • approval by the Shareholders of the increase in the authorised share capital of the Company; • the Directors being granted by Shareholders the authority to allot all the Consideration Shares and generally; • the disapplication of statutory pre-emption rights upon the issue of Ordinary Shares for cash; • the adoption of new articles of association of the Company as anticipated by paragraph (i) of Resolution 2 set out in the Notice of EGM; • evidence that the Company will on Admission have cash resources of not less than £1,1,171,111; and • receipt by the Company in a form acceptable to the Company and WH Ireland of an opinion from counsel qualified in the State of Florida that the agreements transferring the Morphogenesis Shares to ValiRx is effective to transfer such shares under Florida law ("the US Opinion"). The Capital Reorganisation Subject to the approval of Shareholders at the EGM, the Directors propose toreduce the number of issued and unissued ordinary shares of 1p each through thesubdivision of each ordinary share of 1p each into one Reconstruction Share andone 0.9p Deferred Share. Every two Reconstruction Shares will then beconsolidated into one Ordinary Share. On the consolidation of Reconstruction Shares, where the number ofReconstruction Shares held by a Shareholder is not divisible by two, thatShareholder would become entitled to a half an Ordinary Share, fractionalentitlements will not be able to be issued, so it is proposed that all fractionsof shares resulting from the consolidation of Reconstruction Shares will beaggregated and consolidated into Ordinary Shares which will then be sold in themarket at the best price reasonably obtainable. It is intended that the proceedsof such sales to which any Shareholder is entitled are expected to be less than£3 so the proceeds will be applied for the benefit of the Company rather thanbeing sent to the Shareholder entitled as is permitted by the new Articlesproposed to be adopted at the EGM. The City Code The terms of the Acquisition give rise to certain considerations under the CityCode. The City Code is issued and administered by the Panel. The Company is subject tothe City Code and therefore its shareholders are entitled to the protectionsafforded by the City Code. Under Rule 9 of the City Code, any person who acquires, whether by a series oftransactions over a period of time or not, an interest in shares which (takentogether with shares in which persons acting in concert with them areinterested) carry 30 per cent. or more of the voting rights of a company whichis subject to the City Code, is normally required to make a general offer incash to all other shareholders of that company to acquire the balance of theshares not held by such a person (or group of persons acting in concert). In addition, Rule 9 provides that where any person, together with persons actingin concert with them, is interested in shares in a company which is subject tothe City Code and which in aggregate carry not less than 30 per cent. but notmore than 50 per cent. of that company's voting rights, and such person, or anyperson acting in concert with them, acquires an interest in any other shareswhich increases the percentage of the shares carrying voting rights in thatcompany in which they are interested, such person is normally required, in thesame way, to make a general offer to all shareholders. An offer under Rule 9 must be in cash and at the highest price paid within thepreceding 12 months for any interest in shares in the company by the personrequired to make the offer or any person acting in concert with them. The parties shown in the table below are together deemed to be acting in concertfor the purposes of the City Code. Consideration Percentage Deferred ValiRx MCC Warrant Shareholding Percentage Shares holding of Consideration Option Shares after the holding after the Shares Shares issue of the issue of Enlarged Deferred Deferred Share Consideration Consideration Capital Shares, ValiRx Shares, ValiRx Option Shares Option Shares and MCC and MCC Warrant Shares Warrant Shares (1) (1) Rosemount Limited 78,750,000 8.90% 21,000,000 0 0 99,750,000 8.02%Imperial 70,312,500 7.94% 18,750,000 0 0 89,062,500 7.16%InnovationsMCC 59,456,250 6.72% 15,855,000 0 0 75,311,250 6.05%Dr Satu Vainikka 55,912,500 6.32% 14,910,000 59,432,703 0 130,255,203 10.47%MCC Europe 54,168,750 6.12% 14,445,000 0 13,710,602 82,324,352 6.62%Dr Jacob Micallef 50,287,500 5.68% 13,410,000 59,432,703 0 123,130,203 9.90%Dr George Morris 37,125,000 4.19% 9,900,000 0 0 63,726,891 5.12%Ridgecrest 33,750,000 3.81% 9,000,000 16,701,891 0 42,750,000 3.44%Dr Cameron 21,375,000 2.41% 5,700,000 0 0 86,507,703 6.95%MacdonaldKevin Alexander 16,312,500 1.84% 4,350,000 59,432,703 0 20,662,500 1.66%James Thorniley 11,812,500 1.33% 3,150,000 0 0 14,962,500 1.20%Anthony Moore 11,250,000 1.27% 3,000,000 0 0 14,250,000 1.15%Vernon Sankey 9,843,750 1.11% 2,625,000 0 0 12,468,750 1.00%Kenneth Denos 8,437,500 0.95% 2,250,000 0 0 10,687,500 0.86%Sharon Clayton 8,437,500 0.95% 2,250,000 0 0 10,687,500 0.86%Farshid Zonoozi 7,031,250 0.79% 1,875,000 0 0 8,906,250 0.72%Faranak Zonoozi 7,031,250 0.79% 1,875,000 0 0 8,906,250 0.72%Richard Meek 5,625,000 0.64% 1,500,000 0 0 7,125,000 0.57%Guy Innes 5,625,000 0.64% 1,500,000 0 0 7,125,000 0.57%John Savin 2,812,500 0.32% 750,000 0 0 3,562,500 0.29%Paul Rudisill 2,812,500 0.32% 750,000 0 0 3,562,500 0.29%Nigel Tose 1,406,250 0.16% 375,000 0 0 1,781,250 0.14%Oliver Bates 1,406,250 0.16% 375,000 0 0 1,781,250 0.14%Brendan Bates 1,406,250 0.16% 375,000 0 0 1,781,250 0.14%Steven Eccles 112,500 0.01% 30,000 0 0 142,500 0.01% Total 562,500,000 63.55% 150,000,000 195,000,000 13,710,602 921,210,602 74.06% (1) Assuming no other share issues following Admission. After completion of the Proposals, the Concert Party's interest in sharescarrying voting rights in the Company will represent, in aggregate, 63.55 percent. of the voting rights attaching to the Company's issued ordinary sharecapital. The table above shows the interest of the Concert Party assuming that theProposals are implemented. The members of the Concert Party shown in the table above will receiveadditional Deferred Consideration Shares when the Company files a patentapplication with the UK Patent Office. The Deferred Consideration Shares will beissued on or before the date 10 business days from the date on which Cronosfiles a patent application with the UK Patent Office. On exercise of the ValiRx Option, either £2,600,000 will be paid, in aggregate,or 195,000,000 ValiRx Option Shares will be issued to, the Cronos MinorityShareholders, split between them as shown in the table above. On exercise of the MCC Warrant, 13,710,602 Ordinary Shares will be issued to MCCEurope. Following the issue of Deferred Consideration Shares, ValiRx Option Shares andMCC Warrant Shares, the Concert Party's interest will increase to 74.06 percent. of the voting rights attaching to the Company's then enlarged ordinaryshare capital, assuming no other issue of shares by the Company. The Panel has agreed, however, to waive the obligation to make a general offerthat would otherwise arise as a result of the Acquisition and the issue ofDeferred Consideration Shares, ValiRx Option Shares and MCC Warrant Shares,subject to the approval of Shareholders. Accordingly, Resolution 2 is beingproposed at the EGM, and will be taken on a poll. Shareholders should be aware that, following the Acquisition, the members of theConcert Party will together hold more than 50 per cent. of the voting rightsattaching to the Company's issued share capital. Accordingly, the Concert Party,for so long as the members of the Concert Party continue to be treated as actingin concert, may be able to increase its aggregate shareholding without incurringany further obligation under Rule 9 to make a general offer. However, individualmembers of the Concert Party will not be able to increase their percentageshareholdings through a Rule 9 threshold without Panel consent. There have been no public takeover bids by third parties in respect of theCompany's equity in the current financial year or the previous financial year. Save for the City Code, there are no measures in place to ensure that anycontrol by the Concert Party or any other shareholder having control over theCompany as a result of its shareholding is not abused. The Concert Party The Concert Party comprises the parties shown in the table above. Biographies ofDr Satu Vainikka, Dr Jacob Micallef and Dr George Morris are shown underDirectors and Proposed Directors above. Details relating to the other members ofthe Concert Party holding over 3 per cent. of the Enlarged Share Capitalfollowing admission are set out below: MCC MCC was established in July 1999 by Anthony Moore and Sharon Clayton. MCC is astrategic financial advisory firm providing a wide range of financial advisoryservices to growing and established companies. It offers expertise and in-depthknowledge of various industries and financial markets in which it operates. Italso provides strategic contacts to a global network of professionals, financialintermediaries and companies. MCC has offices and joint ventures in London, theUnited States and elsewhere and currently employs approximately 60 peopleworldwide. Turnover for the financial years ending 31 December 2005 and 31 December 2004was US$10,396,273 and US$7,065,820, respectively. Loss before income tax andminority interest at 31 December 2005 was US$731,614 with a loss of US$4,260,506at 31 December 2004. Total assets at 31 December 2005 were US$45,223,907 withtotal liabilities of US$37,403,213. The directors of MCC are Anthony Moore,Sharon Clayton and Kenneth Denos. MCC's principal place of business is at 10757 River Front Parkway, South Jordan,UTAH 84095, USA. MCC Europe is a wholly owned subsidiary of MCC. The registered office for MCC Europe is: York House, 1 Seagrave Road, London SW61RP. Rosemount Limited Rosemount Limited is a company incorporated in the Marshall Islands. It is adormant company that has fully paid up share capital in issue of $5,000, whichis its only asset, and is the investment vehicle for Gary Wyatt, who is the soledirector. Gary Wyatt (FCA) is a qualified accountant. On qualification, he worked for StoyHayward where for several years he specialised in taxation. Before launchingWyatts Chartered Accountants with his wife, Karen Wyatt (FCA), an accountancyfirm based in London that operates within areas of commerce, financial servicesand industry, Mr Wyatt spent a number of years working in the private sector asa finance director for various companies, including a firm of loss adjusters andlater a multi-service public relations company. The contact address for Rosemount Limited is: Rosemount Limited, c/o York House,1 Seagrave Road, London SW6 1RP. Imperial Innovations Imperial Innovations is one of the UK's leading technology commercialisationcompanies. The company was founded in 1986 and is a wholly-owned subsidiary ofImperial Innovations Group plc, which was admitted to trading on AIM in July2006. The company's integrated approach encompasses the identification of ideas,protection of intellectual property, development and licensing of technology andformation, incubation and investment in spin-out companies. A wide range oftechnologies are commercialised within the areas of bioscience and technologyand engineering. Based at Imperial College London, the company has established equity holdings in58 spin-out companies and has completed 90 commercial agreements. ImperialInnovations also commercialises technologies originating from outside ImperialCollege through incubation contracts with the Carbon Trust and WRAP and withmajor technology based corporations. Imperial Innovations currently holds shares in three spin-out companies nowquoted on AIM: Ceres Power plc, a fuel cell company, and ParOS plc, a providerof energy-saving advanced control solutions, as well as Nanoscience plc, adeveloper of low power integrated circuits and silicon chips, following itsacquisition of spin-out company Toumaz Technology. Turnover for the financial years ending 31 July 2005 and 31 July 2004 was£3,935,000 and £4,005,000, respectively. Loss before taxation at 31 July 2005was £2,240,000 with a loss of £1,036,000 at 31 July 2004. Net assets at 31 July2005 were £19,464,000. The directors of Imperial Innovations are Dr MartinKnight, Susan Searle, Julian Smith, Dr Tidu Maini, Dr Paul Atherton and MarkRowan. The registered office of Imperial Innovations is: Level 12, Department ofElectrical and Electronic Engineering, Imperial College, London SW7 2AZ. Ridgecrest Ridgecrest is a publicly traded company in the United States. The company had amarket capitalisation of US$7.5 million at flotation in October 2005 and tradesunder the symbol RGHG.PK. Ridgecrest is a healthcare management and servicecompany providing strategic advisory and other services to healthcare companies. The directors of Ridgecrest are Stuart Bruck, Phil Dalton and Kenneth Denos. Ridgecrest was a dormant company on the Pink Sheets Exchange in the US until itcompleted a major acquisition at the end of 2005. As a Pink Sheet company,Ridgecrest was not required to publish financial statements or have an auditcompleted. Therefore, no public financial information is currently available onthe company. The principal place of business for Ridgecest is: 2301 Rosecrans Avenue, Suite3180, El Segundo CA90245. Intentions of the Concert Party The Company's trading activities were terminated in January 2003 when its onlyremaining subsidiary went into creditors' voluntary liquidation. Upon completionof the Proposals, it is intended that the Company will become the holdingcompany for ValiRx Limited. Extraordinary General Meeting The Acquisition is classed as a reverse takeover for the purpose of the AIMRules and is therefore conditional upon the approval of the Shareholders. AnExtraordinary General Meeting has been convened for 10.00 a.m. on 2 October 2006to be held at Halliwells LLP, 1 Threadneedle Street, London, EC2R 8AW. You will find set out at the end of the Admission Document a notice conveningthe EGM for the purpose of considering and if thought fit approving specialresolutions to: (i) confirm the authorised and issued 0.9p Deferred Share capital and to ratify the allotment of the 0.9p Deferred Shares; (ii) approve the Acquisition for the purposes of Rule 14 of the AIM Rules; (iii) approve the waiver of the obligation by the Concert Party to make a general offer under Rule 9 of the City Code as described above; (iv) increase the authorised share capital of the Company; (v) grant the Directors and Proposed Directors authority to allot Ordinary Shares pursuant to section 80 of the Act in connection with the Acquisition and generally; (vi) disapply statutory pre-emption rights upon the issue of Ordinary Shares for cash; (vii) approve Capital Reorganisation; (viii) change the name of the Company to ValiRx plc; and (ix) adopt new Articles as the articles of association of the Company. In addition, you will find at the end of the Admission Document, noticesconvening Class Meetings of the holders of Existing Ordinary Shares, 0.9pDeferred Shares and 99p Deferred Shares to be held at Halliwells LLP, 1Threadneedle Street, London, EC2R 8AW at 10.30 a.m., 10.45 a.m. and 11.00 a.m.respectively on 2 October 2006 at which resolutions will be proposed to approveany variations to the rights of the holders of Existing Ordinary Shares, 0.9pDeferred Shares and 99p Deferred Shares which arise from the adoption of the newArticles at the EGM. Timetable of principal events Record Date for the Capital Reorganisation 2 October 2006 Publication of the Admission Document 8 September 2006 Latest time and date for receipt of forms of proxy in respect of the EGMand Class Meetings Extraordinary General Meeting 10.00 a.m. on 30 September 2006 Class Meeting of holders of Existing Ordinary Shares 10.30 a.m. on 30 September 2006 Class Meeting of holders of 0.9p Deferred Shares 10.45 a.m. on 30 September 2006 Class Meeting of holders of 99p Deferred Shares 11.00 a.m. on 30 September 2006 Date of the EGM and Class Meetings Extraordinary General Meeting 10.00 a.m. on 2 October 2006 Class Meeting of holders of Existing Ordinary Shares 10.30 a.m. on 2 October 2006 Class Meeting of holders of 0.9p Deferred Shares 10.45 a.m. on 2 October 2006 Class Meeting of holders of 99p Deferred Shares 11.00 a.m. on 2 October 2006 Admission effective and dealings in the New Ordinary Shares and 8.00 a.m. on 3 October 2006Consideration Shares commence on AIM CREST stock accounts credited in respect of New Ordinary Shares and 3 October 2006Consideration Shares Despatch of definitive share certificates in respect of New Ordinary 10 October 2006Shares and Consideration Shares to be held in certificated form Definitions The following definitions apply throughout this announcement. "Acquisition" the proposed acquisition by the Company of the entire issued share capital of ValiRx pursuant to the Acquisition Agreement and the October Acquisition Agreement "Acquisition Agreement" the conditional agreement dated 8 September 2006 between (1) the Concert Party, (2) the Company and (3) ValiRx, details of which are set out in paragraph 11.14 of Part VII of the Admission Document "Act" the Companies Act 1985, as amended "Admission" the admission of the New Ordinary Shares and the Consideration Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules "Adviser Shares" 3,750,000 Ordinary Shares to be issued to Berkeley Consultants Limited in lieu of fees, details of which are set out in paragraph 11.9 of Part VII of the Admission Document "AIM" a market operated by the London Stock Exchange "AIM Rules" the rules governing the admission to and operation of AIM published by the London Stock Exchange as amended from time to time "Articles" the articles of association of the Company, as amended from time to time "Azure" or "the Company" Azure Holdings plc, a company registered in England & Wales with company number 3916791 "the Board" or "the Directors" the directors of the Company whose names are set out on page 8 of the Admission Document "Call Option Agreement" the call option agreement entered into by (1) the Company and (2) the Cronos Minority Shareholders in connection with the ValiRx Option, details of which are set out in paragraph 11.13 of Part VII of the Admission Document "Capital Reorganisation" the reorganisation of the share capital of the Company, details of which are set out in paragraph 13 of Part I of the Admission Document "City Code" the City Code on Takeovers and Mergers "Class Meetings" the separate class meetings of the holders of Existing Ordinary Shares, 0.9p Deferred Shares and 99p Deferred Shares, notices of which are set out at the end of the Admission Document "Combined Code" the principles of Good Governance and Code of Best Practice maintained by the Financial Reporting Council "Completion" completion of the Acquisition "Concert Party" MCC, MCC Europe, Rosemount Limited, Imperial Innovations, Dr Satu Vainikka, Dr Jacob Micallef, Dr George Morris, Ridgecrest, Dr Cameron Macdonald, Kevin Alexander, Farshid Zonoozi, Faranak Zonoozi, James Nicholas Thorniley, Anthony Moore, Vernon Sankey, Kenneth Denos, Sharon Clayton, Richard Meek, Guy Innes, John Savin, Paul Rudistill, Nigel Tose, Oliver Bates, Brendan Bates and Steven Eccles "Consideration Shares" the 637,500,000 Ordinary Shares to be issued pursuant to the Acquisition Agreement and the October Acquisition Agreement, all of which will be created in accordance with the Act "Convertible Loan Stock the convertible loan stock instrument entered into byInstrument 2005" the Company on 9 November 2005, further details of which are set out in paragraph 11.4 of Part VII of the Admission Document "Convertible Loan Stock the convertible loan stock instrument entered into byInstrument 2008" the Company on 18 July 2006, further details of which are set out in paragraph 11.5 of Part VII of the Admission Document "Convertible Loan Stock Shares" Ordinary Shares issued pursuant to the Convertible Loan Stock Instrument 2008 "CREST" the relevant system (as defined in the CREST Regulations) in respect of which CRESTCo Limited is the Operator (as defined in the CREST Regulations) in accordance with which securities may be held and transferred in uncertificated form "CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (as amended) "Cronos" Cronos Therapeutics Limited, a company registered in England & Wales with company number 05085935 "Cronos Minority Shareholders" Dr Satu Vainikka, Dr Jacob Micallef, Dr George Morris and Dr Cameron Macdonald "Current Articles" the articles of association of the Company in effect at the date of the Admission Document "Deferred Consideration Shares" 150,000,000 Ordinary Shares which may be issued to members of the Concert Party pursuant to the Acquisition Agreement on achievement of certain milestones, details of which are set-out in paragraph 11.14 of Part VII of the Admission Document "EGM" or "Extraordinary General the extraordinary general meeting of the Company,Meeting" convened for 10.00a.m. on 2 October 2006, notice of which is set out at the end of the Admission Document "EMI Scheme" the Enterprise Management Incentive Share Option Scheme 2001, details of which are set out in paragraph 14.2 of Part VII of the Admission Document "Enlarged Group" the Company and, following Admission, ValiRx and Cronos "Enlarged Share Capital" the New Ordinary Shares and the Consideration Shares in issue immediately following the completion of the Proposals and assuming that there are no further conversions pursuant to the Convertible Loan Stock Instrument 2005 "Existing Ordinary Shares" the 127,882,777 ordinary shares of 1p each in the capital of the Company in issue as at the date of the Admission Document "Existing Share Capital" the issued ordinary share capital of the Company at the date of the Admission Document "Forms of Proxy" the forms of proxy enclosed with the Admission Document for use by shareholders of the Company in connection with the EGM and the Class Meetings "FSMA" the Financial Services and Markets Act 2000 (as amended) "Funding" a total sum of £1,700,000 in cleared funds to be invested as to £1,200,000 in respect of subscriptions for Loan Stock 2008 and as to £500,000 in respect of subscriptions for ValiRx Loan Stock, in respect of which undertakings to subscribe have been received, details of which are set out in paragraphs 11.6 to 11.8 and 11.18 of Part VII of the Admission Document "Imperial Innovations" Imperial Innovations Limited "Loan Stock 2008" loan stock to be issued by the Company pursuant to the Convertible Loan Stock Instrument 2008 "Locked-In Shareholders" Rosemount Limited, MCC, Dr Satu Vainikka, MCC Europe, Dr Jacob Micallef, Dr George Morris, Ridgecrest, Dr Cameron Macdonald, Kevin Alexander, Anthony Moore, Barry Gold and Gerald Desler "London Stock Exchange" London Stock Exchange plc MCC" Moore, Clayton & Co Inc. "MCC Europe" MCC Europe Limited, a wholly owned subsidiary of MCC "MCC Warrant Shares" 13,710,602 Ordinary Shares to be issued to MCC Europe pursuant to the exercise of the MCC Warrants detailed in paragraph 11.16 of Part VII of the Admission Document "Morphogenesis" Morphogenesis Inc., a company incorporated under the laws of the State of Florida "Morphogenesis Shares" The shares of common stock to be transferred to the company pursuant to the agreements described in paragraphs 11.21 and 11.22 of Part VII of the Admission Document "New Ordinary Shares" ordinary shares of 0.2p each in the capital of the Company in issue following the Capital Reorganisation, the issue of Convertible Loan Stock Shares and the issue of Adviser Shares, all of which are to be created in accordance with the Act "Nominated Adviser Agreement" the Agreement dated 11 May 2006 between (1) the Company and (2) WH Ireland, further details of which are set out in paragraph 11.1 of Part VII of the Admission Document "Notices" respectively the notices of EGM and the Class Meetings set out at the end of the Admission Document "October Acquisition Agreement" the conditional agreement dated 8 September 2006 between (1) the Company and (2) October Investments Limited, details of which are set out in paragraph 11.15 of Part VII of the Admission Document "Official List" the official list of the UKLA "Ordinary Shares" ordinary shares of 0.2p each in the capital of the Company "Panel" the Panel on Takeovers and Mergers "Proposals" the Capital Reorganisation, the Acquisition and Admission "Proposed Directors" the proposed new directors of the Company to be appointed on Admission whose names appear on page 8 of the Admission Document "Prospectus Rules" the Prospectus Rules brought into effect on 1 July 2005 pursuant to Commission Regulation (EC) No. 809/ 2004 "Reconstruction Share" one ordinary share of 0.1p, following the proposed sub-division of each ordinary share of 1p each in the capital of the Company, every two of which are proposed to be consolidated into one Ordinary Share "Registrars" Capita Registrars "Resolutions" the resolutions to be proposed at the EGM and Class Meetings, set out in the Notices at the end of the Admission Document "Restricted Shareholders" Farshid Zonoozi, Faranak Zonoozi, James Thorniley, Vernon Sankey, Guy Innes, John Savin, Paul Rudisill, Nigel Tose, Oliver Bates, Brendan Bates, Steven Eccles, Richard Meek, Sharon Clayton and Kenneth Denos "Ridgecrest" Ridgecrest Healthcare Group Inc., a Delaware corporation whose principal place of business is at 2301 Rosecrans Avenue, Suite 3180, El Segundo CA90245 "Share Option Schemes" the Unapproved Scheme and the EMI Schemes, further details of which are set out in paragraph 14 of Part VII of the Admission Document "Shareholder" a holder of Existing Ordinary Shares in the capital of the Company "UK" the United Kingdom of Great Britain and Northern Ireland "UKLA" the United Kingdom Listing Authority, being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000 "Unapproved Scheme" the unapproved share option scheme of the Company, details of which are set out in paragraph 14 of Part VII of the Admission Document "ValiRx" ValiRx Limited, a company registered in England & Wales with company number 05834378 "ValiRx Loan Stock" loan stock to be issued by ValiRx pursuant to the ValiRx Loan Stock Instrument "ValiRx Loan Stock Instrument" the convertible loan stock instrument entered into by ValiRx on 22 August 2006, further details of which are set out in paragraph 11.17 of Part VII of the Admission Document "ValiRx Option" an option for the Company to acquire the remaining balance of 39.72 per cent. of Cronos' share capital, not already held by ValiRx on Admission, pursuant to the Call Option Agreement "ValiRx Option Shares" Ordinary Shares proposed to be issued to the Cronos Minority Shareholders pursuant to the ValiRx Option "Vendors" MCC, MCC Europe, Rosemount Limited, October Investments Limited, Imperial Innovations, Dr Satu Vainikka, Dr Jacob Micallef, Dr George Morris, Ridgecrest, Dr Cameron Macdonald, Kevin Alexander, Farshid Zonoozi, Faranak Zonoozi, James Nicholas Thorniley, Anthony Moore, Vernon Sankey, Kenneth Denos, Sharon Clayton, Richard Meek, Guy Innes, John Savin, Paul Rudisill, Nigel Tose, Oliver Bates, Brendan Bates, Steven Eccles "WH Ireland" WH Ireland Limited "0.9p Deferred Shares" deferred shares of 0.9p each in the capital of the Company "99p Deferred Shares" deferred shares of 99p each in the capital of the Company. 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