TIDMOMH
RNS Number : 4692U
Osmetech PLC
25 June 2009
Osmetech plc ('Osmetech' or the 'Company')
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
PLACING OF 262,035,353 NEW ORDINARY SHARES
Introduction
Osmetech plc announces today that it and Canaccord Adams have placed
262,035,353 new Ordinary Shares at 2p per share with certain of the Company's
shareholders and new investors. The Placing will raise gross proceeds for the
Company of GBP5.2 million (US$8.6 million). The Placing Shares represent 29.4
per cent. of the existing issued share capital of the Company. As a result of
the Placing, Efficacy Biotech Master Fund Limited and its affiliates, Gartmore
and Schroder plc will, when taken together with their existing shareholdings in
the Company, own 26.6 per cent., 19.3 per cent. and 12.4 per cent. respectively
of the Enlarged Share Capital of the Company.
New investors include Christopher Gleeson, former President and Chief Executive
Officer of Ventana Medical Systems, Inc. ('Ventana'), the world's leading
supplier of automated diagnostic systems to the anatomical pathology market,
which was acquired by Roche in 2008 for $3.4 billion. Until recently Mr Gleeson
was also a member of the Board of Roche Diagnostics. Mr Gleeson has agreed to
subscribe for $1 million in the Placing. The Board intends to appoint Mr.
Gleeson as Non-Executive Chairman of the Company on 1 July 2009.
Canaccord Adams has agreed conditionally, pursuant to the Placing Agreement, to
seek to place 71,602,683 of the Placing Shares at the Placing Price. The
remaining 190,432,670 Placing Shares are being placed directly by the Company
with investors in the United States. The Placing has not been underwritten. The
Placing Shares are expected to be admitted to AIM on or about 26 June 2009. This
Announcement sets out further information on the Company and the background to
and reasons for the Placing.
Definitions used in this Announcement are set out at the end of this
Announcement.
Background to and Reasons for the Placing
As at 31 May 2009, the Group's cash balances stood at approximately GBP1,031,000
($1,666,000), sufficient to support the business until early July 2009, in line
with the guidance given in the 2008 Annual Report sent to shareholders on 2
April 2009. Without an immediate injection of further funding, the Company would
not be in a position to continue to trade.
The Board has been able to secure funding from Efficacy Biotech Master Fund
Limited and its Affiliates, Gartmore and Schroder plc, the Company's principal
shareholders, and from certain new investors in the United States. In view of
the time and cost associated with the production of a prospectus, the Board is
unable to make a general offer available to shareholders through a rights issue
or other pre-emptive offer.
Current Trading and Prospects
Revenues for the five months ended 31 May 2009 were $349,636 (GBP241,580), an
increase of 63 per cent. over revenues of $214,656 (GBP108,757) for the
corresponding period in 2008. Revenues were principally from sales of the
Company's eSensor Cystic Fibrosis Carrier Detection Test for use on the eSensor
4800 System, together with a growing contribution from sales of its eSensor
Warfarin Sensitivity Test for use on its second generation eSensor XT-8
platform.
The installed base of instruments with customers has continued to grow. At 31
December 2008 there were 34 evaluation or revenue generating contract units at
customer sites, increasing to 49 at the end of March 2009 and 58 at 24 June
2009. This rate of progression compares very favourably to the competition, with
Osmetech continuing its excellent conversion rate of customers from the
evaluation phase to a revenue generating contract. The eSensor XT-8 platform's
ease of use and 100% system performance is being recognised by an increasing
number of potential customers illustrated by the selection of Osmetech's
Warfarin Sensitivity Test and eSensor XT-8 molecular diagnostics instrument
platform for use at ten of the twelve sites for a major new 1,238 patient US
trial, examining the utility of using genetic information for warfarin dosing,
sponsored by the US National Heart, Lung, and Blood Institute (NHLBI) part of
the National Institutes of Health (NIH) in the US.
Further commercial progress is expected in the second half of 2009 as eSensor
XT-8 product revenues increase from a broader customer base and a rapidly
growing test menu comprising Warfarin Sensitivity, Extended Warfarin
Sensitivity, 2C9 Genotyping, Cystic Fibrosis Carrier Detection, Factor II,
Factor V and MTHFR venous thrombosis and a Respiratory Pathogen Test Panel.
Use of Proceeds
The issue of the Placing Shares will raise approximately GBP5.1 million ($8.4
million) net of estimated expenses for the Company.
The Company intends to use the net proceeds of the Placing for the following
purposes:
* to continue the development and obtain regulatory clearance for further tests
for the eSensor XT-8 System;
* to fund sales, marketing and service personnel and marketing initiatives in
connection with further placements of eSensor XT-8 Systems and launches of new
tests;
* additional working capital, general corporate purposes and to explore
opportunities to expand its current business through strategic alliances and
licenses with other businesses.
The expected use of the net proceeds of the placing of the Placing Shares
referred to above represents the Directors' current intentions based on the
Company's present plans and business condition. The Company will retain broad
discretion in the allocation and use of the net proceeds. Assuming that no
further funds are raised by the Company, either through capital, licensing,
collaborations or other commercial activities, the net proceeds of the placing
of the Placing Shares are expected to provide sufficient funds to support the
business at least to the end of 2009.
Strategy
The Company's overall objective is to continue to expand the use of its eSensor
platform by providing a growing menu of tests on an easy-to-use, fast and
cost-effective platform. To achieve this objective, the Company intends to
broaden its menu of tests and build an installed base of customers. The Company
is focussing its efforts upon the development and launch of new tests outlined
above for launch in 2009, with further planned tests described below.
* 2C19 Plavix Test for metabolism of the anti-platelet drug Plavix (Clopidogrel).
This test is currently in development and the Company expects to submit an
application for FDA 510(k) clearance if and when development is completed. The
FDA has recently updated the label for Plavix, stating that CYP2C19 poor
metabolizer status is associated with diminished response to Clopidogrel, and an
increased risk of heart attack for such patients. It further notes that
pharmacogenetic testing can identify genotypes associated with variability in
CYP2C19 activity.
* KRAS Test for the analysis of the k-ras gene mutation status in patients with
colorectal cancer. K-ras mutations have been shown to be predictive biomarkers
that can help identify patients with metastatic colon cancer who are more likely
to respond to treatment. This test is currently in development and the Company
intends to submit an application for FDA 510(k) clearance if and when
development is completed.
* Tamoxifen Sensitivity Test for metabolism of the breast cancer drug Tamoxifen.
This test is currently in development and the Company expects to submit an
application for FDA 510(k) clearance if and when development is completed.
* 2D6 Drug Metabolism Test for CYP2D6 biomarkers associated with metabolism of a variety of prescription drugs including antipsychotics, anti-depressants and anti-thrombolytics. This test is currently in development and the Company expects to submit an application for FDA 510(k) clearance if and when development is completed.
Notwithstanding the receipt of the net proceeds of the Placing, the Board is
considering all strategic options to maximise shareholder value, including
attracting further funding into the business, either through investors or
commercial partners, a merger of the business with a complementary third party
business, or the sale of the Company.
Board Structure
With effect from 1 July 2009, it is anticipated that the following changes to
the board of Osmetech will become effective. Christopher Gleeson will become
non-executive chairman of the Company and Jon Faiz Kayyem will become vice
chairman and will remain as a non-executive director.
Christopher Gleeson, aged 59, became president and CEO and a director of Ventana
Medical Systems, Inc. in May, 1999. He joined Ventana in March, 1999, as
executive vice-president and chief operating officer. Prior to joining Ventana,
Mr. Gleeson was senior vice-president of Bayer Diagnostics and general manager
of the U.S. commercial operations for Chiron Diagnostics, and prior to that, the
founder, owner, and managing director of Australian Diagnostics Corporation, a
leading diagnostics company in Australia. Following the acquisition of Ventana
by Roche in February 2008 and until the end of that year, Mr. Gleeson continued
as CEO of Ventana and a member of the Board of Roche Diagnostics. Mr. Gleeson
attended the Pharmacy and Business Schools at Monash University in Australia.
Save as set out below there are no further details in relation to the above
appointment which require disclosure under paragraph (g) of schedule 2 of the
AIM Rules.
Current Directorships and Partnerships
None
Past Directorships and Partnerships
Director Ventana Medical Systems Inc
Member of the Board, Roche Diagnostics
Related Party Transaction
Efficacy Biotech Master Fund Limited, Gartmore and Schroder plc, who are all
participating in the Placing at the Placing Price, are considered to be
Substantial Shareholders under the AIM Rules and as a result are considered to
be Related Parties for the purposes of the AIM Rules. The Directors consider,
having consulted with the Company's nominated adviser, Canaccord Adams, that the
terms of the Placing with Efficacy Biotech Master Fund Limited, Gartmore and
Schroder plc are fair and reasonable insofar as the shareholders of the Company
are concerned. In arriving at this view the Directors have had regard to the
Company's financial position. The shareholdings of Efficacy Biotech Master Fund
and its Affiliates, Gartmore and Schroder plc prior to, and after the placing of
the Placing Shares are set out below:
+---------------+---------------+---------------+---------------+---------------+
| | At the date of this | Immediately following the |
| | announcement | Placing |
+---------------+-------------------------------+-------------------------------+
| | Number of | % of issued | Number of | % of issued |
| | Ordinary |share capital | Ordinary |share capital |
| | Shares held | | Shares held | |
+---------------+---------------+---------------+---------------+---------------+
| Efficacy | 299,582,742 | 33.60 | 307,200,049 | 26.63 |
| Biotech | | | | |
| Master Fund | | | | |
| Limited and | | | | |
| its | | | | |
| Affiliates | | | | |
+---------------+---------------+---------------+---------------+---------------+
| Gartmore | 189,298,177 | 21.23 | 222,814,326 | 19.31 |
+---------------+---------------+---------------+---------------+---------------+
| Schroder plc | 112,507,793 | 12.62 | 142,977,020 | 12.39 |
+---------------+---------------+---------------+---------------+---------------+
Options and Warrants
Conditional upon completion of the Placing, the Board intends to award the
following share options to members of the Board:
+--------------------------+--------------------------+--------------------------+
| Name | Number of Shares |Exercise Price per share |
+--------------------------+--------------------------+--------------------------+
| Christopher Gleeson | 5,768,213 | 2p |
+--------------------------+--------------------------+--------------------------+
| Jon Faiz Kayyem | 5,768,213 | 2p |
+--------------------------+--------------------------+--------------------------+
| Daryl Faulkner | 5,768,213 | 2p |
+--------------------------+--------------------------+--------------------------+
The options will vest over a period of three years provided that the individuals
remain as directors of the Company.
Conditional upon completion of the Placing, the Board proposes to award the
following warrants to Christopher Gleeson:
Warrant A
+--------------------------------------+--------------------------------------+
| Number of Ordinary Shares | Exercise Price per share |
+--------------------------------------+--------------------------------------+
| 30,469,226 | 2p |
+--------------------------------------+--------------------------------------+
Warrant A will be exercisable whilst Christopher Gleeson remains a Director up
until the earlier of 30 June 2012, the 60th day following the date upon which
Christopher Gleeson leaves the Board and the conclusion of a financing of an
amount of US$20 million or more following the issue of the Placing Shares.
Warrant B
+--------------------------------------+--------------------------------------+
| Number of Ordinary Shares | Exercise Price per share |
+--------------------------------------+--------------------------------------+
| 20,312,817 | 3p |
+--------------------------------------+--------------------------------------+
Warrant B will be exercisable up until the earlier of 30 June 2012 and the 60th
day following the date upon which Christopher Gleeson leaves the Board.
James White, Osmetech Chief Executive, commented today:
"I am delighted with the support that we have received for the Placing from our
principal shareholders and from certain new investors, which demonstrates the
belief that our supporters have for our business model, our technology and our
products. I am also delighted to welcome Christopher Gleeson to the Board as our
new Chairman and I look forward to working with him as we continue to capitalize
on the opportunity for Osmetech's market leading technology."
Contacts
For further information contact:
Osmetech plc: +44 (0) 20 7849 6027
James White, Chief Executive
David Sandilands, Finance Director
Madano Partnership: +44 (0) 207 593 4000
Matthew Moth
Mark Way
Canaccord Adams Limited:+44 (0) 20 7050 6500
Robert Finlay
Henry Fitzgerald-O'Connor
General
Canaccord Adams, which is authorised and regulated by the Financial Services
Authority, is acting exclusively for the Company and no-one else in relation to
the Placing and will not be responsible to any person other than the Company
under FSMA, the rules of the FSA or otherwise for providing the protections
afforded to its clients or for any matter concerning the Placing or for
providing advice in relation to the Placing or in relation to the contents of
this Announcement or any other transaction, arrangement or matter referred to
herein.
This Announcement is for information purposes only and does not constitute an
offer to issue or sell, or the solicitation of an offer to subscribe for or
acquire, any securities to any person in any jurisdiction, including without
limitation in the United States, Canada, Australia or Japan. This Announcement
is not an offer of securities for sale in the United States. Securities may not
be offered or sold in the United States absent registration under the Securities
Act or an exemption therefrom. The Company has not registered and does not
intend to register any of its Ordinary Shares under the Securities Act. No
Placing Shares will be offered or sold to the public in the United States.
The distribution of this Announcement in certain jurisdictions may be restricted
by law. Persons into whose possession this Announcement comes are required by
the Company and Canaccord Adams, to inform themselves about and to observe any
such restrictions.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.
DEFINITIONS
In this Announcement:
"Admission" means the admission of the Placing Shares to trading on AIM becoming
effective in accordance with the AIM Rules;
"Affiliate" means in relation to a person (the "first person") each of its
holding companies, subsidiaries, branches, associated undertakings and
affiliates (affiliates having the meaning given in Rule 405 or in Rule 501(b) of
the Securities Act, as applicable in the context used) (including, without
limitation, joint venture partners) from time to time (and subsidiaries of any
such subsidiaries, branches, associated undertakings, affiliates and holding
companies) (including, without limitation, joint venture partners) and each of
their and the first person's respective officers, directors, supervisory board
members, employees, representatives, controlling persons, shareholders and
agents from time to time;
"AIM Rules for Companies" means the AIM Rules for Companies published by London
Stock Exchange;
"AIM Rules for Nominated Advisers" means the AIM Rules for Nominated Advisers
published by London Stock Exchange;
"AIM Rules" means together, the AIM Rules for Companies and the AIM Rules for
Nominated Advisers, both published by London Stock Exchange governing admission
to and the operation of AIM;
"AIM" means the AIM market of the London Stock Exchange;
"Announcement" means this announcement;
"Board" or "Directors" means the board of directors of the Company;
"Canaccord Adams" means Canaccord Adams Limited;
"Company" or "Osmetech" means Osmetech plc;
"Enlarged Share Capital" means the issued share capital of the Company as
enlarged by the issue of the Placing Shares;
FDA" means the US Food and Drug Administration;
"FSA" means the Financial Services Authority;
"FSMA" means the Financial Services and Markets Act 2000, as amended;
"Gartmore" means Gartmore Investment Ltd and Gartmore Fund Managers Limited
"Group" means the Company and its subsidiaries;
"London Stock Exchange" means London Stock Exchange plc;
"Ordinary Shares" means ordinary shares of 0.10 pence each in the share capital
of the Company;
"Placing" means the placing of 190,432,670 of the Placing Shares at the Placing
Price by the Company and the placing of 71,602,683 of the Placing Shares by
Canaccord Adams on behalf of the Company;
"Placing Agreement" means the agreement dated 25 June 2009 between the Company
and Canaccord Adams relating to the Placing;
"Placing Price" means 2 pence per Placing Share;
"Placing Shares" means 262,035,353 new Ordinary Shares to be issued pursuant to
the Placing;
"Securities Act" means the US Securities Act of 1933, as amended;
"Substantial Shareholder" means as that term is defined in the AIM Rules;
"UK" or "United Kingdom" means the United Kingdom of Great Britain and Northern
Ireland;
"United States" or "US" means the United States of America, its territories and
possessions, any State of the United States and the District of Columbia;
"$" means the lawful currency of the United States; and
"GBP" means the lawful currency of the United Kingdom.
In this announcement UK Sterling amounts have been converted into US Dollars
(and vice versa) at the noon buying rate of the Federal Reserve Bank of New York
for the date specified next to such amounts or, where no date is specified, at
an exchange rate of GBP1 = $1.6410.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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