3 December 2024
CRYSTAL AMBER FUND
LIMITED
("Crystal Amber Fund" or the
"Fund")
Further investment into
Morphic Medical Inc
Crystal Amber Fund (AIM: CRS)
announces that as a part of its ongoing commitment to its portfolio
company Morphic Medical Inc ("Morphic" or "Morphic Medical"), the Fund has today
invested US$500,000 (approximately £394,000*) in Morphic Medical, taking the
total invested by the Fund in Morphic Medical in the last 12 months
to US$7 million (approximately £5.5 million*).
As announced on 31 July 2024, the
Fund has been and continues to be the sole provider of finance to
Morphic. The US$7 million invested has been provided to Morphic in
the form of unsecured interest bearing loan notes convertible into
ordinary shares in Morphic Medical ("CLNs") in cash instalments during 2024.
The Fund anticipates providing up to an additional US$4 million in
instalments as CLNs over the next few months. The investments
are to provide Morphic with capital to continue to progress its
commercial objectives, obtain regulatory approvals and to build up
inventory ahead of anticipated sales.
The CLNs accrue interest at 7.5% per
annum and are repayable on 13 January 2025, however, it is the
Fund's intention to seek the conversion of the CLNs to equity, as
well as the other loan notes it holds, on or before this date. The
CLNs and accrued interest automatically convert to equity in
Morphic upon an equity fundraising by Morphic of at least US$8
million (a "Qualifying
Fundraising") at a price determined by reference to the
price of the Qualifying Fundraising. An update on Morphic's funding
discussions is provided below and a further announcement will be
made on this and the conversion of the CLNs as
appropriate.
The Fund now holds US$25.4 million
of convertible loan notes in Morphic Medical with accrued interest
currently standing at approximately US$2.8 million. The Fund
also owns 95.3 per cent of Morphic's share capital via common
shares and preferred shares, which had an audited valuation at 30
June 2024 of approximately £60 million.
Update on Morphic Medical
In recent weeks, Morphic Medical has
continued to make commercial and regulatory progress. Pending CE
certification, 30 German hospitals applied for NUB funding for
RESET. In Germany, NUB is the reimbursement procedure for novel
drugs and devices not yet included in the German healthcare billing
system. In the UK, three substantial NHS Trusts have initiated the
economic business case for RESET. Morphic is also in
discussions with potential distributors in other European
countries.
The regulatory process continues to
advance in the US, EU and UK. Last month, Morphic received positive
feedback following the completion of the Systems Audit at its
premises in Boston, MA, USA. Prior to the final Technical Review
and expected certification by an EU designated organisation, next
month a site visit is scheduled at Morphic's appointed manufacturer
(Medical Murray Inc.).
Of late, Morphic has attracted
further interest from potential investors, including multi-billion
dollar market capitalisation medical device companies and is in
ongoing discussions regarding potential equity investment, as well
as sales and distributions agreements. There can be no certainty as
to a successful outcome of these discussions.
About Morphic Medical
MORPHIC's product, RESET, is a thin,
flexible implant that lines the proximal small intestine and mimics
gastric bypass bariatric surgery as food bypasses the duodenum and
the upper intestines. Unlike gastric bypass surgery, RESET is
reversible, minimally invasive, and temporary. It does not
permanently alter the patient's anatomy and uniquely targets the
body's own blood glucose control mechanisms. This is achieved
through a 20-minute endoscopic procedure. The patient will
typically retain the device for nine months, after which the device
is removed.
Based on Morphic Medical's latest
statutory accounts for the year ended 31 December 2023, Morphic had
not commenced sales and made a loss before tax of
US$9,124,000.
Having commissioned two independent
valuation reports on Morphic, the Fund concluded that, at 30 June
2024, Morphic was valued at US$98.8 million (approximately £77
million) on a risk-adjusted basis and on a cash free, debt free
basis.
*based on the foreign
exchange rate of US$1.268 to £1.
For further enquiries please
contact:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
www.crystalamber.com
Allenby Capital Limited - Nominated Adviser
Jeremy Porter/ Daniel
Dearden-Williams
Tel: 020 3328 5656
Winterflood Investment Trusts - Broker
Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP - Investment
Adviser
Richard Bernstein
Tel: 020 7478 9080