TIDMMTPH
RNS Number : 5848J
Midatech Pharma PLC
13 December 2022
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 2014/596/EU (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018), AS AMED. IN ADDITION, MARKET SOUNDINGS WERE TAKEN IN RESPECT
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THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
13 December 2022
Midatech Pharma PLC
("Midatech" or the "Company")
Proposed Acquisition of Bioasis Technologies Inc.
Equity Raise of US$10.0 million
Change of Name to Biodexa Pharmaceuticals PLC
Company to Remain Listed on NASDAQ; Proposed Cancellation of
Admission to Trading on AIM
and General Meeting
Midatech Pharma PLC (AIM: MTPH.L; Nasdaq: MTP), an R&D
biotechnology company focused on improving the bio-delivery and
biodistribution of medicines , is pleased to announce that the
Company has conditionally agreed to acquire the entire issued and
to be issued share capital of Bioasis Technologies Inc. ("Bioasis")
for consideration of, in aggregate, approximately C$7.4 million
(c.GBP4.4 million) (the "Acquisition") (together, the "Enlarged
Group"). The Acquisition consideration will be satisfied by the
issue of 75,884,553 new ordinary shares of 0.1 pence each in the
capital of the Company ("Ordinary Shares"), at an exchange ratio of
0.9556 Ordinary Shares for every 1 Bioasis Share (the "Exchange
Ratio").
Bioasis' lead product is Epidermal Growth Factor, which is being
developed for optic neuritis associated with multiple sclerosis
(MS). Bioasis is also developing xB3 delivery technology for
various rare and orphan neurodegenerative diseases and has entered
into licensing and co-development agreements with potential
payments, should various performance conditions and milestones be
met, totalling in excess of US$200 million plus royalties on net
sales with Chiesi Farmaceutici SpA, Prothena Corporation plc and
Neuramedy Co. Ltd. Bioasis also has a research agreement with
Janssen Pharmaceutica NV, a Johnson & Johnson subsidiary.
Highlights
-- Conditional agreement for Midatech to acquire Bioasis, a
TSX-V traded biopharmaceutical company focused on research and
development of products for the treatment of rare and orphan
diseases of the nervous system.
-- Bioasis has partnerships with pharmaceutical companies with
potential payments, should various performance conditions and
milestones be met, totalling in excess of US$200 million and the
Enlarged Group intends to focus on rare and orphan therapeutics
with two clinical stage candidates initially focused on CNS
diseases.
-- The Board believes that the Acquisition is a compelling
strategic opportunity to advance the Company's repurposed strategy
and is expected to deliver a number of key benefits to Midatech and
its shareholders, including:
o transition from a drug delivery platform-based company to a
therapeutics company;
o a focus on rare and orphan diseases, conferring advantages
such as:
-- smaller, lower cost studies;
-- higher in-market prices; and
-- marketing exclusivity for seven years and 10 years in the US
and Europe, respectively;
o less reliance on R&D collaborations and licences with
third parties;
o improved news flow including clinical data; and
o lower combined overheads.
-- Proposed change of name to Biodexa Pharmaceuticals PLC,
reflecting the Enlarged Group's rare disease therapeutics
strategy.
-- Two-stage fundraising of US$10.0 million (c.GBP8.2 million)
subject, inter alia, to Shareholder approval, in order to provide
the Enlarged Group with additional working capital and to repay
certain of Bioasis' outstanding indebtedness.
-- Proposed a cancellation of its admission to trading on AIM and retain listing on NASDAQ
Midatech is also pleased to announce a two-stage fundraising of,
in aggregate, US$10.0 million (c.GBP8.2 million) gross, comprising:
(i) gross proceeds of approximately US$0.4 million (c.GBP0.3
million) raised pursuant to a Registered Direct Offering utilising
the Company's existing share capital authorities; and (ii) gross
proceeds of approximately US$9.6 million (c.GBP7.9 million)
pursuant to a Private Placement, subject, inter alia, to
Shareholder approval, in order to provide the Enlarged Group with
additional working capital and to repay certain of Bioasis'
outstanding indebtedness.
Commenting, Stephen Stamp, CEO of Midatech, said:
"We are very pleased to be announcing the proposed acquisition
of Bioasis, together with an associated US$10 million equity
fundraising and other proposals that the Midatech board believe
presents a compelling strategic opportunity aimed at delivering
significant benefits to Midatech and its shareholders.
"By combining the two groups to create Biodexa Pharmaceuticals,
we have the opportunity to reposition the enlarged group as an
emerging biotech company focused on the development of therapeutics
for rare diseases, supported by Midatech and Bioasis' enabling drug
delivery platforms. We continue to believe there is substantial
value to be unlocked from Midatech's MTX110, particularly in our
ongoing phase I clinical trial in GBM, and to leverage our Q-Sphera
technology. In combination with Bioasis' promising development
pipeline we have the opportunity to create a much stronger group
and transition from a drug delivery platform-based company to a
therapeutics company.
"Whilst the proposals require a complex process and a number of
structural changes that will take time to complete, we strongly
believe they are in shareholder's best interests and we look
forward to making further announcements in due course. "
Proposed Acquisition of Bioasis
The Company has conditionally agreed to acquire the entire
issued and to be issued share capital of Bioasis, a TSX-V traded
biopharmaceutical company focused on research and development of
products for the treatment of rare and orphan diseases of the
nervous system, for an aggregate estimated consideration of
approximately C$7.4 (c.GBP4.4 million), based on the Exchange
Ratio. The Acquisition consideration will be satisfied by the issue
of, in aggregate, 75,884,553 new Ordinary Shares, equating to
0.9556 Ordinary Shares being issued for every outstanding Bioasis
Share. Based middle market closing price per Ordinary Share on AIM
of 5.85 pence on 12 December 2022, being the last trading day prior
to this date of this announcement, this represents a price of
C$0.09 for every Bioasis Share. The Acquisition will be implemented
by way of a statutory Plan of Arrangement in accordance with the
laws of the Province of British Columbia, Canada.
Bioasis is a corporation existing under the laws of British
Columbia and its shares are traded on the TSX-V under the stock
symbol "BTI". For its financial year ended 28 February 2022,
Bioasis reported losses of C$2.96 million and had net liabilities
of C$1.92 million.
The Acquisition is conditional, inter alia, upon the Arrangement
being approved by the Court and the Bioasis Securityholders, the
Private Placement and the approval by Existing Shareholders of the
Resolutions at the Company's General Meeting, including the
cancellation of admission to trading of the Ordinary Shares on AIM,
expected to be held in Q1 2023.
With effect from the AIM Cancellation, Sijmen de Vries will
resign as a Director of the Company and Deborah Rathjen and Mario
Saltarelli will be appointed as Directors of the Company.
Fundraising
Midatech is also pleased to announce a two-stage fundraise of
approximately US$10.0 million (c.GBP8.2 million) gross proceeds,
comprising of: (i) gross proceeds of approximately US$0.4 (c.GBP0.3
million) raised pursuant to the Registered Direct Offering in the
United States utilising the Company's existing share capital
authorities, via the issuance of 9,849,325 new Ordinary Shares at a
price of approximately 3.3 pence per Ordinary Share (equivalent to
393,973 new ADSs (the "Registered ADSs") at a price of US$1.00 per
ADS); and (ii) gross proceeds of approximately US$9.6 million
(c.GBP7.9 million) pursuant to the Private Placement, via the
issuance of 14,602,050 new Ordinary Shares (equivalent to 584,082
new ADSs, the "Unregistered ADSs"); 9,021,945 pre-funded warrants
to purchase 9,021,945 ADSs; 10,000,000 A Warrants to purchase up to
10,000,000 ADSs; and 10,000,000 B Warrants to purchase up to
10,000,000 ADSs.
Under the terms of the Private Placement the Company will issue
Units to the Placee, at the Placing Price, comprising: (i) one new
ADS (equivalent to 25 new Ordinary Shares); and (ii) approximately
1.04 A Warrants and approximately 1.04 B Warrants; or, in lieu of
an ADS, if the Placee so chooses, one Pre-Funded Warrant. The
Placing Price is equal to US$1.00 per Unit and US$0.999 per
Pre-Funded Warrant.
The Registered Direct Offering is expected to close on or around
15 December 2022, subject to customary closing conditions. The
Private Placement is conditional upon, inter alia, completion of
the Acquisition, Shareholders approving the Resolutions, as well as
the Bioasis Shareholders approving the Acquisition Resolutions, and
granting of the Final Order. The Registered Direct Offering and
Private Placement is being effected with Armistice Capital (the
"Placee").
Midatech intends to use the net proceeds raised under the
Registered Direct Offering and its existing cash resources to loan
to Bioasis the sum of US$0.75 million (c.GBP0.61 million) to assist
in the short term with Bioasis' working capital requirements.
The net proceeds of the Private Placement will be approximately
US$8.6 million (c.GBP7.0 million) which the Company intends to
utilise to: (i) pay off a portion of the Lind Debt (as defined
below); and (ii) support the Enlarged Group's business plan.
The A Warrants and the B Warrants will become exercisable on the
date that such warrants are issued and will each be exercisable at
an exercise price of US$1.00 per ADS. The A Warrants will expire
one year from the date that such warrants are issued and may be
exercised on a cashless basis if six months after issuance there is
no effective registration statement registering the Ordinary Shares
(in the form of ADSs) to be issued in connection with the A
Warrants. The B Warrants will expire six years from the date that
such warrants are granted and may be exercised on a cashless basis
if six months after issuance there is no effective registration
statement registering the Ordinary Shares (in the form of ADSs) to
be issued in connection with the B Warrants. The Pre-Funded
Warrants will become exercisable on the date that the Pre-Funded
Warrants are issued and will be exercisable at an exercise price of
US$0.001 per ADS. Each Pre-Funded Warrant will be exercisable into
25 new Ordinary Shares (or one ADSs). The Pre-Funded Warrants shall
remain exercisable until exercised in full and may be exercised on
a cashless basis.
The Placee may not exercise the Placing Warrants and/or the
Pre-Funded Warrants if the Placee, together with its affiliates or
any person with whom it is acting in concert under the Takeover
Code, would beneficially own more than 9.99% of the number of
Ordinary Shares outstanding immediately after giving effect to such
exercise. Furthermore, the Placee will be subject to certain
restrictions pursuant to the Securities Purchase Agreement in
relation to the number of Ordinary Shares (as represented by ADSs)
meaning that the Placee, together with any affiliates or any person
with whom it is acting in concert under the Takeover Code, cannot
hold directly or indirectly in excess of 29.9% of the number of
Ordinary Shares outstanding at any time.
Pursuant to the terms of the Securities Purchase Agreement,
until the 18 month anniversary of Completion, upon any issuance by
the Company or any of its subsidiaries of Ordinary Shares or
Ordinary Share equivalents, for cash consideration, indebtedness,
or a combination of units thereof (a "Subsequent Financing"), the
Placee will have the right to participate in up to an amount of the
Subsequent Financing equal to 25% of the Subsequent Financing on
the same terms, conditions and price provided for in the Subsequent
Financing, subject to certain exceptions.
Ladenburg Thalmann & Co. Inc. is acting as the exclusive
placement agent for the Registered Direct Offering and the Private
Placement.
The Registered ADSs described above (but not the Unregistered
ADSs, Warrants or the ADSs underlying the Warrants) are being
offered pursuant to a shelf registration statement (File No.
333-267932) which became effective on 26 October 2022. The
Registered ADSs may be offered only by means of a prospectus
supplement that forms a part of the effective registration
statement. A prospectus supplement and the accompanying prospectus
relating to the Registered Direct Offering will be filed with the
SEC. Electronic copies of the prospectus supplement and the
accompanying prospectus may be obtained, when available, from the
SEC's website at http://www.sec.gov or from Ladenburg Thalmann
& Co. Inc., at Attn: Prospectus Department, 640 Fifth Avenue,
4th Floor, New York, NY 10019 or by e-mail at
prospectus@ladenburg.com.
Pursuant to a registration rights agreement with the Placee, the
Company has agreed to file one or more registration statements with
the SEC covering the resale of the securities sold in the Private
Placement.
Subject to, inter alia, shareholder approval, the Company will
also issue 20,630,531 new Ordinary Shares to Lind in consideration
of the repayment of certain of the Lind indebtedness pursuant to
the Bioasis Convertible Security Agreement, and 27,863,856 new
Ordinary Shares to Ladenburg in consideration for fees of US$2
million owed by Bioasis to Ladenburg pursuant to the Bioasis
Investment Banking Agreement.
Following completion of the Acquisition and the Private
Placement, the interests of the Bioasis Shareholders, the Placee
and Lind in the securities of the Company are set out in the table
below:
Ordinary Undiluted Pre-Funded Existing Maximum Existing Fully Diluted
Shares percentage Warrants Warrants, number Options
of (over A Warrants, of / New Options
Enlarged Ordinary B Warrants, Cresence
Issued Shares) Placement Shares
Share Agent that may
Capital Warrants, be issued
following Ladenburg pursuant
Completion Fee Warrants to the
(over Ordinary Cresence
Shares) Amendment
Agreement
In issue
at the date 3,007,197
of the (Existing
Announcement 98,493,413 39.8% - 17,226,053 - Options) 118,726,663 13.1%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Ordinary
Shares issued
pursuant
to the
Registered
Direct Offering 9,849,325 4% - - - - 9,849,325 1.1%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
In issue
following 3,007,197
Registered (Existing
Direct Offering 108,342,738 43.8% - 17,226,053 - Options) 128,575,988 14.1%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Bioasis
Securityholders
holdings
following 8,481,459
Completion 75,884,553 30.7% - 21,285,497 - (New Options) 105,651,509 11.6%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Cresence
Founders - - - - 5,733,337 - 5,733,337 0.6%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Lind holdings
following
Completion 20,630,531 8.3% - 41,261,062 - - 61,891,593 6.8%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Placee holdings
following
Completion 14,602,050 5.9% 225,548,625 500,000,000 - - 514,602,050 56.6%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
Ladenburg
holdings
following
Completion 27,863,856 11.3% - 65,333,739 - - 93,197,595 10.2%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
TOTAL FOLLOWING
COMPLETION 247,323,728 100% 225,548,625 645,106,352 5,733,337 11,488,656 909,652,073 100.0%
------------- ----------- ------------ --------------- ---------- -------------- ------------- -------
* The Placee may not exercise the Placing Warrants if the
Placee, together with its affiliates, would beneficially own more
than 9.99% of the number of Ordinary Shares outstanding immediately
after giving effect to such exercise.
Current Financial Position
The Company's cash balance as at 30 June 2022 was approximately
GBP6.4 million which was expected to be sufficient to fund
operations into the first quarter of 2023. Midatech's current cash
balance is approximately GBP3.6 million. Following the Company's
receipt of the net proceeds from the Registered Direct Offering and
Midatech's issue of the loan to Bioasis, Midatech expects its cash
resources to remain sufficient to fund operations, in the event
that the Acquisition does not proceed, to mid-March 2023.
Accordingly, should the Private Placement not be completed, the
Company would need to seek urgently alternative sources of funding.
There can be no guarantee that the Company will be able to find
alternative sources of potential funding, which may or may not be
on similar commercial terms, and may not be obtainable on a timely
basis, or at all. If the Private Placement does not proceed, it is
likely that the Company would be unable to continue to develop and
commercialise any of its assets and may not be able to continue as
a going concern. If any alternative sources of potential funding
are not available, the Directors believe that it is likely that the
Company would be forced to enter into administration processes
shortly after the forthcoming General Meeting.
ACCORDINGLY, EXISTING SHAREHOLDERS ARE ENCOURAGED TO VOTE IN
FAVOUR OF THE PROPOSALS AS THE BOARD INT TO DO IN RESPECT OF THEIR
SHAREHOLDINGS AT THE TIME OF THE GENERAL MEETING.
Loan to Bioasis
As stated above, Midatech intends to use the net proceeds raised
under the Registered Direct Offering and its existing cash
resources to loan US$0.75 million (the "Loan Amount") pursuant to
the terms of the Bioasis Promissory Note, to assist in the short
term with Bioasis' working capital requirements. Pursuant to the
terms of the Bioasis Promissory Note, Bioasis will pay the Company
the Loan Amount on the earliest of (each, as applicable, the
"Bioasis Maturity Date") (a) the occurrence of an Event of Default
(as defined in the Bioasis Promissory Note); (b) Completion; and
(c) 30 June 2023. Interest is payable on the Loan Amount (including
any overdue interest) at a rate of 2.00% per month or, from and
after the Bioasis Maturity Date, at a default rate of 15.00% per
annum.
Proposed cancellation of admission to trading on AIM
The Board has decided to propose the AIM Cancellation for the
following reasons:
-- an increasingly smaller proportion of the trading in the
Company's Ordinary Shares is being conducted on AIM compared to
NASDAQ and a continuation of the decline in this proportion would
be likely to lead to a decrease in the liquidity of the Ordinary
Shares trading on AIM;
-- the AIM Cancellation is expected to further enhance the
liquidity of trading in the Company's securities by combining on a
single trading facility, NASDAQ, the volume of existing
transactions from both NASDAQ and AIM;
-- a NASDAQ-only listing structure provides for a streamlined
operation that showcases the global nature of the Company and
places it more clearly within the ranks of international
therapeutics companies that are its true peers;
-- the cost of complying with the AIM Rules for Companies and
maintaining a quotation on AIM is duplicative of that for complying
with the NASDAQ Rules and the Company sees advantages in terms of
reducing its cost base as it progresses its clinical programmes and
commercial strategy;
-- internal financial and legal staff's time spent on compliance
with the AIM Rules for Companies is duplicative of that required
for compliance with the NASDAQ Rules; and
-- ADSs representing the Company's Ordinary Shares will still be tradeable on NASDAQ.
Accordingly, in order to save costs and concentrate trading
volume on a single market, the Directors believe that it is no
longer in the best interests of the Company or its Shareholders as
a whole for the Company to retain admission of its Ordinary Shares
to trading on AIM and the AIM Cancellation will therefore be
proposed as a special resolution at the General Meeting.
As at 12 December 2022, being the latest practicable date prior
to the date of this announcement, approximately 44% of Company's
Existing Ordinary Shares were represented by ADSs tradeable on
NASDAQ. Following Completion, approximately 80% of the Company's
Enlarged Share Capital would be represented by ADSs. Historically,
trading volumes of ADSs on NASDAQ have been higher than equivalent
trading volumes on AIM. All Shareholders who have not already
deposited their Ordinary Shares for delivery of ADSs are currently
able to do so at any time.
In order to facilitate the transition to a sole listing on
NASDAQ, the Company is providing an opportunity for Shareholders to
deposit their Ordinary Shares with the Depositary Bank in exchange
for delivery of ADSs prior to the AIM Cancellation becoming
effective.
The ADSs will continue to be traded on NASDAQ and the Company
has no intention to cancel the listing of its ADSs on the
NASDAQ.
Proposed change of name
To reflect the business of the Enlarged Group, the Board is
proposing to change the name of the Company to Biodexa
Pharmaceuticals PLC, which will be put forward as a special
resolution at the forthcoming General Meeting.
Letters of intent
The Company has received letters of intent from certain Existing
Shareholders (including CMS Medical Venture Investment (HK) Limited
and A&B (HK) Company Limited) to vote in favour of the
Resolutions in respect of a total 17,926,169 Ordinary Shares
representing, in aggregate, approximately 18.2% of the Ordinary
Shares in issue on 12 December 2022 (being the latest practicable
date prior to this announcement).
General Meeting
Due to the certain timings for the Acquisition as prescribed by
Canadian laws, a circular and a notice convening the General
Meeting is expected to be published by the Company in the next two
to three weeks. The General Meeting is expected to be held no later
than 28 February 2023. The Company will seek authority from
Shareholders, inter alia, to: (i) allot the Transaction Shares and
the Warrant Shares that will be issuable upon exercise of the New
Warrants; (ii) cancel the admission to trading on AIM of the
Ordinary Shares; (iii) change the Company's name to Biodexa
Pharmaceuticals PLC; and (iv) to adopt the New Articles.
Expected timetable of principal events
Expected date that the Interim No later than 13 January 2023
Order of the Supreme Court of
British Columbia in connection
with the Plan of Arrangement
will be obtained
Expected date for publication Early-January 2023 and in any
and posting of the Circular event no later than 3 February
and related materials to Shareholders 2023
Expected date for publication Early-January 2023 and in any
and posting of the Bioasis Circular event no later than 3 February
and related materials to Bioasis 2023
Securityholders
Expected date of General Meeting No later than 28 February 2023
Expected date of Bioasis Special No later than 28 February 2023
Meeting
Admission and total voting rights
Application will be made for the admission of the 9,849,325 new
Ordinary Shares, being issued pursuant to the Registered Direct
Offering, to trading on the AIM market of the London Stock Exchange
plc ("Admission"), which is expected to become effective and
trading commence at 8.00 a.m. on or around 19 December 2022. The
new Ordinary Shares will rank pari passu with the existing Ordinary
Shares.
The Company's enlarged issued share capital following Admission
will comprise 247,323,728 Ordinary Shares each with voting rights.
The Company does not hold any shares in treasury. This figure of
247,323,728 may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change in their
interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.
Additional information
Further information of the proposal is set out in the appendix
to this announcement, and will be included in the Circular
convening the General Meeting to be sent to Shareholders in due
course.
For more information, please contact :
Midatech Pharma PLC
Stephen Stamp, CEO
Tel: +44 (0)29 20480 180
www.midatechpharma.com
Strand Hanson Limited (Nominated Adviser)
James Dance / Matthew Chandler / Rob Patrick
Tel: +44 (0)20 7409 3494
Turner Pope Investments (TPI) Ltd (Broker)
Andrew Thacker / James Pope (Corporate Broking)
Tel: +44 (0)20 3657 0050
IFC Advisory Limited (Financial PR and UK Investor Relations)
Tim Metcalfe / Graham Herring
Tel: +44 (0)20 3934 6630
Email: midatech@investor-focus.co.uk
Edison Group (US Investor Relations)
Alyssa Factor
Tel: +1 (860) 573 9637
Email: afactor@edisongroup.com
About Midatech Pharma PLC
Midatech Pharma PLC (currently dual listed on AIM: MTPH; and
NASDAQ: MTP) is a drug delivery technology company focused on
improving the bio-delivery and bio-distribution of medicines. The
Company combines approved and development medications with its
proprietary and innovative drug delivery technologies to provide
compelling products that have the potential to powerfully impact
the lives of patients.
The Company has developed three in-house technology platforms,
each with its own unique mechanism to improve delivery of
medications to sites of disease. All of the Company's technologies
have successfully entered human use in the clinic, providing
important validation of the potential for each platform:
-- Q-Sphera(TM) platform: a disruptive micro-technology used for
sustained release to prolong and control the release of
therapeutics over an extended period of time (from weeks to
months).
-- MidaSolve(TM) platform: an innovative nanotechnology used to
dissolve insoluble drugs so that they can be administered in liquid
form directly and locally into tumours.
-- MidaCore(TM) platform: a leading-edge nanotechnology used for
targeting medications to sites of disease.
The platform nature of its technologies offers the potential to
develop multiple drug assets rather than being reliant on a limited
number of programmes. Midatech's technologies are supported by 36
patent families including 120 granted patents and an additional 70
patent applications. Midatech's headquarters and R&D facility
is in Cardiff, UK. For more information please visit
www.midatechpharma.com.
Forward-Looking Statements
Certain statements in this announcement may constitute
"forward-looking statements" within the meaning of legislation in
the United Kingdom and/or the United States Private Securities
Litigation Reform Act. All statements contained in this
announcement that do not relate to matters of historical fact
should be considered forward-looking statements.
In certain cases, forward-looking statements can be identified
by the use of words such as "plans", "expects" or "does not
anticipate", or "believes", or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved". In particular, this news release contains
forward-looking information pertaining to the following: statements
regarding the Arrangement, including with respect to the benefits
of the Arrangement and expectations regarding the combined company
(including its drug delivery technologies and their progress
towards approval and commercialization, its market presence and
financial condition); the timing of key Arrangement milestones and
closing; the ability of Midatech and Bioasis to satisfy the
conditions to and to complete the Arrangement, the Registered
Direct Offering and the Private Placement; and expectations
regarding the impact of the Arrangement on Midatech and Bioasis
including in respect of anticipated financial and operating
results, strategy and business, and on stakeholders in general.
Forward-looking statements and information are subject to various
known and unknown risks and uncertainties, many of which are beyond
the ability of Midatech to control or predict, that may cause their
actual results, performance or achievements to be materially
different from those expressed or implied thereby, and are
developed based on assumptions about such risks, uncertainties and
other factors set out herein, including but not limited to: the
satisfaction of the conditions precedent to the closing of the
Arrangement (including the obtaining of all shareholder, court, and
regulatory approvals and completion of the Registered Direct
Offering and Private Placement); risks associated with the
Arrangement and acquisitions generally; the Arrangement Agreement
may be terminated in certain circumstances; Midatech will incur
costs even if the Arrangement is not completed; all necessary
approvals and consents may not be obtained; uncertainty regarding
the ability of the parties to complete all Arrangement milestones
on the intended timing; and other related risks and
uncertainties.
Reference should be made to those documents that Midatech shall
file from time to time or announcements that may be made by
Midatech in accordance with the London Stock Exchange's AIM Rules
for Companies ("AIM Rules"), the Disclosure and Transparency Rules
("DTRs") and the rules and regulations promulgated by the US
Securities and Exchange Commission, which contains and identifies
other important factors that could cause actual results to differ
materially from those contained in any projections or
forward-looking statements. These forward-looking statements speak
only as of the date of this announcement. All subsequent written
and oral forward-looking statements by or concerning Midatech are
expressly qualified in their entirety by the cautionary statements
above. Except as may be required under the AIM Rules or the DTRs or
by relevant law in the United Kingdom or the United States,
Midatech does not undertake any obligation to publicly update or
revise any forward-looking statements because of new information,
future events or otherwise arising.
DEFINITIONS
"Act" the Companies Act 2006, as amended from time to time;
"Acquisition" the proposed acquisition of all of the outstanding
and issued Bioasis Shares and the assumption of the Bioasis
Warrants and the Bioasis Options by the Company to be implemented
by way of the Arrangement;
"Acquisition Proposal" means any offer, proposal or indication
of interest from any person or group of persons (other than by
Bioasis, or its affiliates on the one hand or the Company and its
affiliates on the other), contemplating or which might reasonably
be interpreted to lead to the contemplation of an Acquisition
Transaction for such party;
"Acquisition Resolutions" means the special resolution of
Bioasis Securityholders approving the Plan of Arrangement in
accordance with subsection 289(1) of the BCBCA and the Interim
Order;
"Acquisition Transaction" means any transaction or series of
transactions, other than the Transactions, involving:
(a) any acquisition, consolidation, amalgamation, share exchange, business combination, issuance of securities, acquisition of securities, tender offer, exchange offer, liquidation, dissolution or other similar transaction (i) in which Bioasis or the Company (or any of their respective subsidiaries) is a constituent corporation, (ii) in which a person or "group" of persons directly or indirectly acquires beneficial or record ownership of securities representing more than 20% of the outstanding securities of any class of voting securities of Bioasis or the Company (and any of their respective subsidiaries), in each case as reflected on the most recently filed financial statements of such party, or (iii) in which Bioasis or the Company (or any of their respective subsidiaries) issues securities representing more than 20% of the outstanding securities of any class of voting securities of any such person (other than as contemplated under this Agreement); or
(b) any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or assets that constitute or account for 20% or more of the consolidated net revenues, net income or assets of Bioasis or the Company (or any of their respective subsidiaries);
"Admission" the admission to trading on AIM of the Transaction
Shares;
"ADSs" American Depositary Shares of the Company listed on
NASDAQ, each of which represents 25 Ordinary Shares (and each
evidenced by way of a depository receipt (ADR));
"AIM" AIM, a market operated by the London Stock Exchange;
"AIM Cancellation" the proposed cancellation of admission of the
Ordinary Shares to trading on AIM;
"AIM Rules" the AIM Rules for Companies published by the London
Stock Exchange, as amended from time to time;
"Announcement" this announcement made by the Company on 13
December 2022 relating to, inter alia, the Registered Direct
Offering and the Transactions;
"Arrangement" the arrangement of Bioasis under Part 9, Division
5 of the BCBCA on the terms and subject to the conditions set forth
in the Plan of Arrangement, subject to any amendments or variations
to the Plan of Arrangement made in accordance with the terms of the
Arrangement Agreement and the Plan of Arrangement or made at the
direction of the Court in the Final Order with the prior written
consent of Midatech and Bioasis, such consent not to be
unreasonably withheld, conditioned or delayed;
"Arrangement Agreement" the conditional agreement dated 13
December 2022 between Midatech and Bioasis setting out the terms
and conditions of the Arrangement in relation to the
Acquisition;
"Articles" the articles of association of the Company in force
at the date of this Document;
"Assumption Agreement" the assumption agreement to be entered
into between the Company, Bioasis and Lind immediately following
Completion whereby the Company shall assume Bioasis' debt,
obligations and liabilities under the Bioasis Convertible Security
Agreement (as amended);
"A Warrants" the 11,939,775 new warrants to be granted in
connection with the Private Placement, the Lind Debt Warrants and
the Ladenburg Fee Warrants with an expiration date of 12 months
from the date that such warrants are granted pursuant to the terms
of a warrant instrument to be adopted by the Company;
"BCBCA" the British Columbia Business Corporations Act and the
regulations thereto, now in effect and as it may be amended from
time to time;
"Bioasis" Bioasis Technologies Inc., a corporation existing
under the laws of British Columbia, Canada and having its
registered office at Suite 1600 Cathedral Place, 925 W Georgia St,
Vancouver, BC V6C 3L2;
"Bioasis Articles" the articles of Bioasis;
"Bioasis Circular" the notice of the Bioasis Special Meeting to
be sent to Bioasis Securityholders, and the accompanying management
information circular prepared in connection therewith, together
with any amendments thereto or supplements thereof;
"Bioasis Convertible Securities" the convertible securities of
Bioasis, including the Lind Warrants, as issued pursuant to the
terms of the Bioasis Convertible Security Agreement;
"Bioasis Convertible the convertible security funding agreement
Security Agreement" dated 22 June 2021 by and among Bioasis
and Lind relating to the Bioasis Convertible
Securities, as amended on 13 December 2022;
"Bioasis Group" Bioasis and its existing subsidiaries and
subsidiary undertakings;
"Bioasis Investment Banking the investment banking agreement between
Agreement " Bioasis and Ladenburg dated 15 December
2021, as amended on or around 7 December
2022;
"Bioasis Material Adverse Effect" any change, event, effect or
occurrence that, individually or in the aggregate with any other
change, event, effect or occurrence, has had or would reasonably be
expected to have, a material adverse effect on (a) the business,
results of operations, financial condition or assets of the Bioasis
Group, taken as a whole, or (b) the ability of Bioasis to
consummate the Transactions, in each case, in accordance with the
terms of the Arrangement Agreement; provided, however, that, in the
case of clause (a), none of the following shall be taken into
account in determining whether a Bioasis Material Adverse Effect
has occurred or is reasonably likely to occur: any change, event,
effect or occurrence arising after the date of the Arrangement
Agreement from or related to (i) general business or economic
conditions in or affecting the United States or Canada, or changes
therein, or the global economy generally, (ii) any national or
international political or social conditions in the United States,
Canada or any other country, including the engagement by the United
States, Canada or any other country in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the
occurrence in any place of any military or terrorist attack,
sabotage or cyberterrorism, (iii) changes in conditions of the
financial, banking, capital or securities markets generally in the
United States, Canada or any other country or region in the world,
or changes therein, including changes in interest rates in the
United States, Canada or any other country and changes in exchange
rates for the currencies of any countries, (iv) changes in the
trading price or trading volume of Bioasis Shares (although the
underlying facts and circumstances resulting in such change may be
taken into account to the extent not otherwise excluded from this
definition pursuant to clauses (i) through (iii) or (v) through
(ix)), (v) changes in any IFRS or applicable Legal Requirements,
(vi) any change, event, effect or occurrence that is generally
applicable to the industries or markets in which any the Bioasis
Group operates, (vii) the execution or public announcement of the
Arrangement Agreement or the pendency or consummation of the
transactions contemplated by the Arrangement Agreement, including
the impact thereof on the relationships, contractual or otherwise,
of any Bioasis Group company with employees, customers, investors,
contractors, lenders, suppliers, vendors, partners, licensors,
licensees, payors or other third parties related thereto, (viii)
any failure by Bioasis or its subsidiaries to meet, or changes to,
any internal or published budgets, projections, forecasts,
estimates or predictions (although the underlying facts and
circumstances resulting in such failure may be taken into account
to the extent not otherwise excluded from this definition pursuant
to clauses (i) through (vii) or (ix)), or (ix) any hurricane,
tornado, flood, earthquake, tsunami, natural disaster, mudslides,
wild fires, epidemics, pandemics (including COVID-19) or
quarantines, acts of God or other natural disasters or comparable
events in the United States, Canada or any other country or region
in the world, or any escalation of the foregoing; provided,
however, that any change, event, effect or occurrence resulting
from a matter described in any of the foregoing clauses (i) through
(v) or clause (viii) may be taken into account in determining
whether a Bioasis Material Adverse Effect has occurred or is
reasonably likely to occur to the extent such change, event, effect
or occurrence has or has had a disproportionate adverse effect on
the Bioasis Group, taken as a whole, relative to other participants
operating in the industries or markets in which the Bioasis Group
operates;
"Bioasis Options" all issued and outstanding options granted by
Bioasis as at the Effective Time;
"Bioasis Promissory Note" the promissory note issued by Bioasis
on 13 December 2022 evidencing the Loan made by the Company to
Bioasis;
"Bioasis Security Agreement" the security agreement made by
Bioasis and biOasis Advanced Technologies Inc. on 13 December 2022
to and in favour of the Company in connection with the Loan;
"Bioasis Securityholders" all Bioasis Shareholders, holders of
Bioasis Options and holders of Bioasis Warrants as of the close of
business (Eastern Time) on the Bioasis Record Date;
"Bioasis Securityholder Approval" the approval of Bioasis
Securityholders of the Acquisition Resolutions to be proposed at
the Bioasis Special Meeting;
"Bioasis Shareholders" the registered holders of Bioasis Shares;
"Bioasis Shares" the issued and outstanding common shares of
Bioasis;
"Bioasis Special Meeting" the annual and special meeting of the
Bioasis Securityholders to be called and held in accordance with
the Arrangement Agreement, the Interim Order and applicable law to
consider the Acquisition Resolutions;
"Bioasis Superior Proposal" means an unsolicited, bona fide
written Acquisition Proposal (with all references to 20% in the
definition of Acquisition Proposal being treated as references to
50% for these purposes) made by a third party (other than Midatech)
that (a) was not obtained or made as a direct or indirect result of
a breach of (or in violation of) the Arrangement Agreement and (b)
the terms of which the Bioasis board of directors determines, in
its reasonable judgment after consulting in good faith with its
financial advisors and its outside legal counsel, to be (i) more
favorable to its shareholders from a financial point of view than
the terms of the Arrangement and Share Exchange, and (ii)
reasonably capable of being completed in accordance with its terms,
taking into account any financing that is or may be required to
consummate the transaction contemplated by such proposal, and
whether such financing is committed and is reasonably capable of
being obtained by the applicable offeror.
"Bioasis Warrants" all issued and outstanding warrants of
Bioasis immediately prior to the Effective Time (including the Lind
Warrants);
"Board" the Existing Directors of Midatech;
"Business Day" a day other than a Saturday, Sunday or public
holiday on which commercial banks are open for general transaction
of business in the City of London, England; New York, New York; and
Vancouver, British Columbia;
"B Warrants" the 11,939,775 new warrants to be granted in
connection with the Private Placement, the Lind Debt Warrants and
the Ladenburg Fee Warrants with an expiration date of six (6) years
from the date that such warrants are granted pursuant to the terms
of a warrant instrument to be adopted by the Company;
"certificated form" not in an uncertificated form;
"Circular" or "Document" this circular being prepared in
accordance with the AIM Rules in relation to the General
Meeting;
"Company" or "Midatech" Midatech Pharma plc, a company
incorporated in England and Wales with registered number 09216368
and having its registered office at 1 Caspian Point, Caspian Way,
Cardiff, Wales, CF10 4DQ;
"Completion" the date on which the Acquisition becomes
effective, and the ADSs representing the Transaction Shares are
admitted to trading on NASDAQ;
"Consideration Shares" the 75,884,553 new Ordinary Shares,
represented by 3,035,382 New ADSs, to be allotted and issued to
Bioasis Shareholders as consideration in connection with the
Arrangement and the Share Exchange;
"Court" the Supreme Court of British Columbia;
"Cresence Shares" the new Ordinary Shares that may be issued to
the founders of Cresence AS pursuant to the Cresence Amendment
Agreement if certain performance milestones are met, to be
represented by ADSs;
"CREST" the relevant system (as defined in the CREST
Regulations) for paperless settlement of share transfers and the
holding of shares in uncertificated form (in respect of which
Euroclear is the operator as defined in the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations
2001 (SI 2001/3755), as amended;
"Custodian" The Bank of New York Mellon;
"Deposit Agreement" the New York law governed deposit agreement
dated 8 February 2021 between the Company, the Depositary Bank (as
depositary) and the owners and holders of ADSs from time to time,
as such agreement may be amended or supplemented;
"Depositary Bank" The Bank of New York Mellon, as depositary
under the Deposit Agreement, with an address of 240 Greenwich
Street, New York, New York 10286, and any successor depositary of
the Company;
"Directors" the Existing Directors and the Proposed
Directors;
"Disclosure and Transparency Rules" the Disclosure Guidance and
Transparency Rules made by the FCA in exercise of its function as
competent authority pursuant to Part VI of FSMA;
"Dissent Rights" means the rights of dissent in respect of the
Arrangement described in the Plan of Arrangement;
"Effective Time" such time at which the Acquisition becomes
effective, in accordance with the terms of the Arrangement
Agreement;
"Enlarged Group" the Midatech Group, as enlarged by the
Acquisition;
"Enlarged Issued Share Capital" the issued ordinary share
capital of the Company immediately following Completion, assuming
full issuance of the Transaction Shares but excluding any Ordinary
Shares falling to be allotted on the exercise of the Existing
Warrants, the Bioasis Warrants, the New Warrants, the Existing
Options or the New Options;
"Euroclear" Euroclear UK and International Limited, the operator
of the CREST UK System or such other person as may, for the time
being, be approved by HM Treasury as operator under the CREST
Regulations;
"Exchange Ratio" the exchange ratio of 0.9556 Consideration
Shares for each Bioasis Share, which will be rounded down to the
nearest whole ADS;
"Existing Directors" the current directors of the Company;
"Existing Options" the options granted by the Company as at the
date of this announcement pursuant to the Midatech Pharma plc
Enterprise Management Incentive Plan and the DARA BioSciences, Inc.
2008 Employee, Director and Consultant Plan;
"Existing Ordinary Shares" the 98,493,413 Ordinary Shares in
issue at the date of this Document;
"Existing Shareholders" shareholders on record as at the
Effective Time;
"Existing Warrants" the 17,226,053 warrants to subscribe for
Ordinary Shares granted pursuant to various warrant
instruments;
"FCA" the Financial Conduct Authority of the United Kingdom;
"FDA" the United States Food and Drug Administration;
"Final Order" the final order of the Court pursuant to Section
291 of the BCBCA, in a form acceptable to Bioasis and Midatech each
acting reasonably, approving the Arrangement, as such order may be
amended by the Court or with the consent of both Bioasis and
Midatech, such consent to not be unreasonably withheld, conditioned
or delayed, at any time prior to the Effective Time or, if
appealed, then, unless such appeal is withdrawn or denied, as
affirmed or as amended, on appeal, (provided that any such
amendment is acceptable to both Bioasis and Midatech, each acting
reasonably);
"FSMA" the Financial Services and Markets Act 2000, as amended
from time to time;
"General Meeting" the general meeting of the Company to be held
to propose the Resolutions;
"Governmental Body" any United Kingdom, United States, Canadian,
international or other (a) federal, state, provincial, local,
municipal or other government entity, (b) governmental or
quasi-governmental body of any nature (including any governmental
agency, branch, department, official, or entity and any court or
other tribunal) or (c) body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature, including
any arbitrator or arbitral tribunal (public or private);
"IFRS" the International Financial Reporting Standards, as
adopted by the International Accounting Standards Board, as in
effect from time to time;
"Interim Order" the interim order of the Court in respect of the
Arrangement made pursuant to Section 291(2) of the BCBCA, providing
for, among other things, the calling and holding of the Bioasis
Special Meeting, as may be amended by the Court with the consent of
Bioasis and Midatech, such consent not to be unreasonably withheld,
conditioned or delayed, provided that any such amendment is
reasonably acceptable to each of Bioasis and Midatech;
"Ladenburg" Ladenburg Thalmann & Co. Inc., sole bookrunner
and exclusive placement agent for the Private Placement;
"Ladenburg Fee Shares" the 27,863,856 new Ordinary Shares,
represented by 1,114,554 New ADSs, to be allotted and issued to
Ladenburg as part of the consideration for fees of US$2 million
owed by Bioasis to Ladenburg pursuant to the Bioasis Investment
Banking Agreement ;
"Ladenburg Fee Warrants" the 1,114,554 A Warrants and the
1,114,554 B Warrants to subscribe for up to 55,727,712 Ordinary
Shares to be granted to Ladenburg as part of the consideration for
fees of US$2 million owed by Bioasis to Ladenburg pursuant to the
Bioasis Investment Banking Agreement;
"Last Practicable Date" the last practicable date prior to
publication of this announcement, being 12 December 2022;
"Legal Requirement" any federal, state, provincial, regional,
local (statutory, common or otherwise), municipal, foreign or
international, multinational or other law, statute, constitution,
treaty, principle of common law, resolution, ordinance, code,
edict, guideline, policy, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, applied,
implemented or otherwise put into effect by or under the authority
of any Governmental Body;
"Letters of Intent" the letters of intent and consents received
by the Company from certain Shareholders stating their intention to
vote in favour of the Resolutions;
"Lind" Lind Global Macro Fund, L.P.;
"Lind Debt" the amounts owed by Bioasis to Lind pursuant to the
Bioasis Convertible Security Agreement (as amended);
"Lind Debt Warrants" the 825,221 A Warrants and the 825,221 B
Warrants to subscribe for up to 41,261,062 Ordinary Shares to be
granted to Lind in connection with the Assumption Agreement;
"Lind Shares" the new 20,630,531 Ordinary Shares to be issued to
Lind in settlement of part of the outstanding Bioasis indebtedness
pursuant to the Bioasis Convertible Security Agreement and the
Assumption Agreement;
"Lind Warrants" the Bioasis Warrants issued to Lind in
connection with the Bioasis Convertible Security Agreement;
"Loan" a cash secured loan of US$750,000 to be made by Midatech
to Bioasis following the Registered Direct Offering upon the terms
of the Bioasis Promissory Note;
"London Stock Exchange" London Stock Exchange plc;
"Long Stop Date" 31 March 2023, as the same may be extended in
accordance with the terms of the Arrangement Agreement;
"MAR" the EU Market Abuse Regulation (EU 596/2014) as it applies
in the United Kingdom by virtue of the European Union (Withdrawal)
Act 2018, as amended;
"Midatech Board
Recommendations" the recommendation by the Board of the
Acquisition;
"Midatech Group" the Company and its existing subsidiaries and
subsidiary undertakings;
"Midatech Material Adverse Effect" any change, event, effect or
occurrence that, individually or in the aggregate with any other
change, event, effect or occurrence, has had or would reasonably be
expected to have a material adverse effect on (a) the business or
financial condition of the Midatech Group, taken as a whole, or (b)
the ability of Midatech to consummate the Transactions, in each
case, in accordance with the terms of the Arrangement Agreement;
provided, however, that, in the case of clause (a), none of the
following shall be taken into account in determining whether a
Midatech Material Adverse Effect has occurred or is reasonably
likely to occur: any change, event, effect or occurrence arising
after the date of the Arrangement Agreement from or related to (i)
general business or economic conditions in or affecting the United
States or Canada, or changes therein, or the global economy
generally, (ii) any national or international political or social
conditions in the United Kingdom or United States or any other
country, including the engagement by the United Kingdom, United
States, or any other country in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the
occurrence in any place of any military or terrorist attack,
sabotage or cyberterrorism, (iii) changes in conditions of the
financial, banking, capital or securities markets generally in the
United Kingdom, United States, Canada or any other country or
region in the world, or changes therein, including changes in
interest rates in the United Kingdom, United States or any other
country and changes in exchange
rates for the currencies of any countries, (iv) changes in the
trading price or trading volume of Ordinary Shares or ADSs
(although the underlying facts and circumstances resulting in such
change may be taken into account to the extent not otherwise
excluded from this definition pursuant to clauses (i) through (iii)
or (v) through (ix)), (v) changes in IFRS or any applicable Legal
Requirements, (vi) any change, event, effect or occurrence that is
generally applicable to the industries or markets in which the
Midatech Group operates, (vii) the execution or public announcement
of the Arrangement Agreement or the pendency or consummation of the
transactions contemplated by the Arrangement Agreement, including
the impact thereof on the relationships, contractual or otherwise,
of the Midatech Group with employees, customers, investors,
contractors, lenders, suppliers, vendors, partners, licensors,
licensees, payors or other third parties related thereto, (viii)
any failure by the Midatech Group to meet, or changes to, any
internal or published budgets, projections, forecasts, estimates or
predictions (although the underlying facts and circumstances
resulting in such failure may be taken into account to the extent
not otherwise excluded from this definition pursuant to clauses (i)
through (vii) or (ix)), or (ix) any hurricane, tornado, flood,
earthquake, tsunami, natural disaster, mudslides, wild fires,
epidemics, pandemics (including COVID-19) or quarantines, acts of
God or other natural disasters or comparable events in the United
Kingdom, United States, or any other country or region in the
world, or any escalation of the foregoing; provided, however, that
any change, event, effect or occurrence resulting from a matter
described in any of the foregoing clauses (i) through (v) or clause
(viii) may be taken into account in determining whether a Midatech
Material Adverse Effect has occurred or is reasonably likely to
occur to the extent such change, event, effect or occurrence has or
has had a disproportionate adverse effect on the Midatech Group,
taken as a whole, relative to other participants operating in the
industries or markets in which the Midatech Group operates;
"Midatech Shareholder Approval" the approval of the Shareholders
of the Resolutions to be proposed at the General Meeting;
"Midatech Superior Proposal" means an unsolicited, bona fide
written Acquisition Proposal (with all references to 20% in the
definition of Acquisition Proposal being treated as references to
50% for these purposes) made by a third party (other than Bioasis)
that (a) was not obtained or made as a direct or indirect result of
a breach of (or in violation of) the Arrangement Agreement and (b)
the terms of which the Board determines, in its reasonable judgment
after consulting in good faith with its financial advisors and its
outside legal counsel, to be (i) more favorable to its shareholders
from a financial point of view than the terms of the Arrangement
and Share Exchange, and (ii) reasonably capable of being completed
in accordance with its terms, taking into account any financing
that is or may be required to consummate the transaction
contemplated by such proposal, and whether such financing is
committed and is reasonably capable of being obtained by the
applicable offeror;
"NASDAQ" The NASDAQ Stock Market, LLC;
"NASDAQ Listing" the proposed admission to trading on NASDAQ of
the ADSs in respect of the Transaction Shares;
"NASDAQ Rules" the rules of NASDAQ;
"New ADSs" the ADSs representing the Transaction Shares;
"New Option Plan" the option plan to be adopted by the Company
pursuant to which the Company shall grant the New Options;
"New Options" the new options over 8,481,459 new Ordinary Shares
to be granted by Midatech in consideration of the cancellation of
the Bioasis Options pursuant to the Arrangement Agreement;
"New Ordinary Shares" the Transaction Shares and the Cresence Shares;
"New Warrants" the new warrants to subscribe for up to
606,594,801 new Ordinary Shares comprising (i) the Placing
Warrants, (ii) the Lind Debt Warrants, (iii) the Ladenburg Fee
Warrants and (iv) the Placement Agent Warrants;
"Ordinary Share(s)" ordinary shares of 0.1 pence each in the
capital of the Company;
"Overseas Shareholder" holders of Existing Ordinary Shares who
are neither resident in, nor have a registered address in, the
UK;
"Panel" the UK Panel on Takeovers and Mergers;
"Placee" Armistice Capital which has agreed to subscribe for the
Units and Pre-Funded Warrants in the Private Placement;
"Placement Agency Agreement" the agreement dated 13 December
2022 between Ladenburg and the Company relating to the Private
Placement;
"Placement Agent Warrants" the new warrants to subscribe for up
to 4% of the Ordinary Shares to be issued in connection with the
Registered Direct Offering and Private Placement with an expiration
date of three years from the date that such warrants are granted
pursuant to the terms of a warrant instrument to be adopted by the
Company, and which are granted to Ladenburg pursuant to the
Placement Agency Agreement;
"Plan of Arrangement" means the plan of arrangement of Bioasis
in substantially the form attached to the Arrangement Agreement,
with any amendments or variations thereto made in accordance with
the Arrangement Agreement or the Plan of Arrangement or at the
direction of the Court;
"Placing Price" US$1.00 per Unit and US$0.999 per Pre-Funded
Warrant;
"Placing Shares" up to 14,602,050 new Ordinary Shares to be
allotted and issued by the Company pursuant to the Private
Placement to be represented by the New ADSs;
"Placing Warrants" the A Warrants, the B Warrants and the
Pre-Funded Warrants;
"Pre-Funded Warrants" the 9,021,945 new pre-funded warrants to
be granted in connection with the Private Placement, which shall be
exercisable from the date that such warrants are granted until such
warrants are exercised in full;
"Private Placement" the conditional private placement of the
Units and the grant of the Pre-Funded Warrants in the United States
to be undertaken by Ladenburg at the Placing Price pursuant to the
Securities Purchase Agreement;
"Proposals" together the Acquisition, the Private Placement, the
Resolutions, and the AIM Cancellation;
"Proposed Directors" Deborah Rathjen and Mario Saltarelli, the
proposed additional directors of the Company with effect from the
AIM Cancellation;
"Receiving Agent" Neville Registrars Limited;
"Registered Direct Offering" the offering into the US of new
Ordinary Shares allotted and issued by the Company to Armistice
Capital (in the form of ADSs) announced on 13 December 2022
pursuant to the Securities Purchase Agreement;
"Registrar" the Company's registrars, being Neville Registrars
Limited of Neville House, Steelpark Road, Halesowen, West Midlands
B62 8HD;
"Registration Statement" the Registration Statement, filed with
the SEC on Form F-1 by the Company in connection with the Private
Placement and the Placing Shares and New ADSs;
"Regulatory Information any of the services authorised from time
Service" to time by the FCA for the purposes of
or "RIS" disseminating regulatory announcements;
"Resolutions" the resolutions to be proposed at the General
Meeting;
"SDRT" stamp duty reserve tax;
"Section 3(a)(10) Exemption" the exemption from the registration
requirements of the Securities Act provided by section 3(a)(10)
thereof;
"SEC" the U.S. Securities and Exchange Commission;
"Securities Act" the U.S. Securities Act of 1933, as
amended;
"Securities Purchase Agreement" the agreement dated 13 December
2022 between the Company and the Placee
"Shareholders" holders of Ordinary Shares;
"Share Exchange" the acquisition by Midatech of the Bioasis
Shares from Bioasis Shareholders in exchange for the Consideration
Shares pursuant to the Arrangement;
"Sterling" or "GBP" the lawful currency of the United
Kingdom;
"Strand Hanson" Strand Hanson Limited, the Company's Nominated
Adviser;
"subsidiary and subsidiary have the meanings given to them by the Act;
undertaking"
"Takeover Code" The City Code on Takeovers and Mergers;
"Takeover Offer" an offer or approach made by a third party to
Midatech and/or its Shareholders pursuant to the terms of the
Takeover Code;
"Termination Payment" means US$330,000;
"Transactions" together, the Acquisition, the Private Placement,
the Share Exchange and the other transactions contemplated by the
Arrangement Agreement and the Plan of Arrangement;
"Transaction Shares" the 138,980,990 new Ordinary Shares
comprising (i) the Consideration Shares, (ii) the Placing Shares,
(iii) the Lind Shares and (iv) the Ladenburg Fee Shares, in each
case conditional on, inter alia, Admission;
"TSX-V" the TSX Venture Exchange based in Canada;
"uncertificated form" recorded on the relevant register of the
share or security concerned as being held in uncertificated form in
CREST, and title to which, by virtue of the CREST Regulations, may
be transferred by means of CREST;
"Unit" a unit comprising: 25 new Ordinary Shares (which
represents one New ADS); approximately 1.04 A Warrants; and
approximately 1.04 B Warrants in connection with the Private
Placement;
"United Kingdom" or "UK" the United Kingdom of Great Britain and
Northern Ireland;
"United States" or "U.S." or "US" the United States of America,
its territories and possessions, any state of the United States of
America and the District of Columbia and all other areas subject to
its jurisdiction; and
"Warrant Shares" the 627,880,299 new Ordinary Shares to be
allotted and issued to the holders of the New Warrants and the
Bioasis Warrants upon exercise of the New Warrants and the Bioasis
Warrants.
GLOSSARY OF TECHNICAL TERMS
"AD" Alzheimer's Disease
"ALS" amyotrophic lateral sclerosis
"API's" active pharmaceutical ingredients
"BBB" the blood brain barrier, a network of blood vessels that
possess unique properties which tightly regulate the movement of
ions, molecules, and cells between the blood and the brain
"CED" convection enhanced delivery
"CIDP" chronic inflammatory demyelinating polyneuropathy
"CNS" central nervous system
"CSF" cerebrospinal fluid
"DIPG " diffuse intrinsic pons glioma, a type of brain tumor
found in an area of the brainstem known as the pons.
"EGF" epidermal growth factor
"EGFR" EGF receptor
"FTD" frontotemporal dementia
"GBM" glioblastoma, an aggressive type of cancer that can occur
in the brain or spinal cord
"GRN" Granulin Precursor gene / progranulin
"HER2" human epidermal growth factor receptor 2. Over-expression
of this oncogene has been shown to play an important role in the
development and progression of certain types of breast cancer
"IDS" or "I2S" Iduronate 2-Sulfatase
"IL-1" cytokine interleukin 1
"IL-1RA" interleukin-1 receptor antagonist
"IND" investigational new drug application
"IVIG" intravenous immunoglobulins
" LRP-1" low density lipoprotein receptor-related protein 1
"MTf" melanotransferrin, a human iron-binding protein
"NSC" n eural stem cells
"PD" Parkinson's Disease
"PrPCs" cellular prion proteins
"siRNA" small interfering ribonucleic acid
"xB3" a peptide derived from MTf that has been optimized for
delivery of therapeutics across the BBB
ADDITIONAL INFORMATION
Details of the Acquisition
Details of the Acquisition
In order to effect the Acquisition, on 13 December 2022, the
Company and Bioasis entered into the Arrangement Agreement,
pursuant to which the Company agreed to acquire all of the issued
and outstanding Bioasis Shares in return for the Consideration
Shares on the basis of the Exchange Ratio and on the other terms
and subject to the conditions set out in the Arrangement Agreement.
In addition, Midatech agreed to issue ADSs upon exercise of the
Bioasis Warrants and to the grant of the New Options in
consideration of the cancellation of the Bioasis Options. The
Acquisition will be implemented by way of a statutory Plan of
Arrangement in accordance with the laws of the Province of British
Columbia.
Details of Bioasis indebtedness
Immediately following Completion, Bioasis' indebtedness will be
assumed by Midatech pursuant to the Assumption Agreement. Although
the Bioasis Convertible Security Agreement contains a change of
control provision that will be triggered by the Acquisition, the
Company has obtained a waiver in writing from Lind and therefore
the Bioasis Convertible Security Agreement will continue in place
immediately post Completion on the same terms as prior to
Completion.
Details of the Arrangement Agreement
Summary of the principal terms of the Acquisition
The Arrangement Agreement was entered into on 13 December 2022
between Midatech and Bioasis. Pursuant to the Arrangement
Agreement, Midatech agreed to acquire, in consideration of the
issue of the Consideration Shares in Midatech, all of the issued
and outstanding Bioasis Shares in exchange for Consideration Shares
(in the form of ADSs) on the basis of the Exchange Ratio and on the
terms and subject to the conditions of the Arrangement
Agreement.
Conditions
Completion under the Arrangement Agreement is subject to and
conditional upon, and can only occur upon satisfaction or (to the
extent permitted by law) waiver of, a number of outstanding
conditions, including, but not limited to:
-- Midatech Shareholder Approval having been obtained in respect of the Resolutions;
-- Bioasis Securityholder Approval having been obtained in the
manner set out in the Interim Order;
-- the Final Order having been obtained from the Court;
-- the Private Placement becoming unconditional (save for any
condition relating to the Arrangement Agreement);
-- the TSX-V having approved the de-listing of the Bioasis Shares;
-- Bioasis Shareholders shall not have exercised Dissent Rights
in connection with the Arrangement with respect to more than 10% of
the issued and outstanding Bioasis Shares; and
-- no Bioasis Material Adverse Effect or Midatech Material Adverse Effect having occurred.
Non-Solicitation and Superior Proposals
Under the Arrangement Agreement, Midatech is prohibited from
soliciting from any third party an Acquisition Proposal or Takeover
Offer and Bioasis is prohibited from soliciting from any third
party an Acquisition Proposal. However, if prior to obtaining
Midatech Shareholder Approval, Midatech receives a Midatech
Superior Proposal or a Takeover Offer, it retains the ability to
engage in discussions and to consider and respond to an Acquisition
Proposal which is a Midatech Superior Proposal or Takeover Offer in
accordance with the terms of the Arrangement Agreement. Similarly,
if prior to obtaining Bioasis Securityholder Approval, Bioasis
receives a Bioasis Superior Proposal, it may engage in discussions
in relation to such proposal in accordance with the terms of the
Arrangement Agreement.
Upon receipt by the Company (or its Shareholders directly) of a
Takeover Offer prior to the Midatech Shareholder Approval the Board
may change their recommendation in respect to such Midatech
Superior Proposal and terminate the Arrangement Agreement; provided
that, in each case, certain conditions are met, including that the
Board has determined in good faith, after consultation with its
financial advisors and outside legal counsel, that the failure to
take such action would be inconsistent with its fiduciary duties
and/or the Takeover Code. Under such circumstances, the Termination
Payment, totalling US$330,000, would be payable to Bioasis pursuant
to the Arrangement Agreement (other than in the context of a
Takeover Offer in certain circumstances). Likewise, Bioasis will be
required to pay the Termination Payment to Midatech if it were to
recommend a Bioasis Superior Proposal to the Bioasis
Shareholders.
Termination Payment
The Arrangement Agreement requires that the Company pay the
Termination Payment if the Arrangement Agreement is terminated
under certain circumstances, including if the Arrangement Agreement
is terminated because the Board withdraws or modifies its
recommendation with respect to the Arrangement, the Company
breaches its non-solicitation covenants under the Arrangement
Agreement, or the Company elects to do so in order to enter into a
definitive agreement. The Board considered that the amount of the
Termination Payment payable by the Company to Bioasis in certain
circumstances should not preclude a third party from making an
unsolicited Midatech Superior Proposal. There is also an expense
reimbursement payment of US$225,000 that may be payable by the
Company if the Arrangement Agreement is terminated in respect of
such circumstances.
Separately, the Termination Payment would be payable by Bioasis
if the Arrangement Agreement is terminated under certain
circumstances, including if the Arrangement Agreement is terminated
by: (i) Midatech following a change in recommendation of the
Acquisition by the Bioasis board of directors or a breach by
Bioasis of the non-solicitation provisions set out in the
Arrangement Agreement; or (ii) Bioasis following a change in
recommendation of the Acquisition by the Bioasis board of directors
or in connection with a Bioasis Superior Proposal. There is also an
expense reimbursement payment of US$225,000 that may be payable by
Bioasis if the Arrangement Agreement is terminated in respect of
such circumstances.
The Arrangement Agreement contains usual and customary
covenants, representations and warranties and other protections
given by each of Bioasis and Midatech for an agreement of this
nature and type and having read for the facts and circumstances of
Midatech and Bioasis.
Current Trading and Outlook
Midatech
Financial Highlights
On 14 September 2022, the Company announced its interim results
for the six months ended 30 June 2022. Total revenue from R&D
collaborations for 1H22 was GBP0.47m (1H21: GBP0.40m). Research and
development costs in 1H22 increased by 20% to GBP2.41m (1H21:
GBP2.01m) as a result of increased costs associated with MTX110 as
the Company prepared for its Phase I study in recurrent GBM.
Administrative expenses increased by 12% in 1H22 to GBP1.85m (1H21:
GBP1.66m) primarily due to increased legal and professional fees.
Net cash used in operating activities (after changes in working
capital) in 1H22 was GBP3.54m, compared with GBP3.11m in 1H21. The
Company's cash balance at 30 June 2022 was GBP6.42m.
2022/2023 Outlook
Continued execution of the Company's strategy is dependent upon
raising additional funds before the end of the first quarter of
2023. The Company has been active in promoting its technologies to
potential R&D collaborators and licensees at partnering
conferences since the announcement of the Strategic Review in April
2020. While there are several ongoing promising discussions with
potential partners, none are at term sheet stage and therefore
cannot be relied upon to provide additional funding within the
required timeframe. The Board continues to believe in the merits of
the Company's technologies and the potential for MTX110 in
intractable brain cancers and that, with compelling data in hand,
partnerships can be secured in due course.
Bioasis
Financial Highlights
Through six months ended 31 August 2022 Bioasis reported C$0.12m
in research revenue from Bioasis' Neuramedy and Janssen Biotech
research collaborations. Revenue in the same period in the previous
year was nil. Research and development costs for the six months
ended 31 August 2022 were C$0.43m which was a decrease of C$0.18m
from the comparable prior period. General and administrative
expenses for the six months ended 31 August 2022 was C$1.22m which
was a C$0.15m decrease from the prior year to date period.
On 15 June 2022, Bioasis entered into an asset purchase
agreement (the "Cresence Agreement") with the founders of Cresence
AS of Oslo, Norway (the "Cresence Founders"). Under the terms of
the Cresence Agreement, Bioasis purchased all the rights, title and
interest in the intellectual property owned by the Cresence
Founders in relation to their EGF platform. Bioasis believes that
such EGF assets may be key in treatment of Guillain-Barre Syndrome
and Chronic Inflammatory Demyelinating Polyneuropathy, among other
indications. In exchange for this intellectual property, Bioasis
issued 6.5 million common shares in the capital of Bioasis to the
Cresence Founders upon completion of the transaction and has agreed
to issue up to an additional 6 million common shares in the capital
of Bioasis subject to the achievement of additional milestones as
follows: (i) 3 million shares are issuable upon Bioasis' initiation
of a pivotal clinical trial in the U.S. for the first product and
(ii) 3 million shares are issuable upon the FDA approval of any
Bioasis application for the first product. Milestone payments of
US$1 million each will be made upon attaining the second and third
FDA approved indications in neurology for a product. A running
royalty of 1% of net sales is payable for any product until the
expiration of a specified royalty period.
2022/2023 Outlook
Bioasis continues to be engaged in the development of their xB3
(TM) platform for the transport of therapeutic agents, in
particular biological products, across the BBB. xB3(TM) is a
peptide-based technology which Bioasis believes has significant
advantages over competing technologies for BBB drug delivery.
Bioasis is focusing its efforts on the advancement of carefully
selected, internal development programs for the treatment of
specific CNS-related diseases, as well as potential strategic
licensing of their xB3 platform technology to pharmaceutical and
biotechnology companies for the advancement of their neuroscience
programs. Bioasis' internal development is focused on both orphan
drug indications, including brain cancers, and rare genetic
neurodegenerative diseases, and neuroinflammatory conditions where
proof-of-concept for approved medications exist and where there is
potential for more rapid development and approval.
The Cresence Agreement brings Phase 2 ready assets to Bioasis
that are aligned with its focus on rare disease and orphan drug
indications. EGF1-48 comes with a full IND package and clinical
experience indicating that it is safe and well-tolerated in humans.
The molecule has a unique dual mechanism of action, stimulating
myelination and downregulating neuroinflammation, thus offering
neuroprotective properties that support development in
Guillain-Barre Syndrome, Chronic Inflammatory Degenerative
Polyneuropathy and certain clinical manifestations related to onset
and/or progression of multiple sclerosis, including optic neuritis
and relapses of the disease.
Further Information on Bioasis
Indebtedness
Bioasis Convertible Security Agreement
In June 2021, Bioasis entered into a convertible security
funding agreement with Lind Global Macro Fund, LP, an entity
managed by The Lind Partners, a New York based institutional
investment management firm (together, "Lind"), which was amended on
13 December 2022 pursuant to a waiver and amendment agreement (the
"Waiver and Amendment Agreement") (as described below). Under the
terms of the Bioasis Convertible Security Agreement, Bioasis may
issue to Lind convertible securities in the principal amount of up
to C$10,000,000. In June 2021, Lind made an initial investment of
C$3.0 million less a commitment fee of C$90,000, in exchange for a
convertible security (the "First Convertible Security") with a face
value of C$3.6 million, representing a principal amount of C$3.0
million (the "Principal Amount") and a pre-paid interest amount of
C$0.6 million (the "Pre-Paid Interest"). Commencing in the month
181 days from closing, Bioasis began repaying the First Convertible
Security in C$125,000 monthly instalments. As of May 31, 2022,
Bioasis has made payments of in aggregate C$750,000 but the
repayment of the C$125,000 instalments was waived by Lind until 31
January 2023 pursuant to the Waiver and Amendment Agreement (as
described below). Pre-Paid Interest will accrue monthly at C$20,000
per month, and once accrued, Lind will have the option, once every
90 days, to convert accrued Pre-Paid Interest into common shares of
Bioasis at 90% of its market closing price on the day immediately
prior to the conversion. Lind will be restricted from selling any
Bioasis Shares it receives in connection with the First Convertible
Security for a period of four months and a day from the date of
issuance of the First Convertible Security, and is prohibited from
short selling any Bioasis Shares during the term of the Bioasis
Convertible Security Agreement. Lind has the right to convert any
portion of the Principal Amount into Bioasis Shares at a price per
share of C$0.31 (the "Conversion Price"). The Bioasis Convertible
Security Agreement also includes an option for Bioasis to receive
additional investments from Lind of up to C$7,000,000, in exchange
for a convertible security with similar terms to the First
Convertible Security, subject to mutual agreement and TSX-V
approval.
Bioasis has the option to buy back the outstanding convertible
securities in cash at any time. If Bioasis exercises this buy back
option, Lind will have the option to convert (i) up to 33.3% of the
outstanding Principal Amount at the Conversion Price, and (ii) up
to 100% of the then-accrued Pre-Paid Interest into common shares of
Bioasis. Bioasis concluded that the conversion option was an
embedded derivative that requires bifurcation as a derivative
liability due to the contingency that Bioasis could be required to
pay cash for the conversion.
As part of the First Convertible Security financing, Bioasis
issued Lind 4,839,048 warrants exercisable for a term of 30 months
at an exercise price of C$0.41 per Bioasis Share. Bioasis will have
the right to accelerate the expiry date of a certain number of
warrants, subject to certain conditions, including that no event of
default has occurred, as follows: (i) if the Company's shares trade
above C$1.27 for 30 consecutive days, the Company can accelerate
the expiry date of 50% of the warrants; and (ii) if Bioasis Shares
trade above C$1.80 for 30 consecutive days and the First
Convertible Security then outstanding (along with all outstanding
accrued prepaid interest) has been fully repaid or converted, then
the Company can accelerate the expiry of all of Lind's remaining
warrants. Any warrant exercise proceeds will be applied to the
outstanding Principal Amount of the First Convertible Security. The
exercise price is subject to adjustment if shares trade at a price
of less than 95% of the market price, as a result, the warrants do
not meet the criteria to be classified as equity and have been
bifurcated and accounted for as a derivative liability.
Waiver and Amendment Agreement
On 13 December 2022 Bioasis entered into a Waiver and Amendment
Agreement with Lind pursuant to which: (i) Lind agreed to waive
Bioasis' payment obligations under the Bioasis Convertible Security
Agreement until 31 December 2022; (ii) Lind grants consent for the
Acquisition pursuant to the Bioasis Convertible Security Agreement
to permit Bioasis to (a) enter into the Arrangement Agreement, (b)
complete the Acquisition in accordance with the Arrangement
Agreement; and (c) complete the Private Placement; (iii) Lind
agreed to advance a C$350,000 bridge loan to Bioasis (the "Lind
Bridge Loan"), net of amounts payable to Lind in respect of its
legal fees and expenses, (iv) Bioasis agreed to issue the Bridge
Promissory Note and the Holiday Promissory Note (as referenced
below); (v) Bioasis and Lind agreed to execute the Tripartite
Agreement (as described below); (vi) Bioasis agreed to grant
certain security interests to Lind to secure its obligations under
the Bioasis Convertible Security Funding Agreement, the Bridge
Promissory Note and the Holiday Promissory Note; and (vii) certain
amendments are made to the Bioasis Convertible Security Agreement
to permit (i) to (vi) above.
Promissory Note (Bridge)
On 13 December 2022 in connection with its receipt of the Lind
Bridge Loan, Bioasis issued a promissory note to Lind (the "Bridge
Promissory Note") pursuant to which Bioasis promises to pay Lind
the principal amount of C$350,000 (the "Bridge Principal Amount")
on the earliest of (each, as applicable, the "Bridge Maturity
Date") (a) the occurrence of an Event of Default (as defined in the
Bridge Promissory Note); (b) the date on which the closing of the
Acquisition occurs; and (c) 30 June 2023. Interest is payable on
the Bridge Principal Amount (including any overdue interest) at a
rate of 2.00% per month or, from and after the Bridge Maturity
Date, at a default rate of 15.00% per annum.
Bioasis makes positive covenants to Lind under the note
including supplying it with Bioasis information on request. Bioasis
also covenants to only use the proceeds under this note to pay
third party professional service fees incurred by Bioasis in
connection with the Acquisition unless Lind gives written
consent.
Promissory Note (Holiday)
On 13 December 2022, in consideration of Lind's agreement to
enter into the Waiver and Amendment Agreement, Bioasis issued a
promissory note to Lind (the "Holiday Promissory Note") pursuant to
which Bioasis promises to pay Lind the principal amount of
C$510,000 on the earliest of (each, as applicable, the "Holiday
Maturity Date") (a) the occurrence of an Event of Default (as
defined in the Holiday Promissory Note); (b) the date on which the
closing of the Acquisition occurs; and (c) 30 June 2023.
This note is on substantially the same terms as the Bridge
Promissory Note (described above) save that: (i) no interest
accrues on this note until after the Holiday Maturity Date (at
which time the interest rate is 15.00% per annum) and (ii) there is
no use of proceeds restriction.
Tripartite Agreement
On 13 December 2022 Bioasis entered into a tripartite agreement
(the "Tripartite Agreement") with Lind and Midatech whereby
Midatech agrees that, upon completion of the Acquisition, it will
enter into the Assumption Agreement and repay or satisfy amounts
Lind is owed under the Bioasis Convertible Security Agreement, the
Bridge Promissory Note and the Holiday Promissory Note (the
"Payment Obligations"). Following such repayment Lind shall
procure, at the request and expense of Midatech and/or Bioasis, the
release of the relevant security granted to Lind for the amounts
owed to it. The Tripartite Agreement also documents the terms on
which the Loan of C$750,000 was advanced by the Company to Bioasis
by way of a secured promissory note which is subordinated to the
Payment Obligations.
Assumption Agreement
In connection with the completion of the Acquisition, Bioasis
(as Assignor) shall enter into the Assumption Agreement with
Midatech (as Assignee) and Lind whereby Midatech shall assume all
the debt, obligations and liabilities of Bioasis, including the
Lind Debt under the Waiver and Amendment Agreement in consideration
for Bioasis recognising an intercompany debt due to Midatech.
Immediately after entry into the Assumption Agreement, Midatech
shall make a cash payment to Lind of approximately C$2,393,851,
using net proceeds of the Private Placement, in order to pay off a
portion of the Lind Debt arising pursuant to the Bioasis
Convertible Security Agreement (as amended by the Waiver and
Amendment Agreement), the Holiday Promissory Note and the Bridge
Promissory Note (the "Lind Cash Repayments").
All payment obligations that remain outstanding following the
Lind Cash Repayments shall be settled by way of issuance by
Midatech to Lind (or its nominee) of Units at a deemed price equal
to the Placing Price pursuant to the terms of a subscription
agreement to be entered into between Midatech and Lind, which Lind
will be required to enter into as a condition of its receipt of
such securities.
The parties to the Assumption Agreement acknowledge that
following entry into the agreement, Lind shall not have released
the Assignor from its debt, obligations and liabilities under the
Waiver and Amendment Agreement and that Bioasis and Midatech shall
be jointly and severally liable to Lind for any debt, obligations
and liabilities owed to Lind under the Waiver and Amendment
Agreement.
Facilities
Bioasis operates in a virtual model through contract research
organisations which reduces overheads and provides the company with
flexibility in its ability to prosecute both its internal pipeline
programmes and its partnered collaborations.
Bioasis is headquartered in New Haven, Connecticut.
Bioasis Special Meeting
Prior to Completion and as a condition of the Arrangement
Agreement, Bioasis must obtain the Bioasis Securityholder Approval,
in accordance with the Bioasis Articles, the Interim Order and the
BCBCA.
Further Information on the Private Placement
As part of the Acquisition process, the Directors have
considered the funding requirements for the execution of the
Enlarged Group's business plan following Completion. Taking account
of Midatech's existing resources and the Loan to be made to Bioasis
following the announcement of the Acquisition (less existing
indebtedness in Bioasis repayable on Completion and the costs
associated with the Transactions), on Completion, the Board expects
that the Enlarged Group would have an operational cash runway to Q4
2023.
Details of the Private Placement
The Private Placement will close contemporaneously with the
completion of the Acquisition.
Pursuant to the terms of the Securities Purchase Agreement, the
Private Placement is conditional upon, amongst other things:
-- the passing of the Resolutions at the General meeting;
-- all obligations, covenants and agreements of the Company and
the Placee that are required to be performed at or prior to
Completion shall have been performed;
-- there shall have been no material adverse change on the
results of operations, assets, business, or condition (financial or
otherwise) of the Company and its subsidiaries or if there is a
material adverse effect on the Company's ability to perform in any
material respect on a timely basis its obligations under any
documents to be entered into in connection with the Private
Placement; and
-- trading in the ADSs or Ordinary Shares shall not have been
suspended from trading on AIM or NASDAQ (as applicable).
Pursuant to the terms of the Securities Purchase Agreement, the
Company agreed to reduce the exercise price of certain outstanding
warrants previously issued to the Placee on 25 October 2019 and 20
May 2020 to US$1.00.
The Placing Shares upon Admission will be credited as fully paid
and will rank pari passu in all respects with all other Ordinary
Shares then in issue, including the right to receive all dividends
or other distributions declared, paid or made on or after
Completion.
The Placing Shares on Completion will be exchanged for ADSs.
There will be no offer to the public in the United Kingdom
(including to the Company's existing Shareholders generally) or the
United States of ADSs or Ordinary Shares in connection with the
Private Placement.
All Ordinary Shares issued in the Private Placement will not be
registered under the Securities Act. Following the closing of the
Private Placement the Company will be required to file a
registration statement with the SEC to register such shares. All
Existing Ordinary Shares which are not held by affiliates of the
Company will be eligible for conversion into ADSs and resale in the
U.S. Shareholders should consult their legal advisers as to whether
they are affiliates of the Company for the purposes of US
securities law.
All of the Directors and officers of Midatech and Bioasis have
agreed, subject to limited exceptions, with Ladenburg not to offer,
pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase or
otherwise dispose of, directly or indirectly, or enter into any
swap or other agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the Company's ADSs,
Ordinary Shares or such other securities for a period of 90 days
following the date of effectiveness of the Registration Statement
without the prior written consent of Ladenburg.
If a Shareholder holding Ordinary Shares wishes to sell them on
NASDAQ, such Shareholder would need to convert those Ordinary
Shares into ADSs by depositing such shares with the Custodian for
the Depositary Bank against the issuance of the corresponding
number of ADSs before selling the ADSs through a broker on NASDAQ
in compliance with US securities law. Any Shareholder considering
converting Ordinary Shares into ADSs should consult their
stockbroker.
Placement Agency Agreement
Pursuant to the Placement Agency Agreement, Ladenburg has agreed
to use its reasonable best efforts as agent of the Company to
procure subscribers for the Placing Shares and the Placing Warrants
at the Placing Price.
The Placement Agency Agreement contains certain representations,
warranties and indemnities from the Company in favour of Ladenburg
and is conditional, inter alia, upon:
-- all corporate proceedings and other legal matters in
connection with the Placement Agency Agreement and the
registration, sale and delivery of the Placing Shares and the
Placing Warrants, which includes obtaining Midatech Shareholder
Approval of the Resolutions at the General Meeting, shall have been
completed or resolved in a manner reasonably satisfactory to
Ladenburg; and
-- the delivery of certain documents to Ladenburg, including
lock-up agreements executed by each of the Directors and a legal
opinion from each of Brown Rudnick LLP (as legal advisors to the
Company on English law) and Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C. (as legal advisors to the Company on U.S. law) in
connection with the allotment, issuance and sale of the Placing
Shares and the Placing Warrants.
In accordance with the Placement Agency Agreement, the Company
has agreed to pay Ladenburg a cash fee in an amount equal to 8% of
the aggregate gross proceeds of the Private Placement and to issue
to Ladenburg or its designees the Placement Agent Warrants equal to
4% of the total number of the New ADSs. The Company has also agreed
to pay Ladenburg a management fee equal to 1% of the gross proceeds
raised in the Private Placement and an expense allowance of up to
US$85,000 for legal fees and other out-of-pocket expenses. The
exercise price of the Placement Agent Warrants will be 125% of the
Placing Price and shall terminate three years from the date of the
offering of the Placement Agent Warrants.
The Placement Agency Agreement may be terminated without
liability by Ladenburg by notice to the Company at any time on or
prior to Completion if, inter alia, the Company fails to comply
with its obligations under the Placement Agency Agreement, if there
is a material adverse change on the results of operations, assets,
business, or condition (financial or otherwise) of the Company and
its subsidiaries or if there is a material adverse effect on the
Company's ability to perform in any material respect on a timely
basis its obligations under any documents to be entered into in
connection with the Private Placement.
Further Information on the AIM Cancellation
Following the AIM Cancellation, ADSs representing the Company's
Ordinary Shares will remain listed on NASDAQ and all public trading
of securities in the Company will take place on that exchange. To
sell Ordinary Shares on a public market following the AIM
Cancellation, Shareholders will need to deposit their Ordinary
Shares for delivery of ADSs, further details of which will be set
out in the Circular.
Assuming Completion occurs, Shareholders will no longer be able
to buy and sell Ordinary Shares on AIM following the AIM
Cancellation, which is expected to take place two weeks after
Completion.
As a company incorporated in England and Wales, the Company will
continue to be subject to the requirements of the Companies Act
2006.
Following the AIM Cancellation taking effect, the Company will
no longer be subject to the AIM Rules for Companies or be required
to retain the services of an independent nominated adviser. The
Company will also no longer be required to adopt the QCA Corporate
Governance Code or be required to comply with the continuing
obligations set out in the Disclosure and Transparency Rules
(insofar as they currently apply to the Company) or, provided the
Company's securities remain outside the scope of the regulation,
MAR. The Company will, however, continue to comply with all
regulatory requirements for the NASDAQ listing of ADSs, including
the NASDAQ Rules and all applicable rules and regulations of the
SEC.
Shareholders who continue to hold Ordinary Shares following the
AIM Cancellation will continue to be notified in writing of the
availability of key documents on the Company's website, including
publication of annual reports and annual general meeting
documentation. Holders of ADSs will be able to continue to access
all such information via the Midatech website. Holders of Ordinary
Shares and ADSs will both be eligible to receive any future
dividends that may be declared.
Existing holders of ADSs in Midatech not also holding Ordinary
Shares do not need to take any action with the respect to the AIM
Cancellation.
Application of the Takeover Code following AIM Cancellation
Following the AIM Cancellation, as the Company will remain a
public limited company incorporated and with its registered office
in the United Kingdom but its securities will not be admitted to
trading on a regulated market or multilateral trading facility in
the United Kingdom (or a stock exchange in the Channel Islands or
the Isle of Man).The Takeover Code will only apply to the Company
if it is considered by the Panel to have its place of central
management and control in the United Kingdom (or the Channel
Islands or the Isle of Man). This is known as the "residency test".
The way in which the test for central management and control is
applied for the purposes of the Takeover Code may be different from
the way in which it is applied by the United Kingdom tax
authorities, HMRC. Under the Takeover Code, the Panel typically
considers where the majority of the directors of the Company are
resident, amongst other factors, for the purposes of determining
where the Company has its place of central management and
control.
Following Completion, three of the five directors of the Company
will be resident in the United Kingdom and its place of central
management and control is intended, for the time being, to remain
in the United Kingdom. Accordingly, the Panel has confirmed that,
following the AIM Cancellation, the Company will continue to be
subject to the Takeover Code, and the Company and its Shareholders
will therefore continue to have the benefit of the protections that
the Takeover Code affords, including, but not limited to, the
requirement that a person (together with any persons acting in
concert with such person) who acquires an interest in Ordinary
Shares carrying 30% or more of the voting rights in the Company or
who increases an existing interest of not less than 30% but not
more than 50% of the voting rights, must make a mandatory cash
offer to all other shareholders at the highest price paid by such
person (or person acting in concert with such person) in the 12
months before such acquisition.
Notwithstanding the above, the Company may cease to be subject
to the Takeover Code in the future if there are any changes that
lead to the Company being deemed to no longer have its place of
central management and control in the United Kingdom, Channel
Islands or the Isle of Man.
Shareholders should note that, if the Takeover Code ceases to
apply to the Company in the future, they will not receive the
protections afforded by the Takeover Code in the event that there
is a subsequent offer to acquire their Ordinary Shares.
Pro Forma Consolidated Statement of Financial Position as at 30
June 2022 (unaudited)
The pro forma consolidated statement of financial position as at
30 June 2022 (unaudited) is available at:
http://www.rns-pdf.londonstockexchange.com/rns/5848J_1-2022-12-13.pdf
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END
ACQMZMMZKFLGZZM
(END) Dow Jones Newswires
December 13, 2022 10:22 ET (15:22 GMT)
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