SalvaRx Group plc Restructuring, Loan Conversion and Loan Facility (2956Y)
02 March 2017 - 6:01PM
UK Regulatory
TIDMSALV
RNS Number : 2956Y
SalvaRx Group plc
02 March 2017
2 March 2017
SalvaRx Group plc
("SalvaRx" or the "Company")
Restructuring, Loan Note Conversion and Loan Facility
SalvaRx (LON: SALV), a biotechnology company focused on
immunotherapy for cancer, announces a corporate restructuring, loan
note conversion and new loan facility.
Corporate Restructuring and Loan Note Conversion
The Directors of SalvaRx have decided to streamline the group
structure such that all investments will be held, and a new loan
facility will be issued, by SalvaRx Limited, the group's wholly
owned BVI subsidiary.
The Company's investment in Intensity Therapeutics Inc.,
together with the US$1 million convertible loan issued by the
Company to Mr Mellon and Dr Bailey as announced on 22 April 2016
(the "Convertible Loan"), will therefore be assigned to SalvaRx
Limited. The Convertible Loan will immediately be converted into
shares of SalvaRx Limited at a price of US$250 a share (equivalent
to the conversion price of 35.5p under the Convertible Loan ("the
Convertible Loan Exercise Price")). Following the conversion, Mr
Mellon, Non-Executive Chairman, and Dr Bailey, Non-Executive
Director, will hold in aggregate 5.8% of SalvaRx Limited, reducing
the Company's interest to 94.2%. Their existing aggregate holding
in the Company of 73.1% remains unchanged following the conversion.
Mr Mellon and Dr Bailey's direct and indirect interest in SalvaRx
Limited of 74.6% is identical to the aggregate indirect interest
they would have had in SalvaRx Limited if the Convertible Loan had
been converted into shares in SalvaRx.
Loan Facility
In order to evaluate and either invest in or acquire further
assets in the immuno-oncology sector, SalvaRx Limited has
constituted a loan note instrument of up to US$5 million in
unsecured loan notes (the "Loan Notes"). The Loan Notes are
repayable on the fourth anniversary following issue and when issued
will carry a coupon of 7%.
In addition, holders of Loan Notes will receive warrants to
subscribe for new shares in SalvaRx Limited (the "Warrants").
US$7,500 of Warrants will be issued in respect of each US$10,000
loan note unit. The Warrants will vest in the event of a qualifying
transaction (being a transaction or series of transactions whereby
SalvaRx Limited obtains additional external equity financing in
excess of US$15 million ("Qualifying Event") over a defined
period). The exercise price of the Warrants is described in the
note below.
Mr Mellon and Dr Bailey, who are both directors and substantial
shareholders in the Company, have each subscribed for US$1 million
of the Loan Notes.
Ian Walters, CEO of SalvaRx, said "With this potential access to
new capital, the Board is confident that it can continue its
strategy of securing attractive assets and building companies to
drive the group's research and development programs forward
efficiently."
SalvaRx's portfolio of cancer immunotherapy companies comprises
interests in iOx Therapeutics, a University of Oxford spin-out
company developing products that stimulate Natural Killer T-Cells,
Intensity Therapeutics, a US based biotechnology company developing
novel intratumoral therapies that promote antigen presentation and
Nekonal Oncology, a company which is developing a series of novel
immune checkpoint antibodies.
Related Party Transactions
The subscription for the Loan Notes by Mr Mellon and Dr Bailey
and the re-assignment of the Convertible Loan to SalvaRx Limited
each constitute related party transactions under Rule 13 of the AIM
Rules for Companies. The independent directors, being Ian Walters,
Kam Shah, Richard Armstrong and Colin Weinberg, consider, having
consulted with Northland Capital Partners Limited, the Company's
Nominated Adviser, that the terms of (i) the subscription for the
Loan Notes and (ii) the re-assignment of the Convertible Loan are
in both cases fair and reasonable insofar as the Company's
shareholders are concerned.
Warrant Exercise Price
The exercise price of the Warrants is the higher of the
Convertible Loan Exercise Price (equivalent to US$250 per share in
SalvaRx Limited) and a price reflecting a discount to the implied
valuation of SalvaRx Limited based on the Qualifying Event. The
minimum discount of 25% increases in line with the period of time
between the issue of the Loan Notes and the date of the Qualifying
Event, as shown in the table below.
Time from issue of Discount to implied
the Loan Notes valuation of SalvaRx
Limited under the
Qualifying Event
-------------------------- ----------------------
Before first anniversary 25%
-------------------------- ----------------------
Between first and second
anniversary 30%
-------------------------- ----------------------
Between second and
third anniversary 35%
-------------------------- ----------------------
After third anniversary 40%
-------------------------- ----------------------
The life of the Warrants is the shorter of (i) four years and
(ii) two years after either (a) a Qualifying Event, or (b) the date
of repayment of the entire principal and accrued interest of the
Loan Notes (except for when the repayment occurs in the absence of
a Qualifying Event for which the Warrants can extend for an
additional two years).
-Ends-
SalvaRx Group plc
Ian Walters (Chief Executive) Tel: +1 203 441
5451
Northland Capital Partners Limited Tel: +44 (0) 20
Nominated Adviser and Broker 3861 6625
Matthew Johnson / Edward Hutton
(Corporate Finance)
John Howes (Corporate Broking)
Peterhouse Corporate Finance Limited Tel: +44 (0) 20
Joint Broker 7469 0932
Lucy Williams / Duncan Vasey
About SalvaRx
SalvaRx was founded in 2014 to develop therapies within the
rapidly growing immuno-oncology market, which uses treatments
designed to boost the body's natural defences to fight the cancer.
Immuno-oncology therapy is a fast growing and new therapeutic area,
a market expected to grow to $80 billion worldwide by 2020 (Global
& USA Cancer Immunotherapy Market Analysis 2020).
SalvaRx's strategy is to invest in a portfolio of companies
involved in novel cancer immunotherapies and develop them up to
clinical proof of concept. SalvaRx provides portfolio companies
with operational support in addition to capital, either by managing
its portfolio companies directly or augmenting an existing team.
SalvaRx's management team have a proven track record of discovering
and commercialising drugs in the area of cancer immunotherapy with
Bristol-Myers Squibb and Johnson & Johnson. The team is
supported by an extended network of senior academic and industry
executives to promote commercial and scientific outcomes, including
licensing and partnering discussions.
For more information please visit: www.salvarx.io
This information is provided by RNS
The company news service from the London Stock Exchange
END
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