Reports and Releases
FIT Biotech Oy: FIT Biotech enters into EUR 10 million financing – FIT Biotech’s equity back to positive after first tranche financing received
FIT Biotech Oy
Company release 23.12.2017 at 11.00 am EET
FIT Biotech enters into EUR 10 million financing
FIT Biotech's equity back to positive after first tranche financing received
FIT Biotech Oy (the "Company") has entered into a financing agreement with London based Alpha Blue Ocean Investment Group ("ABO"). FIT Biotech Oy's Board has on December 22, 2017 approved the execution of "Agreement for the Issuance of and Subscription to Notes Convertible into new and/or existing Shares and/or partially redeemable in cash with Share Subscription Warrants Attached ("the Agreement") together with a Share Lending Agreement" (together "the Programme") entered into between the Company and a fund (European High Growth Opportunities Securitization Fund) managed by European High Growth Opportunities Manco S.A. The Agreement is expected to be presented for approval of an Extraordinary Shareholders Meeting to be held at the latest in February 2018.
The Board of Directors has decided in its' meeting held on December 22, 2017 to draw down the first Tranche of EUR 500,000 before the end of December.
With the first Tranche being drawn down, the equity including additions according to Companies Act will positive in the end of December. The Company announced on December 19th that the equity was negative and amounted to EUR109,600 at the end of November.
The Programme consists of minimum EUR three (3) million and up to a maximum of EUR ten (10) million in convertible notes with warrants.
Pursuant to the Programme, convertible notes may be drawn down in 20 sequential tranches of EUR 500,000 (each, a "Tranche") during a period of 30 months. The Company may terminate the Programme without cause after the 6th Closing Date i.e when the 6th Tranche has been drawn. The convertible notes issued under in each Tranche drawn down carry the right to convert such Tranche into the Company's Class K shares with the valuation method and technical process stipulated in detail in the Agreement. The conversion price of the K-shares is 85% of the lowest closing volume weighted average price over a 15 trading days period preceding a conversion.
Further pursuant to the Programme, each drawdown of a Tranche will provide ABO with share warrants that will entitle it, but will not oblige, it to subscribe for a number of Class K shares at a subscription price depending on the market value of the Company's K shares at the time the share warrants are issued. The final total number of the Company's K shares to be subscribed under the warrants will remain unknown and will depend on ABO's willingness to subscribe for and invest in the Company's shares as well as on the values of the shares in public trading from time to time as stipulated in the Agreement. In case ABO uses the warrants to subscribe for Company's K shares such subscription would have a positive effect on the Company's equity and cash flow.
The financing under the Programme constitutes a capital loan as referred to in Chapter 12 in the Finnish Companies Act.
The Programme contains also a Share Lending Agreement under which the Company (as the lender) will provide to ABO a total of 41,666,667 K shares as a share loan. These lent shares will be redelivered to the Company upon the termination of the loan at the Company's will.
For the Programme, the Board may use either newly issued shares and/or treasury shares and/or redeem in cash convertible notes issued to the investor.
Under the Agreement ABO is entitled to a commitment fee of EUR 400,000 which will be paid with K shares and convertible notes with no warrants attached delivered at the execution of the agreement (the "Commitment Fee"). The Commitment Fee will consist of 16,666,667 K shares and 200 notes convertible into shares. The total number of shares to be received by ABO as payment of the Commitment Fee depends on the market value of the Company's Class K share. Currently, the part of the Commitment Fee paid in equity shares corresponds to approximately 11,5% K shares.
The aggregate number of new Class K shares to be issued pursuant to the Programme and its convertible loan notes depends on the market value of the Company's Class K share during the Programme period. When calculated with the share prices in public trading preceding the acceptance of the Programme the number of shares to be issued in the first 6 Tranches would be 220,588,230 shares and 112,500,000 warrants that entitle to subscribe to the same number of shares. The Programme has a dilutive effect to the current share owners.
The final number of Class K shares required for the implementation of the Programme as a whole is unknown and will be determined, inter alia, based on the number of Tranches and number of convertible loan notes to be drawn down, the fluctuation and development of the Company's Class K share in trading, the number of share warrants exercised by ABO, and possible future adjustments as agreed during the validity of the Programme.
The balance of this new financing is subject to the approval of the Extraordinary General Meeting scheduled to be held at the latest in February 2018, granting the Company's Board of Directors the requisite authorizations in order to implement it. The notice convening the Extraordinary General Meeting as well as the terms and conditions of the agreement will be published through a separate company release.
As part of this Programme, the current Bracknor financing has been discontinued. The Programme is not anticipated to have any material impact on the current Sitra or Tekes financing. The Programme does not forbid any other types of financing to be used in the Company.
FIT Biotech's most advanced clinical stage gene-based treatment, therapeutic HIV-vaccine, FIT-06, has been shown to be safe and well tolerated in several clinical trials. In the first quarter of 2018, FIT-06 will enter a phase 2 clinical trial as a part of a "functional cure" regimen. A functional cure is defined as a state where HIV-virus is undetectable in the blood, and there is no disease progression nor transmission despite not being treated by standard antiretroviral therapy. This clinical trial is funded by European Commission Horizon 2020 programme and coordinated by the European HIV Vaccine Alliance (EHVA).
FIT Biotech announced in November 2017 that the United States Patent and Trademark Office has issued a patent titled "Methods of treating HIV diseases using novel expression vectors". The patent grants the Company proprietary rights to exploit its GTU®-based DNA vaccines, including FIT-06, for the treatment of HIV patients. Issued patents generally convey commercial exclusivity enabling the premium pricing that large pharmaceutical companies require prior to entering into a licensing agreement.
According to FIT Biotech's CEO, James Kuo: "The recent issuance of the United States patent covering FIT-06 is instrumental in partnering the marketing rights for this important new HIV therapy in the largest pharmaceutical market in the world. As such, it is an economically momentous occasion for the Company. Our partnership with Alpha Blue Ocean will enable us to broadly realize the commercial value of our gene-based platform technologies and drug candidates."
Pierre Vannineuse, CEO and Founder of Alpha Blue Ocean Investment Group and manager of European High Growth Opportunities Securitization Fund had the following comments: "With this new partnership, we are renewing our confidence in FIT Biotech's management team. Alpha Blue Ocean prides itself in financing highly innovative biomedical companies across the globe with a pan European focus. The issued patent in the United States convinced us that they are a pioneer in non-viral gene transfer vectors and possess the corresponding intellectual properties to enable their global commercialization."
FIT BIOTECH OY
James Kuo CEO FIT Biotech Oy
Tel: +358 44 0331307
Certified Advisor: Aalto Capital Partners Oy
Tel: +358 40 587 7000
About FIT Biotech:
FIT Biotech Oy is a biotechnology company established in 1995. The company develops and licenses its patented GTU® (Gene Transport Unit) vector technology for new-generation medical treatments. GTU® is a gene transport technology that meets an important medical challenge in the usability of gene therapy and DNA vaccines.
FIT Biotech applies GTU® technology in its drug development programs. Application areas include cancer (gene therapy) and infectious diseases such as HIV and tuberculosis, as well as animal vaccines.
FIT Biotech shares are listed on the First North Finland marketplace maintained by Nasdaq Helsinki Oy.
About European High Growth Opportunities Securitization Fund:
European High Growth Opportunities SF is an institutional investment vehicle based in Luxembourg focusing on financing highly innovative companies on a pan European basis which it considers highly undervalued. EHGO is funded out of the Alpha Blue Ocean Partner's Equity and is exclusively advised by Alpha Blue Ocean Investment Group. Its mandate is to invest in highly innovative European companies while supporting their needs for growth capital and offer a credible European alternative to funding.
About Alpha Blue Ocean Investment Group:
Alpha Blue Ocean was founded by Pierre Vannineuse and is the investment manager to a family of funds with approximately $300 million in assets under management. Alpha Blue Ocean specializes in providing flexible, innovative and non-invasive debt and equity financing to publicly listed companies across the world and in a variety of sectors including healthcare, energy, mining and technology.
Alpha Blue Ocean has offices in London and Geneva. For more information, please contact email@example.com - www.alphablueocean.comBack to list