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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA AND JAPAN
Proposed Vendor Placing to raise approximately £15.3 million
Proposed Placing and Open Offer to raise approximately £42.7 million
Vernalis plc ("Vernalis" or the "Company") today announced the proposed acquisition of Cita NeuroPharmaceuticals Inc. ("Cita") for an initial consideration of U.S.$29.5 million and deferred consideration of up to U.S.$35 million (the "Cita Acquisition"). Vernalis will also assume certain of Cita's liabilities on Completion. The initial consideration will be satisfied by the issue of 26,915,831 million new Ordinary Shares, of which 24,284,984 have been conditionally placed by Piper Jaffray pursuant a Vendor Placing to realise cash proceeds to the Vendors of approximately £15.3 million (U.S.$26.2 million) (before expenses). In addition, the Company announced its intention to raise approximately £42.7 million (before expenses) in a Placing and Open Offer.
Key reasons for the Cita Acquisition
• Cita's focus on neurology and CNS therapies will strengthen Vernalis' clinical pipeline in its principal area of therapeutic focus;
• Cita has a relatively late stage development pipeline that will enhance the maturity of Vernalis' drug development pipeline behind frovatriptan, with CNP1512 for the treatment of Parkinson's disease being prepared for entry into Phase III clinical trials in H2 2006 and CNP3381 for the treatment of neuropathic pain being prepared for entry into Phase II clinical trials in H1 2006;
• Cita's Parkinson's disease programme will in particular strengthen Vernalis' existing portfolio in this area following the recent acquisition of the rights to market and sell Apokyn® in North America;
• Cita's product pipeline will potentially provide Vernalis with additional products to commercialise through its commercial operation in North America, assuming these programmes successfully complete clinical trials and are approved by the relevant authorities; and
• Cita is managed as a "virtual" company, outsourcing most of its research and development activities and as a result will not increase the Group's cash burn significantly other than for the costs directly related to the development of Cita's clinical drug candidates.
Key terms of the Cita Acquisition
Vernalis has entered into agreements to acquire the entire issued, and to be issued, share capital of Cita for:
• initial consideration of U.S.$29.5 million to be satisfied by the issue of 26,915,831 Ordinary Shares, and
• further deferred consideration of up to U.S.$35 million (in shares, cash or by a combination of cash and shares) payable in instalments by Vernalis dependent upon achieving certain milestones in respect of the development of Cita's clinical drug candidates CNP1512 and CNP3381.
Vernalis will also assume certain of Cita's liabilities on Completion
The Cita Acquisition is conditional, inter alia, upon the approval of Shareholders. Details of Vendor Placing and Placing and Open Offer
• Placing and Open Offer of 67,749,457 Open Offer Shares at 63 pence per share to raise £42.7 million (before expenses), fully underwritten by Piper Jaffray;
• Vendor Placing of 24,284,984 new Ordinary Shares at a price of 63 pence per share, fully underwritten by Piper Jaffray to raise £15.3 million (before expenses) for Vendors;
• Open Offer Shares (less the Committed Open Offer Shares) have been conditionally placed with institutional investors subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer;
• Open Offer on the basis of 5 Open Offer Shares for every 16 Existing Ordinary Shares; and
• Vendor Placing Shares have been placed firm with institutional investors. Use of proceeds
The net proceeds of the Placing and Open Offer (after the cost of the Cita Acquisition, the Vendor Placing and the Placing and Open Offer), which will amount to approximately £38.7 million, will allow the Company to fund the development of Cita's clinical programmes CNP1512 and CNP3381, and invest in the marketing and development of Apokyn®, the onmarket Parkinson's disease product recently acquired by Vernalis, while having sufficient cash resources to fund the Enlarged Group's other existing business activities beyond the first half of 2007 when a U.S.$40 million milestone payment from Endo is due to be received (assuming regulatory approval of frovatriptan for MRM).
Extraordinary General Meeting ("EGM")
An EGM to, among others, approve the Resolutions to enable the Directors to complete the Cita Acquisition Agreements and issue the Consideration Shares, effect the Vendor Placing and issue the Vendor Placing Shares and effect the Placing and Open Offer and issue the Open Offer Shares, will be held at the offices of Allen & Overy LLP at One New Change, London EC4M 9QQ on 13 December 2005 at 10.00 a.m.
Simon Sturge, Chief Executive Officer of Vernalis, commented:
"We are pleased to announce both the acquisition of Cita and the strong support from our existing shareholders and new investors to raise £42.7 million and take up a further £15.3 million in a Vendor Placing. This, in addition to the recent acquisition of Apokyn® for the treatment of Parkinson's disease, gives the Company a broadened portfolio of products on the market and in clinical development and is a major step forward in Vernalis' strategy to become a self funded CNS focused Company. It is now our intention to focus on progressing the current portfolio of compounds in development and to drive product sales. We do not envisage undertaking further corporate transactions in the near future and anticipate that our next major news will come in the form of data from our Phase III safety trial with frovatriptan for the short term prophylaxis for menstrually related migraine, with the confirmatory efficacy data and subsequent filing expected in the first half of next year."
Enquiries:
Vernalis plc
Simon Sturge, Chief Executive Officer
Tony Weir, Chief Financial Officer
Julia Wilson, Head of Corporate Communications
+44 (0) 118 977 3133
Piper Jaffray
David Wilson
David Rasouly
Jamie Adams
+44 (0) 20 7743 8700
Brunswick
Jon Coles
Wendel Verbeek
+44 (0) 20 7404 5959
Piper Jaffray Ltd., which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Vernalis plc in relation to the Cita Acquisition (including the Vendor Placing) and the Placing and Open Offer and will not be responsible to anyone other than Vernalis plc for providing the protections afforded to clients of Piper Jaffray Ltd. nor for providing advice in relation to the Cita Acquisition (including the Vendor Placing) and the Placing and Open Offer or any other transaction or arrangement referred to herein.
This press announcement has been issued by Vernalis plc and is the sole responsibility of Vernalis plc.
Neither the Vendor Placing nor the Placing and Open Offer are being made, directly or indirectly, in or into the United States or Japan and applications in or from the United States or Japan will not be capable of acceptance and will be deemed invalid (subject to certain exceptions). This announcement may not be issued, mailed or otherwise distributed or sent, through CREST or otherwise, in, into or from the United States or Japan.
Neither the Vendor Placing nor the Placing and Open Offer are being made, directly or indirectly, in or into Australia or Canada and applications in or from Australia or Canada will not be capable of acceptance and will be deemed invalid (subject to certain exceptions with respect to Australia). This announcement may not be issued, mailed or otherwise distributed or sent, in, into or from Australia or Canada.
This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities other than the securities to which it relates or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this announcement nor any subscription or sale made under it shall, under any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as of any subsequent time.
This announcement may contain forward-looking statements that reflect the Group's current expectations regarding future events, including the clinical development and regulatory clearance of the Group's products and including that of frovatriptan for menstrually related migraine, the Group's ability to find partners for the development and commercialisation of its products, the benefits of reacquiring the rights to frovatriptan in North America and the partnership with Endo Pharmaceuticals Inc. on the Group's liquidity and results of operations, as well as the Group's future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from those projected herein and depend on a number of factors, including the success of the Group's research strategies, the applicability of the discoveries made therein, the successful and timely completion of clinical studies, including with respect to frovatriptan and the Group's other products, the uncertainties related to the regulatory process, the ability of the Group to identify and agree beneficial terms with suitable partners for the commercialisation and/or development of frovatriptan and other products, as well as the achievement of expected synergies from such transactions, the acceptance of frovatriptan and other products by consumers and medical professionals, the successful integration of completed mergers and acquisitions and achievement of expected synergies from such transactions, the ability of the Group to identify and consummate suitable strategic and business combination transactions. |
