NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
("
Proposed Disposal of LabSkin™and SYN1113 and Related Assets
New Investing Policy
Notice of General Meeting
The Circular contains proposals (the "Proposals") for:
· the approval of the proposed sale of intellectual property rights in LabSkin™ and SYN1113 and related equipment (the "Disposal") ; and
· the adoption of an Investing Policy under AIM Rule 15.
Summary
Following a review of the performance of the business, the Board has concluded that the performance of the Company is not strong enough to secure an independent future.
The Directors are therefore proposing to dispose of the Company's intellectual property rights in LabSkin™ and SYN1113, and related assets. Completion will divest the Company of substantially all of its assets and the Company will be treated as an
For further information, please contact:
|
|
|
+44 (0)844 209 8440 |
Dr |
|
|
James Caithie/ |
Tel: +44(0) 20 7148 7900 |
|
1. Introduction
The Company announces that it has entered into the Disposal Agreement for the sale of certain of its assets to the Purchaser. The consideration will be settled by the issue of the Consideration Shares and a right to potential future revenue payments. Further details on the terms of the Disposal are contained in paragraph 3 below.
Under Rule 15 of the AIM Rules, the Disposal represents a fundamental change to the business of the Company and Completion is therefore conditional upon approval of the Shareholders.
The Disposal will result in the Company becoming an
Shareholders representing 76,964,038 Ordinary Shares, approximately 44.06 per cent. of the Share Capital, have provided irrevocable undertakings to vote in favour of the Resolutions. Further details of the irrevocable undertakings are contained in paragraph 7 below.
A General Meeting of the Company has been convened to seek the approval of Shareholders for the Disposal and the proposed Investing Policy. The General Meeting will be held at
2. BACKGROUND TO AND REASONS FOR THE DISPOSALS
Background to the Disposal
Since its admission to AIM in
2.1 The development of LabSkin™
LabSkin™ is a living skin equivalent model system which seeks to emulate normal human skin. LabSkin™ is a full thickness 3D cell culture model which offers a platform for non-animal cosmetic testing, clinical microbiological experimentation and in vitro skin research. It was developed at the
An internal review of the business was undertaken by the interim CEO, Dr
2.2 Specialist skin microbiology research and SYN1113
SYN1113 is a compound which was developed by Syntopix for cosmetic use in controlling acne and other skin blemishes. SYN1113 is the most advanced of the Company's compounds. It completed several clinical and consumer use tests in the period 2010 to 2012 and the Company sought to licence the product. Although several companies expressed interest in the product, none of these have led to a commercial licence arrangement.
The Directors consider that the reasons for the Company being unable to secure a licencing arrangement with a suitable commercial partner are not related to a lack of activity of SYN1113 or the Company's other compounds but, instead, to a reluctance on the part of companies active in the relevant areas to licence and launch new products, with there not having been any significant anti-acne product carrying a new active compound in the last 10 years.
2.3 Skin microbiology lab services to support
The Company has, in the prior 18 months, sought to build relationships with clinical research organisations ("CRO's") to supply micro-biology studies to support the patient focused activities of the CRO's. This has not lead to any significant collaborative relationships, and it seems there have been few clinical studies with a microbiology element carried out in the
On
In
Current trading
The Company published its Annual Report and Financial Statements for the year ended
Reasons for Disposal
· the Company has insufficient financial and operational resources to grow the sales of the LabSkin™ product quickly enough to such a level as would be required in order to make the Company self-sustaining in its present form;
· the reliance on contract research revenues, which are always unpredictable in terms of regularity and volume, also puts the viability of Company at risk;
· the Directors believe that the proposed Investing Policy has the potential to deliver future returns for Shareholders; and
· the Company has received support from over 44.06 per cent of the Company's Shareholders for the Disposal (in the form of irrevocable undertakings to vote in favour of the Disposal).
Consequently, the Directors consider the Disposal to be in the best interests of Shareholders as a whole and that it represents an opportunity for the Company to realise limited value today through the issue to it of the Consideration Shares and the potential of future revenue, whilst retaining the ability to use its remaining cash reserves to make an investment (by way of reverse takeover and in line with the proposed Investment Policy) with the potential to deliver future returns for Shareholders.
3. summary of the proposed disposal
Under the terms of the Disposal Agreement, the Purchaser has agreed to purchase and the Company has agreed to sell the following assets, conditional on, amongst other things, the Shareholders approving the Disposal in General Meeting:
· intellectual property rights in SYN1113;
· intellectual property rights in LabSkin™; and
· certain equipment associated with the operation of SYN1113 and/or LabSkin™.
The initial consideration for these assets will be the allotment and issue of Consideration Shares on Completion. The Consideration Shares are subject to a six month lock-in period from Completion, during which time the Company may not dispose of any interest in the Consideration Shares except in certain contractually agreed circumstances.
In addition, the Company will be entitled to the following additional consideration:
· a cash payment of 25 per cent. of any proceeds received by the Purchaser from the future sale or license of SYN1113; and
· a cash payment of 7.5 per cent. of future net sales made by the Purchaser in respect of LabSkin™ in the 36 months following Completion.
The Company's entitlement to additional consideration is protected in customary circumstances including a right for the Company to audit the relevant sales of the Purchaser.
In addition to obtaining approval of the Shareholders, the Completion is conditional on:
· the admission of the Consideration Shares; and
· the Purchaser obtaining a valuation report in accordance with section 593 of the Act.
The Company will make customary warranties to the Purchaser, primarily in respect of the assets being sold. The warranties are subject to customary limitations including a longstop for claims of 12 months from Completion. The Company will indemnify the Purchaser in respect of historic liabilities arising from the Company's historic business.
The Company will be subject to customary restrictive covenants for a period of 12 months from Completion, during which time the Company will be restricted from competing with the Purchaser and from enticing any customer or supplier from the Purchaser.
4. fundamental change of business
By virtue of its size, Completion of the Disposal will result in a fundamental change of business for the Company. As such, the Disposal requires the prior approval of Shareholders to be sought at the General Meeting in accordance with the AIM Rules.
5. CHANGES TO THE COMPANY FOLLOWING THE DISPOSAL
If the Disposal is approved by Shareholders, the Company will not hold any material tangible operating assets going forward.
The proposed Disposal will also result in the Company becoming an
6. INVESTING POLICY
As referred to above, on Completion, the Company will have disposed of all of its trading businesses and therefore (under Rule 15 of the AIM Rules) it will be re-classified as an
It is proposed that the Company will have the ability to invest in all sectors, however the focus will be on businesses focused on commercialising intellectual property and exhibiting the factors and management necessary for significant growth over the short to medium term. The Directors intend to focus primarily on the
It may be considered appropriate to take an equity interest in any proposed business, which may range from a minority position to 100 per cent. ownership. Any investment is likely to be made into an unquoted company and structured as a direct acquisition.
As the Company's financial resources are likely to be invested in just one investment, this acquisition is also likely to be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules. The Company does not currently intend to fund any investment with debt or other borrowings, but may do so if appropriate.
The Company's primary objective is that of achieving for Shareholders, over time, both capital growth and income through increasing profitability coupled with dividend payments on a sustainable basis.
The Directors believe that the collective business experience in the areas of acquisitions and corporate and financial management of both the Directors and of the Company's advisers and institutional Shareholders will assist the Company in the identification and evaluation of suitable opportunities.
The Directors consider that current market conditions and the general difficulty of securing both equity and debt financing for businesses, means there exists considerable opportunity to implement the proposed Investing Policy. The Directors also expect to have available to them such additional independent technical and commercial advice as they judge may be required.
Acquisition timeframe
Subject to the approval of the Investing Policy by the Shareholders at the General Meeting, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement its Investing Policy within 12 months of the General Meeting, failing which the Ordinary Shares would then be suspended from trading on AIM. If the Ordinary Shares are suspended, the Directors believe that they would then propose to convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.
7. Irrevocable Undertakings
Irrevocable undertakings to vote, or (where applicable) to procure that the registered holder votes, in favour of the Resolutions have been given to the Company by the Directors in respect of their entire beneficial holdings of 18,123,468 Ordinary Shares representing, in aggregate, approximately 10.37 per cent. of the Share Capital.
In addition to the Directors, Shareholders who in aggregate have a beneficial interest in 58,840,570 Ordinary Shares representing 33.69 per cent. of the Share Capital have irrevocably undertaken to vote in favour of the Resolutions.
In total, irrevocable undertakings to vote, or (where applicable) to procure that the registered holder votes, in favour of the Resolutions have been given to the Company in respect of 76,964,038 Ordinary Shares, representing 44.06 per cent. of the Share Capital.
8. General Meeting
At the General Meeting, the Resolutions will be proposed to approve (a) the Disposal and (b) the proposed Investing Policy. The Notice of GM, which is to take place at
· Resolution 1 seeks Shareholder approval for the Disposal.
· Resolution 2 seeks Shareholder approval for the Investing Policy.
Resolutions 1 and 2 are to be proposed as ordinary resolutions and will be passed if more than 50 per cent. of the votes cast are in favour.
DEFINITIONS
The following definitions shall apply throughout this Circular unless the context otherwise requires:
"Act" |
the Companies Act 2006 (as amended from time to time); |
"AIM" |
the AIM market operated by the |
"AIM Rules"
|
means the AIM Rules for Companies issued by the |
"Business Day" |
means any day, other than a Saturday or Sunday or public holiday in |
"Circular" |
this document; |
"Company" |
|
"Completion" |
completion of the Disposal; |
"Consideration Shares" |
such number of ordinary shares in the share capital of the Purchaser as having an aggregate value nearest to but not less than |
"CREST" |
the relevant system (as defined in the Uncertificated Securities Regulations 2001 (the "Regulations")) in respect of which Euroclear |
"Directors" or "Board" |
the directors of the Company, whose names appear on page 6 of this Circular; |
"Disposal" |
the proposed sale by the Company to the Purchaser of intellectual property rights in LabSkin™ and SYN1113 and related equipment; |
"Disposal Agreement" |
the conditional asset purchase agreement dated
|
"FCA" |
the |
"Form of Proxy" |
the form of proxy for use by Shareholders enclosed with this Circular, to enable Shareholders to appoint one or more proxies to attend the GM and, on a poll, to vote instead of that Shareholder; |
"GM" or "General Meeting" |
the general meeting of the Company convened for |
"Group" |
the Company and its Subsidiaries; |
"
|
an AIM company which has as its primary business or objective, the investing of its funds in securities, businesses or assets of any description; |
"Investing Policy" |
the proposed investing policy to be adopted by the Company in accordance with the AIM Rules following the Disposal; |
"LabSkin™" |
means the Company's living skin equivalent model system which seeks to emulate normal human skin operating under the unregistered trade mark LabSkin™ (as detailed further in paragraph 2.1 of Part I of this Circular); |
"Leeds Skin"
|
|
" |
|
"Nomad" |
|
"Notice of GM" |
the notice of the General Meeting as set out at pages 12 and 13 of this Circular; |
"Ordinary Shares" |
the 174,675,828 ordinary shares of 1p each in issue at the date of this Circular; |
"Purchaser" |
|
"Resolutions" |
the resolutions to be proposed at the General Meeting, details of which are set out in the Notice of GM; |
"RIS" |
|
" |
the entire issued share capital of the Company as at the date of this Circular; |
"Shareholders" |
the persons who are registered as holders of Ordinary Shares as at the date of this Circular; |
"Subsidiaries" |
has the meaning ascribed by the Act; |
"SYN1113" |
means compound SYN1113, comprising of a number of patents of various stages, pending and granted (as detailed further in paragraph 2.2 of Part I of this Circular); |
"Takeover Code" |
means the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers; and |
"United Kingdom" or "UK" |
United Kingdom of Great Britain and Northern Ireland. |
This information is provided by RNS