TIDMMTPH
RNS Number : 1694P
Midatech Pharma PLC
04 June 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO OR FROM THE UNITED STATES OR ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
Midatech Pharma PLC
("Midatech", the "Company" or the "Group")
Proposed Acquisition of DARA BioSciences, Inc.
Midatech Obtains Oncology-Focused Commercial Platform and
Products in the US via Proposed All-Stock Transaction plus CVR
Oxford, UK, 4 June 2015 - Midatech (AIM: MTPH), the
international specialty pharmaceutical company with a diversified
portfolio of high-value products in development, today announces
the proposed acquisition of DARA BioSciences, Inc. ("DARA")
(NASDAQ: DARA), an oncology supportive care pharmaceutical company
(the "Acquisition"). Midatech will issue approximately 5.4 million
new ordinary shares in exchange for the outstanding shares of DARA,
representing an initial consideration of approximately US$24.0
million (GBP15.8 million) based on a Midatech share price of 291
pence, subject to certain adjustments. In addition, DARA
shareholders will receive contingent value rights ("CVRs") to
conditional cash payments of a maximum of US$5.7 million (GBP3.8
million) in aggregate based on the performance of certain DARA
products, representing a total consideration of up to approximately
US$29.7 million (GBP19.5 million).
Acquisition Highlights:
-- Excellent strategic fit; strengthens Midatech's franchise in
oncology with immediate access to revenue generating product
portfolio in cancer supportive care with multiple growth
catalysts
-- Provides Midatech with an established commercial platform in
the US, which will enable the Group to distribute, market and sell
its self-developed products, including Q-Octreo, in the world's
largest and most profitable pharmaceutical market
-- Accelerates the transition towards a leading specialty pharmaceutical company
-- Acquisition expected to generate positive cash flows from early 2018
-- Completion anticipated in H2 2015
-- Conference call for investors and analysts today (full details below).
Principal Terms of the Acquisition
Pursuant to the terms of an acquisition agreement and plan of
merger subject to the laws of the State of Delaware (the
"Acquisition Agreement"), unanimously approved by each party's
Board of Directors, each share of DARA issued and held as at the
date immediately prior to the Acquisition becoming effective will
be converted into the right to receive: (i) the equivalent of 0.272
new shares of Midatech (subject to certain adjustments described in
more detail below); and (ii) one CVR.
At the current exchange ratio, Midatech will issue approximately
5.4 million new ordinary shares of 0.005 pence each in the share
capital of Midatech ("Ordinary Shares") via American Depositary
Receipts ("ADR"s) and current DARA shareholders would own
approximately 16 per cent of the enlarged group following
completion of the Acquisition. This represents approximately $1.20
per DARA share, a premium of 50.8% over the DARA closing price of
$0.796 per share on 3 June 2015 and a premium of 55.6% over the
last 30 day volume weighted average DARA closing price of $0.771
per share.
Each DARA shareholder will receive one CVR per share of DARA
common stock held, representing a right to additional contingent
cash payments in the event that certain sales milestones with
respect to DARA products Gelclair(R) and Oravig(R) are met. A
maximum aggregate value of US$5.7 million (GBP3.8 million) in cash
will become due and payable to the CVR holders over the DARA
financial periods arising in 2017 and 2018 if such milestones are
met, and which shall be financed from the gross profits of DARA in
respect of such sales.
The share exchange ratio is subject to adjustment, and will be
determined based on the volume-weighted average price of the
Ordinary Shares on the AIM Market of the London Stock Exchange
("AIM") over the 15 day period ending on the business day
immediately prior to the Acquisition becoming effective. The
exchange ratio is subject to an implied acquisition price range of
$1.08 to $1.32 per DARA share and will be adjusted for movements
outside this range, subject to a maximum exchange ratio of 0.306
and a minimum of 0.249.
Option holders who do not exercise their securities prior to the
closing and warrant holders are expected to receive options and
warrants in Midatech shares in due course, subject to the terms of
the Acquisition Agreement and relevant plans or agreements. In
addition, warrant holders will receive a CVR if and when
exercised.
Application is expected to be made at the time of completion of
the Acquisition to the London Stock Exchange for the new Ordinary
Shares in respect of the Acquisition to be admitted to trading on
AIM and which are to be issued to DARA shareholders by means of the
issue of a proportionate number of ADRs expected to be admitted to
trading on the NASDAQ Stock Market LLC trading platform ("NASDAQ").
The new Ordinary Shares will rank pari passu with the existing
Ordinary Shares.
The Acquisition is subject to customary closing conditions
including, among other things, approval of the transaction by
stockholders of DARA and the listing of Midatech's ADRs on NASDAQ.
The Acquisition is expected to close in the second half of
2015.
Strategic Rationale for the Acquisition
The Acquisition accelerates Midatech's transition to an
oncology-focused specialty pharma company and is in line with its
strategy, as outlined at the time of its initial public offering on
AIM in December 2014, of generating growth through strategic
acquisitions of complementary products and preparing for product
launches out of its core nanotechnologies.
Through the Acquisition, Midatech acquires a commercial foothold
with a national field sales organisation, a managed markets
presence, an integrated and national distribution network and
established marketing capabilities to leverage the attractive U.S.
market. The Acquisition internationally diversifies Midatech's
business into the US by adding a differentiated and attractive
portfolio of oncology supportive care products, including:
-- Gelclair(R) , an oral gel indicated for the management and
relief of pain due to oral mucositis and other oral lesions that
can occur with common cancer treatments;
-- Oravig(R) , an orally-dissolving buccal tablet indicated for
the local treatment of oropharyngeal candidiasis in adults
scheduled for launch in Q4 2015;
-- Soltamox(R) , the only liquid form of tamoxifen, is indicated
for the treatment of metastatic breast cancer, the adjuvant
treatment of node-positive breast cancer in premenopausal women,
the reduction in risk of invasive breast cancer in women with
ductal carcinoma in situ (DCIS), and for the reduction of the
incidence of breast cancer in women at high risk for breast cancer;
and
-- Co-marketed products with Mission Pharmacal: Ferralet(R) 90 (for anaemia), and Aquoral(R) (for chemotherapy/radiation therapy-induced dry mouth).
The combination of Midatech and DARA (the "Enlarged Group") will
be under the leadership of the existing Midatech management team
and Board of Directors, who have excellent senior executive track
records in the global pharmaceutical and biotech industry. DARA's
management team, including Chris Clement, current President and
Chief Executive Officer of DARA, will continue with the surviving
corporation to ensure the continued success of the Enlarged
Group.
Commenting on the announcement, Midatech's Chief Executive
Officer, Dr. Jim Phillips, said: "The acquisition of DARA provides
Midatech with access to an impressive portfolio of products and the
potential for a fast-growth revenue stream in our target
therapeutic area of oncology. This acquisition also provides us
with a commercial footprint in the US, from which we can launch our
own products and thus retain more value. I am pleased to be
delivering such scale and growth catalysts to Midatech as defined
in the strategy at the time of our IPO in December. I look forward
to working with our expanded team as we welcome DARA staff to
Midatech."
Further details of DARA
-- DARA had revenue of approximately US$1.9 million and loss
before tax of approximately US$9.2 million for the year ended 31
December 2014
-- DARA had net assets of approximately US$13.9 million as at 31
December 2014 including cash and cash equivalents of approximately
US$12.0 million
-- As at 31 December 2014, DARA had the equivalent of 15 full time employees
-- As at 31 March 2015, DARA had cash and cash equivalents of US$9.8 million
Advisers
Torreya Partners served as financial adviser to Midatech on the
Acquisition and Brown Rudnick LLP in the United States and in the
United Kingdom served as the Company's legal adviser. Aquilo
Partners, L.P. served as financial adviser to DARA and K&L
Gates LLP served as its legal adviser.
Analyst and Investor Call Information
Midatech's management team will hold an investor conference call
and webcast this morning at 10:30am GMT to discuss the Acquisition.
To participate in the conference call, please use the following
dial-in:
UK +44 1452 555 566
USA +1 866 966 9439
Conference ID: 59779124
The call will be recorded and available for replay until 2 July
2015, using the following dial-in:
UK +44 1452 550 000
USA +1 866 247 4222
Conference ID: 59779124
Disclaimer
Neither this announcement, the publication in which it is
contained nor any copy of it may be made or transmitted into the
United States of America (including its territories or possessions,
any state of the United States of America and the District of
Columbia) (the "United States"). Neither this announcement, nor any
copy of it may be taken, transmitted or distributed, directly or
indirectly, into Australia, New Zealand, South Africa, Japan,
Canada or Switzerland or any jurisdiction where to do so would
constitute a violation of the relevant laws of such jurisdiction.
Any failure to comply with this restriction may constitute a
violation of securities law in those jurisdictions. The
distribution of this announcement in other jurisdictions may also
be restricted by law and persons into whose possession this
announcement comes should inform themselves about, and observe, any
such restrictions.
This announcement does not itself 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 shares or any other
securities in Midatech Pharma PLC nor shall it (or any part of it)
or the fact of its distribution, form the basis of, or be relied on
in connection with, any contract therefore. The distribution of
this announcement in certain jurisdictions may be restricted by law
and persons into whose possession any document or other information
referred to in this announcement, comes should inform themselves
about, and observe, any such restrictions. Any failure to comply
with these restrictions may constitute a violation of the
securities laws of any such jurisdiction.
In particular, this announcement does not itself constitute an
offer for sale of, or a solicitation to purchase or subscribe for,
any securities of Midatech Pharma PLC in the United States or an
advertisement for the same. There will be no public offering of
such securities in the United States.
Investors should not make any investment decision regarding any
transferable securities to which this announcement relates except
on the basis of information to be contained in the public
documentation to be published in due course in connection with the
Acquisition.
Nothing in this announcement is intended, or is to be construed,
as a profit forecast or to be interpreted to mean that earnings per
Midatech ordinary share or per DARA share either for the current or
future financial years (or that of the Englarged Group) will match
or exceed the historical published earnings of Midatech or DARA
whether combined or otherwise.
Forward Looking Statements
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of legislation in
the United Kingdom and/or United States. Such forward-looking
statements include, but are not limited to, statements regarding
the expected completion of the Acquisition, any expected free cash
flow generation, any expected NASDAQ listing, any market and growth
opportunities, the amount of anticipated cost synergies and other
benefits associated with the Acquisition and other statements that
are not historical fact.
Any forward-looking statements are based on currently available
competitive, financial and economic data together with management's
views and assumptions regarding future events and business
performance as of the time the statements are made and are subject
to risks and uncertainties. We wish to caution you that there are
some known and unknown factors that could cause actual results to
differ materially from any future results, performance or
achievements expressed or implied by such forward-looking
statements, including but not limited to uncertainties as to how
DARA stockholders may vote in respect to the merger proposal, the
possibility that competing offers may be made, the possibility that
various closing conditions for the Acquisition may not be satisfied
or waived, operational challenges in achieving strategic objectives
and executing plans, the risk that markets do not evolve as
anticipated, the potential impact of the general economic
conditions and competition in the industry.
Reference should be made to those documents that Midatech and
DARA shall file from time to time or announcements that may be made
by Midatech and/or DARA, in the case of Midatech, in accordance
with the London Stock Exchange AIM Rules for Companies ("AIM
Rules") and the Disclosure and Transparency Rules ("DTRs") and in
the case of DARA the US Securities and Exchange Commission ("SEC"),
including the section titled "Risk Factors" of DARA's most recent
Annual Report filed on Form 10-K and Quarterly Reports on Form
10-Q. This is in addition to the proxy statement/prospectus
(referred to below) to be filed by Midatech and DARA, which shall
contain and identify 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 or DARA 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
UK or the US, Midatech and DARA do not undertake any obligation to
publicly update or revise any forward-looking statements because of
new information, future events or otherwise arising.
Additional Information and Where to Find It
In connection with the proposed transaction, Midatech will file
with the SEC a Registration Statement on Form F-4, which will
include the proxy statement of DARA and that also constitutes a
prospectus of Midatech under SEC filing rules (the "proxy
statement/prospectus"). INVESTORS ARE URGED TO READ THESE MATERIALS
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT MIDATECH, DARA AND THE ACQUISITION.
This announcement has been prepared in accordance with English
law, the AIM Rules and the DTRs and accordingly information
disclosed in this announcement may not be the same as that which
would have been prepared in accordance with the laws of any
jurisdiction outside of the United Kingdom.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction
Participants in the Solicitation
Midatech, DARA and their respective executive officers and
directors may be deemed to be participating in the solicitation of
proxies from DARA security holders in connection with the
transactions contemplated by the proposed proxy
statement/prospectus. Information regarding the persons who are,
under the rules of the SEC, participants in the solicitation of
security holders of DARA in connection with the proposed
transaction, including a description of their direct and indirect
interests, by security holdings or otherwise, will be set forth in
the proxy statement/prospectus when it is filed with the SEC.
Information regarding DARA's directors and executive officers is
contained in DARA's Annual Report on Form 10-K for the year ended
December 31, 2014 which is filed with the SEC and is available free
of charge.
For more information, please contact:
Midatech Pharma PLC
Jim Phillips, CEO
Tel: +44 (0)1235 841575
www.midatechpharma.com
Panmure Gordon (UK) Limited (Nominated Adviser and Broker)
Corporate Finance
Freddy Crossley / Adam James / Atholl Tweedie / Duncan
Monteith
Broking
Tom Salvesen
Tel: +44 (0)20 7886 2500
Toreya Partners
Stephanie LĂ©ouzon / Kelly Curtin
Tel: +44 (0)20 7451 4550
Consilium Strategic Communications (Financial PR)
Mary Jane Elliott / Ivar Milligan / Matthew Neal / Hendrik
Thys
Tel: +44 (0)20 3709 5700
Email: midatech@consilium-comms.com
About Midatech:
Midatech is a nanomedicine company focused on the development
and commercialisation of multiple, high-value, targeted therapies
for major diseases with unmet medical need. These diseases include
diabetes, rare cancers including brain (glioblastoma), ovarian,
liver and pancreatic cancer and neurological/ophthalmologic
conditions.
Midatech's strategy is to develop its products in-house in rare
cancers and with partners in other indications, and to accelerate
growth of its business through strategic acquisition of
complementary products and technologies.
All of Midatech's product candidates derive from its two
multi-applicable platform technologies that can be used alone or in
combination to enable the targeted delivery ('right place') and
controlled release ('right time') of existing drugs. These
technologies are provided through its wholly-owned subsidiaries,
Midatech and Q-Chip (acquired in 2014).
Midatech's core platform is a drug conjugate delivery system
based on a patented form of gold nanoparticles (GNP) combined with
existing drugs for the safe and targeted release of therapeutic
payloads at specific organs, cells or sites of disease.
The Group's second platform is a sustained release technology
acquired with Q Chip that involves the consistent and precise
encapsulation of active drug compounds within polymer microspheres
enabling their release into the body in a highly controlled manner
over a prolonged period of time.
The Group is headquartered near Oxford, UK, with a nanoparticle
manufacturing operation in Bilbao, Spain and an R&D facility in
Cardiff, UK.
About DARA:
DARA of Raleigh, North Carolina, is an oncology supportive care
pharmaceutical company dedicated to providing healthcare
professionals a synergistic portfolio of medicines to help cancer
patients adhere to their therapy and manage side effects arising
from their cancer treatments. DARA holds exclusive U.S. marketing
rights to Soltamox(R) (tamoxifen citrate) oral solution,
Gelclair(R) oral rinse gel, and Oravig(R) (miconazole) DARA
licensed the U.S. rights to Soltamox(R) from UK-based Rosemont
Pharmaceuticals, Ltd, a UK based manufacturer and a subsidiary of
Perrigo Company plc, Gelclair(R) from the Helsinn Group in
Switzerland, and Oravig(R) from Onxeo S.A. in France.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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