On 9 April 2018, RhoVac reported the board of directors resolved to propose the annual general meeting of 9 May 2018 to resolve on a rights issue of approximately SEK 24.5 million before issue costs (Press release, RhoVac, APR 9, 2018, View Source [SID1234555937]). The net proceeds of the rights issue are primarily intended to strengthen the Company’s position, thereby creating better conditions in the work of identifying potential partnerships or outsourcing opportunities. As part of this, the Company will also initiate preparations for Phase IIb clinical trials.

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Persons, who on the record date 16 May 2018 are shareholders of RhoVac, have pre-emptive rights to subscribe for new shares in the rights issue, whereby six (6) existing shares entitle to subscription for one (1) new share at a subscription price of SEK 18 per share. The subscription period runs from 18 May 2018 up to and including 1 June 2018.

The rights issue is secured up to 80 percent through subscription undertakings on approximately 6.0 MSEK equal to approximately 24.4 percent and entered guarantee undertakings on approximately 13.6 MSEK equal to approximately 55.6 percent. All the members of the Board of Directors and senior executives participate through subscription undertaking. All external investors who entered guarantee undertakings also participate through subscription undertaking.

Background and reasons

RhoVac is a biotechnology company conducting research and development of an immunotherapeutic cancer vaccine. The Company’s primary focus is the development of the drug candidate RV001 with the potential to prevent or limit the spread and recurrence of cancer in the treatment of several different cancer indications. The Company’s development strategy is based on licensing or selling all or parts of the business as soon as possible after completion of clinical phase I/II trial regarding RV001. As the ongoing phase I/II study is in its final stages, RhoVac is investing aggressively in its business development through, among other things, to, as previously announced, employ David Colpman at Colpman Consulting Ltd. The reason for the rights issue of approximately SEK 24.5 million at full subscription (before issue costs) is to primarily strengthen the business development with the purpose of identifying possible licensing opportunities or partnerships, follow-up of clinical phase I/II study, regulatory preparations for a clinical phase IIb study and general working capital required.

A fully subscribed rights issue would provide the Company with SEK 21.5 million (after issue costs), which exceeds the Company’s capital requirements over the next 12 months. In this case, the Company will adjust scheduled activities and allocation of capital taking into account the status of potential licensing and partnership discussions. Focus will be on activities that at the time are deemed most relevant in order to increase the value of the Company. In a step to further strengthen the business development in the next 12 months, the Board will propose Gunnar Gårdemyr as a new Board member at the AGM. The Company wishes to use Mr. Gårdemyr’s extensive experience and contact network in the Life Science area to further strengthen the Company’s business development.

The rights issue

On 9 April 2018, the board of directors of RhoVac AB resolved to propose the annual general meeting of 9 May 2018 to resolve on a new share issue with pre-emptive rights for the Company’s existing shareholders of approximately SEK 24.5 million before issue costs. Persons, who on the record date 16 May 2018 are shareholders of RhoVac, have pre-emptive rights to subscribe for new shares in the rights issue, whereby six (6) existing shares entitle to subscription for one (1) new share (i.e. a 1:6 subscription ratio).

The subscription price amounts to SEK 18.00 per share. The subscription period runs from and including 18 May up to and including 1 June 2018. Through the rights issue, not more than 1,360,507 new shares will be issued, corresponding to a share capital increase of SEK 244,891.26.

Subscription and guarantee undertakings

The rights issue is secured through subscription and guarantee undertakings up to 80 percent of the rights issue, corresponding to approximately SEK 19.6 million. RhoVac has received subscription undertakings of approximately SEK 6.0 million, corresponding to approximately 24.4 percent of the rights issue, from all the members of the Board of Directors and senior executives and, in particular, from a limited number of external investors by overtaking subscription rights. In addition, the Company has received guarantee undertakings of approximately SEK 13.6 million, corresponding to approximately 55.6 percent of the rights issue, whereof all of them have agreed to takeover subscription rights.

Shareholders who choose not to participate in the rights issue will have their shareholdings diluted by approximately 14.3 percent but are able to fully or partially financially compensate for this dilution by selling their subscription rights. In the event that all shares are not subscribed for with subscription rights, the board will, within the framework of the maximum amount of the rights issue, decide on the allotment of shares subscribed for without subscription rights

The rights issue is subject to approval from the annual general meeting of 9 May 2018. The convening notice of the annual general meeting is announced through a separate press release.

The full terms and conditions of the rights issue, as well as other information about the Company, will be outlined in an information memorandum, which will be published prior to the commencement of the subscription period.

Indicative timetable

9 May 2018 Annual general meeting for resolution on the rights issue
14 May 2018 Last day of trading in the RhoVac share, including the right to participate in the rights issue
16 May 2018 Record date for the right to participate with pre-emptive right in the rights issue
18 May – 1 June 2018 Subscription period
18 May – 30 May 2018 Trading in subscription rights
Around 7 June 2018 Announcement of the results of the rights issue
Advisers

Arctic Securities AS, Sweden branch, is acting as financial adviser to RhoVac in connection with the rights issue. Advokatfirman Lindahl is acting as legal adviser to the Company.