On June 17, 2024 TME Pharma N.V. (Euronext Growth Paris: ALTME), a clinical-stage biotechnology company focused on developing novel therapies for treatment of cancer by targeting the tumor microenvironment (TME), reported the launch of a capital increase through issuance of new shares for a minimum of €2.2 million gross proceeds (Press release, TME Pharma, JUN 17, 2024, View Source [SID1234644409]). Guaranteed net proceeds will allow the company to reach key strategic partnering and financing milestones in 2024.
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The operation is open to professional investors and is also open to the retail investors in France via the PrimaryBid platform for up to €390,000, representing up to 15% of the total capital increase. A separate guarantee agreement has been put in place to ensure the company will have received €2.2 million gross by June 28, 2024. Guaranteed net proceeds will extend cash runway from July 20241 into December 2024, past targeted strategic partnering and financing milestones in Q4-2024.
"NOX-A12 has delivered exceptional data in chemotherapy-resistant patients with the aggressive brain cancer, glioblastoma, in combination with radiotherapy and the anti-VEGF antibody bevacizumab: a 10-fold increase in the rate of survival at 21 months when compared to a reference cohort receiving standard of care (50% vs 5%) and a near-doubling of the median overall survival (19.9 vs. 10.5 months)2. This strong clinical data enabled TME Pharma to fulfill its promises to: 1) obtain FDA approval for the Phase 2 trial design in brain cancer, 2) obtain Fast Track designation and access to the accelerated regulatory pathway from the FDA, 3) raise funds to eliminate convertible debt from the capital structure of the company, and 4) generate a high-profile scientific publication around NOX-A12 such as Nature Communications article announced earlier today," said Aram Mangasarian, CEO of TME Pharma. The guaranteed capital injection announced today will provide TME Pharma with financing into December 2024, with the possibility of extending our cash runway even further should the outstanding Warrants Z be exercised between July 1 and the end of 2024. This increased financial visibility will allow us to focus on achievement of our next targeted strategic partnering and financing milestones for 2024, which include: cooperation with a pharma partner on drug supply of the anti-VEGF antibody combination drug for the Phase 2, monetization of the NOX-E36 asset (e.g. via a spinout) and additional transactions sufficient to secure financing of the upcoming Phase 2 NOX-A12 brain cancer trial via a combination of non-dilutive grant funding, a strategic alliance and/or investment from expert institutional investors. In summary, our goal for this financing is to allow a significant transformation of the company’s profile in the remainder of 2024."
Key Financing details and timetable
Capital increases as part of a transaction comprise:
a public offering in France only through the French PrimaryBid platform for up to €390,000, or up to 15% of the total capital increase for retail investors (and not in any other jurisdiction including without being exclusive the Netherlands or any other EU/EEA Member State, the United Kingdom, the United States of America, Australia, Canada or Japan) under the exemption and subject to the applicable publication requirement listed in the French Code monétaire et financier and the General Regulation of the Autorité des marchés financiers (AMF) and falling within one or more of the exemptions from any requirement for the company to publish a prospectus pursuant to the prospectus regulation within the meaning of Regulation (EU)2017/1129 of the European Parliament and of the Council of June 14, 2017, as amended (the PrimaryBid Offering); and
a reserved offering to professional investors within the European Union by way of private placement with an accelerated book-build (the Reserved Offering) with the minimum of €2.2 million excluding the PrimaryBid Offering.
The price of €0.1798 per new share, representing a discount of 10% to the closing price on June 17, 2024.
The PrimaryBid Offering will close on June 17, 2024, at 10.00 p.m. Paris time and the Reserved Offering will close on June 18, 2024, before start of trading (subject to early closure).
A group of guarantors are contractually committed guarantee €2.2 million in gross proceeds by June 28, 2024, by purchasing new shares at the same price of €0.1798 per share, in exchange for a 10% fee on the guaranteed amount. This ensures that even if today’s capital increase does not reach its targeted amount, net proceeds from the guarantors will extend cash runway into December 2024, past targeted strategic partnering and financing milestones in Q4-2024.
The company will announce the results of the transaction as soon as possible following the closing of the order book for the Reserved Offering in a press release, which will present the final number of new ordinary shares issued.
Settlement of the new shares and their admission to trading on Euronext Growth Paris multilateral trading facility are expected to occur on June 20, 2024. The new shares will be of the same class and fungible with the existing shares, will carry all rights attached to the shares, and will be admitted to trading under the same ISIN code NL0015000YE1.
Use of Proceeds
Approximately 30% of net proceeds from the capital increase will be used on research and development (R&D) activities including ongoing NOX-A12 GLORIA Phase 1/2 trial in brain cancer, regulatory interactions in Europe for the next brain cancer trial and intellectual property activities. Another approximately 30% of net proceeds will be used for outreach to potential industry partners and investors, the pursuit of government or charitable grants and preparation for the targeted monetization of the NOX-E36 program. The remaining 40% of net proceeds will be used for general corporate purposes including accounting, auditing, legal advice and maintenance of the listing.
Guarantee
Gross proceeds of €2.2 million is guaranteed by a group of investors, whose individual commitment is not representing a concerted action towards the potential control of the company. None of them individually would cross threshold of 50% ownership even if the guarantee was required in full.
Shareholder and Corporate Authorizations
The issuance of shares in this transaction relies upon the authorizations granted to the Issuer by its shareholders in the annual general meeting (AGM) on June 29, 2023, under agenda items 5 and 6. Issuer has completed and obtained all necessary corporate approvals for the transaction. In particular, at the AGM held on June 29, 2023, the company’s shareholders approved the transitional provision which came into effect in February 2024, as a result the authorized capital amounts to €900,000 divided into 80,000,000 ordinary shares and 10,000,000 preference shares, each share with a nominal value of €0.01.
Dilutive Potential
Shareholders residing in France have the option to participate via the PrimaryBid platform to reduce dilution from this transaction if they are able to purchase sufficient number of shares. If they do not participate in the PrimaryBid Offering they will be diluted as outlined in the table below.
Table: Dilutive Potential from Transaction
Description
Shares to be issued
(max)
Total shares
outstanding
Dilution (max)
Shareholder
starting with 1%
would then hold
Prior to announcement of capital increase
–
28,453,373
–
1%
Up to €2,590,000 capital increase at €0.1798 per share
14,404,894
42,858,267
33.61%
0.66%
Financial Intermediaries
ALLinvest is the global coordinator – lead manager and bookrunner for the Reserved Offering.
For the PrimaryBid Offering, retail investors will be able to subscribe exclusively through the PrimaryBid partners indicated on the PrimaryBid website (www.PrimaryBid.fr). The PrimaryBid Offering is not covered by an underwriting agreement. For further details, please refer to the PrimaryBid website at www.PrimaryBid.fr.
Risk Factors
The main risk factors relating to the transaction are as follows:
the market price of the company’s shares may fluctuate and fall below the subscription price of the new shares, resulting in a loss for investors;
the volatility and liquidity of the company’s shares may fluctuate significantly;
existing shareholders will see their stake in the company’s share capital diluted;
the placement is not subject to a performance guarantee and investors who have acquired shares could sustain a loss equal to the price of acquiring these shares if the company is not able to continue its operations due to strategic, operational or financial factors;
the company expects to incur losses for the foreseeable future and will need substantial additional funding from industrial partners, financial investors, and/or governmental or charitable institutions in order to complete the development and commercialization of its product candidates, which may not be available on acceptable terms when needed, if at all.
Before deciding to invest, investors are asked to familiarise themselves with the risks described in the company’s 2023 annual financial report available on the company website.
Potential Conflict of Interest
Part of the variable remuneration of management relates to corporate goals for advancing the development pipeline of TME Pharma as well as securing the respective funding. Management also holds shares, warrants and options in the company.