On April 23, 2020 NOXXON Pharma N.V. (Euronext Growth Paris: ALNOX), a biotechnology company focused on improving cancer treatments by targeting the tumor microenvironment (TME), reported that it has entered into a flexible convertible bond agreement securing access to financing of up to € 14.2 million (gross amount before issuance discount and transaction fees) with Atlas Special Opportunities, LLC (ASO) (Press release, NOXXON, APR 23, 2020, View Source [SID1234556545]). The full financing instrument, if drawn in total, would allow NOXXON to finance its activities to the beginning of 2022 including completion of the brain cancer trial and manufacturing of additional drug supply for upcoming trials.
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Under this financing vehicle, the company will have the option to access capital in twenty-one tranches plus additional tranches for the drug manufacturing by issuing convertible bonds to ASO, drawable at the company’s discretion and subject to customary conditions being met. The first tranche with a nominal value of € 1,300,000 may be followed by up to twenty further tranches, each of a nominal value of € 475,000. Drug manufacturing tranches in a total nominal amount of € 3,400,000 may be drawn during the term of this agreement upon certain milestones being achieved in the brain cancer clinical trial: 1) the Data Safety Monitoring Board shall have agreed that the safety profile of patients receiving the low dose (200 mg/week) in the NOX-A12 brain cancer trial is appropriate to allow increasing the dose; 2) at least three patients have been enrolled in the middle dose cohort (400 mg/week), and 3) the 4-month post-treatment initiation MRI data being available from all brain cancer patients in the low dose group. The company has exercised its right to the first tranche of funding immediately upon signing. The remaining convertible bonds can be issued by the company over the next 24 months following the signing of the agreement.
"This flexible financing, which provides significant level of financial security for NOXXON’s business plan into 2022, enables us to fully focus on bringing our brain cancer trial to completion and preparing for the next phase of the clinical study in pancreatic cancer patients," said Aram Mangasarian, CEO of NOXXON. "We look forward to working together with Atlas Special Opportunities to ensure the best outcome for the patients and the future of NOXXON. We are confident that strengthening our financial position will be welcomed by our long-term shareholders and investors."
NOXXON was advised and supported in this transaction by Marsac Advisors.
Use of Proceeds
The proceeds from this transaction will be used as general working capital and to advance the company’s pipeline. The proceeds may also be used to manufacture drug supply intended for future clinical trials.
Legal Framework of the Transaction
The company is a Dutch public limited liability company whose shares are listed on Euronext Growth Paris, a multilateral trading facility operated by Euronext Paris S.A., with the ticker symbol ALNOX and the International Securities Identification Number (ISIN): NL0012044762. The company has an authorized share capital of € 479,502 divided into 47,950,200 ordinary shares with a par value of € 0.01 each. Immediately prior to completion of the transaction, the company’s issued share capital amounted to 19,014,408 shares with 35,000 ordinary shares held by the company as treasury shares.
On January 2, 2019, the general meeting authorized the company’s Board of Directors subject to approval of the Supervisory Board, to issue ordinary shares in the capital of the company and grant rights to subscribe for ordinary shares in the capital of the company, at any time during a period of 5 years as from the date of such general meeting and therefore up to and including January 1, 2024 up to the maximum available under the authorized share capital as included in the company’s articles of association after all changes proposed at that meeting have been implemented and therefore up to an authorized capital of € 479,502 or € 1,000,000 when the issued share capital will have reached € 400,000 (as per the transitional provision laid down in article 37 of the company’s articles of association). The authorization includes designating the Board of Directors to limit or exclude pre-emptive rights in connection with any issuance under the designation.
Within the framework of such authorization granted by the general meeting of January 2, 2019, on April 22, 2020 the company’s Supervisory Board has approved the transactions laid down in the financing instrument. On April 22, 2020 the Board of Directors has approved the draw-down of the first tranche in an amount of € 1,300,000.
The shares to be issued upon conversion of the convertible bonds shall give ASO access immediately or in the future to the company’s share capital excluding shareholders’ preferential subscription rights.
Issuance of the convertible bonds and of the shares that may be issued upon conversion is not subject to obligation to publish a prospectus to be approved by the Dutch Authority for the Financial Markets (AFM) or the French Financial Markets Authority (AMF).