Paris and Boston, June 26, 2015 – Neovacs (Alternext Paris: ALNEV), (the “Company”) a leader in active immunotherapies for the treatment of autoimmune diseases, today announced that it has received commitments from three U.S. institutional investors for a capital increase totaling 7,500,000 euros.
Participation in the capital increase is limited to biotechnology-focused institutional investors. Neovacs will issue a total of 7,500,000 securities at a price of one euro (premium included). Each security is composed of one ordinary share and one warrant. The warrants will be immediately detached from the shares.
“This capital increase is in line with our development strategy in the United States, a country which has a very high prevalence of lupus and is the reference market for this indication. The funds raised will enable us to move forward with the development of our product portfolio including lead product, IFNα-Kinoid, with new trials starting both in lupus and dermatomyositis. The subscription commitments made by specialists funds in biotechnology are a strong signal in support of our Kinoid technology and our strategy based on the development of active immunotherapies for the treatment of severe and orphan auto-immune diseases with significant medical need” commented Miguel Sieler, CEO of Neovacs.
Use of Proceeds
The proceeds of the capital increase will provide additional funding to the Company to finance the development plan of IFNα-Kinoid, including:
- A phase IIb clinical trial of IFNα-Kinoid in lupus conducted in Europe, Latin America and Asia, to begin in the second half of 2015; and
- A phase IIa clinical trial of IFNα-Kinoid in lupus conducted in the United States. This study is expected to begin six months after initiation of the phase IIb clinical trial of IFNα-Kinoid, and will provide additional, U.S.-specific, data to the results previously obtained in Europe.
Terms of the capital increase
The capital increase was approved by the Company’s Board of Directors on June 24, 2015. It will be carried out without preferential subscription rights and reserved to the benefits of foreign institutional investors investing in biotechnology companies on a regular basis, in accordance with the eleventh resolution of the Company’s Annual General Meeting of Shareholders held on April 8, 2015.
The capital increase amounts to 30.54% of the share capital of the Company to date and represents a dilution of approximately 23.40% for existing shareholders.
The settlement of the new shares should take place (subject to usual market conditions) no later than July 3, 2015.
In accordance with Article 211-3 of the General Regulation of the French Financial Market Authority (AMF), the capital increase does not require a prospectus to be submitted for approval to the AMF.
Characteristics of the warrants
One warrant will give the right to subscribe to 0.37732 ordinary share of the Company, that is a potential dilution of 10.33% for existing shareholders.
The warrants shall be exercisable within 60 months of their issuance. They will not be listed on the Alternext Paris market.
The warrants shall be exercisable at 1.25 euros per ordinary share.
If all the warrants are exercised, the Company would receive an additional 3,537,500 euros of proceeds.
Listing of the new shares
The new shares, with a par value of 0.15 euro, will be of the same category as the existing shares of the Company and will be listed on the same line as the existing shares of the Company under ISIN code FR0004032746. They will carry the same dividend rights as the existing shares and will be entitled, after issuance, to all dividends declared by the Company from that date.
Lock-up agreement of the Company
In connection with the capital increase, the Company has agreed to a lock‐up period of 90 days following the issuance of the new shares, subject to standard exemptions. The Company has further undertaken not to use the equity financing agreed in October 2014 between Kepler Chevreux and the Company, until after December 31, 2015.
Equity line of Kepler Chevreux
Neovacs could utilize, when needed, two additional tranches of equity financing, totaling 6,500,000 euros each, as from January 1, 2016 and over a fixed period of 17 months, based on the same terms as the equity line previously announced. As previously announced, Neovacs intends to draw down on these purely optional equity lines only if needed, in the best interest of the Company and its shareholders.
Lock-up agreements of certain managers of the Company
Mr. Miguel Sieler (CEO) and the directors holding shares and warrants of the Company have entered into lock-up undertakings for 90 days following the issuance of the new securities with respect to 100% of the securities of the Company they hold (including the shares resulting from the exercise of their warrants).
Neovacs draws investors’ attention to the June 2015 update to the risk factors of the Reference Document registered under the number R-14.074 of December 11, 2014, available on the website of the Company at the following address: http://neovacs.fr/investors/investors-documentation/.
Maxim Group LLC acted as sole placement agent in connection with the capital increase.
 Results of a Phase I/II clinical trial of IFNα-Kinoid were published in November 2011 at ACR and published in 2013 in Rheumatoid & Arthritis (Lauwerys, 2013)
 “BSPCE 2007”, “BSA 2014-1” or “BSA 2015-1” depending on the director