Proposed Fundraising

RNS Number : 5752I

Syntopix Group plc

15 March 2010

 



Press Release

15 March 2010

Syntopix Group plc

("Syntopix" or "the Company" or "the Group")

Proposed Fundraising

Syntopix Group plc (AIM:SYN), the company focused on topical antimicrobial innovations for products in the medicine and consumer healthcare markets, announces today that it is proposing to raise up to £2 million  (approximately £1.91 million net of expenses) pursuant to a placing of 2,997,013 ordinary shares of 10 pence each in the Company (the "Placing Shares") at an issue price of 67 pence per share (the "Placing Price") ("Placing").

The net proceeds of the Placing will be used by the Group to undertake further human use studies with its lead compounds, which the Group expects to commence during 2010, as additional working capital to fund the Group's ongoing research and business development activities and for maintaining and further developing the Company's intellectual property portfolio.

Approval of the Company's shareholders is required in order to complete the issue of the Placing Shares. Accordingly, notice has been sent to shareholders convening a General Meeting of the Company, to be held at the offices of Walker Morris, Kings Court, 12 King Street, Leeds, LS1 2HL at 11.00 a.m. on 31 March 2010 (the "General Meeting"), to approve (in accordance with the Companies Act 2006) the issue of 2,997,013 Placing Shares.

Members of the Board will be subscribing for, in aggregate, 388,806 Placing Shares under the Placing. In addition, IP2IPO Limited will be subscribing for 559,703 Placing Shares and IP Venture Fund, a fund managed by Top Technology Limited (a subsidiary of IP Group plc), will be subscribing for 559,702 Placing Shares.

Following the issue of the Placing Shares, the Directors will be interested in an aggregate of 1,068,014 Ordinary Shares representing approximately 9.97 per cent of the issued share capital of the Company, as enlarged by the Placing.

The Placing

The Company is proposing to raise £2 million, before expenses, by way of a conditional placing of the Placing Shares at the Placing Price. The Placing Price represents a discount of 9.46 per cent. to the closing mid market price of the Ordinary Shares on 12 March 2010.  The Placing is conditional upon (i) the passing of shareholder resolutions to authorise the Directors to allot the Placing Shares and to dis-apply statutory pre-emption rights in respect of the Placing Shares; (ii) the Company raising a minimum of £1.5 million; and (iii) Admission of the Placing Shares to trading on AIM.  The Placing has not been underwritten.

Since its admission to AIM in March 2006 and the subsequent placing in August 2008, Syntopix has continued to progress its drug development programme in dermatology and to enhance its profile amongst prospective partners. The Group has continued to work on the discovery of compounds and combinations of compounds for use in the treatment of acne, oral hygiene and hair care. Its library of compounds now stands at 2,200 compounds and continues to grow.

In April 2009, the Group announced that it had signed its second 12 month exclusive evaluation agreement with a major consumer healthcare company in the field of oral healthcare. The Group received an initial upfront payment at the commencement of this agreement and will receive further payments for any compounds chosen for additional evaluation.

During 2009, Syntopix made good progress in moving its lead compounds from research into clinical development and, in November 2009, the Group completed its second Phase II proof-of-concept human-use study with its lead dermatological compound SYN0126 in 70 subjects with acneic skin. The study was completed over a period of eight weeks, had both positive (an existing marketed product used to treat acne) and negative (vehicle) controls introduced and demonstrated that the Syntopix product containing SYN0126 produced a greater than 30% mean reduction in total spot count.  This level of efficacy compared favourably to the existing marketed product. The Directors intend to carry out further human-use studies with this compound during 2010.

Additionally, the Group's proprietary laboratory screening techniques have identified a second candidate, SYN1113, whose potency is in excess of the world's market leading compound for acne treatment.  The Directors believe that this candidate has significant potential for the treatment of acne and, due to its colour (green) and it being a 'natural' compound, will offer huge consumer appeal.  It is the Directors' intention to test this compound in a human-use study during 2010.

Further, the Group has obtained compelling laboratory data for SYN0017, being the Group's compound which is potent against the main bacterium responsible for gum disease and it is the Directors' intention to carry out proof of principle trials with this compound during 2010.

Whilst the Company has made significant progress during the financial year to date, consistent with statements made in the Group's Interim Statements for the 6 months ending 31 January 2010, published on 12 March 2010, the Group now requires additional funding to enable its planned development programme to continue and to fund the studies planned for 2010 as identified above.

In consultation with Top Technology, the Board has held meetings with a number of prospective new investors and with certain of the Company's major shareholders (by size), and has concluded that, in light of those discussions, current market conditions and the time constraints which the Company is under, the proposed Placing represents the best financing option currently available to the Company.

The Board decided not to make the Placing open to all the Shareholders on a pre-emptive basis as it felt that to do so would have resulted in both the Company incurring additional expense and with the fund raising being delayed.

The Board is of the opinion that, without completion of the Placing, the working capital currently available to Syntopix will not be sufficient for its requirements for the next 12 months following the date of this document.

The Placing Shares represent approximately 27.97 per cent. of the enlarged issued share capital of the Company.

Application will be made for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence on 1 April 2010.

It is expected that the Placing Shares will be delivered into CREST on 1 April 2010 and that share certificates for the Placing Shares will be dispatched by no later than 13 April 2010.

Following completion of the Placing, the following shareholders will have the shareholdings and percentages set opposite their names below:

IP2IPO Limited (together with IP Venture Fund and Techtran Group Limited)	2,992,214	27.93%
Invesco Perpetual	731,462	6.83%
Tom Bannatyne (director)	506,467	4.73%
Peter Ariowitsch	356,219	3.32%
Ridings Early Growth Investment Company Limited	322,109	3.01%
Dr Jon Cove (director)	269,911	2.52%
Dr Gwyn Humphreys (director)	184,441	1.72%
Alan Aubrey (director)	77,059	0.72%
Dr Stephen Jones (director)	23,311	0.22%
Darren Bamforth (director)	6,825	0.06%

The total number of ordinary shares of 10 pence of the Company in issue following the Placing will be 10,714,844 with each share carrying the right to one vote. There are no shares held in treasury.

Related Party Transaction

Top Technology has provided corporate finance advisory services to the Company in connection with the Placing.  Top Technology is a wholly owned subsidiary of IP Group plc, which, by virtue of its ownership of IP2IPO Limited and Techtran Group Limited (each a current Shareholder), is a Substantial Shareholder. Alan Aubrey is also a director of both the Company and IP Group plc. Under the AIM Rules, the engagement between Syntopix and Top Technology in relation to the Placing constitutes a related party transaction. In addition, the participation by IP2IPO Limited in the Placing constitutes a related party transaction.  Where a company enters into a related party transaction the independent directors of the company are required, after consulting with the company's nominated adviser, to state whether, in their opinion, the transaction is fair and reasonable in so far as its shareholders are concerned. Having consulted with Zeus Capital, the Company's nominated adviser, the Independent Directors (being all the directors other than Alan Aubrey) believe that both the terms of the engagement of Top Technology and the participation by IP2IPO Limited in the Placing are fair and reasonable in so far as Shareholders are concerned.

Share Option Schemes

Since the Company was floated on AIM in March 2006 the initial directors of the Company have been granted a number of share options under the Syntopix Group plc Executive Share Option Scheme and/or the Syntopix Group plc Enterprise Management Incentive Scheme (the "Schemes") as part of their remuneration packages and to incentivise performance.  Due to the Company's current share price, the share options granted to date have little value.  In addition, certain of the Company's executive and non-executive directors took the decision in August 2008 to waive their entitlement to receive fees for their services as directors in order to help the Company preserve its cash resources.

In February 2010, the Board agreed to a restructure, with Dr Rod Adams and Dr Helen Shaw leaving the Company.  The limited cash resources available to the Company meant that the Board was unable to put in place any cash based termination payments, compensation for loss of office or any payment for contractual notice periods.  Consequently the Board would like to have a degree of discretion in respect of the non-cash element of directors' remuneration packages, including the share options which have been granted. As a result, the shareholders of the Company will be asked at the General Meeting to authorise the Directors to use their discretion to extend to 36 months the period during which share options granted to specified current and former directors under the Schemes can be exercised following the relevant option holder ceasing to be either an employee or officer of the Group.   

- Ends -

For further information, please contact:

Syntopix Group plc
Dr Stephen Jones, Chief Executive Officer	[phone]
	www.syntopix.com

Zeus Capital Ltd
Ross Andrews / Bobby Fletcher	Tel: [phone]
	www.zeuscapital.co.uk

Media enquiries:

Abchurch Communications
Sarah Hollins / Simone Elviss / Hannah Sharman	Tel: [phone]
[e-mail]	www.abchurch-group.com

Notes to editors

About Syntopix Group plc

Syntopix is a specialised research and development business, focusing on topical antimicrobial innovations for products in consumer healthcare and pharmaceutical markets. The Group was founded in 2003 as a spin-out from the University of Leeds by Dr Jon Cove and Dr Anne Eady, two of the world's leading experts in skin microbiology.

The Group's development focus is on its three leading, core compounds SYN0126, SYN1113 and SYN0017. Each has multiple potential uses across a number of large consumer healthcare markets including skincare, hair-care and oral health. Syntopix has developed strong working relationships with a number of major consumer healthcare companies including Proctor & Gamble and is now actively seeking to out-license these products to commercial partners.

Syntopix has a robust pipeline, with a growing library of over 2,500 compounds. Its strategy is to seek to reduce the risks and costs of drug discovery and development by discovering novel uses for known compounds and combinations of compounds, which have established safety profiles. The Group adopts an ongoing filing process that has resulted in 24 core patents/applications. 

The Group is based at the Institute of Pharmaceutical Innovation in Bradford, giving access to the expertise in skin biology, formulation and toxicology at the universities of Bradford and Leeds.

Syntopix' shareholders include Techtran Group Limited (a subsidiary of IP Group plc), The Wellcome Trust Limited, The University of Leeds and Ridings Early Growth Investment Company Limited. Syntopix joined the AIM market of the London Stock Exchange in March 2006.

For more information, please visit our website at www.syntopix.com.

 

END

 

 

IOEGGUMUWUPUGGA