A new NIPT is targeted to be marketed to EU clinical labs in early 2015: IONA Test from Premaitha Health. This comany was recently acquired by ViaLogy in a reverse merger. Previous activities of ViaLogy were energy related and were moved into a separate entity. Some details are available in this document filed by ViaLogy.
13 June 2014
PUBLICATION OF ADMISSION DOCUMENT AND LIFTING OF SUSPENSION
Proposed acquisition of Premaitha Health Limited
Placing of 59,090,909 New Ordinary Shares at a price of 11 pence per share
Open offer of up to 6,723,651 New Ordinary Shares at a price of 11 pence per share
100:1 share consolidation
Change of name to Premaitha Health plc
Notice of general meeting
Vialogy plc (AIM: VIY), announces that a circular, comprising an admission document ("Admission Document") and a notice of general meeting, has been posted to shareholders. Defined terms in this announcement have the same meaning as those in the Admission Document.
A copy of the circular may be downloaded from the Company's website at www.vialogy.com or available here:
Following publication of the Admission Document, the temporary suspension to trading in the Company's shares will be lifted with effect from 7:30 a.m. today and trading in the Company's shares will resume at 8:00 a.m.
The Company is pleased to announce that it has conditionally acquired the entire issued share capital of Premaitha, which is a molecular diagnostic company. The consideration of £10.5 million is to be satisfied by the issue of 95,454,545 New Ordinary Shares at a price of 11 pence per share. The Company has raised £6.5 million (before expenses) by means of the Placing and intends to raise up to a further £0.7 million by means of the Open Offer. The net proceeds of the Placing and the Open Offer will be used to develop and commercialise the IONA® Test, a non-invasive pre-natal screening test for Down's Syndrome developed by Premaitha, and for general working capital purposes.
The Acquisition, if completed, is of sufficient size to constitute a reverse takeover under the AIM Rules and therefore is subject to the approval of shareholders at a General Meeting to be held at 11.00 a.m. on 3 July 2014 at the offices of Panmure Gordon (NASDAQ:UK) Limited, One New Change, London EC4M 9AF.
Adam Reynolds, Executive Chairman, commented:
"Premaitha offers us an exciting opportunity to acquire a molecular diagnostics company that has developed a non-invasive pre-natal screening test for Down's Syndrome. The IONA® Test is based on the analysis of fetal DNA in the maternal bloodstream, an approach that has been used since 2011 by several screening companies, principally in the USA. We believe that the IONA® Test will be the first regulated CE marked in vitro non-invasive diagnostic pre-natal screening product to market.
"We are delighted by the support from investors with the Placing being oversubscribed. The net proceeds from the Placing and Open Offer will be used to develop and commercialise the IONA®Test and provide capital for the Enlarged Group's sales and marketing initiative in a global market for pre-natal testing estimated at $4.2 billion.
"Premaitha's executive management team is led by Dr Stephen Little, a successful serial biotechnology entrepreneur who has a proven diagnostic and commercial track record and he has assembled a talented and experienced team of individuals with the skills, knowledge and background needed to bring a pre-natal screening product to market. I am also pleased to say that on completion of this transaction we will be joined by David Evans, a well-known and respected figure who has significant experience in acquiring, integrating and growing businesses in the diagnostic area and in value creation. I look forward to working as part of the newly structured team."
Stephen Little, CEO of Premaitha, added:
"As Premaitha builds and commercialises the IONA® Test, the Company is not only building a valuable in vitro diagnostic product in its own right but also establishing a template for creating valuable diagnostic content on third parties' next generation sequencing systems. There are many other potential clinical applications of next generation sequencing such as early detection of cancer and prediction of response to therapy. Premaitha's plan is to take early stage discoveries and translate them into clinically useful diagnostic products that can be widely used to benefit human health. This is an exciting phase in our development of the business roll-out and we are looking forward to working with the new team and delivering on our plans for the IONA® Test."
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Panmure Gordon (UK) Limited
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On 15 April 2014, trading on AIM in the Existing Ordinary Shares was temporarily suspended following an announcement on the same date that the Company was in discussions in relation to a possible reverse takeover of the Company under the AIM Rules.
The Company is pleased to announce that it has conditionally agreed terms in respect of the entire Acquisition. The Acquisition, if completed, is of sufficient size to constitute a reverse takeover under the AIM Rules, and therefore the Proposals are subject to the approval of Shareholders at the General Meeting.
The consideration of £10.5 million is to be satisfied by the issue of 95,454,545 New Ordinary Shares at a price of 11 pence per share, which equates to a price for the Existing Ordinary Shares of 0.11 pence, representing a 42.1 per cent. discount to the Company's share price of 0.19 pence on 15 April 2014, the date on which trading was temporarily suspended.
The Company intends to raise £7.2 million (before expenses) by means of the Placing and the Open Offer which will be used to develop and commercialise the IONA® Test and for general working capital purposes.
Following implementation of the Proposals, certain Shareholders of the Enlarged Group who are deemed to be acting in concert (pursuant to the Takeover Code) will hold 104,573,862 New Ordinary Shares, representing 55.6 per cent. of the Enlarged Ordinary Share Capital, pursuant to the terms of the Acquisition. If the options held by members of the Concert Party are exercised, assuming no other options are exercised, the Concert Party will hold 126,885,262 New Ordinary Shares representing 62.2 per cent. of the Enlarged Ordinary Share Capital (assuming only the members of the Concert Party take up their entitlements under the terms of the Open Offer).
Under Rule 9 of the Takeover Code, the Concert Party would normally be obliged to make a mandatory offer to all Shareholders (other than the Concert Party) to acquire their New Ordinary Shares. Following an application by the Concert Party, the Takeover Panel has agreed to waive this obligation, subject to the approval of the Independent Shareholders (on a poll) at the General Meeting.
The Directors believe that it is appropriate, should the Acquisition be approved by Shareholders at the General Meeting and the Acquisition completes, that the name of the Company be changed to Premaitha Health plc and the Company adopts new articles of association, inter alia, to reflect the Share Consolidation.
The Directors are proposing the Share Consolidation as they consider that it is in the best interests of the Company's long term development as a public quoted company to have a lower number of shares in issue and its Ordinary Shares to be traded in pence rather than fractions of a penny.
The Admission Document provides Shareholders with further information regarding the matters described above and to seek Shareholder's approval of the Resolutions, which include the Rule 9 Waiver, at the General Meeting. The Proposals are conditional, inter alia, on the passing of the Resolutions and Admission. If the Resolutions are approved by Shareholders, it is expected that Admission will become effective and dealings in the Enlarged Ordinary Share Capital will commence on AIM on or around 8.00 a.m. on 4 July 2014. The General Meeting of the Company, at which the Resolutions will be proposed, has been convened for 11.00 a.m. on 3 July 2014 at the offices of Panmure Gordon (UK) Limited, One New Change, London EC4M 9AF.
The Placing and Open Offer are conditional upon the approval and completion of the Proposals, including the Share Consolidation. The Company's Existing Ordinary Share Capital comprises 2,689,460,366 Existing Ordinary Shares.
Resolution 4 to be proposed at the General Meeting proposes that every 100 Existing Ordinary Shares of the Company be consolidated into one New Ordinary Share. Holders of fewer than 100 Existing Ordinary Shares will not be entitled to receive a New Ordinary Share following the Share Consolidation. Shareholders with a holding in excess of 100 Existing Ordinary Shares, but which is not exactly divisible by 100, will have their holding of New Ordinary Shares rounded down to the nearest whole number of New Ordinary Shares following the Share Consolidation. Fractional entitlements, whether arising from holdings of fewer or more than 100 Existing Ordinary Shares, will be aggregated and sold in the market and the proceeds will be retained for the benefit of the Company.
The New Ordinary Shares will continue to carry the same rights as attached to them immediately prior to the Share Consolidation as set out in the New Articles and will continue to be traded on AIM.
The Company will issue new share certificates to those Shareholders holding shares in certificated form to take account of the Change of Name and the Share Consolidation. Following the issue of new share certificates, share certificates in respect of Existing Ordinary Shares will no longer be valid. Shareholders will still be able to trade in Ordinary Shares during the period between the passing of the Resolutions and the date on which Shareholders receive new share certificates.
The Deferred Shares will not be affected by the Share Consolidation.
INFORMATION ON PREMAITHA
Premaitha is a molecular diagnostic company that has developed an in vitro diagnostic non-invasive pre-natal screening test for fetal chromosomal abnormalities such as Down's Syndrome. The IONA® Test is based on the analysis of circulating fetal DNA in the maternal bloodstream, an approach that has been used since 2011 by several pre-natal screening companies, principally in the USA. The Directors and Proposed Directors believe that the IONA® Test will be the first regulated CE marked in vitro diagnostic non-invasive pre-natal screening product to market.
The IONA® Test is a pre-natal screening test which will be offered to pregnant women to determine the risk that their fetus is affected with Down's Syndrome or other serious genetic diseases. The IONA® Test is based on analysis of circulating fetal DNA: an approach which has both a higher detection rate and a lower false positive rate than existing screening tests. This means that expectant mothers can make better informed choices about their pregnancy without risk to them or their fetus.
The market for pre-natal screening
The global market for pre-natal testing is estimated at $4.2 billion. This market is undergoing rapid change as new technologies emerge which offer safer and better tests to allow pregnant women to determine their risk of having a fetus with Down's Syndrome or other genetic disorders. Pre-natal screening is already widely available throughout the developed world but existing tests are not completely accurate leading to many women with healthy pregnancies being incorrectly identified as "at risk" and subject to invasive follow up tests, which are stressful, costly and carry a risk to the fetus. Recent advances in DNA sequencing technology mean that it is now possible to perform a blood test which overcomes the problems with the existing tests by being more specific (>99 per cent. - means fewer false positives) more sensitive (>99 per cent. - higher detection rate) and is completely safe to the fetus. So compelling is the evidence surrounding this new approach the Directors and Proposed Directors believe that over time all pre-natal screening will be carried out this way.
The Directors and the Proposed Directors believe that the market potential is significant. There are an estimated 9.5 million births per annum in the USA and Europe and an estimated 140 million births per annum globally. Initially the new tests will be primarily offered to the 20 per cent. of women at high risk of an affected fetus in the developed world with subsequent expansion to lower risk pregnancies and wider geographies.
At present the price of the new DNA-based tests is between $800 and $1,800 suggesting a market size of between $4-8 billion in Europe and the USA alone. Over time the price will fall but the number of women taking the test will increase. A recent market report estimated the existing market potential as $1.5 billion growing to $5 billion in 2018 if a reliable cost effective test was available to encourage widespread adoption.
It is precisely this market need that the IONA® Test aims to address.
Premaitha's diagnostic solution
Given the size of the market opportunity and the benefits of the technology for non-invasive pre-natal testing, several companies, principally in the USA, have emerged offering a similar laboratory developed testing service directly to obstetricians and pregnant women. These companies target the final customer for the improved pre-natal tests but the Directors and Proposed Directors believe that the new technology will also cause significant change in the laboratory testing market. A well-established pre-natal Down's Syndrome screening infrastructure is already in existence in Europe. It is estimated that there are currently 600 laboratories performing around 3.5 million Down's Syndrome screens annually in Europe. The Directors and Proposed Directors believe that laboratories providing the existing pre-natal screening assays will need to adopt the new technology or see their business disappear to new providers.
Premaitha's non-invasive pre-natal IONA® Test is based on next generation DNA sequencing technology. To date the complexity of this technology has meant that tests which employ next generation sequencing technology are only available in a small number of specialised reference laboratories. The IONA® Test is designed to simplify and standardise the next generation sequencing workflow so that laboratory customers without a background in molecular technology can offer the new tests. Rather than compete with the current providers to displace them, Premaitha supplies a product to these laboratories allowing them to continue to provide their services.
Global commercialisation plan
The proposed customers for the IONA® Tests are the estimated 600 laboratories offering pre-natal screening within the EMEA region as well as similar labs throughout the rest of the world. Premaitha's primary channel to market will be through its own direct sales force targeting laboratory directors supported by activities to target and gain support of key opinion leaders. A secondary channel to market may be direct or indirect support from Premaitha's platform partners.
The technology used in the IONA® Test will be new to many potential customers so Premaitha is in the process of establishing a demonstration laboratory at its Manchester headquarters. This laboratory will reproduce the complete IONA® Test workflow so that customers can test their own samples and be trained in the process. This laboratory will also act as a technical back-up which can provide testing should a customer have a problem in their own operation.
Following the initial launch in Europe, the New Board intend to extend sales and marketing activities into Asia. There are no current plans to launch the IONA® Test in the USA. This is primarily due to the more stringent regulatory regime imposed by the FDA.
As Premaitha builds and commercialises the IONA® Test, the Directors and Proposed Directors believe that the Company is not only building a valuable in vitro diagnostic product in its own right but also establishing a template for creating valuable diagnostic content on third parties' next generation sequencing systems.
The Directors and the Proposed Directors believe there are many other potential clinical applications of next generation sequencing technology and that as these emerge Premaitha will be in a position to capitalise upon them.
The most likely applications appear to be next generation sequencing technology for therapy selection in cancer (personalised medicine) or for early cancer detection or monitoring. Premaitha does not intend to establish research activities to discover new markers, rather it intends to use its capabilities in in vitro diagnostic development and manufacture to take biomarkers identified elsewhere and translate these into valuable clinical content which can be used to improve human health.
BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Company was admitted to trading on AIM under the name BioProjects International plc in May 2002 with the stated objective of providing development capital and commercial and strategic advice to early-stage biotechnology and biotechnology-related companies.
Pursuant to a reverse takeover in October 2006, the Company acquired ViaLogy Corp, a company which provided development and marketing services and software solutions for signal-processing for high technology industries. The lynchpin of its activities was the furtherance of a unique technology, Quantum Resonance Interferometry (QRI™), originally developed to detect, enhance and characterise weak signals in high background noise and interference environments. By late 2013, the Company's focus had evolved into bringing its analytical service offering to clients in the upstream oil and natural gas sector.
The Company posted the Restructuring Circular to shareholders on 18 November 2013, in which the Board proposed a comprehensive restructuring and refocusing by transferring the trading activities carried out by its subsidiary ViaLogy LLC to VEC, a newly incorporated entity formed for the purpose of the VEC Transfer.
In consideration for the VEC Transfer, ViaLogy LLC received preferred shares representing 75 per cent. of the issued and outstanding share capital of VEC at the date of the transfer. The remaining preferred shares representing 25 per cent. of VEC are held by Dr. Sandeep Gulati (19.5 per cent.), a former director of the Company, and certain members of the US-based technical team (5.5 per cent.).
Following Shareholders' approval of the resolutions set out in the Restructuring Circular at a general meeting on 4 December 2013, the Company published the Capital Reorganisation Circular on 7 January 2014 setting out details of, inter alia, a proposed capital reorganisation, placing, open offer and adoption of an investing policy to invest in companies in the facilities management and/or support services sectors. Shareholders approved the proposals contained in the Capital Reorganisation Circular at a general meeting of the Company held on 27 January 2014.
It is proposed that the Company's investing policy is amended at the General Meeting to permit investment into the biotechnology sector which will enable the Acquisition to proceed.
The Directors have identified Premaitha as a suitable target for the Company to undertake a reverse takeover. Accordingly, the Directors propose that, subject to Shareholders' approval of the Resolutions, the Company will acquire the entire issued share capital of Premaitha. The Enlarged Group's operations would thereafter constitute exclusively those of Premaitha which is a life science diagnostic company (although it would retain its 75 per cent. holding in VEC as described above).
CHANGE OF NAME
Subject to Shareholders' approval by way of a special resolution, it is proposed, pursuant to a Resolution, that the name of the Company be changed to Premaitha Health plc with effect from the General Meeting.
If the special resolution to approve the change of name of the Company is passed at the General Meeting, the Company's AIM symbol will be changed to NIPT ('Non-Invasive Prenatal Testing') and its website address will be changed to premaitha.com following the General Meeting.
The Independent Directors, who have been so advised by Cairn, believe that the Proposals are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cairn has taken into account the Independent Directors' commercial assessments.
Accordingly, the Independent Directors recommend that the Independent Shareholders vote in favour of the Resolution to approve the Rule 9 Waiver as they intend to do in respect of their own shareholdings of 150,000,000 Existing Ordinary Shares, representing approximately 5.6 per cent. of the Existing Ordinary Share Capital as at the date of this document.
Disclosure: The author is long SQNM.