Placing and Open Offer of New Ordinary Shares

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THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA EXCEPT IN CERTAIN CIRCUMSTANCES, OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT

Further, this announcement is for information purposes only and shall not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire any new ordinary shares of Circassia in any jurisdiction in which any such offer or solicitation would be unlawful.

This announcement should be read in its entirety. In particular, you should read and understand the information provided in the “Important Notices” section. 

Circassia Pharmaceuticals Plc
(“Circassia” or the “Company”)  

PLACING AND OPEN OFFER OF NEW ORDINARY SHARES

Introduction

Oxford, UK, 15 May 2015: Circassia today announces its intention to raise approximately £275 million (before expenses) through the issue of new ordinary shares of 0.08 pence each in the Company (the “New Ordinary Shares”) in a conditional placing (subject to clawback) and open offer (the “Placing and Open Offer”). The Placing and Open Offer is being fully underwritten by J.P. Morgan Securities plc (which conducts its UK investment banking business as J.P. Morgan Cazenove) (“J.P. Morgan Cazenove”) and Peel Hunt LLP (“Peel Hunt”) on, and subject to, the terms of the placing agreement between the Company, J.P. Morgan Cazenove and Peel Hunt (the “Placing Agreement”).

In addition to the Placing, Circassia today separately announced that it intends to make an all cash offer to acquire Aerocrine, a Swedish listed company focused on the development and commercialisation of medical diagnostic products for use in the diagnosis and management of patients with asthma, for a total consideration of up to SEK 1.78 billion (approximately £139 million). Circassia has also separately announced today its intention to acquire the entire issued and to be issued share capital of Prosonix for aggregate consideration of up to £100 million to be paid in cash, of which £30 million is contingent on UK approval of Prosonix’s lead product, which is currently under review by the UK Medicines and Healthcare products Regulatory Agency (MHRA). These proposed transactions are not interconditional, but are both conditional on approval of the placing.

Highlights

The Acquisitions have a compelling strategic rationale and accelerate the Company’s ambition to build a self-sustaining specialty biopharmaceutical business with the potential for significant growth:

  • Adding Aerocrine’s established sales force and commercial infrastructure, which is already targeting the allergy/asthma specialists, and which gives us the opportunity to accelerate and optimise the launch of Circassia’s Cat-SPIRE allergy immunotherapy product candidate, once approved.
  • Expanding Aerocrine’s sales force to target robust sales growth of Aerocrine’s market leading device used in asthma diagnosis and management, and, to prepare for the launch of Circassia’s lead product and broader portfolio.
  • Complementing Circassia’s commercial offering by adding Prosonix’ near-term asthma products to the Company’s portfolio of novel allergy immunotherapies.
  • Creating a strong broad based specialty biopharmaceutical company with two currently marketed products sold to allergy / asthma specialists and 12 products in development for allergy, asthma and COPD, with the potential for 8 product launches by the end of 2021.
  • Strengthening the commercialisation of its products in key markets by leveraging Aerocrine’s experience and capabilities in achieving reimbursement and inclusion in treatment guidelines, and expanding its portfolio of complementary late-stage product candidates through the acquisition of Prosonix.

A General Meeting is to be held at Northbrook House, Robert Robinson Avenue, Oxford Science Park, Oxford, Oxfordshire, OX4 4GA, United Kingdom at 10.00 a.m. on 10 June 2015 for the purpose of seeking approval for the Aerocrine acquisition and the proposed Placing and Open Offer. Invesco Asset Management, as agent for and behalf of its discretionary managed clients, Imperial Innovations, Woodford Investment Management and Lochside (International) Ltd, who account for c.57 per cent of Circassia’s issued share capital, have indicated their support for the Placing and the Acquisitions and their current intention is to vote in favour of the Resolutions at the General Meeting. Funds managed by Invesco Asset Management Limited and Woodford Investment Management have indicated their intention to participate in the equity raise.

Details of the Placing

The Bookbuild will open with immediate effect following release of this announcement. The number of New Ordinary Shares to be issued under the Open Offer and to be conditionally placed (subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer) in the Placing, and the price at which such New Ordinary Shares are to be issued in the Placing and the Open Offer (the “Offer Price”), will be agreed by J.P. Morgan Cazenove, Peel Hunt and Circassia at the close of the Bookbuild. The timing of the closing of the Bookbuild, pricing and allocations are at the discretion of J.P. Morgan Cazenove, Peel Hunt and Circassia. Details of the Offer Price and the number of New Ordinary Shares to be issued will be announced as soon as practicable after the close of the Bookbuild.

The Placing has been underwritten by J.P. Morgan Cazenove and Peel Hunt subject to the conditions and termination rights set out in the Placing Agreement. Further details of the Placing Agreement can be found in the terms and conditions of the Placing contained in the Appendix to this announcement (together, this “Announcement”).

The New Ordinary Shares, when issued, will be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of 0.08 pence each in the capital of Circassia, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue.

Applications will be made to the FCA for the New Ordinary Shares to be admitted to the premium listing segment of the Official List of the UK Listing Authority (the “Official List”) and to trading on the London Stock Exchange plc’s main market for listed securities (together, “Admission”). It is expected that settlement for the New Ordinary Shares placed in the Placing and Admission will take place at 8.00 a.m. on 11 June 2015. The Placing is conditional upon, amongst other things, Admission becoming effective and the Placing Agreement having become unconditional and not having being terminated in accordance with its terms.

The UK Listing Authority requires listed issuers to maintain at least 25 per cent. free float in their listed shares. Ordinary Shares held by directors, and holdings of Shareholders who hold more than 5 per cent. of Ordinary Shares do not count towards the free float. As at 14 May 2015, the free float of the Ordinary Shares was materially below 25 per cent. There can be no certainty that completion of the Placing and Open Offer will result in an increase in the free float of the Ordinary Shares such that the free float is at least 25 per cent. of the Ordinary Shares. If the Company has insufficient free float following completion of the Placing and Open Offer, the Company will review the percentage of Ordinary Shares that are held by each of its Shareholders and the manner in which such Ordinary Shares are held in order to rectify the insufficiency in the free float. If the Company continues to have a free float below 25 per cent., the Company will seek a derogation. If the Company does not rectify the insufficiency of free float and a derogation is not granted, the Company would be required to delist from the Official List, which would adversely affect the ability of new and existing shareholders to buy Ordinary Shares.

This Announcement should be read in its entirety. In particular, your attention is drawn to the “Important Notices” section of this Announcement, to the detailed terms and conditions of the Placing and further information relating to the Bookbuild described in the Appendix to this Announcement (which forms part of this Announcement).

By choosing to participate in the Placing and by making an oral and legally binding offer to acquire New Ordinary Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix), and to be making such offer on the terms and subject to the conditions of the Placing contained herein, and to be providing the representations, warranties and acknowledgements contained in the Appendix.

Enquiries

Circassia Pharmaceuticals plc                                              +44 (0)1865 405 560
Steve Harris
Julien Cotta
Rob Budge

J.P. Morgan Cazenove                                                             +44 (0)20 7742 4000
James Mitford
Nicholas Hall
Alex Bruce

Peel Hunt LLP                                                                           +44 (0)20 7418 8900
James Steel
Clare Terlouw
Jock Maxwell MacDonald

FTI Consulting                                                                          +44 (0)20 3727 1000
Ben Atwell
Simon Conway
Mo Noonan

Circassia will host an analyst meeting today at 09.00 BST. For further details please contact Mo Noonan on +44 (0)20 3727 1390 or mo.noonan@fticonsulting.com 

IMPORTANT NOTICE

Forward-looking statements
This Announcement contains forward-looking statements, including statements about the discovery, development and commercialisation of products. Various risks may cause Circassia’s actual results to differ materially from those expressed or implied by the forward-looking statements, including: adverse results in clinical development programmes; failure to obtain patent protection for inventions; commercial limitations imposed by patents owned or controlled by third parties; dependence upon strategic alliance partners to develop and commercialise products and services; difficulties or delays in obtaining regulatory approvals to market products and services resulting from development efforts; failure to complete the Acquisition of Aerocrine or Prosonix; the requirement for substantial funding to conduct research and development and to expand commercialisation activities; and product initiatives by competitors. As a result of these factors, prospective investors are cautioned not to rely on any forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. None of the Company,  J.P. Morgan Securities plc, J.P. Morgan Limited or Peel Hunt LLP undertake any obligation nor do they intend to revise or update any document (except, in the case of the Company, to the extent required by the Financial Conduct Authority (the FCA), the London Stock Exchange or by applicable law including the Listing Rules or the Disclosure Rules and Transparency Rules).

This Announcement and the information contained in it is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part, in, into or from the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively the “United States”), Australia, Canada, Japan or South Africa or any other state or jurisdiction in which the same would be unlawful restricted, unlawful or unauthorised (each a “Restricted Territory”). This Announcement is for information purposes only and does not constitute an offer to sell or issue or the solicitation of an offer to buy, acquire or subscribe for shares in the capital of the Company in any Restricted Territory or to any person to whom it is unlawful to make such offer or solicitation. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Subject to certain exemptions, the securities referred to herein may not be offered or sold in any Restricted Territory or for the account or benefit of any national resident or citizen of any Restricted Territory. The shares issued pursuant to the placing and open offer (the “New Ordinary Shares”) have not been and will not be registered under the United States Securities Act of 1933, as amended (“Securities Act”) or the securities laws or with any securities regulatory authority of any other state or other jurisdiction of the United States, and may not be offered, sold or transferred, directly or indirectly, in the United States absent registration under the Securities Act or an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any other state or jurisdiction of the United States. Any offering of the New Ordinary Shares to be made in the United States will be made only to a limited number of “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act pursuant to an exemption from registration under the Securities Act in a transaction not involving any public offering and outside the United States in offshore transactions within the meaning of, and in reliance on, Regulation S under the Securities Act. No public offering of the shares referred to in this Announcement is being made in the United Kingdom, any Restricted Territory or elsewhere.

This Announcement has been issued by, and is the sole responsibility, of the Company. No representation or warranty express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by J.P. Morgan Securities plc, J.P. Morgan Limited or Peel Hunt LLP  or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

J.P. Morgan Securities plc, which is authorised by the Prudential Regulation Authority (the PRA) and regulated in the United Kingdom by the FCA and the PRA, and J.P. Morgan Limited and Peel Hunt LLP, which are each authorised and regulated in the United Kingdom by the FCA, are each acting exclusively for Circassia Pharmaceuticals plc and no one else in connection with the proposed Acquisitions, Placing and Open Offer and Admission, will not regard any other person (whether or not a recipient of this document) as a client in relation to the proposed Acquisitions, Placing and Open Offer or Admission, and will not be responsible to anyone other than Circassia Pharmaceuticals plc for providing the protections afforded to their respective clients, nor for providing advice, in relation to the proposed Acquisitions, Placing and Open Offer or Admission or any other matter referred to in this document.

Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Securities plc, J.P. Morgan Limited or Peel Hunt LLP by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, none of J.P. Morgan Securities plc, J.P. Morgan Limited, Peel Hunt LLP, nor any of their respective affiliates, directors, officers, employees or advisers accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the contents of this document, including its accuracy or completeness or for any other statement made or purported to be made by it, or on behalf of it, the Company, the Directors or any other person, in connection with the Company, the New Ordinary Shares, the proposed Acquisitions, the Placing and Open Offer or Admission, and nothing in this document should be relied upon as a promise or representation in this respect, whether or not to the past or future. Each of J.P. Morgan Securities plc, J.P. Morgan Limited, Peel Hunt and their respective affiliates, directors, officers, employees and advisers accordingly disclaims to the fullest extent permitted by law all and any responsibility or liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above), which it might otherwise have in respect of this document or any such statement.

Each of J.P. Morgan Securities plc, J.P. Morgan Limited, Peel Hunt LLP an and each of their respective affiliates, directors, officers, employees and advisers accordingly disclaims to the fullest extent permitted by law all and any liability whatsoever, whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of any statements or other information contained in this Announcement. The distribution of this and the offering of the New Ordinary Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, J.P. Morgan Securities plc, J.P. Morgan Limited or Peel Hunt LLP  that would permit an offering of such shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company, J.P. Morgan Securities plc, J.P. Morgan Limited and Peel Hunt LLP to inform themselves about, and to observe, such restrictions.

The information in this Announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions. Statements contained in this Announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future.

The New Ordinary Shares to be issued pursuant to the placing and open offer will not be admitted to trading on any stock exchange other than the London Stock Exchange.

Neither the content of the Company’s website nor any website accessible by hyperlinks on the Company’s website is incorporated in, or forms part of, this Announcement.