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11 June 2020

Vator Securities advises LIDDS on 59,3 MSEK Directed and Rights Issue

The Board of Directors of LIDDS AB (“LIDDS” or the “Company”) has today resolved to carry out a capital raise of a maximum of approximately SEK 59.3 million. The capital raise is carried out through a completed new share issue with deviation from the shareholders’ pre-emption rights of approximately SEK 22.3 million (the “Directed Issue”)  and a new share issue with pre-emption rights for existing shareholders with a maximum of approximately SEK 37.1 million, which is fully guaranteed through subscription commitments and guarantee commitments (the “Rights Issue”) (collectively the “Share Issues”). The Share Issues are carried out pursuant to the authorization granted by the annual general meeting on 14 May 2020. The share price in the Share Issues is determined to SEK 12 per share.

Comment from Monica Walter, CEO LIDDS

-This is LIDDS’ largest capital raise for several years, which secures long-term financing during prevailing turbulent financial climate. The Company will, through the Directed Issue as well as the fully guaranteed Rights Issue, ensure that the company at a rapid pace can carry out and initiate new important clinical projects.

Summary

Rights Issue

  • The Rights Issue comprises a maximum of 3,090,333 shares and at full subscription the Company will be provided with a maximum of approximately SEK 37.1 million before issue expenses.
  • The shareholders receive one (1) subscription right for each share held on the record day. Eight (8) subscription rights entitle to subscription of one (1) new share in the Rights Issue.
  • The record date for right to participate in the Rights Issue is on 18 June 2020. Subscription in the Rights Issue shall take place during the period commencing on 23 June up to and including 7 July 2020. Trading with subscription rights is expected to take place on Nasdaq First North Growth Market during the period commencing on 23 June up to and including 3 July 2020.
  • For existing shareholders who choose not to participate in the Rights Issue, and provided that the Share Issues is fully subscribed, the dilution amounts to 16.7 percent of the number of shares and votes.The Company’s board members and several senior executives have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 3.1 million, corresponding to approximately 8.2 percent of the Rights Issue.Some of the Company’s major shareholders have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 2.8 million, corresponding to approximately 7.5 percent of the Rights Issue. In addition, the Company has received guarantee commitments of approximately SEK 31.3 million from certain existing shareholders and external guarantors, corresponding to approximately 84.3 percent of the Rights Issue. Accordingly, the Rights Issue is 100 percent guaranteed. The issue undertakings are not secured.In connection with the Rights Issue, lock-up agreements, which contain customary terms and exemptions from Vator Securities, have been entered into for a period of 180 days from today’s date with the Board members and senior executives of the Company who own shares in the Company.
  • The complete terms and conditions for the Rights Issue will be disclosed in an EU Growth Prospectus, which is expected to be published on the Company’s website on 16 June 2020.

The Directed Issue

  • The Directed Issue is fully subscribed and comprises 1,854,200 shares and will provide the Company with a maximum amount of SEK 22.3 million before issue expenses.
  • The Directed Issue has been directed to a number of selected investors. In addition to provide the Company with capital, the Directed Issue is expected to strengthen the Company’s shareholder base.
  • The Directed Issue will dilute existing shareholders of approximately 7.0 percent of the number of shares and votes in the Company.

Collectively

  • Costs attributable to the Share Issues are estimated to amount to approximately SEK 7.2 million, whereof SEK 2.8 million relates to compensation for the issue guarantors.
  • The Company intends to use the net proceeds from the Share Issues to the following areas specified in priority order:
    • approximately 40 percent to the NZ-TLR9 project where NanoZolid® is combined with a TLR9 agonist;
    • approximately 25 percent to run the NZ-IO project where NanoZolid® is combined with immuno-oncology candidates, in research and development phase, to initiate phase I study; and
    • approximately 35 percent for ongoing projects and operations.
  • The subscription price in the Share Issues is SEK 12 per share, which correspond to a discount of 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Premier Growth Market. The subscription price in the Share Issues has been determined through a structured process within the framework of the Directed Issue.

Background and rationale
In 2019, positive preliminary Phase IIb data was published in LIDDS’s most advanced project, Liproca® Depot. The results from the final analysis that were communicated in May 2020 also included promising data on MRI and prostate biopsies which confirmed the anti-androgenic effect and even indicated some cancer regression during the study period. Liproca® Depot is designed for local tumor treatment for prostate cancer patients who are under “active surveillance” with an intermediate risk of cancer progression. Active surveillance means that the patient does not receive any medical treatment but is instead monitored regularly, which for many patients is associated with stress and anxiety that the tumor will grow. The Company’s goal is that these patients should instead be treated with Liproca® Depot as a way to control the cancer. The phase II study results reported a local tumor effect with both a reduction in patients’ PSA levels and a decrease in prostate volume without hormonal side effects, thus validating the NanoZolid® technology. A licensing agreement has been signed with Puheng Pharma for the Chinese market and LIDDS is working extensively to establish licensing agreements for Liproca® Depot in other major markets.

The Company’s strategy is to, based on the NanoZolid® technology, broaden its existing product portfolio with other proven drugs, thereby creating new drug products for use in a variety of diseases.

In 2019, LIDDS initiated a phase I study in which solid tumors are treated with NanoZolid® in combination with docetaxel, a cytostatic drug that is indicated for a variety of cancers. Five patients have so far been dosed and further dose scaling is ongoing. LIDDS aims to treat cancer at an early stage, at the stage of diagnosis to facilitate surgery and radiation and to reduce the risk of spread before radical treatment is performed.

As part of the strategy, LIDDS has expanded its research in immuno-oncology and strengthened the organization with specialist expertise during the past year. LIDDS has also initiated several research projects that will evaluate how the NanoZolid® technology can be applied to intratumoral immunotherapy. The Company’s goal is to develop a more effective cancer treatment that has fewer and less serious side effects than systemic immunotherapy. Several immunoactive substances have been successfully formulated in the NanoZolid® technology.

LIDDS has also conducted preclinical studies with a specific TLR9 agonist with positive results, which is why a larger preclinical program has been initiated, which is expected to be completed in 2020. As the Company’s Freedom-To-Operate analysis did not show any legal challenges for LIDDS to develop its own product with NanoZolid® combined with a specific TLR9 agonist, the Company decided in 2019 to prepare for the initiation of a phase I study. The goal is for the study to start in early 2021, where there is a possibility that the NanoZolid® TLR9 product can be combined with a checkpoint inhibitor.

The Board of Directors is of the opinion that the existing working capital is not sufficient for the current needs of the Company in the coming twelve months prior to the completion of the Issues. In order to capitalize the Company with working capital and create the conditions for completing the Company’s ongoing clinical studies and taking new projects to clinical phase, the Board of Directors of LIDDS resolved on 11 June 2020 to raise a total of approximately SEK 59.3 million through the Issues. The Company’s assessment is that working capital, following the completion of the Issuance, will cover the working capital requirement for the next twelve months

Use of issue proceeds from the Share Issues
With the proceeds from the Share Issues, the Company will receive SEK 59.3 million before transaction-related costs, which are expected to amount to approximately SEK 7.2 million. The Company intends to use net proceeds from the Issues to the following areas specified in priority order:

  • approximately 40 percent to the NZ-TLR9 project where NanoZolid® is combined with a TLR9 agonist;
  • approximately 25 percent to run the NZ-IO project where NanoZolid® is combined with immuno-oncology candidates, in research and development phase, to initiate phase I study; and
  • approximately 35 percent for ongoing projects and operations.

The Directed Issue

The Board of Directors has completed a new issue of a maximum of 1,854,200 shares with deviation from the shareholders’ preferential rights, pursuant to the authorization granted by the annual general meeting on 14 May 2020. The subscription price for the shares is determined to SEK 12 per share and the Directed Issue will provide the Company with a maximum of approximately SEK 22.3 million. The share price in the issue has been determined through a structured process carried out by Vator Securities. The subscription price corresponds to a discount of approximately 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Growth Market. The Board of Directors is of the opinion that the subscription price’s market capability is ensured through the structured process. The reason for the deviation from the shareholders’ pre-emption rights is to diversify the shareholder base in the Company and to take advantage of the opportunity to raise capital in a time-efficient manner on favorable terms. Through the Directed Issue, the Company’s share capital will increase with SEK 98,272.60 and the number of shares will increase with 1,854,200 shares. The Directed Issue will dilute existing shareholders of approximately 7.0 percent of the number of shares and votes in the Company.

The Rights Issue
The Board of Directors of the Company has decided on a new issue of a maximum of 3,090,333 shares with pre-emption rights for the Company’s existing shareholders pursuant to the authorization granted by the annual general meeting on 14 May 2020. Through the Rights Issue existing shareholders are entitled to subscribe for new shares in relation to the number of shares they own on the record date of 18 June 2020. The person who, on the record date on 18 June 2020, is entered in the share register kept by Euroclear Sweden AB on behalf of LIDDS, is entitled to subscribe with pre-emption right for shares in the Rights Issue. One (1) existing share entitles to one (1) subscription right and eight (8) subscription rights entitle to subscribe for one (1) new share at the subscription price SEK 12 per share. The subscription price corresponds to a discount of approximately 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Growth Market. The Rights Issue will provide LIDDS with SEK 37.1 million before deduction for issue expenses. Through the Rights Issue, the Company’s share capital may increase by a maximum of SEK 163,787.65, and the number of shares may increase by a maximum of 3,090,333 shares. For existing shareholders who choose not to participate in the Rights Issue, and provided that the Rights Issue is fully subscribed, the dilution amounts to approximately 10.4 percent of the number of shares and votes in the Company.

Total increase of the share capital and number of shares
At full subscription in the Share Issues, the number of shares in the Company will amount to a maximum of 29,667,204 and the share capital will amount to a maximum of SEK 1,572,361.81.

EU Growth Prospectus
The complete terms and conditions for the Rights Issue and information regarding the Company will be disclosed in an EU Growth Prospectus, which is expected to be published on the Company’s website around 16 June 2020.

Subscription commitments and guarantee commitments
The Company’s board members and several senior executives have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 3.1 million, corresponding to approximately 8.2 percent of the Rights Issue. Some of the Company’s major shareholders have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 2.8 million, corresponding to approximately 7.5 percent of the Rights Issue. In addition, the Company has received guarantee commitments of approximately SEK 31.3 million from certain existing shareholders and external guarantors, corresponding to approximately 84.3 percent of the Rights Issue. Accordingly, the Rights Issue is 100 percent guaranteed. The issue undertakings are not secured.

Preliminary time schedule for the Rights Issue

Last day of trading including right to receive subscription rights 16 June
The Prospectus is announced and published on the Company’s website 16 June
First day of trading excluding right to receive subscription rights 17 June
Record date for participation in the Rights Issue 18 June
Subscription period in the Rights Issue 23 June – 7 July
Trading with subscription rights 23 June – 3 July
Trading with BTA 23 June until around 16 July
Final subscription result in the Rights Issue is announced 9 July
Delivery of new shares 22 July
Trading in new shares begins 22 July

 

Advisors
Vator Securities is acting as financial advisor to the Company and Advokatfirman Delphi is the legal advisor to the Company in connection with the Share Issues