Vator Securities advises Scandion Oncology on 236 MSEK Rights Issue

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• The proceeds from the Rights Issue will primarily be used to finance continued clinical development of SCO-101.
• Existing shareholders in the Company receive one subscription right for each share held as of the record date, 24 November 2020. Two subscription rights entitle the holder to subscribe for one new share in the Rights Issue.
• Subscription in the Rights Issue may occur under the period as of 26 November – 10 December 2020.
• For existing shareholders not participating in the Rights Issue, a dilution effect corresponding to 33.3 per cent of the total number of shares and votes in the Company following the Rights Issue will arise.

Certain of the Company’s shareholders, board members and management have undertaken to subscribe new shares, amounting to approximately SEK 4.4 million, equivalent to approximately 2 percent of the Rights Issue. In addition, the Company has received subscription commitments (without commitment fee) amounting to approximately SEK 29 million from external professional investors and guarantee commitments amounting to approximately SEK 202.3 million from certain external guarantors, together corresponding to approximately 98 percent of the Rights Issue. Consequently, the Rights Issue is fully guaranteed.

“With the proceeds from this rights issue we will continue the development of Scandion Oncology into a significant clinical stage cancer drug resistance company. We are at the threshold of bringing SCO-101 to proof of concept in drug resistant cancer patients, and we see a large and growing potential to strengthen our pipeline further preventing resistance not only in colorectal cancer, but also in pancreatic cancer and other cancers. SCO-101 is the first of its kind, and will bring a solution to a huge and growing problem for patients – overcoming cancer drug resistance,” says Bo Rode Hansen, President & CEO, Scandion Oncology A/S.

Background and reasons

Scandion Oncology is a clinical phase II biotechnology company addressing cancer drug resistance as a complement to existing anti-cancer therapies by developing first-in-class, oral add-on drugs. Used as a combination therapy, the Company’s products have the potential to quickly reach peak sales in addition to potentially offering better response rates and increased survival time with improved quality of life. The lead candidate, SCO-101, is currently in clinical phase II. The drug has a multimodal mechanism of action, targeting well-documented, key cancer drug resistance mechanisms, which are common among a wide variety of cancer indications. The Company is targeting cancer drug resistance in various treatment modalities including, chemotherapy, anti-hormonal therapy, and immuno-oncology. Initially, the Company is targeting colorectal-, pancreatic-, and breast cancer.

On 1 October 2020, Scandion Oncology appointed Bo Rode Hansen as new President and CEO and co-founder Nils Brünner as new CSO to strengthen executive leadership in order to bring the Company to the next level of its corporate, scientific and commercial phase.

Targeting well-known cancer drug resistance mechanisms enables the Company to develop a broad pipeline that address several indications:

• SCO-101 is currently in phase II trial in combination with standard market-leading chemotherapy (FOLFIRI) to evaluate safety and efficacy of the combination treatment in late-stage metastatic colorectal cancer patients with acquired FOLFIRI resistance. Data from part 1 of the trial is expected in Q2 2021.
• In October 2020, Scandion Oncology initiated phase Ib (dose-range finding) with SCO-101 in combination with first line chemotherapy (nab-paclitaxel and gemcitabine) in patients with metastatic pancreatic cancer. Results are expected in Q2-Q3 2021.
• In addition, Scandion Oncology’s biomarker strategy includes a personalized treatment approach with SCO-101, which is enabled through the development of predictive biomarkers where the biomarker assays are expected to be validated in Q2 2021.
• The second clinical drug, SCO-201, is undergoing preclinical profiling to be prepared for human trial.

During 2020, Scandion Oncology has reached several important milestones. The positive data from the first patients made it possible for the Company to attract Bo Rode Hansen, a seasoned top executive and life science entrepreneur, as President and CEO. Scandion Oncology is now on the path towards value inflecting milestones, aiming to increase benefit of patients and create shareholder value. The Company will use the proceeds from the Rights Issue to further create shareholder value and to bring Scandion Oncology’s candidates towards commercialization.

Use of proceeds

The net proceeds of approximately SEK 200 million from the Rights Issue are intended to finance the following activities:

• Approximately 60% will be used for continued development of SCO-101, including drug production and clinical trials.
• Approximately 10% will fund pre-clinical development of SCO-201 and explorations og additional indications of SCO-101.
• Approximately 30% will support general company activities.

Rights Issue

The Board of Directors of the Company has today, 16 November 2020, pursuant to the authorization granted by the extraordinary general meeting held on 13 November 2020, resolved on a new share issue of up to a maximum of 10,711,848 shares with preferential rights for the Company’s existing shareholders in proportion to their shareholdings as of the record date 24 November 2020.

Holders of shares, which on the record date of 24 November 2020 are entered in the share register held by Euroclear Sweden AB, have the preferential right to shares in the Rights Issue. One existing share gives right to one subscription right and two subscription rights entitle the holder to subscribe for one new share in the Rights Issue at a subscription price of SEK 22 per share.

The Company will receive SEK 235,660,656 before deduction of transaction costs related to the Rights Issue.

The Rights Issue will result in an increase of the share capital of DKK 787,320.8280. Following the Rights Issue, the number of shares in Scandion Oncology will amount to 32,135,544 and the share capital will amount to DKK 2,361,962.4840. For existing shareholders not participating in the Rights Issue, a dilution effect corresponding to approximately 33.3 percent of the total number of shares and votes in the Company following the Rights Issue will arise. Shareholders who choose not to participate in the Rights Issue may sell their subscription rights.

The last day of trading in Scandion Oncology’s shares, including the right to receive subscription rights in the Rights Issue, is 20 November 2020. The first day of trading in Scandion Oncology’s shares without the right to receive subscription rights in the Rights Issue is 23 November 2020. Subscription of shares with subscription rights shall be by cash payment during the period from 26 November – 10 December 2020. Subscription of shares without subscription rights shall be made on a special subscription list during the period from 26 November – 10 December 2020. Payment for remaining shares subscribed without subscription rights shall be made in cash no later than two banking days following the issue of the settlement note, which indicates notification of allocation.

Allotment of remaining shares subscribed for without subscription rights

In the event that all shares are not subscribed for with subscription rights before the expiry of the subscription period, the remaining shares will, without compensation to the holders of unexercised subscription rights, be allotted to such existing shareholders and qualified investors having made binding undertakings to subscribe for remaining shares without subscription rights. In case of oversubscription of the remaining shares, the remaining shares will be allocated according to apportionment keys determined by the Board of Directors.

Prospectus

The full terms and conditions of the Rights Issue and information about the Company will be included in a prospectus expected to be published on the Company’s website around 24 November 2020. In Denmark, the offering is carried out without a prospectus pursuant to applicable exemptions.

Subscription undertakings and guarantees

Certain of the Company’s shareholders, board members and management have undertaken to subscribe new shares, amounting to approximately SEK 4.4 million, equivalent to approximately 2 percent of the Rights Issue. In addition, the Company has received subscription commitments amounting to approximately SEK 29 million from external professional investors and guarantee commitments amounting to approximately SEK 202.3 million from certain external guarantors, together corresponding to approximately 98 percent of the Rights Issue. Consequently, the Rights Issue is fully guaranteed.

A guarantee commission will be paid for the guarantee commitments, based on current market conditions, of nine (9) percent of the guaranteed amount in cash consideration. No consideration is to be paid for the subscription commitments that have been entered into. These subscription and guarantee commitments are not secured through bank guarantees, restricted funds, pledged assets or similar arrangements. Further information on the parties who have entered into guarantee commitments will be presented in the prospectus that will be released before the commencement of the subscription period.

Preliminary timetable for the Rights Issue

Lock-up undertakings

The Board of Directors and executive management of Scandion Oncology have signed so-called lock-up undertakings towards Vator Securities AB, which means that they commit to retain their holdings of shares and/or other securities in the Company for a period of 180 days calculated from the first day of trading of the new shares in the Rights Issue. The lock-up undertaking does also apply to shares subscribed for in the Rights Issue.

Advisors

Vator Securities is financial adviser and Advokatfirman Schjødt (as to Swedish law) and Plesner Advokatpartnerselskab (as to Danish law) are legal advisers to the Company in connection with the Rights Issue.