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("Midatech" or the "Company")
Private Placement Raising US$6.0 million
Midatech Pharma PLC (AIM: MTPH.L; Nasdaq: MTP),
a drug delivery technology company focused on improving the bio-delivery and bio-distribution of medicines, announces that it has
entered into definitive binding agreements with certain institutional US investors ("Placees") to raise aggregate gross
proceeds of approximately US$6.0 million (approximately 5.0 million) (the "Private Placement") by the issue
and allotment of, in aggregate, 10,344,822 Units (as described further below) initially at an issue price of US$0.58 per Unit (the "Initial
The Private Placement is being implemented by
way of a non-pre-emptive cashbox structure, as further detailed below, utilising the Company's existing general share capital authority
granted at the general meeting held on 23 January 2023 ("Existing Shareholder Authority") which is expected to close,
subject to the satisfaction of customary closing conditions and Admission (as defined below), on or around 15 February 2023 ("Closing").
In addition, the Company is seeking shareholder approval for the issue and allotment of certain associated securities in respect of the
Private Placement not covered by the Existing Shareholder Authority. Closure of the Private Placement and receipt of proceeds is not conditional
on such shareholder approval.
The net proceeds received from the Private Placement
will enable the Company to focus on developing its clinical asset, MTX110, and, alongside cost-cutting initiatives, are expected to provide
the Company with sufficient working capital to December 2023. The Company expects to report completion of treatment in the second investigator
initiated Phase I study in rare orphan Diffuse Intrinsic Pontine Glioma (DIPG) in Q2 2023. The Company also expects to report initial
progression free survival (PFS) clinical data from its Phase I study in recurrent Glioblastoma (GBM) in Q3 2023.
Background to and reasons for the Private Placement
As noted in the Company's announcement of
23 January 2023, the Company has sufficient cash resources to fund its operations until mid-March 2023. The Board has sought to preserve
the Company's cash resources as far as practicable, while urgently seeking a commitment for alternative sources of funding in advance
of mid-March 2023 to be able to continue as a going concern. The Company further announced that if alternative funding was not available,
the Directors believed that it is likely that the Company could be forced to enter into administration.
Additional information on the Private Placement
The Private Placement comprises the issue of Units
by the Company, with each such Unit comprising either (i) one American Depository Share ("ADS"), one A Warrant and
one and one-half B Warrant, or (ii) one Pre-Funded Warrant, one A Warrant and one and one-half B Warrant, as otherwise defined and further
Each Placee has elected to hold ADSs equal to
a maximum of 9.99% of the Company's existing issued share capital, with any excess subscription for Units being satisfied via the
issue to each Placee of Pre-Funded Warrants instead of ADSs. The Company will therefore issue, in aggregate, 2,600,160 new ADSs (representing
65,004,000 new ordinary shares of 0.1p each ("Ordinary Shares") (the "Placing Shares")) and 7,744,662
Pre-Funded Warrants (subject to adjustment as set out below) under the Private Placement. In addition, subject to shareholder approval,
the Company will issue, in aggregate, 10,344,822 A Warrants (representing 258,620,550 new Ordinary Shares) and 15,517,236 B Warrants (representing
387,930,900 new Ordinary Shares) to Placees under the Private Placement, and may potentially issue additional Pre-Funded Warrants in accordance
with the price adjustment mechanism described below.
Details of the Warrants and Price Adjustment
Each "Pre-Funded Warrant" will
be exercisable into one new ADS (equivalent to 25 new Ordinary Shares). The Pre-Funded Warrants will become exercisable upon the closing
of the Private Placement and will be exercisable at an exercise price of US$0.0001 per ADS. Accordingly, the price paid per Unit that
includes a Pre-Funded Warrant instead of an ADS shall be reduced by the nominal US$0.0001 exercise price. The
use of such Pre-Funded Warrants ensures that the Company receives the full net proceeds of the Private Placement immediately on completion,
whilst enabling the Placees to limit their shareholdings in the Company to a maximum of 9.99%. The Pre-Funded Warrants shall remain
exercisable until exercised in full.
Price Adjustment Mechanism
The Private Placement is subject to a price adjustment
mechanism which could result in the issue price being adjusted below the Initial Issue Price, with a floor of US$0.30 per Unit, or, subject
to shareholder approval, US$0.10 per Unit, consequently increasing the number of ADSs and/or Pre-Funded Warrants to be issued under the
Private Placement, as described in further detail below.
In more detail: (i) on the sixth business day
post registration in the US of the new ADSs or (ii) to the extent all securities are not registered in the US, the date any registration
is effective or the date all shares may be sold without limitation under Rule 144 of the Securities Act of 1933, as amended, the number
of ADSs and/or Pre-Funded Warrants issuable under the Private Placement shall be increased, and only increase, to equal a number of ADSs
(and/or Pre-Funded Warrants) determined by the quotient of (x) the aggregate subscription amount of an investor for a Unit divided by
(y) the volume weighted average price ("VWAP") of the Company's ADSs for the five trading days immediately prior
to the applicable trigger date, subject to a floor price of US$0.30 per Unit; provided, however, that the floor price shall be adjusted
to US$0.10 per Unit subject to the receipt of shareholder approval at the forthcoming general meeting, which is intended to provide the
Company with sufficient share capital authority to issue and allot such additional ADSs and/or Pre-Funded Warrants (the "Price
Adjustment Mechanism").
A Warrants and B Warrants
Each "A Warrant" and "B
Warrant," if issued, will afford the holder the right to subscribe for one ADS for nil consideration. The A Warrants and B Warrants
may be exercised at any time over a five year and three year period, respectively, following their issuance and they may be exercised
on a cashless basis. The number of A Warrants and B Warrants is fixed at closing. The proposed issue of the A Warrants and B Warrants
is subject to shareholder approval at the forthcoming general meeting.
Placement Agent Warrants
Pursuant to the terms of a Placement Agency Agreement
entered into with Ladenburg Thalmann & Co. Inc. ("Ladenburg"), as placement agent, the Company will, among other
things, issue warrants to Ladenburg (the "Placement Agent Warrants") to purchase new ADSs equal to 4.0% of the total
Units issued in the Private Placement, which is equivalent to 413,792 new ADSs (being 10,344,800 new Ordinary Shares). The Placement Agent
Warrant has substantially the same terms as the A Warrants and B Warrants, except that the exercise price of the Placement Agent Warrant
is US$0.725 per ADS and the term of the Placement Agent Warrant shall be for the three year period following their issuance. The Company
has also agreed to issue additional Placement Agent Warrants to purchase 15,759 new ADSs (equivalent to 393,975 new Ordinary Shares).
The issuance of the Placement Agent Warrants is subject to shareholder approval at the forthcoming general meeting.
Furthermore, pursuant to a waiver of certain rights
held by an investor under the Securities Purchase Agreement dated 13 December 2022, as amended on 16 December 2022, between the Company
and such investor, the Company has agreed to issue to such investor, subject to shareholder approval at the forthcoming general meeting,
500,000 A Warrants (the "Investor Warrants").
Shareholder General Meeting
As noted above, the Company has agreed to convene
a general meeting at which the requisite share capital authorities will be sought to, inter alia, allot and issue, in aggregate,
258,620,550 new Ordinary Shares upon exercise of the A Warrants, 387,930,900 new Ordinary Shares upon exercise of the B Warrants, 10,738,775
new Ordinary Shares upon exercise of the Placement Agent Warrants, 12,500,000 new Ordinary Shares upon exercise of the Investor Warrants
and, subject to the maximum adjustment as discussed above, up to 1,434,996,000 new Ordinary Shares upon exercise of the Pre-Funded Warrants
in connection with the Private Placement. Notice of such general meeting is expected to be posted shortly following closing of the Private
Placement and a further announcement will be made in due course.
Dilution and Securities Capital Table