RNS Number:7790G
Cambridge Antibody Tech Group PLC
7 March 2000
Not for release, distribution or publication in or into
the United States, Canada, Japan, Australia or the
Republic of Ireland
Enquiries:
Cambridge Antibody Technology Tuesday 7 March at
Group plc HCC de Facto on
David Chiswell, John Aston or 020 7 496 3300
Rowena Gardner otherwise
01763 263 233
Deutsche Bank 020 7 545 8000
Antony Macwhinnie
Cazenove 020 7 588 2888
Tony Brampton or Daniel Pritchard
HCC de Facto 020 7 496 3300
Sue Charles, David Dible or
Nikul Odedra
CAMBRIDGE ANTIBODY TECHNOLOGY GROUP PLC ("CAT")
OPEN OFFER & INTERNATIONAL OFFERING TO RAISE #100 MILLION
IN A NEW SHARE ISSUE
Melbourn, UK, 7 March, Cambridge Antibody Technology
(CAT.L) today announces an Open Offer and International
Offering to raise #100 million, before expenses, through
an issue of New Ordinary Shares. In addition, up to a
further 300,000 New Ordinary Shares will be issued if an
Over-Allotment Option is exercised in full.
CAT intends to use the funds raised to expand and
accelerate its own development activities in order to
increase the breadth of its pipeline of products under
development. CAT intends to increase the value retained
from its pipeline by retaining the flexibility to partner
products at a later stage and/or fund a greater
proportion of development costs itself. The Directors
believe that, with the increased financial resources from
the Offers, CAT will be in a stronger position to
negotiate more favourable terms for its drug development
partnerships and strategic alliances.
The structure of the Offers permits the Company to market
a proportion of the New Ordinary Shares actively to
international investors, particularly in the United
States, and to set the Offer Price at a level determined
in a competitive book-building process. It retains the
pre-emptive entitlements of existing Shareholders to
subscribe at the Offer Price on a pro rata basis, for New
Ordinary Shares.
Commenting on the fundraising, Dr David Chiswell, Chief
Executive of CAT said:
"CAT has established itself as a leader in the discovery
and development of human monoclonal antibodies for
therapeutic and drug discovery purposes. We have four
products in clinical development and a toolbox of
technologies with application in genomics and proteomics.
These technologies are validated through collaborations
with leading pharmaceutical and biotechnology companies -
exemplified by our recent deals with Human Genome
Sciences and Searle.
These additional funds will enable us to capitalise on
our market leading position, in particular to increase
the value created by CAT, and allow CAT and its
shareholders to capture more of this value, by expanding
our activities, increasing the breadth of our pipeline
and gaining greater flexibility in the partnering of our
programmes."
A presentation to analysts will be held at 10.00 a.m.
this morning at the offices of Deutsche Bank, Winchester
House, 1 Great Winchester Street, London EC2N 2DB Tel:
020 7 545 8000
Not for release, distribution or publication in or into
the United States, Canada, Japan, Australia or the
Republic of Ireland
Cambridge Antibody Technology Group plc ("CAT")
Offers to raise # 100 million
CAT today announces that it is proposing to make an Open
Offer and International Offering to raise #100 million,
before expenses, through an issue of New Ordinary Shares.
In addition, up to a further 300,000 Ordinary Shares will
be issued if the Over-Allotment Option is exercised in
full. All of the New Ordinary Shares comprised in the
Offers will be issued at the Offer Price, which will be
determined following a competitive book-building process.
Under the Open Offer, Qualifying Shareholders may apply
for New Ordinary Shares, on a pre-emptive basis, for an
amount up to their respective pro rata entitlements under
the Open Offer.
The offers are not conditional upon the approval of
Shareholders and the New Ordinary Shares will be issued
pursuant to authorities granted to the Directors at the
Annual General Meeting on 4 February 2000.
Business strategy
CAT's business is based on a world leading platform
technology for the rapid isolation of fully human
monoclonal antibodies. CAT's strategy is to exploit the
power of its platform technology to build a balance of
long-term revenues, from the development of novel
antibody-based therapeutic products and short-term
revenues, from research collaborations based on its
functional genomics/proteomics and antibody development
technologies. Throughout its business, CAT plans to work
in partnership with other pharmaceutical and
biotechnology companies and to develop a range of
partnerships to manage risk and reward, from early stage
licensing deals to later stage partnering deals. In
addition, CAT expects to continue to improve and extend
its technology base.
Progress since flotation
Since the time of its flotation on the London Stock
Exchange in March 1997, CAT has made significant progress
in a number of areas.
Product Development
Four fully human monoclonal antibodies developed using
CAT's technology are now in clinical trials:
- The most advanced product, D2E7, which was isolated and
optimised by CAT in collaboration with BASF Pharma
("BASF"), has entered Phase III clinical trials
conducted by BASF, in patients with rheumatoid
arthritis. The Directors believe D2E7 is presently the
only fully human monoclonal antibody in Phase III
trials.
- J695, created and developed by CAT in collaboration with
BASF and Genetics Institute ("GI") part of Wyeth-Ayerst,
is in Phase I trials conducted by BASF and GI. Possible
indications are multiple sclerosis, rheumatoid arthritis
and Crohn's Disease.
CAT is itself funding clinical trials for two fully human
monoclonal antibodies it has developed:
- CAT-152 is in Phase II trials in patients undergoing
glaucoma filtration surgery.
- CAT-192 has recently completed Phase I trials and is
expected to enter Phase I/IIa trials later this year in
both local and systemic fibrotic indications.
Alliances
A key part of CAT's business strategy is the forging of
alliances with pharmaceutical and other biotechnology
companies. Since flotation, alliances have been secured
with ICOS, Wyeth-Ayerst, AstraZeneca, Zymogenetics and
Searle as well as HGS.
Technology
The Company's technology base has been significantly
extended since flotation. The size of CAT's phage
antibody libraries has increased from 10 billion to
approximately 100 billion, which leads to better
efficiency in terms of antibody selection. The
combination of investment in automation and the
development of sophisticated bioinformatics resulted in
the launch, at the end of 1997, of ProAb, CAT's
functional genomics-based drug discovery tool. CAT has
also developed ProxiMol, a secondary screening method
useful for generating antibodies to specific targets in
complex environments, and with its acquisition of Optein,
Inc., trading under the name Aptein, Inc. ("Aptein"), CAT
acquired technology and intellectual property in the
field of polysome display.
Intellectual Property
CAT's intellectual property portfolio has been further
strengthened since flotation, with grants of key patents.
Infrastructure
As the scale of its activities has increased, CAT's
infrastructure has developed. Staff numbers now stand at
approximately 150, compared with 67 at flotation. The
Company now operates from 46,000 sq. ft of freehold and
leasehold premises, compared with 19,500 sq. ft at
flotation. In this period, CAT has fitted out and
acquired an additional building, Cambridge House, as
laboratories and offices.
Use of proceeds of the Offers
In line with statements made at the time of flotation in
1997, CAT is seeking to raise further funds to continue
the commercial exploitation of its technology assets.
In particular, CAT intends to expand and accelerate its
own development activities in order to increase the
breadth of its pipeline of products under development.
CAT intends to increase the value retained from its
pipeline by retaining the flexibility to partner products
at a later stage and/or fund a greater proportion of
development costs itself. The Directors believe that,
with the increased financial resources from the Offers,
CAT will be in a stronger position to negotiate more
favourable terms for its drug development partnerships
and strategic alliances.
Specific areas of application of funds include the
following:
- Due to CAT's success in securing additional alliances and
the continuing development and further exploitation of
CAT's business as described above, it is envisaged that
there will be an expansion in staff numbers above the
current levels. Plans show numbers increasing to of the
order of 250, with the greater part of this increase in
the next 18 months. To accommodate this increase, some
increase in CAT's operational facilities may also be
required.
- To expand and automate CAT's overall technology base,
additional funding is required.
- CAT recognises the importance of a strong portfolio of
intellectual property and the need to vigorously defend
its patents. As CAT expands its intellectual property
portfolio, additional funds will be required to maintain
and protect this enlarged portfolio.
- Increased funding will afford CAT greater flexibility in
responding to opportunities, such as acquisition of
suitable targets, technology, intellectual property rights
or product acquisition within the confines of its stated
strategy.
As at 31 January 2000, CAT had cash and liquid resources
of #29.8 million.
CAT has since that date received a licence fee under the
collaboration agreement entered into with Human Genome
Sciences, Inc on 29 February 2000 of US$12 million and
expects to receive #34.6 million pursuant to the HGS
Subscription, subject to Shareholder approval at the EGM
(see below).
Following the Offers, the Company expects its level of
operating spend to increase from its current levels, as
the scale of its activity increases, as described above.
Current trading and prospects
Since the 1999 financial year end, CAT has made
significant progress. The Company has signed substantial
agreements with Searle and HGS. The clinical pipeline has
progressed with BASF initiating Phase III trials for D2E7
and CAT-192 entering and completing Phase I trials.
The significant recent increase in the Company's share
price has resulted in a potential liability for
employer's National Insurance in respect of share options
granted by the Company in December 1999. Based on the
share price as at close of business on 3 March 2000 and
current National Insurance rates of 12.2 per cent., the
amount of this liability is estimated at #1.8 million.
This liability will not crystallise until the options are
exercised, which cannot be before December 2002.
CAT expects that losses and cash outflows will continue
for a number of years. However, CAT expects the current
fundraising to provide a firm foundation for the
development of its business over this period. The need
for any further fundraising will depend on the timing and
magnitude of revenues, including the receipt of milestone
and royalty payments, and of other cash receipts in
connection with collaborations. In addition, CAT will
remain alert to opportunities for further investment to
develop its business where this is to the benefit of
Shareholders.
An integral part of CAT's business is entering into
strategic alliances with other pharmaceutical and
biotechnology companies. Whilst the timing of new
alliances cannot be predicted, CAT expects to enter into
further such alliances in the future. As with some
existing alliances that CAT has already concluded, a
component of such alliances may well be the issue of
Ordinary Shares to the strategic partner.
A significant proportion of CAT's Ordinary Shares are
owned by persons resident in the United States and
further interest from persons resident in the United
States is expected in the Offers. As a result, the
Company intends to seek a NASDAQ listing of its Ordinary
Shares at the appropriate time. There can be no
assurances, however, as to the timing of any such listing
or whether the Company will meet NASDAQ's listing
requirements.
On 1 March 2000, CAT announced a major alliance with HGS
of the United States. HGS and CAT will collaborate to
develop and sell custom-developed, fully human antibody
drugs against genomics-derived disease targets. CAT has
provided HGS with rights to use certain CAT technology
and HGS will pay CAT clinical development milestones and
royalties based on product sales. CAT has received an up-
front licence fee of US$12 million. In addition, HGS will
subscribe for 1,670,000 Ordinary Shares for the sterling
equivalent of US$55 million.
A resolution to approve the HGS Subscription will be
proposed at the EGM. If the approval of Shareholders is
not obtained at the EGM, the number of Ordinary Shares to
be issued to HGS will be reduced to 1,270,770, being the
number which the Directors currently have power to allot
for cash, otherwise than pro rata to Shareholders. This
subscription would be at the same price of #20.75 per
Ordinary Share, giving an aggregate subscription amount
of #26.4 million.
An Extraordinary General Meeting will be held at
Cambridge House, Back Lane, Melbourn, Cambridgeshire SG8
6DD at 4.30 p.m. on Friday 31 March 2000.
Details of the Offers
Open Offer
The Offers comprise the Open Offer and International
Offering and together they are expected to raise, before
expenses (and excluding the effect of any exercise of the
Over-Allotment Option) #100 million. At the outset it is
not possible to state the relative sizes of the Open
Offer and the International Offering as they are
principally dependent on two factors which have yet to be
determined, namely (i) whether any of the Non Pre-emptive
Ordinary Shares will be available for the International
Offering; and (ii) the amount of the Offer Price.
If Shareholders vote in favour of the resolution to
approve the HGS Subscription at the EGM, then the Non Pre-
emptive Ordinary Shares will be made available in the
International Offering. If this happens, the size of the
Open Offer, under which Qualifying Shareholders may apply
on a pre-emptive basis, will be an amount equal to #100
million less the number of Non Pre-emptive Ordinary
Shares (other than those the subject of the Over
Allotment Option) multiplied by the Offer Price, which is
expected to be announced on 3 April 2000. However, the
size of the Open Offer will not be less than #40 million.
The International Offering
All of the New Ordinary Shares not taken up by Qualifying
Shareholders in the Open Offer, together with the Non Pre-
emptive Ordinary Shares if Shareholders vote in favour of
the resolution to approve the HGS Subscription at the EGM
(and assuming exercise in full of the Over-Allotment
Option) will be made available in the International
Offering to investors through institutional offerings in
the United Kingdom and elsewhere, but particularly the
United States.
The Offer Price
The Offer Price, which will apply to all applications for
New Ordinary Shares in the Offers, will be determined at
the end of the International Offering, following a
competitive book-building process. It is expected that
the Offer Price and the number of New Ordinary Shares to
be issued will be determined and announced on or about
7.00 am on Monday 3 April 2000. In determining the Offer
Price, the Company, Deutsche Bank and Cazenove will have
regard to, inter alia, the level of demand from
Qualifying Shareholders in the Open Offer and from
investors in the International Offering, the prevailing
market conditions, and the desire to create a strong
aftermarket for Ordinary Shares following completion of
the Offers.
Reasons for the structure of the Offers
The Directors believe that the offering mechanism
outlined above is in the best interests of the Company
and Shareholders as a whole, for the following reasons:
- it permits the Company to market a proportion of the New
Ordinary Shares actively to international investors,
particularly in the United States, and to set the Offer
Price at a level determined in a competitive book-
building process.
- it retains the pre-emptive entitlements of existing
Shareholders, to subscribe on a pro rata basis for New
Ordinary Shares, at the Offer Price for at least #40
million; and
The New Ordinary Shares to be issued pursuant to the
Offers will, when issued and fully paid, rank pari passu
in all respects with the existing Ordinary Shares.
The Offers are conditional on:
- the Offer Price having been agreed by the Company,
Deutsche Bank and Cazenove;
- the Subscription Agreement becoming unconditional in all
respects and not having been terminated or rescinded in
accordance with its terms; and
- Admission becoming effective by no later than Tuesday 4
April 2000 (or such later time and/or date as the Company,
Deutsche Bank and Cazenove may agree).
It is expected that all these conditions will be
satisfied by, Admission will become effective and that
dealings in the New Ordinary Shares will commence on,
Tuesday 4 April 2000.
If the Offers do not become unconditional, no New
Ordinary Shares will be issued or sold, and all monies
received by the registrars in connection with the Open
Offer will be returned to applicants without interest as
soon as practicable thereafter.
The prospectus is expected to be posted to shareholders
later today. Application forms, which will accompany the
prospectus, are personal to shareholders and may not be
transferred except to satisfy bona fide market claims.
This press release is not an offer of securities for sale
in the United States. Any such securities may not be
offered or sold in the United States absent registration
or an exemption from registration, any public offering of
securities to be made in the United States will be made
by means of a prospectus that may be obtained from the
Company and will contain detailed information about the
Company and management, as well as financing statements.
The issue of this announcement has been approved by the
directors of Cambridge Antibody Technology Group plc who
accept responsibility for the information contained in
it. This announcement has been approved for the purposes
of section 57 of the Financial Services Act 1986 by
Deutsche Bank and Cazenove, both of which are regulated
in the UK by The Securities and Futures Authority
Limited. Deutsche Bank and Cazenove are acting for
Cambridge Antibody Technology Group plc and no one else
in connection with the Fundraising and will not be
responsible to anyone other than Cambridge Antibody
Technology Group plc for providing the protections
afforded to customers of Deutsche Bank and Cazenove nor
for providing advice in relation to the Offers.
Definitions
"CAT" or the Cambridge Antibody Technology Group plc,
"Company" or CAT Limited, as the context so
requires
"Extraordinary the extraordinary general meeting of the
General Meeting" or Company to be held at the offices of the
"EGM" Company at Cambridge House, Back Lane,
Melbourn, Cambridgeshire SG8 6DD on
Friday 31 March 2000 commencing at 4.30
p.m.
"HGS" Human Genome Sciences, Inc
"HGS Subscription" means the subscription by HGS for 1.67
million Ordinary Shares pursuant to the
HGS Subscription Agreement
"International the offer by Deutsche Bank and Cazenove
Offering" on behalf of the Company of New Ordinary
shares to international investors
"New Ordinary the new Ordinary Shares proposed to be
Shares" issued by the Company in connection with
the Offers
"Non Pre-emptive 1,270,000 Ordinary Shares in respect of
Ordinary Shares" which the Directors were empowered,
pursuant to Section 95 of the Act, to
allot for cash as if the provisions of
Section 89(1) of the Act did not apply to
the allotment pursuant to resolution 10
passed at the annual general meeting for
the Company held on 4 February 2000
"Offer Price" the price per share at which New Ordinary
Shares are to be issued or sold under the
Offers
"Offers" the Open Offer and the International
Offering
"Open Offer" the invitation by Deutsche Bank and
Cazenove on behalf of the Company, to
Qualifying Shareholders to apply for New
Ordinary Shares on a pre-emptive basis
"Over-Allotment the option conditionally granted by CAT
Option" to Deutsche Bank to acquire up to 300,000
additional New Ordinary Shares at the
Offer Price
"Qualifying holders of Ordinary Shares on the
Shareholders" register of members of the Company as at
the Record Date (save for certain
overseas shareholders)
END
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