Suspension of Trading, Board Changes, Proposed fundraising
(“Venn”, “Venn Life Sciences” or the “Company”)
Conditional Acquisition of Open Orphan DAC (“Open Orphan”)
Suspension of Trading
Venn Life Sciences, an Integrated Drug Development Partner offering a combination of drug development expertise and clinical trial design and management to pharmaceutical, biotechnology and medical device organisations, has conditionally agreed to acquire the entire issued and to be issued share capital of Open Orphan for an aggregate consideration of approximately £5.7 million, to be satisfied by the allotment and issue of new ordinary shares of 0.1 pence each in the capital of the Company (“New Ordinary Shares”) (the “Acquisition”). Under the terms of the Acquisition, New Ordinary Shares are expected to be issued to existing Open Orphan shareholders with reference to a relative value of Venn of approximately £4.0 million. The Acquisition remains conditional on, inter alia, the approval by Venn’s shareholders.
- The Company and its group as enlarged by the Acquisition (“Enlarged Group”) will target the fragmented orphan drug services market in Europe
- The orphan drug sector is one of the fastest growing sectors in the global pharmaceutical industry and over 50% of all new US Food and Drug Administration (“FDA”) approved drugs coming to market are for rare/orphan conditions
- The Open Orphan strategy is to build upon its existing capability and expertise within orphan drugs to become a full-service consultancy for orphan and other speciality healthcare products
- Open Orphan has identified an extensive pipeline of target acquisitions primarily in the regulatory approval, reimbursement and product launch areas where the Directors perceive that companies need the most help navigating the complex European market
- The Directors intend to undertake an equity fundraise to new and existing investors
- Cathal Friel, non-executive chairman of Venn, becomes CEO with immediate effect and following satisfaction of all outstanding conditions and re-admission of the Company’s enlarged issued share capital to trading on the AIM market of London Stock Exchange plc (“AIM”) and to the Euronext Growth Market of Euronext Dublin, Dr Maurice Treacy will be appointed an executive director
Cathal Friel, CEO of Venn said: “The combination of Venn and Open Orphan gives us a strong platform and we have the pipeline and management team to go out and build a leading full-service consultancy offering services to the fast growing orphan drug market right across Europe.”
The proposed Acquisition represents a reverse takeover under the AIM Rules for Companies (“AIM Rules”) and under the Euronext Growth Rules for Companies (“Euronext Growth Rules”) and may also give rise to an obligation on the part of the shareholders of Open Orphan and other concert party members (the “Open Orphan Concert Party”) to make a mandatory offer for the share capital of the Company pursuant to Rule 9 of the City Code on Takeovers and Mergers (“Takeover Code”). Accordingly, the Acquisition is also conditional on, inter alia, receiving the approval of shareholders of the Company to a reverse takeover under the AIM Rules and under the Euronext Growth Rules, and a waiver of the obligations of the Open Orphan Concert Party to make a mandatory offer for the Company pursuant to Rule 9 of the Takeover Code and on the admission of the New Ordinary Shares to trading on AIM and the Euronext Growth Market.
The Company expects to publish an admission document for the purposes of the AIM Rules and Euronext Growth Rules (“Admission Document”) in respect of the Enlarged Group and shareholder circular in June 2019. Accordingly, trading in the Company’s ordinary shares will now be suspended until publication of the Admission Document.
The Company will make further announcements in due course.
Open Orphan aims to build a leading, European-focused, rare and orphan drug consulting services platform, building on its existing capability through strategic and targeted acquisitions. The Venn service offerings include drug development planning and strategy, early drug development and clinical trials. This will enable the Enlarged Group to assist the developers of rare and orphan drug products from pre-clinical development of their products, into the clinic and through clinical development. The Directors believe that the Enlarged Group’s regulatory approval, reimbursement, launch and (once on the market) registry studies and post-launch efficacy evidence capabilities complement the Company’s existing core business which includes a substantial element of clinical research services to pharmaceutical companies many of which are existing orphan drug companies.
The Enlarged Group will target the fragmented orphan drug services market in Europe and offer a ‘one-stop-shop’ solution for the development and commercialisation of orphan and rare drugs within Europe. This solution will assist developers of rare and orphan products and enable better outcomes for clients by offering an integrated solution supporting developers with multiple clinical and regulatory support services ensuring maximisation of the value of, and access to, a product. Open Orphan has identified an extensive pipeline of target acquisitions primarily in the regulatory approval, reimbursement and product launch areas where the Directors perceive that companies need the most help navigating the complex European market.
The orphan drug sector is one of the fastest growing sectors in the global pharmaceutical industry and over 50% of all new US FDA approved drugs coming to market are for rare/orphan conditions.
Background to Open Orphan
Open Orphan was incorporated in the Republic of Ireland on 18 July 2017 with a strategy and product offering to develop a market leading services platform for pharmaceutical and biotechnology companies seeking to commercialise their products across Europe with a particular focus on drugs treating rare diseases. It has raised over €3 million from investors to build a platform that facilitates obtaining European Medical Agency approval, and/or relevant local approval, and pan-European reimbursement, for launch and commercialisation of orphan and other rare disease drugs.
Since inception, Open Orphan has also developed an orphan drug digital data driven platform comprising of:
- Data Access Platform
Much of the investment to date within Open Orphan has been focussed on building its database of over 500 pharmaceutical companies with orphan drugs either approved or advancing through clinical trials. All of these companies would be expected to look to engage with physicians and key opinion leaders (“KOLs”) across Europe in order to market and sell their products. To this end the Data Access Platform has compiled and detailed contact details of over 4,000 physicians and KOLs across Europe with a focus on orphan drugs. At present pharmaceutical companies can use specialised providers to conduct a KOL mapping exercise to identify KOLs for a condition. However, this is typically expected to be more expensive than paying for annual access to Open Orphan’s platform.
Open Orphan’s Data Access Platform, with its connection to European KOLs, allows Open Orphan to offer a low-cost virtual representative (“Virtual Rep”) service to pharmaceutical companies with orphan drug assets. Open Orphan’s Virtual Rep service can be implemented at any stage of the lifecycle of a rare/orphan product; it can be used as a tool to support the launch of a new product, right the way through to promoting mature brands without incurring the expense of additional field representatives.
The Directors expect that, for an annual fee, Open Orphan can arrange for over 40 KOLs in Europe to get up to three touch points per month with information on specific orphan drug products coming to the European market generating recurring revenue for the Enlarged Group. Engagement with KOLs is expected to be in the form of:
- Written communication;
- Phone calls or webinars; and
- Email communication.
2. Health Data Platform
Open Orphan has identified and begun establishing a patient health data platform, with a focus on orphan diseases. This is intended to be established in partnership with a number of patient advocacy groups on a revenue share basis to encourage patients with rare and orphan conditions to share their health data. Open Orphan expects to generate future revenue from the brokering of aggregated data to pharmaceutical companies on behalf of the patient advocacy groups and in turn speeding up the development of new drugs for these patient groups.
The health data platform is being constructed such that data collection is simplified with EU citizens able to share their data from other health data collection companies such as 23andMe, Inc and Ancestry.com LLC, where individuals have previously shared and retained co-ownership of the data. European data protection legislation now allows individuals greater control over their data and how it is used for commercial purposes.
Open Orphan Acquisition Strategy
Within Europe, the orphan drug pharmaceutical services market is highly fragmented with a large number of smaller scale consultancies. This is in part the result of a fragmented regulatory system in Europe where, despite an EU-wide regulator, reimbursement needs to be negotiated on a country by country basis. The Open Orphan strategy is to build upon its existing capability and expertise within orphan drugs to become a full-service consultancy for orphan and other speciality healthcare products. The Directors intend to pursue an acquisition focussed strategy to expand the capability of the Enlarged Group and believe that the development work already completed gives the Enlarged Group an effective platform from which to act as an attractive consolidator. The Directors believe that the experience of the Board in identifying and managing acquisitions along with specific industry expertise will enable the Enlarged Group to embark on a consolidation-focussed strategy.
In addition, Open Orphan has established a preferred provider network across Europe, with over 40 service providers having signed agreements. This platform will be utilised to service the Enlarged Group’s clients and complement its acquisition strategy.
The Directors intend to undertake an equity fundraise to new and existing investors. The proceeds of the proposed fundraise will be used support the Enlarged Group’s business plan and provide consideration for future acquisitions and working capital. Further details will be announced in due course.
Following the signing of the share purchase agreement in respect of the Acquisition, the Board has agreed that Cathal Friel, non-executive chairman of Venn, becomes CEO with immediate effect. Tony Richardson will remain on the Board as Corporate Development Director and Brendan Buckley will become non-executive Chairman.
Additionally, it is proposed that, following satisfaction of all outstanding conditions and re-admission of the enlarged issued share capital of the Company to trading on AIM and the Euronext Growth Market, Dr Maurice Treacy will be appointed as an executive director of the Company. Maurice was most recently a founder of HiberGen and one of the founders of Genomics Medicine Ireland, which was recently acquired by WuXI NextCODE. Genomics Medicine Ireland was established to research the role of genetics in disease, leading to new prevention strategies and treatments. Maurice’s experience of successfully starting a number of life science ventures will be invaluable to the Enlarged Group going forward.
Related Party Transaction
The Acquisition is a related party transaction for the purposes of Rule 13 of the AIM Rules. The Directors, other than Mike Ryan and Christian Milla (the “Independent Directors”), hold equity interests in Open Orphan, and therefore are not considered to be independent for the purposes of considering and negotiating the Acquisition. The Independent Directors consider, having consulted with Arden Partners plc, the Company’s nominated adviser, that the terms of the Acquisition are fair and reasonable in so far as the Company’s shareholders are concerned.
The Acquisition is a related party transaction for the purposes of Rule 13 of the Euronext Growth Rules. The Directors, other than the Independent Directors, hold equity interests in Open Orphan, and therefore are not considered to be independent for the purposes of considering and negotiating the Acquisition. The Independent Directors consider, having consulted with Davy, the Company’s Euronext Growth adviser, that the terms of the Acquisition are fair and reasonable in so far as the Company’s shareholders are concerned.
Venn Life Sciences Holdings Plc – Tel: +353 (0)1 5499 341
Cathal Friel, Chief Executive Officer
Arden Partners (Nominated Adviser and Joint Broker) – Tel: +44 (0)20 7614 5900
John Llewellyn-Lloyd / Ruari McGirr / Benjamin Cryer
Davy (Euronext Growth Adviser and Joint Broker) – Tel: +353 (0)1 679 6363
Anthony Farrell (Corporate Finance) / Ivan Murphy
Camarco (Financial PR) – Tel: +44 (0)20 3757 4980
Tom Huddart / Billy Clegg / Daniel Sherwen
About Venn Life Sciences
Venn Life Sciences is an Integrated Drug Development Partner offering a combination of drug development expertise and clinical trial design and management to pharmaceutical, biotechnology and medical device organisations. Venn has dedicated operations in France, Germany, the Netherlands, the UK and Ireland with partners across Europe and the US.