Newron secures CHF 30m long term standby equity line
MILAN, Italy - Newron Pharmaceuticals S.p.A. ("Newron"), a research and development company focused on novel CNS and pain therapies, today announced that it has entered into an equity funding agreement with YA Global Investments, L.P. ("YA Global"),to support the continued longer term development of Newron's product candidates. Under the terms of the agreement Newron has the option to take up YA Global's commitment to subscribe and pay for newly issued Newron shares to a total value of up to CHF30m over a period of 36 months at the sole and exclusive discretion of Newron.
The agreement enables Newron to ask YA Global, at any given time during the 36 month term, to subscribe to newly issued Newron shares in regular tranches of up to CHF400,000 as well as advance tranches of up to CHF2m. YA Global can either accumulate these shares up to a maximum holding in Newron of 9.99 % or place them in the market. YA Global is committed not to short sell or enter into any hedging transactions related to Newron stock.
Luca Benatti, Newron's Chief Executive Officer, stated: "Management believes that this instrumentprovides us with sensible financial flexibility in the current market environment. As our product pipeline progresses towards commercialization, a strengthened financial position increases our strategic options to create value. The control and flexibility afforded by this additional source of financing will give Newron the option to raise significant funds over a period of three years entirely at our discretion."
At its half year (19 September 2008) Newron had a cash balance close to €50m, enough to finance its R&D pipeline until at least Q3 2010. During the next 12-18 months the company is expecting to reach key clinical and strategic milestones.
The subscription price for these newly issued shares will be calculated on the basis of the daily volume weighted average price of Newron shares over a period of five consecutive trading days following the date of Newron's notice to draw on the facility, less a 5% discount. Should the market price on certain days fall below a minimum price (set at the sole discretion
of Newron in advance), the pro rata subscription for such days will not be executed unless YA Global decides to execute such subscription at the minimum price.
Newron will pay to YA Global a one-time commitment fee of CHF300,000 as well as a legal and structuring fee. The commitment fee will be used in compliance with the above criteria by YA Global to subscribe to Newron's shares which will be locked-up for a period of 6 months post closing of the transaction.
In conjunction with this new facility, Newron's Board of Directors will increase the company's share capital by up to 450,334 shares. Of these newly created shares, only those required to cover the one time commitment fee of CHF300,000 as well as a total of up to CHF150,000 for two initial subscription notices of, respectively, up to CHF50,000 and CHF100,000 to YA Global, will be used immediately. The remaining shares could be used under this agreement subject to Newron's further notice to YA. Currently, Newron has 6,020,508 outstanding shares.
Michael J. Nowak, Managing Director of Yorkville Advisors, LLC, said: "Yorkville manages assets of more than $ 1bn and specializes in providing innovative financing for public companies around the world. The fund is backed by US, European and Middle Eastern institutional investors. We believe that the Swiss Stock Exchange has a number of high quality biotech companies. Yorkville is proud that Newron Pharmaceuticals is our first Swiss-listed investment."
About Newron Pharmaceuticals
Newron Pharmaceuticals S.p.A. (www.newron.com ) is a biopharmaceutical company focused on novel therapies for diseases of the Central Nervous System and pain. Newron is undertaking phase III trials with safinamide for the treatment of Parkinson's disease (PD) in conjunction with its partner, Merck Serono, which has exclusive worldwide rights to develop, manufacture and commercialize the compound in PD, Alzheimer's disease, and other therapeutic applications. Newron recently reported excellent results for its compound ralfinamide in patients with Nerve Compression and Entrapment conditions, of which neuropathic low back pain (NLBP) represents the most common indication. There are no approved drugs for the treatment of NLBP. The company expects to commence a phase IIb/III trial next in NLBP.
In May 2008, Newron acquired Hunter-Fleming, a private UK bio-pharmaceutical company developing new medicines to treat neurodegenerative and inflammatory disorders. Newron is headquartered in Bresso, near Milan, Italy. The company is listed at SIX Swiss Exchange, trading symbol NWRN.