RhoVac plans for a fully guaranteed convertible loan rights issue, to finance activities following a successful clinical phase IIb study outcome

Feb 09, 2022

RhoVac AB (”RhoVac”) announces today, February 9, 2022, that the Board of Directors intends to decide on execution of a preferential rights issue of a convertible loan (“the Planned Offer”) of approx. 25 M SEK in March/April 2022. The Planned Offer is via written agreement fully guaranteed, free of charge, by RhoVac’s largest shareholder M2 Asset Management AB. The objective of the Planned Offer is to further ensure that the company, given positive primary outcome results of the study, has the proper financial strength to negotiate and conclude optimally on the clinical phase IIb study follow-up. The phase IIb results are expected May/June 2022 and partakers of The Planned Offer would have the option to convert the loan to shares after that at a price of 40 SEK/share in June/July. Fully converted, the shares issued would correspond to 3.2 % of total shares.

The Planned Offer is to be extended to all shareholders, and is fully guaranteed by RhoVac’s largest shareholder, Rutger Arnhult, through his company M2 Asset Management AB. The guarantor receives no compensation for the guarantee commitment. The convertible loan yields an annual fixed interest rate of 10 % and if the convertible loan is not converted into shares, it will be paid back in full within one year. The Planned Offer is thus intended to provide participants with the right, but not the obligation, to convert the loan to shares at a price of 40 SEK/share in June/July of 2022, after the primary outcome of the clinical phase IIb study is known. The solution is specifically designed to offer existing shareholders a possibility of benefitting from an expected valuation upside, on the back of successful study outcomes, by having the ability to convert the loan to shares at the pre-arranged 40 SEK/share price, no matter what the stock price is after the primary results of the study are presented, presumably in May/June 2022. For the company, the benefit is that this precludes a potential need to raise money later, while negotiating and executing on the phase IIb study follow-up, on the back of positive study results. A preliminary timeline for the convertible loan issue is outlined in the attached appendix.

RhoVac started the clinical phase IIb trial (BRaVac) with the company’s drug candidate, RV001 (onilcamotide), late 2019, in prostate cancer patients with a biochemical recurrence (a rise in PSA) after curative intent therapy. In November of 2020, RhoVac was awarded Fast Track Designation by the FDA for its drug candidate in this cancer indication. RhoVac currently estimates finalising the study and presenting primary outcomes by May/June 2022. The objective of the study is to show that RV001 (onilcamotide) can significantly prevent or delay progression in this large patient group for whom no standard therapy is available today. On the back of positive phase IIb results, RhoVac intends to negotiate an acquisition or license deal with a company that has the best possible capabilities for phase III development in prostate cancer, for potential development in other areas, and for a successful launch of the drug.

RhoVac CEO, Anders Månsson, comments: “There is unanimous agreement in the Board that it is best to strengthen the cash position of the company somewhat before starting the negotiations and executing on the phase IIb follow-up that would follow a positive study outcome. In doing that, we want to offer shareholders the possibility of partaking further of an expected valuation increase that would come from positive phase IIb study results, by offering the option of converting the loan to shares, at 40 SEK/share, after phase IIb results are in, and irrespective of the market price of the stock at that time. As such, we suggest it is a win-win solution for the company and its shareholders alike.”

This disclosure contains information that RhoVac is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 09-02-2022 08:38 CET.