Genkyotex secures an up to €7.5 million gross financing to further expand the development of its lead product
· Patient enrollment into the Phase 2 trial of GKT831 in Primary Biliary Cholangitis (PBC) has reached 86 patients and the Company expects to reach the number required for the interim analysis before the end of August
· The Company secures a financing through the issuance of convertible notes with warrants attached (OCABSA) for up to €7.5 million in nominal value
· Upon signing today the Company will receive €4.9 million and controls the right to call an additional €2.45 million from 80 to 95 days post transaction
· The additional funding will support the design of an open label extension for the PBC Phase 2 and CMC activities for the announced NIH funded IPF Phase 2 trial
Genkyotex (Euronext Paris & Brussels: FR00011790542 - GKTX), a biopharmaceutical company and the leader in NOX therapies (the "Company"), announces today that it has secured an up to 7.5 million gross financing through the issuance of notes convertible into shares with share subscription warrants attached to YA II PN, LTD, an investment fund managed by Yorkville Advisors Global LP, a U.S.-based management firm (the "Investor" or "Yorkville").
"We are focused on rapidly advancing our anti fibrotic Phase 2 asset GKT831, and this financing will support these efforts," said Elias Papatheodorou, Chief Executive Officer of Genkyotex. "Enrollment of our ongoing Phase 2 trial of GKT831 in Primary Biliary Cholangitis (PBC) has reached 86 patients, and to date no serious adverse events or liver-related adverse events have been reported. Interim results from this study are expected in the Fall of this year, and we are beginning to plan the Phase 3 program. The ongoing study is already fully financed, and considering the excellent safety profile exhibited to date, Genkyotex is planning to initiate an open label extension (OLE) study with this additional funding."
This additional financing will also allow to provide chemistry, manufacturing and controls (CMC) support for the recently announced NIH funded Phase 2 trial of GKT831 in patients with Idiopathic Pulmonary Fibrosis (IPF)."
Legal framework of the transaction
The Investor agreed to fund the Company in two tranches, up to € 7.5 million in nominal value (the "Commitment"), by subscribing up to 750 notes convertible into ordinary shares of Genkyotex (the "Convertible Notes" or "OCA") with share subscription warrants attached (the "Warrants" or "BSA") giving access to new shares ("obligations convertibles en actions avec bons de souscription d'actions attachés" or "OCABSA").
The Investor and the Company agreed that the number of Warrants attached to the Convertible Notes to be subscribed by the Investor shall be determined in order for the Company to receive proceeds for a total amount equal to 25% of the nominal amount of the Convertible Notes they were attached to, if all those Warrants are exercised.
The Company first issues to the Investor 500 Convertible Notes with Warrants attached for a nominal amount of €5 million (the "First Tranche") and will have the option, between 80 and 95 days after this first issuance, to request the Investor to subscribe to 250 additional Convertible Notes with Warrants attached for a nominal amount of €2.5 million (the "Second Tranche").
Altogether, the maximum issuance could thus reach a total cash contribution of €9.225 million: €7.35 million resulting from the conversion of all the Notes into shares and €1.875 million resulting from all the Warrants being exercised.
The Tranches will be fully subscribed by YA II PN, LTD, an investment fund managed by Yorkville Advisors Global LP, a U.S.-based management firm, within the framework of the 12th resolution of the shareholders' general meeting of the Company convened on June 13, 2018 (the "Shareholders' Meeting") which has authorized the board of directors of the Company (the "Board of Directors"), to issue shares and/or any securities giving access to the share capital or to debt securities of the Company without preferential subscription rights, to several categories of investors.
The maximum nominal amount of shares to be issued pursuant to such authorization is up to EUR 3,850,000, this limit being included in the global cap of EUR 3,850,000 provided for by the 15th resolution of the shareholders' meeting dated June 15, 2017. As of the date hereof, the abovementioned authorizations relating to the issuance of shares and debt securities have not been used by the Company.
In its meeting held on June 13, 2018 (the "Board Meeting"), the Board of Directors has approved the principle of issuing notes convertible into new shares with warrants attached giving access to new shares, within the limits of the authorization granted by the Shareholders' Meeting in its 12th resolution, and has granted all powers to the chief executive officer (the "CEO" or "Directeur Général") of the Company to issue, in two tranches, up to 750 notes convertible into new shares with warrants attached giving access to new shares up to a total principal amount of € 7.5 million.
The terms and conditions of this transaction, the main characteristics of each financial instrument, and the Investor's obligations are detailed as an appendix to the present press release.
This transaction is not subject to the filing of a prospectus with the AMF.
· Issuance on the date hereof, by the CEO of the Company, using the powers received from the Board of Directors, to the Investor of five hundred (500) Convertible Notes with Warrants attached for a total principal amount of €5 million.
· During a period starting on the eightieth (80th) calendar day from the signing date of the agreement with Yorkville and ending on the ninety-fifth (95th) calendar day from the signing date of the agreement with Yorkville, the Company will have the option to request, at its sole discretion, that the Investor subscribes to two hundred fifty (250) additional Convertible Notes with Warrants attached for a total principal amount of €2.5 million.
Genkyotex is the leading biopharmaceutical company in NOX therapies, listed on the Euronext Paris and Euronext Brussels markets. A leader in NOX therapies, its unique therapeutic approach is based on a selective inhibition of NOX enzymes that amplify multiple disease processes such as fibrosis, inflammation, pain processing, cancer development, and neurodegeneration.
Genkyotex's platform enables the identification of orally available small-molecules that selectively inhibit specific NOX enzymes. Genkyotex is developing a pipeline of first-in-class product candidates targeting one or multiple NOX enzymes. The lead product candidate, GKT831, a NOX1 and NOX4 inhibitor is evaluated in a phase II clinical trial in primary biliary cholangitis (PBC, a fibrotic orphan disease) and in an investigator-initiated Phase II clinical trial in Type 1 Diabetes and Kidney Disease (DKD). A grant from the United States National Institutes of Health (NIH) of $8.9 million was awarded to Professor Victor Thannickal at the University of Alabama at Birmingham (UAB) to fund a multi-year research program evaluating the role of NOX enzymes in idiopathic pulmonary fibrosis (IPF), a chronic lung disease that results in fibrosis of the lungs, the core component of the program will be to conduct a Phase 2 trial with the GKT831 in patients with IPF. This product candidate may also be active in other fibrotic indications. Its second product candidate, GKT771, is a NOX1 inhibitor targeting multiple pathways in angiogenesis, pain processing, and inflammation, currently undergoing preclinical testing.
Genkyotex also has a versatile platform well-suited to the development of various immunotherapies (Vaxiclase). A partnership covering the use of Vaxiclase as an antigen per se (GTL003) has been established with Serum Institute of India Private Ltd (Serum Institute), the world's largest producer of vaccine doses, for the development by Serum Institute of cellular multivalent combination vaccines against a variety of infectious diseases. This partnership could generate approximately €150 million in future revenues for Genkyotex, before royalties on sales.