Redwood Pharma to execute New Rights Issue and takes important step in securing further financing

Regulatory

Press release 03-15-2018

On March 15, 2018, Redwood Pharma AB (publ)’s Board of Directors decided to execute a new rights issue of stock, when fully subscribed, would provide the company 15.8 million Swedish Kronor (MSEK) before banking fees. Furthermore, the Board has entered into a Term Sheet regarding a credit facility for an additional 15 MSEK from the Danish fund Formue Nord Markedsneutral A/S. The purpose of these actions is to secure financing of the planned clinical Phase II study of the company’s product candidate RP101, a therapy for chronic dry eye disease.

The Redwood Pharma AB (publ) (”Redwood Pharma” or the ”Company”) Board of Directors has, through an authorization from the Annual General Meeting on May 15, 2017, decided to execute a new preferred rights issue for current shareholders (”New Rights Issue”). The terms of the New Rights Issue confer that four (4) existing shares allow the right to subscribe to one (1) new share at a price of 6.75 SEK. The subscription period will extend between April 6 – 23, 2018.

The 525,000 shares that the Board has decided to issue on March 9, 2018, allows for participation in the New Rights Issue.

Upon subscription, the Company will receive up to 15.8 MSEK before banking fees. The New Rights Issue is not secured by subscription commitments or guarantees.

Furthermore, the Board has entered into a Term Sheet with Formue Nord Markedsneutral A/S, an independent Danish asset management company (”Formue Nord”). Formue Nord has agreed to issue convertible bonds over a 20-month period for up to 15 MSEK, in discrete tranches of 1.0 MSEK each. Redwood has committed itself to take down at least three (3) such tranches.

The loans can be converted to common shares with a nine (9) percent discount to the lowest daily volume weighted average price (VWAP) for the 15 trading days prior to the date at which Formue Nord has submitted a request for conversion. Days in which Formue Nord’s trades account for twenty (20) percent or more of the total trades in Redwood Pharma stock shall not be included in the calculation. Conversion must occur within twelve (12) months from the taking down of a tranche.

An initial fee of five (5) percent of the agreed upon facility of 15 MSEK shall be payable with shares issued in conjunction with the first conversion.

The agreement indicates that the parties have agreed to the main terms of the credit facility and intend, as soon as possible, to enter into a binding contract. Furthermore, this financing solution is predicated upon the authorization by the Board of Directors during Redwood Pharma’s Annual General Meeting, who in turn will facilitate this.

Background and Intention
Redwood Pharma’s first project is the development of a medicine, RP101, against moderate-to-severe chronic dry eye disease in postmenopausal women. The medicine employs the IntelliGel drug delivery platform that controls the release of active substances. By using IntelliGel, Redwood Pharma can most likely even improve dosing regimens in other established or new medicines. Redwood Pharma is focused on formulation and early clinical development. Revenues will be generated through licensing agreements with pharmaceutical firms that are interested in Redwood Pharma’s drug development project and IntelliGel.

The next step for the Company is the clinical Phase II study of RP101. The primary goal of the New Rights Issue and the agreement with Formue Nord is to secure capital in order to perform the clinical trial, as well as fund ongoing operations.

New Rights Issue Terms
The New Rights Issue confers that the total number of shares in the Company will increase by at the most 2,337,581 shares to at a maximum of 11,687,581 shares. Each share has a par value of 0.20 SEK. As a consequence, the Company’s Paid-in Capital will increase by 467,516.20 SEK to a maximum of 2,337,581.60 SEK.

Current shareholders will have preferred rights to subscribe to shares in an amount relative to their current level of ownership. Those shareholders which are registered upon the Record Date of the New Rights Issue will receive one subscription for each current share that the shareholder has in the Company. Four (4) subscriptions confer the purchase of one (1) share.

In the case where not all new shares are subscribed through preferred right, the Board shall within the right of the New Rights Issue’s largest amount, decide how to allocate those unsubscribed shares. Such an allocation shall initially give each and every shareholder that has exercised their subscriptions in the New Rights Issue in relation to the number of subscriptions exercised, and secondly, to the remaining subscribers in relationship to the amount subscribed.

The Record Date for the right to participate in the New Rights Issue is April 4, 2018. The subscription period will extend from April 6 through April 23, 2018. The Subscription Price has been set at 6.75 SEK/share, which confers that the New Rights Issue at full subscription, will provide the Complany with 15.8 MSEK before banking fees, which are estimated at 0.8 MSEK. The New Rights Issue has not been secured through subscription commitments or guarantees.

From the CEO
“This solution secures access to operating capital through completion and evaluation of the clinical Phase II study of RP101,” says Redwood Pharma CEO Martin Vidaeus. “The solution is designed to limit dilution and at the same time accommodate our actual capital needs. The financing also gives us flexibility in light of possible future business opportunities surrounding our IntelliGel drug delivery platform. In consideration of the credit facility, we believe this becomes a more cost-effective solution in total, as guarantees are avoided.”

“We believe that we can secure our entire capital needs either through the New Rights Issue or through the credit facility. The combination of the two alternatives means that we can in part limit dilution, as well as in light of the current increasing interest in our business, invite current and new owners to purchase new shares. We hope that this expands our investor base, which we believe will in turn benefits the continued trading of our stock,” concludes Martin Vidaeus.

Preliminary Schedule for the New Rights Issue (all dates refer to the year 2018)

29 mars                             Last day of trading in Redwood Pharma stock with the right to obtain subscriptions

3 april                                 First day of trading in Redwood Pharma stock without the right to obtain subscriptions

4 april                                 Record Date for the right to subscriptions in the New Rights Issue

5 april                                 Estimated date for publishing of the Prospectus

6 april                                 Start of the Subscription Period

6 april                                 Start of trading of Subscriptions

6 april                                 Start of trading of “betalda tecknade aktier” (BTA)

19 april                               Last day of trading of Subscriptions

23 april                               End of Subscription Period

26 april                              Publishing of the result of the New Rights Issue

Registration of New         End of BTA trading

Rights Issue

As a consequence of the schedule for the New Rights Issue, the Board of Directors has decided to postpone the Annual General Meeting until Wednesday, May 30, 2018 at 4:00 pm in Stockholm. The Interim Report for the period of January 1 to March 31, 2018 will be made public on the same day.

Advisors
Eminova Fondkommission AB (www.eminova.se) serves as financial advisor and Advokatfirman Lindahl KB as legal advisor in connection with the New Rights Issue.

This information is information that Redwood Pharma AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, 15 March 2018.

For more information:
Martin Vidaeus, CEO Redwood Pharma AB (publ)
Tel: +46 (0) 70 232 29 29
E-mail: martin.vidaeus@redwoodpharma.com

About Redwood Pharma
Redwood Pharma develops ophthalmic products for unmet medical needs. The company’s first project is the development of drug candidate RP101 with a known active substance against chronic dry eye in postmenopausal women who have moderate to severe symptoms. With the drug delivery platform IntelliGel® the release of active substances is controlled. Through the use of IntelliGel, Redwood Pharma can also improve dosing of other established drugs. Redwood Pharma’s strength lies in formulation and early clinical development. Revenues will be generated through licensing agreements with pharmaceutical companies that have capabilities to manufacture and sell commercial products worldwide.

Redwood Pharma AB (publ) is listed on AktieTorget, a Swedish Multilateral Trading Facility (Ticker: REDW.ST, ISIN: SE008294789).

For more information visit: www.redwoodpharma.com

2018-03-15