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December 20, 2020

Naventus Corporate Finance has advised Spago Nanomedical in equity raise of SEK 59,1 million

The Board of Directors of Spago Nanomedical AB (publ) (“Spago Nanomedical” or “the Company”) has, subject to the approval of the Annual General Meeting, decided on a fully secured new share issue with preferential rights for existing shareholders of approximately SEK 59.1 million before issue costs (the “Rights Issue”). The subscription price amounts to SEK 7.50 per share. The rights issue is subject to approval at the Extraordinary General Meeting, which is intended to be held on January 15, 2021. To satisfy a possible oversubscription in the Rights Issue, the Board also proposes that the Extraordinary General Meeting authorizes the Board to decide on a directed new issue of a maximum of 1,333,334 shares, corresponding to approximately SEK 10 million. from the shareholders' preferential rights (the “Over-allotment option”). The price for acquiring shares in the Over-allotment Option will be the same as in the Rights Issue. To strengthen the company's long-term financing opportunities, the Board has also decided to start a process to change marketplace to Nasdaq First North Growth Market, provided that the Rights Issue is completed.

Background

The Board of Directors of Spago Nanomedical AB (publ) has resolved on the Rights Issue to be able to vigorously drive the development of the company's radionuclide therapy, Tumorad® forward. The decision is made considering recent progress in the project as well as positive interim data from the clinical study with the company's other project, SpagoPix, which supports the central treatment principle for Tumorad®.

Spago Nanomedical conducts two projects in the field of cancer, SpagoPix, which is in clinical development, and Tumorad® which is in the final phase of preclinical development. An interim report from the Study with SpagoPix published in November, shows that the nanomaterial accumulates in human tumors. The Radionuclide project Tumorad® uses the same principle to be able to treat several different types of aggressive and metastatic cancer with precision. The Rights Issue aims to finance the final steps required to initiate phase I/II clinical studies with Tumorad®. Through the Rights Issue, the company's financing is expected to be secured until mid- 2022.

"Tumorad® has the potential to be a valuable, and crucial, supplement in the treatment arsenal for intractable and metastatic cancer. This capital raising gives us the opportunity to focus fully on driving the development of the pharmaceutical project", says Mats Hansen, CEO of Spago Nanomedical.

The Board of Directors has also decided to initiate a process for changing the marketplace from Spotlight Stock Market to Nasdaq First North Growth Market. This is expected to facilitate increased Swedish and foreign institutional shareholding and thus strengthen the company's financing opportunities in the long term. The list change is scheduled to take place in early 2021, following the completion of the rights issue, subject to Nasdaq's approval.

Summary of the Rights Issue

  • The Rights Issue relates to an issue of a maximum of 7,886,129 shares and will provide Spago Nanomedical with approximately SEK 59.1 million before issue costs.
  • The subscription price per share amounts to SEK 7.50, which corresponds to a discount of 9.1 percent to the volume-weighted average price during the last twenty     trading days leading up to publication.
  • The record date for determining which shareholders are entitled to receive subscription rights in the Rights Issue is February 5, 2021.
  • Holders of shares in the Company receive one (1) subscription right for each share held on the record date. Four (4) subscription rights entitle to subscription of one (1) new share.
  • The subscription period is intended to run from 9 February 2021 to 23 February 2021. The Board of Directors has the right to extend the subscription period.
  • Subscription of shares with subscription rights shall be made by simultaneous cash payment. Subscription of shares without subscription rights shall be made on a separate subscription list and allotted shares shall be paid in cash no later than three business days after notification of allotment has been sent to the subscriber. The Board of Directors has the right to extend the payment period.
  • Shares subscribed for without subscription rights are primarily allotted to persons who have also subscribed for shares with subscription rights, secondly to other persons who subscribed for shares without subscription rights and thirdly issue guarantors.
  • The Board's complete proposal for resolutions is set out in the notice that will be published through a separate press release.

Overallotment option

In order to meet a potentially higher demand in the Rights Issue, the Board of Directors of Spago Nanomedical proposes that the Extraordinary General Meeting on January 15, 2021 authorize the Board of Directors, in the event of oversubscription in the Rights Issue, with deviation from the shareholders' preferential rights, to resolve on an increase in the Company's share capital through a directed share issue of a maximum of 1,333,334 shares. The issue shall be directed to those who have subscribed in the Rights Issue but have not received full allotment. The issue under this authorization shall be made at the same subscription price as in the Rights Issue, i.e. SEK 7.50 per share. The over-allotment option may add a maximum of SEK 10 million to the Company, before issue costs.

Subscription commitments and guarantee commitments

The Rights Issue is 100 percent covered by subscription commitments and guarantee commitments, of which subscription commitments correspond to approximately 28.4 percent of the Rights Issue and guarantee commitments approximately 71.6 percent of the Rights Issue.

Subscription commitments have been made by Peter Lindell, Mikael Lönn and Ranny Davidoff, all major owners of the company, and by Eugen Steiner, Chairman of the Board. No remuneration is paid for the subscription commitments entered.

Guarantee commitments have been made by Formue Nord, WMG Funds and Thoren Tillväxt. For the issue guarantees, a guarantee commission, adapted to the prevailing market situation, of nine (9) percent of the guaranteed amount is paid. Each individual guarantor may choose whether the guarantee remuneration shall be paid by the Company in cash or in the form of new shares, whereby the value per newly issued share shall correspond to the subscription price in the Rights Issue. In order to enable payment of guarantee remuneration in the form of new shares, the Board of Directors may resolve, pursuant to the authorization granted by the Annual General Meeting of Spago Nanomedical on 28 May 2020, on a directed issue of a maximum of 508,307 new shares. If all guarantors choose to receive only newly issued shares as a guarantee remuneration, this corresponds to a dilution of approximately 1.3 percent based on the number of shares in the Company after the completion of the Rights Issue.

The subscription commitments and underwriting are not secured by bank guarantee, escrow funds, pledges or similar arrangements. Further information regarding the parties that have entered into guarantee commitments will be contained in the prospectus published before the beginning of the subscription period.

Issue costs for the Rights Issue amount to approximately SEK 7 million, of which approximately SEK 3.8 million constitutes remuneration for guarantee commitments.

Shares and dilution

In connection with the Rights Issue, the number of shares and share capital in Spago Nanomedical will increase by up to 7,886,129 new shares and SEK 7,886,129 respectively, thereby amounting to a total of 39,430,646 shares and 39,430,646 SEK after the Rights Issue. For existing shareholders who do not participate in the Rights Issue, a dilution effect corresponding to 20.0 percent of the total number of shares and votes in the Company arises after the Rights Issue. Shareholders who choose not to participate in the Rights Issue can compensate for the financial dilution effect by selling their subscription rights.

If the Over-Allotment Option is exercised, it will mean an additional increase in the number of shares and share capital by up to 1,333,334 shares and SEK 1,333,334, respectively.

If both the Rights Issue and the Over-Allotment Option are exercised in full, the Company's number of shares and share capital will increase by 9,219,463 shares and SEK 9,219,463 to 40,763,980 shares and SEK 40,763,980, respectively. The dilution will then amount to a maximum of approximately 22.6 percent based on the number of shares after the Rights Issue and the Over-Allotment Option.

Preliminary timetable for the rights issue

December 22, 2020, Notice of extraordinary general meeting

January 15, 2021, Extraordinary General Meeting

February 3, 2021, Last Day of trading in the share including right to subscription rights

February 4, 2021, First day of trading in the share excluding right to subscription rights

February 5, 2021, Record date for right to subscribe for shares based on subscription rights

February 9- 23, 2021, Subscription period

February 9-19, 2021, Trading in subscription rights

February 25, 2021, Estimated date of publication of the outcome

Full terms and instructions for the Rights Issue and other information about the Company will be stated in the prospectus published before the beginning of the subscription period.

Naventus Corporate Finance is financial advisor to Spago Nanomedical in connection with the transaction.


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