RNS Number : 4541Y
Biofusion PLC
07 July 2008
For immediate release 7 July 2008
BIOFUSION PLC
Expanded Exclusive 10 Year Agreement with the University of Sheffield
Placing to Raise �2.115 million and Proposed Change of Name to Fusion IP
Biofusion plc (AIM: BFN), the university IP commercialisation company that turns world class university research into business, is
pleased to announce today that it has expanded its existing 10 year exclusive agreement with the University of Sheffield to include the
commercialisation of all non-life science research-generated intellectual property ("IP") (the "Agreement") and raised approximately �2.115
million before expenses through a placing (the "Placing") of 2,349,999 placing shares (the "Placing Shares") at 90 pence per share (the
"Placing Price").
The Board also announces that it proposes to change its name from Biofusion plc to Fusion IP plc to reflect more accurately the Group's
enlarged business, which includes more than 20 portfolio companies based on a broad spectrum of world class IP from clean tech energy and
renewables to engineering and medical technology.
Highlights:
* A new 10 year agreement with the University of Sheffield - expanding the existing agreement to include all non-life science IP
* Biofusion increases the annual research pipeline spend to which Biofusion has exclusive access from �121.6 million to
approximately �168.8 million
* A placing of 2,349,999 Placing Shares at 90 pence per share with institutional investors raising �2.115 million
* Name change from Biofusion to Fusion IP to reflect more accurately the Group's enlarged business
* Appointment of Robert Rabone (Director of Finance and Resources at Sheffield University) as a Non-executive Director
The Placing has been fully underwritten by Nomura Code Securities.
Under the Agreement, Sheffield has the right to appoint a Non-executive Director to the Board of Biofusion. Accordingly, the Board
welcomes the appointment of Robert Rabone (Director of Finance and Resources at Sheffield University) as a Non-executive Director.
A circular relating to the proposals and convening the General Meeting, which will take place at 12 noon on 31 July 2008 at the offices
of Ashurst, Boardwalk House, 5 Appold Street, London EC2A 2HA, will be sent to Shareholders today (the "Circular").
Commenting on today's announcement, David Baynes, Chief Executive Officer of Biofusion, said: "We are pleased to announce the expanded
10 year agreement with the University of Sheffield and the associated fundraising. The expanded and exclusive agreement with Sheffield gives
Biofusion access to all of the university's IP and especially the university's world class research in areas such as energy, engineering and
electronics.
"Biofusion is a leading university IP commercialisation business operating amongst a very strong peer group and today's news endorses
our current business model and reflects positively on the relationship that we have already built with the University of Sheffield. We are
confident that Biofusion will continue to expand its business model across additional universities in the future.
"Biofusion has a portfolio of companies with potentially disruptive IP in some exciting new markets such as knee imaging, wind turbine
motors, lensless microscopy and renewable energy. The expanded IP pipeline increases the potential for the development of new blockbuster
companies in these growing markets. We look forward to working with our partners and creating value for investors."
For further information please contact:
Biofusion +44 (0)114 275 5555
David Baynes, Chief Executive Officer
Stuart Gall, Commercial Director
Nomura Code Securities +44 (0) 20 7776 1200
Phil Walker
Buchanan Communications +44 (0)20 7466 5000
Mary-Jane Johnson / Lisa Baderoon / Catherine Breen
Introduction
The Board announces that Biofusion has signed a new 10 year agreement with the University of Sheffield, for all Non-Life Science IP.
In conjunction with the Expanded Sheffield Agreement, Biofusion is proposing to place 2,349,999 Placing Shares at 90 pence per share
with institutional investors raising �2.115 million. The Placing has been fully underwritten by Nomura Code Securities.
As a result of the Expanded Sheffield Agreement Biofusion increases the annual research pipeline spend to which Biofusion has exclusive
access from �121.6 million to approximately �166.8 million.
The Board also announces that it plans to change its name from Biofusion plc to Fusion IP plc to reflect more accurately the Group's
enlarged business.
The Expanded Sheffield Agreement, the Placing and the name change are conditional upon, inter alia, the passing of the Resolutions and
Admission.
Biofusion's Commercial Model
Biofusion specialises in commercialising university-generated IP. Its business model is to secure long-term exclusive commercialisation
agreements with universities and to align directly each university's long-term interests with Biofusion by making them a shareholder in
Biofusion. This enables all parties to concentrate on their respective core skills - the university focuses on the creation of IP, whilst
Biofusion focuses on creating, funding, managing and exiting Portfolio Companies.
Biofusion's objective is to generate value for Shareholders through the growth of, and exit from, its Portfolio Companies. To ensure a
steady stream of new high quality Portfolio Companies, Biofusion has signed long-term pipeline agreements with leading UK universities.
Biofusion's first agreement was signed in 2005 with Sheffield to commercialise all of its Medical Life Science IP for 10 years and for
initial ownership of 100 per cent of all future Portfolio Companies resulting from its Medical Life Science IP and the second with Cardiff
in 2007 to commercialise all of its IP for 10 years and for initial ownership of 100 per cent of all future Portfolio Companies. In both
cases, academics are given the opportunity to subscribe for typically 40 per cent of the shares in the Portfolio Companies.
The Expanded Sheffield Agreement increases the size of its exclusive research pipeline and the Directors believe this expanded IP
pipeline will increase the potential for creating Portfolio Companies with blockbuster potential.
The Directors realise the importance of managing the lifecycle of Portfolio Companies from creation through to exit and, as such, have a
clearly defined model aimed at achieving this.
Biofusion's ability and intention to invest in earlier funding rounds enables it to minimise the dilution of its shareholding in each
Portfolio Company. The Directors do not intend to provide either long-term management or long-term funding for any of the Portfolio
Companies.
After the first funding round, Biofusion will then seek to work with investment partners with whom the Company has strategic
partnerships, as well as other third party investors, to fund the Portfolio Companies in later rounds. To date �5.3 million has been raised
by Biofusion's Portfolio Companies from Finance Wales and other third party investors. The Directors believe that this approach should
enable Biofusion to maximise the returns achieved on its investments in Portfolio Companies.
The Group's Current University Agreements
The Group signed its first 10 year exclusive agreement with Sheffield for the commercialisation of Medical Life Science IP in February
2005. To date, under this agreement Biofusion has:
* created 7 new Portfolio Companies, in which Biofusion has invested �1.4 million;
* invested �3.0 million in 6 existing Portfolio Companies;
* helped Portfolio Companies secure �3.1 million from third party investors; and
* exited 2 Portfolio Companies.
In January 2007, Biofusion signed its second agreement, with Cardiff University, under which it has since:
* created 1 new Portfolio Company, in which Biofusion has invested �0.4 million;
* invested �0.9 million in 5 existing Portfolio Companies;
* helped Portfolio Companies secure �2.3 million from third party investors; and
* exited 2 Portfolio Companies.
The Expanded Sheffield Agreement
The Expanded Sheffield Agreement expands on the Company's existing exclusive 10 year Medical Life Science IP pipeline with the
University of Sheffield (which continues to run to 16 February 2015) by providing Biofusion with exclusive access for ten years to all of
Sheffield's rights to Non-Life Science IP (which will run to July 2018). In the financial year ended 31 July 2007 the Non-Life Science
research accounted for �45 million of Sheffield's research spend. With the Expanded Sheffield Agreement, Biofusion will have access to
approximately �85 million of research spend per annum from Sheffield, which, allowing for continued modest growth, the Directors estimate
will provide an aggregate research spend available to Biofusion over the life of the Expanded Sheffield Agreement of approximately �1
billion.
Sheffield is a member of the exclusive Russell Group of research led-universities,and was ranked 6th in the UK RAE study 2001 (based on
the number of faculties rated 5 and 5*, the top two ratings). It counts five Nobel laureates among its alumni and has a long tradition of
scientific excellence.
Under the Expanded Sheffield Agreement, in addition to its existing rights to Medical Life Science IP, Biofusion will receive:
* 10 years' exclusive rights to exploit Sheffield's Non-Life Science IP, in return for up to 4,347,826 Ordinary Shares to be issued
to Sheffield (worth approximately �4.13 million calculated at a price of 95 pence per share, being the Closing Price) plus VAT; and
* provision of a Non-Life Science IP 'mining' team, provided by SUEL, and the patenting of relevant IP (before it is transferred to
a Portfolio Company) in return for a payment of �8,750 per month.
Subject to obtaining any necessary consents from the shareholders of the relevant companies, Biofusion also has the option to acquire
from Sheffield, and Sheffield has the option to sell to Biofusion, Sheffield's shareholding, and/or those shares held by SUEL, in certain of
Sheffield's existing Non-Life Science IP spin-out companies, in return for Sheffield Portfolio Company Loan Notes.
The Sheffield Consideration Shares which are to be issued pursuant to the Expanded Sheffield Agreement will be issued at the request of
Biofusion Trading Limited, a wholly owned subsidiary of Biofusion plc. This will result in an intra-group debt arising between Biofusion and
Biofusion Trading Limited and for this reason, under the Act, the Sheffield Consideration Shares will be deemed to be issued for cash.
The Expanded Sheffield Agreement is conditional upon:
* the passing of Resolution 1 at the General Meeting; and
* Admission.
The Sheffield Pipeline
The Expanded Sheffield Agreement gives Biofusion 10 years exclusive rights (in addition to its existing rights to Medical Life Science
IP), to all of Sheffield's rights to Non-Life Science IP generated by Sheffield research, and to commercialise this IP through the formation
of Portfolio Companies.
Biofusion will initially hold 100 per cent of the equity in each new Portfolio Company and will then allocate an appropriate proportion
(typically 40 per cent) to the academics involved in these Portfolio Companies.
Biofusion and SUEL will continue to meet regularly to review new opportunities identified by SUEL as having commercial potential, and
Biofusion will then either:
* decide that the IP concerned merits the creation of a new Portfolio Company through which to exploit the IP;
* determine that additional research is required and that the opportunity be reviewed at a later date;
* license the IP (subject to Sheffield's approval), the net revenue for which will be split 50/50 between Biofusion and Sheffield.
Any amount due to academic(s) concerned is payable out of the Sheffield's 50 per cent share; or
* reject the opportunity on the basis that it is unlikely to merit the formation of a Portfolio Company, and leave the IP to
Sheffield.
By virtue of its shareholding in Biofusion (9,333,324 Ordinary Shares, representing approximately 25.46 per cent. of the current issued
share capital of the Company), in relation to the Expanded Sheffield Agreement, Sheffield is a related party for the purposes of the AIM
Rules. Accordingly, the Directors, having consulted with Nomura Code in its capacity as Nominated Adviser to the Company, consider that the
terms of the Expanded Sheffield Agreement are fair and reasonable insofar as Shareholders are concerned.
Proposed Appointment to the Board of Biofusion
Under the Expanded Sheffield Agreement, Sheffield has the right to appoint a Non-executive Director to the Board of Biofusion, and the
Board welcomes the appointment of Bob Rabone whose details are set out below.
Robert Rabone, Proposed Non-Executive Director, aged 54
Bob Rabone is a Chartered Accountant, who qualified with Coopers & Lybrand (now part of PricewaterhouseCoopers) after graduating at
Imperial College as a Mechanical Engineer. After several years providing management consultancy, Bob has had wide commercial experience in
three previous Finance Director positions with both private and public companies. Bob joined the University of Sheffield as Director of
Finance and Resources in June 2005 and is responsible for the Resources Division, which includes finance, procurement and accommodation and
campus services. Just before joining the University, Bob was a member of the senior management team at the international law firm Eversheds
LLP.
Proposed Name Change
Following completion of the Expanded Sheffield Agreement, both of Biofusion's university agreements will encompass both life sciences
and non-life sciences and, as such, the Directors believe that the "Biofusion" name no longer reflects the Group's business. The Directors
are therefore proposing that Shareholders resolve to change the Company's name at the General Meeting to Fusion IP plc. Following the
General Meeting, Biofusion will also change the name of Biofusion Trading Limited to Fusion IP Sheffield Limited and the name of Fusion
Cardiff Limited to Fusion IP Cardiff Limited.
The Placing
Pursuant to the Placing the Company is proposing to issue 2,349,999 Placing Shares at the Placing Price to raise approximately �2.115
million for the Company. The Placing has been fully underwritten by Nomura Code Securities pursuant to the Placing Agreement.
The Placing Shares represent approximately 6.41 per cent of the Company's issued share capital as at the date of this announcement.
The Placing Shares have not been and will not be offered generally to Shareholders, whether on a pre-emptive basis or otherwise.
Following the introduction of the Prospectus Rules on 1 July 2005 and the consequential increase in costs and the time required for AIM
companies to raise new equity capital on a pre-emptive basis, the Directors believe that the Placing is the most cost effective and
expeditious method of raising new equity capital.
The Placing Shares will, on Admission, rank in full for all dividends or other distributions declared, made or paid in respect of
Ordinary Shares after Admission and will otherwise rank pari passu in all respects with the existing Ordinary Shares.
The Placing is conditional upon the Placing Agreement becoming unconditional in all respects by 1 August 2008 (or such later date as
Nomura Code Securities shall determine, not being later than 11 August 2008) and Nomura Code Securities not having terminated its
obligations thereunder. The Placing Agreement is conditional upon, inter alia, the satisfaction of the following conditions:
* the passing of Resolution 1 to be proposed at the General Meeting;
* Admission having become effective on or before 8.00 a.m. on 1 August 2008;
* the Expanded Sheffield Agreement having become unconditional except for any condition relating to Admission; and
* there being no material breach of warranty in the Placing Agreement prior to Admission.
Use of Proceeds
The net proceeds of the Placing will be principally applied in the commercialisation of both Non-Life Science IP and Medical Life
Science IP from Sheffield.
Intentions of Directors and other Shareholders
Shareholders holding in aggregate 26,999,719 Ordinary Shares (representing 73.64 per cent of the current issued share capital of the
Company), being Sheffield, holding 9,333,324 Ordinary Shares (representing approximately 25.45 per cent of the current issued share capital
of the Company), Cardiff holding 10,997,541 Ordinary Shares (representing approximately 29.99 per cent of the current issued share capital
of the Company), NPI Ventures Limited, holding 2,668,858 Ordinary Shares (representing approximately 7.27 per cent of the current issued
share capital of the Company), and Stuart Gall, David Baynes and Peter Grant holding in aggregate 3,999,996 Ordinary Shares (representing
approximately 10.90 per cent of the current issued share capital of the Company) have irrevocably undertaken to vote in favour of the
Resolutions.
Directors Recommendation
The Directors believe that the Expanded Sheffield Agreement, the Placing and the name change to Fusion IP plc are in the best interests
of the Company and Shareholders as a whole because they:
consolidate Biofusion's position as a leading university IP commercialisation business with exclusive pipeline rights to all IP
generated by two of the UK's leading universities; and
increase the R&D pipeline spend to approximately �166.8 million per annum (a 37 per cent increase) whilst only increasing the overheads
by approximately 5 per cent, which the Directors believe creates an IP pipeline of depth and quality that should increase the potential for
generating companies with blockbuster potential.
For these reasons, the Directors believe that the Expanded Sheffield Agreement, the Placing and the name change are in the best
interests of Biofusion and its Shareholders as a whole and, accordingly, unanimously recommend you to vote in favour of the Resolutions to
be proposed at the General Meeting, notice of which will be set out in the Circular, as those holding Ordinary Shares have undertaken to do
in respect of their own beneficial holdings amounting to an aggregate of 3,999,996 Ordinary Shares, representing approximately 10.90 per
cent of Biofusion's current issued ordinary share capital.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Date of publication of the Circular 7 July 2008
Latest time and date for receipt of Forms of 12 noon on 29 July 2008
Proxy
General Meeting 12 noon on 31 July 2008
Anticipated completion of the Expanded Sheffield 1 August 2008
Agreement
Admission and commencement of dealings in the 8.00 a.m. on 1 August
New Ordinary Shares 2008
Delivery in CREST of New Ordinary Shares to be 1 August 2008
held in uncertificated form
Despatch of definitive share certificates for 15 August 2008
New Ordinary Shares to be held in certificated
form by
PLACING STATISTICS
Percentage of
Enlarged Issued
Share Capital
Placing Price 90 pence
Number of Ordinary Shares in 36,663,967
issue as at the date of this
announcement
Number of Placing Shares 2,349,999 5.57
Number of Sheffield 3,140,000 7.45
Consideration Shares to be
issued on Admission
Total number of New Ordinary 5,489,999 13.02
Shares issued on Admission
Gross proceeds of the Placing �2.115 million
Enlarged Issued Share Capital 42,153,966
Proposed Director Robert Rabone
Robert Rabone, aged 54, has:
* no unspent convictions in relation to indictable offences;
* not had any bankruptcy order made against him or entered into any individual voluntary arrangements;
* not been a director of a company which has been placed into receivership, compulsory liquidation or creditors' voluntary
liquidation or administration or which has entered into any company voluntary arrangement or any composition or arrangement with its
creditors generally or any class of its creditors, nor has he been a director of any such company within the 12 months preceding such an
event;
* not been a partner of any partnership which has been put into compulsory liquidation or administration or entered into partnership
voluntary arrangements, nor has he been a partner of such partnership within the 12 months preceding such an event;
* not had any asset of his or of a partnership where he was a partner at the time or within the last 12 months put into
receivership;
* not been publicly criticised by statutory or regulatory authorities (including recognised professional bodies); and
* not been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs
of any company.
Robert Rabone
Current Directorships: Past Directorships:
In-Tend Limited -
In-Tend Asset Management Limited
Risk2Value Limited
AMRC Manufacturing Limited
There is nothing further to disclose in relation to the appointment of Robert Rabone under paragraph (g) of Schedule 2 of the AIM
Rules.
The defined terms used in this announcement have the same meaning as those in the Circular, unless the context otherwise requires.
Notes for Editors
About Biofusion plc
Biofusion was established in 2002 to commercialise university-generated IP. Biofusion has signed long-term agreements with two of the
UK's top ten research intensive universities (University of Sheffield and Cardiff University) giving a combined R&D spend attributable to
Biofusion of approximately �114 million a year.
Biofusion's first agreement was a ten-year exclusive arrangement with the University of Sheffield for the commercialisation of IP owned
by the University in the area of medical life sciences. Biofusion has shareholdings in a portfolio of University of Sheffield spin-out
companies including Asterion, Axordia, Biohydrogen, Lifestyle Choices, Diurnal and Phase Focus. The University of Sheffield was ranked 5th
in the UK for the quality of its life sciences research and will be spending an estimated �0.5bn of research funding over the lifetime over
the life of the Sheffield Agreement.
In January 2007, Biofusion completed a long-term exclusive agreement with Cardiff University, to commercialise 100% of all Cardiff
University's research-generated IP. Biofusion has shareholdings in a portfolio of Cardiff University spin-out companies including
Abcellute, Q-Chip and Morvus. Cardiff University was ranked 7th in the UK in the most recent research rankings and will be spending more
than �1.0bn of research funding over the lifetime over the life of the Cardiff Agreement.
In September 2007 Biofusion signed a Memorandum of Understanding with Finance Wales, the provider of commercial funding to Wales-based
SMEs, detailing a co-investment strategy for investing in opportunities arising from Biofusion's exclusive IP pipeline agreement with
Cardiff University. Finance Wales already manages funds of more than �130m and has to date invested approximately �85m in Wales.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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