THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the
contents of this document or the action you should take you should seek your own personal financial advice immediately from your
stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities.
Application will be made for the Ordinary Shares, issued and to be issued pursuant to the Placing and the Acquisition, to be admitted
to trading on the AIM Market of the London Stock Exchange plc (‘‘AIM’’). AIM is a market designed primarily for emerging or smaller
companies to which a higher investment risk tends to be attached than to larger or more established companies. AIM securities are not
admitted to the Official List of the United Kingdom Listing Authority (‘‘UKLA’’). A prospective investor should be aware of the risks
of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation
with an independent financial adviser. London Stock Exchange plc has not itself examined or approved the contents of this document.
This document, which comprises an AIM admission document, has been drawn up in accordance with the AIM Rules. This document
does not comprise a prospectus for the purposes of the Prospectus Rules published by the Financial Services Authority of the United
Kingdom (‘‘FSA’’), as amended (‘‘Prospectus Rules’’) and it has not been, and will not be, approved by the FSA.
The Directors and the Proposed Directors (whose names appear on page 3 of this document) accept responsibility for the information
contained in this document including individual and collective responsibility for the Company’s compliance with the AIM Rules. To the
best of the knowledge and belief of the Directors and the Proposed Directors (who have taken all reasonable care to ensure that such
is the case) the information contained in this document is in accordance with the facts and makes no omission likely to affect the import
of such information.
Prospective investors should read the whole text and contents of this document and should be aware that an investment in the Company
is speculative and involves a degree of risk. In particular, the attention of investors is drawn to the risk factors set out in paragraph 17
of Part I of this document.
Greenchip Investments plc
(Incorporated and registered in England and Wales under the Companies Act 1985 with registered number 03213174)
Proposed acquisition of Lipoxen Technologies Limited
Proposed approval of waiver of Rule 9 of the City Code on Takeovers and Mergers
Proposed Placing of 28,000,000 new Ordinary Shares at 13.5p per share
Proposed change of name to Lipoxen plc and
Application for re-admission to trading on AIM
Nominated Adviser
Grant Thornton Corporate Finance
Broker
Canaccord Capital (Europe) Limited
SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION
Amount
£5,000,000
Authorised
Number of
Ordinary Shares of
Number of deferred shares
0.5p each
of 0.01p each
673,300,000
16,335,000,000
Amount
£2,148,333
Issued and fully paid
Number of
Number of
Ordinary Shares of deferred shares
0.5p each
of 0.01p each
102,966,665
16,335,000,000
The Placing Shares and Consideration Shares will, on Admission, rank pari passu in all respects with the existing Ordinary Shares and
rank in full for all dividends and other distributions declared, made or paid on Ordinary Shares after Admission. It is expected that
Admission will become effective and that dealings will commence in the Ordinary Shares on 17 January 2006.
The Ordinary Shares have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, or with
any securities regulatory authority of any state or other jurisdiction of the United States or under the applicable securities laws of
Australia, Canada, Japan, the Republic of South Africa or the Republic of Ireland. Subject to certain exceptions, the Ordinary Shares
may not be offered or sold, directly or indirectly, in or into the United States, Australia, Canada, Japan, the Republic of South Africa
or the Republic of Ireland or to or for the account or benefit of any national, resident or citizen of Australia, Canada, Japan, the
Republic of South Africa or the Republic of Ireland or any person located in the United States. This document does not constitute an
offer to issue or sell, or the solicitation of an offer to subscribe for or buy, any Ordinary Shares to any person in any jurisdiction to whom
it is unlawful to make such offer or solicitation in such jurisdiction.
Grant Thornton Corporate Finance, a division of Grant Thornton UK LLP, and Canaccord Capital (Europe) Limited who are
authorised and regulated in the United Kingdom by the Financial Services Authority, are acting as Nominated Adviser and Broker
respectively for the Company in connection with the Placing and Admission and are not acting for any other person and will not be
responsible to any other person for providing the protections afforded to clients of Grant Thornton Corporate Finance or customers
of Canaccord Capital (Europe) Limited, nor for advising any other person in connection with the Placing and Admission. The
responsibilities of Grant Thornton Corporate Finance as Nominated Adviser, are owed solely to the London Stock Exchange plc and
are not owed to the Company or any Director, Proposed Director or any other entity or person.
Notice of an Extraordinary General Meeting (‘‘EGM’’) of Greenchip Investments plc to be held at the offices of Stringer Saul LLP,
17 Hanover Square, London W1S 1HU at 10 a.m. on 16 January 2006 is set out at the end of this document. Shareholders are requested
to complete and return the accompanying Form of Proxy as soon as possible and, in any event, so as to be received not later than 10 a.m.
on 14 January 2006. The completion and return of the Form of Proxy will not preclude Shareholders from attending the EGM and
voting in person should they subsequently wish to do so.
Copies of this document will be available free of charge during normal business hours on any weekday (except Saturdays, Sundays and
public holidays) at the Company’s registered office and at the offices of Grant Thornton Corporate Finance at Grant Thornton House,
Melton Street, Euston Square, London NW1 2EP from the date of this document and for a period of at least one month from
Admission.
Contents
Directors, Secretary and Advisers
Definitions
Glossary of Terms
Placing Statistics and Expected Timetable
Part I – Letter from the Chairman
Part II – Information on Lipoxen
Part III – Financial Information
A – Accountants’ Report on Greenchip and its former Subsidiaries
B – Unaudited Interim Report on Greenchip for the six months ended 30 June 2005
C – Accountants’ Report on Lipoxen
D – Unaudited Interim Financial Information on Lipoxen Technologies Limited for the
six months ended 30 June 2005
Part IV – Intellectual Property Report
Part V – Additional Information
1. Responsibility Statements
2. Incorporation and Status of the Company
3. Share Capital of the Company
4. Memorandum and Articles of Association
5. Articles of Association
6. Interests of the Directors and the Proposed Directors
7. Directors’ and Senior Managers’ Service Agreements and Letters of Appointment
8. Additional Information on the Directors and the Proposed Directors
9. Substantial Shareholders
10. Interests and Dealings
11. Employees
12. Share Option Schemes
13. Material Contracts
14. Litigation
15. Working Capital
16. Information on the Concert Party
17. Taxation
18. General
19. Documents Available for Inspection
20. Availability of this Document
Notice of EGM
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Directors, Secretary and Advisers
Current Directors of the Company:
Malcolm Alex Burne
Colin William Hill
Dr Giap Wang Chong
All of 22 Melton Street, London NW1 2BW
Proposed Directors upon Admission:
Sir Brian Mansel Richards CBE, Non-executive Chairman
Scott Maguire, Chief Executive Officer
Professor Gregory Gregoriadis, Non-executive Director
Dr Dmitry Dmitrievich Genkin, Non-executive Director
Dr Tatiana Zhuravskaya, Non-executive Director
All of Suite 303, Hamilton House, Mabledon Place,
London WC1H 9BB
Dr Giap Wang Chong, Non-executive Director
Colin William Hill, Non-executive Director
Both of 22 Melton Street, London, NW1 2BW
Company Secretary:
Cargil Management Services Limited
Registered Office:
22 Melton Street
London
NW1 2BW
Nominated Adviser to the Company and to the
Enlarged Group on Admission:
Grant Thornton Corporate Finance
Grant Thornton House
Melton Street
Euston Square
London
NW1 2EP
Broker to the Company:
Fiske plc
Salisbury House
London Wall
London
EC2M 5Q
Broker to the Enlarged Group:
Canaccord Capital (Europe) Limited
1st Floor, Brook House
27 Upper Brook Street
London
W1K 7QF
Solicitors to the Company:
Stringer Saul LLP
17 Hanover Square
London
W1S 1HU
Solicitors to Lipoxen:
Charles Russell LLP
8-10 New Fetter Lane
London
EC4A 1RS
3
Auditors to the Company:
F.W. Smith, Riches & Co
18 Pall Mall
London
SW1Y 5LU
Reporting Accountants to Lipoxen and to the
Enlarged Group:
PKF (UK) LLP
Farringdon Place
20 Farringdon Place
London
EC1M 3AP
Reporting Accountants to the Company:
F.W. Smith, Riches & Co
Registrars to the Company and the Enlarged
Group:
Share Registrars Limited
Craven House
West Street
Farnham
Surrey
GU9 7EN
4
Definitions
The following definitions apply throughout this document, unless the context requires otherwise:
‘‘Act’’
the Companies Act 1985 (as amended)
‘‘Acquisition’’
the proposed acquisition of the entire issued share capital of
Lipoxen by the Company, pursuant to the Acquisition Agreements
or, in the event that any shareholder in Lipoxen does not enter into
an Acquisition Agreement, by compulsory acquisition pursuant to
sections 429 et seq. of the Act
‘‘Acquisition Agreements’’
the conditional agreements in identical form proposed to be
entered into by the Company and each shareholder in Lipoxen
under which the Company offers to acquire all the issued shares of
Lipoxen and which at the date of this document have been entered
into by the Company and the holders of not less than 90 per cent.
of the issued shares of Lipoxen
‘‘Acting in Concert’’
has the meaning given to it in the City Code
‘‘Admission’’
the admission of the Ordinary Shares, issued and to be issued
pursuant to the Acquisition and the Placing, to trading on AIM and
such admission becoming effective in accordance with the AIM
Rules
‘‘AIM’’
a market operated by the LSE
‘‘AIM Rules’’
the rules of the LSE governing admission to and the operation of
AIM
‘‘Articles’’
the articles of association of the Company, further details of which
are set out in paragraph 5 of Part V of this document
‘‘Board’’
the board of Directors of the Company
‘‘Canaccord’’
Canaccord Capital (Europe) Limited
‘‘City Code’’
The City Code on Takeovers and Mergers
‘‘Combined Code’’
the Principles of Good Corporate Governance and Code of Best
Practice
‘‘Company’’ or ‘‘Greenchip’’
Greenchip Investments plc
‘‘Concert Party’’
Eastern Infotec Services Limited, FDS Pharma Ass., Professor
Gregory Gregoriadis, Path Property Limited, Sydney Morley,
Walbrook Trustees (Jersey) Limited, Tatiana Zhuravskaya, Igor
Volodin and Dmitry Genkin
‘‘Concert Party Options’’
the 800,000 options over Lipoxen ordinary shares held by certain
members of the Concert Party namely Professor Gregoriadis (as to
300,000 options), Tatiana Zhuravskaya (as to 250,000 options) and
Igor Volodin (as to 250,000 options)
‘‘Consideration Shares’’
the 66,666,665 new Ordinary Shares to be issued to the Vendors
pursuant to the Acquisition Agreements
‘‘CREST’’
the computerised settlement system to facilitate the transfer of title
to or interests in securities in uncertificated form, operated by
CRESTCo Limited
‘‘CREST Regulations’’
the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)
‘‘Current Directors’’ or ‘‘Directors’’
Colin Hill, Dr Giap Wang Chong and Malcolm Burne
5
‘‘EGM’’ or ‘‘Extraordinary General
Meeting’’
the extraordinary general meeting of the Company to be held at the
offices of Stringer Saul LLP, 17 Hanover Square, London W1S 1HU
at 10 a.m. on 16 January 2006, notice of which is set out at the end
of this document
‘‘Enlarged Group’’
the Company and Lipoxen following the completion of the
Acquisition
‘‘Enlarged Issued Share Capital’’
the aggregate of the current issued share capital of the Company,
the Consideration Shares and the Placing Shares
‘‘Existing Ordinary Shares of the
Company’’
the 8,300,000 ordinary shares of 0.5p each in issue in the capital of
the Company as at the date of this document
‘‘Existing Ordinary Shares of
Lipoxen’’
the 49,143,234 ordinary shares of 1p each in issue in the capital of
Lipoxen as at the date of this document
‘‘FSA’’
the Financial Services Authority of the United Kingdom
‘‘FDS Pharma Ass’’ or ‘‘FDS’’
means FDS Pharma Associates LP, an English registered limited
partnership, being the major shareholder of Lipoxen and one of the
Vendors
‘‘FDS Development Agreement’’
an agreement between Lipoxen and FDS dated 10 October 2005 for
the provision of manufacturing and clinical development services
‘‘Grant Thornton Corporate Finance’’ the corporate finance division of Grant Thornton UK LLP which is
authorised and regulated in the UK by the FSA to carry on
investment business
‘‘Group’’
the Company and its former subsidiaries
‘‘J&J’’
Johnson and Johnson
‘‘Lipoxen’’
Lipoxen Technologies Limited
‘‘Lipoxen Directors’’
the directors of Lipoxen at the date of this document whose names
are set out in paragraph 16 of Part V of this document
‘‘LSE’’
London Stock Exchange plc
‘‘Member State’’
a member state of the European Union
‘‘Novation Agreement’’
the agreement to be entered into between Lipoxen, Greenchip and
FDS which is conditional upon the Warranty Deed becoming
unconditional and completing in accordance with its terms, pursuant
to which Greenchip agrees to accept the obligations of Lipoxen
under the FDS Development Agreement in particular to allot a
maximum of 10,174,340 Ordinary Shares in Greenchip to FDS upon
achievement of certain milestones, details of which are described in
paragraph 13.10 of Part V of this document
‘‘Official List’’
the Official List of the UKLA
‘‘Ordinary Shares’’
ordinary shares of 0.5p each in the capital of the Company
‘‘Panel’’
the Panel on Takeovers and Mergers
‘‘Placees’’
those persons subscribing for Placing Shares at the Placing Price
‘‘Placing’’
the conditional placing by Canaccord as agent for the Company, of
the Placing Shares at the Placing Price, pursuant to the terms of the
Placing Agreement
6
‘‘Placing Agreement’’
the conditional agreement dated 22 December 2005 and made
between the Company (1), the Directors (2) and Canaccord (3)
relating to the Placing, details of which are set out in paragraph 13.2
of Part V of this document
‘‘Placing Price’’
13.5 pence per Placing Share
‘‘Placing Shares’’
the 28,000,000 new Ordinary Shares to be issued at the Placing Price
by the Company pursuant to the Placing
‘‘Proposals’’
the proposals set out in this document including those which require
the approval of Shareholders at the EGM including the Acquisition,
the waiver of Rule 9 of the City Code, the Placing, entry into the
Novation Agreement, and the change of name of the Company to
Lipoxen plc
‘‘Proposed Directors’’
the proposed directors of the Enlarged Group whose names are set out
in paragraph 9 of Part I of this document
‘‘Resolutions’’
the resolutions contained in the notice of the EGM set out at the end
of this document
‘‘Senior Manager’’
Peter Laing
‘‘Shareholder’’
a holder of Ordinary Shares in the capital of the Company
‘‘The Serum Institute’’
the Serum Institute of India Limited
‘‘UK’’
the United Kingdom of Great Britain and Northern Ireland
‘‘UKLA’’
the United Kingdom Listing Authority, being the Financial Services
Authority acting in its capacity as the competent authority for the
purposes of Part VI of the Financial Services and Markets Act 2000
and Article 21 of the Prospectus Directive (2003/71/EC)
‘‘United States’’, ‘‘USA’’ or ‘‘US’’
the United States of America and the District of Columbia
‘‘uncertificated’’ or ‘‘in uncertificated
form’’
recorded on the register of Ordinary Shares as being held in
uncertificated form in CREST, entitlement to which, by virtue of the
CREST Regulations, may be transferred by means of CREST
‘‘VAT’’
UK value added tax
‘‘Vendors’’
the shareholders of Lipoxen as at the date of this document
‘‘Waiver’’
the waiver of the obligations that would otherwise arise under Rule 9
of the Code for the Concert Party to make a general cash offer for the
whole of the Company’s issued share capital
‘‘Warranty Deed’’
means the warranty and commitment deed entered into between FDS
and Greenchip on 22 December 2005 containing warranties and
indemnities in relation to the sale of shares in Lipoxen held by FDS to
Greenchip which is conditional, inter alia, upon Admission
Throughout this document the following exchange rate has been used: £1 = US $1.75 (the exchange rate as
at 21 December 2005, the latest practicable date prior to the posting of this document). (References in this
document to $ are to US$)
7
Glossary of Terms
µg
microgram, a unit of measurement of weight (one millionth of one gram)
Aluminium hydroxide
aluminium-based compound used for the enhancement of immune responses
to vaccines
Anaphylaxis
allergic attack that could lead to heart failure
Antibody
a chemical produced in the body which neutralises foreign material
introduced
Antigen
a foreign material introduced into the body which stimulates antibody
production against it
Antigenic
capable of binding to the corresponding antibody
Bilayers
double layers in a membrane
Carboplatin
a platinum-based anticancer drug
Co-delivery
Lipoxen’s term for the administration of more than one antigen co-entrapped
in a liposome
Covalent
a form of chemical bond
DNA
deoxyribonucleic acid, the basis of genetic material
Doxorubicin
an anticancer drug
EMEA
European Medicines Agency (the European equivalent of the FDA)
EPO
Erythropoietin – a hormone produced by the kidney to maintain the red cell
population of the blood and prevent anaemia
ErepoXen
Lipoxen’s proprietary term for its polysialylated EPO
FDA
The Food and Drug Administration of the USA
G-CSF
Granulocyte Colony Stimulating Factor – prescribed to stimulate production
of ‘neutrophils’, a type of white blood cell
GMP or Good
Manufacturing Practice
a part of the pharmaceutical quality assurance which ensures that products
are consistently produced and controlled to the quality standards appropriate
for their intended use and as required by the product specification
Half-life
a measure of the rate of decrease of the concentration of a drug in the body
Hib
Haemophilus influenzae – a bacterium causing serious infections in children
Hib vaccine
a vaccine against Hib
HIV
human immunodeficiency virus
HIV vaccine
a vaccine against HIV
Immunogenic
capable of eliciting an immune response
Immunoglobulin
a protein produced in the body as part of the immune reaction
ImuXen
TM
Lipoxen’s proprietary term for its liposomal vaccine technology platform,
e.g. for the delivery of Hib, pneumococcal, rabies and HIV vaccines
InferoXen®
Lipoxen’s proprietary term for its polysialylated interferon-alpha-2b product
candidate
Insulin
a hormone in the body regulating blood glucose
IFN
Interferons − a family of naturally occurring proteins which form part of the
body’s defence mechanism
Interferon ␣2b
a subtype of interferon
8
Interferon-␥
a subtype of interferon
LipoHib
Lipoxen’s proprietary term for its liposomal formulated Hib vaccine candidate
LipoNeu
Lipoxen’s proprietary term for its liposomally formulated pneumococcal
vaccine candidate (against the bacterium Streptococcus pneumoniae)
LipoRab
Lipoxen’s proprietary term for its liposomally formulated rabies vaccine
candidate
Liposome
a hollow vesicle whose outer membrane is composed of one or more bilayers
made up of molecules of lipid
LipoTaxenTM
Lipoxen’s proprietary term for its liposomally formulated Paclitaxel candidate
NeutroXen
Lipoxen’s proprietary term for its polysialylated GCSF
Nucleic acids
DNA or RNA
Paclitaxel
an anticancer drug
PEG
Polyethylene glycol
PEGylation
the practice of attachment of the synthetic polymer polyethyleneglycol to
drugs to improve their therapeutic performance
Peptide
a chemical constructed from amino acids and a component of proteins
Pharmacokinetics
the measurement of the levels and breakdown of drugs within the body
Plasmid DNA
a piece of DNA
Pneumococcal vaccine
a vaccine against Streptococcus pneumoniae
Polymer
a chemical made of repeating units of the same molecule
Polysaccharide
a chemical made of repeating sugar units
Polysialic acid
a naturally occurring biodegradable polymer of sialic acid
PolyXen®
Lipoxen’s proprietary term for its polymer-based drug delivery technology
platform based on polysialic acid, e.g. for the delivery of protein drugs such as
EPO and GCSF
Sialic acid
a sugar found in the body
SuliXen®
Lipoxen’s proprietary term for its polysialyalted insulin product candidate
Supergeneric
A modified generic drug with performance advantages over plain generic
forms by virtue of an in-built delivery system such as PolyXen
Synvirion®
Lipoxen’s proprietary term for its liposomal formulation incorporating a DNA
vaccine, the corresponding protein vaccine and a targeting molecule
Taxol®
an anticancer drug
Taxotere®
an anticancer drug similar to taxol
Tetanus vaccine
vaccine against tetanus
VesicAll
Xeniva
TM
Lipoxen’s proprietary term for its liposomal formulation of small molecule
drugs, such as anti-cancer drugs
Lipoxen’s proprietary term for its liposomally formulated HIV vaccine
product candidate
9
Placing Statistics and Expected Timetable
PLACING STATISTICS
Placing Price per share
13.5 pence per share
Number of Placing Shares being issued pursuant to the Placing
28,000,000
Number of Ordinary Shares in issue immediately following the Acquisition, the
Placing and Admission
102,966,665
Percentage dilution as a result of the Placing and Acquisition
92 per cent.
Gross proceeds of the Placing
£3.78 million
Net proceeds of the Placing to be received by the Company
£2.57 million
Market capitalisation of the Company following Admission at the Placing Price
£13.9 million
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt of the Forms of Proxy for the EGM
10 a.m. on 14 January 2006
Extraordinary General Meeting
16 January 2006
Completion date of the Acquisition
16 January 2006
Admission and dealings expected to commence in the Ordinary Shares on AIM
17 January 2006
CREST accounts credited by
17 January 2006
Despatch of definitive share certificates (if any) by
31 January 2006
10
KEY INFORMATION
The following information is derived from, and should be read in conjunction with, the full text of this
document. Sole reliance should not be placed on the information set out below and you should read the
whole of this document. In particular, your attention is drawn to the section entitled ‘‘Risk Factors’’ in
paragraph 17 of Part 1 of this document.
Summary of the Transaction
The Company has entered into conditional agreements with certain of Lipoxen’s shareholders to acquire
shares representing 91.16 per cent. of the issued share capital of Lipoxen for a consideration of 1.3565787
Ordinary Shares per Lipoxen ordinary share. The Consideration Shares to be issued in consideration for the
acquisition of all the existing issued shares of Lipoxen will constitute 88.92 per cent. of the aggregate of the
Consideration Shares and the Ordinary Shares in issue prior to the Acquisition. In view of its size, the
Acquisition will constitute a reverse takeover of Greenchip under the AIM Rules and therefore requires the
approval of Shareholders at an Extraordinary General Meeting of the Company.
Greenchip’s Business
In the Company’s circular to Shareholders dated 20 October 2000 applying for admission to trading on AIM,
the stated principal goal and investment strategy of the Company was to bring into European markets,
technology-driven business ventures, with a particular focus on life science, environmental technology and
internet related technologies. In response to the changes to the AIM Rules relating to investment strategies,
at the Extraordinary General Meeting held on 2 June 2005, the Company’s new investment strategy was fully
reaffirmed by Shareholders. One of the main features of the strategy was to seek to invest in a company (or
companies) whose business was in the natural resources, financial or healthcare sectors. Investee companies
were likely to be located in the UK, the Eurozone, Australasia and/or North America and there was a clear
preference to find a single primary investment in one of the sectors outlined above.
Although the Company had no operational activity during the eighteen month period ended 30 June 2005,
the Current Directors have continuously sought out a suitable transaction to utilise its status as a listed-shell
following the disposal of all of its operating assets in 2003.
Lipoxen’s Business
Lipoxen was founded in 1997 as a spin out from The School of Pharmacy, University of London to exploit
and commercialise research in the expanding area of drug and vaccine delivery systems. Lipoxen is a
company engaged in the development of proprietary products in the fields of protein drugs, vaccines and
oncology. Its proprietary delivery technologies allow it to pursue the development of high-value and
differentiated pharmaceutical products. Lipoxen has under development, either solely or in partnership,
improved forms of five products that each address markets valued in excess of $1 billion. Lipoxen also
provides expertise to assist and enable pharmaceutical and biotechnology companies to optimise the
performance of drugs and vaccines, extend product franchises, fuel product pipelines and create new patent
life for patent-expired products. To this end it has collaboration or strategic partnership agreements with
large biotechnology and pharmaceutical companies that provide access to potential new products.
Reasons for the Acquisition
The Current Directors believe that in Lipoxen they have identified an acquisition opportunity that satisfies
their investment criteria and the Company’s investment strategy (as described above) and provides
significant prospects to grow shareholder value.
Details of the Placing
Concurrently with the Acquisition, the Company is also seeking to raise £3.78 million (before expenses) by
way of a placing of the Placing Shares at the Placing Price. The Placing Shares comprise 28,000,000 Ordinary
Shares of 0.5p each in the capital of the Company.
The Placing Shares will be issued credited as fully paid and will, when issued, rank in full for all dividends
and other distributions declared paid or made on the Ordinary Shares after Admission.
11
Part I — Letter from the Chairman
Directors
Colin William Hill (Non-executive Chairman)
Malcolm Alex Burne
Dr Giap Wang Chong
Registered Office:
22 Melton Street
London
NW1 2BW
23 December 2005
To Shareholders of Greenchip
Dear Sir or Madam
Proposed acquisition of Lipoxen Technologies Limited (‘‘Lipoxen’’)
Proposed approval of waiver of Rule 9 of the City Code
Proposed Placing of 28,000,000 new Ordinary Shares at 13.5p per share
Proposed change of name to Lipoxen plc
Application for re-admission to trading on AIM
1.
Introduction
The Current Directors of Greenchip Investments plc (the ‘‘Company’’) are pleased to inform you that it has
today announced that it has conditionally agreed to acquire more than 90 per cent. of the issued share capital
of Lipoxen. The consideration to be provided by the Company for the issued shares in Lipoxen which the
Company has conditionally agreed to acquire and the balance of the issued shares of Lipoxen which the
Company has today offered to acquire will be satisfied by the issue to the shareholders of Lipoxen of
approximately 67 million Ordinary Shares.
The Consideration Shares represent approximately 64.75 per cent. of the issued ordinary share capital of the
Company as enlarged by the Acquisition and the Placing, and values the Company at approximately
£13.9 million following the Placing. Further details of the Acquisition Agreements and the Warranty Deed
are set out in paragraph 13 of Part V of this document.
Lipoxen is a company engaged in the development of drug delivery systems and proprietary products in the
fields of protein drugs, vaccines and oncology. Lipoxen is exploiting its proprietary delivery technologies to
create a new generation of drug and vaccine products with improved performance. In pre-clinical studies for
protein drug delivery, Lipoxen’s PolyXen technology has shown to impart protection from degradation and
improved active lifetime in circulation. In pre-clinical studies relating to vaccine delivery, Lipoxen’s ImuXen
technology is being used to develop products that have shown increased immune responses and protection
against infection. In pre-clinical studies for oncology drug delivery, Lipoxen’s VesicAll technology is being
used to develop products with reduced toxicity and greater convenience of use. Lipoxen is engaged in the
out-licensing of these technologies to biopharmaceutical companies that have strong manufacturing and
marketing capabilities. These companies are incorporating Lipoxen’s technologies into human therapeutic
product candidates. Lipoxen’s market strategy is to focus on product development, in collaboration with
major biotech and pharmaceutical company partners, for the protein, vaccine and oncology drug markets.
Lipoxen has developed two platform delivery technologies which it is applying to product candidates:
PolyXen is a technology that uses the natural polymer polysialic acid (PSA) that has the potential to prolong
the active life and improve the performance of therapeutic proteins and peptides in man. PolyXen may be
considered an alternative solution to PEGylation (currently the most widely used protein delivery solution)
because of expected benefits of reduced toxicity and preserved activity of protein drugs made with PolyXen.
Polysialic acid is a natural polymer and, when linked to protein drugs increases their active life in circulation
and prevents them from being recognised by immune systems, which is a particular problem for existing
protein drugs.
ImuXen is a group of novel liposomal technologies designed to increase the effectiveness of DNA, protein
and polysaccharide vaccines. ImuXen has the potential to achieve protective immunity in a single dose which
otherwise requires multiple doses with conventional vaccine materials.
Upon Admission, Malcolm Burne will step down from the Board and I will take a new role as non-executive
director for the Enlarged Group. Dr Giap Wang Chong will remain on the board and be joined by Sir Brian
Richards (who will assume the role of non-executive Chairman) with Scott Maguire becoming Chief
12
Part I — Letter from the Chairman
Executive Officer. Other appointees to the board of the Company will be Professor Gregory Gregoriadis,
(currently the Chief Scientific Officer and founder of Lipoxen), Dr Dmitry Genkin and Dr Tatiana
Zhuravskaya.
Due to the size and the relative value of Lipoxen, the Acquisition is a reverse takeover under the AIM Rules
and therefore requires the approval of Shareholders. The purpose of this letter is to explain the background
to and reasons for the Proposals and to recommend that you vote in favour of each of the resolutions to be
proposed at the Extraordinary General Meeting of the Company to be held on 16 January 2006, notice of
which is set out at the end of this document.
2.
Details of the Placing and use of Proceeds
Concurrently with the Acquisition, the Company is also seeking to raise £3.78 million (before expenses) by
way of a placing of the Placing Shares at the Placing Price. The Placing Shares comprise 28,000,000 ordinary
shares of 13.5 p each in the capital of the Company. Canaccord has agreed, pursuant to the Placing
Agreement and conditional, inter alia, upon Admission, to use its reasonable endeavours to place the Placing
Shares at the Placing Price with investors. The Placing has not been underwritten.
The Placing Shares were created under the Act, will be issued credited as fully paid and will, when issued,
rank in full for all dividends and other distributions declared, paid or made on the Ordinary Shares after
Admission.
The Placing Shares can be held in both certificated or uncertificated form. The ISIN number for the shares
in the Company is GB00B08NWV55. All documents sent by or to a Placee, or at his/her direction, will be
sent through the post at the Placee’s risk. Pending the despatch of definitive share certificates, instruments
of transfer will be certified against the register of members of the Company. No temporary documents of title
will be issued.
Further details of the Placing Agreement are set out in paragraph 13 of Part V of this document.
The net proceeds of the Placing will be used by the Enlarged Group to:
•
employ senior management on a full time basis;
•
hire a full time chief financial officer;
•
fund on-going operations;
•
acquire necessary laboratory equipment;
•
hire a regulatory consultant to supervise numerous clinical initiatives; and
•
drive the product candidates through preclinical trials and into clinical trials.
3.
Admission to AIM and Dealings
Application will be made for the Enlarged Issued Share Capital to be admitted to trading on AIM and it is
anticipated that Admission will become effective and that trading in the Enlarged Issued Share Capital on
AIM will commence on the first trading day following the EGM, namely 17 January 2006.
4.
Information on Lipoxen
Lipoxen was founded in 1997 as a spin out from The School of Pharmacy, University of London to exploit
and commercialise research in the expanding area of drug and vaccine delivery systems. This research was
carried out over 27 years by Lipoxen’s founder Professor Gregory Gregoriadis at the Medical Research
Council and the School of Pharmacy, University of London where he was Head of the Centre for Drug
Delivery Research between 1990 and 2001. Lipoxen began operations in November 1998, following a seed
financing which enabled it to staff the laboratory and management office.
Lipoxen has funded its operations to date by way of fund raisings from, primarily, high net worth individuals.
FDS Pharma Ass has been the primary provider of capital from 2002 to the present day, of which Dr Dmitry
Genkin, a former post doctoral scholar of Professor Gregoriadis, is one of the joint beneficial owners.
Further details of the business of Lipoxen are set out in Part II of this document.
An intellectual property report produced by Gill Jennings & Every on Lipoxen’s principal intellectual
properties is reproduced in Part IV of this document.
13
Part I — Letter from the Chairman
5.
Background to and reasons for the Acquisition
In the Company’s circular to Shareholders dated 20 October 2000 applying for admission to trading on AIM,
the stated principal goal and investment strategy of the Company was to bring into European markets,
technology-driven business ventures, with a particular focus on life science, environmental technology and
internet related technologies. In response to the changes to the AIM Rules relating to investment strategies,
at the Extraordinary General Meeting held on 2 June 2005, the Company’s new investment strategy was fully
reaffirmed by Shareholders. One of the main features of the strategy was to seek to invest in a company (or
companies) whose business was in the natural resources, financial or healthcare sectors. Investee companies
were likely to be located in the UK, the Eurozone, Australasia and/or North America and there was a clear
preference to find a single primary investment in one of the sectors outlined above.
As stated in my Chairman’s Statement in the accounts for the eighteen-month period ended 30 June 2005,
while the Company had no operational activity during that period, the Current Directors have continuously
sought out a suitable transaction to utilise its status as a listed-shell following the earlier disposal of all of its
operating assets in 2003. Regrettably, although many opportunities were investigated, none progressed to the
point where a transaction could be put to Shareholders.
However, the Current Directors believe that in Lipoxen they have identified an acquisition opportunity that
satisfies their investment criteria and provides significant prospects to grow shareholder value.
6.
Principal terms of the Acquisition
The consideration for the acquisition of the entire issued share capital of Lipoxen will be the allotment and
issue by the Company of the Consideration Shares to Lipoxen’s current shareholders. The Consideration
Shares will rank pari passu in all respects with the existing Ordinary Shares.
Lipoxen has 32 shareholders and, as at the date of this document shareholders in Lipoxen holding
91.16 per cent. of the entire issued share capital of Lipoxen have entered into Acquisition Agreements to sell
their ordinary shares in Lipoxen to the Company conditional upon approval by Shareholders at the
EGM and admission of the Consideration Shares to trading on AIM. As at the date of this document,
shareholders holding ordinary shares in Lipoxen representing 8.84 per cent. of the entire issued share capital
of Lipoxen have yet to execute an Acquisition Agreement for the sale of their shares.
The Company will have the option to exercise its right under section 429 of the Act to compulsorily acquire
the remaining 8.84 per cent of the entire issued share capital of Lipoxen.
Since FDS is the major shareholder of Lipoxen, holding approximately 68.77 per cent. of the entire issued
share capital of Lipoxen it has entered into a Warranty Deed (conditional upon, inter alia, Admission) with
Greenchip pursuant to which FDS has provided Greenchip with warranties and certain indemnities in
relation to Lipoxen and its business.
It is expected that completion of the Acquisition and Admission of the Consideration Shares will take place
on or about 16 January 2006.
Further details of the Acquisition Agreements and the Warranty Deed are contained in paragraph 13 of Part
V of this document.
7.
Novation of FDS Development Agreement
The FDS Development Agreement entered into between FDS Pharma Ass and Lipoxen provides that FDS
Pharma Ass shall provide certain drug and product candidate development services and contains provision
for the allotment of ordinary shares in Lipoxen to FDS Pharma Ass upon the achievement of certain
milestones. Greenchip, Lipoxen and FDS Pharma Ass have entered into an agreement novating Lipoxen’s
obligations under the FDS Development Agreement to Greenchip. Greenchip has undertaken to satisfy
Lipoxen’s obligations under the FDS Development Agreement, in particular the obligation to allot ordinary
shares in Greenchip to FDS. As part of the Novation Agreement a liquidated amount has been agreed as
the fee payable to FDS for achievement of each milestone under the Development Agreement, which in
aggregate for all milestones is $2,670,764.2. The aggregate number of shares which can be allotted to FDS
in satisfaction of Greenchip’s obligation to pay fees to FDS is up to 10,174,340 Ordinary Shares. Greenchip
otherwise agrees to perform the obligations of the FDS Development Agreement and to be bound by its
terms as if Greenchip were a party to it. The entry into the Novation Agreement by Greenchip requires the
14
Part I — Letter from the Chairman
approval of the Shareholders of Greenchip by way of an ordinary resolution pursuant to the provisions of
section 320 of the Act. A detailed description of the terms of the FDS Development Agreement is set out
at paragraph 13 of Part V of this document.
The Current Directors, having consulted with Grant Thornton Corporate Finance believe that the terms of
the proposed Novation Agreement are fair and reasonable in so far as the Company’s Shareholders are
concerned and that entry into the Novation Agreement is in the best interests of the Company and they
recommend that the Shareholders vote in favour of its approval at the EGM.
8.
Current trading, trends and prospects
Included in Part III A and B of this document are the audited results for Greenchip for the three years ended
31 December 2004 and the unaudited interim figures for the six months ended 30 June 2005.
Included in Part III C and D of this document are the audited results for Lipoxen for the three years ended
31 December 2004 and the unaudited interim figures for the six months ended 30 June 2005.
As shown by the figures in Part III A, Greenchip has not had any operational activities since the disposal
of its interests in Programmable Life Inc and Programmable Materials Inc in November 2003. During the
first half of 2005, Lipoxen had revenues of £77,557. Its future revenues are dependent on the commercial
success of its technologies.
9.
Directors and Senior Management
Board changes
On completion of the Acquisition, Malcolm Burne will resign as a director of Greenchip and I will take on
a new role as a non-executive director for the Enlarged Group. Dr Giap Wang Chong will remain on the
board as a non-executive director. The board of Directors of the Company on completion of the Acquisition
will be as follows:
Sir Brian Richards CBE, Non-executive Chairman, age 73. Sir Brian Richards was appointed nonexecutive Chairman of Lipoxen in June 2005. He has extensive experience in chairing boards of public
companies and is currently the non-executive Chairman of Alizyme plc, Cozart plc and MAN Mail
(Guernsey) Limited. He has previously served as executive Chairman of British Bio-technology Limited, a
company he co-founded, and has had non-executive chairmanships or directorships in several
biopharmaceutical companies including Peptide Therapeutics (later Acambis plc), Oxford Biomedical plc
and CeNeS Pharmaceuticals plc.
Scott Maguire MBA, Chief Executive Officer, age 42. Scott joined Lipoxen as Chief Executive Officer in
April 2004. His background is primarily in life science and healthcare investment banking and he has advised
many US and European companies on capital raisings and commercial development over his 18 year career.
Scott started his banking career with Merrill Lynch in 1987 in New York. After receiving his MBA in 1993
he joined the healthcare division of W.R. Grace, National Medical Care as the manager responsible for
assisting in building the international healthcare division. In May 1996 Scott co-founded the Arthur
Andersen global healthcare corporate finance practice. Scott is currently a partner and director of
Healthcare Capital Partners Limited, a healthcare corporate finance and proprietary investment boutique he
co-founded in 2002.
Professor Gregory Gregoriadis Ph.D., D.Sc., Chief Scientific Officer, age 71. Gregory founded Lipoxen in
November 1997 as a spin out from The School of Pharmacy, University of London, where he was Head of
the Centre for Drug Delivery Research (1990-2001). Gregory is an internationally acknowledged leader in
the expanding field of drug and vaccine delivery and was the first to introduce liposomes in 1971 and
polysialic acids in 1991 as drug and vaccine delivery systems. He has published nearly 400 research papers,
reviews and articles as well as 24 volumes on drug delivery and targeting. Gregory has been honoured with
numerous awards, including the Controlled Release Society Founders award (1994), the A.D.Bangham FRS
life achievement award (1995), and a D.Sc. from the University of London (2001), all for exceptional
contributions to the field of drug and vaccine delivery. Gregory’s seminal contributions to the field of drug
and vaccine delivery are also reflected in his directorships of the NATO Advanced Studies Institutes
‘‘Targeting of Drugs’’ and ‘‘Vaccines’’ (1981-1999). Since 2003 he has been President of the International
Liposome Society.
15
Part I — Letter from the Chairman
Dr Dmitry Dmitrievich Genkin, Non-executive Director, age 36. Dmitry has the Russian equivalent of an
MD in Internal Therapy and has attended training courses in drug delivery at The School of Pharmacy,
University of London (1992) and the Department of Clinical Pharmacology at Karolinska hospital,
Stockholm (1992-1993). Dmitry is currently a director of the general partner and limited partner of FDS
Pharma Ass, and in the past has served as a Chief Executive Officer of ASGL Research Laboratories ZAO,
a company founded by Dmitry in 1994 to run drug development programmes focusing on viral and cancer
diseases. Dmitry has also served as Executive Chairman of Pharmavit OAO and Scientific Director of
Pharmavit Holding ZAO.
Dr Tatiana Zhuravskaya Ph.D., Non-executive Director, age 39. As well as being a director of Lipoxen,
Tatiana is Chief Scientific Adviser of Baltic Pharmaceutical Society and Chief Executive Officer of ASGL
– Research Laboratories, which are part of Pharmavit Holding – a group of biotechnology research and
development and manufacturing companies specialising in research, development, manufacture and
marketing of pharmaceutical products. Tatiana is also a director of the general partner and limited partner
of FDS Pharma Ass. Prior to joining Pharmavit Holding, Tatiana worked as a clinical scientist at Public
Health Laboratory Services (London) where she managed several Hepatitis C research projects and clinical
studies. From 1997 to 1998 Tatiana was a clinical researcher in the Neurology Department of the University
of Pennsylvania in Philadelphia, USA where she conducted clinical studies and managed several research
projects in the area of HIV research. Tatiana has a Medical Degree from Medical School in St Petersburg,
Russia and a PhD in Cell and Molecular Biology from the University of Nevada, Reno, USA.
Dr Giap Wang Chong MBBS, MBA, Non-executive Director, age 39. Wang joined Greenchip Investments
plc as Director in August 2005. Wang is a physician with an MBA and has over 17 years of experience in the
healthcare industry. Previous positions include Chief Financial Officer of Phytopharm plc, Pharmaceutical
Analyst at Canaccord Capital (Europe) Ltd, Chief Executive Officer of Osmetech plc, leader of UK
Healthcare Initiatives at Arthur D. Little Inc, and commercial roles at Glaxo Wellcome plc and SmithKline
Beecham plc. He is a Council Member of the Royal Society of Medicine and an associate of the Securities
and Investment Institute.
Colin William Hill, Non-executive Director, age 60. Colin joined Greenchip Investments plc as Finance
Director in November 2001 and became non-executive Chairman in June 2003. He has been a member of
the Chartered Institute of Management Accountants since 1968 and spent 15 years in industry specialising
in corporate turnaround and development work before becoming a freelance consultant in 1981. Since that
time, Colin has focused on due diligence relating to corporate finance assignments in small and medium
enterprises and public companies with small market capitalisations in the UK, USA, and overseas. Since
April 1998, Colin has been the Finance Director of Arlington Group Limited, a company listed on AIM.
Paragraph 8 of Part V of this document contains further details of the current and past directorships and
certain other important information regarding the Directors and Proposed Directors of the Company.
Senior Management
Dr Peter Laing, (Business Development). Peter joined Lipoxen in March 2002. Previously he held the
positions of Director of Research at Peptide Therapeutics plc, Director of Research and Development at
Actinova Ltd and Director of Development at Syngenix Ltd. He joined the biotech industry in 1994
following an independent academic career that included working for the New Zealand MRC, as a visiting
scholar at the National Institutes of Health, and as a University Lecturer in Immunology at Nottingham
University. He is currently non-executive Chairman of Activotec Ltd.
Following Admission, the Enlarged Group intends to appoint a chief financial officer who will assume
responsibility for overall control of financial reporting for the Enlarged Group.
10.
Share option arrangements
The Directors consider that an important part of the Group’s remuneration policy should include equity
incentives through the grant of share options to Directors and employees. The Company’s share option
scheme, which will be adopted for the Enlarged Group, is described in paragraph 12.2 of Part V of this
document. It is the intention of the Directors to grant further options to current and future employees of the
Enlarged Group. Proposals will be made to the option holders of Lipoxen in due course to roll their options
into the Company’s share option scheme on the same basis as the Consideration Shares that are being issued
to the Vendors. The maximum number of Ordinary Shares which will be subject to options granted to
16
Part I — Letter from the Chairman
Directors and employees under the share option scheme and any other share schemes adopted by the
Company will not exceed 20 per cent. of the Company’s issued share capital from time to time.
11.
Lock-in Arrangements
In accordance with the AIM Rules, FDS and each of the Proposed Directors have agreed not to dispose of
any interest in Ordinary Shares held on the date of Admission for a period of 12 months following
Admission, save in the event of the acceptance of any offer for the share capital of the Company, any
intervening court order in relation to the Company or the death of a party to the lock-in arrangements who
is an applicable employee or a related party. FDS and the Proposed Directors have further undertaken only
to dispose of any interest in Ordinary Shares during the period between the first and second anniversaries
of Admission through Canaccord, or the Company’s broker at the time. These arrangements cover
52,161,937 Ordinary Shares in aggregate, representing approximately 50.66 per cent. of the Enlarged Issued
Share Capital.
12.
Dividend policy
After completion of the Acquisition, Placing and Admission, the Directors and Proposed Directors do not
intend to declare or pay a dividend in the immediate foreseeable future but, subject to the availability of
sufficient distributable profits, intend to commence the payment of dividends when it becomes commercially
prudent to do so and will adopt a progressive dividend policy thereafter.
13.
Corporate Governance
The Directors and Proposed Directors support the highest standards of corporate governance and, whilst
AIM companies are not obliged to comply with the Combined Code, the Directors and Proposed Directors
intend that the Company will observe the requirements of the Combined Code taking into account the
Company’s size and stage of development.
On completion of the Acquisition, the Company will have five non-executive directors. The Company
intends to hold quarterly Board meetings at which financial and other reports are considered and, where
appropriate, voted on. Apart from these regular meetings, additional meetings will be arranged when
necessary to review strategy, planning, operational, financial performance, risk and capital expenditure and
human resource and environmental management. The Board is also responsible for monitoring the activities
of the executive management and the Group’s internal control environment.
The Company already has Remuneration and Audit committees that have had delegated to them certain
duties and responsibilities. On completion of the Acquisition the Remuneration Committee and the Audit
Committee will comprise of non-executive directors and will be chaired by Sir Brian Richards and me
respectively.
The Company will continue to comply with Rule 21 of the AIM Rules for directors’ dealings as applicable
to AIM companies and will take all reasonable steps to ensure compliance by Directors and Proposed
Directors and relevant employees. The share dealing code adopted by the Company on 14 October 2005 will
apply to the Enlarged Group after Admission.
14.
Relationship Deed
FDS Pharma Ass and the Company have entered into a Relationship Deed governing the relationship
between them. Further details of the Relationship Deed are set out in paragraph 13.13 of Part V.
15.
CREST
CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a
certificate and transferred otherwise than by written instrument. In accordance with standard practice the
Consideration Shares and Placing Shares will be made eligible for settlement in CREST in accordance with
the Uncertificated Securities Regulations 2001.
16.
City Code
The terms of the Acquisition give rise to certain considerations under the City Code. Brief details of the
Panel, the City Code and the protections they afford to Shareholders are described below.
17
Part I — Letter from the Chairman
The City Code has not, and does not seek to have, the force of law. It has, however, been acknowledged by
both the UK government and other UK regulatory authorities that those who seek to take advantage of the
facilities of the securities markets in the UK should conduct themselves in matters relating to takeovers in
accordance with best business standards and so according to the City Code.
The City Code is issued and administered by the Panel. The City Code applies to offers for all listed and
unlisted public companies which are considered by the Panel to be resident in the UK and to certain
categories of private limited companies. For the purposes of the City Code, an offer includes, wherever
appropriate, takeover and merger transactions however effected and includes reverse takeovers. Due to the
size and relative value of Lipoxen, the Acquisition constitutes a reverse takeover of Greenchip and
Greenchip’s shareholders are therefore entitled to the protection afforded by the City Code.
Under Rule 9 of the City Code (‘‘Rule 9’’) when (i) any person acquires shares which, when taken together
with shares already held by him or shares held or acquired by persons acting in concert with him, carry 30 per
cent. or more of the voting rights of a company subject to the City Code or (ii) any person who, together with
persons acting in concert with him, holds not less than 30 per cent. but not more than 50 per cent. of the
voting rights of a company subject to the City Code and such person, or persons acting in concert with him,
acquires any voting rights, that person is normally obliged to make a general offer in cash to all shareholders
to purchase their shares at the highest price paid by him, or any person acting in concert with him, within
the preceding 12 months.
Certain shareholders of Lipoxen and representatives of such shareholders, whose names and brief details are
set out in paragraph 16 of Part V of this document, are deemed to be a Concert Party for the purposes of
the City Code due to their position as Vendors of Lipoxen and their relationships with each other.
Immediately following implementation of the Proposals, the shareholding of the Concert Party will be, in
aggregate, 60,777,756 Ordinary Shares, representing approximately 59.03 per cent. of the issued voting share
capital of the Company. Assuming that a) the Concert Party Options are rolled over into options to acquire
Ordinary Shares in the Company on the same basis as the Consideration Shares that are being issued to the
Vendors, (assuming exercise in full of all such options and assuming that no other person exercises any
option or other right to subscribe for shares in the Company) and b) the issue of 10,174,340 shares in the
Company to FDS pursuant to the FDS Development Agreement, the members of the Concert Party will
between them own 72,037,360 Ordinary Shares representing approximately 63.07 per cent. of the Company’s
enlarged issued voting share capital. The respective individual holdings of the members of the Concert Party,
now and following implementation of the Proposals and following the exercise of the options on the basis
set out above, are set out in paragraph 16 of Part V of this document. Accordingly, following completion of
the Proposals and subject to resolution one set out in the notice of EGM being passed, the Concert Party
will own or control more than 50 per cent. of the Enlarged Issued Share Capital of the Company.
The Panel has agreed however, subject to resolution numbered one set out in the notice of Extraordinary
General Meeting being passed on a poll by independent Shareholders at the Extraordinary General Meeting
and as set out below, (a) to waive the obligation on the Concert Party to make a general offer to
Shareholders under Rule 9 of the City Code which would otherwise arise on completion of the Acquisition
and (b) that Rule 9 of the City Code will not apply to the issue of Consideration Shares to the members of
the Concert Party pursuant to the terms of the Acquisition Agreements to which they are a party or to FDS
under the novated FDS Development Agreement or to the exercise by Professor Gregoriadis, Tatiana
Zhuravskaya and Igor Volodin (being members of the Concert Party) of their Concert Party Options. All
Shareholders will be eligible to vote on resolution one set out in the notice of Extraordinary General
Meeting.
Following completion of the Acquisition and Admission the members of the Concert Party will between
them hold more than 50 per cent. of the Enlarged Issued Share capital of the Company and (for so long as
they continue to be treated as acting in concert) may accordingly be able to increase their aggregate
shareholding without incurring any further obligation under Rule 9 to make a general offer, although
individual members of the Concert Party will not be able to increase their percentage shareholding through
a Rule 9 threshold without Panel consent.
No member of the Concert Party nor any person acting in concert with any of them has purchased Ordinary
Shares in the 12 months immediately preceding the date of this document. The waiver which the Panel has
agreed to provide will be invalidated if any purchases of Ordinary Shares are made by any member of the
Concert Party or any person acting in concert with any of them in the period between the date of this
document and the Extraordinary General Meeting. Each member of the Concert Party has undertaken to
the Company that it will not make any purchases of Ordinary Shares in that period.
18
Part I — Letter from the Chairman
Save for the Acquisition Agreements and the service agreements referred to in paragraphs 13 and
7 respectively of Part V of this document, there are no agreements, arrangements or understandings
(including compensation arrangements) between the Vendors and any of the Directors, Shareholders or
recent Shareholders of the Company connected with or dependent upon the Acquisition.
Save as disclosed in this document, there is no agreement, arrangement or understanding whereby the
beneficial ownership of any Consideration Shares will be transferred to any other person. References in this
paragraph to ‘‘arrangement’’ includes, in addition to indemnity and option arrangements, any arrangement,
agreement or understanding, formal or informal, of whatever nature which may be an inducement to deal
or refrain from dealing.
17. Risk Factors
The Directors and Proposed Directors believe that the following risk factors should be considered by potential
investors before making a decision to invest in Greenchip. If any of the following risks actually occur, the
Enlarged Group’s business, financial condition, results or future operations could be materially adversely
affected. In such a case, the price of its shares could decline, and investors may lose all or part of their
investment.
An investment in the Company may not be suitable for all recipients of this document. Potential investors
are accordingly advised to consult an independent financial adviser duly authorised under the Financial
Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities
before making a decision to invest.
The Enlarged Group will need access to additional capital in the future
The Enlarged Group will require additional capital in the future, and it does not have any assurance that
funding will be available when needed on terms that it finds favourable, if at all. If additional capital is raised
by issuing equity securities this will be dilutive to shareholders. If additional funds are raised through
collaborations and licensing arrangements, the Enlarged Group may be required to relinquish some rights
to its technologies or drug candidates, or to grant licences on terms that are not as favourable to it as if
circumstances were different. If adequate funds are not available or are not available on acceptable terms,
the ability of the Enlarged Group to fund its operations, take advantage of opportunities, develop products
and technologies, and otherwise respond to competitive pressures could be significantly delayed or limited,
and the Enlarged Group may need to downsize or halt its operations. The present and future capital
requirements of the Enlarged Group depend on many factors, including:
•
•
•
the results and timing of preclinical and clinical testing, which can be unpredictable in drug development;
the success rate of the Enlarged Group and that of its collaborators in preclinical and clinical efforts
associated with milestones and royalties;
the time and costs involved in obtaining regulatory approvals;
•
the timing, willingness, and ability of collaborators of the Enlarged Group to commercialise products
incorporating its technologies.
Lipoxen has a history of losses, and as a result the Enlarged Group may incur continued losses for some time
The level of operating expenditures will vary depending upon the stage of development of proprietary
proteins and vaccines and the number and nature of collaborations of the Enlarged Group. The Enlarged
Group may continue to incur substantial losses even if revenues increase.
Lipoxen has not yet commercialised any products or technologies, and as a result the Enlarged Group may
never become profitable
Lipoxen has not yet commercialised any products or technologies, and may never be able to do so. Since
1997, Lipoxen has not generated any revenues, except from corporate collaborations and licence agreements.
The Directors do not know when or if the Enlarged Group will complete any of its product development
efforts, obtain regulatory approval for any product candidates incorporating its technologies, or successfully
commercialise any approved products.
The Enlarged Group has limited product development and commercial manufacturing experience
To date, Lipoxen has not manufactured, on a commercial scale, any pharmaceutically active proteins or
vaccines. Lipoxen confronts scale-up risks associated with protein and vaccine manufacturing and has sought
and continues to have collaborators, licencees or contract manufacturers to manufacture most of the
compounds necessary to commercialise its technologies. The Enlarged Group may become dependent on
suppliers that could discontinue its supply arrangements or change supply terms to its disadvantage. The
19
Part I — Letter from the Chairman
success of the Enlarged Group depends on its ability to manufacture these compounds on a commercial scale
or to obtain commercial quantities, in either case, at reasonable cost. Manufacturing processes also must
comply with current Good Manufacturing Practices, or cGMP. The Enlarged Group may not be able to
manufacture or obtain sufficient quantities of the products it develops to meet its needs for pre-clinical or
clinical development.
Success is dependent on the performance of third party collaborators
The Enlarged Group will rely on collaborative partners to co-develop and manufacture products and to
commercialise products made using Lipoxen’s technologies. Lipoxen has entered into several significant
collaboration agreements and the success of the product candidates is highly dependent on its collaborators,
most notably FDS and The Serum Institute. These collaborators have significant discretion over the
allocation of their resources and the Enlarged Group cannot guarantee that these third parties will devote
adequate resources to these collaborations. Failure of collaborators could adversely affect the ability of the
Enlarged Group to develop product candidates and could materially affect operations.
The partnering strategy of the Enlarged Group will entail many risks, including:
•
the Enlarged Group may not be successful in producing its technologies to commercial scale and even
if it produces to commercial scale, it may not be able to perform in a manner that meets regulatory
approval;
•
the Enlarged Group may not be successful in applying its technologies to the needs of its collaborative
partners;
•
collaborators of the Enlarged Group may not be successful in, or may not remain committed to,
co-developing products of the Enlarged Group or commercialising products incorporating technologies
of the Enlarged Group;
•
collaborators are not obliged to market or commercialise products of the Enlarged Group or products
incorporating technologies of the Enlarged Group; and
•
the collaboration agreements in existence may be terminated by partners of Lipoxen on short notice.
The Enlarged Group may be exposed to product liability and related risks
The use in humans of compounds developed by the Enlarged Group or incorporating its technologies may
result in product liability claims. Product liability claims can be expensive to defend, and may result in large
settlements of claims or judgments against the Enlarged Group. The Enlarged Group may not be able to
obtain insurance cover at a reasonable cost or in sufficient amounts to protect it against losses.
Intellectual Property and Patent Protection
The Enlarged Group’s success will depend in part on its ability to establish, protect and enforce proprietary
rights, including patents for its innovations. Whilst the Directors and Proposed Directors are confident of the
strength and range of Lipoxen’s patent position, there can be no assurance that any intended patent
applications will mature into patents or that existing patents or future patents will adequately protect the
Enlarged Group’s products and technology. There is no assurance that the Enlarged Group’s competitors will
be unable to develop competing products which do not infringe the rights obtained by the Enlarged Group.
The laws of some foreign countries may not protect intellectual property rights of the Enlarged Group to the
same extent as European and U.S. laws. The Enlarged Group may need to participate in proceedings to
determine the validity of patents belonging to it, licensed to it or belonging to its competitors, which could
result in substantial costs and the diversion of the Enlarged Group’s efforts. Finally, some patent protection
in Europe is not available to the Enlarged Group in foreign countries due to the differences in the patent
laws of those countries. Patents can also be challenged by competitors.
There is no assurance that third parties have no granted or pending patent rights which may inhibit the
Enlarged Group’s freedom to exploit its own proprietary rights. Since patent applications are maintained in
secrecy for 18 months, Lipoxen cannot be certain that it was the first to make the inventions covered by the
pending applications or that it was the first to file patent applications for such inventions.
20
Part I — Letter from the Chairman
Competitors may develop better or more successful products
Competitors of the Enlarged Group may succeed in developing products and technologies that are more
effective or less costly that would render products or technologies of the Enlarged Group, or both, obsolete
or uncompetitive. The Directors and the Proposed Directors are aware that other companies with substantial
scientific and financial resources are working on the development of next-generation proteins and improved
vaccines.
Necessary regulatory approvals may not be obtained by the Enlarged Group or its collaborators or long
delays and large expenditures may be incurred in obtaining such approvals
Pharmaceutical product candidates manufactured using Lipoxen’s technologies must undergo an extensive
regulatory approval process before commercialisation. This process is regulated by EMEA and the FDA and
by comparable agencies in other countries. The regulatory agencies have substantial discretion to terminate
clinical trials, require additional testing, delay or withhold registration and marketing approval, and mandate
product withdrawals.
Lipoxen has not and its collaborators have not submitted any product candidates incorporating Lipoxen’s
technologies for approval to EMEA or to the FDA or any other regulatory authority. If any product
candidate manufactured using Lipoxen’s technology is submitted for regulatory approval, it may not receive
the approvals necessary for commercialisation. Any delay in receiving, or failure to receive, these approvals
would adversely affect the ability of the Enlarged Group to generate product revenues from milestone
payments and royalties, and significant sums will already have been spent in pursuing approval.
Collaboration partners’ manufacturing processes would be subject to continued review by regulatory
agencies. Any discovery of unknown problems with products of the Enlarged Group, products incorporating
its technologies, or manufacturing processes could result in restrictions on such products or manufacturing
processes, including potential withdrawal of the products.
Adverse actions by animal rights activists could interfere with research activities
Activities of the Enlarged Group or its collaborators’ activities, operations and research, and services
conducted for the Enlarged Group by third parties, could be adversely affected by animal rights activists.
Any such adverse action could delay research projects and decrease the ability to conduct future research
and development. Any significant interruption of the ability of the Enlarged Group to conduct its business
operations, research and development activities, or manufacturing operations could reduce revenue and
increase expenses.
Foreign Exchange Risk
Most of the agreements Lipoxen has entered into are denominated in US dollars while Lipoxen’s operating
costs are in sterling. Lipoxen has not entered into any contracts to reduce its currency risk exposure.
Therefore currency fluctuation could have a potential adverse impact on financial results of the Enlarged
Group.
Dependence on key employees
The future success of the Enlarged Group is substantially dependent on the continued services and
performance of its senior management and other key personnel in the various areas of its business. The loss
of the services of certain key employees or the inability to recruit personnel of the appropriate calibre could
have a significant adverse effect on the business of the Enlarged Group.
Requirement for further funding
In the opinion of the Directors and Proposed Directors, having made due and careful enquiry and taking into
account the net proceeds of the Placing, the working capital available to the Enlarged Group will be
sufficient for its present requirements, that is for at least the next 12 months from the date of Admission.
However, it is likely that the Enlarged Group will need to raise further funds in the future. There is no
guarantee that the then prevailing market conditions will allow for such a fundraising or that new investors
will be prepared to subscribe for Ordinary Shares at the same or higher price as the Placing Price.
Growth management
The Directors and the Proposed Directors anticipate that further expansion will be required to address the
anticipated growth in the markets in which the clients of the Enlarged Group operate. The future success of
the Enlarged Group will depend, in part, on its ability to manage this anticipated expansion. Such expansion
is expected to place significant demands on management, support functions, accounting, sales and marketing
and other resources. If the Enlarged Group is unable to manage its expansion effectively, its business and
financial results could suffer.
21
Part I — Letter from the Chairman
Investment in AIM securities
Investment in shares traded on AIM is perceived to involve a higher degree of risk and be less liquid than
investment in companies whose shares are listed on the Official List and traded on the London Stock
Exchange’s market for listed securities. An investment in Ordinary Shares may be difficult to realise.
Prospective investors should be aware that the value of Ordinary Shares may go down as well as up and that
the market price of the Ordinary Shares may not reflect the underlying value of the Enlarged Group.
Investors may therefore realise less than, or lose all of, their investment.
Potentially volatile share price and liquidity
The share price of quoted emerging companies can be highly volatile and shareholdings illiquid. The price
at which the Ordinary Shares are quoted and the price at which investors may realise their Ordinary Shares
may be influenced by a significant number of factors, some specific to the Company and its operations and
some which affect quoted companies generally. These factors could include the performance of the Enlarged
Group, large purchases or sales of Ordinary Shares, legislative changes and general, economic, political or
regulatory conditions.
18.
Extraordinary General Meeting
You will find at the end of this document a notice convening an Extraordinary General Meeting of the
Company to be held at the offices of Stringer Saul LLP, 17 Hanover Square, London W1S 1HU at 10.00 a.m.
on 16 January 2006 at which the following resolutions will be proposed:
1.
an ordinary resolution on a poll of independent shareholders to approve the waiver by the Panel on
Takeovers and Mergers of the obligation on the Concert Party to make a general offer under Rule 9 of
the City Code;
2.
an ordinary resolution to approve the Acquisition for the purposes of Rule 14 of the AIM Rules:
3.
an ordinary resolution to approve the terms of the Novation Agreement pursuant to which Greenchip
agrees to accept the obligations of Lipoxen under the FDS Development Agreement in particular to
allot ordinary shares in Greenchip to FDS upon achievement of certain milestones to the financial value
of $2,670,764.2.
4.
special resolutions;
a) to give the directors of the Company from time to time authority to allot relevant securities up to
an aggregate nominal amount of £679,267.
b) to disapply section 89(1) of the Act in connection with, inter alia, the Proposals.
5.
19.
a special resolution to change the name of the Company to Lipoxen plc.
Action to be taken
Shareholders will find enclosed with this document a Form of Proxy for use at the Extraordinary General
Meeting. Whether or not you intend to be present at the meeting, you are requested to complete, sign and
return your Form of Proxy to the Company’s registrars, Share Registrars, Craven House, West Street,
Farnham, Surrey GU9 7EN as soon as possible but, in any event, so as to arrive no later than 10.00 a.m. on
14 January 2006. The completion and return of a Form of Proxy will not preclude Shareholders from
attending the meeting and voting in person should they wish to do so.
20. Further information
Your attention is drawn to the additional information set out in Parts II to V of this document.
22
Part I — Letter from the Chairman
21.
Recommendation
The Current Directors, who have been so advised by Grant Thornton Corporate Finance consider the terms
of the Acquisition, the terms of the Novation Agreement and the seeking of the waiver of the obligation on
the members of the Concert Party (both individually and collectively) to make a general offer to
Shareholders under Rule 9 of the City Code, to be fair and reasonable and in the best interests of
Shareholders as a whole. In giving its advice, Grant Thornton Corporate Finance has taken into account the
Current Directors’ commercial assessment. Accordingly, the Current Directors unanimously recommend
Shareholders to vote in favour of the resolutions numbered 1 to 5 to be proposed at the Extraordinary
General Meeting, as they intend to do in respect of their shareholdings of 1,048,500 existing Ordinary Shares
in aggregate representing approximately 13 per cent. of the existing issued ordinary share capital of the
Company.
Yours faithfully
Colin W Hill
Non-executive Chairman
23
Part II — Information on Lipoxen
INTRODUCTION
Lipoxen is a company engaged in the development of proprietary products in the fields of protein drugs,
vaccines and oncology. Lipoxen is exploiting its proprietary delivery technologies to create a new generation
of drug and vaccine products with improved performance. In pre-clinical studies for protein drug delivery,
Lipoxen’s PolyXen technology has been shown to impart protection from degradation and improved active
lifetime in circulation. In pre-clinical studies relating to vaccine delivery, Lipoxen’s ImuXen technology is
being used to develop products that have shown increased immune responses and protection against
infection. In pre-clinical studies for oncology drug delivery, Lipoxen’s technology (VesicAll) is being used to
develop products with reduced toxicity and greater convenience of use. Lipoxen is engaged in the
out-licensing of these technologies to biopharmaceutical companies that have strong manufacturing and
marketing capabilities. These companies are incorporating Lipoxen’s technologies into human therapeutic
product candidates. Lipoxen’s market strategy is to focus on product development, in collaboration with
major biotech and pharmaceutical partners, for the protein, vaccine and oncology drug markets.
Lipoxen’s delivery technologies allow it to pursue the development of high-value and differentiated
pharmaceutical products. Lipoxen has under development, either solely or in partnership, five products that
each address markets valued in excess of $1 billion*. Lipoxen also provides expertise to assist and enable
pharmaceutical and biotechnology companies to optimise the performance of drugs and vaccines, fuel
product pipelines and create new patent life for patent-expired products such as Taxol, G-CSF and
pneumococcal vaccine. To this end it has collaboration or strategic partnership agreements with large
biotechnology and pharmaceutical companies that provide access to potential new products.
Lipoxen is developing its own range of proprietary products based on products that are already on the
market including vaccine products and oncology drug products that incorporate its proprietary delivery
technologies. Lipoxen’s proprietary product candidates, based on EPO, G-CSF, Insulin, Interferon-alpha and
pneumococcal vaccine each address markets valued in excess of $1 billion. Lipoxen intends that these
products will be licenced to biopharmaceutical companies at an appropriate stage of development for them
to complete clinical trial programmes and commercialise, in return for upfront, milestone and royalty
payments.
Lipoxen has ongoing research collaborations with some of the world’s largest biotech companies, Amgen
Inc, Genentech Inc, and Genzyme Inc; a leading generics company, Teva Pharmaceutical Industries Limited;
a leading vaccines manufacturer, the Serum Institute of India Limited and a major US pharmaceutical
company, Baxter Healthcare Corporation.
Lipoxen has a total of twelve staff, six of which are employees and the remainder of which are either
consultants or secondees from the School of Pharmacy.
BACKGROUND TO LIPOXEN
Lipoxen was founded in 1997 as a spin out from The School of Pharmacy, University of London, to exploit
and commercialise research in the expanding area of drug and vaccine delivery systems. This research was
carried out over 27 years by Lipoxen’s founder Professor Gregory Gregoriadis Ph.D.,D.Sc. at the Medical
Research Council and the School of Pharmacy, University of London, where he was Head of the Centre for
Drug Delivery Research (1990-2001). Lipoxen began operations in November 1998, following a seed
financing which enabled it to staff the laboratory and management office.
Lipoxen has funded its operations to date by way of fund raisings from, primarily, high net worth individuals.
FDS Pharma Ass has been the primary provider of capital from 2002 to the present day, of which Dr Dmitry
Genkin, a former post doctoral scholar of Professor Gregoriadis, is joint beneficial owner.
THE TECHNOLOGIES
Protein Drugs
PolyXen is a technology that uses the natural polymer polysialic acid (PSA) has the potential to prolong the
active life and improve the performance of therapeutic proteins and peptides in man. PolyXen may be
considered an alternative solution to PEGylation (currently the most widely used protein delivery solution)
*
Please refer to paragraph 18.21 of Part V of this document.
24
Part II — Information on Lipoxen
because of expected benefits of reduced toxicity and preserved activity of protein drugs made with PolyXen.
Polysialic acid is a natural, human, polymer and, when linked to protein drugs increases their active life in
circulation and prevents them from being recognised by the immune system, which is a particular problem
for existing protein drugs.
Polysialic acid (unlike PEG which is a synthetic polymer) is a naturally occurring, biodegradable polymer
composed of sialic acid (a sugar). Polysialic is produced by certain bacterial strains from which it can be
easily isolated. PolyXen technology can potentially enhance peptide and protein drugs by:
•
prolonging active life of drug in the circulation;
•
reducing frequency and amount of dosing;
•
reducing immunogenicity and antigenicity;
•
prolonging pharmacological action;
•
reducing toxicity seen with alternative delivery solutions (e.g. PEG); and
•
preserving drug activity upon conjugation (better than PEG in some instances).
Vaccines
ImuXen is a group of novel liposomal technologies designed to increase the effectiveness of DNA, protein
and polysaccharide vaccines. ImuXen has the potential to achieve protective immunity in a single dose which
would otherwise require multiple doses with conventional vaccine materials.
Modern vaccines are often inefficient at inducing appropriate immune responses that neutralise the target
infectious agent and usually require multiple repeat doses, giving rise to logistic and compliance difficulties
in the immunisation of human populations.
ImuXen is based on the administration of vaccines via liposomes. The natural materials used already have
a history of safe use in man. Vaccine materials are protected by the liposomal vehicle enhancing their
delivery to the immune system. This leads to protective immune responses which are much stronger and
more rapid than those observed with vaccine materials delivered by conventional means. Moreover,
liposomal formulation is well known to minimise the side effects of vaccination (such as injection site
reactions and anaphylaxis) as a result of entrapment and also slow release of the active materials.
ImuXen is a system of vaccine formulation capable of the efficient delivery of various forms of vaccine
(DNA, protein and polysaccharide) to the immune system in various combinations. This new system has the
potential to allow multiple vaccines to be administered in one ‘shot’ which is an increasing trend in the
industry. Proprietary liposomal co-entrapment of diverse vaccine antigens, known as ‘co-delivery’ is the basis
of several partnered product candidates under development by Lipoxen, for example The Serum Institute’s
Liposomal pneumococcal vaccine (known as ‘‘LipoNeu’’).
ImuXen technology has the potential to enhance vaccines by:
•
increasing the immune response;
•
increasing efficacy of vaccines;
•
generating broadly based immune responses (cell mediated immunity and antibodies);
•
reducing doses of vaccines to ensure adequate supply;
•
reducing the number of doses required to achieve protection; and
•
making oral administration possible for vaccine candidates.
Oncology Drugs
VesicAlI is a versatile and highly efficient method for the formulation of oncology drugs by a proprietary
method of entrapment in liposomes. The liposome vehicles of VesicAll are very similar in their structure and
composition to those used in the ImuXen technology, consisting predominantly of materials that are found
naturally in every cell of the body (phosphatidyl choline and cholesterol). VesicAll is particularly useful for
insoluble drugs which are difficult to deliver or for the encapsulation of toxic drugs to allow sustained release
of the drug away from the injection site. The natural materials used in VesicAll already have a history of safe
25
Part II — Information on Lipoxen
use in man for the delivery of drug substances – as exemplified by Ambisome® (a ‘liposomally detoxified’
anti-fungal drug made by Gilead Sciences), and by Doxil® (a liposomal chemotherapy drug made by Alza
(a division of J&J)). The VesicAll liposomal vehicle system has several potential advantages for oncology
drugs such as:
•
reduced toxicity of drug due to sustained release;
•
bolus injection instead of infusion (infusion is required for Taxol);
•
elimination of toxicity of Cremaphor® vehicle (e.g. anaphylaxis with Taxol);
•
lower treatment costs due to avoidance of hospitalisation (elimination of risk of anaphylaxis); and
•
reduced toxicity due to elimination of cardiac (e.g. for Doxil®).
THE MARKET
Drug and vaccine delivery technologies are being applied to new and existing drug and vaccine candidates
to provide improved effectiveness, reduced side effects, and reduced dosing. The global drug delivery market
is significant, estimated at around $73 billion in 2004* and predicted to grow to in excess of $98 billion by
2008*. The collective number of drug delivery based products exceeds 350. In 2002, 50 per cent. of FDA
approved products were delivery-enhanced formulations. Injectable polymer systems account for 8.2 per cent.
of the total global drug delivery market. The prevailing polymer delivery system, PEGylation, has been the
founding basis for a number of publicly traded companies. Companies such as Nektar Therapeutics,
Maxygen, Enzon and Neose have utilized the PEG technology to create alliances and develop product
candidates. There are a number of billion dollar drug products in the market utilizing PEG, such drugs
include G-CSF and PEGylated forms of interferon alpha. There are a number of other companies, for
example, Biovail, Alkermes and Skye Pharma who have developed alternative delivery solutions.
Proteins
The global therapeutic protein market generated sales of $33 billion in 2002*, a 24 per cent. increase on sales
from the previous year. There were at least 75 protein or peptide based products approved for marketing in
the US alone with in excess of 100 in clinical trials in 2002. It is predicted that half the value of the therapeutic
proteins market will be suseptible to generic competition by 2006. Product differentiation and market
extension through drug delivery approaches is therefore predicted to be a major driver of the industry’s
development. As proteins cannot currently be delivered effectively via the oral route, delivery systems that
enable proteins to be delivered more efficiently and efficaciously and via less frequent injections are
predicted to succeed commercially. Lipoxen intends to continue to pursue new product development
opportunities in the protein drug field by applying its proprietary delivery technology to off patent protein
drugs. Lipoxen currently has in development four protein drug candidates that each address markets valued
in excess of $1 billion. These candidates include a proprietary interferon alpha and insulin and a partnered
EPO and G-CSF (see table below).
The table below highlights the estimated size of the current markets for Lipoxen’s protein candidates
Estimated size of market (2004)*
$ billion
Protein
EPO
G-CSF
IFN
Insulin
9-10
3.0
2.7
5.0
Vaccines
The 2003 global vaccine market was estimated to be $8.9 billion* and growing at an estimated 9 to
11 per cent*. The first billion dollar vaccine product, Prevnar®, is produced by Wyeth. Prevnar® is a 7-valent
pneumococcal conjugate vaccine that is on patent until at least 2007. Since Prevnar® covers only seven
strains, it has proven to be vulnerable to the emergence of previously rare strains. In contrast, Lipoxen’s
liposomal pneumococcal vaccine candidate is designed to cover 14 strains and is expected to be more
*
Please refer to paragraph 18.21 of Part V of this document.
26
Part II — Information on Lipoxen
effective as a result of this wider strain coverage. Public health authorities, medical practitioners and patients
frequently favour combination vaccines, particularly in paediatric vaccines, because they eliminate the need
for multiple injections and may increase compliance with recommended vaccination schedules. As new
combination vaccines are introduced, older combinations and single products often become obsolete.
Lipoxen’s ImuXen vaccine technology is potentially well suited to the development of combination vaccines.
The products Lipoxen has in development reflect key expanding areas in the vaccines industry, including
biodefence.
The market is currently dominated by pediatric vaccines, however, a major growth driver for the future is
likely to be from the adolescent and adult population. Lipoxen’s portfolio of vaccine candidates in
development will potentially penetrate all of these markets.
Liposome Oncology Drugs
The cancer-therapies market is estimated to be worth approximately $32 billion* and is forecast to grow to
between $55 billion and $70 billion by 2010*. Cancer’s high incidence rate and the lack of drugs and therapies
that can either cure it or increase the life-expectancy period of patients is driving the discovery of novel
agents.
Taxol, Bristol-Myers Squibb’s chemotherapy drug, an enhancement of which Lipoxen is pursuing with The
Serum Institute, had global sales of over $1 billion in 2000*, which only declined to $934 million in 2003
following patent loss. Taxotere (in the same drug class as Taxol which still has patent protection) generated
sales of over $1.4 billion* in 2004 for Sanofi-Aventis. Paclitaxel is the generic form of Taxol (BMS) used for
the treatment of lung, breast and ovarian cancer, which recently came off patent. Taxol is one of the largest
revenue producing cancer drugs on the market with worldwide annual revenues of over $800 million in
2002*. Platinum chemotherapy drugs, such as cisplatin and carboplatin, are used to treat patients with a
number of common cancers and generate annual global sales over $700 million* despite lack of patent
protection.
LEAD CANDIDATES
Protein Drugs
Polysialic-EPO ‘ErepoXen’
EPO stands for ‘erythropoietin’ a hormone produced by the kidney to maintain the red cell population of
the blood and prevent anaemia. In kidney failure the kidneys no longer produce enough of this substance
and therapy with EPO is required to treat the resulting anaemia. Lipoxen is developing a performanceenhanced form of EPO designed to require less frequent dosing and to be less immunogenic than Aranesp®
from Amgen Inc.. The biodegradability of polysialic acid could also avoid toxicity attributed to PEG in
PEGylated protein drug candidates. The global market size for EPO is in the range of $9 to 10 billion*.
Clinical Timelines for Polysialic EPO
2004
2005
2006
2007
Polysialic EPO
Research
Pre-Clinical
Phase-I
Phase-II
*
Please refer to paragraph 18.21 of Part V of this document.
27
2008
2009
2010
Part II — Information on Lipoxen
Polysialic-GCSF ‘NeutroXen’
Lipoxen is developing a proprietary potentially long-acting form of granulocyte colony stimulating factor
(G-CSF) NeutroXen. G-CSF is prescribed to stimulate production of ‘neutrophils’ (a type of white blood
cell) and is approved for sale in major markets around the world for treatment of neutropenia (a deficiency
of those white blood cells) associated with cancer chemotherapy (myelosuppressive chemotherapy). Plain
and an improved form of GCSF are already marketed around the World (Neupogen® and Neulasta®,
respectively), the latter being plain GCSF modified with PEG polymer. The biodegradability of polysialic
acid could also avoid toxicity attributed to PEG in PEGylated protein drug candidates. Polymer modification
of GCSF confers treatment advantages for the patient – requiring fewer, less frequent injections (one for
every cycle of chemotherapy). Lipoxen’s polysialic GCSF is modelled on the performance profile of
Neulasta®. The global market size for GCSF is $3 billion*.
Polysialic interferon-alpha ‘InferoXen’
Lipoxen is developing a proprietary polysialic interferon alpha-2b product candidate (InferoXen) which in
proof of concept studies has demonstrated a longer circulation time than generic interferon alphas,
comparable to the PEGylated forms of interferon alpha (PEGIntron®). The biodegradability of polysialic
acid could also avoid toxicity attributed to PEG, in PEGylated protein drug candidates. The worldwide
recombinant interferon alpha market was worth $2.7 billion in 2004* and is forecast to grow to $5.5 billion
by 2010*, such expansion will be led by the introduction of pegulated interferons.
Clinical Timelines for Polysualic Interferonalpha
2004
2005
2006
2007
2008
Polysialic
Interferon-alpha
Research
Pre-Clinical
Phase-I
Phase-II
Polysialic Insulin ‘SuliXen’
Lipoxen’s ‘SuliXen’ – a proprietary human insulin product candidate is a long acting injected form of insulin
with a pharmaceutical performance profile modelled on Sanofi-Aventis’ Lantus, which had sales of greater
than $1 billion in 2004. Lipoxen is developing Sulixen for the treatment of type-II diabetes. Its immune
stealth properties are expected to decrease the likelihood of generating anti-insulin antibodies, which can be
problematic in the management of diabetes. The biodegradability of polysialic acid could also avoid toxicity
attributed to PEG, in PEGylated protein drug candidates. The insulin market size is expected to reach
approximately $8 billion by 2010*. The total number of people affected worldwide by diabetes is almost
200 million but this is expected to increase to more than 300 million by 2025 according to World Health
Organisation estimates*.
*
Please refer to paragraph 18.21 of Part V of this document.
28
Part II — Information on Lipoxen
Clinical Timelines for Polysialic Insulin
2004
2005
2006
2007
2008
Polysialic Insulin
Research
Pre-Clinical
Phase-I
Phase-II
VACCINE PRODUCTS
Liposomal pneumococcal vaccine ‘LipoNeu’
Streptococcus pneumoniae is a cause of meningitis and other serious infections in infants and children. It also
infects adults causing pneumonia (which is often fatal in elderly subjects). One of the existing pneumococcal
vaccines is ‘Prevnar®’ by Wyeth, which is a best selling vaccine product having sales over $1 billion.
However, a recognised deficiency of Prevnar® and successors in development at Wyeth is that it provides
only limited coverage of the many strains that afflict humans (Prevnar® covers only 7 of the 23 most
common strains). The LipoNeu product candidate is a new form of 14-strain vaccine, being lipopsome-based,
which is expected to have the superior performance characteristics of a conjugate vaccine but which is
designed to have much wider strain coverage than Prevnar®.
Clinical Timelines for Lipsomal Pneumo Polysaccaride Vaccine
2004
2005
2006
2007
2008
2009
2010
2011
Lipsomal Pneumo
Polysaccaride
Vaccine
Research
Pre-Clinical
Phase-I
Phase-II
Oral tetanus vaccine ‘LipoTet’
Lipoxen is exploiting its oral liposomal formulation technology in the delivery of a tetanus booster shot for
adults already primed (in childhood) by the injected form of the tetanus vaccine. Lipoxen expects to obtain
early ‘proof of principle’ human data for its oral vaccine technology with this product candidate.
LIPOSOMAL ONCOLOGY DRUGS
Liposomal paclitaxel (Taxol) LipoTaxen
Paclitaxel is the generic form of Taxol (BMS) used for the treatment of lung, breast and ovarian cancer,
which recently came off patent. Taxol and generic forms of Taxol give rise to serious side effects (allergic
29
Part II — Information on Lipoxen
reactions) that are caused by the Cremaphor® component and which have to be controlled by slow infusion
of Taxol in a hospital setting. Lipoxen’s LipoTaxen uses a proprietary liposomal formulation of the active
ingredient ‘paclitaxel’ which is designed to allow rapid administration in a saline vehicle avoiding the dangers
of the Cremaphor® vehicle. Taxol generated annual revenues of over $900 million in 2004*.
Clinical Timelines for Liposomal Taxol
2004
2005
2006
2007
2008
2009
2010
Liposomal Taxol
Research
Pre-Clinical
Phase-I/
Phase-II
MATERIAL BUSINESS RELATIONSHIPS
Baxter Healthcare Corporation – Lipoxen entered into a collaboration with Baxter Healthcare Corporation
and Baxter Healthcare SA on 15 August, 2005. The collaboration is structured as an initial seven month
research period for which Lipoxen will receive initially a cost coverage of $423,333.50 from Baxter and then
an additional payment of $423,333.50 if Baxter does not terminate the licence midway through the research.
The research period is focused on conjugating Lipoxen’s PolyXen technology with two of Baxter’s
proprietary proteins. After the seven month period, Baxter has an exclusive option to enter into a
pre-negotiated development and licence agreement for the use of Lipoxen’s PolyXen technology to develop
an improved version of its currently marketed protein or, potentially, a new proprietary protein. If Baxter
chooses to exercise the exclusive world wide option for a defined therapeutic area, Lipoxen will receive a
non-refundable $1 million for this exercise. The pre-negotiated agreement includes further pre-approved
milestones of $10 million as well as further significant approval and commercial milestone payments that
could total a further $64 million, plus royalties. Baxter will have the right to terminate the licence agreement
midway through the initial research period (and not pay the second instalment of $423,333.50 as mentioned
above) at any time after the research period. Lipoxen has the right to terminate the licence agreement if
specific development milestones are not met within certain periods of time.
The Serum Institute of India Limited – By an agreement dated 16 December 2004 between the Serum
Institute of India Limited and Lipoxen, Lipoxen has agreed to develop with the Serum Institute of India
Limited three protein drug candidates, six vaccines and four liposomal oncology drug candidates, a total of
thirteen candidates, for Lipoxen’s PolyXen, ImuXen and VesicAll drug technologies. Lipoxen has licenced
exclusive rights for the thirteen candidates excluding North America, Europe, Russia and CIS, Israel, Japan,
Australia, and New Zealand. In return Lipoxen will receive royalty payments for the marketed products of
2.5 per cent. of the invoiced price of products sold (for products supplied pursuant to contracts entered into
with sovereign agencies and/or charitable organisations) or 5.0 per cent. in the case of any other products
supplied by the Serum Institute of India Limited. Lipoxen also has a partnership for four product candidates
which includes EPO, liposomal Pneumococcal vaccine and liposomal Taxol for FDA and EMEA trials,
thereby establishing joint ownership of product candidates for North America, Europe, Russia and CIS,
Israel, Japan, Australia, and New Zealand. All upfront, milestone payments will be shared equally between
Lipoxen and the Serum Institute of India Limited. Lipoxen has also entered into a contract manufacturing
arrangement with the Serum Institute of India Limited which will produce the protein delivery component,
polysialic acid, on a contract basis.
*
Please refer to paragraph 18.21 of Part V of this document.
30
Part II — Information on Lipoxen
FDS Pharma Ass. – Lipoxen has entered into an Agreement for the Provision of Manufacturing and Clinical
Development Services with its largest shareholder, FDS Pharma Ass. (‘‘FDS’’). Pursuant to the Agreement,
FDS will use technology described in the PolyXen patents to manufacture certain product candidates for
Lipoxen (insulin and interferon) in relation to which FDS (or sub-contractors appointed with the consent of
Lipoxen) will carry out further clinical development work in accordance with an agreed timetable and
development programme. In consideration for FDS agreeing to conduct initial development and certain
manufacturing services, including work to develop certain cell lines, Lipoxen has allotted 15 million ordinary
shares in Lipoxen to FDS. FDS is entitled to receive an additional maximum 7.5 million ordinary shares in
Lipoxen which will be issued provided that FDS has achieved certain milestones. Upon the completion of
the first milestone for certain conjugation work and obtaining certain regulatory audit and certification from
the European Union regulators, a further 1.5 million ordinary shares in Lipoxen shall be allotted to FDS.
Upon completion by FDS of all required pre-clinical activities in accordance with the terms of the FDS
Development Agreement in relation to PolyXen Insulin and PolyXen Interferon (the ‘‘Products’’) and
having obtained EMEA clearance for Phase 1 clinical trials for the Products, a further 1.5 million ordinary
shares in Lipoxen shall be allotted to FDS. Upon the completion of Phase 1 clinical trials in relation to the
Products by FDS in accordance with the terms of the FDS Development Agreement and demonstration by
FDS that all trial data is valid for EMEA regulatory purposes, a further 2 million ordinary shares in Lipoxen
shall be allotted to FDS. The final milestone is that upon completion of Phase 2 clinical trials in relation to
the Products in accordance with the terms of the FDS Development Agreement and provided that all trial
data is valid for EMEA regulatory purposes, a further 2.5 million ordinary shares in Lipoxen shall be allotted
to FDS. In addition to the issue of shares to FDS, FDS is entitled to receive a royalty equal to 10 per cent.
of any cash milestone received by Lipoxen from licence payments triggered by the completion of Phase III
clinical trials and/or EMEA and/or FDA marketing approval. There is an unwinding mechanism in the event
of non-performance by FDS. At the first stage, if the cell lines as detailed in the contract are not to the
satisfaction of the Lipoxen board, then the Lipoxen shareholders as at 10 October 2005 have the right to
purchase the 15 million shares allotted to FDS at 10 October 2005. In the event that the further milestones
are not achieved by FDS, the additional shares will not be issued. In the event of unwinding, Lipoxen will
be entitled to all the rights that would have accrued pursuant to the agreement up to the date of unwinding.
Other Business Relationships
Amgen Inc. – Lipoxen entered into a Technology Evaluation Agreement with Amgen Inc. on 27 June 2005
in relation to the unfunded evaluation of Lipoxen’s PolyXen technology. The agreement may be terminated
upon 30 days notice by either party and there is no commitment by either party to enter into any further
relationship.
Genzyme Inc. – Lipoxen entered into a Technology Evaluation Agreement with Genzyme Inc. on
24 March 2005 in relation to a fully funded evaluation of Lipoxen’s PolyXen technology.
Teva Pharmaceutical Industries Limited – Lipoxen has an ongoing non-commercially binding feasibility
study initiated in early 2005 with Teva Pharmaceutical Limited for an extended release protein.
Genentech, Inc – Lipoxen has an on-going non-commercially binding feasibility study initiated in early 2002
with Genentech, Inc for an extended release protein.
MARKETING AND SALES STRATEGY
Business Strategy
Lipoxen’s goal is to become a leading biopharmaceutical company focused on discovering, developing, and
commercialising innovative and high value differentiated drug and vaccine products via its proprietary
technologies.
Lipoxen identifies product candidates and takes them from an early stage into clinical trials by proving
efficacy in patients. At the appropriate stage of clinical development, Lipoxen aims to out-licence the
product candidate to a partner with the ability to complete late phase clinical trials, obtain the relevant
regulatory approvals and market the product. Lipoxen applies its two main technologies to:
•
develop its own product candidates – Lipoxen will continue to pursue the development of its two
improved long acting insulin and interferon alpha candidates;
31
Part II — Information on Lipoxen
•
pursue proprietary candidates with significant market potential – Lipoxen expects its modified proteins
and vaccines to offer significant advantages, including less frequent dosing and possibly improved
efficacy over the original versions of the drugs now on the market, as well as to meet or exceed the
pharmacokinetic and pharmacodynamic profile of next-generation versions of the drugs now on the
market. The strategy of targeting the many commercially attractive protein drugs and vaccines with
proven safety and efficacy allows Lipoxen to lower the risk profile of its proprietary drug and vaccine
development portfolio as compared to new protein drug development. Lipoxen intends to continue to
focus its research and development resources on several therapeutic proteins that it believes have the
highest probability of benefitting from clinically meaningful therapeutic profile improvements from its
technology and are in commercially attractive categories;
•
co-develop product candidates in collaboration with a partner – Lipoxen will continue to seek alliances
similar to its collaboration with The Serum Institute whereby Lipoxen provides product development
expertise and its patented technology for access to new product candidates on a mutually owned basis
or ownership on a territory specific basis; and
•
continue to seek attractive partnership opportunities – Lipoxen will continue its efforts to build upon its
outstanding collaboration portfolio. Its collaborations will continue along the economic lines it has
pursued in the past. This would include upfront payments, research funding and milestone payments, as
well as significant royalty rates on product sales.
Business Model
Lipoxen maximises the efficiency of its pharmaceutical development operation by outsourcing manufacturing
and later stage clinical development activities to partner companies with particular expertise in these areas.
This strategy allows Lipoxen to focus its human and capital resources on its internal research and
development operations, comprising therapeutic proof-of-principle studies and early stage clinical
development. These operations include the generation of new product candidates and the servicing of
corporate collaborations with major partners for the co-development of new products.
COMPETITION
The biotechnology and pharmaceutical industries are characterised by rapidly evolving technology and
significant competition. Lipoxen competitors include pharmaceutical and biotechnology companies. In
addition, many specialised biotechnology companies have formed collaborations with large, established
companies to support research, development and commercialisation of products that may compete with
Lipoxen’s current and future product candidates and technologies. The Lipoxen Directors believe that
Lipoxen has a competitive position in the protein and vaccine market given the patent protection of its core
technologies.
Proteins
Lipoxen considers PEGylation (PEG) as the prevailing protein delivery technology. There are currently a
number of protein drugs in the market utilizing PEG such as IFN and G-CSF. PEGylation entails the
covalent attachment of PEG (a non-metabolisable inert polymer of ethylene oxide) to drug actives, usually
proteins.
PEG technology has previously been exploited to extend the lifecycle of approved protein therapeutics.
Examples include Schering Plough’s PEG-Intron and Roche’s Pegasys both used for the treatment of
Hepatitis C and Amgen Inc’s Neulasta (PEGylated Neupogen) that is used to treat immune deficient
patients.
A number of competitors are working on the development of next-generation protein therapeutics. Some of
these competitors include Maxygen, Nektar Therapeutics, Enzon Pharmaceuticals, Neose, Human Genome
Sciences and Alkermes. Other companies have programs focused on developing next-generation or
improved versions of EPO and G-CSF. These companies include Amgen, Roche, Transkaryotic Therapeutics
(Shire), Human Genome Sciences, Maxygen, ARIAD Pharmaceuticals and Affymax. Other companies are
also active in this area and it is expected that competition will increase.
Although a clear development and regulatory path does not currently exist for biologic products that are, or
soon will be, off-patent in the U.S., Europe and Japan, Lipoxen is aware that companies are pursuing the
opportunity to develop and commercialise follow-on versions of currently marketed products, including
EPO, G-CSF and others. Several companies are developing or planning to develop follow-on biologics,
including Sandoz, Pliva and Teva.
32
Part II — Information on Lipoxen
Vaccines
There are an estimated 200 companies operating in the vaccine sector, selling or developing around
600 products. The five leading companies in the sector are Wyeth, Merck, GSK, Sanofi Pasteur and Chiron,
who generated around 83 per cent. of the $8.9 billion worldwide vaccine sales in 2003. Although a majority
of sales today are for pediatric vaccines, elective vaccination of adolescents, adults and the elderly is
increasing. The infectious disease area offers significant opportunities as follows: increased emphasis on
preventative medicine in Western countries; the emergence of new diseases; increasing drug resistance;
continued growth in travel to endemic areas and concerns about biological weapons and terrorism, all of
which have contributed to the recognition of vaccines as a critical part of health management world-wide.
The infectious disease sector is an attractive market for Lipoxen since the compound annual growth rate was
26 per cent. between 1999 and 2003. Two liposomal vaccines have recently been brought to the market,
namely Berna Biotech’s liposome based vaccines, Epaxal® for hepatitis A and Inflexal® V for flu. Epaxal
sales tripled in 2004 from 2003 and sales for Inflexal tripled from 2001 to 2004. There are a number of
companies developing vaccines based on lipid and liposome technologies for vaccine delivery, including
Corixa (GSK), Berna Biotech and Biomira. All of these companies are developing delivery systems for
protein antigens. There are currently a number of companies engaged in the development of delivery
systems for DNA vaccines: namely Merck, Chiron, Vical, PowderMed, Valentis, Targeted Genetics Corp.,
Crucell NV and Wyeth.
Liposomal Oncology Drugs
Alza (a division of J&J), Bristol Myers (BMS) and Schering-Plough are a few of the large pharmaceutical
companies pursuing liposomal oncology products. J&J currently produce a liposomal doxorubicin called
Doxil. Doxorubicin is a drug that has been used to treat cancer patients for about 20 years and new
formulations with drug delivery agents has resulted in substantial sales growth for J&J and Schering-Plough.
Taxol, Bristol-Myers Squibb’s chemotherapy drug, had global sales of over $1 billion in 2000, which only
declined to $934 million in 2003 following patent loss. Taxotere (in the same drug class as Taxol but with
patent protection) generated sales of over $1.4 billion in 2004 for Sanofi-Aventis. Platinum chemotherapy
drugs, such as cisplatin and carboplatin, are used to treat patients with a number of common cancers and
generate annual global sales over $700 million despite lack of patent protection.
RECENT TRENDS AND FUTURE PROSPECTS
There has been an increasing trend in Lipoxen to allocate more capital resources to research and
development away from costs for general administrative matters. In the financial year ending 31 December
2003, of the total operating costs of Lipoxen, 25 per cent. was spent on research and development and
75 per cent. on general administrative costs. However, in the financial year ending 31 December 2004, of the
total operating costs of Lipoxen, 60 per cent. was spent on research and development and 40 per cent. on
general administration costs.
THE BOARD
Brief biographies of the Lipoxen Directors are set out below. Paragraph 8.1 of Part V of this document
contains further details of the current and past directorships and certain other important information
regarding the directors of the Company on Admission.
Sir Brian Richards, Non-executive chairman, age 73. Sir Brian was appointed Non-Executive Chairman of
Lipoxen in June 2005. He has extensive experience in chairing boards of public companies and is currently
the non-executive Chairman of Alizyme plc, Cozart plc and MAN Mail (Guernsey) Limited. He has
previously served as executive Chairman of British Bio-technology Limited, a company he co-founded, and
has had non-executive chairmanships or directorships in several biopharmaceutical companies including
Peptide Therapeutics (later Acambis plc), Oxford Biomedical plc and CeNeS Limited.
Dr Dmitry Dmitrievich Genkin, Director, age 36. Dmitry has the Russian equivalent of an MD in Internal
Therapy and has attended training courses in drug delivery at The School of Pharmacy, University of London
(1992) and the Department of Clinical Pharmacology at Karolinska hospital, Stockholm (1992-1993). Dmitry
is currently a director of FDS Pharma Ass, and in the past has served as a Chief Executive Officer of ASGL
Research Laboratories ZAO, a company founded by Dmitry in 1994 to run drug development programmes
focusing on viral and cancer diseases. Dmitry has also served as Executive Chairman of Pharmavit OAO and
Scientific Director of Pharmavit Holding ZAO.
33
Part II — Information on Lipoxen
Scott Maguire, Chief Executive Director, age 42. Scott joined Lipoxen as Chief Executive Officer in April
2004. His background is primarily in life science and healthcare investment banking and he has advised many
US and European companies on capital raisings and commercial development over his 18 year career. Scott
started his banking career with Merrill Lynch in 1987 in New York. After receiving his MBA in 1993 he
joined the healthcare division of W.R. Grace, National Medical Care as the manager responsible for assisting
in building the international healthcare division. In May 1996 Scott co-founded the Arthur Andersen global
healthcare corporate finance practice. Scott is currently a partner and director of Healthcare Capital
Partners Limited, a healthcare corporate finance and proprietary investment boutique he co-founded in
2002.
Professor Gregory Gregoriadis, Director, Chief Scientific Officer, age 71. Gregory founded Lipoxen in
November 1997 as a spin out from The School of Pharmacy, University of London, where he was Head of
the Centre for Drug Delivery Research (1990-2001). Gregory is an internationally acknowledged leader in
the expanding field of drug and vaccine delivery and was the first to introduce liposomes (in 1971) and
polysialic acids (in 1991) as drug and vaccine delivery systems. He has published nearly 400 research papers,
reviews and articles as well as 24 volumes on drug delivery and targeting. Gregory has been honoured with
numerous awards, including the Controlled Release Society Founders award (1994), the A.D.Bangham FRS
life achievement award (1995), and a D.Sc. from the University of London (2001), all for exceptional
contributions to the field of drug and vaccine delivery. Gregory’s seminal contributions to the field of drug
and vaccine delivery are also reflected in his directorships of the NATO Advanced Studies Institutes
‘‘Targeting of Drugs’’ and ‘‘Vaccines’’ (1981-1999). Since 2003 he has been President of the International
Liposome Society.
Dr Tatiana Zhuravskaya, Non-executive Director, age 39. As well as being a director of Lipoxen, Tatiana is
Chief Scientific Adviser of Baltic Pharmaceutical Society and Chief Executive Officer of ASGL – Research
Laboratories, which are part of Pharmavit Holding – a group of biotechnology research and development
and manufacturing companies specialising in research, development, manufacture and marketing of
pharmaceutical products. Tatiana is also a director of the general partner of FDS Pharma Ass. Prior to
joining Pharmavit Holding, Tatiana worked as a clinical scientist at Public Health Laboratory Services
(London) where she managed several Hepatitis C research projects and clinical studies. From 1997 to 1998
Tatiana was a clinical researcher in the Neurology Department of the University of Pennsylvania in
Philadelphia, USA where she conducted clinical studies and managed several research projects in the area
of HIV research. Tatiana has a Medical Degree from Medical School in St Petersburg, Russia and a PhD in
Cell and Molecular Biology from the University of Nevada, Reno, USA.
SENIOR MANAGEMENT
Dr Peter Laing, (Business Development) Peter joined Lipoxen in March 2002. Previously he held the
positions of Director of Research at Peptide Therapeutics plc, Director of Research and Development at
Actinova Ltd and Director of Development at Syngenix Ltd. He joined the biotech industry in 1994
following an independent academic career that included working for the New Zealand MRC, as a visiting
scholar at the National Institutes of Health, and as a University Lecturer in Immunology at Nottingham
University. He is currently non-executive Chairman of Activotec Ltd.
REASONS FOR THE OFFER AND USE OF PROCEEDS
The net proceeds of the Placing will be used by the Company to:
•
drive the product candidates through preclinical trials and into human clinical trials;
•
hire a regulatory consultant to supervise numerous clinical initiatives;
•
fund on-going operations;
•
acquire necessary laboratory equipment;
•
employ senior management on a full time basis; and
•
hire a full time chief financial officer.
Further information
Your attention is drawn to paragraph 17 of Part I of this document which contains certain risk factors relating
to any investment in the Company and to Part V of this document which contains further additional
information on the Group.
34
Part III — Financial Information
A — Accountants’ Report on Greenchip and its
former Subsidiaries
F.W. Smith, Riches & Co. accepts responsibility for the information contained in Part III A of this document.
To the best of the knowledge of F.W. Smith, Riches & Co. (who have taken all reasonable care to ensure that
such is the case) the information contained in Part III A of this document is in accordance with the facts and
makes no omission likely to affect the import of such information.
The Directors
Greenchip Investments plc
18 Pall Mall
London
SW1Y 5LU
and
Grant Thornton Corporate Finance
Grant Thornton House
Melton Street
London
NW1 2EP
23 December 2005
Dear Sirs,
GREENCHIP INVESTMENTS PLC
Introduction
We report on the financial information set out below relating to Greenchip Investments plc (‘‘the
Company’’) and its former subsidiary undertakings, Programmable Life Inc. and Infantcare UK Limited
(together ‘‘the Group’’). This financial information has been prepared for inclusion in the AIM admission
document dated 23 December 2005 (‘‘the Admission Document’’) relating to the proposed acquisition by the
Company of Lipoxen Technologies Limited and re-admission to AIM of the enlarged issued share capital of
the Company and is given for the purpose of complying with Schedule Two of the AIM Rules and for no
other purpose.
Responsibility
The Directors of the Company are responsible for preparing the financial information on the basis of
preparation set out in the notes to the financial information and in accordance with the financial reporting
framework.
It is our responsibility to form an opinion as to whether the financial information gives a true and fair view,
for the purposes of the Admission Document, and to report our opinion to you.
F. W. Smith, Riches & Co. of 18, Pall Mall, London SW1Y 5LU were the auditors of the Company for each
of the periods covered by this report.
Basis of opinion
We conducted our work in accordance with the Statements of Investment Circular Reporting Standards
issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of
evidence relevant to the amounts and disclosures in the financial information. It also included an assessment
of significant estimates and judgements made by those responsible for the preparation of the financial
information and whether the accounting policies are appropriate to the Company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial information is free from material misstatement whether caused by fraud, other irregularity or error.
35
Part III — Financial Information
Opinion
In our opinion, the financial information gives, for the purposes of the Admission Document, a true and fair
view of the state of affairs of the Group as at 31 December 2002, 31 December 2003 and 31 December 2004
and of its losses and cash flows and recognised gains and losses for each of the years then ended in
accordance with the basis of preparation set out in Note 2 and in accordance with the financial reporting
framework as described in Note 1.
Declaration
For the purposes of Schedule Two of the AIM Rules we are responsible for this report as part of the
Admission Document and declare that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains no
omission likely to affect its import. This declaration is included in the Admission Document in compliance
with Schedule 2 of the AIM Rules.
Yours faithfully,
F.W. SMITH, RICHES & CO.
36
Part III — Financial Information
I
(a)
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
2004
Year ended 31 December
2003
2002
Turnover – discontinued operations
Cost of sales
—
—
58,173
43,907
80,861
82,326
Gross profit/(loss)
Administrative expenses (including impairment of
goodwill)
Other operating income
—
14,266
(1,465)
11,730
—
147,378
—
4,985,539
7,565
Operating loss – discontinued operations
Profit on disposal of discontinued operations
Interest receivable
Waiver of secured loans
Profit on sale/(amounts written off) investments
Interest payable
(11,730)
—
83
—
—
—
(133,112)
85,836
113
—
10,218
(3,117)
(4,979,439)
—
12,757
155,247
(315,567)
(12,777)
Loss for the year before and after taxation
(11,647)
(40,062)
(5,139,779)
Loss per ordinary share – basic
(b)
(0.01)p
(0.02)p
(3.68)p
CONSOLIDATED STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES
2004
Loss for the year
Exchange differences on translation of net assets of
subsidiary undertaking
(11,647)
Total losses recognised since last annual report
(11,647)
—
37
Year ended 31 December
2003
2002
(40,062)
4,818
(35,244)
(5,139,779)
62,193
(5,077,586)
Part III — Financial Information
(c)
CONSOLIDATED BALANCE SHEETS
2004
FIXED ASSETS
Intangible assets
Tangible assets
Investments
As at 31 December
2003
2002
—
—
—
—
—
—
157,233
1
91,875
—
—
249,109
CURRENT ASSETS
Stocks
Debtors
Cash at bank and in hand
—
10,000
931
—
16,259
3,599
1,000
12,518
64,376
CREDITORS: Amounts falling due within one year
10,931
(993)
19,858
(17,367)
77,894
(131,180)
NET CURRENT ASSETS/(LIABILITIES)
9,938
2,491
(53,286)
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: Amount falling due after more than
one year
9,938
2,491
195,823
—
—
9,938
2,491
CAPITAL AND RESERVES
EQUITY
Called up share capital
Share premium account
Profit and loss account
1,635,128
7,136,165
(8,770,168)
1,602,816
7,136,165
(8,758,521)
(180,119)
15,704
1,602,816
7,136,165
(8,723,277)
1,125
(19,540)
NON EQUITY
Shares to be issued
8,813
22,031
—
SHAREHOLDERS’ FUNDS
9,938
2,491
15,704
38
15,704
Part III — Financial Information
(d)
CONSOLIDATED CASH FLOW STATEMENTS
2004
Net cash outflow from operating activities
(130,796)
(902,514)
83
—
113
(3,117)
12,757
(12,777)
Net cash inflow/(outflow) from returns on investments
and servicing of finance
83
(3,004)
(20)
Capital expenditure and financial investment
Proceeds from disposal of tangible fixed assets
Proceeds from sale of listed investments
—
—
—
102,093
285
—
Net cash inflow from capital expenditure and financial
investment
—
102,093
285
Acquisitions and disposals
Purchase of subsidiary
Cash acquired with subsidiary
Proceeds of sale of subsidiaries
—
—
—
—
—
2
Returns on investments and servicing of finance
Interest receivable
Interest payable
(35,063)
Year ended 31 December
2003
2002
Net cash inflow/(outflow) from acquisitions and
disposals
—
Net cash outflow before financing
Financing
Issue of equity shares
(34,980)
32,312
Decrease in cash resources
(2,668)
39
2
(31,705)
—
(31,705)
(288,318)
4,323
—
(283,995)
(1,186,244)
—
(1,186,244)
Part III — Financial Information
II
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
FINANCIAL REPORTING FRAMEWORK
The financial statements have been prepared under the historical cost convention and in accordance with
applicable Accounting Standards issued by the Accounting Standards Board in the United Kingdom.
The financial statements have been prepared on the going concern basis. In the year ended 31 December
2002, this was on the basis that additional funding would be secured to bring the Group’s product
development and marketing programme to fruition. In the event, no additional funding was secured and the
Company’s subsidiaries were disposed of during 2003. For the years ended 31 December 2003 and 2004, this
basis was subject to the agreement of certain of the Company’s leading shareholders to underpin the
Company’s limited cash requirements by the provision of essential support services. On 28 July 2005 the
Company raised cash of £200,000 before costs, by a placing of ordinary shares.
The financial statements have been prepared in UK sterling, rounded to the nearest pound.
2.
BASIS OF PREPARATION
The financial information is based on the financial records of the Company, to which no adjustment was
considered necessary.
3.
ACCOUNTING POLICIES
Basis of consolidation
The Group financial statements incorporate the financial statements of the parent company and all of its
subsidiary undertakings. The results of subsidiary undertakings acquired or disposed of during the year are
included in the group financial statements from, or up to, the date of acquisition or disposal.
Investments
Investments held as fixed assets are stated at cost less provision for any permanent diminution in value.
Patents
Patents are capitalised at cost and amortised over the estimated economic life of the assets which, for existing
assets, is fifteen years.
Goodwill
Goodwill, being the difference between the consideration and the attributable fair values of the net assets
of the undertaking acquired, is amortised over its useful economic life. Provision is made for any impairment.
Depreciation
Depreciation is calculated so as to write off the cost of an asset, less its estimated residual value, over the
useful economic life of that asset as follows:
Furniture and equipment
IT equipment
15-25 per cent. reducing balance
50 per cent. straight line
Stocks
Stocks are stated at the lower of cost and net realisable value.
Deferred taxation
Deferred tax arises as a result of including items of income and expenditure in taxation computations in
periods different from those in which they are included in the Company’s financial statements. Deferred tax
is provided in full on timing differences which result in an obligation to pay more (or less) tax at a future
date, at the average tax rates that are expected to apply when the timing differences reverse, based on
current tax rates and laws.
40
Part III — Financial Information
3.
ACCOUNTING POLICIES
(continued)
Foreign currencies
Assets and liabilities in foreign currencies are translated into Sterling at the rates of exchange ruling at the
balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating
profit.
The accounts of overseas subsidiary undertakings are translated into Sterling on the following basis:
•
Assets and liabilities at the rate of exchange ruling at the year-end.
•
Profit and loss account items at the average rate of exchange for the year.
Exchange differences arising on the translation of accounts into Sterling are recorded as movements on
reserves.
The relevant exchange rates used during the year are:
Closing rate
Average rate
4.
2004
£/US Dollar
2003
£/US Dollar
2002
£/US Dollar
N/A
N/A
1.79
1.65
1.61
1.50
TURNOVER
Turnover was attributable to the Group’s principal activity and arose wholly in the United States of America.
5.
OPERATING LOSS
2004
Operating loss is stated after charging:
Depreciation
Amortisation of intangible fixed assets
Impairment of goodwill
Operating lease payments – land and buildings
Auditors’ remuneration
Audit fees
Other services
6.
Year ended 31 December
2003
2002
—
—
—
—
—
10,277
—
—
10,676
13,891
4,101,234
26,296
—
—
2,500
4,000
3,000
3,000
TAXATION
No taxation is provided due to the availability of losses for tax purposes in all periods.
7.
INFORMATION REGARDING DIRECTORS AND EMPLOYEES
Directors’ Emoluments:
2004
Remuneration
Benefits
41
Year ended 31 December
2003
2002
—
—
—
—
47,899
211
—
—
48,110
Part III — Financial Information
7.
INFORMATION REGARDING DIRECTORS AND EMPLOYEES
(continued)
Employees
Staff costs, including directors’ remuneration, were as follows:
Year ended 31 December
2003
2002
2004
Wages and salaries
Social security costs
6,888
212
8,823
845
192,312
7,573
7,100
9,668
199,885
The average number of employees, including directors during the year was as follows:
Number
2004
Product development and marketing
Management
8.
—
4
—
4
2
6
4
4
8
INTEREST PAYABLE
2004
On bank loans and overdrafts
On other secured loans
9.
Number
Number
Year ended 31 December
2003
2002
Year ended 31 December
2003
2002
—
—
1,102
2,015
—
12,777
—
3,117
12,777
LOSS PER ORDINARY SHARE
The calculation of loss per ordinary share is based on losses of £11,647 (2003: £40,062) (2002: £5,139,779) and
on the number of shares in issue, being the adjusted weighted average number of shares in issue during the
period of 162,570,399 ordinary 1p share (2003: 160,281,597 ordinary 1p share) (2002: 139,733,655 ordinary 1p
shares). There is no dilutive effect of share options on the basic loss per share.
42
Part III — Financial Information
10.
INTANGIBLE FIXED ASSETS
Cost
At 1 January 2002
Additions
Acquisitions of subsidiary
At 31 December 2002
Disposals
Patents
Goodwill
Total
—
—
210,664
—
4,101,234
—
—
4,101,234
210,664
210,664
(210,664)
4,101,234
(4,101,234)
4,311,898
(4,311,898)
At 31 December 2003 and 2004
Amortisation
At 1 January 2002
Acquisition of subsidiary
Charge for year
At 31 December 2002
Charge for year
Disposals
—
—
—
—
39,540
13,891
—
—
4,101,234
—
39,540
4,115,125
53,431
10,277
(63,708)
4,101,234
—
(4,101,234)
4,154,665
10,277
(4,164,942)
At 31 December 2003 and 2004
—
—
—
Net Book Value
At 31 December 2004
—
—
—
At 31 December 2003
—
—
—
At 31 December 2002
157,233
—
157,233
11.
TANGIBLE FIXED ASSETS
Furniture and
Equipment
Cost
At 1 January 2002
Acquisition of subsidiary
Disposals
42,017
28,065
(42,017)
At 31 December 2002
Disposals
28,065
(28,065)
At 31 December 2003 and 2004
—
Depreciation
At 1 January 2002
Acquisition of subsidiary
Charge for year
Disposals
40,017
19,388
10,676
(42,017)
At 31 December 2002
Disposals
28,064
(28,064)
At 31 December 2003 and 2004
—
Net Book Value
At 31 December 2004
—
At 31 December 2003
—
At 31 December 2002
1
43
Part III — Financial Information
12.
INVESTMENTS HELD AS FIXED ASSETS
Cost
At 1 January 2002
Additions
Disposals
At 31 December 2002
Disposals
Shares in
unquoted
companies
Shares in
listed
companies
35,979
—
(1,000)
175,425
375,000
—
211,404
375,000
(1,000)
34,979
(34,979)
550,425
(439,884)
585,404
(474,863)
110,541
(110,541)
110,541
(110,541)
At 31 December 2003
Disposals
—
—
At 31 December 2004
—
Provision for diminution in value
At 1 January 2002
Charge for year
Disposals
At 31 December 2002
Disposals
Total
—
—
35,979
—
(1,000)
142,983
315,567
—
178,962
315,567
(1,000)
34,979
(34,979)
458,550
(348,009)
493,529
(382,988)
110,541
(110,541)
110,541
(110,541)
At 31 December 2003
Disposals
—
—
At 31 December 2004
—
—
—
Net Book Value
At 31 December 2004
—
—
—
At 31 December 2003
—
—
—
At 31 December 2002
—
91,875
91,875
13.
STOCKS
At 31 December
2004
2003
2002
—
—
1,000
Goods for resale
14.
DEBTORS
2004
Other debtors
Prepayments and accrued income
15.
Year ended 31 December
2003
2002
10,000
—
14,352
1,907
4,143
8,375
10,000
16,259
12,518
CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR
2004
Bank loans and overdrafts
Trade creditors
Other creditors
Accruals and deferred income
44
Year ended 31 December
2003
2002
—
399
244
350
—
3,488
—
13,879
33,890
81,688
—
15,602
993
17,367
131,180
Part III — Financial Information
16.
CREDITORS AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2004
Other loans
Accruals and deferred income
17.
Year ended 31 December
2003
2002
—
—
—
—
155,280
24,839
—
—
180,119
CALLED UP SHARE CAPITAL
2004
Year ended 31 December
2003
2002
Authorised:
452,909,957 ordinary shares of 1p each
4,529,100
4,529,100
4,529,100
Called up allotted and fully paid:
163,512,847 ordinary shares of 1p each
1,635,128
1,602,816
1,602,816
The following share issues were made during the periods:
Number
£
Shares in issue at 1 January 2002
5 January 2002 – acquisition of subsidiary
26 September 2002 – share exchange
7 April 2004 – capitalisation of creditors
35,281,597
100,000,000
25,000,000
3,231,250
352,816
1,000,000
250,000
32,312
Shares in issue at 31 December 2004
163,512,847
1,635,128
On 3 May 2005, the Company issued 1,487,153 ordinary shares of 1p each in satisfaction of an outstanding
creditor balance.
In June 2005 the Company underwent a restructuring of its share capital under which:
(a)
the authorised share capital was increased to 500,000,000 ordinary shares of 1p each;
(b)
each of the 165,000,000 ordinary shares of 1p each in issue was sub-divided into 1 ordinary share
of 0.01p and 99 deferred shares of 0.01p. The rights of the deferred shares are such that they have
no value and in due course they will be repurchased by the Company for no consideration;
(c)
each of the 335,000,000 unissued ordinary shares of 1p each was subdivided into 100 ordinary
shares of 0.01p each; and
(d)
each 50 ordinary shares of 0.01p each were then consolidated into 1 ordinary share of 0.5p each.
Following completion of the restructuring, the authorised share capital of the Company is £5,000,000,
comprising 673,300,000 ordinary shares of 0.5p each, of which 3,300,000 are in issue, and 16,335,000,000
deferred shares of 0.01p each, all of which are in issue.
On 28 July 2005 the Company has placed a further 5,000,000 ordinary shares of 0.5p each at 4p per share,
raising cash of £200,000 before costs.
45
Part III — Financial Information
18.
SHARE OPTIONS
The Company has share option schemes for the Company’s shares under which options have been granted
to directors and other parties. The share options in existence at 31 December 2004 are as follows:
Date granted
Parties
9 August 1999
9 August 1999
1 February 2000
Directors
Others
Directors
Exercise Price
Number of
Ordinary
shares of
1p each
3p
3p
15p
250,000
1,250,000
800,000
Final Exercisable date
8 August 2006
8 August 2006
31 January 2007
2,300,000
Following the restructuring of the Company’s share capital described above, the options are now over 46,000
ordinary shares of 0.5p each with 30,000 options exercisable at 150p and 16,000 options exercisable at 750p.
19.
RESERVES
Share Premium
Account
Profit and Loss
Account
At 1 January 2002
Loss for the financial year
Share premium on issue of share capital
Exchange difference on translation of net assets of
subsidiary undertaking
4,511,165
—
2,625,000
(3,645,691)
(5,139,779)
—
At 31 December 2002
Loss for the financial year
Exchange difference on translation of net assets of
subsidiary undertaking
7,136,165
—
At 31 December 2003
Loss for the financial year
7,136,165
—
(8,758,521)
(11,647)
(1,622,356)
(11,647)
At 31 December 2004
7,136,165
(8,770,168)
(1,634,003)
20.
—
—
62,193
(8,723,277)
(40,062)
4,818
Total
865,474
(5,139,779)
2,625,000
62,193
(1,587,112)
(40,062)
4,818
SHARES TO BE ISSUED
At 1 January 2002 and 2003
Amount agreed to be settled in shares
—
22,031
At 31 December 2003
Amount agreed to be settled in shares
Shares issued in year
22,031
19,094
(32,312)
At 31 December 2004
8,813
At 31 December 2003 a trade creditor who was owed £22,031 irrevocably agreed to accept settlement in the
form of shares in the Company to be issued at par. The creditor agreed to accept settlement in shares in
respect of further costs incurred of £19,094 in 2004 and £6,059 during 2005. The amounts due were settled
by the issue of shares with a par value of £32,312 on 7 April 2004 and shares with a par value of £14,872 on
3 May 2005. As the Company no longer has any obligation to transfer economic benefits to the creditor, the
balance has been reported within Shareholders’ funds as required by Financial Reporting Standard 4
‘‘Capital Instruments’’.
46
Part III — Financial Information
21. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
Year ended 31 December
2003
2002
2004
Operating loss
Amortisation of intangible fixed assets
Depreciation of tangible fixed assets
Profit on disposal of tangible fixed assets
Decrease in stocks
Decrease/(increase) in debtors
Decrease in creditors
(11,730)
—
—
—
—
6,259
(29,592)
(133,112)
10,277
—
—
—
(3,741)
(4,220)
(4,979,439)
4,115,125
10,676
(285)
70,501
328,698
(447,790)
Net cash outflow from operating activities
(35,063)
(130,796)
(902,514)
22.
RECONCILIATIONS OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Cash at
bank and
in hand
At 1 January 2002
Cash flow
Acquisition of subsidiary
Other
Bank
Overdraft
Total
Secured
loan
Total
1,168,011
(1,103,635)
—
—
—
(82,609)
—
48,719
1,168,011
(1,186,244)
—
48,719
—
—
(342,431)
187,151
1,168,011
(1,186,244)
(342,431)
235,870
At 31 December 2002
Cash flow
Sale of subsidiary
Other
64,376
(65,595)
—
4,818
(33,890)
33,890
—
—
30,486
(31,705)
—
4,818
(155,280)
—
155,280
—
(124,794)
(31,705)
155,280
4,818
At 31 December 2003
Cash flow
3,599
(2,668)
At 31 December 2004
—
—
931
—
47
3,599
(2,668)
931
—
—
—
3,599
(2,668)
931
Part III — Financial Information
B — Unaudited Interim Report on Greenchip for
the Six Months ended 30 June 2005
CHAIRMAN’S STATEMENT
The operating status of the Company has remained unchanged since my last report and the Directors have
continued to seek out a suitable transaction to utilise the Company’s status as a listed shell.
At the Extraordinary General Meeting (EGM) held on 2 June 2005, shareholders gave their full support to
the Board’s proposals to reorganize and consolidate the Company’s capital structure; accordingly, all of the
relevant proposals were duly passed: the Board’s future strategy was also fully affirmed at that meeting. In
that latter regard, I believe that it will be useful to restate the main features of the newly approved strategy
which, inter alia, stated:
•
The Company is seeking to invest in a company (or companies) whose business is in the Natural
Resources, Financial or Healthcare sectors. Investee companies are likely to be located in the United
Kingdom, the Eurozone, Australasia and/or North America. There is a clear preference to find a single
primary investment in one of the sectors outlined above.
•
The Company’s Directors and its principal shareholders are committed to this strategy and will procure
such capital or other monetary support to ensure that the Company is able to meet its obligations for at
least the remainder of the current financial year. The Company also intends to carry out a Placing in due
course to further underpin its ability to conduct relevant due diligence on promising potential acquisitions.
Financial Statements
The attached unaudited Financial Statements again demonstrate that all operating activities of the Company
have ceased and that the Company no longer holds any consolidatable interests or assets for sale. The Profit
and Loss account shows that operating costs have been maintained at a low level, in which regard the
continuing support of certain key shareholders is fully acknowledged.
Showing a de minimis net asset position at the half year, the Company’s Balance Sheet amply demonstrates
the need for the Board to procure new capital to address the execution of the approved business strategy
and, to that end, as stated in my full year’s report, all necessary steps will be taken to secure sufficient funding
to meet the needs of the Company for the remainder of this financial year.
Future Prospects
While there can be no guarantee of success, in consideration of the recently approved capital restructuring,
I am now more confident of being able to conclude a funding. If successful, this will permit relevant Due
Diligence work to be instructed and give the Company an improved opportunity to introduce a new business
proposition.
Colin Hill
Chairman
London: 8th July 2005
48
Part III — Financial Information
PROFIT AND LOSS ACCOUNT
Unaudited Interim Results for the six months to 30th June 2005
Six months
to 30/06/05
Unaudited
£
Six months
to 30/06/04
Unaudited
£
Year to
31/12/04
Audited
£
—
—
—
—
—
—
—
14,547
—
10,947
—
11,730
OPERATING LOSS
Interest receivable
(14,547)
50
(10,947)
51
(11,730)
83
LOSS ON ORDINARY ACTIVITIES
BEFORE AND AFTER TAXATION
(14,497)
(10,896)
(11,647)
TURNOVER
COST OF SALES
GROSS PROFIT/(LOSS)
Administrative expenses
Loss per ordinary share – basic and diluted
(0.44)p
49
(0.34)p
(0.36)p
Part III — Financial Information
BALANCE SHEET AS AT 30TH JUNE 2005
Unaudited Interim Results for the six months to 30th June 2005
As at
30/06/05
Unaudited
£
As at
30/06/04
Unaudited
£
As at
31/12/04
Audited
£
9,686
1,312
—
5,421
10,000
931
10,998
5,421
10,931
(9,498)
(3,545)
NET CURRENT ASSETS
1,500
1,876
9,938
TOTAL ASSETS LESS CURRENT
LIABILITIES
1,500
1,876
9,938
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: Amounts falling due within one
year
CAPITAL AND RESERVES
Called up share capital
Share premium account
Profit and loss account
1,650,000
7,136,165
(8,784,665)
1,500
NON EQUITY
Shares to be issued
SHAREHOLDERS’ FUNDS
50
1,602,816
7,136,165
(8,769,417)
(993)
1,635,128
7,136,165
(8,770,168)
(30,436)
1,125
—
32,312
8,813
1,500
1,876
9,938
Part III — Financial Information
CASH FLOW STATEMENT FOR THE SIX MONTHS TO 30TH JUNE 2005
Unaudited Interim Results for the six months to 30th June 2005
Six months
to 30/06/05
Unaudited
£
Net cash (outflow)/inflow from operating activities
(14,541)
Returns on investments and servicing of finance
Bank interest received
50
Net cash flow before financing
(14,491)
Financing
Issue of equity shares
Increase/(decrease) in cash in the period
51
Six months
to 30/06/04
Unaudited
£
1,771
51
1,822
14,872
—
381
1,822
Year to
31/12/04
Audited
£
(35,063)
83
(34,980)
32,312
(2,668)
Part III — Financial Information
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS TO 30TH JUNE 2005
1.
The interim financial statements for the six months ended 30th June 2005 are unaudited and were
approved by the directors on 8 July 2005. The financial information set out above does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985. The information given
as comparative figures for the year ended 31 December 2004 was extracted from the Company’s audited
statutory accounts for that financial year.
2.
ACCOUNTING POLICIES
The principal accounting policies of the Company have remained unchanged from those set out in the
Company’s 2004 accounts.
Certain of the Company’s leading shareholders have agreed to underpin the Company’s limited cash
requirements by the provision of essential support services. Accordingly, the financial statements have
been prepared on a going concern basis.
3.
RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW/(OUTFLOW) FROM
OPERATING ACTIVITIES
Six months
to 30/06/05
Unaudited
£
4.
Year to
31/12/04
Audited
£
Operating loss
Decrease in debtors
Decrease in creditors
(14,547)
314
(308)
(10,947)
16,259
(3,541)
(11,730)
6,259
(29,592)
Net cash (outflow)/inflow from operating activities
(14,541)
1,771
(35,063)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Opening net funds
Increase/(decrease) in cash in period
Closing net funds
5.
Six months
to 30/06/04
Unaudited
£
Six months
to 30/06/05
Unaudited
£
Six months
to 30/06/04
Unaudited
£
931
381
3,599
1,822
1,312
5,421
Year to
31/12/04
Audited
£
3,599
(2,668)
931
EARNINGS PER SHARE
The calculation of earnings per ordinary share is based on losses of £14,497 and on the weighted average
number of shares in issue during the period of 3,277,323 ordinary 0.5p shares. The diluted earnings per
share have been presented on the same basis as the basic earnings per share as the issue of all potential
ordinary shares would be anti-dilutive.
6.
Copies of the interim report are available to the public free of charge from the Company at 18 Pall Mall,
London SW1Y 5LU during normal office hours, Saturdays and Sundays excepted, for 14 days from
today.
52
Part III — Financial Information
C — Accountants’ Report on Lipoxen
For the purposes of Paragraph A of Schedule Two of the AIM Rules PKF (UK) LLP are responsible for this
report as part of the Admission Document and declare that we have taken reasonable care to ensure that
the information contained in this report is, to the best of our knowledge, in accordance with the fact and
contains no omissions likely to affect its import. This declaration is included in the Admission Document in
compliance with Schedule Two of the AIM Rules.
The Directors,
Greenchip Investments plc
18 Pall Mall
London
SW1Y SLU
and
Grant Thornton Corporate Finance
Grant Thornton House
Melton Street
London
NW1 2EP
23 December 2005
Dear Sirs
LIPOXEN TECHNOLOGIES LIMITED (‘‘LIPOXEN’’)
We report on the financial information of Lipoxen set out below. This financial information has been
prepared for inclusion in the Admission Document relating to the proposal acquisition of all the issued share
capital of Lipoxen by Greenchip and subsequent re-admission of the Enlarged Group to AIM dated
23 December 2005 (‘‘Admission Document’’).
Basis of preparation
The financial information set out below is based on the audited statutory financial statements of Lipoxen for
the periods ending 31 July 2002, 31 December 2002, 31 December 2003 and 31 December 2004, and has been
prepared on the basis set out in this report.
Responsibility
The directors of Lipoxen are responsible for preparing the financial information on the basis set out in the
basis of preparation note to the financial information below and in accordance with applicable United
Kingdom accounting standards.
The Directors and Proposed Directors of Greenchip Investments plc are responsible for the contents of the
Admission Document.
It is our responsibility to compile the financial information set out in our report from the financial
statements, to form an opinion on the financial information and to report our opinion to you.
PKF (UK) LLP (formerly PKF) of Farringdon Place, 20 Farringdon Road, London EC1M 3AP were the
auditors of the Company for each of the periods covered by this report.
Basis of opinion
We conducted our work in accordance with the Statements of Investment Circular Reporting Standards
issued by the Auditing Practices Board in the United Kingdom. Our work included an assessment of
evidence relevant to the amounts and disclosures in the financial information. The evidence included that
recorded by the auditors who audited the Company financial statements underlying the financial information.
It also included an assessment of significant estimates and judgements made by those responsible for the
preparation of the financial statements underlying the financial information and whether the accounting
policies are appropriate to the entity’s circumstances, consistently applied and adequately disclosed.
53
Part III — Financial Information
We planned and performed our work so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the
financial information is free from material misstatement whether caused by fraud or other irregularity or
error.
Opinion
The financial information has been prepared on a going concern basis. This assumes that the proposed
acquisition of Lipoxen is approved by Greenchip’s shareholders and that the proceeds of the Placing are
received by the Enlarged Group. Should this not be the case Lipoxen would be required to seek additional
funding and, were such funding not be available, it would be necessary to make adjustments to the financial
information to record additional liabilities and to write down assets to their recoverable amount. It is not
practical to quantify these possible adjustments.
In our opinion, the financial information set out below gives, for the purposes of the Admission Document,
a true and fair view of the state of affairs of Lipoxen as at 31 July 2002, 31 December 2002, 2003 and 2004
and of its respective losses, and recognised gains and losses for the periods then ended in accordance with
the basis of preparation set out below and in accordance with applicable United Kingdom accounting
standards.
Yours faithfully,
PKF (UK) LLP
54
Part III — Financial Information
Financial Information
Accounting policies
Basis of preparation
The financial statements have been prepared under the historical cost convention and in accordance with
applicable accounting standards (UK GAAP).
The financial statements for Lipoxen have been prepared on the going concern basis, though since the year
ended 31 July 2002 this has been on the basis that the majority shareholder, FDS Pharma Ass has continued
to provide financial support to the company.
Turnover
Turnover comprises fees receivable for research projects undertaken for third parties.
Intangible fixed assets
Intangible fixed assets acquired are capitalised at cost. Intangible assets (excluding development costs)
created within business are not capitalised and such expenditure is charged in the profit and loss account in
the year in which it is incurred. Intangible assets are amortised on a straight line basis over their estimated
useful lives up to a maximum of 20 years. The carrying value of intangible assets is reviewed for impairment
at the end of the first full year following acquisition and in other periods if events or changes in circumstances
indicate the carrying value may not be appropriate.
Tangible fixed assets and depreciation
Depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets on a
straight line basis over their estimated useful economic lives as follows:
Laboratory equipment
Plant and machinery
Computer equipment
4 years
4 years
4 years
Operating leases
Operating lease rentals are charged in the profit and loss account on a straight line basis over the lease term.
Research and development costs
Research and development costs are written off to the profit and loss account as incurred, except that
development expenditure which is incurred on an individual project is carried forward when its future
recoverability can be reasonably foreseen. Any expenditure carried forward is amortised in line with the
expected future sales from the project concerned.
Foreign exchange
Assets and liabilities denominated in foreign currencies are translated into sterling at the rate ruling as at the
balance sheet date. Transactions arising in the accounting period are translated at the exchange rate ruling
at the date on which that transaction occurred.
Deferred taxation
In accordance with FRS 19 full provision is made at current rates for taxation deferred in respect of all timing
differences. Deferred tax balances are not discounted. Deferred tax assets are only recognised where they
arise from timing differences where their recoverability in the short term is regarded as more likely than not.
Pensions
Lipoxen’s contributions to personal pension schemes in respect of employees are written off to the profit and
loss account each year as incurred.
55
Part III — Financial Information
Profit and loss accounts
For the four periods ended 31 December 2004
Notes
Turnover
Research and development costs
Administrative expenses
Operating loss
Profit on sale of fixed assets
Net interest receivable/(payable)
Loss on ordinary activities before
taxation
Taxation
(i)
(vi)
(v)
Loss for the period
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
1,000
(340,690)
(960,731)
890
(156,474)
(527,827)
13,005
(345,696)
(1,028,257)
42,511
(449,678)
(295,428)
(1,300,421)
—
2,007
(683,411)
—
(1,463)
(1,360,948)
—
149
(702,595)
250,000
2,308
(1,298,414)
—
(684,874)
161,843
(1,360,799)
96,927
(450,287)
47,402
(1,298,414)
(523,031)
(1,263,872)
(402,885)
All amounts relate to continuing operations.
There were no recognised gains or losses for the period other than those included in the profit and loss
account.
56
Part III — Financial Information
Balance sheets
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
(viii)
47,667
—
40,572
2
17,811
2
11,411
2
(ix)
116,122
139,127
206,091
107,105
209,016
80,026
199,749
111,900
255,249
313,196
289,042
311,649
(668,447)
(236,220)
(167,328)
(340,753)
Net current assets / (liabilities)
(413,198)
76,976
121,714
(29,104)
Total assets less current liabilities
Creditors: amounts falling due after
more than one year
(365,531)
117,550
139,527
(17,691)
—
—
Net assets / (Net liabilities)
(365,531)
117,550
139,527
Notes
Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling due within
one year
(x)
—
Capital and reserves
Called up share capital
Share premium account
Capital reserve
Profit and loss account
(xii)
(xiii)
(xiii)
(xiii)
151,550
2,189,960
—
(2,707,041)
Equity shareholders’ funds
(xiv)
(365,531)
304,712
2,699,722
343,188
(3,230,072)
117,550
304,712
2,699,722
1,629,037
(4,493,944)
139,527
—
(17,691)
304,712
2,699,722
1,874,704
(4,896,829)
(17,691)
Notes to the financial information
(i) Operating loss
Operating loss is stated after charging:
Depreciation of tangible fixed assets:
− owned by the company
Auditor’s remuneration:
audit fees
− non audit fees
Operating lease rentals
− land and buildings
Research and development costs
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
22,756
9,581
23,165
7,075
25,100
11,700
18,108
11,500
7,639
7,731
−
13,500
3,500
180,814
340,690
43,750
156,474
94,459
345,696
62,972
449,678
57
Part III — Financial Information
(ii) Directors’ emoluments
Directors’ emoluments
Compensation for loss of office
Contributions to money purchase
pension schemes
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
292,627
—
105,765
—
309,353
—
59,034
49,982
8,107
2,800
7,420
—
300,734
108,565
316,773
109,016
Two directors are accruing benefits under pension schemes. (31 December 2003, 2002: 2 and 31 July 2002:
3).
No directors were members of company pension schemes (31 December 2003, 2002 and 31 July 2002: Nil).
(iii)
Staff costs
Staff costs, including directors’ emoluments, were as follows:
Wages and salaries
Social security costs
Other pension costs
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
474,424
46,855
23,260
199,241
20,761
12,594
518,474
55,053
27,721
136,261
18,282
19,854
544,539
232,596
601,248
174,397
The average monthly number of persons, including executive directors, during the period was:
Year ended
31 July 2002
5 months to
31 Dec 2002
Year ended
31 Dec 2003
Year ended
31 Dec 2004
3
7
3
7
5
5
6
5
10
10
10
11
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
Office and management
Research
(iv)
Net interest receivable and similar income
Bank interest receivable
Bank and loan interest payable
(v)
a)
8,046
(6,039)
680
(2,143)
2,007
(1,463)
1,443
(1,294)
2,308
—
149
2,308
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
Taxation
Analysis of credit in period
Year ended
31 July 2002
£
UK corporation tax
Current tax on income of the period
Adjustments in respect of previous
periods
Total current note (note (b))
—
5 months to
31 Dec 2002
£
(37,401)
(96,774)
(47,014)
—
(124,442)
(153)
(388)
—
(161,843)
(96,927)
(47,402)
58
Part III — Financial Information
b)
Factors affecting tax charge for the period
The tax assessed for the period does not reflect a credit equivalent to the loss on ordinary activities
multiplied by the standard rate of corporation tax in the UK of 30 per cent. The differences are explained
below:
Loss on ordinary activities before tax
Loss on ordinary activities multiplied
by the standard rate of corporation
tax at 30 per cent.
Expenses not deductible for tax
purposes
Capital allowances in excess of
depreciation
Additional research and development
deduction
Surrender of tax losses for research
and development credit
Short term timing differences
Unrelieved tax losses arising in the
period
Over-provision of current tax
Adjustments in respect of previous
periods
Year ended
31 July 2002
£
5 months to
31 Dec 2002
£
Year ended
31 Dec 2003
£
Year ended
31 Dec 2004
£
(1,298,414)
(684,874)
(1,360,799)
(450,287)
(389,524)
(205,462)
(408,240)
(135,086)
11,611
161,436
(3,226)
(353)
(51,104)
71,545
2,218
276,714
124,442
(42,676)
—
(vi)
1,846
964
1,530
(1,854)
(23,471)
(60,485)
(29,384)
32,726
(2,277)
84,678
—
41,137
(1,449)
283,897
—
78,658
—
—
—
(124,442)
(153)
(388)
(161,843)
(96,927)
(47,402)
Intangible fixed assets
Product Rights
£
Cost
At 1 August 2002
Additions
Impairment
—
143,994
(143,994)
At 31 December 2002, 2003 and 2004
—
Amortisation
At 1 August 2002, 31 December 2002, 2003 and 2004
—
Net book values
At 1 August 2002, 31 December 2002, 2003 and 2004
—
Product rights were returned to FDS Pharma Ass on 10 June 2004 for proceeds of £250,000.
(vii)
Fixed asset investments
Lipoxen has established a wholly owned subsidiary, Lipoxen Pharma Ltd, a dormant company incorporated
in the United Kingdom in 2002. The cost of investment is £2.
59
Part III — Financial Information
(viii)
Tangible fixed assets
Computer
equipment
£
Fixtures and
fittings
£
Total
£
Cost
At 1 August 2001
Additions
6,516
2,766
64,097
16,507
70,613
19,273
At 31 July 2002
Additions
9,282
2,486
80,604
—
89,886
2,486
At 31 December 2002
Additions
11,768
404
80,604
—
92,372
404
At 31 December 2003
Additions
12,172
1,167
80,604
164
92,776
1,331
At 31 December 2004
13,339
80,768
94,107
Depreciation
At 1 August 2001
Charge for the period
3,439
2,604
16,024
20,152
19,463
22,756
At 31 July 2002
Charge for the period
6,043
1,185
36,176
8,396
42,219
9,581
At 31 December 2002
Charge for the period
7,228
3,014
44,572
20,151
51,800
23,165
At 31 December 2003
Charge for the period
10,242
1,014
64,723
6,717
74,965
7,731
At 31 December 2004
11,256
71,440
82,696
Net book values
At 31 July 2002
3,239
44,428
47,667
At 31 December 2002
4,540
36,032
40,572
At 31 December 2003
1,930
15,881
17,811
At 31 December 2004
2,083
9,328
11,411
(ix)
Debtors
Due within one year
Corporation tax
Other debtors
Prepayments and accrued income
Unpaid share capital
At 31 July 2002
£
At 31 Dec 2002
£
At 31 Dec 2003
£
At 31 Dec 2004
£
—
27,231
17,009
71,882
—
177,941
28,150
—
134,328
24,695
49,993
—
144,176
31,348
24,225
—
116,122
206,091
209,016
199,749
60
Part III — Financial Information
(x)
Creditors: amounts falling due within one year
Amounts falling due within one year
Convertible loan from parent
undertaking
Other convertible loan (see note (xi))
Bank loan and overdrafts
Trade creditors
Other tax and social security
Accruals and deferred income
Other loans
At 31 July 2002
£
At 31 Dec 2002
£
At 31 Dec 2003
£
At 31 Dec 2004
£
—
—
3,332
153,859
17,559
78,190
415,507
668,447
—
—
6,890
84,074
21,723
77,842
45,691
236,220
—
—
22,830
66,131
30,086
48,281
—
167,328
154,400
40,000
29
76,814
12,027
57,483
—
340,753
Other loans at 31 July 2002 and 31 December 2002 relate to an agreement between the Company and the
School of Pharmacy with an interest rate of 6 per cent.
(xi)
Convertible loans
The convertible loans from the parent undertaking, FDS Pharma Ass, include £54,400 which is repayable on
demand or convertible into ordinary shares of Lipoxen. Under the terms of the conversion rights FDS
Pharma Ass is by notice to Lipoxen, prior to demand for repayment being made, entitled to require Lipoxen
to allot to FDS Pharma Ass ordinary shares in Lipoxen to a value equal to the outstanding amount of the
loan. The share price is to be determined between the parties at the date of the conversion.
A further loan of £100,000 was advanced by FDS Pharma Ass under a separate agreement dated
29 December 2004. This loan is repayable on demand not earlier than the first anniversary of the date of
grant, unless it is converted to ordinary shares of Lipoxen. The loan is convertible into ordinary shares of
Lipoxen at a conversion price to be agreed between the parties. In the event of Lipoxen raising funds
through an institutional round of financing, the conversion price will be the post funding price of Lipoxen,
less 15 per cent. In any event the conversion price should not be more than 20p per share.
The other convertible loan was granted on 11 May 2004 and is repayable not earlier than the first anniversary
of the grant date, Lipoxen issuing new shares or generating income from licensing its technologies after the
date of the loan. The loan is convertible into ordinary shares of Lipoxen at a conversion price to be agreed
between the parties.
Subsequent to 31 December 2004 the above loans were converted into ordinary shares.
(xii)
Share capital
At 31 July 2002
(’000)
At 31 Dec 2002
(’000)
At 31 Dec 2003
(’000)
At 31 Dec 2004
(’000)
400
600
1,000
400
600
1,000
400
600
1,000
400
600
1,000
40,000
60,000
100,000
40,000
60,000
100,000
40,000
60,000
100,000
40,000
60,000
100,000
152
—
152
152
153
305
152
153
305
152
153
305
1p Ordinary shares – number
15,155
15,155
15,155
15,155
1p ‘‘A’’ Ordinary shares − number
—
15,155
15,316
30,471
15,316
30,471
15,316
30,471
Authorised
1p Ordinary shares – amount (£)
1p ‘‘A’’ Ordinary shares – amount (£)
1p Ordinary shares – number
1p ‘‘A’’ Ordinary shares − number
Allotted, called up and fully paid
1p Ordinary shares – amount (£)
1p ‘‘A’’ Ordinary shares – amount (£)
61
Part III — Financial Information
During the year ended 31 July 2002 authorised share capital was increased from £100,000 to £1,000,000. The
Company issued 439 1p ordinary shares for a total cash consideration of £566 per share. In addition there
was a 999 for 1 bonus issue.
During the five months ended 31 December 2002, FDS Pharma Ass was granted 15,316,234 shares in
Lipoxen pursuant to a sale and purchase agreement. The consideration for the share issues was as follows:
916,837 1p ‘‘A’’ ordinary shares issued as consideration for the conversion of a £518,930 loan; and 14,399,397
1p ‘‘A’’ ordinary shares were issued in return for the rights and ownership of five pharmaceutical products.
The ordinary shares and the ‘‘A’’ ordinary shares shall rank equally for voting, any dividend declared by
Lipoxen and in the event of winding up or any other return of capital. Immediately prior to listing, all of the
‘‘A’’ ordinary shares will convert into the same number of ordinary fully paid shares. Upon occurrence of any
funding default, the ‘‘A’’ ordinary shares will convert to deferred shares. The directors have authority to
attach rights to the unclassified shares as they see fit.
Subsequent to 31 December 2004 the ‘‘A’’ ordinary shares were converted into ordinary shares.
At 31 December 2004 there were 1,356,000 share options exercisable at 1p, 36,000 share options exercisable
at 30p and 260,328 share options exercisable at 56.6p. All options are exercisable within 10 years from grant
date, which for the majority of options was July 2002.
In addition, director Scott Maguire holds a right entitling him to options over up to 6 per cent. of the fully
diluted share capital of Lipoxen as a success fee should the Company enter into certain revenue producing
transactions. This right will be superceded under the terms of Scott Maguire’s new service agreement as set
out in Part V of the document.
(xiii)
Reserves
£
Share premium account
At 1 August 2001
Premium on shares issued during the period
Bonus issue during the year
2,092,901
248,458
(151,399)
At 31 July 2002
Premium on shares issued during the period
2,189,960
509,762
At 31 December 2002, 2003 and 2004
2,699,722
Capital reserves
At 1 August 2001 and 31 July 2002
Capital contribution
—
343,188
At 31 December 2002
Capital contribution
343,188
1,285,849
At 31 December 2003
Capital contribution
1,629,037
245,667
At 31 December 2004
1,874,704
Profit and loss account
At 1 August 2001
Loss for the year
(1,408,627)
(1,298,414)
At 31 July 2002
Loss for the period
(2,707,041)
(523,031)
At 31 December 2002
Loss for the year
(3,230,072)
(1,263,872)
At 31 December 2003
Loss for the year
(4,493,944)
(402,885)
At 31 December 2004
(4,896,829)
62
Part III — Financial Information
(xiv)
Shareholders’ funds
At 31 July 2002
(£’000)
Opening shareholders’ funds
Loss for the period
Issue of shares
Increase in share premium account
Capital contribution
Closing shareholders’ funds
(xv)
684
(1,298)
248
—
—
(366)
At 31 Dec 2002
(£’000)
(366)
(523)
153
510
343
117
At 31 Dec 2003
(£’000)
At 31 Dec 2004
(£’000)
117
(1,264)
—
—
1,286
139
(403)
—
—
246
139
(18)
Other commitments
Lipoxen has annual commitments under operating leases in relation to land and buildings as follows:
Expiry date:
Within one year
(xvi)
At 31 July 2002
£
At 31 Dec 2002
£
At 31 Dec 2003
£
At 31 Dec 2004
£
106,833
28,083
13,875
15,520
Transactions with related parties
FDS Pharma Ass is the ultimate controlling party and at 31 December 2004 retained an interest of 50.02 per
cent. of the issued ordinary share capital of Lipoxen.
During the year ended 31 December 2004, in accordance with an agreement in October 2003 Lipoxen
received £250,000 from FDS Pharma Ass in respect of the return of product rights to FDS Pharma Ass.
Lipoxen also received funding from FDS Pharma Ass totalling £245,667 during the period (31 July 2002: Nil,
December 2002: £343,188 and 31 December 2003: £1,285,849). As at 31 December 2004, FDS Pharma was
due £154,400 from the Company in the form of convertible loans (31 July 2002, 31 December 2002 and 2003:
Nil).
During the year ended 31 December 2004 an amount of £25,000 was paid to Professor Gregoriadis, a director
of Lipoxen, for consultancy services provided to Lipoxen (31 December 2003: £84,000). At 31 December 2004
no balance is due to Professor Gregoriadis and no amounts were written off during the year (31 December
2003: Nil).
(xvii)
Controlling party
At 31 December 2004 the ultimate and immediate controlling party of the Company is FDS Pharma Ass, a
limited partnership registered in England and Wales.
(xviii)
Subsequent events
Subsequent to the year end the company has received a loan from FDS Pharma Ass of £150,000. This loan
is repayable on demand not earlier than 29 December 2005, unless it is converted into ordinary shares in
Lipoxen. The loan is convertible into ordinary shares at a conversion price to be agreed between the parties.
In the event of the company raising funds through an institutional round of financing, the conversion price
will be the post funding price of the company, less 15 per cent. In any event the conversion price shall not
be more than 20p per share.
Lipoxen has also received a loan of £200,000 from another party. This loan is repayable on demand not
earlier than 1 March 2006, unless it is converted into shares in the company. The loan is convertible into
ordinary shares at a conversion price to be agreed between the parties. In the event of the company raising
funds through an institutional round of financing, the conversion price will be the post funding price of the
company, less 15 per cent. In any event the conversion price shall be not more than 20 p per share.
On 10 October 2005 Lipoxen entered into an agreement with FDS Pharma Ass to allot to FDS Pharma Ass
a maximum of 22,500,000 ordinary shares of Lipoxen as fully paid shares, as consideration for FDS Pharma
Ass providing manufacturing and clinical development services to Lipoxen. The shares will be allotted based
on the attainment of a number of milestones set out in the agreement, with 15,000,000 being allotted on the
date of commencement of the agreement. Lipoxen shall also pay FDS Pharma Ass a royalty equal to
10 per cent. of any cash milestone received by Lipoxen from licensee payments triggered by the completion
of clinical trials and or appropriate marketing approval for the relevant products.
63
Part III — Financial Information
On 30 September 2005 convertible loans of £240,000 from Hexagon were converted into 1 pence ordinary
shares in Lipoxen at a conversion rate of 20 pence per share.
On 13 October 2005 convertible loans of £434,400 from FDS Pharma Ass were converted into 1 pence
ordinary shares in Lipoxen at a conversion rate of 20 pence per share.
64
Part III — Financial Information
D — Unaudited Interim Financial Information on
Lipoxen Technologies Limited for the Six Months
Ended 30 June 2005
Set out below is unaudited interim financial information for Lipoxen for the six months ended 30 June 2005.
The financial information is the responsibility of the directors of the Lipoxen and was approved by the board
of Lipoxen on 13 October 2005.
UNAUDITED INTERIM FINANCIAL INFORMATION
PROFIT AND LOSS ACCOUNT
(Unaudited)
6 months
ended
30 June 2005
£
(Unaudited)
6 months
ended
30 June 2004
£
Turnover
Research and development costs
Administrative expenses
77,557
(323,662)
(245,592)
32,072
(206,892)
(187,310)
Operating loss
Exceptional items:
Profit on the disposal of fixed assets
(491,697)
(362,130)
—
250,000
Interest receivable and similar income
(491,697)
1,496
(112,130)
781
Loss on ordinary activities before taxation
Tax on loss on ordinary activities
(490,201)
30,943
(111,349)
23,713
Loss for the financial period
(459,258)
(87,636)
All amounts reflected above relate to continuing operations.
There were no gains or losses arising during the period, other than those reflected above.
65
Part III — Financial Information
UNAUDITED INTERIM FINANCIAL INFORMATION
BALANCE SHEET
(Unaudited)
As at
30 June 2005
£
(Audited)
As at
31 December 2004
£
11,247
—
11,411
2
11,247
11,413
196,749
35,336
199,749
111,900
232,085
311,649
Creditors
Amounts falling due within one year (includes convertible debt
of £544,400; 2004: £194,400)
(720,281)
(340,753)
Net current liabilities
(488,196)
(29,104)
Total assets less current liabilities
(476,949)
(17,691)
Fixed assets
Net current liabilities
11,247
(488,196)
11,413
(29,104)
Net assets
(476,949)
(17,691)
304,712
2,699,722
1,874,704
(5,356,087)
304,712
2,699,722
1,874,704
(4,896,829)
(476,949)
(17,691)
Fixed Assets
Tangible Assets
Investments
Currents assets
Debtors and prepayments
Cash at bank and short term deposits
Capital and reserves
Called up share capital
Share premium account
Capital reserve
Profit and loss account
Equity shareholders’ funds
66
Part III — Financial Information
NOTES TO THE INTERIM FINANCIAL INFORMATION FOR THE 6 MONTHS ENDED
30 JUNE 2005
Basis of preparation
The interim financial information has been prepared under the historical cost convention and in accordance
with applicable accounting standards.
The interim financial information shows that Lipoxen incurred a loss of £459,258 for the six month period.
Since 30 June 2005 the majority shareholder, FDS Pharma Ass (‘‘FDS’’) has continued to provide financial
support to the Lipoxen but additional finance is required to enable it to continue to trade and to
commercially exploit its intellectual property to generate positive cash flow.
The Directors are currently seeking alternative sources of finance through the acquisition of Lipoxen by
Greenchip in conjunction with an equity fundraising of £3.5 million and admission to trading on AIM.
The interim financial information has been prepared on a going concern basis which assumes that the
proposed acquisition of the Lipoxen is approved by Greenchip’s shareholders and that the proceeds of the
placing are received by the Enlarged Group.
Should this not be the case Lipoxen would be required to seek additional funding and, were such funding
not to be available, it would be necessary to make adjustments to the financial information to record
additional liabilities and to write down assets to their recoverable amount. It is not practical to quantify these
possible adjustments.
The interim financial information has been prepared on a basis consistent with the accounting policies
applied to the financial statements for the year ended 31 December 2004. They do not constitute statutory
accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the year ended
31 December 2004, on which the report of the auditors was unqualified and did not contain a statement
under section 237 of the Companies Act 1985, have been filed with the Registrar of Companies.
Post balance sheet events
On 10 October 2005 Lipoxen entered into an agreement with FDS to allot to FDS Pharma Ass a maximum
of 22,500,000 ordinary shares of Lipoxen as fully paid shares, as consideration for FDS Pharma Ass providing
manufacturing and clinical development services to Lipoxen. The shares will be allotted based on the
attainment of a number of milestones set out in the agreement, with 15,000,000 being allotted on the date
of commencement of the agreement. Lipoxen shall also pay FDS Pharma Ass a royalty equal to 10 per cent.
of any cash milestone received by Lipoxen from licensee payments triggered by the completion of clinical
trials and or appropriate marketing approval for the relevant products.
On 30 September 2005 convertible loans of £240,000 from Hexagon were converted into 1 pence ordinary
shares at a conversion rate of 20 pence per share.
On 14 September 2005 FDS Pharma Ass served notice that their convertible loans of £494,400 be converted
into 1 pence ordinary shares at a conversion rate of 20 pence per share.
67
Part IV — Intellectual Property Report
The Directors
Greenchip Investments plc
22 Melton Street
London
NW1 2BW
Grant Thornton Corporate Finance
Grant Thornton House
Melton Street
London
NW1 2EP
14 December 2005
Dear Sirs
Gill Jennings & Every is a partnership of Chartered Patent Agents, European Patent Attorneys and
European Trade Mark Attorneys based in London, with sub offices in Cambridge, Munich and Alicante. The
firm advises on all aspects of intellectual property including obtaining and enforcing patents and trade marks
and has a wide variety of clients, British and overseas, over an extensive range of technologies. Gill Jennings
& Every has acted as the patent attorneys for Lipoxen Technologies Limited (‘‘Lipoxen’’) since its inception.
Gill Jennings & Every has been instructed by Grant Thornton Corporate Finance and the Directors of
Greenchip Investments plc (‘‘Greenchip’’) to report on Lipoxen’s patent strategy and its portfolio of patent
applications and have been asked to comment on any third party rights which could inhibit the Enlarged
Group’s freedom to operate in commercialisation of the inventions following the reverse takeover of
Lipoxen by Greenchip. We have also been instructed to report on the trade mark strategy of Lipoxen.
For the purposes of Schedule 2 of the AIM Rules we are responsible for this report as part of Greenchip’s
admission document and we confirm that we have taken all reasonable care to ensure that the information
contained in this report is, to the best of our knowledge, in accordance with the facts and contains no
omission likely to affect its import.
Introduction
We have been responsible since Lipoxen was established for filing and maintenance of the patent property
assigned to it and invented by its employees and consultants. We instruct local attorneys authorised to
represent the Company before foreign patent offices, in USA, Canada, Japan, Korea, China and Australia.
We act as representatives for Lipoxen before the European Patent Office. We have in our files therefore
copies of all correspondence between the patent offices and the respective representatives for all the pending
applications. We have discussed the cases with Professor Gregoriadis in preparing this report.
We have also been responsible for Lipoxen’s trade mark advice since Lipoxen was established, and for filing
applications to register its trade marks and carry out searches on the availability of its proposed marks for
use.
Patent Strategy
Lipoxen’s business is based on technology originally developed by Professor Gregory Gregoriadis of the
School of Pharmacy, University of London. Two families of patent applications were assigned from the
School of Pharmacy to Lipoxen after its incorporation. Further inventions have since been made by
Professor Gregoriadis as development of the ideas covered by the two original School of Pharmacy patent
families. Under the terms of a consultancy agreement with the School of Pharmacy these inventions have
belonged to Lipoxen. Other inventions have been made by employees of and a consultant to Lipoxen and
employees of the School of Pharmacy, under the terms of agreements which establish proprietorship of the
inventions in Lipoxen. Patent applications have been filed on new developments which have reached an
appropriate stage of development.
The value of the intellectual property and the importance of achieving good patent protection for its
inventions have been appreciated by Lipoxen. The scope of claims which are being pursued in the
applications currently undergoing examination is as broad as the prior art allows. The geographical extent
of the earliest two families is, in our view, broad enough to protect Lipoxen’s interests. The more recent
applications are at an early stage of their life, but for those which have been searched, we believe that there
is a good prospect of achieving grant of claims which will protect Lipoxen’s interests in due course. The
geographical extent of some filings has been more limited, in order to reduce the patent costs. The claims
should protect Lipoxen’s interests however as the major manufacturing areas of USA and Europe are
68
Part IV — Intellectual Property Report
covered. For Inventions number 8 onwards the applications could still be extended to any of the Patent
Co-operation Treaty (‘‘PCT’’) countries and no final decisions have been made with regard to the final
geographical extent which is required.
The filing strategy adopted by the School of Pharmacy and by Lipoxen has involved the filing of a first
application in the European Patent Office (‘‘EPO’’), followed by an international application filed under the
PCT system. The European application is searched by the EPO within the first year after filing. The EPO’s
search is generally considered to be authoritative, so that a considered view may be taken of the patentability
of the invention after receipt of that search report (that is before the PCT filing).
The PCT system allows a single application to be filed designating any or all of more than one hundred
contracting states including Europe, USA, Canada, Japan, Korea, China, India, Russia and Australia. The
PCT application is searched by the EPO. The EPO may further conduct a preliminary examination of the
patentability of the claims, that is whether the claims are novel, involve an inventive step and are industrially
applicable.
Thirty months from the first EPO filing, the International Phase of the PCT application is concluded. By this
date, national applications must be lodged in countries where patent protection is ultimately required. In
Europe, a regional system exists for granting patents in any or all of the contracting states to the European
Patent Convention (‘‘EPC’’), administered by the EPO. At present the contracting states include all
European Union states, Switzerland and Liechtenstein, Turkey, and some Eastern European countries.
After grant the patents in each country generally stand alone in that they must be enforced or attacked in
individual countries. Lipoxen has pursued patent applications in USA, EPO, Canada, Japan and Korea for
the two basic applications which have proceeded into the national phase on the PolyXen and ImuXen
technologies. For more recent filings the national phase applications have been pursued in a restricted list
of countries primarily US and EP only. For the most recent filings no final decisions have been made on the
geographical coverage required.
Where patent applications are pursued using the PCT route as described above, it may be expected that a
European patent will be granted six to eight years from the first priority date, and US patents to be granted
four to eight years from the first priority date, in each case, depending upon the stringency of the patent
examiner’s objections. In Japan it has, until a very recent change in the law, been possible to delay
substantive examination for up to seven years from the PCT filing date. Grant in Japan is expected within
two to five years of a request for examination being filed. A similar, delayed examination, system, applies in
Canada, and in Korea. In Australia grant is likely to take place within two to four years from the PCT filing
date. In China, grant is likely to take place five to seven years from the PCT filing date.
In Europe, patents may be opposed by third parties after grant. Challenges to validity may also be mounted
during infringement proceedings.
For all of the cases in this portfolio, the maximum term of protection for each country will expire twenty
years from the PCT filing date. In Europe, USA and Japan, at least, it may be possible to extend the term
of protection, where the normal period has been limited by delays in obtaining market authorisation for
products covered by the claims. If and when any market authorisations are granted on products covered by
the claims of patents granted on Lipoxen’s patents, whether the authorisation is granted to Lipoxen or to a
third party, it may be possible to extend the period of protection for the authorised product(s).
The patenting strategy of Lipoxen seems to us to be generally satisfactory. However there can be no
assurance that future patent applications will be successfully filed, that any filed applications will mature into
granted patents, or that existing patents, or patents which may be obtained in the future, will adequately
protect Lipoxen’s products and technology. Since the publication of patents documents, and even
publications in scientific literature, lag behind actual discoveries, Lipoxen cannot be certain that it was the
first to make the inventions covered by the pending applications, or that it was first to file applications for
such inventions. Lipoxen cannot be certain that the granted patents will be enforceable. However we see no
grounds for suspecting that the patents or applications may fail through prior art or prior inventions being
uncovered in the future. Nor do we see any grounds for any of the patents or future patents being
unenforceable for any other reasons.
There can be no assurance that the patent or future patents will not become involved in opposition or
revocation proceedings instituted by third parties. If such proceedings were initiated challenging Lipoxen’s
rights, the defence of such rights could involve substantial costs. The outcome could not be predicted with
certainty.
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Part IV — Intellectual Property Report
Patent Portfolio
The various inventive concepts that are the subject of filed applications and granted patents at present in
force and owned by Lipoxen are listed below. The list is up to date as of 14 December 2005.
In the schedules, we have indicated which applications are pending and granted. Where we have indicated
an expected grant date, this is our best estimate of when grant is likely, based on the current stage of
prosecution. Grant may, however, be later. Projected expiry dates for pending applications have been
included and are based on an assumption that all cases will have a term of twenty years from the PCT filing
date. Maintenance of the patent rights depends upon payment of regular fees. The expiry dates do not take
into account any future patent term extensions which may be granted.
Lipoxen has agreements with several third parties which include the grant of licences to use Lipoxen’s patent
rights in some fields and some territories, we do not have a complete record of such licences. We recommend
that Lipoxen ensures it manages the grant and maintenance of such licences and complies with any
obligations concerning maintenance of its patent rights so that no breaches occur and no conflicting rights
are granted to third parties.
Invention 1 – Pharmaceutical Compositions
Countries
Filing Date
Grant Date
EP (AT, DE, ES,
FR, GB, IT, LU)
08.06.1992
16.08.2001
US
01.05.1995
08.12.1998
08.06.1992
22.04.2005
JP
KR
08.06.1992
18.09.2002
CA
08.06.1992
18.11.2003
08.06.1992
JP
Application No.
Publication No(s)
Grant No.
92911095.5
WO-A-9222331
EP-A-0587639
EP-B-0587639
08/431474
5846951
510527/92
WO-A-9222331
3671054
93-703716
WO-A-9222331
KR-A-94701274
0354944
2109952
WO-A-9222331
2005-42054
Status
Expiry Date
(Prospective)
Granted
08.06.2012
Granted
08.12.2015
Granted
08.06.2012
Granted
08.06.2012
Granted
08.06.2012
Pending
(08.06.2012)
Inventor: G. Gregoriadis
Applicant/Assignee: Lipoxen Technologies Limited (Assigned from the School of Pharmacy, University of
London)
This invention relates to the polysialylation of therapeutically active compounds or drug delivery systems.
The claims will cover polysialylated liposomes, as well as polysialylated proteins.
The claims granted in all countries provide protection for the PolyXen technology. The claims should
prevent unauthorised use of polysialylation processes, whatever chemistry is used, and of the products
thereof with improved stability, longer circulation times and/or reduced immunogenicity. In particular the
polysialic-EPO, polysialic GCSF, polysialic interferon-alpha and polysialic insulin products should be
covered so that Lipoxen will have control over third parties’ use of those compounds. The patents also cover
the proteins being developed in collaboration with Baxter and the other polysialic proteins being developed
in collaboration with The Serum Institute and polysialylated leptin, polysialylated Apo2L and polysialylatedgalactosidase.
Although appeals in Japan and South Korea had to be pursued against rejections by the examiners, both
patents were granted. In Japan the claims were limited because of strict requirements for support on the
polysialylated protein area and to allow the more important claims to issue. We believe there is a reasonable
prospect that the examiner’s objections can be overcome and have pursued a divisional application in Japan
to optimise protection for protein-polysialic acid conjugates.
The US and European patents are both granted.
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Part IV — Intellectual Property Report
The Assignment from the School of Pharmacy, the original applicant in respect of all the applications in this
family, has been registered in all jurisdictions. It is irrevocable.
Invention 2 – Liposomes
Countries
Filing Date
Grant Date
Application No.
Publication No(s)
Status
Expiry Date
(Prospective)
EP (AT, BE, CH/LI,
DE, DK, ES, FI, FR,
GB, GR, IE, IT, NL,
SE)
EP
JP
15.09.1997
04.12.2002
97940250.0
WO-A-9810748
EP-A-0938298
Granted
15.09.2017
15.09.1997
15.09.1997
Pending
Pending
(15.09.2017)
(15.09.2017)
KR
15.09.1997
Allowed
(15.09.2017)
CA
15.09.1997
Pending
(15.09.2017)
CN
15.09.1997
18.02.2004
Granted
15.09.2017
AU
15.09.1997
26.04.2001
Granted
15.09.2017
US
15.09.1997
02016936.3
10-513398
WO-A-9810748
99-7002103
WO-A-9810748
2271388
WO-A-9810748
97199674.1
WO-A-9810748
CN-A-1237102
144022
42154/97
WO-A-9810748
728581
10/617734
Pending
(15.09.2017)
Inventor: G. Gregoriadis
Applicant/Assignee: Lipoxen Technologies Limited (assigned from the School of Pharmacy, University of
London)
This invention is directed to liposomes in which gene vaccines are encapsulated in the intravesicular space.
The liposomes are generally made by the dehydration-rehydration technique, to ensure proper entrapment
and protection of the gene vaccine. The lipid from which the liposome is formed preferably includes cationic
lipid. Some patents have already been granted restricted to use of the dehydrate/rehydration process
pioneered by Prof. Gregoriadis. In Europe a divisional application has been filed to protect Lipoxen’s
interests and cover the products of other methods which may produce products with the same results.
The prior art against which patentability is to be judged for this application at first sight appears to be close.
The patents have now been granted in several countries with process limitations, defining the dehydration/
rehydration process of liposome loading. We believe that there is a broader concept which should be
patentable over the art which does not require those process steps as essential. Upon the detailed analysis
of the prior art disclosures by Professor Gregoriadis, and following further work to provide a direct
side-by-side comparison between the different production techniques disclosed in the prior art as compared
to the invention, it is apparent that there is a significant difference between the products of the prior art and
those of the invention. We believe that it will be possible to persuade the examiners that such claims are
adequately distinguished in terms of essential features, and that patents will be granted for instance in the
European divisional application.
The US application is currently under examination and the US examiner has taken a very negative view and
has rejected the application. An appeal may be pursued if the examiner continues to reject the application.
At present an examination report from the examiner is awaited.
Although the ImuXen technology has developed since this application was filed, towards coentrapment of
gene vaccine and peptide/protein antigen, the series of patents and applications provides protection for the
ImuXen vaccine against hepatitis B and the HIV vaccine, both under development with The Serum Institute.
The Assignment from the School of Pharmacy, the original applicant in respect of all the applications in this
family, has now been registered in each of the patent offices. It is irrevocable.
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Part IV — Intellectual Property Report
Invention 3 – Oral Vaccines
Countries
EP (AT, BE, CH,
CY, DE, DK, ES, FI,
FR, GB, GR, IE, IT,
LU, MC, NL, PT,
SE)
US
CA
CN
JP
KR
Filing Date
Grant Date
Application No.
Publication No.
Status
Expiry Date
(Prospective)
02.10.2000
00964471.7
WO-A-0124773
EP-B-1217989
Granted
(02.10.2020)
02.10.2000
02.10.2000
02.10.2000
13.04.2005
02.10.2000
02.10.2000
10/089312
2386024
00813476.6
Pending
Pending
Granted
(02.10.2020)
(02.10.2020)
02.10.2020
2001-527772
2002-7003922
Pending
Pending
(02.10.2020)
(02.10.2020)
Inventors: G. Gregoriadis, Y. Perrie
Applicant: Lipoxen Technologies Limited
This application is directed to orally administered liposomal gene vaccine compositions in which the
liposome mixture comprises at least one cationic compound based on a di-hydrophobically substituted
moiety and a phosphatidylcholine compound, the lipids selected so as to provide liposomes able to deliver
their contents after oral delivery. The claims have been limited since filing but still provide protection for
liposomes optimised for oral delivery.
At present there are no products under active development which are covered by this case, but since oral
delivery of vaccines is highly desirable it is believed by Lipoxen to be of value in the longer term.
This invention was a development of invention 2. Professor Gregoriadis had a consultancy agreement with
the School of Pharmacy, which provided that, as between him and the School, he owned the rights in such
inventions. The right to be granted a patent of such inventions belonged to Lipoxen by virtue of its
employment of Professor Gregoriadis and/or his special responsibility to Lipoxen. Dr Perrie was an
employee and thus rights to her inventions belong to Lipoxen as employer. The School of Pharmacy has
executed a general assignment (which is irrevocable) also of any residual rights created by Professor
Gregoriadis during the period when this invention was made. We believe Lipoxen is properly entitled to this
invention and the patents.
Invention 4 – Liposomes
Countries
Filing Date
Grant Date
Application No.
Publication No.
EP (BE, FR, DE, IT,
CH, GB)
12.12.2000
01.09.2004
US
12.12.2000
00981480.7
WO-A-0141739
EP-B-1237541
10/149670
Status
Expiry Date
(Prospective)
Granted
12.12.2020
Pending
(12.12.2020)
Inventor: G. Gregoriadis
Applicant: Lipoxen Technologies Limited
This invention relates to co-encapsulation of therapeutic polyanionic compounds, usually nucleic acids, and
calcium phosphate into liposomes. The presence of calcium phosphate improves the entrapment ratios of the
polyanionic compounds.
The European patent is granted and no opposition was filed in the opposition period. The US application
is pending and we believe that good protection should be granted although the claims may be somewhat
narrower than in Europe.
This case will cover the process used to make the siRNA under development with Galenea.
Lipoxen is entitled to be granted patents by virtue of the fact that this invention is a development of
Invention 2, for similar reasoning as for Invention 3 in respect of Professor Gregoriadis’ contribution.
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Part IV — Intellectual Property Report
Invention 5 – Liposomes
Countries
Filing Date
EP (AT, BE, CH,
CY, DE, DK, ES,
FR, FI, GR, GB, IE,
IT, LU, MC, NL, PT,
SE, TR)
JP
US
31.01.2001
31.01.2001
31.01.2001
Application No.
Publication No.
Status
Expiry Date
prospective
01948934.3
WO-A-0156548
EP-A-1259225
Pending
(31.01.2021)
2001-556240
10/182921
Pending
Allowed
(31.01.2021)
(31.01.2021)
Inventor: B. Zadi
Applicant: Lipoxen Technologies Limited
This invention is directed to processes for improving the encapsulation of hydrophobic compounds into
liposomes by forming them in a process involving a dehydration step carried out in the presence of dissolved
sugar.
The European application is pending. A report from the examiner is awaited and we are optimistic that this
will be the allowance. The US application is allowed. We believe the claims are patentable over the closest
prior art, which is probably the earlier patent filing by Professor Gregoriadis, Dr Zadi, et al. WO-9965465
which is licensed to Lipoxen, see below.
The EPO has not searched the application. On the basis of the report and prior art found by Professor
Gregoriadis we believe that it will be possible to define patentable claims which adequately protect Lipoxen’s
interests. The claims should cover the liposomal paclitaxel, cisplatin and carboplatin compositions under
development.
The invention belongs to Lipoxen by virtue of the fact is was made by Dr Zadi under the terms of a
consultancy agreement by which he agreed to assign inventions to Lipoxen Limited (the former name of the
company Lipoxen Technologies Limited). An irrevocable confirmatory assignment was executed by Dr Zadi
and Lipoxen Limited and we believe the proprietorship is properly vested in Lipoxen.
Invention 6 – Derivatisation of Proteins
Countries
Filing Date
EP (AT, BE, CH,
CY, DE, DK, ES,
FR, FI, GR, GB, IE,
IT, LU, MC, NL, PT,
SE, TR)
JP
US
15.05.2001
14.05.2001
14.05.2001
Application No.
Publication No.
Status
Expiry Date
prospective
01931843.5
WO-A-0187922
EP-A-1335931
Allowed
(14.05.2021)
2001-585141
10/276552
6962972
Pending
Granted
(14.05.2021)
14.05.2021
Inventor: G. Gregoriadis
Applicant: Lipoxen Technologies Limited
This invention relates to a development of the polysialylation process for use with proteins, by which the
level of derivatisation is increased. Derivatisation is carried out in the presence of a denaturant, usually
sodium dodecyl sulphate.
The claims of the application as originally filed extended to processes using reagents other than polysialic
acid for protein derivatisation. They have been limited to avoid prior art but still cover polysialylation
processes and thus protect Lipoxen’s interests. It may prove desirable to use this technology for the various
polysialylated proteins being developed, such as EPO, GCSF, leptin, Apo-2L, interferon -2b, insulin and the
Baxter proteins.
The invention belongs to Lipoxen by virtue of the same facts as invention 3 above.
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Part IV — Intellectual Property Report
Invention 7 – Co-delivery Compositions
Countries
Filing Date
EP (AT, BE, CH,
DE, DK, ES, FR,
GB, GR, IE, IT, LU,
MC, NL, PT, SE)
US
CN
IN
JP
RU
07.07.2003
07.07.2003
07.07.2003
07.07.2003
07.07.2003
07.07.2003
Application No.
Publication No.
Status
Expiry Date
prospective
03738331.2
WO-A-04004758
EP-A-1519745
Pending
(07.07.2023)
10/520169
03815952.X
376/DELNP/2005
2004-518995
2004137791
Pending
Pending
Pending
Pending
Pending
(07.07.2023)
(07.07.2023)
(07.07.2023)
(07.07.2023)
(07.07.2023)
Inventors: A. D. Bacon; P. Laing; G. Gregoriadis; W. R. Caparros-Wanderley
Applicant: Lipoxen Technologies Limited
This invention relates to the coentrapment of a gene vaccine and peptide antigen into liposomes. It should
cover the combination vaccines being developed on the ImuXen platform. The claims have been searched
and the examination is ongoing before the EPO. Although the examiner has some outstanding objections we
believe it will be possible to overcome the objections and maintain protection for valuable subject matter,
for instance covering the hepatitis B vaccine being developed by Lipoxen.
The inventors were employees of Lipoxen when the invention was made so that the invention belongs to
Lipoxen.
Invention 8 – Sialic acid derivatives for protein derivatisation and conjugation
Countries
Filing Date
PCT (all)
12.08.2004
Application No.
Publication No.
PCT/GB04/03511
WO2005/016974
Status
Expiry Date
(prospective)
Pending
(12.08.2024)
Inventors: S. Jain; D.H. Hreczuk-Hirst; P. Laing; G. Gregoriadis; I. Papaioannou
Applicant:Lipoxen Technologies Limited
This invention relates to polysialic acid compounds which provide improved uniformity when used to
derivatise other compounds. In the original applications (inventions 1 and 6) relating to polysialylation the
processes would result in derivatisation at one terminal of the polymer chain, but there would inevitably be
a certain level of reaction through the other end of the chain leading to a mixture of products. This invention
passivates one terminal and then subjects the other terminal to an activation step. The novel compounds and
methods in which they are used to derivatise proteins as well as the derivatised products are claimed.
The PCT (International) application has been searched and the claims were amended to ensure they are
patentable over the prior art cited. A preliminary report on patentability has now been issued reaching a
positive view on the patentability of all the claims. The claims will protect Lipoxen’s interests in this
invention.
This technology is likely to be used in all the developments of the PolyXen platform.
Apart from Papaioannou, the inventors are employees of Lipoxen or of the School of Pharmacy. The School
of Pharmacy has irrevocably assigned its rights to Lipoxen. Papaioannou assigned his rights irrevocably to
Lipoxen. We believe Lipoxen has good title.
Invention 9 – Sialic acid derivatives for protein derivatisation and conjugation
Countries
Filing Date
PCT – (all)
12.08.2004
Application No.
Publication No.
PCT/GB04/03488
WO2005/016973
Status
Expiry Date
prospective
Pending
(12.08.2024)
Inventors: D H Hreczuk-Hirst; S. Jain; P. Laing; G. Gregoriadis; I. Papaioannou
Applicant: Lipoxen Technologies Limited
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Part IV — Intellectual Property Report
This invention relates to polysialic acid derivatives with functionalities allowing site-specific derivatisation,
eg at cysteine residues of proteins. The functionality may be a maleimido group but other groups which
specifically react at thiol groups are also protected. This technology may be used in any of the PolyXen
products, if it proves desirable to provide this control over the site of derivatisation.
The International application has been searched by the EPO and amendments have been made recently to
ensure the claims are patentable over the prior art cited. We are confident that claims of value will be held
to be patentable by the examiner and that valuable patent protection can be achieved.
Apart from Papaioannou, the inventors are employees of Lipoxen or of the School of Pharmacy and the
School of Pharmacy has irrevocably assigned its rights to Lipoxen. Papaioannou has assigned his rights
irrevocably to Lipoxen. We believe Lipoxen has good title in the invention.
Invention 10 – Sialic acid derivatives
Countries
Filing Date
PCT (all)
12.08.2004
Application No.
Publication No.
PCT/GB04/03484
WO2005/016949
Status
Expiry Date
(prospective)
Pending
(12.08.2024)
Inventors: S. Jain; G. Gregoriadis
Applicant: Lipoxen Technologies Limited
This invention relates to a polysialic acid which is passivated in order to avoid its reacting with other
molecules. It is of particular value for use as an excipient. Although there are currently no products being
developed which involve use of this technology, it is believed that the technology is of value and may be used
in future as polysialic acids become more widely used in therapeutic and prophylactic compositions. The
application has been searched and amendments have been made recently to ensure the claims are patentable
over the prior art cited in the search. The inventors are employees of the School of Pharmacy or Lipoxen
and the School has assigned its rights to Lipoxen. We believe Lipoxen has good title to the invention.
Invention 11 – Sialic acid derivatives
Countries
Filing Date
Application No.
Status
Expiry Date
(prospective)
PCT (all)
12.08.2005
PCT/GB05/003160
Pending
(12.08.2025)
Inventors: S. Jain; S. Thobani; I. Papaioannou
Applicant: Lipoxen Technologies Limited
This invention relates to new conjugation chemistries used with polysialic acid. The polysialic acids are
derivatised to form amine or hydrazine terminal groups and are then reacted with bifunctional reagents at
least one of the functionalities of which is a N-hydroxysuccinimide group. The product may have a variety
of functionalities introduced to allow selection of a desired functionality for conjugation to actives with
defined derivatisable groups.
The invention has been searched and the claims are believed to define patentable subject matter which will
protect Lipoxen’s interests in developing a portfolio of functional polysialic acids. It is possible that the
products will be used in at least some of the molecules being developed in the PolyXen platform.
Apart from Papaioannou, the inventors are employees of either Lipoxen or the School of Pharmacy. The
School of Pharmacy has irrevocably assigned its rights to Lipoxen. Papaioannou has assigned his rights to
Lipoxen. We believe Lipoxen has good title to the invention.
Invention 12 – Fractionation of Polysaccharides for Protein derivatisation and conjugation
Countries
Filing Date
Application No.
Status
Expiry Date
(prospective)
PCT (all)
12.08.2005
PCT/GB05/003149
Pending
(12.08.2025)
Inventors: S. Jain; P. Laing; I. Papaioannou
Applicant: Lipoxen Technologies Limited
This invention relates to techniques for fractionating polysialic acids, such as colominic acid, and derivatives,
into narrow polydispersity fractions. The technique will be of particular value for providing well defined
starting materials for a range of derivatised end products, and thus of improved acceptability for
pharmaceutical end uses.
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Part IV — Intellectual Property Report
The claims have been searched by the EPO. The process claims appear to be patentable and valuable patent
protection should be achieved. We believe that it will also be possible to achieve grant of product claims to
the novel fractionated products.
Apart from Papaioannou, the inventors are employees of Lipoxen or of the School of Pharmacy. The School
of Pharmacy has irrevocably assigned its rights to Lipoxen. Papaioannou has assigned his rights to Lipoxen.
We believe Lipoxen has good title to the invention.
Invention 13 – Activated Sialic acid derivatives for protein derivatisation and conjugation
Countries
Filing Date
Application No.
Status
EP
23.02.2005
05251017.9
Pending
Inventors: Not determined
Applicant: Lipoxen Technologies Limited
This invention relates to new functional derivatives of polysialic acids. N-Hydroxysuccinimide groups are
introduced into the molecules to render them reactive with amine or hydrazine groups on derivatisable
substrates. Such derivatisation chemistry is used for introducing other moieties onto biological molecules
and is thus well understood.
The claims have been searched by the EPO and some relevant prior art has been found, although none
relates to reactions of polysialic acid with substrate molecules. The relevance of the prior art has still to be
fully reviewed by Lipoxen. An international application is due to be filed by 23 February 2006 and
consideration will be given to the prior art and further developments made between the priority date
23 February 2005 and the end of the priority year when the specification is revised.
The inventorship has yet to be determined but is likely to be some or all of those named as inventors on
inventions 11 and 12, to which this invention is related. Lipoxen will have good title if our expectation
regarding inventorship is correct. Inventorship will be reviewed towards the end of the priority year.
Invention 14 – Liposomal Compositions
Country
Filing Date
Application No.
Status
EP
30.09.2005
05256161.0
Pending
Inventors: Not yet determined
Applicant: Lipoxen Technologies Limited
This invention relates to liposomal vaccine formulations which contain polysaccharide antigens and a specific
antibody. The formulation with the particular antibody gives a surprisingly increased immune response. The
patent application has been filed only recently and the subject-matter has not been searched for patentability
by any patent office. However a search has been requested at the EPO and the report should be issued in
the second quarter of 2006. We recommend that the patentability be assessed so that a decision can be made
regarding protecting the invention in other territories within 12 months of this first filing, claiming priority
from this application. Lipoxen’s right to be granted patents in this invention will be assessed having regard
to relevant agreements with third parties during that 12 month period as it is likely that third party may have
rights under the invention by virtue of an agreement. The claims are intended to provide protection to one
of the pneumococcal vaccines under development by Lipoxen and may cover other vaccines which may be
developed in the future.
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Invention 15 – Liposomal Compositions
Country
Filing Date
Application No.
Status
EP
30.09.2005
05256160.2
Pending
Inventors: Not yet determined
Applicant: Lipoxen Technologies Limited
This invention relates to liposomal vaccine formulations which contain polysaccharide antigens and a specific
type of protein adjuvant. The formulation gives good immune response to the polysaccharide antigens.
The patent application has been filed only recently and the subject-matter has not been searched for
patentability by any patent office. We recommend that the patentability be assessed so that a decision can
be made regarding protecting the invention in other territories within 12 months of this first filing, claiming
priority from this application. Lipoxen’s right to be granted patents in this invention will be assessed having
regard to relevant agreements with third parties during that 12 month period but it is believed that Lipoxen
is solely entitled to proprietorship of this invention. The claims are intended to provide protection for one
of the pneumococcal vaccines being developed by Lipoxen (different to the pneumococcal vaccine
protection by invention 14) as well as the Hib vaccine being developed by Lipoxen and may cover other
polysaccharide vaccines to be developed in future.
A search has been requested from the EPO and a report should be issued in the second quarter of 2006.
Third Party Issues
Licensed in Technology
Method of Forming Liposomes
Countries
Filing Date
EP (DE, FR, GB,
NL, SE)
16.06.1999
GB
16.06.1999
AU
16.06.1999
CA
JP
KR
NO
NZ
RU
16.06.1999
16.06.1999
16.06.1999
16.06.1999
16.06.1999
16.06.1999
US
ZA
16.06.1999
16.06.1999
Application No.
Publication No.
99928051.4
WO9965465
EP 1087754
0030767.8
2354166
45180/99
719499
2335183
2000-554345
10-2000-70144
20006442
508960
2001101910
2216315
09/719795
2000/7507
2000/7507
Status
Expiry Date
(prospective)
Granted
16.06.2019
Granted
16.06.2019
Granted
16.06.2019
Pending
Pending
Pending
Pending
Granted
Granted
(16.06.2019)
(16.06.2019)
(16.06.2019)
(16.06.2019)
16.06.2019
16.06.2019
Pending
Granted
(16.06.2019)
16.06.2019
Applicant/patentee: Defence Science and Technology Laboratory (DSTL)
Inventors: G. Gregoriadis; B. Zadi; and P. N. Jayasekera
The applications and patents claim methods for making small liposomes in the presence of sugar.
Patents have been granted after substantive examination in the EPO, GB, AU, NZ and RU. No opposition
was filed in the recently expired opposition period of the EP case. Examination is ongoing in Japan and
South Korea and should start soon in Norway. The patent attorneys prosecuting the application are confident
that claims will be granted of similar scope to those granted in the EP case. These claims will cover the
products being developed on the ImuXen platform, for instance the pneumococcal vaccine being developed
with The Serum Institute, the Hib vaccine being developed with The Serum Institute, the oral tetanus
booster vaccine being developed with The Serum Institute, the rabies vaccine being developed with The
Serum Institute, possibly the liposomal/siRNA product being developed with Galenea, and the various
liposomal cancer-treatment products being developed with The Serum Institute.
77
Part IV — Intellectual Property Report
The prosecution of the US application has been protracted and has not yet led to a positive indication that
a patent can be granted. However the proprietor has indicated a positive intention to maintain the
application and we are confident that valuable protection will be granted before FDA approval of any
products is likely to take place i.e. in a commercially acceptable timescale.
We understand that, under the terms of the agreement with Ploughshare Innovations Limited (the arm of
the Defence Science and Technology Laboratory established to exploit its technology in the civil sector)
appropriate rights have been granted to Lipoxen, which will allow it freedom to use the technology upon
payment of royalties. The licence grants certain powers to enforce the rights against third party infringers.
Other Licensed in Rights
We have seen some agreements between Lipoxen and third parties which may grant licence rights under the
IP of such third parties. We have not at this stage been asked to give any advice in relation to the value of
such rights. We recommend that Lipoxen or the Enlarged Group carry out an audit of the rights which are
mentioned in existing agreements between Lipoxen and third parties and of the requirement of Lipoxen or
its collaborators (i.e. other parties) to have freedom to operate having regard to such right and indeed of the
licences which have in fact been granted to Lipoxen. We also recommend that Lipoxen/the Enlarged Group
carry out an assessment of the background IP and any licence rights granted under it when concluding
agreements with third parties to develop, test or commercialise products.
Liposomally entrapped nucleic acids
It is clear from the prior art cited during the prosecution of the application for Invention 2 that the area of
nucleic acid delivery is crowded with third party patent rights. Many of the patents do not present a risk since
they are restricted to the use of cationic lipids which Lipoxen is able to avoid.
No clearance search has yet been conducted directed to the gene vaccine products being developed by
Lipoxen for the rabies vaccine nor the siRNA product. Since the products are at a relatively early stage of
development exhaustive freedom to operate searches are not appropriate. We recommend that the Enlarged
Group undertake such searches as specific candidate products are identified, prior to expensive clinical trials.
Polysialylation
The prior art cited during the prosecution of the applications in respect of Inventions 1, 6 and 8 to 13 has
revealed no prior art which, as patent rights owned by third parties, constitutes a risk to Lipoxen’s or the
Enlarged Group’s plans to commercialise the PolyXen technology.
However no clearance search has been conducted by or for Lipoxen directed to the particular actives
especially the proteins to be conjugated to polysialic acids, to identify third party rights which might inhibit
Lipoxen, its collaborators and the Enlarged Group in exploiting the products under development. We cannot
say now whether there are any risks or not to Lipoxen’s plans to develop the various products identified on
its PolyXen platform. We recommend that the Enlarged Group arrange clearance searches as specific
candidates are identified prior to expensive clinical trials.
Trade Marks
Lipoxen in logo form is registered as a trade mark in UK, USA and Japan. An application for registration
is pending in the European Union. An application to register the word Lipoxen as a mark has recently been
filed in the UK, with the intention of pursuing applications in other countries within the 6 month priority
period. We advise that protection be sought in countries where commercial exploitation of products under
the Lipoxen trade mark is planned.
PolyXen is registered in the UK, European Union, USA and Japan.
ImuXen is registered in the UK and European Union.
Synvirion is registered in the UK and an application is pending in the European Union. We expect the trade
mark to be registered in due course.
Applications to register the marks VesicALL, ErepoXen, NeutroXen, InferoXen and SuliXen were filed in
the UK on 26 September 2005. We believe these marks are registrable and are available at least in the UK
and Europe. We recommend that applications are filed to register these marks in other countries where
exploitation of the products is planned. Priority from the September 2005 filings can be claimed if such
applications are filed before 26 March 2006.
78
Part IV — Intellectual Property Report
We have advised Lipoxen that availability searches should be conducted prior to adoption of trade marks
and such advice has been taken. We have also advised that applications to register adopted trade marks
should be filed in countries where there are plans to commercialise the respective products. Where marks
have already been registered or applications are pending, we believe the classes and products in respect of
which the requests were made should adequately protect Lipoxen’s interests.
Yours faithfully
GILL JENNINGS & EVERY
Broadgate House
7 Eldon Street
London
EC2M 7LH
H M M Jones
(Partner)
79
Part V — Additional Information
1
RESPONSIBILITY STATEMENTS
1.1 The Directors and the Proposed Directors accept responsibility for the information contained in this
document. To the best of the knowledge and belief of the Directors and the Proposed Directors (who have
taken all reasonable care to ensure that such is the case) the information contained in this document is in
accordance with the facts and makes no omission likely to affect the import of such information.
1.2 The Lipoxen Directors accept responsibility for all information contained in this document relating to
Lipoxen, the Concert Party, themselves, their immediate families and persons connected with them. Subject
as aforesaid, to the best of the knowledge and belief of the Lipoxen Directors (who have taken all reasonable
care to ensure that such is the case) such information contained in this document is in accordance with the
facts and does not omit anything likely to affect the import of such information.
2
INCORPORATION AND STATUS OF THE COMPANY
2.1 The Company was incorporated in England and Wales as a public limited company on 12 June 1996
under the Act and with registered number 3213174. The Company was incorporated under the name
Thompson Turnbury plc. On 4 September 1996 the Company changed its name to Infantcare plc and to its
present name on 28 July 1999. Greenchip received its trading certificate on 20 August 1996.
2.2
The liability of the members of the Company is limited.
2.3 The principal legislation under which the Company operates is the Act and the regulations made
thereunder.
2.4 The registered office of the Company is at 22 Melton Street, London NW1 2BW, telephone number
0207 4875540.
2.5
3
At the date of this document the Company does not have any subsidiaries.
SHARE CAPITAL OF THE COMPANY
3.1 The authorised and issued share capital of the Company, at the date of this document and immediately
following Admission, is and will be as follows:
Authorised
Number of
Ordinary
Shares of
£
0.5p each
At the date of this
document
Enlarged Issued
Share Capital on
Admission
Number of
Deferred
Shares of
0.01p each
Issued and credited as fully paid
Number of
Number of
Ordinary
Deferred
Shares of
Shares of
£
0.5p each
0.01p each
5,000,000 673,300,000 16,335,000,000 1,675,000
8,300,000 16,335,000,000
5,000,000 673,300,000 16,335,000,000 2,148,333 102,966,665 16,335,000,000
3.2 On incorporation, the share capital of the Company was £5,000,000 divided into 50,000,000 ordinary
shares of 10p each, of which 10 were issued credited as fully paid to the subscribers to the memorandum of
association.
3.3 On 20 July 1999, pursuant to a special resolution, the share capital of the Company was changed from
50,000,000 ordinary 10p shares to 452,909,957 ordinary 1p shares and 47,090,043 deferred 1p shares.
3.4 On 19 June 2000, pursuant to a special resolution and with the consent of the High Court of Justice, the
share capital of the Company was reduced from £5,000,000 to £4,529,099.57 divided into 452,909,957
ordinary shares of 1p each and the reduction was effected by cancelling and extinguishing the 47,090,043
deferred shares of 1p each in existence.
3.5 On 2 June 2005, pursuant to an ordinary resolution, the share capital of the Company was increased
from £4,529,099.57 to £5,000,000 by the creation of an additional 47,090,043 ordinary shares of 1p each.
Further, pursuant to a special resolution, each of the 165,000,000 ordinary shares of 1p each in the capital of
the Company in issue as at close of business on 2 June 2005 was subdivided into one ordinary share of 0.01p
and 99 deferred shares of 0.01 p each; and each of the 335,000,000 ordinary shares of 1p each in the capital
of the Company that were unissued as at the close of business on 2 June 2005 were subdivided into
100 ordinary shares of 0.01 p each.
80
Part V — Additional Information
Pursuant to an ordinary resolution, every fifty existing issued and unissued ordinary shares of 0.01p each
were then consolidated into one ordinary share of 0.5p.
3.6
On 28 July 2005 the Company placed 5,000,000 Ordinary Shares at 4p per share.
3.7 At an Extraordinary General Meeting of the Company to be convened for 16 January 2006 resolutions
will be proposed as follows, resolutions 4 and 5 (set out in paragraphs 3.7.4 and 3.7.5 below) as special
resolutions:
3.7.1 THAT the waiver by the Panel on Takeovers and Mergers of the obligation which would otherwise
arise on the members of the Concert Party (as that term is defined in the Admission Document of the
Company dated 23 December 2005 (the ‘‘Admission Document’’)), both individually and collectively,
to make a general cash offer for the whole of the Company’s issued share capital pursuant to Rule 9
of the City Code on Takeovers and Mergers as a result of the issue of new ordinary shares in the
Company to the Concert Party pursuant to (a) the offer to acquire the entire issued share capital of
Lipoxen Technologies Limited (the ‘‘Acquisition’’) on the terms and subject to the conditions of the
agreements between (1) the Vendors (as defined in the Admission Document) and (2) the Company
(the ‘‘Acquisition Agreements’’) (b) the issue of shares in the Company to FDS under the FDS
Development Agreement (as defined in the Admission Document) and (c) the exercise by Professor
Gregoriadis, Tatiana Zhuravskaya and Igor Volodin (being members of the Concert Party) of the
Concert Party Options (as defined in the Admission Document) (which, assuming exercise in full by
the members of the Concert Party of the Concert Party Options (as defined in the Admission
Document) (and assuming no other person exercises any option or other right to subscribe for
Ordinary Shares in the Company) and assuming the issue of 10,174,340 ordinary shares to FDS under
the FDS Development Agreement would result in the Concert Party holding approximately 63.07 per
cent. of the issued ordinary share capital and voting rights of the Company), be and is hereby
approved.
3.7.2 THAT the acquisition by the Company of the entire issued share capital of Lipoxen Technologies
Limited pursuant to the Acquisition Agreements (a copy of one such agreement being produced to
the meeting and signed by the Chairman for the purposes of identification), be and is hereby
approved and the directors of the Company from time to time be are hereby authorised to cause the
Acquisition Agreements and all matters provided therein or related thereto to be completed and at
their discretion, to amend, alter, vary and/or extend the terms of the Acquisition Agreements and/or
any document referred to therein and/or connected therewith in whatever way they may consider to
be or become necessary in connection therewith, provided that these are not material in relation to
the Acquisition as a whole
3.7.3 THAT the terms of the Novation Agreement pursuant to which Greenchip agrees to accept the
obligations of Lipoxen under the FDS Development Agreement in particular to allot up to 10,174,340
shares in Greenchip upon achievement of certain milestones to the financial value of $2,670,764.2 be
and are hereby approved.
3.7.4 THAT, conditional upon the Placing Agreement becoming unconditional in all respects (save for the
conditions requiring the passing of the Resolutions and Admission) and not being terminated:
(a)
in substitution for any existing authority subsisting at the date of the resolution (save to the
extent that the same may already have been exercised and for any such powers granted by
statute), the directors of the Company from time to time be generally and unconditionally
authorised to exercise all powers of the Company to allot relevant securities (within the
meaning of section 80 of the Companies Act 1985 (the ‘‘Act’’)) up to an aggregate nominal
amount of £679,267, provided that such power shall expire on the date of the Annual General
Meeting of the Company to be held in 2006 or 15 months after the date of the passing of the
resolution (whichever is the earlier) but so that the Company may before such expiry make an
offer or agreement which would or might require relevant securities to be allotted after such
expiry and the directors of the Company from time to time may allot equity securities in
pursuance of such offer or agreement as if the power conferred hereby had not expired;
(b)
the directors of the Company be empowered pursuant to section 95 of the Act to allot equity
securities (within the meaning of section 94(2) of the Act) of the Company for cash pursuant to
the general authority conferred on the directors pursuant to paragraph (a) above as if section
89(1) of the Act did not apply to such allotment, provided that this power shall be limited to:
81
Part V — Additional Information
(i)
the allotment of 89,074,047 ordinary shares of 0.5p each in the capital of the Company
pursuant to the Proposals;
(ii)
the allotment of 28,000,000 ordinary shares of 0.5p each in the capital of the Company
pursuant to the Placing; and
(iii) otherwise than as set out in (i) and (ii) above, the allotment of up to 15,445,000 ordinary
shares of 0.5p each in the capital of the Company;
provided that such power shall expire on the date of the Annual General Meeting of the
Company to be held in 2006 or 15 months after the date of the passing of the resolution
(whichever is the earlier) but so that the Company may before such expiry make an offer or
agreement which would or might require equity securities to be allotted after such expiry and
the directors of the Company from time to time may allot equity securities in pursuance of such
offer or agreement as if the power conferred hereby had not expired.
3.7.5 THAT the name of the Company be changed to Lipoxen plc.
3.8 The provisions of Section 89(1) of the Act (which, to the extent not disapplied pursuant to Section 95
of the Act), confer on shareholders rights of pre-emption in respect of the allotment of equity securities
which are, or are to be, paid up in cash, apply to the authorised but unissued share capital of the Company
except to the extent disapplied as described in paragraph 3.7 above. Subject to certain limited exceptions,
unless the approval of shareholders in a general meeting is obtained, the Company must normally offer
Ordinary Shares to be issued for cash to holders of existing Ordinary Shares on a pro rata basis.
3.9 The new Ordinary Shares in issue following Admission will rank pari passu in all respects with the
existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made
or paid after Admission on the Ordinary Share capital.
3.10
46,000 Ordinary Shares in Greenchip are subject to options as follows:
3.10.1 On 9 August 1999, the Company entered into option agreements with each of Alan Bentley (a former
director), Malcolm Burne (a current director), Ian Burne (a former director) and three others under
which each option holder could subscribe for up to 250,000 ordinary shares at 3p per share at any time
between 9 August 2000 and 8 August 2006. Following the share restructuring in June 2005, these
options are now over a total of 30,000 ordinary shares (5,000 shares per person) of 0.5p each and the
exercise price is £1.50.
3.10.2 On 1 February 2000, the Company entered into an option agreement with Gavin Simonds (a former
director of the Company) under which he could subscribe for up to 800,000 ordinary shares at
70p per share at any time between 1 February 2001 and 31 January 2007. The option price was
reduced to 15p per share by letter agreement dated 31 July 2000. Following the restructuring, the
option is over 16,000 ordinary shares of 0.5p each and the exercise price is £7.50.
3.11
Save as disclosed in this document:
(a)
no share or loan capital of the Company has been issued or is proposed to be issued, fully or partly paid,
either for cash or for a consideration other than cash;
(b)
no share or loan capital of the Company is under option or is the subject of an agreement, conditional
or unconditional, to be put under option; and
(c)
no commission, discount, brokerage or other special term has been granted by the Company or is now
proposed in connection with the issue or sale of any part of the share or loan capital of the Company.
82
Part V — Additional Information
3.12
The following table shows the closing prices of the Company’s Ordinary Shares for the first business
day in each of the six months immediately prior to the date of this document and for 21 December
2005 (being the latest practicable date prior to the publication of this document):*
Price per Ordinary Share
(pence)
Date
1 June 2005
1 July 2005
1 August 2005
1 September 2005
3 October 2005
1 November 2005
1 December 2005
21 December 2005
16.25
11
9.5
11
14.25
16
16
19.5
*
Please refer to paragraph 18.21 of Part V of this document.
4
MEMORANDUM AND ARTICLES OF ASSOCIATION
The principal objects of the Company are set out in clause 4 of its memorandum of association and are to
carry on business as a general commercial company.
5
ARTICLES OF ASSOCIATION
The articles of association of the Company contain, amongst others, the following provisions:
Votes of members
(a)
Subject to any special rights or restrictions as to voting or to which any shares may have been issued,
on a show of hands every member who is present has one vote and on a poll every member who is
present in person or by proxy shall have one vote for every Ordinary Share of which he is the holder.
(b)
Unless the directors determine otherwise, a member of the Company is not entitled in respect of any
Ordinary Shares held by him to vote at any general meeting of the Company if any amounts payable
by him in respect of those shares have not been paid.
Variation of rights
Subject to the provisions of the Act, if at any time the capital of the Company is divided into different classes
of shares, the rights attached to any class may be varied or abrogated with the consent in writing of the
holders of at least three-fourths in nominal value of that class or with the sanction of an extraordinary
resolution passed at a separate meeting of the holders of that class but not otherwise. The quorum at any
such meeting is two or more persons holding, or representing by proxy, at least one-third in nominal value
of the issued shares in question.
Annual and Extraordinary General Meetings
The Company shall in each year hold a general meeting as its annual general meeting in addition to any other
meetings and not more than 15 months shall elapse between annual general meetings. 21 days’ notice must
be given for all annual general meetings and extraordinary general meetings at which a special resolution is
to be passed. All other general meetings of the Company require 14 days’ notice. The length of the required
notice period can be reduced in the case of annual general meetings with the consent of all members who
are entitled to attend and vote and, in the case of extraordinary general meetings, with the consent of a
majority of members having a right to attend and vote, being a majority holding not less than 95% of the
nominal value of the shares giving that right.
Changes in capital
The Company may by ordinary resolution increase its share capital, consolidate and divide its share capital
into shares of a larger amount, sub-divide its share capital into shares of a smaller amount and cancel any
shares which have not been taken or agreed to be taken by any person and diminish the amount of its
authorised share capital by the amount of the shares so cancelled.
Subject to the provisions of any requirements of the law, the Company may reduce share capital, any capital
redemption reserve and any share premium account in any manner. The Company may also, subject to the
requirements of the Act, purchase its own shares.
83
Part V — Additional Information
Transfer of shares
(a)
All transfers of shares may be effected by transfer in writing and must be signed by or on behalf of the
transferor and, (except in the case of a fully paid share), by or on behalf of the transferee. The
transferor is deemed to remain the holder of the share until the name of the transferee is entered in
the register of members in respect of it.
(b)
The directors may, in their absolute discretion and without assigning any reason, refuse to register the
transfer of shares, not being fully paid shares, provided always that the directors shall not exercise their
discretion in such a way as to prevent dealings on the Official List of the London Stock Exchange
taking place on an open and proper basis.
Payment of dividends
The Company may by ordinary resolution declare dividends but no such dividends shall exceed the amount
recommended by the directors. Dividends are payable half yearly or on such other dates prescribed for the
payments thereof.
Unclaimed dividends
Any dividend unclaimed after a period of 12 years from the date of its declaration will be forfeited and will
revert to the Company.
Untraceable shareholders
The Company may sell any share if, during a period of 12 years, at least three dividends in respect of such
shares have been paid, no cheque or warrant in respect of any such dividend has been cashed and no
communication has been received by the Company from the relevant member. The Company must advertise
its intention to sell any such shares in both a national daily newspaper and in a newspaper circulating in the
area of the last known address to which cheques or warrants were sent. Notice of the intention to sell must
also be given to the London Stock Exchange.
Return of capital
On a winding-up of the Company, the balance of the assets available for distribution will, subject to any
sanction required by the Act, be divided amongst the holders of Ordinary Shares in proportion to the capital
which at the commencement of the winding up is paid up.
Borrowing powers
Subject to the provisions of the Act, the directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and assets, including its uncalled or unpaid
capital, and to issue debentures and other securities.
The directors must restrict the borrowing of the Company and exercise all voting and other rights and
powers of control exercisable by the Company in relation to subsidiary companies, if any, so as to secure, as
regards subsidiary companies so far as by such exercise they can secure, that the aggregate amount for the
time being remaining outstanding of all money borrowed by the Company and its subsidiaries (the
‘‘Group’’), and for the time being owing to persons outside the Group does not at any time, without the
previous sanction of an ordinary resolution of the Company, exceed an amount equal to the greater of
£1,000,000 or if the Company has not yet had published audited accounts a sum equal to the greater of
£1,000,000 or twice the aggregate of the nominal amount of the share capital of the Company for the time
being issued and paid up or credited as paid up and the amounts for the time being standing to the credit
of the consolidated reserves, including share premium account, capital reserve and profit and loss account,
of the Group all as shown in the then latest audited balance sheet of the Company.
Directors
(a)
No shareholding qualification is required by a director.
(b)
The directors are entitled to fees at the rate decided by them, subject to an aggregate limit of £50,000
per annum or such additional sums as the Company may by ordinary resolution determine. The
Company may by ordinary resolution also vote extra fees to the directors as they agree, or failing
agreement, equally. The directors are also entitled to be reimbursed for all reasonable travelling, hotel
and other expenses incurred by them in connection with the business of the Company.
(c)
At every annual general meeting, one third of the directors who are subject to retirement by rotation,
or as near to it as may be, will retire from the office. A retiring director is eligible for re-appointment.
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Part V — Additional Information
(d)
The directors may from time to time appoint one or more of their body to be the holder of an executive
office on such terms as they see fit.
(e)
Except as provided in paragraphs (f) and (g) below, a director may not vote or be counted in the
quorum present on any motion in regard to any contract, transaction, arrangement or any other
proposal in which he has any material interest, which includes the interest of any person connected with
him, otherwise than by virtue of his interests in shares or debentures or other securities of or otherwise
in him or through the Company. Subject to the Act, the Company may by ordinary resolution suspend
or relax this provision to any extent or ratify any transaction not duly authorised by reason of a
contravention of it.
(f)
In the absence of some other material interest than is indicated below, a director is entitled to vote and
be counted in the quorum in respect of any resolution concerning any of the following matters:
(i) the giving of any security, guarantee or indemnity to him in respect of money lent or obligations
incurred by him or by any other person at the request of or for the benefit of the Company or any
of its subsidiaries;
(ii) the giving of any security, guarantee or indemnity to a third party in respect of a debt or obligation
of the Company or any of its subsidiaries for which he himself has assumed responsibility in whole
or in part under a guarantee indemnity or by the giving of security;
(iii) any proposal concerning an offer of shares or debentures or other securities of or by the company
or any of its subsidiaries for subscription or purchase in which offer the Director is or may be
entitled to participate as a holder of shares or debentures or other securities of the Company or
is to be interested as a participant in its underwriting or sub-underwriting;
(iv) any proposal concerning any other company in which he is interested, as defined in Part IV of the
Act, provided that he is not the holder of, or beneficially interested in one per cent. or more of
any class of the equity share capital of such company, (or of a third company through which his
interest is derived), or of the voting rights available to members of the relevant company, (any
such interest being deemed for this purpose to be a material interest in all circumstances);
(v)
any proposal relating to a pension, a superannuation fund or retirement, death or disability
benefits scheme or employees’ share option scheme which relates both to directors and
employees of the Company or any of its subsidiaries and does not award to any director any
privilege or advantage not generally accorded to the employees to whom such scheme relates; and
(vi) any arrangement concerning insurance that the Company proposes to maintain or purchase for
the benefit of directors or for the benefit of employees or any of its subsidiaries and does not
award to any director any privilege or advantage not generally accorded to the employees to
whom such a scheme relates.
(g)
If any question arises at any meeting as to the materiality of a director’s interest or as to the entitlement
of any director to vote and such question is not resolved by his voluntarily agreeing to abstain from
voting, such question must be referred to the chairman of the meeting and his ruling in relation to any
other director will be final and conclusive except in a case where the nature or extent of the interest
of such director has not been fully disclosed.
Deferred shares
The rights attached to the deferred shares in the Company are:
(a)
no entitlement to receive or participate in any dividend;
(b)
on a return of capital on a winding-up, an entitlement to receive in respect of each deferred share a
sum equal to the nominal capital paid up or credited as paid up thereon but only after the sum of
£1,000,000 per 0.01p of nominal value paid up or credited as paid up has been distributed amongst the
holders of the Ordinary Shares, and no entitlement to any further participation in the assets or profits
of the Company;
(c)
no right to receive notice of or to attend or vote at a general meeting;
(d)
the obligation to permit the Company at any time to appoint any person to execute on behalf of the
holders of deferred shares a transfer and/or an agreement to transfer the deferred shares, without
making any payment to the holders, to such persons as the Company may determine and to acquire
the deferred shares in accordance with the provisions of the Act without making any payment to the
holders.
85
Part V — Additional Information
6
INTERESTS OF THE DIRECTORS AND THE PROPOSED DIRECTORS
6.1 The interests (all of which are beneficial unless otherwise stated) of the Directors and the Proposed
Directors and their immediate families and the persons connected with them (within the meaning of section
346 of the Act) in the issued share capital of the Company which have been notified to the Company
pursuant to Section 324 and 328 of the Act (or are required to be disclosed in the register of directors’
interests pursuant to Section 325 of the Act) or the existence of which could, with reasonable diligence, be
ascertained by any Director or Proposed Director as at the date of this document and as expected to be
immediately following Admission, are as follows:
At the date of this document
Name
No. of
Ordinary
Shares
Malcolm Burne
Colin Hill
Giap Wang Chong
Sir Brian Richards
Dmitry Genkin**
Scott Maguire
Gregory Gregoriadis
Tatiana Zhuravskaya
298,500
375,000*
375,000
−
−
−
−
−
*
**
% of Issued
Share
Capital
No. of
Ordinary
Shares over
which
Options are
granted
3.60
4.52
4.52
−
−
−
−
−
5,000
—
—
−
−
−
−
−
Immediately following Admission
No. of
% of
Ordinary
Enlarged
Shares over
No. of
Issued
which
Ordinary
Share
Options are
Shares
Capital
granted
298,500
375,000
375,000
—
—
—
5,561,973
—
0.29
0.36
0.36
—
—
—
5.4
—
5,000
—
—
101,743
—
6,950,250
406,974
339,145
Owned through Pershing Keen Nominees Limited.
Dmitry Genkin has a 34 per cent. interest in FDS Pharma Ass, Lipoxen’s major shareholder.
6.2 Save as disclosed above and in paragraph 6.6 below, none of the Directors and the Proposed Directors
(or persons connected with the Directors within the meaning of Section 346 of the Act) has any interest,
whether beneficial or non-beneficial, in any share or loan capital of the Company.
6.3 There are no outstanding loans granted or guarantees provided by the Company to or for the benefit
of any of the Directors or Proposed Directors.
6.4 Save as disclosed above, and save as otherwise disclosed in this document, no Director or Proposed
Director has any interest, whether direct or indirect, in any transaction which is or was unusual in its nature
or conditions or significant to the business of the Company taken as a whole and which was effected by the
Company since its incorporation and which remains in any respect outstanding or unperformed.
6.5 None of the Directors or Proposed Directors or any person connected with them (within the meaning
of section 346 of the Act) is interested in any related financial product referenced to the Ordinary Shares
(being a financial product whose value is, in whole or in part, determined directly or indirectly by reference
to the price of the Ordinary Shares including a contract for differences or a fixed odds bet).
6.6 The Company has agreed that, conditional upon Admission becoming effective Scott Maguire will be
granted options to subscribe at 1p per share for the number of Ordinary Shares which equals 6.75 per cent.
of the Enlarged Issued Share Capital. The terms of such options are set out in paragraph 7.5 below.
7
DIRECTORS’ AND SENIOR MANAGERS’ SERVICE AGREEMENTS AND LETTERS OF
APPOINTMENT
7.1 Malcolm Burne entered into a letter of appointment with the Company to act as a non-executive
Chairman on 11 December 2001. His appointment commenced on 9 January 2002. The appointment is for
an indefinite period subject to 6 months’ notice by either party at any time and also subject to the Articles.
He receives an annual fee of £10,000 payable in quarterly instalments in arrears. He is not entitled to any
bonus or other benefits. He is a member of the Remuneration and Audit Committees. He is entitled to be
reimbursed for expenses in accordance with the Articles and to be reimbursed his reasonable legal costs in
seeking independent advice in futherance of his director’s duties. He is subject to confidentiality obligations
and provisions relating to conflicts of interest. In the event of termination of his appointment, however
caused, he has agreed he will not be entitled to any compensation for the loss of office. Malcolm Burne has
provided the company with notice of termination of his appointment which will take effect on the date of
Admission.
86
Part V — Additional Information
7.2 Colin Hill has entered into a letter of appointment with the Company dated 22 December 2005 to act
as a non-executive Director, conditional upon Admission. His appointment is deemed to have commenced
with effect from 9 January 2002. The appointment is for an indefinite period subject to 6 months’ notice by
either party at any time and also subject to the Articles. He will receive an annual fee of £36,000 payable in
monthly instalments in arrears. He will not be entitled to any bonus, pension or other benefits apart from
share options. He will chair the Audit Committee. He will be reimbursed for expenses in accordance with
the Articles. The Company will also reimburse his reasonable legal costs in seeking independent advice in
furtherance of his director’s duties and in relation to proceedings to enforce the warranties relating to the
Acquisition. He is subject to confidentiality obligations and provisions relating to conflicts of interest. In the
event of termination of his appointment, however caused, he has agreed he will not be entitled to any
compensation for the loss of office. Upon Admission, Colin Hill will be entitled to be paid deferred
remuneration of £30,000.
7.3 On 22 December 2005 Giap Wang Chong entered into a letter of appointment with the Company to act
as a non-executive Director conditional upon Admission. His appointment is deemed to have commenced
with effect from 1 August 2005. The appointment is for an indefinite period subject to three months’ notice
by either party at any time and also subject to the Articles. He receives an annual fee of £24,000 payable in
monthly instalments in arrears, which will increase to £30,000 upon Admission. He will not be entitled to any
bonus, pension or other benefits apart from share options. He is subject to confidentiality obligations and
provisions relating to conflicts of interest. In the event of termination of his appointment, however caused,
he has agreed he will not be entitled to any compensation for the loss of office.
7.4 Peter Laing entered into a service agreement with Lipoxen (dated 27 September 2005) to act as
Director of Research & Development and Business Development with effect from 1 September 2005. His
term of employment is for an indefinite period terminable on 6 months’ notice by either Lipoxen or Peter
Laing. Lipoxen may make a payment in lieu of notice to terminate the agreement with immediate effect.
Peter Laing will receive an annual salary of £100,000. Peter Laing will be entitled to a bonus of £12,500 (less
deductions), provided that he remains employed by Lipoxen at Admission. He is entitled to PHI cover, life
assurance cover equivalent to four times his salary, private medical cover for himself (and members of his
household if he pays additional subscriptions) and membership of a personal pension scheme established by
Lipoxen, which will contribute a sum equal to eight per cent. of his salary. He is entitled to 25 days’ holiday
per annum. The agreement contains detailed provisions regarding confidentiality, intellectual property and
other matters and post-termination restrictive covenants applicable for six months after termination. In the
event that he is removed from office, his employment continues on the terms of the agreement. Under the
terms of his service agreement Peter Laing will be entitled, after Admission, to be granted an option to
subscribe for 205,000 Ordinary Shares at an exercise price of 1p per share, exercisable for a period of ten
years from the date of his agreement. In addition, he is entitled to be granted options to subscribe for 158,333
Ordinary Shares if and when the Company’s market capitalisation reaches £25 million, a further 158,333
Ordinary Shares if and when the Company’s, market capitalisation reaches £50 million and 158,334 Ordinary
Shares if and when the Company’s market capitalisation reaches £100 million. The exercise price for such
shares shall be market price (being the price per Ordinary Share which (i) if listed is the mid-market price
at which the Ordinary Shares were trading at the end of a day on which trading took place, or (ii) if the
Ordinary Shares are not listed, is the fair market value per share as determined by the board of directors of
Lipoxen, or, following Admission, of Greenchip acting reasonably), and the options are exercisable during
the period commencing 18 months after the date of grant and ending on the day before the tenth anniversary
of the agreement.
7.5 On 22 December 2005 Scott Maguire entered into a service agreement with the Company to act as
Chief Executive Officer of the Company subject to and with effect from Admission. His term of employment
is for an indefinite period terminable on 6 months’ notice by either the Company or Scott Maguire. He will
receive an annual salary of £120,000 per annum. Salary will be reviewed by the remuneration committee
from time to time to ensure that it is competitive with Chief Executive Officers of comparable companies in
the pharmaceutical/biotechnology sector listed on AIM, without any obligation to increase. He will receive
immediately upon Admission, deferred salary which has accrued from 1 April 2004 to the date of Admission,
a total of a £167,000. (He is also entitled to receive up to £28,000 from Lipoxen as part of his bonus
arrangements from his employment terms with Lipoxen depending on payments being made to Lipoxen
under certain of Lipoxen’s commercial agreements.) He receives reimbursement of expenses, including up
to a maximum of £3,500 plus VAT for the cost of preparing and filing a US tax return. He also receives:
pension contributions by the Company capped at 8 per cent. of basic salary into a personal pension scheme
87
Part V — Additional Information
(subject to a minimum contribution of 4 per cent. of basic salary by him); private medical, permanent health
and life assurance (4 x salary) cover; 25 days’ holiday in addition to public holidays; 30 days’ full pay
contractual sick pay. Immediately following Admission, Scott Maguire is to be granted an option over 6.75%
of the Ordinary Shares then in issue at an exercise price of 1p per Ordinary Share. The option is to be
exercisable from twelve months following Admission, and is not to be dependent on Scott Maguire being a
director or employee of the Company at the time of exercise and is not to be subject to the satisfaction of
any performance conditions. If Scott Maguire wishes to exercise any of his options within two years of
Admission, the consent of a majority of the directors is required and such consent can only be provided if
the relevant majority are satisfied, in their reasonable opinion and having taken an independent opinion
from the Company’s auditors as to the impact on the Company and its subsidiaries’ working capital
requirements were the option to be exercised, that the Company and its subsidiaries’ working capital
position for the twelve months following the proposed date of exercise will not be prejudiced thereby. Any
employer’s National Insurance contributions arising on exercise of the Option (in whole or in part) by
Scott Maguire is to be borne by the Company. He will also be eligible to participate in the Company’s bonus
and share option schemes, from time to time in force. The agreement contains detailed provisions regarding
confidentiality, intellectual property, garden leave, payment in lieu of notice and other matters and
post-termination restrictions applicable for six months after termination. In the event that he is removed
from office his employment continues on the terms of the agreement.
7.6 On 22 December 2005 Professor Gregory Gregoriadis entered into a letter of appointment with the
Company to act as a non-executive director subject to and with effect from Admission. His appointment is
for an indefinite period, terminable on 6 months’ notice by either party at any time. He will receive an annual
fee of £3,000 per annum payable monthly in arrears. He will not be entitled to any bonus or other benefit
(apart from share options). He will be reimbursed for expenses in accordance with the Articles. The
Company will also reimburse his reasonable legal costs in seeking independent advice in furtherance of his
director’s duties. He is subject to confidentiality obligations and restrictions concerning dealings in shares. In
the event of termination of his appointment, he will not be entitled to compensation for loss of office. There
is also a consultancy arrangement in place between Professor Gregoriadis and Lipoxen which came into
effect on 1 May 2005 and is for an indefinite period, terminable on six months’ notice by either party at any
time. Pursuant to the agreement Professor Gregoriadis provides various scientific advisory services to
Lipoxen in return for a fee of £4,610 per month. From 1 May 2005 he has been receiving a reduced fee of
£2,500 on the basis that upon Admission he will immediately receive deferred fees which have accrued from
1 May 2005 to the date of Admission.
7.7 On 22 December 2005 Dr Dmitry Genkin entered into a letter of appointment with the Company to
act as a non-executive director subject to and with effect from Admission. His appointment is for an
indefinite period, terminable on three months’ notice by either party at any time. He will receive an annual
fee of £3,000 per annum payable monthly in arrears. He will not be entitled to any group bonus schemes or
other benefit. The Company will also reimburse his reasonable legal costs in seeking independent legal
advice in furtherance of his director’s duties. He is subject to confidentiality obligations and restrictions
concerning dealings in shares. In the event of termination of his appointment, he will not be entitled to
compensation for loss of office.
7.8 On 22 December 2005 Dr Tatiana Zhuravskaya entered into a letter of appointment with the company
to act as a non-executive director subject to and with effect from Admission. Her appointment is of indefinite
duration, terminable on three months’ notice by either party at any time. She will receive a fee of £250 per
month. She is not entitled to any bonus or other benefit apart from share options. The Company will also
reimburse her reasonable legal costs in seeking independent legal advice in furtherance of her director’s
duties. She is subject to confidentiality obligations and restrictions concerning dealings in shares. In the event
of termination of her employment, she will not be entitled to compensation for loss of office. There is also
a consultancy arrangement in place between Dr Tatiana Zhuravskaya and Lipoxen pursuant to which she
provides consultancy services relating to employees and staff, administration and company secretarial
matters in return for a fee based on an hourly rate of £25. The agreement commenced on 1 October 2005
and is for an indefinite period, terminable on two months’ notice by either party at any time.
7.9 On 22 December 2005 Sir Brian Richards entered into a letter of appointment with the Company to act
as a non-executive Chairman subject to and with effect from Admission. His appointment is for a fixed
period which will expire on 30 May 2008 and thereafter terminable by three months’ notice. His fee will be
£30,000 per annum payable monthly in arrears. He is not entitled to participate in any group bonus scheme
or other benefit apart from options. The Company will also reimburse him reasonable legal costs in seeking
88
Part V — Additional Information
independent legal advice in furtherance of his director’s duties. He will chair the Remuneration Committee.
He is subject to confidentiality obligations and restrictions concerning dealings in shares. In the event of
termination, he will not be entitled to compensation for loss of office.
7.10 Save as disclosed above, there are no service contracts in existence or proposed between any Director
and Proposed Director and the Company or any company in the Group.
7.11 The aggregate remuneration and benefits in kind paid by the Company to the Directors in respect of
the year ending 31 December 2005 will be £10,000, and it is estimated that under the arrangements in force
at the date of this document and as as set out in paragraph 7 of Part V of this document, the aggregate
remuneration payable and benefits in kind to be granted to the Directors and the Proposed Directors for the
year ending 31 December 2006 will be £584,300.
Save as set out above, there have been no changes in the last six months’ to the Directors’ or the Proposed
Directors’ service contracts or letters of appointment.
8
ADDITIONAL INFORMATION ON THE DIRECTORS AND THE PROPOSED DIRECTORS
8.1 The names of all companies (excluding group companies) and partnerships of which each of the
Directors and Proposed Directors has been a director or partner at any time in the five years preceding the
date of this document and indicating whether they are current or past interests are set out below:
Director/Proposed Director
Current Directorships/Partnerships
Past Directorships/Partnerships
Malcolm Burne
West End TST Limited
Golden Prospect PLC
The Venture Capital Exchange
Limited
Golden Prospect Mining Company
Limited
Far East Resources PLC
Greenchip Investments plc
Jubilee Platinum PLC
Interactive Resource Information
Limited
Grasshopper Investments PLC
Resource Investments PLC
Anglesey Mining PLC
Whats-online Limited
Pan African Resources PLC
Infantcare (UK) Limited
Nautical Petroleum PLC
Ambran Asset Management Limited
Colin Hill
Arlington Group plc
Cemtron Ltd
Cemtron Holdings Ltd
C&G Tool & Cutter Co Ltd
Greenchip Investments plc
Eaton Investments (UK) Ltd
Tool & Cutter Holdings Ltd
Swan Enford Ltd
Sentinel Group Holdings Ltd
Arlington Group Asset Management
Limited
Sentinel Business Services Group Ltd
Arlington Group Management
Services Ltd
Centron Management Services Ltd
Signature Music Ltd
Microcap Equities plc
Recall Coventry Ltd
Recall GG Ltd
MPC Sentinel Ltd
Essential4business plc
PI Associates Ltd
Sentinel Storage Services Ltd
MPC Sentinel Ltd
MPC Sentinel Midlands Ltd
Giap Wang Chong
Greenchip Investments plc
Phytopharm plc
Phytotech Ltd
89
Part V — Additional Information
Director/Proposed Director
Current Directorships/Partnerships
Past Directorships/Partnerships
Sir Brian Richards
Lipoxen Technologies Limited
Alizyme plc
Cozart plc
MAN Mail (Guernsey) Limited
Vastox plc
Acambis plc
Innogenetic SA
LGC Limited
CeNeS Pharmaceuticals plc
Oxford Biomedica plc
Prelude Trust plc
Drug Royalty Corporation Inc
Dmitry Genkin
Lipoxen Technologies Limited
FDS Pharma Ass
Pharma Industries Limited
Pharma Research Limited
Pharmavit Holding ZAO
Scott Maguire
Lipoxen Technologies Limited
Healthcare Capital Partners Limited
Healthcare Venture Advisors Limited
Tatiana Zhuravskaya
Lipoxen Technologies Limited
FDS Pharma Ass
ASGL-Research Laboratories
Pharma Industries Limited
Pharma Research Limited
None
Gregory Gregoriadis
Lipoxen Technologies Limited
The School of Pharmacy
International Liposome Society
None
8.2
Save as otherwise disclosed in paragraph 8.3 below, none of the Directors or Proposed Directors has:
8.2.1. any unspent convictions in relation to indictable offences;
8.2.2. had any bankruptcy order made against him or entered into any voluntary arrangement;
8.2.3. been a director of a company which has been placed in receivership, compulsory liquidation,
administration, been subject to a voluntary arrangement or any composition or arrangement with its
creditors generally or any class of its creditors whilst he was a director of that company or within the
12 months after he ceased to be a director;
8.2.4. been a partner in any partnership which has been placed in compulsory liquidation, administration or
been the subject of a partnership voluntary arrangement whilst he was a partner in that partnership
or within the 12 months after he ceased to be a partner in that partnership;
8.2.5. been the owner of any asset or been a partner in any partnership which owned any asset which while
he owned that asset, or while he was a partner or within the 12 months after he ceased to be a partner
in the partnership which owned the asset, entered into receivership;
8.2.6. been the subject of any public criticism by any statutory or regulatory authority (including recognised
professional bodies); or
8.2.7. been disqualified by a court from acting as a director of any company or from acting in the
management or conduct of the affairs of any company.
8.3 Colin Hill entered into an individual voluntary arrangement in July 1996 due to the difficult economic
conditions for trading as an independent consultant. Colin worked with his supervisor and creditors to agree
a single payment and settlement which was paid from his own funds within the time period stipulated by the
creditors. The individual voluntary arrangement was finally closed on 5 January 1998.
Colin was appointed as a director of Essential4business plc (‘‘E4B’’) and its subsidiary, PI Associates Limited
(‘‘PIA’’), on 27 January 2000 and 22 May 2000 respectively. Prior to his appointment, Colin was offering
advice and assistance in line with E4B’s stated policy that he was to become the group finance director
immediately after the completion of a successful fundraising and AIM listing. Colin became an executive
director on 27 January 2000 in order to facilitate the fundraising. Ultimately the level of institutional support
for the project was inadequate and E4B was placed into administration on 23 November 2000 along with
PIA. Colin resigned as a director of E4B on 26 July 2004.
Colin was appointed as a director of MPC Sentinel Limited (‘‘MPC Sentinel’’) on 9 August 2002. MPC
Sentinel was a wholly owned subsidiary of Sentinel Business Services Group Limited (‘‘SBSG’’), a company
90
Part V — Additional Information
to which Arlington Group plc lent monies. In order to protect its initial exposure, Arlington Group plc
decided to advance further money to SBSG and MPC Sentinel as a non-executive director with a mandate
to protect the interests of Arlington Group plc. Colin was not involved in the management of MPC Sentinel
and was purely representing Arlington Group plc on the board of MPC Sentinel to ensure that Arlington
Group plc had proper information on which to base its incentive decisions. Despite efforts to turn the MPC
Sentinel business around, it became apparent that the business had no realistic prospects of trading its way
out of its position and MPC Sentinel requested that Arlington Group plc appoint administrative receivers.
Colin resigned as a director of MPC Sentinel on 21 March 2003. Colin is still a director of SBSG although
SBSG was also put into receivership and subsequently liquidation.
8.4 Save as disclosed in this document, none of the Directors nor Proposed Directors has or has had any
interest in transactions effected by the Company since its incorporation which are or were unusual in their
nature or conditions or which are or were significant to the business of the Company.
8.5 Each of the Directors and Proposed Directors has given an undertaking not to dispose of any of their
Ordinary Shares, save in certain specified circumstances, for the period of 12 months from the date of
Admission.
8.6 No loans made or guarantees granted or provided by the Company or any Company in the Group to
or for the benefit of any Director or Proposed Director are outstanding.
9
SUBSTANTIAL SHAREHOLDERS
9.1 Save as disclosed in sub-paragraph 6.1 above and paragraph 16 below the Company is only aware of the
following persons who, at the date of this document and immediately following Admission, represent an
interest within the meaning of Part VI of the Act directly or indirectly in 3 per cent. or more of the
Company’s issued share capital or could exercise control over the Company (disregarding any Ordinary
Shares to be subscribed pursuant to the Placing):
At the date of this document
No. of
Ordinary
Shares
Name
Aran Asset Management SA
Malcolm A Burne
Dr Giap Wang Chong
Halb Nominees Limited A/C 044276
HSBC Global Custody Nominee (UK) Ltd A/C 813259
Smith & Williamson Nominees Limited
Nortrust Nominees Limited A/C N0P01
Pershing Keen Nominees Limited A/C AGCLT
State Street Nominees Limited
375,000
298,500
375,000
1,665,000
2,275,960
252,480
400,000
1,460,862
250,000
% of Issued
Share
Capital
Following Admission
% of
Enlarged
No. of
Issued
Ordinary
Share
Shares
Capital
4.52
375,000
3.60
298,500
4.52
375,000
20.06 1,665,000
27.42 2,275,960
3.04
252,480
4.82
400,000
17.60 1,460,862
3.01
250,000
0.36
0.29
0.36
1.62
2.21
0.25
0.39
1.42
0.24
9.2 None of the Directors, nor any persons named in sub-paragraph 9.1 above, has voting rights which are
different to any other holder of Ordinary Shares.
10 INTERESTS AND DEALINGS
10.1 Save for interests arising as a consequence of the Acquisition Agreements, neither Lipoxen or any of
its directors or any member of the Concert Party or any person acting in concert with it or any of them
owned, controlled or was interested, directly or indirectly, in any relevant securities of the Company on 21
December 2005 (the latest practicable date prior to the posting of this document), nor has any such person
dealt for value in any relevant securities of the Company (as defined in paragraph 10.8 below) during the
disclosure period.
10.2 Save as disclosed in paragraph 6 above, none of the Directors or Proposed Directors nor any member
of their families owned, controlled or (in the case of the Directors and the Proposed Directors and their
immediate families) was interested, directly or indirectly, in any relevant securities of the Company on
21 December 2005 (the latest practicable date prior to the posting of this document), nor has any such person
dealt for value in any relevant securities of the Company during the disclosure period.
10.3 Save as disclosed in paragraph 10.7 below, no associate of the Company (as defined in 10.8(a)(i)
below), no bank, stockbroker, financial or other professional adviser (other than an exempt market maker)
91
Part V — Additional Information
to the Company or any associate of the Company (as defined in 10.8(a)(i) below), nor any person controlling,
controlled by, or under the same control as such bank, stockbroker, financial or other professional adviser,
nor any pension fund of the Company or of any associate of the Company (as defined in 10.8(a)(i) below)
nor any employee benefit trust of the Company or of any associate of the Company (as defined in 10.8(a)(i)
below), nor any person whose investments are managed on a discretionary basis by fund managers (other
than exempt fund managers) connected with the Company, owned, controlled or was interested directly or
indirectly, in any relevant securities of the Company on 21 December 2005 (the latest practicable date prior
to the posting of this document), nor has any such person dealt for value therein during the disclosure period.
10.4 Neither the Company nor any of its Current Directors, controlled or was interested, directly or
indirectly, in any relevant securities of Lipoxen on 21 December 2005 (the latest practicable date prior to the
posting of this document), nor has any such person dealt for value in any relevant securities of Lipoxen (as
defined in paragraph 10.8 below) during the disclosure period.
10.5 None of Lipoxen, any member of the Concert Party or the Company or any associate (as defined in
paragraph 10.8 below) of the Company has any arrangement with any person in relation to relevant
securities of the Company. For the purposes of this paragraph, ‘‘arrangement’’ includes any indemnity or
option arrangement and any agreement or understanding, formal or informal, of whatever nature which may
be an inducement to deal or refrain from dealing.
10.6 No concert party of the Company nor any member of the Concert Party disclosed in paragraph 16 of
Part V of this document has borrowed or lent, directly or indirectly, any relevant securities of the Company
during the disclosure period.
10.7 Grant Thornton Nominees Limited, a wholly-owned subsidiary of Grant Thornton UK LLP, holds
94,368 Ordinary Shares of 0.5p each, fully paid, in the Company representing 1.14 per cent. of the current
issued share capital of the Company.
10.8 In this paragraph 10:
(a) references to an ‘‘associate’’ of the Company are to:(i) its parent, subsidiaries and associated companies and companies of which any such subsidiaries or
associated companies are associated companies;
(ii) banks, financial and other professional advisers (including stockbrokers) to it or a company covered
in (i) above, including persons controlling, controlled by or under the same control as such banks,
financial or other professional advisers;
(iii) its directors and directors of any company in (i) above (together in each case with their immediate
families and related trusts);
(iv) its pension funds or of a company covered in (i) above;
(v) an investment company, unit trust or other person whose investments an associate (as otherwise
defined in this sub-paragraph (a)) manages on a discretionary basis, in respect of the relevant
investment accounts; and
(vi) its employee benefit trust or that of a company covered in (i) above;
(b) references to a ‘‘ bank’’ do not apply to a bank whose sole relationship with Lipoxen or the Company
or a company covered in (a)(i) above is the provision of normal commercial banking services or activities
in connection with the Acquisition and the Placing, such as registration work;
(c) ownership or control of 20 per cent. or more of the equity share capital of a company is regarded as the
test of associated company status and ‘‘control’’ means a holding, or aggregate holdings, of shares
carrying 30 per cent. or more of the voting rights attributable to the share capital of the company which
are currently exercisable at a general meeting, irrespective of whether the holding gives de facto control;
(d) ‘‘relevant securities of the Company’’ means the existing Ordinary Shares, interests, short positions and
other securities of the Company convertible into, or exchangeable for, rights to subscribe for and options
(including traded options) in respect of, or derivatives referenced to, any of the foregoing;
(e) ‘‘relevant securities of Lipoxen’’ means the existing ordinary shares, interests, short positions and other
securities of Lipoxen convertible into, or exchangeable for, rights to subscribe for and options (including
traded options) in respect of, or derivatives referenced to, any of the foregoing;
(f) ‘‘derivative’’ includes any financial product including short positions whose value, in whole or in part, is
determined directly or indirectly by references to the price of any underlying security but which does not
include the possibility of delivery of such underlying securities; and
92
Part V — Additional Information
(g) the ‘‘disclosure period’’ is the period commencing on 21 December 2004, being the date 12 months prior
to the latest practicable date prior to the posting of this document.
11 EMPLOYEES
11.1 Excluding Current Directors, there were no employees employed in the Group for each of the last
2 financial years.
12 SHARE OPTION SCHEMES
12.1
LIPOXEN SHARE OPTION SCHEME
On 19 June 2002 Lipoxen adopted the Rules of the Lipoxen Technologies Limited 2002 Unapproved Share
Option Scheme (the ‘‘Lipoxen Scheme’’). Under the Lipoxen Scheme, options over ordinary shares in
Lipoxen may be granted to executive directors and employees of Lipoxen as well as externally contracted
staff and consultants or any subsidiary of Lipoxen up until 31 May 2012. The Lipoxen Scheme has not been
approved by the Board of Inland Revenue. The number of shares in respect of which options may be granted
on a given day, when added to the number of shares in respect of which subscription options (being rights
to subscribe for shares granted pursuant to the Lipoxen Scheme or any other employee’s share option or
share incentive scheme) have previously been granted in the ten year period preceding that day, shall not
exceed 10 per cent. of the ordinary share capital of Lipoxen on that day.
Each option granted may be subject to specific performance related conditions imposed by the Lipoxen
Directors. An option may generally not be exercised later than the tenth anniversary of its grant. Save in
certain circumstances (such as death, incapacity, redundancy etc.) an option may not generally be exercised
earlier than the third anniversary of its grant. The price in respect of each option shall be determined by the
directors but shall not be less than the nominal value of an ordinary share.
At the date of this document options over a total of 2,655,793 ordinary shares in Lipoxen are held by certain
individuals as set out in the table below. Of these options, 786,000 were granted otherwise than pursuant to
the Lipoxen Scheme.
Current Lipoxen option holders
The current holders of options over Lipoxen shares are set out below.
Name
Allan Cambridge
Andrew Bacon
Andrew Tivenan
Azra Qurashi
Eleni Karnabakou
George Christie
Number
Granted
606,000
45,000
45,000
350,000
53,004
17,670
3,926
100,000
36,000
Gregory Gregoriadis
Peter Laing
Wilson Caparros-Wanderley
Tatiana Zhuravskaya
Sanjay Jain
300,000
275,000
10,993
250,000
50,000
Date of Grant
21/10/02
26/10/04
30/09/05
01/05/02
29/07/02
29/07/02
29/07/02
01/11/98
Exercise
Price
1p
1p
1p
1p
56.6p
56.6p
56.6p
1p
24/12/2001
26/05/04
26/10/04
29/07/02
26/10/04
26/10/04
30p
1p
1p
56.6p
1p
1p
93
Exercise Period
21/10/05 – 20/10/07
See note below
See note below
01/05/02 – 31/04/12
See note below
See note below
See note below
Exercisable until
31/10/08 conditional
upon the flotation of
the Company on AIM
or another recognised
investment exchange
Exercisable up until
the tenth anniversary
of the grant
26/05/04 – 25/05/14
See note below
See note below
See note below
See note below
Total
number of
options held
606,000
90,000
403,004
17,670
3,926
136,000
300,000
275,000
10,993
250,000
95,000
Part V — Additional Information
Number
Granted
Name
Brenda McCormack
Igor Volodin
Haruhiko Harada
Sir Brian Richards
Ioannis Papaioanou
Smita Thobhani
Rumpf Nobert
Date of Grant
Exercise
Price
Total
number of
options held
Exercise Period
45,000
35,000
14,000
250,000
30/09/05
26/10/04
30/09/05
18/03/05
1p
1p
1p
1p
See
See
See
See
note
note
note
note
below
below
below
below
10,000
75,000
25,000
28,000
11,200
20,000
11/02/05
12/05/05
26/10/04
26/10/04
30/09/05
30/09/05
1p
1p
1p
1p
1p
1p
See
See
See
See
See
See
note
note
note
note
note
note
below
below
below
below
below
below
49,000
250,000
10,000
75,000
25,000
39,200
20,000
Note:
Pursuant to rule 8 of the Lipoxen Scheme, an option may be exercised between the third and tenth anniversary of the date of grant
subject to certain exceptions including death, retirement, redundancy and rule 12 which provides that options become exercisable for
a period of up to six months following the date of a change of control of the company following a takeover offer.
12.2
GREENCHIP SHARE OPTION SCHEME
On 18 July 2000 the Company adopted the Greenchip Investments plc Unapproved Share Option Scheme
(the ‘‘Greenchip Scheme’’). Under the Greenchip Scheme, options over Ordinary Shares may be granted to
executive directors and employees of the Company. The Greenchip Scheme has not been approved by the
Board of Inland Revenue. The Board may grant options over shares representing up to 20 per cent. of the
share capital issued in that and the preceding nine years.
Each option granted may be subject to specific conditions imposed by the Board. An option may generally
be exercisable between the first and tenth anniversary of its grant. The price in respect of each option will
be the middle market price on the day prior to the grant of the options provided always that the exercise
price shall not be less than the nominal value of an Ordinary Share.
Proposals will be made to the option holders of Lipoxen in due course to roll their options into the
Greenchip Scheme. By an amendment to the terms of the Greenchip Scheme approved by the Board on
13 October 2005, subject to the Board’s discretion, none of the rolled over options should be exercisable
within the first year following their grant under the Greenchip Scheme.
Details of persons holding options in Greenchip are set out in paragraph 3.10 above.
13 MATERIAL CONTRACTS
The following contracts, not being contracts entered into in the ordinary course of business, have been
entered into by the Group and Lipoxen and its subsidiaries within the period of two years immediately
preceding the date of this document or were entered into prior to two years immediately preceding the date
of this document but contain provisions which are, or may be, material:
13.1 Acquisition Agreements dated 23 December 2005 in identical form between the Company and
persons holding not less than 91.06 per cent. of the entire issued share capital of Lipoxen whereby the
Company will purchase the shares in Lipoxen held by each such Lipoxen shareholder in consideration for
the issue and allotment, credited as fully paid, of 1.3565787 new Ordinary Shares for each Lipoxen share.
Each Acquisition Agreement is conditional upon completion of the Warranty Deed taking place no later
than 28 February 2006 or such later date as made be agreed by the Company and Lipoxen.
13.2 The Placing Agreement dated 22 December 2005 between the Company, Canaccord Capital (Europe)
Limited (‘‘Canaccord’’) and the Proposed Directors whereby Canaccord was appointed as agent of the
Company to use its reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price.
Pursuant to the Placing Agreement, the Company and the Directors have given certain warranties to
Canaccord regarding, inter alia, the accuracy of information in this document. The Placing is not
underwritten. The Placing Agreement is conditional, inter alia, on Admission taking place no later than
31 January 2006 or such later date as may be agreed by the Company and Canaccord and the Company and
94
Part V — Additional Information
the Directors complying with certain obligations under the Placing Agreement. Under the Placing
Agreement, the Company had agreed to pay to Canaccord a commission of 6 per cent. of the aggregate value
of the Placing Shares at the Placing Price, together with all costs and expenses and VAT thereon, where
appropriate. Canaccord is entitled, in certain limited circumstances, to terminate the Placing Agreement
prior to Admission and to the payment of its outstanding costs on such termination.
13.3 A letter of engagement dated 19 September 2005 from Grant Thornton Corporate Finance to the
Company pursuant to which the Company has appointed Grant Thornton Corporate Finance to act as
nominated adviser for the purposes of the AIM Rules. The agreement contains certain undertakings by the
Company and indemnities given by the Company in respect of, inter alia, compliance with all applicable
regulations. The Agreement continues until terminated by, inter alia, either the Company or Grant Thornton
Corporate Finance giving not less than thirty days prior written notice.
13.4 A Broker Agreement dated 22 December 2005 between the Company and Canaccord pursuant to
which the Company has appointed Canaccord to act as its broker for the purposes of the AIM Rules. The
Company has agreed to pay Canaccord a retainer of £50,000 payable half yearly in advance. The agreement
contains certain undertakings by the Company and indemnities given by the Company in respect of, inter
alia, compliance with all applicable regulations. The appointment continues for a minimum period of
12 months and is subject to termination, inter alia, by either the Company or Canaccord on the giving of not
less than three months’ prior written notice.
13.5 A collaboration agreement dated 15 August 2005 between Baxter Healthcare Corporation, Baxter
Healthcare SA and Lipoxen. The collaboration is structured as an initial seven month research period for
which Lipoxen will receive initially a cost coverage of $423,333.50 from Baxter and then an additional
payment of $423,333.50 if Baxter does not terminate the licence midway through the research. The research
period is focused on conjugating Lipoxen’s PolyXen technology with two of Baxter’s proprietary proteins.
After the seven month period, Baxter has an exclusive option to enter into a pre-negotiated development
and licence agreement for the use of Lipoxen’s PolyXen technology to develop an improved version of its
currently marketed protein or, potentially, a new proprietary protein. If Baxter chooses to exercise the
exclusive worldwide option for a defined therapeutic area, Lipoxen will receive a non-refundable $1 million
for this exercise. The pre-negotiated agreement includes further pre-approved milestones of $10 million as
well as further significant approval and commercial milestone payments that could total a further $64 million,
plus royalties. Baxter will have the right to terminate the licence agreement midway through the initial
research period (and not pay the second instalment of $423,333.50 as mentioned above) and at any time after
the research period. Lipoxen has the right to terminate the licence agreement if specific development
milestones are not met within certain periods of time.
13.6 By an agreement dated 16 December 2004 between the Serum Institute of India Limited and Lipoxen,
Lipoxen has agreed to develop with the Serum Institute of India Limited three protein drug candidates, six
vaccines and four liposomal oncology drug candidates, a total of thirteen candidates, for Lipoxen’s PolyXen,
ImuXen and VesicAll drug technologies. Lipoxen has licenced exclusive rights for the thirteen candidates
excluding North America, Europe, Russia and CIS, Israel, Japan, Australia, and New Zealand. In return
Lipoxen will receive royalty payments for the marketed products of 2.5 per cent of the invoiced price of
products sold (for products supplied pursuant to contracts entered into with sovereign agencies and/or
charitable organisations) or 5.0 per cent. in the case of any other products supplied by the Serum Institute
of India Limited. Lipoxen also has a partnership for four product candidates which includes, EPO, liposomal
Pneumococcal vaccine and liposomal Taxol for FDA and EMEA trials, thereby establishing joint ownership
of product candidates for North America, Europe, Russia and CIS, Israel, Japan, Australia, and New
Zealand. All upfront, milestone payments will be shared equally between Lipoxen and the Serum Institute
of India Limited. Lipoxen has also entered into a contract manufacturing arrangement with the Serum
Institute of India Limited which will produce the protein delivery component, polysialic acid, on a contract
basis.
13.7 By an agreement dated 10 October 2005 between FDS Pharma Ass. and Lipoxen, FDS will use
technology described in the PolyXen patents to manufacture certain product candidates for Lipoxen (insulin
and interferon) in relation to which FDS (or sub-contractors appointed with the consent of Lipoxen) will
carry out further clinical development work in accordance with an agreed timetable and development
programme. In consideration for FDS agreeing to conduct initial development and certain manufacturing
services, including work to develop certain cell lines, Lipoxen has allotted 15 million ordinary shares in
Lipoxen to FDS. FDS is entitled to receive an additional maximum 7.5 million ordinary shares in Lipoxen
95
Part V — Additional Information
which will be issued provided that FDS has achieved certain milestones. Upon the completion of the first
milestone for certain conjugation work and obtaining certain regulatory audit and certification from the
European Union regulators, a further 1.5 million ordinary shares in Lipoxen shall be allotted to FDS. Upon
completion by FDS of all required pre-clinical activities in accordance with the terms of the FDS
Development Agreement in relation to PolyXen Insulin and PolyXen Interferon (the ‘‘Products’’) and
having obtained EMEA clearance for Phase 1 clinical trials for the Products, a further 1.5 million ordinary
shares in Lipoxen shall be allotted to FDS. Upon the completion of Phase 1 clinical trials in relation to the
Products by FDS in accordance with the terms of the FDS Development Agreement and demonstration by
FDS that all trial data is valid for EMEA regulatory purposes, a further 2 million ordinary shares in Lipoxen
shall be allotted to FDS. The final milestone is that upon completion of Phase 2 clinical trials in relation to
the Products in accordance with the terms of the FDS Development Agreement and provided that all trial
data is valid for EMEA regulatory purposes, a further 2.5 million ordinary shares in Lipoxen shall be allotted
to FDS. In addition to the issue of shares to FDS, FDS is entitled to receive a royalty equal to 10 per cent.
of any cash milestone received by Lipoxen from license payments triggered by the completion of Phase III
clinical trials and/or EMEA and/or FDA marketing approval. There is an unwinding mechanism in the event
of non-performance by FDS. At the first stage, if the cell lines as detailed in the contract are not to the
satisfaction of the Lipoxen board, then the Lipoxen shareholders as at 10 October 2005 have the right to
purchase the 15 million shares allotted to FDS at 10 October 2005. In the event that the further milestones
are not achieved by FDS, the additional shares will not be issued. In the event of unwinding, Lipoxen will
be entitled to all the rights that would have accrued pursuant to the agreement up to the date of unwinding.
13.8 By the Programmable Life Inc (‘‘PLI’’) stock purchase agreement, on 25 November 2003 the
Company sold its 100 per cent. holdings in PLI to Highlander Acquisition LLC (‘‘Highlander’’) for $1. As
part of the terms of the agreement, Robert Downie agreed to resign as a director of the Company. In
addition the Company agreed to ratify and confirm a waiver agreement, under which Arlington Group PLC
irrevocably waived any right to repayment of a secure loan note for the sum of $250,000 made to PLI. The
Company also agreed to enter into a note purchase agreement, pursuant to which Highlander would acquire
a loan note instrument in the sum of $250,000, in favour of the Company for $36,000. The Company also
agreed to a mutual reciprocal release, pursuant to which the Company released the Downie Group subject
to certain specific exceptions and Robert Downie released the Company from various liabilities and
obligations with Robert Downie and the Downie Group.
13.9 By the Programmable Materials Inc (‘‘PMI’’) stock purchase agreement, on 25 November 2003 the
Company sold its 100 per cent. holdings in PMI to Highlander Acquisition LLC (‘‘Highlander’’) for $1. As
part of the terms of the agreement, Robert Downie agreed to resign as a director of the Company. In
addition the Company agreed to ratify and confirm a waiver agreement, under which Arlington Group PLC
irrevocably waived any right to repayment of a secure loan note for the sum of $250,000 made to PMI. The
Company also agreed to enter into a note purchase agreement, pursuant to which Highlander would acquire
a loan note instrument in the sum of $250,000, in favour of the Company for $36,000. The Company also
agreed to a mutual reciprocal release, pursuant to which the Company released the Downie Group subject
to certain specific exceptions and Robert Downie released the Company from various liabilities and
obligations with Robert Downie and the Downie Group.
13.10 By a Novation Agreement dated 22 December 2005 between FDS, Lipoxen and Greenchip, the
rights and obligations of Lipoxen under the FDS Development Agreement were novated to Greenchip,
conditional on Admission. Greenchip undertakes to satisfy Lipoxen’s obligations under the FDS Development
Agreement, in particular the obligation to allot ordinary shares in Greenchip to FDS upon achievement of
certain milestones. As part of the Novation Agreement a liquidated amount has been agreed for
achievement of each milestone under the Development Agreement, which in aggregate for all milestones is
$2,670,764.2. The aggregate number of shares which can be alloted to FDS is up to 10,174,340 Ordinary
Shares. Greenchip otherwise agrees to perform the obligations of Lipoxen under the FDS Development
Agreement and to be bound by its terms as if Greenchip were a party to it.
13.11 By a warrant agreement dated 22 December 2005 (the ‘‘Warrant Agreement’’) the Company has
granted the right to subscribe for up to 1,680,000 Ordinary Shares (the ‘‘Warrant Shares’’) at the Placing
Price to Canaccord Capital (Europe) Limited (the ‘‘Canaccord Warrants’’). The subscription right is
exercisable in respect of all or any of the Warrant Shares at any time or times. during the 18 month period
following Admission. The agreement provides for the adjustment of the subscription right in the case of
certain share capital reorganisations.
96
Part V — Additional Information
13.12 By an Agreement dated 22 December 2005 made between FDS and Greenchip, FDS has given
warranties to Greenchip in respect of Lipoxen’s business and financial position and agreed to procure that
prior to Admission Lipoxen would not make any change in its share capital or constitution nor make any
material change in its ordinary activities or intellectual property rights. In addition, FDS agreed not to
dispose of any Ordinary Shares for a period of 12 months from the date of issue of such shares and agreed
for a period of three years from completion of the agreement not to compete with Lipoxen. FDS has agreed
to use its reasonable endeavours to procure that there is at all times when Ordinary Shares are traded on
AIM an independent director on the board of directors of Greenchip, being a person who is not a former
shareholder of Lipoxen and could not reasonably be considered to be an appointee of one or more of the
former shareholders of Lipoxen and to ensure that in relation to any dealing between Greenchip and FDS,
the directors of Greenchip take any relevant decision having regard to the interests of the shareholders of
Greenchip as a whole. The aggregate maximum of FDS’ liability for breach of any of the warranties or the
tax indemnity in the agreement is limited to the market capitalisation of Greenchip calculated by reference
to the period of sixty trading days prior to an announcement of the Proposals being made, subject to a
minimum of £1 million on the market capitalisation figure.
13.13 By a Relationship Deed dated 22 December between FDS and Greenchip, FDS, as the holder of
44.53 per cent of the issued share capital of Greenchip after Admission and the Acquisition and therefore
a major shareholder, has agreed not to vote on certain matters without the consent of the independent
directors of the board. FDS has also undertaken to exercise its voting rights so as to maintain the
independence of the board of Greenchip and undertaken that all transactions and relationships between it
and any related person and Greenchip will be at arms length and on a normal commercial basis.
14 LITIGATION
14.1 There are no governmental, legal or arbitration proceedings (including any such proceedings which
are pending or threatened) of which the Enlarged Group is aware, which may have or have had during the
12 months immediately preceding the date of this document a significant effect on the financial position or
profitability of the Enlarged Group.
15 WORKING CAPITAL
In the opinion of the Directors and the Proposed Directors, having made due and careful enquiry and taking
into account the net proceeds of the Placing, the working capital available to the Enlarged Group is sufficient
for its present requirements, that is, for at least the next 12 months from the date of Admission.
16 INFORMATION ON THE CONCERT PARTY
The Concert Party comprises certain shareholders and officers of Lipoxen as at the date of this document,
as detailed below. They comprise a concert party under the Rules of the City Code.
97
Part V — Additional Information
No of Lipoxen
shares
Name
Path Property Limited
of 3 Thalia Street, PO Box 53254, 3303 Limassol, Cyprus
Eastern Infotec Services Ltd
of Citadel Bank and Trust Inc., Suite 100, One Financial Place,
Collymore Rock, St Michael, Barbados
FDS Pharma Ass.
of Enterprise House, 21 Buckle Street, London E1 8NN
Gregory Gregoriadis
of Crantock, Kewferry Hill, Richmansworth Road, Northwood,
Middlesex HA6 2RQ
Sydney Morley
of 10 Cottesmore Gardens, Hale Barns, Nr Altrincham,
Cheshire, WA15 8TS
Walbrook Trustees (Jersey) Ltd
of PO Box 248, Lord Countanche House, 66-68 Esplanade,
St Helier, JE4 5PS
Dmitry Genkin
of 77 Bolshoi Prospect P.S. St Petersburg, Russia, 197022
Tatiana Zhuravskaya
of 44 Suvorovsky Avenue, Flat 22, St Petersburg, 193015 Russia
Igor Volodin of 4/2 Dachnyi Prospect, Flat 79, St Petersburg,
Russia 198262
Subtotal
Total no. of Lipoxen shares in issue
98
%
2,534,000
5.16
1,220,000
2.48
33,798,234
68.77
4,100,000
8.34
50,000
0.10
3,100,000
6.31
—
—
—
—
—
—
44,802,234
91.16
49,143,234
100
Part V — Additional Information
Following completion of the Proposals, the members of the Concert Party will each hold the following
interests in the Enlarged Issued Share Capital:
Maximum
Number of
number of Percentage
options for
novation of Enlarged
Company
shares
Issued
shares after
pursuant to the
Share
2
Completion Novation Agreement
Capital3
Name
Number of
Percentage of
Ordinary Enlarged Issued
Shares at Share Capital at
Completion1
Completion
Path Property Limited
Eastern Infotec Services Ltd
FDS Pharma Ass.
Gregory Gregoriadis
Sydney Morley
Walbrook Trustees (Jersey) Ltd
Tatiana Zhuravskaya
Igor Volodin
Dmitry Genkin
3,437,570
1,655,026
45,849,964
5,561,973
67,829
4,205,394
—
—
—
3.34
1.61
44.53
5.40
0.07
4.08
—
—
—
—
—
—
406,974
—
—
339,145
339,145
—
—
—
10,174,340
—
—
—
—
—
—
3.01
1.45
49.04
5.23
0.06
3.68
0.30
0.30
—
Total
60,777,756
59.03
1,085,264
10,174,340
63.07
1
2
3
Converted on the basis of 1.3565787 Ordinary Share for each Lipoxen share
Converted on the same basis as the Consideration Shares that are being issued to the Vendors
Assuming the exercise of options held by Concert Party members and the issue of the maximum number of novation shares
permitted under the Novation Agreement
The current directors of Lipoxen are:
Sir Brian Richards CBE
Scott Maguire
Professor Gregory Gregoriadis
Dr Dmitry Genkin
Dr Tatiana Zhuravskaya
Igor Volodin
Stuart Maconochie
Chairman
Chief Executive
Chief Scientific Officer
FDS representative
FDS representative
Financial Controller and FDS representative
Non Executive Director
FDS is an English limited partnership that was established in 1996 to run investments in the field of
pharmaceutical manufacturing, research and development. As at the date of this document FDS’ only asset
is its shares in Lipoxen. Dr Dmitry Genkin has a 34 per cent. interest in FDS and the estate of the late
Roman Tsepov, which is administered by Dr Tatiana Zhuravskaya, has the remaining 66 per cent. interest.
FDS is controlled by a British Virgin Island company, Pharma Industries Limited (99 per cent.) and an
English company Pharma Research Limited (1 per cent.) (which are the general partner and limited partner
respectively of FDS) which are themselves owned as to 34 per cent. by Dmitry Genkin and 66 per cent. by
the estate of the late Roman Tsepov, the beneficiaries of which, subject to the grant of probate in the UK,
are Igor Abramovic Beylenson, Tamara Makarovna Beylenson, Igor Romanovic Tsepov and Darya
Romanovic Tsepova.
Walbrook Trustees (Jersey) Limited is the registered holder and owner of Lipoxen ordinary shares as
Trustees of the KAYA Trust. The KAYA Trust is an Interest in Possession trust of which Professor
Agamemnon A Epenetos is the Life Tenant.
Path Property Limited is a Cypriot limited liability company, the issued and outstanding ordinary shares of
which are held in equal parts by Themis Papodopoulos and three other members of his family.
Eastern Infotec Services Ltd. (‘‘EIS’’) is a company registered in the British Virgin Islands, the issued and
outstanding shares of which are held by Jupiter Nominees Incorporated, a Barbadian company (‘‘Jupiter’’).
Jupiter holds the EIS shares in trust for the account and benefit of Cidel Bank & Trust Inc., a Barbadian
company, in its capacity as Trustees for The Morley Coal Trust (‘‘Cidel’’). The beneficiaries of the Morley
Coal Trust include several members of the Morley family.
Sydney Morley is a retired property developer and businessman and is an investor who has been active in
pre intitial public offering and technology stocks.
Igor Volodin is a Russian national and is a non-executive director of Lipoxen. His current role involves the
provision of financial services to Lipoxen.
99
Part V — Additional Information
17 TAXATION
The following paragraphs are intended as a general guide only for shareholders who are resident and
ordinarily resident in the United Kingdom for tax purposes, holding Ordinary Shares as investments and not
as securities to be realised in the course of a trade, and are based on current UK legislation and HM Revenue
and Customs practice. Any prospective purchaser of Ordinary Shares who is in any doubt about his tax
position or who is subject to taxation in a jurisdiction other than the UK, should consult his own professional
adviser immediately.
17.1
Taxation of Chargeable Gains
For the purpose of UK tax on chargeable gains, the issue of Ordinary Shares pursuant to the Placing will be
regarded as an acquisition of a new holding in the share capital of the Company.
To the extent that a shareholder acquires Ordinary Shares allotted to him, the Ordinary Shares so allotted
will, for the purpose of tax on chargeable gains, be treated as acquired on the date of allotment. The amount
paid for the Ordinary Shares will constitute the base cost of a shareholder’s holding. The amount paid for
the Ordinary Shares subscribed for may be eligible for taper relief allowance for an individual and indexation
allowance for companies. The amount of relief/allowance will depend in part on the period of ownership.
If a Shareholder disposes of all or some of his Ordinary Shares, a liability to tax on chargeable gains may
arise depending on his circumstances.
17.2
Stamp Duty and Stamp Duty Reserve Tax
The following comments are intended as a guide to the general position and do not relate to persons such
as market intermediaries, dealers or persons concerned with depository receipt arrangements or clearance
services to which special rules apply.
No charge to stamp duty or stamp duty reserve tax (‘‘SDRT’’) should arise on the issue or registration of the
Ordinary Shares.
A subsequent transfer on sale of Ordinary Shares held in certificated form will generally be subject to stamp
duty on the instrument of transfer at the rate of 0.5 per cent. of the amount or value of the consideration.
An agreement to purchase Ordinary Shares will lead to a charge to SDRT (at the rate of 0.5 per cent. of the
amount or value of the consideration) although any liability to SDRT will be cancelled or payments refunded
if an instrument of transfer is executed and duly stamped within six years of such agreement (or, where such
agreement is conditional, within six years of such agreement becoming unconditional).
A subsequent transfer of Ordinary Shares within CREST will usually be liable to SDRT at the rate of 0.5 per
cent. of the amount or value of the consideration. Where such a purchase is affected through a stock broker
or other financial intermediary, that person should usually account for the liability to SDRT. In other cases,
the transferee of the Ordinary Shares will be liable to pay the SDRT and must account for it to HM Revenue
and Customs.
17.3
Dividends and other Distributions
Dividends paid by the Company will carry an associated tax credit of one-ninth of the cash dividend or ten
per cent. of the aggregate of the cash dividend and associated tax credit. Individual shareholders resident in
the UK receiving such dividends will be liable to income tax on the aggregate of the dividend and associated
tax credit at the Schedule F ordinary rate (10 per cent.) or the Schedule F upper rate (32.5 per cent.).
The effect will be that taxpayers whose total taxable income is within the lower rate or basic rate of income
tax will have no further liability to income tax in respect of such a dividend. Higher rate taxpayers will have
an additional tax liability (after taking into account the tax credit) of 22.5 per cent. of the aggregate of the
cash dividend and associated tax credit. Individual shareholders whose income tax liability is less than the
tax credit will not be entitled to claim a repayment of all or part of the tax credit associated with such
dividends.
A UK resident corporate shareholder should not be liable to corporation tax or income tax in respect of
dividends received from the Company unless that company is carrying on a trade of dealing in shares.
Trustees of discretionary trusts are liable to account for income tax at the rate applicable to trusts on the
trust’s income and are required to account for tax at an effective rate of up to 40 per cent.
Persons who are not resident in the UK should consult their own tax advisers on the possible application of
such provisions and on what relief or credit may be claimed for any such tax credit in the jurisdiction in which
they are resident.
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Part V — Additional Information
18 GENERAL
18.1 The gross proceeds of the Placing are expected to be £3.78 million. The total costs and expenses
relating to the Placing payable by the Company are estimated to be £1.211 million (excluding VAT).
18.2 In the opinion of the Directors and Proposed Directors the minimum amount which must be raised
from the Placing is £3.5 million to be applied as follows:
Commissions and expenses of the issue
Working capital
–
–
£1,211,000
£2,289,000
18.3 The Placing Shares are not being offered generally and no applications have or will be accepted other
than under the terms of the Placing Agreement and the letters addressed to the Placees. All the Placing
Shares have been placed firm with the Placees. The Placing is not being guaranteed or underwritten by any
person.
18.4 Monies received from applicants pursuant to the Placing will be held in accordance with the terms and
conditions of the Placing until such time as the Placing Agreement becomes unconditional in all respects. If
the Placing Agreement does not become unconditional in all respects by 31 January 2006, application monies
will be returned to the Placees at their risk without interest.
18.5
The Placing Price represents a premium of 13p over the nominal value of 0.5p per Ordinary Share.
18.6 Grant Thornton Corporate Finance has given and not withdrawn its written consent to the inclusion
of references to its name in the form and context in which they appear.
18.7 Canaccord Capital (Europe) Limited has given and not withdrawn its written consent to the inclusion
in this document of reference to its name in the form and context in which they appear.
18.8 PKF (UK) LLP has given and not withdrawn its written consent to the inclusion in this document of
its accountants’ report on Lipoxen set out in Part III of this document and its name and references thereto
in the form and context in which they appear.
18.9 F W Smith & Riches and Co. has given and has not withdrawn its written consent to the inclusion in
this document of its accountants’ report on Greenchip set out in Part III of this document and its name and
references thereto in the form and context in which they appear.
18.10 Gill Jennings & Every has given and has not withdrawn its written consent to the inclusion in this
document of its intellectual property report on Lipoxen set out in Part IV of this document and its name and
references thereto in the form and context in which they appear.
18.11
The accounting reference date of the Company is 31 December.
18.12 It is expected that definitive share certificates in respect of the Placing Shares will be despatched by
hand or first class post by 31 January 2006. In respect of uncertificated shares, it is expected that
Shareholders’ CREST stock accounts will be credited on 17 January 2006.
18.13 The Directors and Proposed Directors are unaware of any exceptional factors which have influenced
the Company’s activities.
18.14 Save as disclosed in this document, there are no patents or other intellectual property rights, licences
or particular contracts which are or may be of fundamental importance to the business of the Enlarged
Group.
18.15 The Group has not made any investments since 31 December 2004 up to the date of this document,
nor are there any investments by the Group in progress or anticipated which are significant, save for the
Acquisition.
18.16 There have been no significant changes in the trading or financial position of the Company since
31 December 2004, being the date to which the last audited accounts were made up.
18.17 There have been no significant changes in the trading or financial position of Lipoxen since
31 December 2004, being the date to which the last audited accounts were made up.
18.18 CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a
certificate and transferred otherwise than by written instrument. The Articles permit the holding and
transfer of shares under CREST. The Company has applied for the issued and to be issued Ordinary Shares
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Part V — Additional Information
to be admitted to CREST and it is expected that the issued and to be issued Ordinary Shares will be so
admitted, and accordingly enabled for settlement in CREST.
18.19 No person directly or indirectly (other than the Company’s professional advisers and trade suppliers
or save as disclosed in this document) in the last twelve months received or is contractually entitled to
receive, directly or indirectly, from the Company on or after Admission (excluding in either case persons
who are professional advisers otherwise than as disclosed in this document and persons who are trade
suppliers) any payment or benefit from the Company to the value of £10,000 or more or securities in the
Company to such value at the Placing Price or entered into any contractual arrangements to receive the same
from the Company at the date of Admission.
18.20 Lipoxen has no financing arrangements in place where repayment or security is dependent on the
Company.
18.21 The information contained in the sections in Part II of this document identified below have been
sourced as follows:Introduction
Neose Technologies Inc website dated 17 November 2004
www.neose.com/pages/tech-studyProprietary.htm;
Amgen Inc 10-K Report for year ended 31 December 2004 at
www.sec.gov/Archives;
www.pharmiweb.com/features/feature.asp as at 18 October 2005;
Therapeutic Proteins Source: visiongain, 2005;
Sarasin Report dated 28 July 2003;
Contract Pharma Top 20 Pharma July/August 2005.
The Market
Drug Delivery: Global Industry Guide, Datamonitor Premium
Report, 02.01.2005;
The Therapeutic Proteins outlook to 2007: An analysis of
leading products and late stage pipeline developments, Reuters
Business Insights, 2003;
The Vaccines Market Outlook: Market analysis of future growth
and future players by sector. Reuters Business Insights, 2005;
Neose Technologies Inc website dated 17 November 2004
www.neose.com/pages/tech-studyProprietary.htm;
Datamonitor: Therapeutic Proteins Report, August 2002;
Article entitled Cancer Drugs: Therapy for Stocks?’ by Barney
Brodie dated 25 August 2005 from www.businessweek.com;
Bristol Myers Squibb Company 10-K Report for year ended
31 December 2004;
Sanofi-Aventis 2004 Annual Report;
Datamonitor Article entitled ‘‘Cancer: titanium offers hope
where platinum fails’’, 3 March 2003.
Lead Candidates
Neose Technologies Inc website dated 17 November 2004
www.neose.com/pages/tech-studyProprietary.htm;
Datamonitor: Therapeutic Proteins Report, August 2002;
World Health Organization website as at 30 September 2005;
The information contained in paragraph 3.12 of Part V of this document was sourced from the London Stock
Exchange website on 24 November 2005 at www.londonstockexchange.com.
As far as the Company is aware and is able to ascertain from the information published by the above sources,
no facts have been omitted which would render this information inaccurate or misleading.
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Part V — Additional Information
19. DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents may be inspected at the offices of Charles Russell LLP, 8-10 New Fetter
Lane, London EC4A 1RS during normal business hours on any weekday (excluding Saturdays, Sundays and
public holidays) until 16 January 2006:
(a) the memorandum and articles of association of Lipoxen and the Company;
(b) the audited accounts for the Company and Lipoxen for the two years ended 31 December 2004;
(c) the consent letters referred to in paragraph 18 above;
(d) the service contracts and letters of appointment for the Directors and Proposed Directors referred to in
paragraph 7 above;
(e) the material contracts referred to in paragraph 13 above;
(f) the rules of the share option schemes referred to in paragraph 12 above;
(g) the accountants’ reports referred to in Part III of this document; and
(h) the intellectual property report referred to in Part IV of this document.
20. AVAILABILITY OF THIS DOCUMENT
Copies of this document are available free of charge from the Company’s registered office and at the offices
of Grant Thornton Corporate Finance, during normal business hours on any weekday (Saturdays, Sundays
and public holidays excepted) and shall remain available for at least one month after Admission.
23 December 2005
103
GREENCHIP INVESTMENTS PLC
(Incorporated and registered in England and Wales under the Companies Act 1985
with registered number 3213174)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Company will be held at 10 a.m. on 16 January 2006 at the offices
of Stringer Saul LLP, 17 Hanover Square, London W1S 1HU for the purpose of considering and, if thought fit, passing the following resolutions
of which resolutions 1, 2 and 3 will be proposed as ordinary resolutions and resolutions 4 and 5 will be proposed as special resolutions:
ORDINARY RESOLUTIONS
1
THAT the waiver by the Panel on Takeovers and Mergers of the obligation which would otherwise arise on the members of the Concert
Party (as that term is defined in the Admission Document of the Company dated 23 December 2005 (the ‘‘Admission Document’’)),
both individually and collectively, to make a general cash offer for the whole of the Company’s issued share capital pursuant to Rule
9 of the City Code on Takeovers and Mergers as a result of the issue of new ordinary shares in the Company to the Concert Party
pursuant to (a) the offer to acquire the entire issued share capital of Lipoxen Technologies Limited (the ‘‘Acquisition’’) on the terms
and subject to the conditions of the agreements between (1) the Vendors (as defined in the Admission Document) and (2) the Company
(the ‘‘Acquisition Agreements’’) (b) the issue of shares in the Company to FDS under the FDS Development Agreement (as defined
in the Admission Document) and (c) the exercise by Professor Gregoriadis, Tatiana Zhuravskaya and Igor Volodin (being members of
the Concert Party) of the Concert Party Options (as defined in the Admission Document), (which, assuming exercise in full by the
members of the Concert Party of the Concert Party Options (as defined in the Admission Document) (and assuming no other person
exercises any option or other right to subscribe for Ordinary Shares in the Company) and assuming the issue of 10,174,340 ordinary
shares to FDS under the FDS Development Agreement would result in the Concert Party holding approximately 63.07 per cent. of the
issued ordinary share capital and voting rights of the Company), be and is hereby approved.
2
THAT the acquisition by the Company of the entire issued share capital of Lipoxen Technologies Limited pursuant to the Acquisition
Agreements (a copy of one such agreement being produced to the meeting and signed by the Chairman for the purposes of
identification), be and is hereby approved and the directors of the Company from time to time be are hereby authorised to cause the
Acquisition Agreements and all matters provided therein or related thereto to be completed and at their discretion, to amend, alter,
vary and/or extend the terms of the Acquisition Agreements and/or any document referred to therein and/or connected therewith in
whatever way they may consider to be or become necessary in connection therewith, provided that these are not material in relation
to the Acquisition as a whole.
3
THAT the terms of the Novation Agreement pursuant to which Greenchip agrees to accept the obligations of Lipoxen under the FDS
Development Agreement in particular to allot up to 10,174,340 shares in Greenchip upon achievement of certain milestones to the
financial value of $2,670,764.2 be and are hereby approved.
SPECIAL RESOLUTIONS
4
THAT, conditional upon the Placing Agreement becoming unconditional in all respects (save for the conditions requiring the passing
of the Resolutions and Admission) and not being terminated:
(a) in substitution for any existing authority subsisting at the date of this resolution (save to the extent that the same may already have
been exercised and for any such powers granted by statute), the directors of the Company from time to time be generally and
unconditionally authorised to exercise all powers of the Company to allot relevant securities (within the meaning of section 80 of
the Companies Act 1985 (the ‘‘Act’’)) up to an aggregate nominal amount of £679,267, provided that such power shall expire on
the date of the Annual General Meeting of the Company to be held in 2006 or 15 months after the date of the passing of this
resolution (whichever is the earlier) but so that the Company may before such expiry make an offer or agreement which would
or might require equity securities to be allotted after such expiry and the directors of the Company from time to time may allot
relevant securities in pursuance of such offer or agreement as if the power conferred hereby had not expired;
(b) the directors of the Company be empowered pursuant to section 95 of the Act to allot equity securities (within the meaning of
section 94(2) of the Act) of the Company for cash pursuant to the general authority conferred on the directors pursuant to
paragraph (a) above as if section 89(1) of the Act did not apply to such allotment, provided that this power shall be limited to:
(i) the allotment of 89,074,047 ordinary shares of 0.5p each in the capital of the Company pursuant to the Proposals;
(ii) the allotment of 28,000,000 ordinary shares of 0.5p each in the capital of the Company pursuant to the Placing; and
(iii) otherwise than as set out in (i) and (ii) above, the allotment of up to 15,445,000 ordinary shares of 0.5p each in the capital
of the Company;
provided that such power shall expire on the date of the Annual General Meeting of the Company to be held in 2006 or 15 months
after the date of the passing of this Resolution (whichever is the earlier) but so that the Company may before such expiry make
an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the
Company from time to time may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby
had not expired.
5
THAT the name of the Company be changed to Lipoxen plc.
Registered Office:
22 Melton Street
London
NW1 2BW
By Order of the Board
Colin Hill
Director
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Notes:
1 A member entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to attend and, on a poll, vote instead of
him/her. The proxy need not be a member of the Company. A form of proxy is enclosed with this notice for use at the meeting.
2 To be valid a form of proxy, together with a power of attorney or other authority, if any, under which it is executed or a notarially certified
copy thereof, must be deposited at the offices of Share Registrars Limited, Craven House, West Street, Farnham, Surrey GU9 7EN not less
than 48 hours before the time for holding the meeting or adjourned meeting.
3 In the case of joint holder, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the
votes of any other joint holders. For these purposes, seniority shall be determined by the order in which the names stand in the register of
members in respect of the joint holding.
4 In the case of a corporation, the form of proxy must be executed under its common seal or signed on its behalf by a duly authorised attorney
or duly authorised officer of the corporation.
5 The Company, pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those shareholders registered
in the register of members of the Company as at 10 a.m. on 14 January 2006 shall be entitled to attend and vote, whether in person or by proxy,
at the Extraordinary General Meeting, in respect of the number of Ordinary Shares registered in their name at that time. Changes to entries
in the register of members after 10 a.m. on 14 January 2006 shall be disregarded in determining the rights of any person to attend or vote at
the Extraordinary General Meeting. If the Extraordinary General Meeting is adjourned, entitlements to attend and vote will be determined
by reference to the register of members of the Company 48 hours before the time of the adjourned meeting.
6 Completion and return of the form of proxy will not preclude members from attending or voting in person at the meeting if they so wish.
7 Resolution 1 will be taken on a poll of independent Shareholders in accordance with the requirements of the Panel on Takeovers and Mergers
for the waiver of the obligation under Rule 9 of the City Code on Takeovers and Mergers.
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Capital Printing Systems (UK) Limited 30427