New Capital to Complete US Pivotal ReActiv8-B Clinical Study and Advance European Commercialization
Mainstay Medical International plc (Mainstay or the Company, Euronext Paris: MSTY.PA and ESM of the Irish Stock Exchange: MSTY.IE), a medical device company focused on bringing to market ReActiv8®, an implantable neurostimulation system to treat disabling Chronic Low Back Pain, announces today that it has raised gross proceeds of €30.1 million through the issue of 2,151,332 new ordinary shares (New Shares) to new and existing shareholders.
The funds raised in this financing will be used to significantly advance Mainstay’s business. In particular, the net proceeds will be used:
- to complete the U.S. Pivotal ReActiv8-B Clinical Study in support of an application for pre-market approval (PMA) from the US Food and Drug Administration (FDA)
- to advance the initial commercialization of ReActiv8 in Germany and additional markets
- to invest in early commercial activities in preparation for launch in the United States
- for general corporate purposes.
Jason Hannon, CEO of Mainstay, commented: “Our goals for the next two years are clear: complete the ReActiv8-B clinical study, file the PMA for ReActiv8 with the FDA, and build our commercial presence in 2018 for more meaningful commercial expansion starting in 2019. A key focus in 2018 will be building market awareness in Germany and developing reference sites who care for chronic back pain patients and believe in ReActiv8. Over the next year we are targeting to have 10 or more physician partners who have performed multiple implants, with whom we will work to expand market awareness and adoption, refine patient selection strategies and follow ongoing patient progress. This financing provides the capital to drive forward on all these goals.”
- In December 2017, we announced the positive outcome of the Interim Analysis of the ReActiv8-B Study. The Independent Data Monitoring Committee recommended the continuation of the
- Study with a definitive size of 168 evaluable patients. The DMC also reported that they had no safety concerns in the Study.
- The ReActiv8-B Study is expected to be fully enrolled by the end of the second quarter of 2018, with a full data readout expected towards the end of 2018. The ultimate number of patients in the Study will be higher than 168 due to the nature of the enrollment process.
- Mainstay has continued to advance the initial commercialization of ReActiv8 in Europe. Our European commercial activities are initially focused on Germany, where we are working to drive adoption in a select number of high volume spine care centers to develop reference sites.
- To date, 5 centers in Germany and Ireland have implanted patients with ReActiv8, and several additional sites have been trained.
- We were recently issued a new US Patent, U.S. Patent No. 9,861,811 “Electrical Stimulator for Treatment of Back Pain and Methods of Use”, bringing the total current number of US issued patents in the Mainstay portfolio to nine.
Investors in the Financing
The investors in this pivotal financing are primarily institutions in Europe and North America, at a price of €14 per New Share. The Ireland Strategic Investment Fund) (ISIF) is participating in the financing, subscribing for 714,285 New Shares, representing approximately 33.2% of the total number of New Shares, for an amount of approximately €10 million. ISIF is an Irish sovereign development fund with a statutory mandate to invest on a commercial basis in a manner designed to support economic activity and employment in Ireland. ISIF played a key role in this transaction.
Mainstay is implementing plans to bring additional elements of its operations to Ireland following the ISIF investment. Mainstay will build on its Irish footprint and benefit from the strong local talent base. These elements of operational infrastructure will take shape as the Company’s business scales commercially. These investments will, the Directors believe, support the Company’s growth over time and allow it to reach more customers, while simultaneously adding investment and job creation to the Irish market.
Specific information regarding the Financing
The New Shares will be issued immediately following the publication of this announcement. In addition to ISIF, the Company’s existing long-term investors, Sofinnova Partners, Fountain Healthcare Partners and KCK Limited and several individual investors, are also participating in the financing.
The New Shares, when issued, will represent an increase of approximately 32.5% from the Company's existing issued ordinary share capital. Following issuance of the New Shares, the Company’s issued share capital will consist of 8,770,229 Ordinary Shares of €0.001 each (which carry voting rights) and 40,000 deferred shares with a nominal value of €1.00 each (which do not carry voting rights). Therefore, the figure that should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their holdings of voting rights, or a change to their holdings of voting rights, over the Ordinary Shares of the Company under the Transparency (Directive 2004/109/EC) Regulations 2007 of Ireland, as amended and the Transparency Rules of the Central Bank of Ireland is 8,770,229.
The New Shares, when issued, will be fully paid and rank pari passu in all respects with the existing issued Ordinary Shares, except that the New Shares will not be admitted to trading on Euronext Paris or the Enterprise Securities Market (ESM) of the Irish Stock Exchange plc (Admission) until the Company has published a prospectus that is required to effect the admission to trading of the New Shares on Euronext Paris in accordance with Directive 2003/71/EC (as amended). The Company expects to publish that prospectus (which requires approval by the Central Bank of Ireland and which will be passported into France), and that Admission will occur, by 15 May 2018. Under the terms of the subscription agreements for the New Shares, the Company has agreed that if Admission does not occur by 120 days after the issuance of the New Shares, then for all or part of one or more of the consecutive 30 day periods following that date (a Relevant Period) during which Admission does not occur the Company shall separately pay to each investor, as liquidated damages, a cash payment of 0.5% of the total subscription price paid by the relevant investor for each Relevant Period (or partial Relevant Period) during which Admission has still not occurred; provided, however that in no event shall the Company be required to pay to any investor an aggregate amount that exceeds 5% of the total subscription price paid by that investor. Any such payment(s) shall be made within five Business Days of the end of each such Relevant Period.
Sofinnova Partners, KCK Limited and Fountain Healthcare Partners (who are considered substantial shareholders under the Enterprise Securities Market Rules for Companies (ESM Rules)) will subscribe for 250,000, 428,572 and 138,280 New Shares respectively. Their participation in the financing will constitute related party transactions under Rule 13 of the ESM Rules. The Directors, with the exception of Antoine Papiernik (with respect to Sofinnova Partners), Nael Karim Kassar and Greg Garfield (with respect to KCK Limited) and Manus Rogan (with respect to Fountain Healthcare Partners), consider, having consulted with J&E Davy, the Company’s ESM Adviser, that the terms of the participation of Sofinnova Partners, KCK Limited and Fountain Healthcare Partners in the financing are fair and reasonable insofar as Mainstay shareholders are concerned.
Jason Hannon, who is a Director, will also participate in the financing, subscribing for 30,000 New Shares, so that following completion of the financing, he will hold 30,000 Ordinary Shares, representing 0.3% of the enlarged issued ordinary share capital of the Company.
David Brabazon, who is also a Director, will also participate in the financing, subscribing for 30,000 New Shares, so that following completion of the financing, he will hold 57,828 Ordinary Shares, representing 0.7% of the enlarged issued ordinary share capital of the Company.
Greg Garfield, who is also a Director, will also participate in the financing, subscribing for 2,912 New Shares, so that following completion of the financing, he will hold 2,912 Ordinary Shares, representing 0.03% of the enlarged issued ordinary share capital of the Company.
Kempen (Amsterdam) acted as financial adviser and coordinating placement agent, J&E Davy (Dublin) acted as financial adviser and ESM Adviser, Merrion Capital (Dublin) acted as financial adviser and placement agent and LifeSci Capital acted as financial adviser and placement agent.
This Announcement contains inside information for the purposes of the Market Abuse Regulation (EU) No 596/2014 (MAR). Market soundings, as defined in MAR, were taken in respect of the Financing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this Announcement. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.
The person responsible for arranging release of this Announcement on behalf of Mainstay is Tom Maher.
Mainstay is a medical device company focused on bringing to market an innovative implantable neurostimulation system, ReActiv8®, for people with disabling Chronic Low Back Pain (CLBP). The Company is headquartered in Dublin, Ireland. It has subsidiaries operating in Ireland, the United States, Australia, Germany and the Netherlands, and is listed on regulated market of the Euronext Paris (MSTY.PA) and the ESM of the Irish Stock Exchange (MSTY.IE).
About Chronic Low Back Pain
One of the recognized root causes of CLBP is impaired control by the nervous system of the muscles that dynamically stabilize the spine in the low back, and an unstable spine can lead to back pain. ReActiv8 is designed to electrically stimulate the nerves responsible for contracting these muscles and thereby help to restore muscle control and improve dynamic spine stability, allowing the body to recover from CLBP.
People with CLBP usually have a greatly reduced quality of life and score significantly higher on scales for pain, disability, depression, anxiety and sleep disorders. Their pain and disability can persist despite the best available medical treatments, and only a small percentage of cases result from an identified pathological condition or anatomical defect that may be correctable with spine surgery. Their ability to work or be productive is seriously affected by the condition and the resulting days lost from work, disability benefits and health resource utilization put a significant burden on individuals, families, communities, industry and governments.
Further information can be found at www.mainstay-medical.com
CAUTION – in the United States, ReActiv8 is limited by federal law to investigational use only.
PR and IR Enquiries:
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LifeSci Advisors, LLC
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