Funds to be used to support PMA process for ReActiv8® in US and to further European commercial validation efforts
Gross proceeds, together with savings from previously-announced debt restructuring, provides approximately $28 million in cash runway extension
Dublin, Ireland: Mainstay Medical International plc (Mainstay or the Company, Euronext Paris: MSTY.PA and Euronext Growth of Euronext Dublin: 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 completed financing transactions to raise gross proceeds of €16.9 million (US$18.9) million.
Jason Hannon, CEO of Mainstay, commented: “Our objectives for the remainder of 2019 and 2020 are clear: file the pre-market approval (PMA) application for ReActiv8 with the U.S. Food and Drug Administration (FDA) this summer; advance the PMA review process with the FDA, with an approval decision expected in late 2020; and continue the commercial validation effort in Germany and other select European markets by working with key physician partners who identify appropriate ReActiv8 patients in their centres in order to validate commercial adoption, refine patient selection strategies and follow ongoing patient progress. We are pleased with the outcome of this financing, which was oversubscribed. These deals will provide the capital to expeditiously advance each of these goals and, together with our previously-announced debt restructuring, expands our expected cash runway into 2021.”
The total cash runway extension achieved by Mainstay amounts to approximately $28.0 million: approximately $18.9 million in gross proceeds from the financing transactions and approximately $9.1 million in savings that resulted from the Company’s restructuring of its debt completed in April.
Specific information regarding the Financing
The financing transactions consist of the issuance of 4,649,775 new ordinary shares (New Shares) at a purchase price of €3.00 per New Share and the drawdown of €3.0 million in additional debt from the Company’s existing lender. The investors in the equity financing are primarily existing shareholders in the Company (principally Sofinnova Partners, KCK Limited, Fountain Healthcare Partners and several individual investors).
The New Shares, when issued, will represent an increase of approximately 53.0% from the Company's existing issued ordinary share capital. Following issuance of the New Shares, the Company’s issued share capital will consist of 13,421,504 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 13,421,504.
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 Euronext Growth market (Euronext Growth) of Euronext Dublin (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 EU prospectus law. 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 Euronext Growth Markets Rule Book (Euronext Growth Rules)) will subscribe for 533,333, 654,000 and 1,333,333 New Shares, respectively. Their participation in the financing will constitute related party transactions under Rule 5.18 of the Euronext Growth Rules. The Directors, with the exception of Antoine Papiernik (with respect to Sofinnova Partners) and Nael Karim Kassar and Greg Garfield (with respect to KCK Limited), consider, having consulted with J&E Davy, the Company’s Euronext Growth 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.
David Brabazon, who is a Director, will also participate in the financing, subscribing for 155,000 New Shares, so that following completion of the financing, he will hold 212,828 Ordinary Shares, representing 1.6% of the enlarged issued ordinary share capital of the Company.
This announcement contains inside information for the purposes of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (the “Market Abuse Regulation” or “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 Matt Onaitis.
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 Euronext Growth market of Euronext Dublin (MSTY.IE).
About Chronic Low Back Pain
One of the root causes of CLBP is impaired control by the nervous system of the muscles that dynamically stabilize the spine. ReActiv8 is designed to electrically stimulate the nerves responsible for contracting these muscles to 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:
LifeSci Advisors, LLC
Tel: + 1 (212) 915-2578
FTI Consulting (for Ireland)
Jonathan Neilan or Patrick Berkery
Tel. : +353 1 765 0886
Euronext Growth Advisers:
Fergal Meegan or Barry Murphy
Tel: +353 1 679 6363