THIS ANNOUNCEMENT (INCLUDING THE APPENDICES) (THIS "ANNOUNCEMENT") AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

8 March 2022

Destiny Pharma plc

Fundraising to raise up to £7.0 million

Destiny Pharma plc (AIM: DEST) (the "Company" or "Destiny Pharma"), a clinical stage biotechnology company focused on the development of novel medicines to prevent life threatening infections, today announces a conditional fundraising of up to approximately £7.0 million (before expenses) comprising the Placing, the Subscription and the Open Offer. The net proceeds of the Fundraising will allow the Company to continue progress towards Phase 3 trials in its two lead, clinical assets, NTCD-M3 and XF-73 Nasal, and finalise regulatory plans, whilst also strengthening the balance sheet as the Company progresses partnering discussions in relation to NTCD-M3.

Certain defined terms used in this Announcement are set out in Appendix III to this Announcement.

The Company has conditionally placed 11,860,000 new ordinary shares of one penny each ("Ordinary Shares") in the capital of the Company (the "Placing Shares") at a price of 50 pence per Placing Share (the "Issue Price") to raise approximately £5.9 million (before expenses), (the "Placing").

The Company also announces a subscription by certain directors of the Company (the "Directors" or the "Board") of an aggregate 140,000 new Ordinary Shares (the "Subscription Shares") at the Issue Price to raise £70,000 (before expenses), (the "Subscription").

In addition to the Placing and the Subscription, Qualifying Shareholders will be given the opportunity to subscribe for an aggregate of up to 2,012,269 new Ordinary Shares (the "Open Offer Shares" and, together with the Placing Shares and the Subscription Shares, the "New Shares") at the Issue Price through an open offer to raise up to approximately £1.0 million (before expenses), (the "Open Offer", and together with the Placing and the Subscription, the "Fundraising").

Highlights

Neil Clark, CEO of the Company commented:

"We are very pleased with the results of the fundraising and the support from our existing and new shareholders. The funds will allow us to continue our progress towards the Phase 3 trials in our lead clinical assets, NTCD-M3 and CF-73 Nasal. The capital will also allow us to finalise the regulatory plans and strengthen the Company's balance sheet as the Company progresses its partnering discussions with regards to NTCD-M3."

finnCap is acting as nominated adviser and broker in connection with the Placing.

The Company intends to publish and send a shareholder circular (the "Circular") to Shareholders in connection with the Open Offer in due course. The Circular will be available from the Company's website (www.destinypharma.com) once published.

The person responsible for arranging the release of this Announcement on behalf of the Company is Shaun Claydon, Chief Financial Officer and Company Secretary of the Company.

For further information, please contact: 

Destiny Pharma plc 

Neil Clark, CEO 

Shaun Claydon, CFO 

+44 (0)1273 704 440 

[email protected] 

Optimum Strategic Communications 

Mary Clark / Hollie Vile / Manel Mateus

+44 (0) 208 078 4357

[email protected] 

finnCap Ltd (Nominated Adviser and Joint Broker)

Geoff Nash / Kate Bannatyne / George Dollemore, Corporate Finance

Alice Lane / Nigel Birks / Harriet Ward, ECM

+44 (0)20 7220 0500

MC Services AG (Joint Broker)

Anne Hennecke / Andreas Burckhardt

+49-211-529252-12

About Destiny Pharma

Destiny Pharma is a clinical stage, innovative biotechnology company focused on the development of novel medicines that can prevent life-threatening infections. Its pipeline has novel microbiome-based biotherapeutics and XF drug clinical assets including NTCD-M3, a Phase 3 ready treatment for the prevention of C. difficile infection (CDI) recurrence which is the leading cause of hospital acquired infection in the US and also XF-73 nasal gel, which has recently completed a positive Phase 2b clinical trial targeting the prevention of post-surgical staphylococcal hospital infections including MRSA. It is also co-developing SporCov, a novel, biotherapeutic product for the prevention of COVID-19 and other viral respiratory infections and has earlier grant funded XF research projects. 

For further information on the Company, please visit  https://www.destinypharma.com      

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this Announcement.

IMPORTANT NOTICES

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (1) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2(e) OF REGULATION (EU) 2017/1129 (THE "EU PROSPECTUS REGULATION"); (2) IF IN THE UNITED KINGDOM, QUALIFIED INVESTORS AS DEFINED IN ARTICLE 2(e) OF REGULATION (EU) 2017/1129 AS IT FORMS PART OF UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE "UK PROSPECTUS REGULATION") WHO; (A) FALL WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") (INVESTMENT PROFESSIONALS) OR (B) FALL WITHIN ARTICLE 49(2)(a) TO (d) (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE ORDER; AND (3) OTHERWISE, PERSONS TO WHOM IT IS OTHERWISE LAWFUL TO COMMUNICATE IT TO (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THIS ANNOUNCEMENT AND THE INFORMATION IN IT MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS ANNOUNCEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS ANNOUNCEMENT DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN DESTINY PHARMA PLC.

THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA) (THE "UNITED STATES" OR THE "US") EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE PLACING SHARES ARE BEING OFFERED AND SOLD ONLY OUTSIDE OF THE UNITED STATES IN "OFFSHORE TRANSACTIONS" WITHIN THE MEANING OF, AND IN ACCORDANCE WITH, REGULATION S UNDER THE SECURITIES ACT AND OTHERWISE IN ACCORDANCE WITH APPLICABLE LAWS. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES OR ELSEWHERE.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE OR SUBSCRIPTION INTO THE UNITED STATES.

The distribution of this Announcement and/or the Placing and/or issue of the Placing Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, the Broker or any of their respective affiliates, agents, directors, officers, consultants, partners or employees ("Representatives") that would permit an offer of the Placing Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Placing Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by the Company and the Broker to inform themselves about and to observe any such restrictions.

This Announcement or any part of it is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Australia, Canada, the Republic of South Africa or Japan or any other jurisdiction in which the same would be unlawful. No public offering of the Placing Shares is being made in any such jurisdiction.

All offers of the Placing Shares in the United Kingdom or the EEA will be made pursuant to an exemption from the requirement to produce a prospectus under the UK Prospectus Regulation. In the United Kingdom, this Announcement is being directed solely at persons in circumstances in which section 21(1) of the Financial Services and Markets Act 2000 (as amended) does not require the approval of the relevant communication by an authorised person.

The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Placing or the accuracy or adequacy of this Announcement. Any representation to the contrary is a criminal offence in the United States. The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada, no prospectus has been lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; the relevant clearances have not been, and will not be, obtained from the South Africa Reserve Bank or any other applicable body in the Republic of South Africa in relation to the Placing Shares; and the Placing Shares have not been, nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of the United States, Australia, Canada, the Republic of South Africa or Japan. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa or Japan or any other jurisdiction outside the United Kingdom.

Persons (including, without limitation, nominees and trustees) who have a contractual right or other legal obligations to forward a copy of this Announcement should seek appropriate advice before taking any such action.

This Announcement may contain, or may be deemed to contain, "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the control of the Company, including amongst other things, United Kingdom domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of governmental and regulatory authorities, the effect of competition, inflation, deflation, the timing effect and other uncertainties of future acquisitions or combinations within relevant industries, the effect of tax and other legislation and other regulations in the jurisdictions in which the Company and its affiliates operate, the effect of volatility in the equity, capital and credit markets on the Company's profitability and ability to access capital and credit, a decline in the Company's credit ratings; the effect of operational risks; and the loss of key personnel. As a result, the actual future financial condition, performance and results of the Company may differ materially from the plans, goals and expectations set forth in any forward-looking statements. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Except as required by applicable law or regulation, the Company expressly disclaims any obligation or undertaking to publish any updates or revisions to any forward-looking statements contained in this Announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

finnCap is authorised and regulated by the Financial Conduct Authority (the "FCA") in the United Kingdom and is acting exclusively for the Company and no one else in connection with the Placing or any other matters referred to in this Announcement, and finnCap will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this Announcement.

MC Sevices is authorised and regulated in Germany according to §3 (2) WpIG as a Tied Agent of CapSolutions GmbH and is acting exclusively for the Company and no one else in connection with the Placing or any other matters referred to in this Announcement, and MC Services will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this Announcement.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Broker, MC Services or by any of their respective Representatives as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

No statement in this Announcement is intended to be a profit forecast or estimate, and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

The New Shares to be issued pursuant to the Fundraising will not be admitted to trading on any stock exchange other than the AIM market of the London Stock Exchange.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

Information to Distributors

Solely for the purposes of the product governance requirements contained within Chapter 3 of the FCA Handbook Production Intervention and Product Governance Sourcebook (the "UK Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Requirements) may otherwise have with respect thereto, the New Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of investors who meet the criteria of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in paragraph 3 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all distribution channels (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors (for the purposes of UK Product Governance Requirements) should note that: (a) the price of the New Shares may decline and investors could lose all or part of their investment; (b) the New Shares offer no guaranteed income and no capital protection; and (c) an investment in the New Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom.  The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraising.  Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Broker will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapter 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Shares.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the New Shares and determining appropriate distribution channels.

The following is an extract from the Chairman's letter to be set out in substantially the same form in the Circular.

The Company has conditionally raised £6.0 million, before expenses, by way of a Placing of 11,860,000 Placing Shares and a Subscription of 140,000 Subscription Shares, in each case, at a price of 50 pence per share.

In addition, in order to provide Shareholders who have not taken part in the Placing or the Subscription with an opportunity to participate in the proposed issue of New Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 2,012,269 Open Offer Shares, to raise up to approximately £1.0 million (before expenses), on the basis of 1 Open Offer Share for every 30 Existing Ordinary Shares held on the Record Date, at 50 pence per share. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility.

The total amount that the Company could raise under the Fundraising is approximately £7.0 million (before expenses), assuming that the Open Offer is fully subscribed.

The net proceeds of the Fundraising will allow the Company to continue progress towards Phase 3 trials in its two lead, clinical assets, NTCD-M3 and XF-73 Nasal and finalise regulatory plans, whilst also strengthening the balance sheet as the Company progresses partnering discussions with regards to NTCD-M3.

finnCap has conditionally agreed, pursuant to the terms of the Placing Agreement, to use its reasonable endeavours to procure Placees to subscribe for the 11,860,000 Placing Shares at the Issue Price. The Placing Shares are not subject to clawback and are not part of the Open Offer. Neither the Placing nor the Open Offer are being underwritten.

Each of Neil Clark, Shaun Claydon, Nick Rodgers and Debra Barker are participating in the Fundraise and have agreed to subscribe for 140,000 Subscription Shares in aggregate at the Issue Price. The Directors will not take up any entitlements they have under the Open Offer.

The Placing, the Subscription and the issue of the Open Offer Shares are conditional, inter alia, on the passing by Shareholders of the Resolutions at the General Meeting, which is being convened for 11 a.m. on 28 March 2022.

As part of the Fundraising, the Company is seeking to raise funds by the issue of certain Placing Shares to investors seeking the benefit of relief under the Enterprise Investment Scheme and certain Placing Shares to investors seeking the benefit of tax relief through VCT. The issue of both the Placing Shares and the Subscription Shares are subject to the passing of the Resolutions at a General Meeting. The issue of the Subscription Shares, the Open Offer Shares and the Placing Shares is conditional upon Admission.

For avoidance of doubt, the Open Offer Shares will not be eligible for relief under the Enterprise Investment Scheme or VCT Schemes.

Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the New Shares will commence at 8.00 a.m. on 29 March 2022 (being the business day following the General Meeting) or such later time and/or dates as the Company and finnCap may agree (being in any event no later than 8.00 a.m. on 15 April 2022).

If the conditions relating to the issue of the Placing Shares are not satisfied, or the Placing Agreement is terminated in accordance with its terms, the Placing Shares will not be issued and the Company will not receive the related placing monies.

Background on the Company

Destiny Pharma is an established, clinical stage, innovative biotechnology company focused on the development and commercialisation of novel medicines that can prevent life-threatening infections. The Company's legacy asset, XF-73 Nasal, is targeting the prevention of post-surgical hospital infections caused by Staphylococcal aureus, including MRSA. Following the positive Phase 2 clinical results announced in H1 2021, the Company has been in advanced discussions with regulatory authorities in Europe and the US. These important discussions will help clarify the design, size and cost of the final Phase 3 clinical trials needed prior to registration. It is anticipated that there will be different Phase 3 requirements and therefore the Company expects that two Phase 3 programmes will be expected. It is likely that feedback from EMA (European Medicines Authority) will be received before the US FDA (Food and Drug Administration). The Company expects to receive feedback from the EMA and the FDA during Q2 2022 and is confident that getting clarity on the final Phase 3 studies will help secure partnering agreements. The Company is targeting commencement of these Phase 3 studies in 2023.

The Company also recently commissioned an independent European market research study, the findings of which reinforce the clinical support and market potential of XF-73 nasal gel in Europe. Based on the key fundamentals of clinical need, efficacy, ease of use and value for money, the Company is confident that there is a good European commercial opportunity in addition to the large US market for XF-73 nasal gel. The Company estimates that global peak sales for XF-73 nasal gel could exceed US$1 billion with the US being half of the total market opportunity.

In November 2020, the Company acquired the global rights to NTCD-M3, a Phase 3 ready asset targeting the prevention of C. difficile infection (CDI) recurrence, the leading cause of hospital acquired infection in the U.S. By acquiring the global rights for NTCD-M3, the Company extended its microbiome portfolio alongside the SPOR-COV COVID-19 project that was added in September 2020. The acquisition strengthened further the Company's focus on the prevention of infections and fits well with the Board's strategy to build a world leading anti-infection Company.

NTCD-M3 is the world's first, single strain, live biotherapeutic product being developed to reduce the recurrence of CDI in the gut which is targeted to start Phase 3 trials by the end of 2022. Good progress was made in 2021 with the transfer and commencement of the manufacturing scale up process for NTCD-M3. This is a key project requirement and needs to be delivered to a high standard at high volumes. The Company's clinical team is also finalising the detail of the Phase 3 clinical trial design and expects to conclude discussions with US and European regulators during the first half of 2022. Additionally, supportive microbiological research studies using NTCD-M3 are also underway, and positive results were announced in the first quarter of 2022.

A number of competitor CDI projects delivered clinical trial results in 2021 including companies using faecal matter, bacterial consortia and antibiotic approaches. The results and data reported were encouraging for the Company and the Company remains confident in the superior profile and potential positioning of NTCD-M3 as a targeted, safe, effective and easy to use biotherapeutic preventive treatment. NTCD-M3 has delivered excellent clinical data from previously reported Phase 2 studies showing that it significantly reduces the levels of recurrence in CDI patients. The Company remains very positive that when the planned Phase 3 trials deliver similar results that NTCD-M3 can become a breakthrough product to prevent the recurrence of CDI. This is a substantial commercial opportunity that the Company estimates could lead to peak sales of up to US$500 million in the US alone.

The Company is making good progress in discussions with potential licensing partners for NTCD-M3, with several potential partners active in a data room. This is in line with the Company's stated strategy of seeking partners to help co-fund the required Phase 3 trials and lead commercialisation.

Good progress has also been made with the Company's joint partner SporeGen Limited in carrying out the pre-clinical work on SPOR-COV, the novel bacterial formulation designed to prevent coronavirus and other viral respiratory infections (including COVID-19 and influenza) by stimulating the innate immune system using a simple nasal spray. The work is largely funded by an £800,000 Innovate UK grant. SPOR-COV is being tested in COVID-19 and influenza infection models and the project is due to complete in Q1 2022. Plans for the next stage of development are being progressed to maintain momentum in the project after the grant funded work is completed.

The Company has two active dermal infection research programmes using new XF-73 formulations that are continuing in 2022; one is funded by a US government group and the other by CMS in China.

The Company also has several XF platform research projects that are progressing well and are largely funded by grants and non-dilutive funding.

The Company has conditionally placed 11,860,000 Placing Shares pursuant to the Placing at the Issue Price, which represents a discount of approximately 28 per cent. to the closing mid-market price of 69 pence per Existing Ordinary Share on 7 March 2022, being the latest practicable date prior to the date of the announcement of the Fundraise.

In addition, each of Neil Clark, Shaun Claydon, Nick Rodgers and Debra Barker are participating in the Fundraise and have agreed to subscribe for 140,000 Subscription Shares in aggregate at the Issue Price.

Alongside the Placing, the Company is making an Open Offer pursuant to which it may raise a further amount of up to approximately £1.0 million (before expenses). The proposed issue price of 50 pence per Open Offer Share is the same price as the price at which New Shares are being issued pursuant to the Placing.

The maximum aggregate number of New Shares that may be issued pursuant to the Fundraise is 14,012,269 new Ordinary Shares, representing approximately 18.8 per cent of the Enlarged Share Capital following Admission.

Details of the Placing

finnCap, as agent of the Company, has conditionally placed the Placing Shares at the Issue Price with existing Shareholders and other institutional investors, representing gross proceeds of approximately £5.9 million. The Placing will comprise 11,860,000 Placing Shares.

As part of the Fundraising, the Company is seeking to raise funds by the issue of certain Placing Shares to investors seeking the benefit of relief under the Enterprise Investment Scheme and certain Placing Shares to investors seeking the benefit of tax relief through VCT. The issue of both the Placing Shares and the Subscription Shares are subject to the passing of the Resolutions at a General Meeting. The issue of the Subscription Shares, the Open Offer Shares and the Placing Shares are conditional upon Admission.

The Placing Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares in issue at that time, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission. The Placing Shares are not subject to clawback and are not part of the Open Offer. The Placing is not underwritten.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, finnCap, as agent of the Company, has conditionally agreed to use its reasonable endeavours to procure subscribers for the Placing Shares at the Issue Price. The Placing Agreement is conditional upon, inter alia, the Resolutions being duly passed at the General Meeting, and Admission becoming effective on or before 8.00 a.m. on 29 March 2022 (or such later time and/or date as the Company and finnCap may agree, but in any event by no later than 8.00 a.m. on 15 April 2022).

The Placing Agreement contains customary warranties from the Company in favour of finnCap in relation to, inter alia, the accuracy of the information in the Circular and other matters relating to the Company and its business.  In addition, the Company has agreed to indemnify finnCap in relation to certain defined liabilities that it may incur in respect of the Fundraising.

finnCap has the right to terminate the Placing Agreement in certain circumstances prior to Admission. in particular, in the event of a material breach of the warranties given to finnCap in the Placing Agreement or a material adverse change affecting the business, financial trading position or prospects of the Company.

The Placing Agreement also provides for the Company to pay all costs, charges and expenses of, or incidental to, the Placing and Admission including all legal fees (up to an agreed cap) and other professional fees and expenses.

The Placing Shares have not been made available to the public and have not been offered or sold in any jurisdiction where it would be unlawful to do so.

Details of the Subscription and Directors' participation

The Company has conditionally raised £70,000 (before expenses) through the issue of 140,000 new Ordinary Shares at the Issue Price, pursuant to the Subscription.

The Subscription has not been underwritten and, pursuant to the Subscription Letters, is conditional, inter alia, upon:

Accordingly, if any such conditions are not satisfied or, if applicable, waived (if capable of waiver), the Subscription will not proceed.

Directors Neil Clark, Shaun Claydon, Nick Rodgers and Debra Barker have conditionally agreed to subscribe for an aggregate of 140,000 Subscription Shares as set out below.

*assuming full take-up of the Open Offer Shares

Details of the Open Offer

Subject to the fulfilment of the conditions set out below, Qualifying Shareholders may subscribe for Open Offer Shares in proportion to their holding of Existing Ordinary Shares held on the Record Date. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares as an Excess Entitlement, up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer.

The Open Offer is conditional, inter alia, on the Placing becoming unconditional in all respects and not being terminated before Admission. The principal terms of the Placing are:

Basic Entitlement

On, and subject to the terms and conditions of the Open Offer, the Company invites Qualifying Shareholders to apply for their Basic Entitlement of Open Offer Shares at the Issue Price. Each Qualifying Shareholder's Basic Entitlement has been calculated on the following basis:

1 Open Offer Share for every 30 Existing Ordinary Shares held at the Record Date

Basic Entitlements will be rounded down to the nearest whole number of Ordinary Shares.

Excess Entitlement

Qualifying Shareholders are also invited to apply for additional Open Offer Shares (up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer) as an Excess Entitlement. Any Open Offer Shares not issued to a Qualifying Shareholder pursuant to their Basic Entitlement will be apportioned between those Qualifying Shareholders who have applied for an Excess Entitlement at the sole discretion of the Board, provided that no Qualifying Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.

Qualifying CREST Shareholder stock accounts will be credited as soon as possible after 8.00 a.m. on 10 March 2022 with Basic and Excess Entitlements in such Qualifying CREST Shareholder's name as at the Record Date.

Shareholders with no basic entitlement cannot apply for excess shares.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares in issue at that time, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission. The Open Offer is not underwritten.

Qualifying Shareholders should note that the Open Offer is not a "rights issue". Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market nor will they be placed for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares under the Open Offer.

Settlement and dealings

Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM. It is expected that Admission will become effective at 8.00 a.m. on 29 March 2022.

Overseas Shareholders

The Open Offer Shares have not been and are not intended to be registered or qualified for sale in any jurisdiction other than the United Kingdom. Accordingly, unless otherwise determined by the Company and effected by the Company in a lawful manner, the Application Form will not be sent to Shareholders with registered addresses in, or who are resident or located in the United States or another Restricted Jurisdiction since to do so would require compliance with the relevant securities laws of that jurisdiction. The Company reserves the right to treat as invalid any application or purported application for Open Offer Shares which appears to the Company or its agents or professional advisers to have been executed, effected or dispatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents or professional advisers believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of share certificates for Open Offer Shares outside the UK, or in the case of a credit of Open Offer Shares in CREST, to a CREST member whose registered address would not be in the UK.

Notwithstanding the foregoing and any other provision of this document or the Application Form, the Company reserves the right to permit any Qualifying Shareholder to apply for Open Offer Shares if the Company, in its sole and absolute discretion, is satisfied that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

If a Qualifying Shareholder does not wish to apply for Open Offer Shares he should not complete or return the Application Form or send a USE message through CREST.

Qualifying non-CREST Shareholders

If you are a Qualifying non-CREST Shareholder you will have received a personalised Application Form, which accompanies the Circular and which gives details of your Basic Entitlement (as shown by the number of the Open Offer Shares allocated to you). If you wish to apply for Open Offer Shares under the Open Offer you should complete the accompanying Application Form in accordance with the procedure for application set out in the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post, or by hand (during normal business hours only), to the receiving agent Link Group, Corporate Actions, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL, so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 24 March 2022.

Qualifying CREST Shareholders

Application will be made for the Open Offer Entitlements of Qualifying CREST Shareholders to be credited to stock accounts in CREST. It is expected that the Open Offer Entitlements will be credited to stock accounts in CREST on 10 March 2022. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. If you are a Qualifying CREST Shareholder, no Application Form is enclosed but you will receive credits to your appropriate stock account in CREST in respect of the Basic Entitlements to which you are entitled. You should refer to the procedure for application set out in the Circular. The relevant CREST instruction must have settled by no later than 11.00 a.m. on 24 March 2022.

The issue of Subscription Shares to Neil Clark, Shaun Claydon, Nick Rodgers and Debra Barker constitutes a related party transaction pursuant to Rule 13 of the AIM Rules by virtue of their status as Directors of the Company. William Love, Peter Morgan and Huaizheng Peng, being the independent directors for this purpose, consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Subscription with such related parties is fair and reasonable insofar as the Company's Shareholders are concerned.

You will find set out at the end of the Circular a notice convening the General Meeting to be held at the offices of finnCap Ltd, 1 Bartholomew Close, London, EC1A 7BL on 28 March 2022 at 11.00 a.m. where the following Resolutions will be proposed:

Resolution 1 - An ordinary resolution, which is conditional upon the passing of Resolution 2, to authorise the Directors to allot the New Shares in connection with the Fundraise.

Resolution 2 - A special resolution, which is conditional upon the passing of Resolution 1, which dis-applies statutory pre-emption rights in respect of the allotment of the New Shares in connection with the Fundraise.

The authorities and the powers described in Resolutions 1 and 2 above will (unless previously revoked or varied by the Company in general meeting) expire on the date 3 months from the passing of such Resolutions or at the conclusion of the next annual general meeting of the Company following the passing of the Resolutions, whichever occurs first. The authority and the power described in Resolutions 1 and 2 above are in addition to any like authority or power previously conferred on the Directors.

Your Directors consider that the Fundraise and the authorities granted by the Resolutions are in the best interests of the Company and its Shareholders as a whole. Accordingly, your Directors  unanimously recommend that you vote in favour of the Resolutions as they intend to do in respect of their own shareholdings of 7,667,996 Ordinary Shares, representing approximately 12.7 per cent. of the Company's current issued share capital."

APPENDIX I - EXPECTED TIMETABLE OF PRINCIPAL EVENTS

APPENDIX II - SHARE CAPITAL AND FUNDRAISE STATISTICS

APPENDIX III - DEFINITIONS