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

24 February 2023

Destiny Pharma plc

Fundraising to raise up to £8 million

Destiny Pharma plc (AIM: DEST) (the "Company" or "Destiny Pharma"), a clinical stage innovative biotechnology company focused on the development of novel medicines that can prevent life-threatening infections, today announces a conditional fundraising of up to approximately £8 million (before expenses) comprising a Placing, Subscription and an Open Offer (each as defined below). The net proceeds of the Fundraising will allow the Company to complete final Phase 3 clinical trial preparation for NTCD-M3, including clinical trial material manufacturing; progress XF-73 Nasal CMC manufacturing and Phase 3 preparation; to further progress its preclinical projects; and to provide general working capital to strengthen the balance sheet, which is a condition of the Collaboration and Co-development agreement with Sebela Pharmaceuticals as announced earlier today.

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

The Company has placed new ordinary shares of one pence each ("Ordinary Shares") in the capital of the Company (the "Placing Shares") at a price of 35 pence per Placing Share (the "Issue Price") to raise approximately £7 million (before expenses), (the "Placing"). Of the Placing Shares, 14,285,714 new ordinary shares are being allotted out of existing share authorities and will be admitted on 1 March 2023 the remaining 5,714,286 new ordinary shares will be subject to approval by Shareholders of the requisite authorities at the General Meeting on 16 March 2023.

The Company also announces a conditional subscription by certain directors of the Company (the "Directors" or the "Board") of an aggregate 71,428 new Ordinary Shares (the "Subscription Shares") at the Issue Price to raise £25,000 (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 2,938,284 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 million (before expenses), (the "Open Offer", and together with the Placing and the Subscription, the "Fundraising").

It is intended that the Circular to Shareholders will be posted on 28 February 2023.

Highlights

Neil Clark, CEO of the Company commented:

"This agreement is a landmark transaction for Destiny Pharma, as Sebela Pharmaceuticals is not only planning to finance all future clinical development and commercialisation costs of NTCD-M3 in the US, but also pay success based development and commercialisation milestone payments, as well double-digit royalties. The agreement could be worth up to a maximum of US$570m plus royalty income, which represents a tremendous potential return on investment in a little over two years since acquisition. We not only retain the majority of worldwide rights to NTCD-M3 outside the US, but also have a portfolio of other very valuable, novel drugs candidates in our portfolio, including our  XF-73 Nasal gel, which has  completed a positive Phase 2b clinical trial and is heading towards the final Phase 3 clinical studies. This fundraising will put us in a robust position to continue to work on developing and commercialising these assets.

"We are grateful for the continued support of existing shareholders and are delighted to welcome a large number of new shareholders onto our register in what was an upsized and oversubscribed Placing.   We look forward to a year of further progress and now have an excellent partner in Sebela and a strong balance sheet to complete the development of NTCD-M3, which has a substantial market opportunity and the potential to add significant value to the Company."

finnCap Limited ("finnCap") and Shore Capital Stockbrokers Limited ("Shore Capital") acted as Joint Bookrunners in connection with the Placing.

The Company intends to publish and send a shareholder circular and notice of General Meeting (the "Circular") to Shareholders in connection with the Resolutions and the Open Offer on 28 February 2023. 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] 

finnCap Ltd (Nominated Adviser, Joint Broker and Joint Bookrunner)

Geoff Nash / Abigail Kelly / George Dollemore, Corporate Finance

Alice Lane / Nigel Birks / Harriet Ward, ECM

+44 (0)20 7220 0500

Shore Capital (Joint Broker and Joint Bookrunner)

Daniel Bush / James Thomas / Lucy Bowden

+44 (0) 207 408 4090

Optimum Strategic Communications 

Mary Clark / Nick Bastin / Jonathan Edwards / Eleanor Cooper

+44 (0) 7931 500066

[email protected] 

MC Services AG (Placing Agent)

Anne Hennecke / Andreas Burckhardt

+49-211-529252-12

Stern IR - US

Janhavi Mohite

+1-212-362-1200

[email protected]

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 completed a positive Phase 2b clinical trial targeting the prevention of post-surgical staphylococcal hospital infections including MRSA. It is also co-developing SPOR-COV, a novel, biotherapeutic product for the prevention of COVID-19 and other viral respiratory infections and has earlier grant funded XF drug 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, finnCap, Shore Capital, MC Services 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, finnCap, Shore Capital and MC Services 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.

Shore Capital Stockbrokers Limited ("Shore Capital") is authorised and regulated by 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 Shore Capital 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 finnCap, Shore Capital, 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, finnCap, Shore Capital and MC Services 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 raised £7 million (before expenses) by way of a placing of 14,285,714 First Placing Shares, 5,642,858 Second Placing Shares and 71,428 Subscription Shares, in each case, at a price of 35 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 up to 2,938,284 Open Offer Shares, to raise up to approximately £1 million (before expenses), on the basis of 1 Open Offer Share for every 25 Existing Ordinary Shares held on the Record Date, at 35 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 Fundraise is approximately £8 million (before expenses), assuming that the Open Offer is fully subscribed.

The net proceeds of the Fundraise will be used for clinical trial material manufacturing and final Phase 3 clinical trial preparation for NTCD-M3, progression  of XF-73 CMC manufacturing and phase 3 preparation, to progress preclinical projects, and to provide general working capital to strengthen the balance sheet, a condition of the Collaboration and Co-Development agreement with Sebela Pharmaceuticals as detailed below. finnCap and Shore Capital have conditionally agreed, pursuant to the terms of the Placing Agreement, to use their reasonable endeavours to procure Placees to subscribe for the Placing Shares at the Issue Price. The Second 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 and Nick Rodgers are participating in the Fundraise and have agreed to conditionally subscribe for 71,428 Subscription Shares in aggregate at the Issue Price. The Directors will not take up any entitlements they have under the Open Offer.

The First Placing does not require Shareholder approval because the First Placing Shares will be issued pursuant to the Shareholder authorities granted at the Company's 2022 annual general meeting. Accordingly, completion of the First Placing and First Admission is expected to occur at 8.00 a.m. on 1 March 2023 or such later time and/or date as finnCap, Shore Capital and the Company may agree, not being later than 8.30 a.m. on 31 March 2023.

The Second 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 11.00 a.m. on 16 March 2023.

The issue of the Second Placing Shares is conditional upon the passing of the Resolutions and Second Admission.

Application has been made to the London Stock Exchange for the First Placing Shares and the Second Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the First Placing Shares will commence at 8.00 a.m. on 1 March 2023 and in respect of the Second Placing Shares and the Subscription Shares at 8.00 a.m. on 17 March 2023 (being the business day following the General Meeting) or such later time and/or dates as the Company, finnCap and Shore Capital may agree (being in any event no later than 8.00 a.m. on 31 March 2023).

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

Background on the Company

Destiny Pharma is a clinical stage innovative biotechnology company focused on the development of novel medicines that can prevent life-threatening infections. The Company has a rich pipeline of de-risked assets including NTCD-M3 and its XF antimicrobial drug platform which includes XF-73 Nasal, the lead drug candidate developed from the XF platform which is expected to enter Phase 3 in 2024, subject to the Company securing a partnering deal in 2023. The Company also has a grant funded COVID-19/influenza preclinical programme testing a nasal bacterial spray and two active dermal infection research programmes using new XF-73 formulations with one programme being funded by a US government group and the other by China Medical Systems ("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.

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. NTCD-M3 is the world's first, single strain, live biotherapeutic product being developed to reduce the recurrence of CDI in the gut. 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 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 promising clinical data from previously reported Phase 2 studies showing that it significantly reduces the levels of recurrence in CDI patients. The planned Phase 3 study design for NTCD-M3 has been approved by the FDA and the EMA and subject to the final development plan the Phase 3 trial could commence in 2024.

NTCD-M3 Collaboration and Co-Development Agreement

Destiny Pharma's stated strategy is to seek partners to co-fund its assets through Phase 3 trials to commercialisation. In line with this strategy, having considered a range of potential partners for NTCD-M3, the Company has signed an exclusive conditional collaboration and co-development agreement for the North American (U.S., Canada, Mexico) rights of NTCD-M3 with Sebela Pharmaceuticals^® ("Sebela"), a U.S. pharmaceutical company with a market-leading position in gastroenterology. Under the terms of the Collaboration and Co-Development Agreement, it is anticipated that Sebela will lead and finance all future North American and European clinical development and commercialisation activities of NTCD-M3 in North America (U.S., Canada and Mexico). Destiny Pharma will retain its NTCD-M3 rights for Europe and Rest of the World (excluding China region that is owned by China Medical Systems) and Sebela will hold a minority interest in any income generated in these non-North American territories based on the clinical studies it is funding.

The Collaboration and Co-Development Agreement fully funds NTCD-M3 clinical development through to commercialisation and includes upfront, development and sales milestones, which could be worth up to $570 million, as well as royalties, as follows:

·      an initial upfront payment of $1 million;

·      success-based development milestones of $19 million;

·      sales revenues-based milestone payments up to $550 million; and

·      tiered, royalties between 10% and 18% from launch.

The Collaboration and Co-Development Agreement is conditional on Destiny Pharma strengthening its balance sheet with a net funding requirement of £4 million or other amount as agreed between the Company and Sebela. Subject to First Admission becoming effective (which is expected to occur at 08.00 a.m. on 1 March 2023), this condition will be satisfied.  The Company will continue to complete the ongoing manufacture of all clinical trial supplies needed to undertake the required clinical studies. Sebela has reserved the right to carry out an additional Phase 2 study to de-risk Phase 3 further at its own cost (c.$3.5 million). If the results from additional Phase 2 study are positive and Sebela does not proceed to Phase 3, but NTCD-M3 is subsequently approved as a product, Destiny Pharma will reimburse the Phase 2 cost (capped at $3.5 million) over two years following commercial launch of NTCD-M3 in the future. There are no additional clinical costs which are expected be borne by Destiny Pharma.

The Board believes that the Collaboration and Co-Development Agreement:

·      significantly de-risks the development of NTCD-M3 with no additional clinical trial funding required by the Company;

·      provides the Company with an excellent,  specialist partner that is well-capitalised to finance the final clinical trials for NTCD-M3 and which is well placed to pursue regulatory approval with the FDA following the completion of such clinical trials;

·      provides Destiny Pharma with considerable potential future returns in the form of both milestone payments and royalties;

·      allows Destiny Pharma the ability to consider further partnering agreements in respect of the European and Rest of World rights (excluding China region) to NTCD-M3; and

·      validates the Company's approach of seeking clinical development partners for its pipeline of assets.

The completion of the Collaboration and Co-Development Agreement is conditional upon the Fundraise. Accordingly, the Board has pursued the Fundraise which it believes is in the best interests of the Company and its shareholders.

About Sebela Pharmaceuticals^®

Sebela Pharmaceuticals is a U.S. pharmaceutical company with a market leading position in gastroenterology and a focus on innovation in women's health. Braintree, a part of Sebela Pharmaceuticals, has been the market leader in colonoscopy screening for over 35 years, having invented, developed and commercialised a broad portfolio of innovative prescription colonoscopy preparations and multiple gastroenterology products. Braintree also has multiple gastroenterology programs in late-stage clinical development. In addition, Sebela Women's Health has two next generation intra-uterine devices for contraception in the final stages of clinical development. Sebela Pharmaceuticals, with offices/operations in Roswell, GA; Braintree, MA; and Dublin, Ireland; has annual net sales of approximately $200 million and has grown to over 320 employees through strategic acquisitions and organic growth.

The Company intends to use the net proceeds of £6.4 million from the Fundraise as follows:

Additional funding received from the Open Offer will be used to progress the XF-73 Nasal programme, as additional working capital and to progress the XF-73 Dermal and SPOR-COV projects towards clinical trials.

As well as progressing partnering discussions relating to NTCD-M3 as detailed above, during 2022 Destiny Pharma also defined the US and EU Phase 3 clinical development plan for XF-73 Nasal, a novel nasal gel for the prevention of post-surgical infections. Destiny Pharma is now running an active partnering campaign for XF-73 Nasal with some early discussions already underway. The target is to secure a commercialisation partner for the XF-73 Nasal programme in 2023.

For both lead clinical programmes, the Company is seeking to close partnerships with pharmaceutical companies that can lead the commercialisation of NTCD-M3 and XF-73 Nasal in key markets, as well as contribute to the funding and design of the required Phase 3 clinical trials.

Good progress has also been made on the Company's earlier pre-clinical pipeline programmes and 2022 ends with two active dermal infection projects running in the US and China, and with the completion of the SPOR-COV COVID-19 grant-funded collaboration. Further updates on these projects will be announced in H1 2023.

The Company has raised £5m (before expenses) by way of the First Placing by the proposed issue of, in aggregate, 14,285,714 Placing Shares at the Issue Price.

The First Placing is being made pursuant to existing authorities to allot shares for cash and disapply pre-emption rights under section 551 and section 570 of the Act, which were granted to the Directors at the Annual General Meeting of the Company held on 27 May 2022. Accordingly, completion of the First Placing and First Admission, which is expected to occur at 8.00 a.m. on 1 March 2023 or such later time and/or date as finnCap, Shore Capital and the Company may agree, not being later than 8.30 a.m. on 31 March 2023.

The Company has raised £2 million (before expenses) by way of the Second Placing and Subscription by the proposed issue of, in aggregate, 5,714,286 Placing Shares and Subscription Shares at the Issue Price.

The Company will require further share authorities to allot the Second Placing Shares and the Open Offer Shares. Accordingly, the Second Placing is conditional, inter alia, upon the passing of Resolution 1 and the Open Offer is conditional, inter alia, on the passing of both Resolution 1 and Resolution 2 by Shareholders at the General Meeting. This means that whilst the Second Placing can go ahead if the Open Offer resolution (Resolution 2) is not passed, the Open Offer will only go ahead if the Second Placing also goes ahead.

The Resolutions are contained in the Notice of General Meeting at the end of the Circular. Second Admission is expected to occur at 8.00 a.m. on 17 March 2023 or such later time and/or date as finnCap, Shore Capital and the Company may agree, not being later than 8.30 a.m. on 31 March 2023.

The Second Placing is conditional, inter alia, on the following:

a)   First Admission having occurred;

b)   the Resolutions being passed at the General Meeting;

c)   the Placing Agreement not having been terminated prior to Second Admission and becoming unconditional in all respects; and

d)   Admission of the Second Placing Shares having become effective on or before 8.00 a.m. on 17 March 2023 (or such later date and/or time as the Company and the Joint Bookrunners may agree, being no later than 8.30 a.m. 31 March 2023).

In addition, each of Neil Clark, Shaun Claydon and Nick Rodgers are participating in the Fundraise and have agreed to subscribe for 71,428 Subscription Shares in aggregate at the Issue Price.

Alongside the Placing, the Company is making the Open Offer pursuant to which it may raise a further amount of up to approximately £1 million (before expenses). The proposed issue price of 35 pence per Open Offer Share is the same price as the price at which the 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   22,938,284 new Ordinary Shares, representing approximately 24 per cent of the Enlarged Share Capital following Admission.

The Issue Price represents a discount of approximately 27 per cent. to the closing mid-market price of 48 pence per Existing Ordinary Share on 23 February 2023, being the last practicable date prior to the date of the announcement of the Fundraise. The New Ordinary Shares (assuming take up of the Open Offer in full) will represent approximately 24 per cent. of the Enlarged Issued Share Capital and will, when issued, rank pari passu in all respects with the other Existing Shares in issue.

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 and Shore Capital, as agents of the Company, have conditionally agreed to use their 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, the Sebela Documents not being terminated, rescinded or amended, and Admission becoming effective on or before 8.00 a.m. on 1 March 2023 in respect of the First Placing Shares and 17 March 2023 in respect of the Second Placing Shares and the Subscription Shares (or such later time and/or date as the Company, finnCap and Shore Capital may agree, but in any event by no later than 8.00 a.m. on 31 March  2023).

The Placing Agreement contains customary warranties from the Company in favour of finnCap and Shore Capital 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 and Shore Capital in relation to certain defined liabilities that they may incur in respect of the Fundraise.

finnCap and Shore Capital have the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, if any of the Sebela Documents are terminated, rescinded or amended, and in the event of a material breach of the warranties given to finnCap and Shore Capital 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 approximately £25,000 (before expenses) through the issue of 71,428 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 and Nick Rodgers have conditionally agreed to subscribe for an aggregate of 71,428 Subscription Shares as set out below.

*assuming full take-up of the Open Offer Shares under the Open Offer

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.

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 25 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 1 March 2023 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 Open Offer 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.

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 the Circular 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 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 15 March 2023.

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 1 March 2023. 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 15 March 2023.

The issue of Subscription Shares to Neil Clark, Shaun Claydon and Nick Rodgers 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, Debra Barker, James Stearns, Aled Williams and Nigel Brooksby, 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.

Application will be made to the London Stock Exchange for the First Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence in the First Placing Shares at 8.00 a.m. on 1 March 2023.

Subject to the passing of Resolutions 1 and 2, it is expected that Second Admission will become effective and that dealings in the Second Placing Shares and the Subscription Shares will commence at 8.00 a.m. on 17 March 2023.

You will find set out at the end of the Circular a notice convening the General Meeting to be held at the offices of Covington & Burling LLP, 22 Bishopsgate, London, EC2N 4BQ on 16 March 2023 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 Second Admission 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 Second Admission Shares for cash in connection with the Fundraise.

The Company intends to propose additional resolutions to put in place a new authority to issue additional shares on a non pre-empive basis.

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 beneficial shareholdings of 7,131,246 Ordinary Shares, representing approximately 9.7 per cent. of the Company's existing issued share capital.

APPENDIX I - EXPECTED TIMETABLE OF PRINCIPAL EVENTS

APPENDIX II - SHARE CAPITAL AND FUNDRAISE STATISTICS

DEFINITIONS

The following definitions apply throughout this announcement, unless the context otherwise requires: