19 June 2023

PSYCH CAPITAL PLC

("Psych", "Psych Capital", or "the Company")

Acquisition of Short Wave Pharma for £3.5m via Cash and Equity

Board Appointments

London, 19th June 2023 - Psych Capital PLC, a leading global investment firm specialising in the healthcare sector, is pleased to announce that it has agreed to acquire 100% of the issued share capital of  Shortwave Pharma Inc. ("Shortwave Pharma"), a biopharmaceutical drug-development company ("Acquisition"), expanding the Company's pharmaceutical portfolio to address the growing market for eating disorders. The main terms of the Share Purchase Agreement ("SPA") are outlined further below.

Shortwave Pharma, an Ontario registered company with operations based in Israel, develops breakthrough therapies to address unmet medical needs in the field of mental health, with focus on the area of eating disorders. This strategic acquisition aligns with Psych Capital's commitment to improving patient care and advancing mental healthcare through innovative treatments.

Shortwave Pharma's initial program is a transformative therapy for anorexia nervosa, the most fatal eating disorder, a complex and often underserved area of healthcare. Eating disorders, including anorexia nervosa, bulimia nervosa, and binge-eating disorder, affect millions of individuals worldwide. According to the World Health Organization, it is estimated that approximately 9% of the global population suffers from an eating disorder, highlighting the significant market opportunity for effective treatments.

Shortwave Pharma developed a novel delivery method and drug combination for its initial eating disorders programme for anorexia nervosa. It has completed the preliminary early-stage activities that demonstrate the chemistry, manufacturing and controls ("CMC") and preclinical abilities of its drug delivery product. The final product meets regulatory requirements for the early phases of the clinical studies. The preclinical programme has so far demonstrated not only the safety profile of the drug, but also the ability of the Shortwave Pharma's product to bring the active ingredients to the blood flow without the first pass metabolism, which, Shortwave Pharma believes, will dramatically improve the efficacy of the drug and will allow a better safety profile.

Shortwave Pharma is continuing with pre-clinical studies to complete the profiling of the drug, which should support the design of the clinical studies coming up later this year.

 Principal Deal Terms

Psych Capital has agreed to pay £3.5m through a combination of cash and new ordinary shares of £0.001 each ("Ordinary Shares") as follows:

-      Initial consideration shares of 71,170,131 new Ordinary Shares to be issued at a presumed price of £0.04 per share.  

-     New Ordinary Shares of 9,015,100 pursuant to deferred consideration shares of 9,015,100. The deferred consideration shares will be issued conditionally on Shortwave Pharma obtaining a positive examiner opinion including at least one novel and non-obvious claim in at least one patent application filed under the Patent Cooperation Treaty (PCT) filings taking priority from the currently submitted US provisional applications. The conditionality must be met by 31 December 2024 in order for the deferred consideration shares to be issued.

-   New Ordinary Shares of 7,499,998 pursuant to deferred guarantee shares of 7,499,998. The deferred guarantee shares will be issued on the first anniversary of the Completion Date, subject to no claims in respect of warranties set out in the SPA.

-      Cash payment of US$120,000.

-      Consideration subject to 12-month lock-in followed by 12-month orderly market agreement.

Concurrently with the Acquisition, Shortwave Pharma has raised US$510,00 (including the US$120,000 cash payment by the Company) through a simple agreement for future equity ("SAFE").

The acquisition of Shortwave Pharma by Psych Capital PLC positions the combined entity as a leading player in the field of eating disorder treatments. By leveraging Shortwave Pharma's expertise in drug development, coupled with Psych Capital's extensive resources and global network, as well as its commitment to innovation in the field of mental health, the combined entity aims to accelerate the development of novel therapies and address the urgent needs of patients suffering from these critical illnesses. 

William Potts, CIO of Psych Capital PLC, emphasised the importance of this acquisition, stating, "The acquisition of Shortwave Pharma represents a significant step forward in our mission to improve the lives of individuals affected by mental illnesses such as eating disorders. With their scientific prowess and innovative approach to drug development, we are well-positioned to make meaningful advancements in this critical area of healthcare. The market opportunity for eating disorder treatments is substantial, and there is a pressing need for effective therapies that can address the complex nature of these disorders" he added.

Board Appointments

The Company is pleased to announce that Rivki Stern Youdkevich of Shortwave Pharma will join as CEO of the Company and as board  member of Psych Capital upon deal completion. In addition, the Warrantors of Shortwave Pharma have the right to nominate an additional board director of Psych Capital within six months of the Completion Date, subject to background or regulatory checks as required by the AQUIS adviser.

Co-founder and CEO at Shortwave Pharma, Rivki Stern has over 2 decades of entrepreneurial, financial, and hands-on management experience in life sciences and biotech, consumer goods and services Rivki is a CPA (Isr.) and MBA with vast experience in strategy and business development in the US, Europe and Asia. 

In recent years Rivki led go-public processes (NASDAQ: IMCC, CSE: IMCC) and raised over $30M for cannabis and biotech companies in the fields of diagnostics, therapeutics and clinical development. 

Rivki was member of the board of Israeli governmental companies, private bio-pharma companies, serves as consultant to the Israeli government, to accelerator programs and investment funds and is a member of the executive management committee at University of Haifa.

Further information on Rivki Stern (born 26 November 1967):

Except as set out above, there is no further information regarding Rivki Stern, that is required to be disclosed pursuant to Rule 4.9 of the AQSE Growth Market Access Rulebook.

Upon the issue of the initial consideration shares, Rivki Stern will hold 9,394,231 Ordinary Shares of the Company, representing 2.6% of the enlarged issued share capital, and no options in the Company.

Total Voting Rights

Following the issue of the 71,170,131 new Ordinary Shares pursuant to the initial consideration, the Company will have 361,203,466 Ordinary Shares in issue, which also represents the total number of voting rights in the Company. The Company does not hold any ordinary shares in treasury. This figure should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest.

Following the issue of the initial consideration shares, the interests of the other Directors of the Company are

William Potts is the son of Christopher Potts. Christopher Potts is interested in 54,780,247 Ordinary Shares, and together, Christopher and William's combined interest following the issue of the initial consideration shares will be 18.13% of the issued share capital.

About Psych Capital Plc

Psych Capital Plc identifies, funds and aims to support the building of leading companies across three core pillars: next-gen drug development, integrated therapeutics and digital and data ancillary services. Its mission is to support and operate a new wave of scientific innovations that challenge the status quo and revolutionise how society deals with mental health conditions.

About Shortwave Pharma:

Short Wave Pharma Inc. is an Israeli-based biopharmaceutical company developing novel formulations of psilocybin and additional APIs, as well as customised delivery methods, to effect significant additional benefits for patients suffering from mental health disorders, with an initial focus on eating disorders. The Company is conducting pre-clinical studies related to its anorexia nervosa product comprised of a novel formulation and a buccal film delivery system and plans to be ready for phase I/IIa trials in Q4 2023. Shortwave's leadership team combines years of experience in drug development and clinical research, accelerated regulatory pathways and pharmaceutical industry expertise. By leveraging advanced technologies and a commitment to scientific excellence, Shortwave Pharma aims to make a lasting impact on global mental healthcare.

The Directors of the Company accept responsibility for the contents of this announcement.

Enquiries:

Company:

Joseph Colliver: +44 20 3838 7621

William Potts: +44 20 3838 7621

[email protected]

https://psych.capital

Peterhouse Capital Limited:

Corporate Adviser:
Guy Miller / Narisha Ragoonanthun: + 44 (0) 20 7469 0930

Corporate Broker

Lucy Williams: +44 (0) 20 7469 0930
Duncan Vasey: +44 (0) 20 7220 9797 (Direct)