Background and reason

Wntresearch is a biotech company in oncology that develops the drug candidate Foxy-5 to prevent the development of cancer metastases. Foxy-5 is currently in the ongoing Phase 2 clinical study NeoFox. The study includes patients with colon cancer in stage II/III, who at diagnosis, according to established assessment criteria, are considered to have a high risk of recurrence after the primary tumor has been surgically removed. Foxy-5 is a peptide that mimics the function of the protein WNT5A which is found naturally in the body, a protein that prevents the spread of cancerous cells in the body. 

The purpose with Foxy-5 is to prevent metastases from occurring, i.e. a tumor spreading to other parts of the body. Preclinical data supports the hypothesis and clinical Phase 1 studies have defined appropriate doses and shown that the substance has a very high safety and tolerance, where treatment can be carried out without the problems that normally arise with other anti-cancer treatments. Metastasis is considered to be the cause of a large part of all cancer-related deaths associated with solid tumors. Although current cancer treatment has become more effective, there are currently no effective ways to prevent the onset of metastases, which causes about 90 per cent of all cancer-related deaths.

The Company’s ongoing NeoFox Phase 2 study with Foxy-5 is ongoing in approximately 25 hospitals and so far, 127 patients have been included. In an ad hoc analysis in August 2022 of approximately 100 patients, a reduced tumor burden, so-called down-staging (in primary tumor and regional lymph nodes), was observed in the group that received Foxy-5. Down-staging means that the tumor burden has decreased at the time of surgery compared to when the patients entered the study. Based on these observations, the Company considered that the NeoFox study should not be completed as originally planned, since the study was not intended to study these observations. In October 2022, the Company announced that following analyses of additional pathology reports, the previous observations have been confirmed and expanded in an updated analysis. An update of the NeoFox study plan has been initiated. The revised study plan creates an opportunity to validate the observations and confirm the preclinical data that constitutes the basis for Foxy-5 and its potential to prevent tumor spread in patients in a shorter time compared to the original study plan for NeoFox.

Provided that the Rights Issue is fully subscribed, the Company will receive initial proceeds of approximately SEK 40.0 million before issue costs, which are expected to amount to approximately SEK 7.0 million. The net proceeds from the Rights Issue thus amount to approximately SEK 33.0 million. The Company intends to use the net proceeds from the Rights Issue to finance the Company’s ongoing Phase 2 study NeoFox through 2023 and part of 2024 as well as continued clinical and regulatory development and intensified business development.

In September 2023, the Company may receive additional proceeds if the warrants series TO 6 that are issued in the Rights Issue are exercised for subscription of shares. In the event of full subscription and that all warrants within the framework of issued units are fully exercised, the Company may receive an additional capital contribution of approximately SEK 106.6 million, based on a maximum subscription price of SEK 0.80. The proceeds from the exercise of warrants series TO 6 are intended to be used for continued financing and completion of the Company’s ongoing Phase 2 study NeoFox as well as work with Market Access.

Terms and conditions of the Rights Issue

The board of directors has today, subject to approval by the extraordinary general meeting on 12 December 2022, resolved to carry out the Rights Issue by issuing a maximum of 133,235,987 units. The right to subscribe for units with preferential rights shall vest in those who are registered as shareholders in the Company on the record date, 15 December 2022, whereby one (1) existing share entitles to one (1) unit right and one (1) unit right entitles to subscription of one (1) unit consisting of one (1) share and one (1) warrant series TO 6. In total, the Rights Issue comprises a maximum of 133,235,987 shares and a maximum of 133,235,987 warrants series TO 6. The subscription price is SEK 0.30 per unit corresponding to a subscription price of SEK 0.30 per share, which means that WntResearch, provided that the Rights Issue is fully subscribed, initially will receive approximately SEK 40.0 million before issue costs and excluding the additional proceeds that may be received upon exercise of the warrants. The warrants are issued free of charge. Subscription of units with or without preferential rights shall take place during the period 19 December 2022 – 6 January 2023. Unit rights that are not utilized during the subscription period will become invalid and lose their value. Trading in unit rights is expected to take place on Spotlight Stock Market during the period 19 December 2022 – 3 January 2023.

One (1) warrant series TO 6 entitles the rights to subscribe for one (1) new share in the Company to a subscription price corresponding to seventy (70) per cent of the volume weighted average price of the Company’s share during the period from and including 21 August 2023 up to and including 1 September 2023, however not lower than the shares’ quota value (SEK 0.09) and not more than SEK 0.80. Subscription of shares by exercise of warrants will take place during the period 6 September – 20 September 2023.

If not all units are subscribed for by exercise of unit rights, allotment of the remaining units shall be made within the highest amount of the Rights Issue: firstly, to those who have subscribed for units by exercise of unit rights (regardless of whether they were shareholders on the record date or not) and who have applied for subscription of units without exercise of unit rights and if allotment to these cannot be made in full, allotment shall be made pro rata in relation to the number of unit rights that each and every one of those, who have applied for subscription of units without exercise of unit rights, have exercised for subscription of units; secondly, to those who have subscribed for units in the Rights Issue without exercise of unit rights and if allotment to these cannot be made in full, allotment shall be made pro rata in relation to the number of units the subscriber in total has applied for subscription of units; and thirdly, to those who have provided underwriting commitments with regard to subscription of units, in proportion to such underwriting commitments. To the extent that allotment in any section above cannot be done pro rata, allotment shall be determined by drawing of lots.

Change of share capital and number of shares as well as dilution

Through the Rights Issue, the number of shares in WntResearch will, upon full subscription, increase by a maximum of 133,235,987 shares, from 133 235 987 shares to 266,471,974 shares and the share capital will increase by a maximum of SEK 11,991,238.83 from SEK 11 991 238,83 to SEK 23,982,477.66. This means that existing shareholders who choose not to participate in the Rights Issue will, if the Rights Issue is fully subscribed, experience a dilution of approximately 50.0 per cent of their votes and capital in the Company.

In the event all warrants series TO 6 are fully exercised to subscribe for new shares in the Company, the number of shares will increase by an additional 133,235,987 shares to a total of 399,707,961 shares and the share capital will increase by an additional SEK 11,991,238.83 to SEK 35,973,716.49. This corresponds to a dilution from the warrants of an additional maximum of approximately 33.3 per cent. The total dilution in the event both the Rights Issue and the warrants are exercised in full thus amounts to approximately 66.7 per cent.

Subscription undertakings, subscription intentions and guarantee commitments

WntResearch has received subscription undertakings from certain existing shareholders, amounting to a total of approximately SEK 0.8 million, corresponding to approximately 2.0 per cent of the Rights Issue. In addition, a number of major shareholders as well as members of the board of directors and executive management have issued subscription intentions of a total of approximately SEK 2.0 million, corresponding to approximately 4.9 per cent of the Rights Issue. No remuneration is paid for submitted subscription undertakings or subscription intentions. The Company has also entered into agreements with certain existing shareholders and a number of external investors regarding guarantee commitments of a total of approximately SEK 18.5 million, corresponding to approximately 46.3 per cent of the Rights Issue. Cash compensation is paid according to the guarantee agreements of 15 per cent of the guaranteed amount, corresponding to approximately SEK 2.8 million, or 20 per cent of the guaranteed amount in the form of newly issued units in the Company, on the same terms and conditions as units in the Rights Issue, however the subscription price per unit shall correspond to the volume-weighted average share price for the Company’s share on Spotlight Stock Market during the subscription period in the Rights Issue (i.e. 19 December 2022 – 6 January 2023), however not lower than the subscription price in the Rights Issue.

In aggregate, the Rights Issue is covered by subscription undertakings, subscription intentions, and guarantee commitments of approximately SEK 21.2 million, corresponding to approximately 53.1 per cent of the Rights Issue.

In order to enable issue of units as guarantee remuneration to the guarantors who choose to receive guarantee remuneration in the form of newly issued units, the board of directors has proposed that the extraordinary general meeting on 12 December 2022, which, among other things, is proposed to resolve on the approval of the Rights Issue and amendment of the articles of association, also resolves to authorize the board of directors to resolve on the issue of such units to the guarantors.

Lock-up undertakings
In connection with the Rights Issue, all board members and senior executives with shareholdings in WntResearch have undertaken towards Vator Securities, with customary exceptions, not to sell or carry out other transactions with the same effect as a sale without, in each individual case, first having obtained a written approval from Vator Securities AB. The decision to give such written consent is decided by Vator Securities AB and an assessment is made in each individual case. Granted consent can depend on both individual and business reasons. The lock-up undertakings only apply to the shares that are held before the Rights Issue and the lock-up period lasts 180 days after the publication of the Rights Issue.

Preliminary timetable for the Rights Issue

12 December 2022	Extraordinary general meeting
13 December 2022	Last day of trading including the right to receive unit rights
14 December 2022	First day of trading excluding the right to receive unit rights
14 December 2022	Estimated day for publication of prospectus
15 December 2022	Record date for participation in the Rights Issue
19 December 2022 – 3 January 2023	Trading in unit rights on Spotlight Stock Market
19 December 2022 – 6 January 2023	Subscription period
19 December 2022 – Until the Rights Issue is registered by the Swedish Companies Registration Office	Trading in paid subscribed units (Sw. “BTU”)
Around 10 January 2023	Publication of outcome in the Rights Issue

Extraordinary general meeting

The board of directors’ resolution on the Rights Issue is subject to approval by the extraordinary general meeting on 12 December 2022. The resolution on the Rights Issue is subject to and conditional upon the limits of the share capital and the number of shares in the Articles of Association being changed in accordance with the board of directors’ proposal to the extraordinary general meeting. Notice to the extraordinary general meeting will be published through a separate press release.

Prospectus

Full terms and conditions and instructions for the Rights Issue as well as other information about the Company will be presented in the prospectus that the Company expects to publish around 14 December 2022 (the "Prospectus").

Advisers

Vator Securities AB acts as financial adviser and Setterwalls Advokatbyrå AB acts as legal adviser to the Company in connection with the Rights Issue. Vator Securities AB also acts as issuer agent in connection with the Rights Issue.

For further information:

Pernilla Sandwall, CEO

E-mail: pernilla.sandwall@wntresearch.com

This information is such information as Wntresearch AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, on 8 November 2022 at 11.30 AM CET.

About Wntresearch AB

WntResearch is a biotech company in oncology that develops new therapies intended to prevent the metastatic process. The company's research is focused on studying the endogenous protein WNT5A, which in scientific studies has shown to affect tumour cells' ability to move and spread in the body. WntResearch drug candidate Foxy-5 is a peptide that mimics the function of WNT5A and is intended to reduce the mobility and spread of cancer cells thus preventing metastases from occurring. Although current cancer treatment has become more effective, there are no effective ways to prevent the onset of metastases that cause about 90 per cent of all cancer-related deaths. Foxy-5 has a unique mechanism of action and has shown a good safety profile with few side effects in two Phase I clinical trials. The safety and efficacy of Foxy-5 are now being evaluated in the ongoing Phase 2 clinical trial NeoFox, in patients with stage II-III colon cancer.

WntResearch is listed on the Spotlight Stock Market. For more information, please visit: www.wntresearch.com.

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IMPORTANT INFORMATION

The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, warrants or other securities in WntResearch. No action has been taken and measures will not be taken to permit a public offering in any jurisdictions other than Sweden. Any invitation to the persons concerned to subscribe for units in Wntresearch will only be made through the Prospectus that WntResearch estimates to publish on or around 14 December 2022 on WntResearch’s website, www.wntresearch.com. The upcoming approval of the Prospectus by the Swedish Financial Supervisory Authority shall not be regarded as an approval of the Company’s shares, warrants or any other securities. This release is not a prospectus in accordance with the definition in the Prospectus Regulation (EU) 2017/1129 (“Prospectus Regulation”) and has not need approved by any regulatory authority in any jurisdiction. This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in shares, warrants or other securities in WntResearch. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the Prospectus. Thus, investors are encouraged to review the Prospectus in its entirety. In accordance with article 2 k of the Prospectus Regulation this press release constitutes an advertisement.

The information in this press release may not be released, distributed or published, directly or indirectly, in or into the United States of America, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, South Korea, Switzerland or any other jurisdiction in which such action would be unlawful or would require registration or any other measures than those required by Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities laws. No shares, warrants or other securities in WntResearch have been registered, and no shares, warrants or other securities will be registered, under the United States Securities Act of 1933, as amended (the “Securities Act”) or the securities legislation of any state or other jurisdiction in the United States of America and no shares or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States of America, except under an available exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States of America.

Within the European Economic Area (“EEA”), no public offering of shares, warrants or other securities (“Securities”) is made in other countries than Sweden. In other member states of the EU, such an offering of Securities may only be made in accordance with the Prospectus Regulation. In other member states of the EEA which have implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation and/or in accordance with an applicable exemption under a relevant national implementation measure. In other member states of the EEA which have not implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption under national law.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, “qualified investors” (within the meaning of the United Kingdom version of the EU Prospectus Regulation (2017/1129/ EU) which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under the Order (all such persons together being referred to as “relevant persons”). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

This press release may contain forward-looking statements which reflect the Company’s current view on future events and financial and operational development. Words such as “intend”, “will”, “expect”, “anticipate”, “may”, “believe”, “plan”, “estimate” and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual outcome could differ materially from the forward-looking statements.

This information, the opinions and the forward-looking statements included in this press release are only applicable as of this date and may change without any notice thereof. WntResearch does not undertake to publish any updates or amendments of forward-looking statements, future events or similar circumstances other than what is required by appliable legislation.