Resolutions on a convertible rights issue

Resolutions on a convertible rights issue and bringing forward the Q1 report

This is an office translation. In case of any differences, the swedish text shall prevail.

At the Board meeting of PharmaLundensis AB (publ) (hereinafter PharmaLundensis or the Company) of today Friday, April 24, 2020, it was resolved, under authorization of the Annual General Meeting of June 11, 2019, that the Company raise a convertible loan in the maximum nominal amount of SEK 7,398,366 through the issue of no more than 2,466,122 convertibles each with a nominal value of SEK 3 (or whole multiples thereof) with preferential rights for existing shareholders. Each existing share in the company on record day May 5, 2020 entitles the holder to 1 unit right, and 10 unit rights entitle the holder to subscribe for one unit consisting of a convertible at a subscription price of SEK 3. The record date for participation in the issue is May 5, 2020. The subscription period is May 8 through May 25, 2020. The convertibles mature on 15 June 2027. The convertibles carry 7 per cent annual interest as of June 15, 2020 through June 15, 2027 and the interest will be paid in full after the due date. Thus 149% of the invested amount will be repaid. The convertibles may be exchanged (converted) for new shares in the company at a conversion price of SEK 3 during the period from May 3, 2027 through May 31, 2027. The convertibles and unit rights will not be listed on equities markets. Given full subscription, PharmaLundensis will receive approx. SEK 7.4 million before issue expenses. Total issue expenses are estimated at approx. SEK 200,000. To make sure investors have access to the latest financial information about the Company, the Q1 interim report will be brought forward for publication on May 7, 2020.

CEO Staffan Skogvall’s introduction from the Memorandum
Today, as the coronavirus harries the world, I would like to begin with information about the PharmaLundensis project to develop a drug against the most serious symptom of this virus, namely severe respiratory failure. The virus causes such severe inflammation in the airways that the bronchioli (the smaller airways) begin to swell. This prevents the air from entering the alveoli (air sacs) where gas exchange normally occurs, which can lead to suffocation. Our project seeks to develop an effective drug to combat this inflammation, thus keeping the respiratory tract open and allowing patients to breathe freely. Such a drug would enable patients to stay at home and allow the body to overcome the virus without the risk of death from respiratory failure. This would transform the coronavirus, and many other virus pandemics of the future, into quite unremarkable diseases similar to normal colds, and there would be no need to lock down society. Similarly, the treatment could be used by patients who suffer respiratory distress from the usual seasonal influenza. An efficacious drug would have a large market with sales to hospitals and emergency stockpiles worldwide.

The main PharmaLundensis project is our new, efficacious treatment for COPD, chronic bronchitis and chronic fatigue syndrome. Preparations are in progress for important tests on animals of our promising mercury-binding test substance. The tests will provide a clear indication of how the substance can be expected to function in future clinical studies. I believe there to be excellent prospects for our producing a superb drug!

With regard to the EcoFilter project, we are currently focusing on selling licenses for our EWR-101 technology for eliminating liquid chemical waste (concentrates) when cleaning evaporators. We have identified some 50 companies worldwide that manufacture and sell evaporators. I estimate license sales of approx. SEK 1 million per year per company. Hopefully a number of producers, or indeed most of them, will want a license. In this case, these revenues could finance the entire PharmaLundensis future drug program.

Recently, stock markets have been alarmingly unstable and it’s difficult to know if share prices will go up or down. Generally speaking, convertibles such as our current issue are considered to involve lower risk than shares as investors make money during both upturns and downturns1. In principle, if the share price rises, the value of a convertible will increase as though it were a share. Should the share price fall, the investors are repaid the entire invested amount plus interest2.

I hope you would like to join us on our exciting journey to develop excellent new drugs and help us combat multiple severe diseases.

Full information: Press April 2020