Announcement PDF PARADIGM BIOPHARMACEUTICALS LIMITED ACN 169 346 963 ENTITLEMENT OFFER PROSPECTUS For a non-renounceable accelerated institutional and retail entitlement issue of 1 Share for every 10 Shares held by those Eligible Shareholders registered at the Record Date at an issue price of $0.43 per Share to raise up to approximately $12,100,000 (based on the number of Shares on issue as at the date of this Prospectus), together with 3 Options exercisable at $0.65 on or before 30 November 2024 (Attaching Options) for every 4 Shares subscribed for and issued (Entitlement Offer). Shareholders who apply for their full Entitlement will also be entitled to apply for additional Shares under the Shortfall Offer. This Prospectus also contains an offer up to 41,860,466 Shares at an issue price of $0.43 per Share (together with 3 Attaching Options for every 4 Shares subscribed for and issued) to professional, sophisticated and institutional investors to raise up to approximately $18,000,000 (Placement Offer). IMPORTANT NOTICE This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the Securities being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser. The Securities offered by this Prospectus should be considered highly speculative. This distribution of this Prospectus, and the offer of Shares, is restricted outside Australia. In particular, this Prospectus may not be released to US wire services or distributed in the United States except to shareholders who are Institutional Investors. CONTENTS 1. IMPORTANT NOTICES .............................................................................................. 1 2. CORPORATE DIRECTORY......................................................................................... 3 3. KEY OFFER DATES .................................................................................................... 4 4. LETTER FROM THE CHAIRMAN & MANAGING DIRECTOR ....................................... 5 5. KEY OFFER INFORMATION....................................................................................... 7 6. DETAILS OF THE OFFERS AND HOW TO APPLY ...................................................... 11 7. PURPOSE AND EFFECT OF THE OFFERS .................................................................. 22 8. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES ............................................ 26 9. RISK FACTORS ....................................................................................................... 31 10. ADDITIONAL INFORMATION ................................................................................. 37 11. DIRECTORS’ AUTHORISATION ............................................................................... 43 12. GLOSSARY ............................................................................................................. 44 5884-02/3318993_7 i 1. IMPORTANT NOTICES This Prospectus is dated 30 October 2023 and was lodged with the ASIC on that date. The ASIC, ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. issues). You should seek professional advice from your accountant, financial adviser, stockbroker, lawyer or other professional adviser before deciding to subscribe for Securities under this Prospectus to determine whether it meets your objectives, financial situation and needs. No Securities may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Forward-looking statements No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Securities offered by this Prospectus should be considered as highly speculative. Applications for Securities offered pursuant to this Prospectus can only be made by an original Application Form. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus and is only required to contain information in relation to the effect of the issue of securities on a company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company. Representations contained in this Prospectus are made taking into account that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters are publicly available information or may reasonably be expected to be known to investors and professional advisers whom prospective investors may consult. No Investment Advice The information contained in this Prospectus is not financial product advice or investment advice and does not take into account your financial or investment objectives, financial situation or particular needs (including financial or taxation 5884-02/3318993_7 This Prospectus contains forwardlooking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and the Company’s management. The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forwardlooking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forwardlooking statements. The Company has no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law. These forward-looking statements are subject to various risk factors that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 9. Overseas shareholders The Offers do not, and are not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Entitlement Offer is not being extended and Securities will not be issued to Shareholders with a registered address which is outside Australia and certain other countries. The Shares and the Attaching Options (and the underlying Shares) have not been, and will not be, registered under the US Securities Act, and accordingly, the Shares and the Attaching Options (and the underlying Shares) may not be offered, or sold in the United States without registration under the US Securities Act except in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act and any other applicable US state securities laws. For further information on overseas Shareholders please refer to Section 6.10. Continuous disclosure obligations The Company is a “disclosing entity” (as defined in section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Securities. This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest. Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the three months before the issue of this Prospectus which required the Company to notify ASX 1 of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX. Please refer to Section 10.2 for further details. Target Market Determination In accordance with the design and distribution obligations under the Corporations Act, the Company has determined the target market for the offer of Options issued under this Prospectus. The Company and the Lead Manager will only distribute this Prospectus to those investors who fall within the target market determination (TMD) as set out on the Company’s website (www.paradigmbiopharma.com). By making an application under the Offers, you warrant that you have read and understood the TMD and that you fall within the target market set out in the TMD. Electronic Prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.paradigmbiopharma.com. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian or New Zealand resident and must only access this Prospectus from within Australia or New Zealand. The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company by phone on +61 8 6382 1805 during office hours or by emailing the Company at info@paradigmbiopharma.com. The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. Company Website No documents or other information available on the Company’s website is incorporated into this Prospectus by reference. 5884-02/3318993_7 Financial forecasts The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection. Clearing House Electronic SubRegister System (CHESS) and Issuer Sponsorship The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Securities issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship. Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month. Photographs and Diagrams Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Definitions and Time Unless the contrary intention appears or the context otherwise requires, words and phrases contained in this Prospectus have the same meaning and interpretation as given in the Corporations Act and capitalised terms have the meaning given in the Glossary in Section 12. All references to time in this Prospectus are references to Australian Eastern Daylight Time unless otherwise stated. Privacy statement If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder. The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry. You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Securities, the Company may not be able to accept or process your application. Use of Trademarks This Prospectus includes Company’s registered unregistered trademarks. the and All other trademarks, tradenames and service marks appearing in this Prospectus are the property of their respective owners. Enquiries If you are in any doubt as to how to deal with any of the matters raised in this Prospectus, you should consult with your broker or legal, financial or other professional adviser without delay. Should you have any questions about the Offers or how to accept the Offers please call the Company Secretary on +61 8 6382 1805. 2 2. CORPORATE DIRECTORY Directors Legal Advisers Paul Rennie Managing & Executive Director Steinepreis Paganin Level 4, 16 Milligan Street PERTH WA 6000 Donna Skerrett Executive Director Amos Meltzer Non-Executive Director Helen Fisher Non-Executive Director Company Secretary Abby Macnish Niven Registered Office Level 15, 500 Collins Street Melbourne VIC 3000 Lead Manager Bell Potter Securities Limited (ACN 006 390 772) (AFSL No. 243480) Level 29, 101 Collins Street Melbourne VIC 3000 Auditor* RSM Australia Partners Level 21, 55 Collins Street Melbourne VIC 300 Share Registry Automic Pty Ltd Level 5, 126 Phillip Street SYDNEY NSW 2000 Telephone: + 61 8 6382 1805 Email: info@paradigmbiopharma.com Website: www.paradigmbiopharma.com Telephone: +61 2 9698 5414 Email: hello@automic.com.au ASX Code PAR *This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus. 5884-02/3318993_7 3 3. KEY OFFER DATES Event Date Announcement of Placement and Entitlement Offer 30 October 2023 Lodgement of Prospectus with ASIC and ASX Placement Offer and Institutional Offer opens 30 October 2023 Placement Offer and Institutional Offer closes 31 October 2023 Announcement of results of Placement and Institutional Offer 1 November 2023 Trading resumes on an ex-entitlement basis 1 November 2023 Record Date for Retail Offer 1 November 2023 Prospectus despatched to Eligible Retail Shareholders 6 November 2023 Retail Offer opens Settlement of Placement and Institutional Offer 7 November 2023 Issue of Shares under Placement Offer and Institutional Offer 8 November 2023 Quotation of Shares issued Institutional Offer under Placement Offer and 9 November 2023 Closing date of Retail Offer 20 November 2023 Announcement of results of Retail Offer 23 November 2023 Issue of Shares under Retail Offer and Options under Entitlement Offer 27 November 2023 Quotation of Shares issued under Retail Offer and Options issued under Entitlement Offer 28 November 2023 AGM (to approve issue of Options under Placement Offer) 29 November 2023 Issue of Options issued under Placement Offer 29 November 2023 Quotation of Options issued under Placement Offer 30 November 2023 *The Directors may extend the closing date of the Retail Offer by giving at least 3 Business Days’ notice to ASX prior to the closing date. Accordingly, the date the Securities are expected to commence trading on ASX may vary. *All dates are indicative and subject to change. The Company reserves the right to alter this timetable at any time. 5884-02/3318993_7 4 4. LETTER FROM THE CHAIRMAN & MANAGING DIRECTOR Dear Investors On behalf of the directors of Paradigm Biopharmaceuticals Ltd (ASX:PAR) (Paradigm or the Company), it gives me great pleasure to offer you this opportunity to invest in the Company. Paradigm Biopharmaceuticals is an Australian-based, global late-stage drug development company driven by a purpose to improve patients’ health and quality of life by discovering, developing, and delivering pharmaceutical therapies. Paradigm’s current focus is developing iPPS for the treatment of diseases where inflammation plays a major pathogenic role, indicating a need for the anti-inflammatory and tissue regenerative properties of pentosan polysulfate sodium (iPPS or brand name Zilosul®). The immediate commercial focus is for the treatment of pain and joint dysfunction associated with osteoarthritis (OA) and pain and arthropathy in patients with the rare genetic disorder mucopolysaccharidosis types I and VI (MPS). Paradigm has an experienced management team and a Board of Directors with relevant commercial and industry experience to support the ongoing growth of the business. These new Offers to invest in Paradigm will support the Company’s efforts to continue to progress its phase 3 global osteoarthritis program and are expected, together with the Company’s existing cash, the proceeds of the exercise of options, as well as cost management initiatives, to fund the Company into mid CY 2025. Paradigm is focussed on partnering its clinical assets and expects any partnering transaction to add further funding sources to bring iPPS through to commercialisation. OA is the most prevalent form of joint disease, affecting up to 16% of the population in the developed world, with more than 72 million people in the US, EU5, Canada and Australia suffering from OA. OA has a significant impact on day-to-day functioning and, although the levels of pain and disability may fluctuate, it has no known cure or spontaneous remission and is associated with irreversible structural damage and progression over time. Presently, there are no drugs approved that can prevent, stop, or even restrain progression of OA. Moreover, the available medications available to mitigate the pain of OA have numerous risk/benefit considerations and market research indicates that only 19% of knee OA patients are satisfied with currently available treatments. The prevalence of OA is increasing in line with the aging population and increasing rates of obesity. By 2030, the number of people suffering from OA in the US alone is predicted to increase by 86% to 67 million. If we assume a similar increase across the other markets defined above, even allowing for lower rates of obesity in non-US markets, it is anticipated that more than 120 million people will be suffering from OA by 2030. This presents a significant commercial opportunity for iPPS to address this unmet need. The proceeds from the Offers will be used to fund the Company’s phase 3 OA clinical program and to pay for the costs of the Offer. The proceeds are expected to fund the Company’s OA phase 3 clinical program to the end of CY2024, with the exercise of options expected to provide further runway to mid CY2025 and past Paradigm’s top-line read out from the first phase 3 pivotal clinical trial. 5884-02/3318993_7 5 This Prospectus contains detailed information about the Offers and includes a description of the key risks associated with an investment in Paradigm. We encourage you to read the Prospectus carefully and in its entirety before making your investment decision. You should seek professional advice as necessary before making an investment decision. We are focussed on progressing our global OA late-stage clinical program and also on expediting the path to market for iPPS and revenue generation through various provisional approval pathways globally. On behalf of the Board, we look forward to reporting continued progress of our clinical assets and bringing iPPS to the market to address substantial unmet needs. Yours sincerely, Paul Rennie Chair & Managing Director 5884-02/3318993_7 6 5. KEY OFFER INFORMATION This Section is not intended to provide full information for investors intending to apply for Securities pursuant to this Prospectus. Prospective investors should read this Prospectus in full before deciding whether to invest in Securities. 5.1 Summary of the Placement and the Entitlement Offer The Company is intending to conduct a placement and accelerated nonrenounceable entitlement offer in order to raise up to approximately $30,100,000 (before costs). The funds raised from the Offers (assuming all Entitlements are accepted and the Placement is fully subscribed) are intended to be applied towards funding the Company through the next stage of the phase 3 Pivotal OA clinical trial and expenses of the Offers. The Company is seeking to raise approximately $18,000,000 (before costs) by way of a placement to institutional investors (Placement) through the issue of up to 41,860,466 Shares (Placement Shares) at an issue price of $0.43 per Placement Share together with 3 Attaching Options for every 4 Placement Shares subscribed for and issued. In addition, the Company is conducting an accelerated non-renounceable entitlement offer (Entitlement Offer) to raise approximately $12,100,000 (before costs) through the issue of approximately 28,175,662 Shares at an issue price of $0.43 per Share, on the basis of 1 Share for every 10 Shares held by Eligible Shareholders as at the Record Date, together with 3 Attaching Options for every 4 Shares subscribed for and issued. The Entitlement Offer has two components: (a) an accelerated offer to Eligible Institutional Shareholders, which is due to settle on 7 November 2023; and (b) an offer to Eligible Retail Shareholders, which is due to open on 6 November 2023. Further details in respect of the Placement and the Entitlement Offer are set out in Section 6. 5884-02/3318993_7 7 5.2 Key statistics of the Offers Shares Full Subscription (approx. $30,100,000) Offer Price per Share $0.43 Shares currently on issue 281,756,625 Shares to be issued under the Placement Offer 41,860,466 Shares to be issued under the Entitlement Offer 28,175,662 Gross proceeds of the issue of Shares $30,100,000 Shares on issue post-Offers 351,792,753 Notes: 1. Assuming the full amount offered is raised under the Placement Offer and the Entitlement Offer. 2. Refer to Section 8.1 for the terms of the Shares. Options Full Subscription (approx. $30,100,000) Options currently on issue Nil Options to be issued under the under the Placement Offer 31,395,350 Options to be issued under the under the Entitlement Offer 21,131,747 Sub-Underwriter Options3 10,012,031 Options on issue post-Offers 62,539,128 Notes: 5.3 1. Assuming the full amount offered is raised under the Placement Offer and the Entitlement Offer. 2. Refer to Section 8.2 for the terms of the Options. 3. At this stage, neither the Placement nor the Entitlement Offer is underwritten. Should the Company enter into an underwriting agreement, it may offer up to 10,012,031 Sub-Underwriter Options on the same terms as the Attaching Options to an underwriter and/or sub-underwriters of the Entitlement Offer, subject to and conditional on entry into an underwriting agreement and/or sub-underwriting agreements. If no underwriting agreement is entered into, the Sub-Underwriter Options will not be issued. Risk Factors Prospective investors should be aware that subscribing for Securities involves a number of risks and an investment in the Company should be considered as highly speculative. The future performance of the Company and the value of the Securities may be influenced by a range of factors, many of which are largely beyond the control of the Company and the Directors. The key risks associated with the Company’s business, the industry in which it operates and general risks applicable to all investments in listed securities and financial markets generally are set out in Section 9. 5884-02/3318993_7 8 5.4 Directors' Interests in Securities The relevant interest of each of the Directors in the Securities of the Company as at the date of this Prospectus, together with their respective Entitlement, is set out in the table below: Director Shares Entitlement $ Shares Attaching Options Paul Rennie1 20,512,8052 2,051,281 1,538,461 $882,051 Donna Skerrett1 1,094,2843 109,429 82,072 $47,054 Amos Meltzer - - - - Helen Fisher 10,2044 1,021 766 $439 Notes: 1. The Company is seeking Shareholder approval to issue an aggregate of 2,200,000 Performance Rights to Dr Skerrett and Mr Rennie, subject to Shareholders approving the adoption of the Company’s proposed incentive plan, at the Company’s upcoming annual general meeting to be held on 29 November 2023. Refer to the Company’s notice of annual general meeting dated 25October 2023 for further details. 2. Comprising: (a) 8,500,548 Shares held directly by Mr Rennie; (b) 10,914,902 Shares held indirectly through KZEE Pty Ltd <KZEE Superannuation Fund> an entity which Mr Rennie has a controlling interest; and (c) 1,097,355 Shares held indirectly through EAR Investments Pty Ltd <EAR Investments Trust> an entity which Mr Rennie has a controlling interest. 3. Held directly by Dr Skerrett. 4. Held directly by Ms Fisher. The Board recommends all Shareholders take up their Entitlements. The Board advises that, of the Directors who hold Shares, Paul Rennie and Donna Skerrett intend to take up a part Entitlement (approximately $200,380 and $1,075, respectively) and Helen Fisher intends to take up her full Entitlement. 5.5 Underwriting and sub-underwriting At this stage, neither the Placement nor the Entitlement Offer is underwritten. Should the Company enter into an underwriting agreement, it may offer up to 10,012,031 Options on the same terms as the Attaching Options (Sub-Underwriter Options) to an underwriter and/or sub-underwriters of the Entitlement Offer, subject to and conditional on entry into an underwriting agreement and/or subunderwriting agreements. If no underwriting agreement is entered into, the SubUnderwriter Options will not be issued. 5.6 Effect on Control The Company, in consultation with the Lead Manager, will ensure that the Entitlement Offer (including the equitable dispersion of any Shortfall Securities) complies with the provisions of Chapter 6 of the Corporations Act 2001 (Cth) and is otherwise consistent with the policy guidelines contained in ASIC Regulatory Guide 6 and Takeovers Panel Guidance Note 17. 5884-02/3318993_7 9 5.7 Potential dilution on non-participating Shareholders Shareholders should note that if they do not participate in the Entitlement Offer, their holdings are likely to be diluted by approximately 19.91% (as compared to their holdings and number of Shares on issue as at the date of this Prospectus) as a result of the impact of the Entitlement Offer and the Placement. No immediate dilution will occur as a result of the issue of Options under this Prospectus. However subsequent exercise of any or all of the Attaching Options (and the Sub-Underwriter Options if they are issued) will result in dilution. Assuming all Options offered pursuant to this Prospectus (and the Sub-Underwriter Options if they are issued) a