Letter to Shareholders and SPP Plan Rules

Dear Shareholder

SHARE PURCHASE PLAN

The Directors of Invion Limited (“Invion” or “Company”) are pleased to extend an invitation to eligible shareholders to participate in the Company’s Share Purchase Plan (“Plan”). 

The Plan allows eligible shareholders to purchase up to $15,000 worth of fully paid ordinary shares in the Company (“Shares”) at a discount and without any brokerage or transaction costs. The Plan was announced by the Company to the Australian Securities Exchange (“ASX”) on 28 March 2013 (“Announcement Date”). RBS Morgans Corporate Limited is acting as Lead Manager to the Offer.

The Shares under the Plan will be issued at the lower of:

–         4.8 cents; or

–         the price which is equal to a 10% discount to the five day volume weighted average price (VWAP) of shares traded on the ASX up to and including the last day of the Plan offer period.

The offer of Shares under the Plan is open to all Eligible Shareholders (as defined in the attached Offer) as at 7:00pm (AEDT) on 27 March 2013 (“Record Date”). The Plan allows Eligible Shareholders, irrespective of the size of their shareholding, to apply for additional ordinary Invion Shares at a discount to market in parcels from as little as $500 and up to $15,000.

This is an opportunity for Eligible Shareholders to take advantage of prevailing market conditions and to participate in the future growth of the Company.

Directors of Invion who are Eligible Shareholders have indicated their intention to participate in the Plan.

Funds raised through the Plan will be used for the Company’s general working capital which is to be applied (at the discretion of the Board) to costs associated with the ongoing development of INV102 (nadolol) and INV103 (ala-Cpn10), including regulatory costs; the development and maintenance of Invion’s intellectual property portfolio; and two phase II clinical trials.

The first, a phase II trial in patients with chronic bronchitis (undergoing smoking cessation) is being conducted under an Investigational New Drug (IND) application in the US, with patient dosing to commence in the near term. The second, a phase II trial in patients with systemic lupus erythematosus (lupus), is the subject of the Company’s second IND application which is due for submission to the FDA in the second calendar quarter of 2013. The company’s third current phase II clinical trial is being conducted in patients with asthma and is funded by the United States National Institutes of Health (NIH) ($4.4M).

Data from the chronic bronchitis (smoking cessation) and lupus trials is expected to be received this calendar year.

Participation in the Plan is entirely voluntary. Offers under the Plan are non-renounceable, meaning that you are not permitted to transfer your rights to subscribe for Shares under the Plan.

The Directors reserve the right to scale back applications received in excess of the amount permitted by ASX Listing Rules, or to place any shortfall with institutional and professional investors (subject to the Listing Rules).

If after reading the attached Offer you wish to participate in the Plan, you must complete and return the attached personalised Application Form, together with a cheque and return it to the Company’s Share Registry on or before 5.00pm (AEST) on 24 April 2013. Alternatively you may use the BPAY facility described later in this documentation.

Invion Limited – Fact File

Invion is a clinical-stage drug development company focussed on the development of treatments for major opportunities in the inflammatory diseases market including asthma and COPD ($34B)[i] and lupus (to $4B)[ii]. The Company’s strategy is the cost-effective development of its assets to late phase II before negotiating commercial partnerships.

Invion has two phase II proprietary therapeutic candidates:

  • INV102 (nadolol), a beta blocker being repurposed to treat inflammatory lung conditions; and
  • INV103 (ala-Cpn10), a modified human protein being targeted to the treatment of autoimmune inflammation

 In 3 x phase II clinical programs:

  • chronic bronchitis (smoking cessation)
  • asthma
  • systemic lupus erythematosus (lupus)

Medical, regulatory and commercial precedent, as well as existing phase II data, supports Invion’s development strategy which is being carried out under an experienced management team including Dr Mitchell Glass who has filed five New Drug Applications (NDAs) with the US Food and Drug Administration (FDA).

Invion’s strategic partners include the United States National Institutes of Health (NIH) and Numoda.

The NIH is funding Invion’s phase II clinical trial in patients with asthma to $4.4 million. This is an exciting validation by one of the most prominent medical research bodies in the world.

The Numoda Corporation/ Numoda Capital Innovations, LLC (NCI) alliance provides Invion access to Numoda’s TruPoints technology which will facilitate the flow of “live” clinical trial information to potential commercial partners without incurring a statistical penalty. NCI are to invest in the order of $250,000 in 2013, via open market purchases and private placements at a 10% premium to market. NCI’s total commitment is for an investment of up to $2 million to occur across current and future clinical trials.

Market Opportunity: large and growing inflammation market[i]

  • INV102 (nadolol): asthma, chronic obstructive pulmonary disease (COPD) ($34B)
  • INV103 (ala-Cpn10): systemic lupus erythematosus (lupus) (to $4B)

INV102 target: adding INV102 to existing therapy may improve treatment outcomes. Leading asthma and COPD drugs have annual sales of $16B+. FDA Black box warnings have been placed on all Long Acting Beta Agonists (LABAs) and LABA/steroid combinations due to increased risk of death. INV102 may reduce long-term inflammation of the lung tissue and improve treatment outcomes. The smoking cessation drug market was estimated at $2.4B in 2012. Nicotine-focussed therapies comprise the bulk of the existing market, however these therapies do not address lung healing. INV102 presents an opportunity to expand the existing market by adding lung healing therapy to nicotine-focussed therapies.

INV103 target: potential new therapy in under-serviced market. Despite sales of lupus therapies being anticipated to reach $4B by 2020, Lupus presents a significant unmet medical need, with only one drug approved by the FDA in over 50 years. Lupus is a vascular inflammatory disease that is complex both in terms of diagnosis and treatment. Invion data accumulated to date demonstrates that INV103 (ala-Cpn10) has a significant effect on the reduction of interleukin-6 (IL-6) which is a recognised marker of vascular inflammation.

Risks
Your directors encourage your continued support of the Company.  Before making an investment decision however, you should read the terms of the Plan Offer and the Plan Rules accompanying this letter in their entirety.  The Company’s success in the near-intermediate term will depend upon the conduct and outcome of its clinical trials and progress of FDA and other regulatory approvals. An investment in Invion is speculative.  

Please refer to the accompanying Share Purchase Plan Offer and Rules booklet for further details of the Offer. If you have any questions about participating in the Plan, you should consult your stockbroker, accountant, professional adviser or contact the Company’s share registry, Link Market Services on P: 1300 880 751.

I look forward to having the opportunity to meet with you at a forthcoming Investor Information Session. If you would like to receive information about these sessions, or if you would like to join Invion’s Investor file to receive status updates, please email investor@invion.com.au or visit www.invion.com.au.

Yours faithfully

William Garner, M.D.
Managing Director and CEO

 


 

[i]Respiratory and Inflammation, AstraZeneca Annual Report, 2011; Smoking Cessation Drugs: World Market Prospects 2012-2022, Visiongain Reports 2012 ; Healthcare Finance, Bloomberg Brief, 13 August 2012; Full-Year and Fourth-Quarter 2011 Financial Results, Merck & Co.

[i] Respiratory and Inflammation, AstraZeneca Annual Report, 2011

[ii] Datamonitor: Systemic Lupus Erythematosus Market Forecast, 22 August 2011; Decision Resources: Systemic Lupus Erythematosus, 2012

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