Otsu/Shiga, Japan – August 20, 2013 – Takara Bio Inc. announced today that it has determined the issue price, the selling price and other matters in connection with the issuance of new shares through a public stock offer and the offering of Takara Bio shares from Takara Holdings Inc., following a resolution by the Board of Directors at a meeting held on August 12, 2013.

 

The net proceeds from the public offering are estimated to be JPY 10,965,280,000. JPY 2,616,280,000 will be invested in its clinical development projects, including HF10 anti-cancer therapy and MazF gene therapy for HIV infections, which are currently undergoing Phase I clinical trials in the United States. The remaining JPY 8,349,000,000 will be used to construct a new GMP-compliant manufacturing facility, an animal experimentation facility and R&D center in Kusatsu city. The new center will bring together the Company’s R&D activities, which are currently scattered in 3 separate cities (Otsu, Kusatsu and Yokkaichi), as well as all other functions that are currently located at its headquarters in Otsu city, including sales & marketing, business development, finance, general affairs, intellectual properties, internal audit, etc.

 

The details are as set forth below.

1. Issuance of new shares though a public offering

(1) Class and Number of shares to be issued 6,000,000 shares of common stock
(2) Issue Price (Offer Price) JPY 1,989 per share
(3) Total Value at Issue Price JPY 11,934,000,000
(4) Amount to be Paid JPY 1,840.88 per share
(5) Total Amount to be Paid JPY 11,045,280,000
(6) Amount of Stated Capital and Additional Paid-in Capital to be Increased

Amount of Stated Capital to be Increased JPY 5,522,640,000
Amount of Additional Paid-in Capital to be Increased JPY 5,522,640,000

(7) Subscription Period

From Wednesday, August 21, 2013 to Thursday, August 22, 2013

(8) Payment Date Tuesday, August 27, 2013

Note: The underwriters will underwrite and purchase at the amount to be paid and offer at the issue price (offer price).

 

Reference

1) Calculation for the issue price

Base Date for Calculation Tuesday, August 20, 2013

Price on the Base Date

JPY 2,116
Discount Rate 6.00%

2) Total number of issued shares before and after the issuance of new shares

Current total number of issued shares: 113,987,600 shares as of July 31, 2013
Number of shares to be newly issued by the issuance of new shares through a public offering:

6,000,000 shares

Total number of issued shares after the issuance of new shares through public offering:

119,987,600 shares

2. Use of Proceeds

As indicated above, out of the estimated net proceeds of JPY 10,965,280,000 raised from the public offering, JPY 2,616,280,000 will be invested for clinical development projects, and the remaining JPY 8,349,000,000 will be used for capital investments.

 

The Japanese government is instituting a wide range of measures to support development in the regenerative medicine and cell therapy fields. The amount of government funding in Japan available for conducting basic research and clinical development related to regenerative medicine and cell therapy is set to increase substantially. In addition, the National Diet and related ministries are currently undertaking deliberations in order to accelerate the development of leading-edge medical technologies. Among the measures that have been brought to the table for discussion are a quick approval system for new drugs in advanced medical fields, outsourcing of cell processing, and the development of a framework for guaranteeing safety of such advanced medical technologies in light of their inherent risks.

 

Takara Bio’s main business is to provide products, services, and technologies to support organizations conducting basic and clinical research. Accordingly, such government measures for accelerating the development of leading-edge medical technologies as well as the rise in government research grants for development in these fields will create a favorable business environment for the Company. Takara Bio also possesses technologies for manufacturing clinical grade gene modified cells in accordance with GMP (Good Manufacturing Practices), and is providing technical support services (cell cultivation and processing) for medical institutions practicing cancer immunotherapy. These capabilities mean that significant business opportunities will be created for us should the outsourcing of cell processing be instituted.

 

In its mid-term management plan, announced in May 2013, Takara Bio stated that it would work to expand its CDMO (Contract Development & Manufacturing Organization) business to take advantage of the Japanese government’s current strong support for clinical development geared toward bringing regenerative medicine and cell therapy treatments to practical application. Through its CDMO business, Takara Bio not only manufactures biopharmaceuticals in accordance with GMP, but also performs contract research as an R&D partner, using the technologies and know-how accumulated through its own clinical development of the cell and gene therapies. Concrete examples of the CDMO business are production of GMP-grade vectors for gene therapy, safety testing services for biopharmaceuticals, development of manufacturing processes and testing methods for cells used in the regenerative medicine field. To be prepared for such a favorable change in the current business environment, Takara Bio is planning to invest approximately JPY 10.7B in total as indicated in the table below; with JPY 8.3B to be invested by the end of September 2015 from the proceeds of the new stock issuance. The new GMP-compliant Manufacturing Facility will be used not only to produce clinical-grade vectors for the Company’s own gene therapy projects but also to provide GMP contract manufacturing services for vectors as well as gene transduced cells for regenerative medicine and gene therapy applications.

Table. New Investments

In its mid-term plan presented in May 2013, Takara Bio also stressed that, as an important company strategy, it would continue to advance its gene therapy projects with the aim of commercialization as soon as possible. The company is currently conducting two Phase I clinical trials in the United States; HF10 anti-cancer therapy for the treatment of head and neck cancer and other solid tumors, and MazF gene therapy for HIV infections. In addition, Takara Bio is preparing to commence several additional clinical trials in Japan, the United States and Asia. Takara Bio is planning to spend a total of JPY 5,232M in R&D expenses in its Gene medicine business segment over the coming 3 years as. JPY 2,616M will be invested by the end of September 2015 from the proceeds of the new stock issuance.

3. Offering of Takara Bio shares from Takara Holdings through a public offering

(1) Class and Number of shares to be issued

5,000,000 shares of common stock of Takara Bio that Takara Holdings owns
(2) Issue Price (Offer Price) JPY 1,989 per share
(3) Total Value at Issue Price JPY 9,945,000,000
(4) Amount to be Paid JPY 1,840.88 per share
(5) Total Amount to be Paid JPY 9,204,400,000
(6) Subscription Period

From Wednesday, August 21, 2013 to Thursday, August 22, 2013

(7) Delivery Date Wednesday, August 28, 2013

Note: The underwriters will underwrite and purchase at the amount to be paid and offer at the issue price (offer price).

4. Additional Offering of Takara Bio shares from Takara Holdings to cover over-allotments

(1) Class and Number of shares to be issued

1,650,000 shares of common stock of Takara Bio that Takara Holdings owns

(2) Issue Price (Offer Price) JPY 1,989 per share
(3) Total Amount of Issue Pric JPY3,281,850,000
(4) Subscription Period From Wednesday, August 21, 2013 to Thursday, August 22, 2013
(5) Delivery Date Wednesday, August 28, 2013

 

Reference

Green shoe option exercise period From Wednesday, August 28, 2013 to Thursday, September 12, 2013
Syndicate cover transaction period From Friday, August 23, 2013 to Monday, September 9, 2013

5. Lock-up

In connection with the offerings, Takara Holdings will agree not to sell Takara Bio shares, for a period commencing on the date of determination of the issue price, and ending on the date 90 calendar days from and including the delivery date relating to the offerings (the “Lock-up Period”; from August 20, 2013 until November 25, 2013), without obtaining the prior written consent of Nomura Securities Co., Ltd.

 

In addition, Takara Bio will agree, during the Lock-up Period, not to issue shares of Takara Bio, issue securities convertible or exchangeable for shares of Takara Bio or issue securities that represent rights to acquire or receive shares of Takara Bio (excluding issuances of shares of common stock through the public offering and the stock split), without obtaining the prior written consent of Nomura Securities.

 

Nomura Securities, at its discretion, have the right to decide to partially or fully remove the lock-up restriction during the Lock-up Period.

 

[ About Takara Bio Inc. ]

Takara Bio Inc. is an innovative biotechnology company based in Shiga, Japan. As a world leader in biotechnology research and development, Takara Bio was the first company to market PCR technology in Japan and is also the developer of the RetroNectin® reagent, which is a world-standard in gene therapy protocols. In addition to providing research reagents and equipment to the life science research market, Takara Bio has active research and product development activities in the fields of gene and cell-based therapy, and agricultural biotechnology including functional food and mushroom production businesses; and is committed preventing disease and improving the quality of life for all people through the use of biotechnology. Through strategic alliances with other industry leaders, the Company aims to extend its reach around the world. More information is available at http://www.takara-bio.com.