LIDDS announces a capital raise of a total of approximately SEK 59.3 million and accordingly secures long-term financing

The Board of Directors of LIDDS AB (“LIDDS” or the “Company”) has today resolved to carry out a capital raise of a maximum of approximately SEK 59.3 million. The capital raise is carried out through a completed new share issue with deviation from the shareholders’ pre-emption rights of approximately SEK 22.3 million (the “Directed Issue”)  and a new share issue with pre-emption rights for existing shareholders with a maximum of approximately SEK 37.1 million, which is fully guaranteed through subscription commitments and guarantee commitments (the “Rights Issue”) (collectively the “Share Issues”). The Share Issues are carried out pursuant to the authorization granted by the annual general meeting on 14 May 2020. The share price in the Share Issues is determined to SEK 12 per share.

-Comment from Monica Walter, CEO LIDDS

-This is LIDDS’ largest capital raise for several years, which secures long-term financing during prevailing turbulent financial climate. The Company will, through the Directed Issue as well as the fully guaranteed Rights Issue, ensure that the company at a rapid pace can carry out and initiate new important clinical projects.

Summary

Rights Issue

• The Rights Issue comprises a maximum of 3,090,333 shares and at full subscription the Company will be provided with a maximum of approximately SEK 37.1 million before issue expenses.
• The shareholders receive one (1) subscription right for each share held on the record day. Eight (8) subscription rights entitle to subscription of one (1) new share in the Rights Issue.
• The record date for right to participate in the Rights Issue is on 18 June 2020. Subscription in the Rights Issue shall take place during the period commencing on 23 June up to and including 7 July 2020. Trading with subscription rights is expected to take place on Nasdaq First North Growth Market during the period commencing on 23 June up to and including 3 July 2020.
• For existing shareholders who choose not to participate in the Rights Issue, and provided that the Share Issues is fully subscribed, the dilution amounts to 16.7 percent of the number of shares and votes.The Company's board members and several senior executives have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 3.1 million, corresponding to approximately 8.2 percent of the Rights Issue.Some of the Company's major shareholders have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 2.8 million, corresponding to approximately 7.5 percent of the Rights Issue. In addition, the Company has received guarantee commitments of approximately SEK 31.3 million from certain existing shareholders and external guarantors, corresponding to approximately 84.3 percent of the Rights Issue. Accordingly, the Rights Issue is 100 percent guaranteed. The issue undertakings are not secured.In connection with the Rights Issue, lock-up agreements, which contain customary terms and exemptions from Vator Securities, have been entered into for a period of 180 days from today's date with the Board members and senior executives of the Company who own shares in the Company.
• The complete terms and conditions for the Rights Issue will be disclosed in an EU Growth Prospectus, which is expected to be published on the Company's website on 16 June 2020.

The Directed Issue

• The Directed Issue is fully subscribed and comprises 1,854,200 shares and will provide the Company with a maximum amount of SEK 22.3 million before issue expenses.
• The Directed Issue has been directed to a number of selected investors. In addition to provide the Company with capital, the Directed Issue is expected to strengthen the Company's shareholder base.
• The Directed Issue will dilute existing shareholders of approximately 7.0 percent of the number of shares and votes in the Company.

Collectively

• Costs attributable to the Share Issues are estimated to amount to approximately SEK 7.2 million, whereof SEK 2.8 million relates to compensation for the issue guarantors.
• The Company intends to use the net proceeds from the Share Issues to the following areas specified in priority order:
  • approximately 40 percent to the NZ-TLR9 project where NanoZolid^® is combined with a TLR9 agonist;
  • approximately 25 percent to run the NZ-IO project where NanoZolid^® is combined with immuno-oncology candidates, in research and development phase, to initiate phase I study; and
  • approximately 35 percent for ongoing projects and operations.
• The subscription price in the Share Issues is SEK 12 per share, which correspond to a discount of 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Premier Growth Market. The subscription price in the Share Issues has been determined through a structured process within the framework of the Directed Issue.

Background and rationale
In 2019, positive preliminary Phase IIb data was published in LIDDS's most advanced project, Liproca^® Depot. The results from the final analysis that were communicated in May 2020 also included promising data on MRI and prostate biopsies which confirmed the anti-androgenic effect and even indicated some cancer regression during the study period. Liproca® Depot is designed for local tumor treatment for prostate cancer patients who are under "active surveillance" with an intermediate risk of cancer progression. Active surveillance means that the patient does not receive any medical treatment but is instead monitored regularly, which for many patients is associated with stress and anxiety that the tumor will grow. The Company's goal is that these patients should instead be treated with Liproca^® Depot as a way to control the cancer. The phase II study results reported a local tumor effect with both a reduction in patients' PSA levels and a decrease in prostate volume without hormonal side effects, thus validating the NanoZolid^® technology. A licensing agreement has been signed with Puheng Pharma for the Chinese market and LIDDS is working extensively to establish licensing agreements for Liproca^® Depot in other major markets.

The Company's strategy is to, based on the NanoZolid® technology, broaden its existing product portfolio with other proven drugs, thereby creating new drug products for use in a variety of diseases.

In 2019, LIDDS initiated a phase I study in which solid tumors are treated with NanoZolid^® in combination with docetaxel, a cytostatic drug that is indicated for a variety of cancers. Five patients have so far been dosed and further dose scaling is ongoing. LIDDS aims to treat cancer at an early stage, at the stage of diagnosis to facilitate surgery and radiation and to reduce the risk of spread before radical treatment is performed.

As part of the strategy, LIDDS has expanded its research in immuno-oncology and strengthened the organization with specialist expertise during the past year. LIDDS has also initiated several research projects that will evaluate how the NanoZolid^® technology can be applied to intratumoral immunotherapy. The Company's goal is to develop a more effective cancer treatment that has fewer and less serious side effects than systemic immunotherapy. Several immunoactive substances have been successfully formulated in the NanoZolid® technology.

LIDDS has also conducted preclinical studies with a specific TLR9 agonist with positive results, which is why a larger preclinical program has been initiated, which is expected to be completed in 2020. As the Company's Freedom-To-Operate analysis did not show any legal challenges for LIDDS to develop its own product with NanoZolid^® combined with a specific TLR9 agonist, the Company decided in 2019 to prepare for the initiation of a phase I study. The goal is for the study to start in early 2021, where there is a possibility that the NanoZolid^® TLR9 product can be combined with a checkpoint inhibitor.

The Board of Directors is of the opinion that the existing working capital is not sufficient for the current needs of the Company in the coming twelve months prior to the completion of the Issues. In order to capitalize the Company with working capital and create the conditions for completing the Company's ongoing clinical studies and taking new projects to clinical phase, the Board of Directors of LIDDS resolved on 11 June 2020 to raise a total of approximately SEK 59.3 million through the Issues. The Company's assessment is that working capital, following the completion of the Issuance, will cover the working capital requirement for the next twelve months

Use of issue proceeds from the Share Issues
With the proceeds from the Share Issues, the Company will receive SEK 59.3 million before transaction-related costs, which are expected to amount to approximately SEK 7.2 million. The Company intends to use net proceeds from the Issues to the following areas specified in priority order:

• approximately 40 percent to the NZ-TLR9 project where NanoZolid® is combined with a TLR9 agonist;
• approximately 25 percent to run the NZ-IO project where NanoZolid® is combined with immuno-oncology candidates, in research and development phase, to initiate phase I study; and
• approximately 35 percent for ongoing projects and operations.

The Directed Issue

The Board of Directors has completed a new issue of a maximum of 1,854,200 shares with deviation from the shareholders' preferential rights, pursuant to the authorization granted by the annual general meeting on 14 May 2020. The subscription price for the shares is determined to SEK 12 per share and the Directed Issue will provide the Company with a maximum of approximately SEK 22.3 million. The share price in the issue has been determined through a structured process carried out by Vator Securities. The subscription price corresponds to a discount of approximately 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Growth Market. The Board of Directors is of the opinion that the subscription price's market capability is ensured through the structured process. The reason for the deviation from the shareholders' pre-emption rights is to diversify the shareholder base in the Company and to take advantage of the opportunity to raise capital in a time-efficient manner on favorable terms. Through the Directed Issue, the Company's share capital will increase with SEK 98,272.60 and the number of shares will increase with 1,854,200 shares. The Directed Issue will dilute existing shareholders of approximately 7.0 percent of the number of shares and votes in the Company.

The Rights Issue
The Board of Directors of the Company has decided on a new issue of a maximum of 3,090,333 shares with pre-emption rights for the Company's existing shareholders pursuant to the authorization granted by the annual general meeting on 14 May 2020. Through the Rights Issue existing shareholders are entitled to subscribe for new shares in relation to the number of shares they own on the record date of 18 June 2020. The person who, on the record date on 18 June 2020, is entered in the share register kept by Euroclear Sweden AB on behalf of LIDDS, is entitled to subscribe with pre-emption right for shares in the Rights Issue. One (1) existing share entitles to one (1) subscription right and eight (8) subscription rights entitle to subscribe for one (1) new share at the subscription price SEK 12 per share. The subscription price corresponds to a discount of approximately 21 percent compared to the closing price on 10 June 2020 at Nasdaq First North Growth Market. The Rights Issue will provide LIDDS with SEK 37.1 million before deduction for issue expenses. Through the Rights Issue, the Company's share capital may increase by a maximum of SEK 163,787.65, and the number of shares may increase by a maximum of 3,090,333 shares. For existing shareholders who choose not to participate in the Rights Issue, and provided that the Rights Issue is fully subscribed, the dilution amounts to approximately 10.4 percent of the number of shares and votes in the Company.

Total increase of the share capital and number of shares
At full subscription in the Share Issues, the number of shares in the Company will amount to a maximum of 29,667,204 and the share capital will amount to a maximum of SEK 1,572,361.81.

EU Growth Prospectus
The complete terms and conditions for the Rights Issue and information regarding the Company will be disclosed in an EU Growth Prospectus, which is expected to be published on the Company's website around 16 June 2020.

Subscription commitments and guarantee commitments
The Company's board members and several senior executives have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 3.1 million, corresponding to approximately 8.2 percent of the Rights Issue. Some of the Company's major shareholders have undertaken to subscribe their respective pro rata shares of the Rights Issue. These subscription commitments amount to a total of approximately SEK 2.8 million, corresponding to approximately 7.5 percent of the Rights Issue. In addition, the Company has received guarantee commitments of approximately SEK 31.3 million from certain existing shareholders and external guarantors, corresponding to approximately 84.3 percent of the Rights Issue. Accordingly, the Rights Issue is 100 percent guaranteed. The issue undertakings are not secured.

Preliminary time schedule for the Rights Issue

Advisors
Vator Securities is acting as financial advisor to the Company and Advokatfirman Delphi is the legal advisor to the Company in connection with the Share Issues.

Responsible parties
This information is such information LIDDS AB (publ) is obliged to make public in accordance with the (EU) Market Abuse Regulation. The information in this press release has been made public through the agency of the responsible person set out below for publication at the time stated by LIDDS AB’s news distributor GlobeNewswire at the publication of this press release. The responsible person below may be contacted for further information.

Monica Wallter, CEO

E-mail: monica.wallter@liddspharma.com | Phone: +46 737-07 09 22

Anja Peters, CFO

E-mail: anja.peters@liddspharma.com | Phone: +46 733-26 00 00

This press release is in all respects a translation of the Swedish original press release. In the event of any differences between this translation and the Swedish original, the latter shall prevail.

About NanoZolid®
The NanoZolid® platform is based on an injection technology that can be combined with various types of drug substances. The technology is clinically validated in phase II trials. The NanoZolid® technology enables the development of drugs with a predetermined and controlled release of active drug substances for up to six months.

With NanoZolid®, LIDDS’ goal is to offer an effective tumor treatment of cancer without severe side effects, which systemic treatments can entail. Since today's drug-based cancer treatments are given in the form of tablets, syringes or infusions, large parts of the body are often exposed to the drug's effects and side effects rather than just the specific tumor that one wants to target.

With the NanoZolid® platform, the active drug substance is mixed in a patent protected suspension. The suspension is then injected into the tumor area and forms a solid depot from which the drug is gradually excreted with a predetermined, controlled and long-lasting effect.

About LIDDS
LIDDS is a Swedish-based pharmaceutical company which develops new innovative pharmaceutical products with its proprietary drug delivery technology NanoZolid®. The technology is patented on the large markets in the world and offers a controlled, sustained and customized release of medication for up to six months. LIDDS has its head office in Uppsala. For more information, please visit www.liddspharma.com.

LIDDS shares are listed on Nasdaq First North Growth Market (ticker: LIDDS). Redeye AB, +46 (0)8 121 576 90, certifiedadviser@redeye.se, is the Company’s certified adviser.

Important information
The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in LIDDS in any jurisdiction, neither from LIDDS nor from someone else.

An investment decision based on the Share Issues shall be made on the basis of all publicly available information regarding the Company. Such information has not been independently verified by Vator Securities AB. The information in this press release is only published as background information and does not claim to be complete. Accordingly, an investor should not rely solely on the information contained in this press release or its accuracy or completeness

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa, Switzerland, the United States or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

This announcement is not a prospectus or an EU Growth Prospectus for the purposes of Regulation (EU) 2017/1129 (the "Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction. An EU Growth Prospectus regarding the Rights Issue which is described in this press release will be prepared and submitted to the Swedish Financial Supervisory Authority. Following the Swedish Financial Supervisory Authority’s approval and registration of the EU Growth Prospectus, the same will be published and made available, among other things, on LIDDS website.

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” 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”); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of 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.

Forward-looking statements
This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the Group operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialise or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market rule book for issuers.

Information to distributors
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in LIDDS may decline and investors could lose all or part of their investment; the shares in LIDDS offer no guaranteed income and no capital protection; and an investment in the shares in LIDDS is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Share Issues.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in LIDDS.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in LIDDS and determining appropriate distribution channels.