The subscription period in Diagonal Bio AB's ("Diagonal Bio" or the "Company") rights issue of units of initially approximately SEK 6.0 million ended on 6 February 2025 (the "Rights Issue"). The Rights Issue was subscribed to a total of approximately 122 percent, including subscription undertakings, meaning that no underwriting commitments have been utilized. In parallel with the Rights Issue, the Company has carried out the directed issue of units which was announced on 23 December 2024 and approved by the Extraordinary General Meeting 17 January 2025, of initially approximately SEK 1.7 million to Redén Trotting AB and Svea Bank AB (the "Directed Issue"). In total, through the Rights Issue and the Directed Issue, Diagonal Bio is thus provided proceeds of approximately SEK 7.7 million before deduction of issue related costs. Should all attached warrants of series TO 2 issued in the Rights Issue and the Directed Issue be exercised, the Company may receive additional proceeds of approximately SEK 3.4 million in June 2025.
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"I am very glad to announce the outcome of this successful transaction - we now have the funds to move forward with the exciting plans we have, and provided that all warrants are exercised, Diagonal Bio will be financed until Q1 2026. In the time until then, it is our assessment that with completed pilot studies, studies that have been converted into sales agreements and expansion in our three main segments - horse, pig and fish - we will have established a solid platform for continued expansion. We will primarily focus on validating LAMPlify's commercial interest in the equine segment, by reaching the targets we have set for initiating new pilot projects and results from completed pilot projects, with the overall goal of achieving market acceptance by the end of 2025" - Karin Wehlin, CEO of Diagonal Bio AB (publ)
Subscription, allocation and payment
The Rights Issue was subscribed to a total of approximately SEK 7.3 million including subscription undertakings of approximately SEK 0.4 million, which corresponds to a subscription rate of approximately 122 percent. Diagonal Bio is thus, through the Rights Issue, provided with approximately SEK 6.0 million before issue related costs of approximately SEK 1.5 million (of which approximately SEK 0.45 million refers to underwriting fees, if all external underwriters desire to receive cash compensation).
A total of 26,116,901 units were subscribed for with the support of unit rights, including subscription undertakings. A total of 14,666,393 units were subscribed without the support of unit rights. Through the Rights Issue, 601,071,318 new shares and 267,142,808 warrants of series TO 2 will be issued. The subscribers who are allocated units without support of unit rights will receive settlement notes, which are planned to be sent out after a formal board decision on allocation. Allotted units without pre-emptive unit rights shall be paid in accordance with the instructions on the settlement note.
Through the Directed Issue, 166,599,972 new shares and 74,044,432 warrants of series TO 2 are issued.
Compensation for underwriting commitments
For the top-down underwriting commitments provided by external underwriters, the underwriters receive an underwriting compensation of 15 percent in cash or 17 percent in the form of units (on the same terms as in the Rights Issue). No compensation is paid for the top-down underwriting provided by CEO Karin Wehlin or the board members.
Terms for warrants of series TO 2
Warrants of series TO 2 are issued both through the Directed Issue and the Rights Issue. One (1) warrant of series TO 2 gives the holder the right to subscribe for one (1) new share in Diagonal Bio during the period that runs from and including 4 June 2025, to and including 18 June 2025. The exercise price for warrants series TO 2 has been set to SEK 0.01 per new share. The Company may receive a maximum of approximately SEK 3.4 million from the exercise of warrants of series TO 2, before deduction of issue related costs, which are estimated to amount to approximately SEK 0.4 million.
The warrants are intended to be admitted to trading on Nasdaq First North Growth Market after final registration of the Directed Issue and the Rights Issue with the Swedish Companies Registration Office. The last day of trading in TO 2 is expected to be 16 June 2025.
Number of shares, warrants and share capital
When the Rights Issue and the Directed Issue have been registered with the Swedish Companies Registration Office, the total number of shares will have increased by 767,671,290 shares, from 400,714,213 shares to 1,168,385,503 shares. The Extraordinary General Meeting in Diagonal Bio resolved, on 17 January 2025, to reduce the share capital for allocation to non-restricted equity by an amount corresponding to the maximum initial share capital increase from the Rights Issue and the Directed Issue. The maximum initial share capital increase from the Rights Issue and the Directed Issue is SEK 7,659,877.37 meaning that, upon registration of the Rights Issue and the Directed Issue the share capital will also be reduced with the same amount, resulting in the share capital not increasing from SEK 3,998,354.20. Following the share capital reduction, the share's quota value will be approximately SEK 0.0034.
In the event of full exercise of all issued warrants of series TO2 for subscription of new shares in the Company, the number of shares will increase by an additional 341,187,240 shares to a total of 1,509,572,743 shares and the share capital will increase by additional SEK 5,132,547.33.
The shareholders who have not participated in the Rights Issue or the Directed Issue will be subject to a dilution effect corresponding to approximately 66 percent of the votes and capital in the Company. If all warrants of series TO 2 are exercised for subscription of new shares, they will result in a dilution of approximately 23 percent for those not participating in the warrant exercise.
Trading in BTU
Trading in BTU's (Paid Subscribed Unit) is currently ongoing on Nasdaq First North Growth Market under the short name DIABIO BTU and will cease after the Rights Issue has been registered with the Swedish Companies Registration Office. The registration is expected to take place around 20 February 2025. Thereafter, after approximately one week, BTU will be converted into shares and warrants of series TO 2. The shares and warrants will then be admitted to trading on First North Growth Market as soon as possible after registration with the Swedish Companies Registration Office.
Lock up
The Board and management have, through a lock-up agreement, with Navia Corporate Finance AB as counterparty, undertaken, with customary exceptions, not to sell any of the existing shareholding or such shareholding that has been acquired through subscription in the Rights Issue, for a period lasting until 31 July 2025.
Advisors
Navia Corporate Finance AB is the financial advisor in connection with the Rights Issue and the Directed Issue. Setterwalls Advokatbyrå AB is the legal advisor. Aqurat Fondkommission AB is the issuing agent.
This press release contains inside information that Diagonal Bio AB (publ) is required to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication on 7 February, 2025, at 16:15 CET.
For additional information about the Rights Issue and the Directed Issue, please contact:
Navia Corporate Finance AB
E-mail: info@naviacf.se
For additional information about Diagonal Bio, please contact:
Karin Wehlin, CEO
Phone: +46 703 052488
E-mail: kw@diagonalbio.com
Certified Adviser
Svensk Kapitalmarknadsgranskning AB
E-mail: ca@skmg.se
About Diagonal Bio
Diagonal Bio AB was founded in 2020 and is a Swedish biotechnology company with headquarters and offices in Lund. The Company develops the PANVIRAL® platform to detect and diagnose small sections of pathogen genomes, for example viruses, bacteria and fungi. The Company was founded with the goal of reducing human suffering by revolutionising global diagnostics of pathogen-borne diseases with proprietary technology. Diagonal Bio's patented technology can also be used for the less regulated market segments via LAMPlify®.
Important information
The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, warrants or other securities in Diagonal Bio. No action has been taken, and measures will not be taken to permit a public offering in any jurisdictions other than Sweden. Any invitation to the persons concerned to subscribe for units in Diagonal Bio has only been made through the Memorandum that the Company published on 22 January 2025 on Diagonal Bio's website www.diagonalbio.com. The Memorandum does not constitute a prospectus as defined in the provisions of Prospectus Regulation (EU) 2017/1129 of the European Parliament and of the Council ("Prospectus Regulation") and has not been reviewed, registered or approved by the Swedish Financial Supervisory Authority. The offering in the Memorandum is exempt from the prospectus obligation in accordance with Article 3 (2) of the Prospectus Regulation and Chapter 2, Section 1 of the EU Prospectus Regulation (Supplemental Provisions) Act (2019:414) due to the fact that the amount offered by the Company to the public is less than EUR 2.5 million. This release is not a prospectus in accordance with the definition in the Prospectus Regulation and, accordingly, does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in shares, warrants or other securities in Diagonal Bio. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the Memorandum. Thus, investors are encouraged to review the Memorandum in its entirety.
The information in this press release may not be released, distributed or published, directly or indirectly, in or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, South Korea or any other jurisdiction in which such action would be unlawful or would require registration or any other measures than those required by Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities laws. No shares, warrants or other securities in Diagonal Bio have been registered, and no shares, warrants or other securities will be registered, under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities legislation of any state or other jurisdiction in the United States of America and no shares, warrants or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States, except under an available exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States.
Within the European Economic Area ("EEA"), no public offering of shares, warrants or other securities ("Securities") is made in other countries than Sweden. In other member states of the European Union ("EU"), such an offering of Securities may only be made in accordance with the Prospectus Regulation. In other member states of the EEA which have implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation and/or in accordance with an applicable exemption under a relevant national implementation measure. In other member states of the EEA which have not implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption under national law.
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" (within the meaning of the United Kingdom version of the EU Prospectus Regulation (2017/1129/ EU) which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) 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"); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under 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.
This press release may contain forward-looking statements which reflect the Company's current view on future events and financial and operational development. Words such as "intend", "expect", "anticipate", "may", "believe", "plan", "estimate" and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development, and the actual outcome could differ materially from the forward-looking statements.
Since Diagonal Bio conducts essential services according to the Swedish Screening of Foreign Direct Investments Act (Sw. lag (2023:560) om granskning av utländska direktinvesteringar), certain investments in the Rights Issue or the Directed Issue may require review by the Inspectorate of Strategic Products (ISP). More information about this can be found on Diagonal Bio's website, www.diagonalbio.com.
