Sosei reaches agreement to acquire 100% of Activus

Sosei Group Corporation ("Sosei"; TSE Mothers Index: 4565), announced today that it has reached an agreement to acquire 100% of Activus Pharma Ltd. ("Activus"), a privately-held biopharmaceutical company based in Chiba, Japan.

Activus Pharma Ltd. was established in 2006 as a spin-off from DIC Corporation (TSE Section 1 Index: 4631).

Strategic Rationale

Activus' core technologies in drug formulation using proprietary nano-particle processing will form the basis of Sosei's new platform technology.

Activus Pure Nano-particle Technology (APNT), unlike other nano-particle processing technologies, keeps compounds virtually free from contamination. At the same time, it can yield pharmaceutical ingredients with particle sizes ranging from 50 to 300nm levels. Thus, APNT enables the development of injections, ophthalmic solutions and inhalations with poorly soluble compounds where high purity is required.

The needs for nano-particle technology within the pharmaceutical industry are still largely unmet. Therefore, the technology can be expected to generate new development candidates for Sosei, and partnership with other pharmaceutical companies will allow Sosei to realize revenue from this technology in a relatively short period of time.

Structure of the transaction

The deal contemplates the acquisition of 100% of the issued share capital of Activus through a stock exchange, but there will be no issuance of the new stocks to the current shareholders of Activus. In exchange for the acquired shares Sosei will offer a cash consideration to:

1) Preference shareholders

Cash consideration of 500,250,000 yen will be provided. However, in case the net cash balance of the day preceding the day of share exchange is below the above sum, the net cash balance will be paid to preference shareholders, while common shareholders will be paid 1 yen per share.

2) Common shareholders

Common shareholders will be paid the difference between the net cash balance of the day preceding the day of share exchange and the cash considerations provided to preference shareholders.

Additionally, a part of the gross profit generated from the acquired Activus assets will be split among common shareholders up to 5 years effective from the day of the enforcement of the deal or until the gross profit amounts to 1 billion yen, whichever comes sooner.