7 July 2016
Frontier International plc
("Frontier Resources", "Frontier" the "Company" or the "Group")
Intention to acquire Concepta Diagnostics Limited
Placing and Open Offer to raise £3.5 million
Change of Name to Concepta PLC
Share Consolidation
Frontier Resources (AIM:FRI), is pleased to announce it has conditionally agreed to acquire
Concepta Diagnostics Limited ("Concepta"), a pioneering UK healthcare company established in 2013, that
has developed proprietary products and a platform, which targets the personalised mobile health market with a primary focus on
women's fertility and specifically unexplained infertility. SPARK Advisory Partners is acting as Nominated Adviser and Financial
Adviser to the Company with Beaufort Securities as Broker.
Highlights of the proposed Placing, Open Offer and Acquisition
· Raising £3.5million in a Placing and Open
Offer
· Frontier Resources is acquiring Concepta for
£3.026 million comprising 30,343,950 New Ordinary Shares and £0.75 million in cash
· Concepta is an innovative player in the Mobile
Health and Connected Health Sector that has developed proprietary products for home self-testing as well as in a point-of-care
environment
· Concepta's products will initially address the
specific needs of women with fertility issues, in particular unexplained infertility
· MyLotus brand - unique offering allowing
quantitative and qualitative measurement of a woman's personal hCG and LH hormone levels in urine samples
· Defined route to market:
o Regulatory approvals for launch in China in place - first order
from distributor with payment in advance expected following hospital testing after AIM admission
o CE-Marking for UK and Europe to follow in 2017
· Acquisition presents an attractive market
opportunity to capitalise on the Chinese and EU infertility market with annual revenue potential worth c.£600m
· Proven management team with a wealth of
experience in the women's health diagnostics industry
· New Product Development growth opportunities
- Concepta's proprietary platform lends itself to wider family home-health monitoring to improve
individual health parameters including chronic stress, inflammation, urinary tract, healthy pregnancy progression etc
Adam Reynolds, Executive Chairman of Frontier said: "We have found a
compelling acquisition target in Concepta which we believe, if approved, will be in the best interests for the Company, wider
stakeholders and offers a value accretive opportunity for our supportive shareholders.
"Since its foundation in 2013, Concepta has established itself as a leading and innovative
developer of personalised mobile health diagnostics with a primary focus on women's fertility, where a significant market
opportunity exists to develop a 'best in class' product to help women with unexplained infertility to conceive.
"To this end, Concepta has developed a proprietary product branded 'MyLotus', which compared to
competing products, has a unique product offering that allows both quantitative and qualitative measurement of a woman's personal
hCG and LH hormone levels to help increase conception probability. Concepta is set to launch its product in China in 2016
and in the UK and Europe in 2017 and has the potential to translate its proprietary platform into commercial success in these
initial markets where annual revenues are estimated to be worth c. £600m."
Erik Henau Chief Executive Officer of Concepta said: "Research
indicates that in any given population only an estimated 70% of women are able to fall pregnant within the first six months of
trying to conceive and 92% of women after two years. Medical intervention for infertility is not typically offered until at least
a year of unsuccessfully trying to conceive and with many couples starting to take positive action well ahead of this time, with
little support to help them do so, the market opportunity for a product specifically targeted at helping women with unexplained
infertility to conceive is huge.
"The issue of infertility is universal and largely unaffected by demographics, and Concepta has developed a unique product, 'MyLotus', targeting women who have not become pregnant
in the first six months of trying to conceive. This accounts for 0.36% of the total population in any given
market. Competitor home tests only provide qualitative data collection,
measuring hormone levels against a benchmark based on the 'average woman'. This, however, does not capture a significant
proportion of the female population. Our target group falls outside of the 'average woman' and MyLotus' quantitative
results, we believe, will help early diagnosis of a given woman's fertility issues and increase the
chance of conception.
"In addition to this, we intend My Lotus to be a springboard for the launch of other diagnostic products as the platform lends itself to a wide range of home-health monitoring. By quantifying aspects of
daily life the platform can be used to improve individual health parameters such as chronic stress, inflammation, urinary tract
infection as well as monitoring pregnancy progression. We look forward to updating the market on the launch of MyLotus and these
wider new product developments as the Company moves forward."
The Acquisition will constitute a reverse takeover under the AIM Rules and therefore is subject to
the approval of Shareholders at the General Meeting to be held at 11.00 a.m. on 25 July 2016 at Finsgate, 5 - 7 Cranwood Street,
London EC1V 9EE. If the Resolutions are approved, it is expected Admission will become effective and dealings in the
Enlarged Ordinary Share Capital will commence on AIM on or around 26 July 2016.
For further information on Concepta Diagnostics, its products and unexplained infertility please
visit www.conceptaplc.com.
Enquiries:
Frontier Resources International Plc
Adam Reynolds, Chairman
Tel: +44 (0) 7785 908158
Concepta Diagnostics Limited
Erik Henau, CEO
+44 (0) 1234 866 601
SPARK Advisory Partners Limited (Nominated Adviser)
Neil Baldwin/ Mark Brady
Tel +44 (0)20 3368 3550
Beaufort Securities Limited (Broker)
Jon Belliss
Tel: +44 (0)20 7382 8300
Yellow Jersey PR Limited (Financial PR)
Felicity Winkles/ Joe Burgess/ Josh Cole
Tel: +44 (0) 7748 843 871
There follows an extract from the Chairman's letter in Part I of the Admission Document which has been
published today, and which is available on www.friplc.com
PROPOSED ACQUISITION OF CONCEPTA DIAGNOSTICS LIMITED APPROVAL OF WAIVER OF OBLIGATIONS UNDER RULE
9 OF THE TAKEOVER CODE
CHANGE OF NAME TO CONCEPTA PLC PLACINGS AND SUBSCRIPTION TO RAISE £3.538 MILLION
SHARE CONSOLIDATION
ADMISSION OF THE ENLARGED SHARE CAPITAL TO TRADING ON AIM AND
NOTICE OF GENERAL MEETING
1. INTRODUCTION
The Company announced earlier today that it has agreed terms in respect of the acquisition of
Concepta Diagnostics Limited. As a result, a number of proposals are to be put to Shareholders at the General Meeting. This
document sets out the details of, and reasons for, the Proposals.
The Acquisition, if completed, will constitute a reverse takeover under the AIM Rules and
therefore is subject to the approval of Shareholders at the General Meeting. Further details of the General Meeting are set out
in paragraph 23 of this Part I. Further details of the terms and conditions of the Acquisition are set out in paragraph 5 of this
Part I.
The consideration for the Acquisition of £3.026 million is to be satisfied by the issue of
30,343,950 New Ordinary Shares at the Issue Price of £0.075 per share and cash of £750,120, which values the Existing Share
Capital at circa. £1.55 million. In addition, the Company will assume £650,000 of Concepta's debt, which will be converted to New
Ordinary Shares in Frontier under the Debt Conversion Agreement.
Following implementation of the Proposals, a group of Shareholders of the Enlarged Group
comprising the Vendors of Concepta (excluding FYSCF) together with myself are deemed to be acting in concert - referred
throughout this document as the Concert Party.
Following Admission the Concert Party will be interested in 33,301,138 New Ordinary Shares,
representing approximately 30.55 per cent. of the Enlarged Ordinary Share Capital. If all New Options and New Warrants to be
granted to members of the Concert Party were exercised at the earliest available opportunity, the Concert Party would be
interested in a total of 37,811,438 New Ordinary Shares representing 33.31 per cent. of the Company's then issued share
capital.
Under Rule 9 of the Takeover Code, the Concert Party would normally be obliged to make an offer to
all Shareholders to acquire their New Ordinary Shares. Following an application by the Concert Party, the Panel has agreed to
waive this obligation, subject to the approval of the Independent Shareholders (on a poll) at the General Meeting. Your attention
is drawn to the Rule 9 Waiver section contained in paragraph 7 of this Part I.
The Directors believe that it is appropriate, should the Acquisition be approved by Shareholders
at the General Meeting and the Acquisition completed, that the name of the Company be changed to Concepta Plc.
The Directors are proposing the Share Consolidation (whereby every 250 Existing Shares are
converted into 1 New Ordinary Share) as they consider that it is in the best interests of the Company's long term development as
a public quoted company to have a lower number of shares in issue and a higher nominal value such that Ordinary Shares are traded
in pence rather than fractions of pence.
The purpose of this document is to provide Shareholders with further information regarding the
matters described above and to seek your approval of the Resolutions, which include the Rule 9 Waiver, at the General Meeting.
The notice of General Meeting is set out at the end of this document. The Proposals are conditional, inter
alia, on the passing of the Resolutions and Admission. If the Resolutions are approved by Shareholders, it is expected
that Admission will become effective and dealings in the Enlarged Ordinary Share Capital will commence on AIM on or around 26
July 2016. The General Meeting of the Company at which the Resolutions will be proposed has been convened for 11.00 a.m. on 25
July 2016 at Finsgate, 5 - 7 Cranwood Street, London EC1V 9EE.
You should read the whole of this document and not just rely on the information contained in this
letter. In particular, you should consider carefully the "Risk Factors" set out in Part III of this document. Your attention is
also drawn to the information set out in Part II and in Parts IV to VIII of this document.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
The Company became an AIM Rule 15 cash shell on 23 March 2016, following the disposal of its
previous subsidiaries, Frontier Oman Resources Limited and Frontier Resources International Inc. Under this Rule the Company must
make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 within six months, failing which the
Exchange will suspend trading in the Company's shares pursuant to AIM Rule 40. Since 23 March 2016 the Company has been seeking
suitable acquisitions that fit within its new investing policy which is to focus on targeting the acquisition of a business in
the media, technology and healthcare sectors.
The Existing Directors believe that the acquisition of Concepta Diagnostics Limited fits within
that policy and that the Acquisition presents the Company and its Shareholders with an exciting opportunity to benefit from a
business with significant potential in a developing personalised healthcare sector.
Accordingly, the Directors propose that, subject to Shareholders' approval of the Resolutions, the
Company will acquire the entire issued share capital of Concepta. The Enlarged Group's operations would thereafter constitute
exclusively those of Concepta. Details of the business and operations of Concepta are set out below in paragraph 3 of this Part
I.
3. INFORMATION ON CONCEPTA & FUTURE STRATEGY OF THE
ENLARGED GROUP
Overview and Strategy
Concepta Diagnostics Limited is a healthcare company operating in the area of fertility and, more
specifically, in the niche market segment of unexplained infertility. Concepta's products target the personalised mobile health
market which forms part of the growing global connected healthcare sector.
The initial product offering addresses a specific area of unexplained infertility that women can
check themselves. The ability to quantify personal hormone levels enables the identification of the fertile period for a large
number of women, especially those whose hCG and LH levels vary from mean levels.
The pipeline of future tests which the Directors hope to develop will target additional factors
that can affect conception. Addressing a number of factors in any given cycle aims to increase the chances of
conception.
The product platform allows for data to be transferred to healthcare professionals and offers the
opportunity to play a wider role in private or government mobile health initiatives.
Background
Concepta was founded in 2013 by Michael Catt and Zhang Zhi Gang, each of whom has a background in
women's health diagnostics. The founders, and several other of Concepta's employees, had previously worked for Unipath Limited
(subsequently part of Alere, Inc), a company operating in the pregnancy and ovulation testing market segment. Concepta was
established to address initially the specific needs of women with fertility issues, with target customers being women who are
classified as having "unexplained infertility". These are women who are clinically identified as having no identified cause of
infertility and who have not conceived after 1 year of trying.
The Concepta team has developed a proprietary platform for self-testing with application in the
home as well as in a point-of-care environment. The platform allows Concepta to participate in the exciting emerging mobile
health and connected health sectors where the use of technology is looking at improved health outcomes at a lower burden to
healthcare systems. An increased ability to track and monitor wellbeing is expected by the Directors to lead to improved
prevention.
In April 2014, Concepta raised £2.3 million of funding in a private round from FYSCF, Angel
CoFund, private individuals, and its directors and employees.
During the first half of 2016 a further £0.68 million of bridging finance was raised from
Concepta's shareholders, their associates, and its advisers.
Infertility: the issue Concepta is seeking to address
There is a range of available research which indicates that "fertility issues" exist for a
significant minority of women. For example, a World Health Organisation report looking at national, regional and global trends
using data from 277 health studies from 190 countries lead to an estimate of 48.5 million infertile couples worldwide after five
years of trying.
Medical intervention in cases of infertility typically does not start until after 12 months of
unsuccessfully trying for a baby. In the UK In Vitro Fertilisation (IVF) treatment is typically only offered after trying for 2
years. In the Concepta Directors' experience, many women and couples start to take positive action ahead of this time.
The term "infertile" can be a misnomer: studies illustrate that after 6 months of trying around
70% of women will be pregnant. The rate of conception slows down thereafter, such that after 2 years around 91% of women are
expected to be pregnant.
Concepta's aim is to target primarily these women (who have not become pregnant after 6 months of
trying) with the objective of speeding up the time to pregnancy.
Concepta's platform and suite of tests, of which it has two existing tests but more of which are
in development and/or planned, allow measurement of factors that can affect the chances of a couple to conceive in any given
menstrual cycle as well as providing confirmation (or not) of conception. The focus is on parameters where access to this
information can lead to intervention of infertility issues, and where the use of the various products can cumulatively increase
the chance of conception.
At present, the Concepta platform allows the measurement of a woman's personal hCG and LH levels.
It can store the data and allows for tracking of the menstrual cycle and comparison with her previous menstrual cycles.
Concepta's management know of no other home test that can provide women with this quantitative information. Home tests are based
on the "average woman", however large variances can exist between women. Concepta's target group of women with "unexplained
infertility" has a higher likelihood of not falling into the "average" category.
Description of the platform
Concepta Diagnostics Limited has developed a platform comprising a proprietary meter ("MyLotus
Meter") and urine test under the MyLotus brand, together with a mobile phone application ("App") which is compatible with Apple
iOS and Android systems.
On a stand-alone basis the App enables users to input data obtained from the urine tests to allow
period tracking and mood diary entries. The application allows entering and logging of the test results, which indicate their
fertility status and/or pregnancy that appear on the MyLotus Meter.
The business model relies on creating awareness among the target group and on selling them a
starter pack that contains a MyLotus Meter and sufficient tests for 3 cycles. Refill test packs can be bought for further
cycles.
Once the test (see Figure 1 below) has been inserted in the MyLotus Meter (Figure 2 below) a urine
sample is applied. The MyLotus Meter's proprietary anti-counterfeiting facility ensures that only the results of valid tests
(i.e. those manufactured by Concepta), and which are used before the "use-by date", are displayed. A digital display shows these
results.
Concepta's ovulation test
Precise knowledge of the timing of ovulation has important clinical implications including:
helping to optimise the chances of conception; the monitoring of growth; screening for birth defects and the management of
delivery following confirmation of pregnancy.
There is considerable normal variability in the phases of the menstrual cycle. Indeed in only
about 30% of women is the fertile window entirely within the days of the menstrual cycle identified by clinical
guidelines.
The technology for Concepta's ovulation test allows the detection and quantification of the level
of LH in urine samples. Once inserted in the MyLotus Meter the test gives both a qualitative result (i.e whether the outcome is
positive or negative) to indicate whether a surge in LH has been detected. It also provides a quantitative result - of the actual
level of the hormone in the sample.
Detection of the LH Surge is an indicator that ovulation could happen in the next 24 - 48 hours,
thereby providing the user with valuable information as to when to attempt conception.
The information received from the quantitative result (expressed in mIU/ml) can be input into the
App. For women with unexplained infertility, monitoring the quantitative levels can provide background information to their
doctor. For example, a high level of pre-ovulatory LH can be linked to poor conception rates; women with low LH base levels may
not detect their ovulation with some other commercial kits which do not tailor results to each user, but rather to the average
woman rather than to each user.
MyLotus LH tracking allows a number of LH variations to be identified (e.g. pre-peak surges,
small, double and long peaks), thereby providing useful information to users in planning conception.
Additionally monitoring of the menstrual cycle around specific fertility issues, such as
polycystic ovary syndrome can take place.
Concepta's pregnancy test
Concepta's pregnancy test also provides both qualitative and quantitative (mIU/ml) results. The
qualitative result simply confirms pregnancy (or not). Concepta intends to develop the quantitative result further into a healthy
pregnancy monitoring feature as the hCG hormone exhibits a steady rise in the early stages of pregnancy.
Many women currently test themselves on a regular basis to see whether they are still pregnant. Qualitative tests are not
suitable for this and can give them the wrong result.
Intellectual Property
Concepta has looked to obtain intellectual property through patents, Company know-how, design
rights and trademarks.
Patent
Concepta's main patent application looks at the use of the LH Surge to estimate fertilisation
date, from this the hCG progression can be tracked to establish if hCG levels are in a healthy range. If they are not, then quick
intervention can be delivered to help the pregnancy return to normal health trajectory. Concepta's patent application covers this
aspect in a portable system.
Concepta has a sole patent family which includes a pending international patent application, and
an application which is being pursued in the UK, and is currently in examination.
Company know-how
Anti-counterfeiting measures have been added to Concepta's system to prevent competitors from
copying Concepta's devices. Concepta is keeping, and intends to keep, this as company know-how and will not publish this
information.
Design Rights
The MyLotus Meter design and strip design has been protected using design rights. This means that
the public design and shapes of Concepta's products cannot be lawfully copied. Application for design right protection have been
filed in Europe, Japan, Taiwan, India and China, and of these the European Designs have been registered.
Trademarks
Concepta has trademarks in Europe granted for MyLotus, Lotus, Concepta, and our Flower, and is
still waiting for the outcomes from Japan, Taiwan and China.
Freedom to Operate
As far as the Directors are aware there are no issues that impact Concepta's freedom to operate.
Further details of Concepta's IPR are set out in paragraph 16 of Part VIII of this document.
Regulatory Approvals
The British Standards Institution ("BSI") has been chosen as Concepta's authorised body for
obtaining CE marking. Concepta has passed Stage 1 of the ISO13485 audit. Concepta has commenced the process to seek a CE Mark for
the ovulation and pregnancy products, and it is envisaged that this process will take around 9 months to complete post Admission,
subsequent to which the Directors expect that the products will be allowed to be sold in the UK and the EU.
Product registrations in China under CFDA have been obtained by Concepta's manufacturing partner,
Shiajiazhuang Huanzhong Biotech Limited ("SHBL"). Concepta has entered into an agreement with SHBL (set out in more detail in
paragraph 15.18 of Part VIII of this document), whereby SHBL has confirmed that it holds the registration of the products for the
benefit of Concepta alone, and that it will use the registration solely for the production of the Concepta products. Additionally
Concepta has the right to acquire the business holding the registration if certain events were to occur. Once production for the
Chinese market commences, it is also anticipated that SHBL will act as assembler and packager of Concepta's products from
components (tests and MyLotus Meters) to be supplied by Concepta though no formal assembly agreement has yet been signed.
Following Admission, this registration means that Concepta will be in a position to take orders immediately post
Admission.
Future products
Concepta has a development programme for further products that will complement the existing
product offering to couples with unexplained infertility and where monitoring can cumulatively improve their chance to conceive.
Concepta's R&D effort will be focussed on incorporating next generation product ideas into its proprietary MyLotus Meter,
providing improved functionality and lower-cost production.
The Directors believe that, ultimately, the platform lends itself to be used by multiple members
of a household by offering personalised monitoring, where each member puts together a profile of parameters they wish to monitor.
The MyLotus Meter will be capable of use by multiple users who will be able to download results to their personal App.
Concepta is exploring technology that allows more of this quantitative testing to be done in a
home and/or point-of-care environment.
Target markets
Concepta's core target market is women who have tried but failed to conceive for 6 months or
longer, although its existing products are suitable for any woman seeking to conceive. The Directors calculate, based on their
knowledge of the industry and published articles on the subject, that this core market represents around 3,500 women in any
representative population of 1 million women.
Furthermore the Directors believe that this target market is typically highly motivated and is
easy to identify. As such, the Directors' strategy is to adopt a targeted approach, rather than adopting a traditional mass-
market Over The Counter marketing approach. The business plan does not rely on heavy TV advertising nor does it require
significant margins for retail chains. The Directors believe that targeted awareness, availability and affordability are the
marketing factors that will drive sales growth.
Premises and Manufacturing
Concepta has its registered office in York and a research laboratory in Colworth,
Bedfordshire.
At present the manufacturing of the test strips takes place at the Colworth site which also has
some capacity for manual assembly of the test strips into their plastic housing. As the Company moves from low volume production
towards commercial production post Admission, the test strip production will be relocated. Concepta will be setting up a
manufacturing site in Yorkshire, using a "pick and place" machine which will automate the assembly process
for high volumes. The entire re-location process is expected to take 4 - 6
months. Plans are in place to handle the initial orders with manual assembly. It is intended that all the Company's products will
be "made to order" with a standard lead time of 12 weeks.
Real time stability testing will extend the product shelf-life over time from the current 12
months to a minimum of 2 years. Actual demand data will then allow Concepta to optimise batch sizes and improve lead
times.
The MyLotus Meter is manufactured for the Company by Shenzhen H&T Intelligent Control Ltd.
Concepta is in advanced negotiations on the terms of an Assembly Agreement with SHBL, which is expected to be concluded in the
near future.
Routes to market
Europe
The Directors believe that the target market in the EU comprises c1.7m women.
As mentioned above, Concepta has commenced its application for CE Marking which is required before
it can make sales in the EU. Concepta intends to focus initially on its home market in the UK, and will target on-line sales
direct to consumers rather than through retail channels. Marketing activities will centre on dedicated websites for infertile
women, specialised publications, help and support groups and the specialised consumer fertility exhibitions.
Achievement of CE marking will allow roll-out into other EU markets.
China
Concepta has the ability to sell into China already, through the CFDA registration obtained by
SHBL. In China Concepta intends to use two routes to market: namely through hospitals and via the online market. Concepta intends
to target what it has identified as the top 20,000 out of some 600,000 medical facilities and hospitals. This will require a
network of regional distributors. Concepta anticipates it will ultimately need to appoint 20 distributors. However in the initial
stages, Concepta intends to test this route through the appointment of one distributor.
Concepta will aim to outsource the operational functions to its distributor and will retain
control over strategic planning. It is anticipated that its distributor will employ dedicated staff to implement Concepta's
strategy for China. This will primarily include the implementation of the marketing plan and the management of a network of
Chinese distributors. Concepta expects to receive its first order from its distributor, with payment in advance, following
hospital testing soon after Admission.
The second route to market will be via the on-line market, which the Directors believe to be
growing fast in China. To date over 400 licences to operate on-line pharmacies have been issued by the PRC Government. Concepta's
distributors will be responsible for contracting with suitable on-line pharmacies, and managing those who sign up. Concepta
intends to work on-line with a dedicated Chinese distributor through its dedicated staff to provide sales and product support to
its distributors.
Competition
Pregnancy tests and ovulation tests have been available commercially for over 30 years. However,
the users of those tests can range from those women hoping for a negative result through to Concepta's target market of infertile
women hoping to improve their chances of conception.
As such, some providers of products which are capable of use by Concepta's target market are not
regarded by the Directors as direct competition. These include, for example, manufacturers of basic urine tests which are capable
of providing a yes/no result. However, the Directors believe that ovulation tests are usually provided by competitors as an
add-on to the pregnancy test.
The women in the "unexplained infertility" category are typically not "average" - in the sense
that their base LH levels may be lower than the statistical mean, or their ovulation commences earlier or later than this mean.
Consequently, the Directors believe that current commercial tests are often not suitable for them. Some women use Basal Body
Temperature, however medical advice warn not to use this for ovulation testing.
The Directors believe that a large section of the target group currently does not seek medical
help. Whilst some ultimately opt for IVF, which tends to produce a pregnancy on c27% of occasions, the Directors believe that
MyLotus offers them a chance to try for a natural conception at a fraction of the cost of this alternative.
Apart from competing with IVF, MyLotus can also be used as a complementary product prior to IVF
treatment to help identify and rule out cycles with a low probability of success.
4. EXISTING DIRECTORS, PROPOSED
DIRECTORS, SENIOR MANAGEMENT AND ADVISORY BOARD
Brief biographical details of the Existing Directors, Proposed Directors, senior management and
members of the Advisory Board are set out below:
Existing Directors
The current composition of the Board of the Company is as follows:
Adam Reynolds (Non-executive Chairman) aged 53
Mr Reynolds is a former stockbroker with over 35 years' experience within the UK financial
services sector. In 2000, Mr Reynolds founded Hansard Group plc which was admitted to trading on AIM in 2000. Mr Reynolds is
currently a director of several AIM traded companies: he is a non-executive director of EKF
Diagnostics Holdings plc, a point-of-care, central laboratory, and molecular diagnostics company;
Optibiotix plc, a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes; and Premaitha
Health Plc, a company involved in the development of prenatal screening devices. He is also a director of a number of private
companies. Adam joined the Frontier board as non-executive Chairman in February 2016.
Neil Herbert (Non-executive Director) aged 50
Neil Herbert has over 25 years of experience in finance and is a Fellow of the Association of
Chartered Certified Accountants. He retired as Co-Chairman and Managing Director of energy focused investor Polo Resources
Limited in 2013. Under his stewardship the company paid $185 million in special dividends following asset sales. Prior to this he
was Finance Director of exploration investment group Galahad Gold PLC and from which Neil also became Finance Director of its
most successful investment UraMin Inc, a company which was acquired in 2007. He has a wealth of experience as both an executive
and non-executive director having managed and advised companies through asset acquisitions, disposals and company takeovers. Neil
joined the Frontier board in November 2014.
Barbara Spurrier (Chief Financial Officer) aged 60
Barbara is a qualified certified accountant (FCCA) with over 35 years finance experience in
numerous sectors including Technology, Oil & Gas and Food. As CFO of a fast growing online technology company, blur group
plc, she was an integral part of the successful IPO onto AIM. In addition to the establishment of a US subsidiary and the
conversion to the International Financial Reporting Standards (IFRS) of the company accounts, she has overseen the application of
accounting principles to ensure IFRS compliance. As that company's CFO, she successfully completed its IPO in which she was able
to help raise $3.5m in difficult market conditions in 2013. She has been a main board director on four AIM quoted plc's, heading
the revenue recognition committee of the board for one of these companies. Alongside her fund raising and IFRS experience
Barbara's expertise includes financial and cash management, profit optimisation and the implementation of long term strategic
objectives. Barbara was appointed to the Frontier board in March 2013.
4.1 Proposed Directors
On Admission it is intended that the following individuals will be appointed to the
Board:
Erik Henau (Chief Executive Officer) aged 56
Erik has over 35 years of experience in Life Sciences companies (Amersham International, Oxoid)
and consumer diagnostics (Unipath/Alere). He held a number of General Manager positions including running Unilever subsidiaries
in Scandinavia and the Netherlands. He finished his career at Alere as International OTC Director and then set up Adaxis, a
Women's Health Consultancy business, before returning to corporate life as firstly business development director, and then as
CEO, of Concepta Diagnostics Limited.
Dr Mark Wyatt (Non-executive Director) aged 43
Mark is an investment Director at Enterprise Ventures Limited and has particular expertise in
healthcare and clean technology sectors.
He re-joined Enterprise Ventures in 2010 following two years as Bioscience Ventures Manager at
London-based Imperial Innovations where is was responsible for the formation of new, and management of existing, early-stage
portfolio companies.
Prior to joining Imperial, Mark had spent the previous five years with Enterprise Ventures'
Technology team based in the North West, and before that, six years at Merlin Biosciences, a venture capital and advisory company
dedicated to the life sciences sector.
4.2 Senior Management
In addition to the Board, details of key senior management personnel within the Enlarged Group are
set out below:
Dr Robert Porter - (Chief Technology Officer)
Robert was one of the founders of Concepta Diagnostics and led the research and development,
Quality, regulatory and manufacturing teams to develop the MyLotus product. He led the tech transfer of the product to suppliers
to manufacture key components of the product and help lead the final product manufacture. He is a highly respected figure in the
life sciences industry and is the former co-founder and CTO of Agplus Diagnostics Ltd. In his 19 years in the industry, he has
worked in many diagnostics areas evolving women's health, food, personal care and myocardial infarction to name a few. He served
as a head scientist at the National Physical Laboratory for the Bio-diagnostics and single molecule detection area, where he
helped national bodies (EPSRC, MRC, BBSRC, TP) and international bodies (IFCC) with developments and direction within Diagnostic
devices. He has worked at Alere, Unipath and at Unilever. Robert holds a PhD in Immunodiagnostics from the University of
Swansea.
Zhang Zhi Gang - (Chief Operations Officer)
Zhang was one of the founders of Concepta Diagnostics and led the way in developing key contacts
in China for manufacturing and distribution. Zhang's previous position was at Alere-China's first General Manager and she has
extensive knowledge of the Chinese health-care market. During her time at Alere-China, she helped launch 8 new products and
managed 5 product lines. Previous to this Zhang was at Unipath UK where she helped develop the patented algorithms currently used
by Clearblue's range of fertility and pregnancy test products.
4.3 Advisory Board and consultants
The Company proposes to establish an Advisory Board post Admission. This Board will comprise
individuals with skill-sets, expertise or commercial experience which the Board believes can assist the Company in implementing
its strategic vision. The first appointee will be Ian Gilham, current Chairman of Concepta.
In addition, David Evans will be appointed as a consultant to the Board. Details of these
individuals are set out below:
Dr Ian Gilham
Ian is currently the Chairman of AIM quoted Horizon Discovery PLC and Epistem Holdings plc, a
board member at Vernalis plc, and sits on the boards of private companies, Biosurfit Limited and Multiplicom NV. Ian is the
former CEO of Axis-Shield PLC, a diagnostics company with over £100m sales and acquired by Alere for £235m. Prior to joining
Axis-Shield, Dr. Gilham held international general management, marketing, business development and R&D positions with GSK,
Abbott Laboratories, Celltech and Amersham, gaining wide expertise in the fields of pharmaceuticals and clinical
diagnostics.
David Evans
David has a track record in acquiring, integrating and growing businesses in the diagnostic area
and in value creation, exemplified by his role at BBI Holdings plc where he grew the company through acquisition and organic
growth, from a value of £4 million to a value of £84 million in 2007, when BBI was sold to Inverness Medical Innovations Inc. He
was chairman of DxS Limited (DxS), which was sold three months after his departure in 2009 for £82 million. David was also
chairman of Sirigen Group Limited, an early stage medical technology company that was sold in 2012 to Becton, Dickinson and
Company, a global medical technology company. David was also previously Chairman of Immunodiagnostics Systems Holdings Plc, EKF
Diagnostics Holdings plc, Epistem Holdings Plc and Scancell Holdings Plc. David is currently Chairman of Premaitha Health
Plc.
5. PRINCIPAL TERMS OF THE ACQUISITION
The Company has conditionally agreed to acquire the entire issued share capital of Concepta
Diagnostics Limited for a consideration of £3.026 million, to be satisfied by the issue of the Consideration Shares and cash of
£750,120, which will immediately be used by the Vendors to acquire New Ordinary Shares in the Firm Placing. The Acquisition is
conditional, amongst other things, on the passing of the Resolutions and Admission becoming effective on or before 26 July 2016.
The Warrantors have given certain customary warranties and indemnities pursuant to the Acquisition Agreement. The Company has
entered into a short acquisition agreement with those Vendors who are not giving such warranties and indemnities. Further details
of the Acquisition Agreement and such short form acquisition agreement are set out in paragraph 15.1 and 15.2 of Part VIII of
this document.
The parties to the Debt Conversion Agreement have separately agreed that the obligation to repay
the principal amounts of the Concepta Debt shall be novated by Concepta to the Company. The Company will immediately following
Admission repay the principal amount of the Concepta Debt by the issue of New Ordinary Shares and pay the accrued interest of
£17,380 in cash.
6. FINANCIAL INFORMATION
Historical financial information on the Company and on Concepta is set out in Parts IV and V
respectively of this document. An unaudited pro forma net assets statement showing the hypothetical net assets of the Enlarged
Group after the Proposals is set out in Part VI of this document.
7. IMPLICATIONS OF THE PROPOSALS UNDER THE CODE
Background to the Concert Party
Under the Code a concert party arises, inter alia, when persons acting together pursuant to an
agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of, or frustrate the
successful outcome of an offer for, a company to which the Code applies. Control means an interest or interests in shares
carrying an aggregate of 30 per cent. or more of the voting rights of the company irrespective of whether the holding or holdings
give de facto control. Persons acting in concert include persons who, pursuant to an agreement or understanding (whether formal
or informal), co-operate, to obtain or consolidate control of that company.
Shareholders of a company which is being acquired for shares in a transaction subject to the Code
are deemed to be acting in concert. The Panel has agreed, based solely on information provided by the Company, that a concert
party exists in relation to the Proposals. The Vendors (excluding FYSCF), together with myself, form the Concert Party in
relation to the Proposals.
Further details of the Concert Party are set out in Part VII of the document.
Concert Party
The Concert Party's existing shareholdings in the Company and their proposed interest in the
Enlarged Group immediately following Admission are set out in the table below: