Ann: Notice of Annual General Meeting/Proxy Form, page-19

Little T

Yes, ACAD would need over 50% of shareholders to agree to the offer first, at a minimum.

Let’s assume Karst Peak still hold their 14m shares this time next year, as does Dr. Treagus his 2m. Let’s also assume the requested 3m loan funded shares are granted and that there’s a placement of 11m shares to fund Phase 2 NNZ-2591. Also ACAD holds 1.333m. Together, this represents over 27% of the register potentially for sale.

Then there’s director shares - Scott with 4m., Davies with ~120,000 and Harry with 14,000. That would represent just 3.6% of 115m shares. Not a big percentage in the scheme of things.

Now let’s assume that a couple of funds that have “anticipated” the deal and will happily agree to the offer have quietly and steadily been acquiring parcels below 5%. Even now, as per the latest Annual Report, a quarter of NEU’s register sits with nominee funds such as HSBC, Citicorp, JP Morgan and UBS. Do we know whose interests these funds represent?

To use the example of Australian biotech, Viralytics, there were multiple well-known funds sitting below the 5% substantial shareholder threshold, and therefore unidentified, at the time that Merck lobbed its acquisition offer. Baker Bros, OrbiMed and BVF Partners were there as well as the familiar Karst Peak Capital. Between them they represented almost 16% of the register. They accepted Merck’s offer of A$502m, representing A$1.75 per share and sold as a 160% premium to the then share price. Yet just 10 months previously, on the announcement of positive trial data, VLA had been trading @ $1.25.

And there was more at play in the VLA acquisition than just overseas funds in stealth mode. Just 2-3 months before the acquisition offer, the CEO and directors were granted 3 million plus the CSO 2 million “incentivizing” options exercisable @ either $0.64 or $0.74. And just 6 weeks before the acquisition offer, there had been a $30m placement @ $0.82 to a Chinese group which then held 13% of the company. The Board recommended the Merck offer in the absence of another offer, and the offer was accepted by 90%+ of shareholders.

But returning to NEU, of course, there are other substantial shareholders, including you, Little T. Reading between the lines of your post, A$4.44 wouldn’t do it for you. But I note that in January, when the share price was $2.60, you said you’d be “very happy” to accept an offer of $3 with a further $3 conditional on milestones being met. At the time, that represented a 15% premium to share price on the certain component or a total 123% premium to share price if you include the conditional component.

So let’s say that ACAD bumped up their offer by $50m to US$390m (A$585m - A$5.10 per share, a 155% premium to $2). Not tempting?