Dancann Pharma

The Rights Issue in short:

• The Offer is comprised by a maximum of 1,832,907,879 new shares of the Company, each of a nominal value of DKK 0.01, and in the event of full subscription of the Rights Issue, the share capital of the Company will be increased by nominally DKK 18,329,078.79 (equivalent to a total issue of 1,832,907,879 new shares).
• The new shares are offered to the public with pre-emptive subscription rights (“Pre-Emptive Rights”) for existing shareholders. Each holder of existing shares registered with Euronext Securities on 10 June 2024 (the record date) at 5:59 pm CET as a shareholder in the Company will be allocated eleven (11) Pre-Emptive Rights for each existing share. For each (1) Pre-Emptive Right, the holder is entitled to subscribe for 1 new share at a subscription price of DKK 0.01 per new share.
• The subscription price is DKK 0.01 per new share.
• The subscription period of the Rights Issue will commence on 11 June 2024 at 9:00 am CET and will close on 24 June 2024 at 5:00 pm CET.
• DanCann Pharma has received guarantee commitments (i.e. commitments to subscribe for shares) of approximately DKK 8.959 million, which corresponds to approx. 48.88% of the issue volume, of which (i) approximately DKK 5.5 million consists of bottom-up guarantee commitments, and (ii) approximately DKK 3.459 million consists of top-down guarantee commitments.
• In the event of full subscription of the Rights Issue, the Company’s gross proceeds will be DKK 18,329,078.79 (before transaction costs).
• The result of the Rights Issue will be communicated in a company announcement expected to be published no later than three trading days after the expiry of the subscription period, and the result of the Rights Issue is therefore expected to be announced on 27 June 2024.
• The New shares issued in the Rights Issue will carry the same rights as the existing shares of the Company.

Background and motive
 

DanCann Pharma announced a strategic pivot in the autumn last year, influenced by macroeconomic shifts and a dip in market valuation, prompting a refocus and decision to prioritise the part of the business that focuses on sourcing, importing, and distributing, particularly the regulatory aspects of the Danish market.

DanCann Pharma’s adjusted strategy is founded on an asset-light business plan designed for optimal capital efficiency. It reflects the commitment to a sustainable future, one that benefits both the patients and the financial well-being of the Company.

DanCann Pharma has implemented the strategy with a streamlined team, targeting breakeven during Q4-2024, while continuing its profitable distribution of existing Rx products and planning to introduce new offerings in the pipeline.

To achieve this and secure the necessary capital, the Company is now conducting this Rights Issue. This initiative is primarily driven by (1) new submissions, where the Company aims to introduce 4-6 new cannabinoid medicines under the Pilot Programme during 2024-2025, and (2) the need to rebuild the Company’s capital structure, including the elimination of outstanding debt and current convertible bonds.

Guarantee commitments
DanCann Pharma has received guarantee commitments (i.e. commitments to subscribe for shares) of approximately DKK 8.959 million, which corresponds to approx. 48.88% of the issue volume, of which (i) approximately DKK 5.5 million consists of bottom-up guarantee commitments, and (ii) approximately DKK 3.459 million consists of top-down guarantee commitments. Any subscription of shares by those having provided bottom-up guarantee commitments will be by way of cash subscription of new shares. Any subscription of shares by those having provided top-down guarantee commitments will be carried out by way of conversion of existing debt in the Company.

In addition to the above, an existing lender of the Company (New Growth Opportunities 2) has committed to convert an outstanding loan of an amount of DKK 3,350,000 to shares of the Company at a price of DKK 0.01, provided that the Company receives cash subscriptions of DKK 5.5 million in the rights issue (which the Company has secured) but otherwise regardless of the outcome of the Rights Issue.

Please refer to pages 17-19 of the memorandum for further information regarding guarantee commitments.

Proceeds and transaction costs

In the event of full subscription of the Rights Issue, the Company’s gross proceeds will be DKK 18,329,078.79. In the event of full subscription of the Rights Issue, the Company’s costs in connection with the Rights Issue are estimated at approx. DKK 4.7 million, and hence the net proceeds will in this case be approx. DKK 13.629 million. In the event that the Rights Issue will not be subscribed for by any other than those having provided guarantee commitments, the costs of the Company in connection with the rights issue are estimated at DKK 3.3 million.

The Company intends to use the net issue proceeds of approximately DKK 13.63 million as follows (in the event of full subscription of the Rights Issue):

• Achieving a debt-free status by repayment of the loans listed under “top-down guarantees” in the memorandum: approximately 25%
• Progressing new product submissions (regulatory affairs): approximately 50%
• Penetrate and developing new market shares (DK): approximately 25%

Please refer to page 16 of the memorandum for further information regarding use of proceeds.

Other terms and information of the Rights Issue

• The Rights Issue is based on a pre-money valuation of the Company of DKK 1,666,279.89 (the total number of shares of the Company being 166,627,989 as of today, and subscription price is DKK 0.01 per share).
• The Pre-Emptive Rights have been approved for trading and official listing on Spotlight to the effect that they can be traded on Spotlight during the Rights Trading Period in the temporary ISIN code DK0062956579.

• The Rights Trading Period (the period in which Pre-Emptive Rights can be traded) commences on 7 June 2024 at 9:00 a.m. CET and closes on 20 June 2024 at 5:00 pm CET.

• Existing shares traded from 7 June 2024 at 9:00 am CET will be traded without Pre-Emptive Rights, provided that the existing shares are traded with customary two-day settlement.
• The Rights Issue is not subject to prospectus requirements, and the Company publishes a memorandum regarding the Rights Issue pursuant to Spotlight Stock Market’s regulations.

Share capital of the Company

As of today, the nominal value of the Company’s registered share capital is DKK 1,666,279.89 divided into 166,627,989 shares, each having a nominal value of DKK 0.01. The Company’s share capital is not divided into share classes, and all shares carry the same rights. Each existing share carries 1 vote.

In the event of full subscription of the Rights Issue, the share capital of the Company will increase from nominally DKK 1,666,279.89 to 19,995,358.68, and the number of outstanding shares will increase from 166,627,989 shares to 1,999,535,868 shares.

Dilution

Upon issue of the new shares, existing shareholders’ share of ownership of the Company may be reduced. In the event of full subscription of the Rights Issue, if an existing shareholder refrains from exercising its Pre-Emptive Rights allocated to the existing shareholder in connection with the Rights Issue, the existing shareholder's ownership will be diluted by approximately 91.67%. If the existing shareholders elect to partly exercise the Pre-Emptive Rights allocated to them, the rate of dilution will be between 0 to 91.67% depending on the exercise (in the event of full subscription of the Rights Issue). If the existing shareholders exercise their Pre-Emptive Rights in full, they will not be diluted.

Memorandum

Full terms and conditions for the Rights Issue as well as other information about the Company are set out in the memorandum regarding the Rights Issue that the Company attached to this press release and which can be found on the following link: https://www.dancann.com/rights-issue-2024.

Time plan for the Rights Issue

Please note that adjustments may be made to the time plan.

For further information regarding the Rights Issue, please contact:

Jeppe Krog Rasmussen, CEO

E-mail: jkr@dancann.com

Advisors

EK Equity AB is acting as a financial advisor to DanCann Pharma.
Mazanti-Andersen is acting as the legal adviser of DanCann Pharma.
Nordic Issuing acts as issuing agent.

About DanCann Pharma A/S

DanCann Pharma A/S (SS: DANCAN) was founded in 2018 and is a Danish biopharmaceutical Company powered by cannabinoids.

DanCann Pharma A/S (SS: DANCAN) is listed on the Spotlight Stock Market in Copenhagen/Stockholm.

For more information, visit: www.dancann.com

Forward-looking-statement:

Some statements in this release may contain forward-looking information. All statements, other than of historical fact, that address activities, events, or developments that the Company believes, expects, or anticipates will or may occur in the future (including, without limitation, statements regarding potential acquisitions and financings) are forward-looking statements. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology.

Forward-looking statements are subject to several risks and uncertainties, many of which are beyond the Company's ability to control or predict, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among other things, without limitation, the inability of the Company, to obtain sufficient financing to execute the Company’s business plan; competition; regulation and anticipated and unanticipated costs and delays, the success of the Company’s research strategies, the applicability of the discoveries made therein, the successful and timely completion and uncertainties related to the regulatory process, the timing and outcomes of regulatory or intellectual property decisions and other risks disclosed in the Company's public disclosure record on file with the relevant securities regulatory authorities.

Although the Company has attempted to identify important factors that could cause actual results or events to differ materially from those described in forward-looking statements, there may be other factors that cause results or events not to be as anticipated, estimated or intended. Readers should not place undue reliance on forward-looking statements. The forward-looking statements included in this presentation are made as of the date of this presentation and the Company does not undertake an obligation to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless required by applicable securities legislation.