On August 23, 2021 Epigenomics AG (FSE: ECX, OTCQX: EPGNY, the "Company" reported that the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin") has today approved the securities prospectus required for the issuance of a subordinated mandatory convertible bond in an aggregate principal amount of up to EUR 16,500,000.00 (Press release, Epigenomics, AUG 23, 2021, View Source [SID1234586843]). The mandatory convertible bond may be converted into up to a total of 15,000,000 registered no-par value shares of the Company with a share in the Company’s share capital of up to a total of EUR 15,000,000.00. Accordingly, the conversion price will be EUR 1.10 per share, subject to any anti-dilution adjustments.

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The mandatory convertible bond consists of up to 165,000 notes with a nominal amount of EUR 100.00 each, which will initially be offered to the existing shareholders of Epigenomics AG by means of a rights offering. Shareholders will also be given the option of over-subscription. The rights offering is published on the Company’s website (View Source) and is expected to be published in the German Federal Gazette on August 26, 2021. The subscription period for the Company’s shareholders is scheduled to start on August 27, 2021, and to end on September 10, 2021 (including each of these two days). Stock exchange trading of the subscription rights on the Hamburg Stock Exchange is also expected to commence at the beginning of the subscription period on August 27, 2021.

The bonds are non-interest bearing (zero coupon) and have a term until September 29, 2027. In addition to the conversion rights of the holders or creditors of the bonds, the terms and conditions of the bonds also include a conversion obligation for all outstanding notes not yet converted at the end of their term.

As announced in the ad hoc announcements of June 11, 2021, and August 20, 2021, Epigenomics AG has entered into a back-stop agreement with its shareholder Deutsche Balaton Aktiengesellschaft, under which the latter has undertaken to acquire all notes in an aggregate principal amount of up to EUR 16,500,000.00 by exercising its subscription rights and by the acquisition of notes not subscribed via subscription rights and oversubscription rights. This obligation expires at the end of the year 2023.

Epigenomics AG plans to use the proceeds from the issuance of the mandatory convertible bond to finance its operations, in particular the further development of the blood-based colorectal cancer screening test Epi proColon Next-Gen. For this purpose, the Company plans to conduct a clinical study in the U.S.A., which is required to obtain approval for the test by the U.S. Food and Drug Administration (FDA). Preparations are currently underway for the clinical trial, which is scheduled to begin in the first half of 2022.