Sensorion Announces a €20m Convertible Bond Issue Subscribed by Two Renowned Investors Invus and Sofinnova Partners

  • €20m issue of bonds mandatorily convertible into ordinary shares of
    the Company subscribed by Invus Public Equities LP and Sofinnova
    Crossover I SLP, which become long-term partners for Sensorion’s
    transformation. These bonds will be mandatorily converted into shares
    on the maturity date (June 13 2024)
  • The funds raised will allow to continue the clinical development of
    the phase 2 programs for SENS-111 and SENS-401 and to initiate the new
    gene therapy programs in inner ear diseases in the wake of the
    recently signed strategic framework agreement with Institut Pasteur

MONTPELLIER, France–(BUSINESS WIRE)–Regulatory News:

Sensorion (Paris:ALSEN)(FR0012596468 – ALSEN) a pioneering
clinical-stage biopharmaceutical company which specializes in the
development of novel therapies to restore, treat and prevent inner ear
diseases such as hearing loss, tinnitus and vertigo, today announces a
convertible bond (‘CB’) issue with a nominal value of 20 million
euros subscribed by two new investors, Invus Public Equities LP as the
anchor investor and Sofinnova Crossover I SLP as co-anchor investor.

The proceeds from the issue will be used to fund the clinical phase 2
programs for SENS-111 and SENS-401, the initiation of our new gene
therapy preclinical programs and the Company’s overhead costs until the
second half of 2020. We expect the results of the phase 2 trial on the
efficacy of SENS-111 in acute unilateral vestibulopathy in the second
half of 2019. The phase 2 of SENS-401, in sudden hearing loss (SSNHL),
is underway and interim read out results should be available by the end
of the year. As part of the partnership framework agreement recently
signed with Institut Pasteur, Sensorion will launch and finance two
preclinical gene therapy programs aiming at correcting hereditary
monogenic forms of deafness including Usher type 1 syndrome and deafness
caused by a mutation of the gene coding for Otoferlin.

2019 is a year of transformation for Sensorion. We have just signed
a framework agreement with Institut Pasteur, an institution recognized
worldwide for the quality of its scientific progress in the hearing
field. We now have one of the richest pipelines in the inner ear field
with two assets in phase 2 in addition to our new gene therapy
portfolio. Our drug candidates could significantly improve the quality
of life of many patients, from new-borns to ageing populations in a
medical field where there are few effective therapeutic options.

Today we are raising the largest amount of financing in Sensorion’s
history with prestigious investors to accompany our growth. We are
delighted to work closely with Invus and Sofinnova Partners whose
expertise and resources will underpin our leadership and allow us to
deploy our ambitious clinical development projects over the coming
years”, comments
Nawal Ouzren, Sensorion CEO.

“Sensorion is a leading French biotech company with great innovative
science. In addition to its strong small molecule pipeline, Sensorion
has recently signed a unique partnership with a world renowned French
academic institution to develop next generation gene therapies. Invus is
excited to leverage its long-term capital structure to finance the
company and support its strong management team in their pursuit to find
effective treatments and, hopefully one day, cures, for patients
suffering from various inner ear diseases,” 
states Khalil
Barrage, Partner at Invus

“We are very pleased to support Sensorion, which has a pipeline of
very promising products in the field of inner ear diseases. This
investment is fully in line with the strategy of our Sofinnova Crossover
fund, aiming to actively participate in the development of Sensorion to
make it a world leader in its field. We are also delighted to make this
investment alongside Invus, a high-quality investor we know well.” 
Cédric Moreau, Partner at Sofinnova Partners.

“Sensorion is leaping forward thanks to the high quality of its
management team which was able to partner with a key academic
institution in the hearing space and experienced well known investors
such as Invus and Sofinnova Partners. Bpifrance, the lead investor since
the inception of the company is proud to see the differentiated value
proposition of Sensorion being recognized internationally
” states
Chahra Louafi senior investment director at Bpifrance.

Legal Framework for the Issuance of Bonds Convertible into Common

The principle of this issuance of bonds convertible into common shares
was decided by the Board of Directors during its June 11, 2019 meeting,
using the 12th resolution approved by the Company’s May 28, 2019
Combined General Meeting (cancellation of preferential subscription
rights in favor of categories of beneficiaries
). The payment and
delivery of the convertible bonds (“CB”) as well as the receipt of funds
shall occur no later than June 18, 2019 and shall be recorded by the CEO
acting on delegation from the Board of Directors.

In this context, the Company today entered into a subscription agreement
with Invus Public Equities LP and Sofinnova Crossover I SLP as
subscribers to the bonds convertible into common shares for €12.5
million and €7.5 million, respectively.

On this occasion, at its meeting of June 11, 2019, the Board of
Directors decided to co-opt, in replacement of the resigning directors,
Ms. Dominique Constantini, an independent director and Mr. François
Thomas, representing Inserm Transfert Initiative, two directors
representing Invus in the person of Mr. Khalil Barrage, Partner and Mr.
Julien Miara, Director. In addition, the Board of Directors decided to
convene a general shareholders’ meeting to be held no later than
September 30, 2019 in order, in particular, to propose to the
shareholders the appointment of a representative of Sofinnova Crossover
I SLP as a member of the Board of Directors.

The bonds will not be the subject of any application for admission to
trading on Euronext Growth. Any common shares resulting from the
conversion of the CBs will be, from their issuance, admitted to listing
on the same quotation line as the existing common shares (ISIN code
FR0012596468) as soon as they are issued. No prospectus subject to
approval by the French Autorité des Marchés Financiers (AMF) has
been filed in connection with the bond issuance.

The Company will periodically publish on its website the number of new
shares issued upon conversion of the convertible bonds.

Main Features of the Bond Issuance Convertible into Common Shares

The convertible bond issuance, with a nominal amount of €20,000,000, is
represented by 20,000,000 CBs with a nominal value of 1 euro each fully
subscribed for at a unit price of €1, i.e., gross proceeds from the bond
issuance of €20 million.

The main characteristics of the CBs are as follows:

Maturity: June 13, 2024;

Mandatory conversion at maturity: any CB
not converted seven trading days before the maturity date will
automatically be converted into common shares on the maturity date
according to the conversion ratio referred to below;

Interest: the CBs shall not give rise to
interest (except default interest applicable to any delay in case of
redemption in cash in respect of an event of default or a change of

Conversion: the CBs may be converted into
common shares by their holders at any time between their issuance date
and the maturity date. In the event of conversion, the CBs will entitle
their holders, to a number N of new common shares equal to the nominal
value of a CB divided by X: X being the lower of (a) 1.36621
euros, and (b) the volume weighted average of the prices of the trading
sessions during a three-month period ending on the trading day preceding
the conversion request date;

Event of Default: usual in such matters
(in particular, violation of the terms and conditions, delisting, sale
of significant assets or cessation of business) giving the right (at the
initiative of the representative of the bondholders group at the request
of a convertible bondholder) to early redemption in cash of the CBs for
an amount corresponding to 110% of the nominal value.

Change of Control: in the event of a
change of control, the right (at the initiative of a convertible
bondholder to redeem all or a portion of the CBs held by this holder) to
early repayment of the convertible bonds in cash at an amount
corresponding to 100% of the nominal value;

Guarantees: the cash repayment of the CBs
(in the event of default or change of control) is guaranteed by a pledge
granted by the Company on certain of the intellectual property rights
held by the Company itself, it being specified that the pledge is
granted subject to the licenses and exploitation rights granted or to be
granted by the Company on the pledge rights and that the pledge will be pari
with the existing pledge granted for the benefit of the
holders of CB 0321 and single bonds issued by the Company in March 2019;

Non-Assignment of Convertible Bonds
except for the benefit of affiliates of the convertible bondholders or
with the prior written consent of the Company;

Company Lock Up: 90 days (subject to
customary exceptions);

Subscribers’ Lock Up: on shares resulting
from the conversion of the CBs until the earlier of (i) the public
announcement of Phase 2 (clinical trial) results of SENS-401, in Sudden
Sensorineural Hearing Loss (SSNHL) or (ii) June 30, 2020 (excluding the
event of an initiated public offer on the Company’s securities).

In addition, the Board of Directors, at its meeting of June 11, 2019,
decided, using the authorizations granted by the shareholders, to
authorize the reimbursement of the 1,250,000 single bonds issued in
March 2019 into 1,250,000 convertible bonds under the same terms as the
CB 0321 (cf Company press release issued on March 11, 2019). For
illustrative purposes, a shareholder holding 1% of the Company’s share
capital before the conversion of the CB 0321 issued in reimbursement of
the single bonds would hold 0.938%after conversion of the said CB 0321
(on the basis of a conversion price amounting to €1.30 and before the
conversion of 2,140,862 CB 0321 issued in March 2019).

Capitalization (before and after Conversion of the CBs)

Taking into account the above-mentioned characteristics, if all CBs were
converted based upon the conversion price of €1.3662, 14,639,145 shares
would be created, representing a dilution of 50.2 % (based upon a
capital composed of 14,510,932. In addition, in the event all of the CBs
and all of the CBs 0321 (including the CBs 0321 newly issued in
reimbursement of the 1,250,000 single bonds) were converted on the basis
of a conversion price of € 1.3662 (for the CBs) and €1.30 (for the CBs
0321), 17,247,500 shares would be issued representing a dilution of

The breakdown of the Company’s share capital is as follows, it being
specified that the last two columns include the impact of the possible
conversion of all CBs issued in March and June 2019 (based on
information as at May 28, 2019).

1 This price has been set in accordance with the limits set
forth by the 12th Resolution approved the Combined General
Meeting held on May 28, 2019.

    Before Bonds conversion by the company*   After Bonds conversion by the company*
  number of shares   Capital % and theotrical   Numbers   Number of   Capital %
voting rights of CB in shares and
circulation (following theotrical
(following bond voting
the Bond conversion) rights
Bpifrance Investissements (Innobio)   3 499 874   24,1%       3 499 874   11,0%
Inserm transfert Initiative   982 911   6,8%       982 911   3,1%
Cochlear   533 755   3,7%       533 755   1,7%
Flottant   9 323 886   64,3%       9 323 886   29,4%
Management   170 506   1,2%       170 506   0,5%
Invus Public Equities LP**           12 500 000   9 149 466   28,8%
Soffinova Partners**           7 500 000   5 489 679   17,3%
Titulaires OC 0321***           2 140 862   1 646 817   5,2%
Titulaires OS (converted in OC 0321)           1 250 000   961 538   3,0%
    14 510 932   100,0%   23 390 862   31 758 432   100,0%

* it being specified that the dilution does not comprise the shares
that would be issued pursuant to the exercise of BSPCE and BSA
(warrants) issued by the Company

**Conversion scenario at €1.3662 (conversion price of the CBs issued
on March 2019)

*** Conversion scenario at € 1.30 (conversion price of the CBs 0321),
on the basis of the information received by the Company

OneHealth Partners Limited acted as Financial Advisor to the Company for
this fundraising.

Risk factors

Investor attention is drawn to the risk factors referred to in section 1
of the management report for the financial year ending 31 December 2018,
available on the Sensorion internet site (http://www.sensorion-pharma.com)

About Sensorion

Sensorion is a pioneering clinical-stage biopharmaceutical company,
which specializes in the development of novel therapies to restore,
treat and prevent inner ear diseases such as hearing loss, vertigo and
tinnitus. Our clinical-stage portfolio includes two phase 2 products:
Seliforant (SENS-111) under investigation for acute unilateral
vestibulopathy and Arazasetron (SENS-401) for sudden sensorineural
hearing loss (SSNHL). We have built a unique R&D technology platform to
expand our understanding of the physiopathology and etiology of inner
ear related diseases enabling us to select the best targets and
modalities for drug candidates. We also identify biomarkers to improve
diagnosis and treatment of these underserved illnesses. Sensorion is
launching in the second half of 2019 two preclinical gene programs
aiming to correct hereditary monogenic forms of deafness including Usher
Type 1 and deafness caused by a mutation of the gene encoding for
Otoferlin. We are uniquely placed through our platforms and pipeline of
potential therapeutics to make a lasting positive impact on hundreds of
thousands of people with inner ear related disorders; a significant
global unmet need in medicine today.


About Invus (new investor)

Invus is a global investment firm with principal offices in New York,
Paris and Hong Kong whose source of capital since its founding in 1985
has been a European family group. The exceptional returns from Invus’
evergreen investment strategy have allowed a modest initial pool of
capital to grow to over $8 billion even after having distributed
billions to shareholders. Invus doesn’t raise any outside funds and
focuses all its energy on value creation. On the private side, Invus
mostly takes majority control positions in companies that have ambitious
transformational strategies but also makes minority investments in
high-growth companies where it can add real strategic value through its
partnership with owner-managers. On the public side, Invus takes
significant long-only, long-term positions in companies whose
fundamentals and management it believes in. The average holding period
in the public equity portfolio is not measured in weeks or months but


About Sofinnova Partners (new investor)

Sofinnova Partners is a leading European venture capital firm
specialized in Life Sciences. Headquartered in Paris, France, the firm
brings together a team of professionals from all over Europe, the U.S.
and China. The firm focuses on paradigm shifting technologies alongside
visionary entrepreneurs. Sofinnova Partners seeks to invest as a lead
investor in start-ups and corporate spin-offs as founding investor and
lead investor. Since 47 years, the company has backed nearly 500
companies around the globe that have become leaders in their market.
Today, Sofinnova Partners has over €2 billion under management


ISIN : FR0012596468
Mnemonic : ALSEN


Nawal Ouzren
[email protected]
: +33 467 207 730

Catherine Leveau
[email protected]
: +33 467 207 730

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