Aerocrine Strengthens Financial and Strategic Position by Placement of New Shares and Convertible Bonds.  Novo A/S Becomes a Major Shareholder Alongsi

​SOLNA, Sweden – 16 September 2010 - Aerocrine AB (OMX Nordic Exchange: AERO B) today announces that on 15 September 2010 the Board, by virtue of authorization by the shareholders’ meeting, decided to carry out a SEK 225 million directed issue of new shares and convertible bonds to Denmark-based Novo A/S, as well as a SEK 155.5 million new share issue with preferential rights to existing shareholders.  The issue price and the conversion price of the convertible bonds are set at 13 and 41 per cent premium, respectively, to the closing share price on 15 September, 2010.  The proceeds from the issue of new shares and convertible bonds will strengthen Aerocrine’s financial position and enable the company to drive the commercialization of its products.

Over the past year Aerocrine has achieved several important, strategic objectives, including successful product and technology developments, initiation of private payer reimbursement in the U.S. and strengthening of the Company’s patent portfolio. The issue of shares and convertibles is carried out to strengthen Aerocrine’s financial position and to provide the company with a new strategic shareholder.  The substantial bolstering of Aerocrine’s financial position and the addition of Novo A/S, a strong specialist healthcare investor, as a major shareholder will enable Aerocrine to:

-          Accelerate activities to achieve full reimbursement and generate additional revenues in the clinical market

-          Exploit the Company’s leading technology position and the previously announced Panasonic collaboration to further the adoption of exhaled nitric oxide monitoring as a routine clinical practice in the doctor’s office setting and take preparatory steps towards exploring the potential for home use

-          Capitalize on investments made in the development and enforcement of the Company’s intellectual property portfolio

Directed issue of shares and convertible bonds

Aerocrine will issue 16,071,428 new shares at an issue price of SEK 7.00 through a directed issue to Novo A/S, corresponding to a capital infusion of SEK 112.5 million. In addition, Aerocrine will raise a convertible loan at the total amount of SEK 112.5 million through a directed issue of convertible bonds to Novo A/S.  The convertible loan has a five year life and a fixed rate coupon of 8% per annum.   Novo A/S has the right to convert the bond at a conversion price of SEK 8.75 per share, representing a 41 per cent premium to the closing price of Aerocrine’s shares on 15th September 2010. Aerocrine has a corresponding right to call for conversion if the Company’s share price exceeds SEK 13.10 during a qualified period. 

The investment will be managed by the growth equity unit of Novo A/S, and brings Aerocrine a committed long-term shareholder with significant experience in the life-sciences sector. 

“Aerocrine has developed a revolutionary technology from initial discovery to a unique product that has now been launched in a large number of markets.  The Company is addressing a well-defined medical need in one of the world’s most widespread diseases and has established the method of inflammation monitoring both scientifically and clinically.  A market leading position, a valuable collaboration with Panasonic, strong intellectual property and a significant growth potential make this an attractive investment opportunity that fits well with the focus of Novo Growth Equity”said Ulrik Spork, Managing Partner, Novo Growth Equity.

Novo A/S’ shareholding following the directed share issue will be dependent on the subscription rate in the rights issue described below.  Upon full subscription of the rights issue, Novo A/S’ shareholding will amount to 15 per cent, and upon subsequent conversion of the convertible bond, Novo A/S’ shareholding will increase to 25 per cent.  Further, the Company will call an extraordinary shareholders’ meeting (“EGM”) where it will be proposed that Scott Beardsley, a Senior Partner with Novo Growth Equity, will become a Director on Aerocrine’s Board.  This proposal is supported by Investor Growth Capital, HealthCap and Life Equity Sweden representing approximately 60 per cent of the votes.

Rights issue

In order to allow existing shareholders to invest on substantially the same terms as in the directed issue of shares, Aerocrine will also conduct a rights issue with preferential rights issued to all existing shareholders. The rights issue will raise equity capital of up to SEK 155.5 million, before costs, through the issue of up to 22,217,532 new shares.  The subscription price is set to SEK 7.00 per share; the same issue price as in the directed share issue.

For each share in Aerocrine held as of the record date, September 22, 2010, shareholders will receive one (1) subscription right.  Three (3) subscription rights entitle the subscription of one (1) new share.  The subscription period runs from 27 September to 14 October and a prospectus will be made public on 22 September.  Investor Growth Capital, HealthCap and Life Equity Sweden KB have announced their intention to at least subscribe for shares in the rights offering to offset their respective outstanding loans to the Company, corresponding to approximately SEK 50 million, including accrued interest.

Preliminary timetable for the preferential rights issue

17 September 2010                                Last day of trading including subscription rights

22 September 2010                                Publication of prospectus

22 September 2010                                Record date for the rights issue

27 September – 11 October 2010        Subscription rights trading period

27 September – 14 October 2010        Subscription period

20 October 2010                                    Announcement of the result of the preferential share issue

In order to allow all existing shareholders sufficient time to trade subscription rights, the date for Aerocrine’s January to September interim report is moved forward to November 12th, 2010.

“We appreciate the strong support from our existing major shareholders.  The strengthening of Aerocrine’s ownership group and the capital now being made available to the company will provide even better prerequisites for reaching our target of becoming a rapidly growing and commercially successful international company”, said Paul de Potocki, CEO Aerocrine AB.

Financial targets

The Company’s continued growth in the U.S. market will require substantial investment to achieve broad private payer reimbursement and successful market penetration.  The Board also considers personalized inflammation monitoring in a home setting by asthma patients to be an opportunity with high priority and potential.  One part of Aerocrine’s strategic collaboration with Panasonic targets the development of an emerging home use market, and investments in clinical and health economy documentation will be required to access this market.  Following the strengthening of the Company’s financial position and the addition of Novo A/S as a major owner, the Company will accelerate investments in the areas described above and will revise its operational plan, and as a consequence, the previously communicated financial targets are no longer valid.

Swedbank Corporate Finance is managing the described transactions and Mannheimer Swartling Advokatbyrå is the legal advisor.

For more information, contact: 

Paul de Potocki, CEO, telephone: +46 8 629 07 80

Michael Colérus, CFO, telephone: +46 8 629 07 85

About Aerocrine

Aerocrine AB is a medical technology company focused on the improved management and care of patients with inflammatory airway diseases. The pioneer and leader in the technology to monitor and manage airway inflammation, Aerocrine markets NIOX MINO® and NIOX® Flex. Both products enable the fast and reliable measurement of airway inflammation and may thus play a critical role in more effective diagnosis, treatment and follow-up of patients with inflammatory airway diseases such as asthma. Aerocrine is based in Sweden with subsidiaries in the US, Germany and the UK. Aerocrine shares were listed on the Stockholm Stock Exchange on 15 June 2007.

About Novo

Novo A/S is the holding and investment company of the Novo Group, and is wholly owned by the Novo Nordisk Foundation. Novo A/S was formed in 1999 to actively manage the assets of the foundation. It employs about 30 people and has approximately USD 15 billion of assets under management. These include significant shareholdings in the publicly listed Novo Nordisk A/S (NasdaqOMX: NOVO B) and Novozymes A/S (NasdaqOMX: NZYM B). Novo A/S provides seed, venture and growth capital to development stage companies within life science and biotechnology, as well as manages a broad portfolio of financial assets. Novo A/S is committing up to USD 300 million annually to its investments in seed, venture and growth equity life science companies. Of this, nearly two-thirds are directed to the Novo Growth Equity activities focusing on investment in promising late stage companies with near term commercial potential. For further information please visit www.novo.dk

Aerocrine may be required to disclose the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 08:00 am on September the 16th 2010.

This press release may not be made public, published or distributed, directly or indirectly, in or into the United States, Canada, South Africa, Australia, New Zeeland, Singapore, Hong Kong or Japan

IMPORTANT INFORMATION

In certain jurisdictions, publication or distribution of this press release may be subject to legal restrictions and persons in those jurisdictions where this press release has been published or distributed should inform themselves about and abide by such legal restrictions.

This press release may not be made public, published or distributed, directly or indirectly, in or into the United States, Canada, South Africa, Australia, New Zeeland, Singapore, Hong Kong, Japan or in any other country where such action is subject in full or in part to legal restrictions, nor may the information in this press release be forwarded, reproduced or disclosed in any way that is in conflict with such restrictions. Failure to follow this instruction may involve a breach of the United States Securities Act of 1933 ("Securities Act") or applicable laws in other jurisdictions.

This press release does not contain or constitute an invitation or offer to acquire, subscribe for or otherwise trade in shares, subscription rights or other securities in Aerocrine. The invitation to the persons concerned to subscribe for shares in Aerocrine will only be made through the prospectus that Aerocrine expects to publish later in September 2010, which prospectus, among other things, will contain financial statements and information on the board of directors and auditor of Aerocrine.

Neither the subscription rights, the paid subscription shares (BTA) or the new shares will be registered in accordance with the Securities Act or any provincial act in Canada, and may not be transferred or offered for sale in the United States or Canada, or to persons resident there, or on behalf of such persons, other than in such exceptional cases where registration in accordance with the Securities Act or any provincial act in Canada is not required.