DGAP-News: Mainstay Medical International Plc:

Nachricht vom 23.03.2017 (www.4investors.de) -


DGAP-News: Mainstay Medical International Plc / Schlagwort(e): Jahresergebnis/Produkteinführung

Mainstay Medical International Plc: (News mit Zusatzmaterial)
23.03.2017 / 08:40


Für den Inhalt der Mitteilung ist der Emittent verantwortlich.
 

Mainstay Medical veröffentlicht Konzernabschluss des Jahres 2016 und Geschäftsverlauf

- Klinische Studie ReActiv8-B - planmäßiger Verlauf des Einschlusses bis Ende 2017, erste Datenverfügbarkeit ab 2018

- Veröffentlichung von erstem Verkauf und Implantation von ReActiv8 in Deutschland im Februar 2017

- CE-Kennzeichnung basierend auf positiven Ergebnissen der Klinischen Studie ReActiv8-A, Ein-Jahres-Ergebnisse zeigen anhaltenden Erfolg

- Abschluss einer Privatplatzierung über 30 Millionen US-Dollar im Juni 2016

- Barmittelbestand 36,7 Millionen US-Dollar per 31. Dezember 2016

Dublin - Ireland, 23. März 2017 - Mainstay Medical International plc ("Mainstay", "Mainstay Medical" oder das "Unternehmen", Euronext Paris: MSTY.PA und ESM der Irish Stock Exchange: MSTY.IE), ein Medizintechnikunternehmen mit dem Ziel der Markteinführung von ReActiv8(R), einem implantierbaren Neurostimulationssystem zur Behandlung chronischer Kreuzschmerzen (Chronic Low Back Pain, CLBP), veröffentlicht heute den Jahresbericht 2016.

Peter Crosby, Vorstandsvorsitzender von Mainstay Medical, sagte: "Wir sehen erfreuliche Fortschritte bei Mainstay's Entwicklung hin zur Kommerzialisierung von ReActiv8, einer innovativen neuen Behandlungsalternative für viele Patienten mit chronischen Kreuzschmerzen. Unsere klinische Studie zu ReActiv8-B verläuft nach Plan und ist ein wichtiger Schritt in Richtung der Markteinführung in den USA, unserem wichtigsten Zielmarkt. Zu Beginn des Jahres 2017 haben wir die Vermarktung in Europa mit dem Verkauf von ReActiv8 in Deutschland begonnen. Wir fokussieren uns auf diesen ersten Markt, um Erfahrungen für die mögliche Expansion in anderen Regionen zu sammeln."

Aktueller Geschäftsverlauf

- Der Einschluss für die klinische Studie ReActiv8-B hat im September 2016 begonnen, der erste Teilnehmer unterzog sich am 6. Oktober 2016 einer Implantation. Die ReActiv8-B-Studie ist eine internationale, multizentrische, prospektive, randomisierte, Sham-kontrollierte dreifach verblindete Studie mit einmaligem cross-over, durchgeführt unter dem Status der Investigational-Device-Exemption-Regelung (IDE) der US-Bundesbehörde zur Lebens- und Arzneimittel-Überwachung (FDA). Zweck der Klinischen Studie ReActiv8-B ist die Sammlung von Daten zur Unterlegung des Antrags auf eine vorwettbewerbliche Zulassung bei der US-Bundesbehörde zur Lebens- und Arzneimittel-Überwachung (FDA), einer wichtigen Voraussetzung für den Vertrieb von ReActiv8 in den Vereinigten Staaten. Eine Zusammenfassung der Details zur ReActiv8-B-Studie, einschließlich der Einschlusskriterien und einer Liste der Behandlungszentren, findet sich auf folgender Webseite:

https://clinicaltrials.gov/ct2/show/study/NCT02577354.

- Die Klinische Studie ReActiv8-B verläuft erfreulich. Es wurden 27 Standorte zur klinischen Studie registriert, von denen 18 Standorte bereits Teilnehmer rekrutieren. Die übrigen arbeiten mit uns zusammen, um baldmöglichst damit zu beginnen. 75 Teilnehmer wurden bisher eingeschlossen. 22 von ihnen bekamen ReActiv8 implantiert. 9 Teilnehmern sollen bald implantiert werden oder werden noch hierzu untersucht. Nach den bisherigen Erfahrungen erwartet Mainstay die Komplettierung des Einschlusses von Teilnehmern für die ReActiv8-B-Studie gegen Ende des Jahres 2017 und erste verwertbare klinische Daten im Jahr 2018, so wie bisher geplant.

- Der erste Verkauf und die Implantation für ReActiv8 in Deutschland wurden am 1. Februar 2017 bekannt gegeben. Die Implantation von ReActiv8 führte der Orthopäde und Neurochirurg Dr. med. Francis Kilian am Katholischen Klinikum Koblenz-Montabaur durch. Das Unternehmen treibt Verhandlungen mit Kunden in ganz Deutschland voran. Mainstays europäische Vertriebsaktivitäten für ReActiv8 konzentrieren sich zunächst auf Deutschland, wo das Unternehmen das Ziel verfolgt, die Akzeptanz von ReActiv8 in ausgewählten multidisziplinären Wirbelsäulenzentren voranzutreiben, die eine große Patientenpopulation haben und Referenzzentren werden sollen.

- Im Jahr 2016 hat Mainstay die CE-Kennzeichnung und Zulassung für ReActiv8 erhalten, gestützt auf die positiven Resultate der klinischen Studie ReActiv8-A, die eine klinisch bedeutsame, statistisch signifikante und nachhaltige Besserung bei Schmerz, Einschränkungen und Lebensqualität für Menschen mit einschränkenden chronischen Kreuzschmerzen und wenigen anderen Behandlungsmöglichkeiten ergeben haben. Die 2016 bekannt gegebenen Ein-Jahres-Ergebnisse zeigten anhaltenden Behandlungserfolg.

- Im Januar 2017 hat Mainstay für ReActiv8 die Vertriebszulassung in Australien beantragt.

- Während des Jahres 2016 erhielt Mainstay zwei neue US Patente; die Gesamtzahl der an Mainstay Medical erteilten laufenden US-Patente beläuft sich nun auf acht.

Aktuelle Finanzlage
Am 17. Juni 2016 wurde der Abschluss einer Privatplatzierung über 30 Millionen Euro (rund 33,7 Millionen US-Dollar) bekannt gegeben. Die Platzierung erfolgte über die Ausgabe von 2.307.694 neuer Stammaktien für neue und bestehende Aktionäre ("die Platzierung"). Am 11. August 2016 erfolgte die Veröffentlichung des Platzierungsprospekts ("der Prospekt") zu der genannten Platzierung. Der Barbestand per 31. Dezember 2016 betrug 36,7 Millionen US-Dollar.
Per 31. Dezember 2016 hat das Unternehmen die Kreditlinie bei IPF Partners über 15 Millionen US-Dollar vollständig in Anspruch genommen. Diese Kreditlinie wurde während des Jahres 2015 bekannt gegeben und die letzte Tranche über 4,5 Millionen US-Dollar im Juli 2016 nach Erteilung der CE Kennzeichnung für ReActiv8 gezogen.
Die Betriebsausgaben für das Jahr 2016 betrugen 16,8 Millionen US-Dollar und haben sich im Vergleich zum Vorjahr 2015 um 3,9 Millionen US-Dollar erhöht, hauptsächlich verursacht durch die Kosten im Zusammenhang mit dem Beginn der ReActiv8-B-Studie und dem Beginn der Vertriebsaktivitäten. Der Abfluss an operativen Barmitteln im Jahr 2016 betrug 16,7 Millionen US-Dollar.

Ausblick
Die Mainstay Medical sieht den Verlauf der ReActiv8-B-Studie positiv, der Einschluss von Teilnehmern hat schon begonnen und wird voraussichtlich gegen Ende des Jahres 2017 abgeschlossen sein mit ersten verfügbaren Daten ab 2018, was im Rahmen der Zielplanung liegt. Bei Erfolg soll diese klinische ReActiv8-B-Studie Level-1-Evidenz zur Wirksamkeit erbringen, mit dem die vorwettbewerblichen Zulassung (PMA) beantragt werden soll, die einen kommerziellen Vertrieb in den USA ermöglicht. Das Unternehmen verspricht sich davon zudem, dass die dann vorliegenden Daten die Expansion des Vertriebs außerhalb der Vereinigten Staaten unterstützen werden.
Mainstays europäische Vertriebsaktivitäten für ReActiv8 konzentrieren sich zunächst auf Deutschland, wo das Unternehmen das Ziel verfolgt, die Akzeptanz von ReActiv8 in einer ausgewählten Zahl von Wirbelsäulenzentren voranzutreiben, die eine große Patientenpopulation mit chronischen Kreuzschmerzen haben und die bei der Behandlung einen multidisziplinären Ansatz verfolgen. Das Unternehmen hat einen Direktvertrieb aufgebaut, der von einem Team erfahrener Klinikspezialisten unterstützt wird. In Zusammenarbeit mit seinen Kunden ist das Unternehmen darauf fokussiert, ReActiv8 in deren reguläre klinische Praxis zu integrieren, um eine neue Behandlungsmöglichkeit für Menschen anzubieten, die unter chronischen Kreuzschmerzen leiden. Sobald das Unternehmen Erfahrungen gesammelt und Schlagkraft gewonnen hat, wird es seine Vertriebsaktivitäten auf andere Zentren und Länder ausdehnen.

- Ende -

 

Über Mainstay
Mainstay ist ein Medizintechnik-Unternehmen mit dem Ziel, das innovative implantierbare Neurostimulationssystem ReActiv8(R) für Menschen mit einschränkenden chronischen Kreuzschmerzen (chronic low back pain, CLBP) auf den Markt zu bringen. Das Unternehmen hat seinen Hauptsitz in Dublin, Irland. Es ist mit Tochtergesellschaften in Irland, in den USA, in Australien und in Deutschland tätig. Seine Aktien sind zum Handel an der Börse Euronext Paris (MSTY.PA) und am ESM der Irish Stock Exchange (MSTY.IE) zugelassen.

Über chronische Kreuzschmerzen
Eine der anerkannten Ursachen von chronischen Kreuzschmerzen (chronic low back pain, CLBP) ist die gestörte Kontrolle des Nervensystems über die Muskeln, die für die dynamische Stabilisierung der Wirbelsäule im unteren Rücken zuständig sind. Eine instabile Wirbelsäule kann zu Rückenschmerzen führen. ReActiv8 ist so konstruiert, dass es diejenigen Nerven elektrisch stimuliert, die für die Kontraktion dieser Muskeln zuständig sind. Dadurch hilft es, die Kontrolle über die Muskeln wieder herzustellen und die dynamische Stabilisierung der Wirbelsäule zu verbessern, was dem Körper eine Genesung von den chronischen Kreuzschmerzen erlaubt.

Menschen mit chronischen Kreuzschmerzen haben üblicherweise eine stark reduzierte Lebensqualität und weisen erhöhte Werte bei Schmerz, Einschränkungen, Depressionen, Angstzuständen und Schlafstörungen auf. Ihre Schmerzen und Einschränkungen können trotz bester verfügbarer medizinischer Behandlung fortbestehen. Nur ein kleiner Teil der Fälle lässt sich auf einen pathologischen Befund oder einen anatomischen Defekt zurückführen, der mit einem wirbelsäulenchirurgischen Eingriff korrigierbar wäre. Die Betroffenen sind durch die Beschwerden in ihrer Arbeitsfähigkeit und Alltagstauglichkeit stark eingeschränkt. Die Verluste an Arbeitstagen, Hilfeleistungen bei Schwerbehinderung und Inanspruchnahme medizinischer Leistungen ist eine erhebliche Belastung für den Einzelnen, seine Familie, die Allgemeinheit, die Wirtschaft und die öffentliche Verwaltung.

Weitere Einzelheiten finden sich unter www.mainstay-medical.com

ACHTUNG - in den USA ist ReActiv8 durch Bundesgesetze auf den Einsatz in der Forschung beschränkt.


Peter Crosby, Chief Executive Officer und Hugh Kavanagh, Chief Financial Officer, halten einen Conference Call mit anschließendem Q&A für Analysten und Investoren um 12:30pm GMT (13:30 m MEZ, 8:30am EST) am 23 März 2017. Der Call wird in Englischer Sprache ablaufen; eine Aufzeichnung ist 30 Tage lang verfügbar.

Einwahlnummern für den Call untenstehend:
Europa: + 44 203 139 4830

Irland: + 353 1 696 8154

Frankreich: + 33 2 9092 0977

USA: + 1 718 873 9077

Teilnehmer PIN: 75508149#

PR- und IR-Anfragen:

Consilium Strategic Communications (International Strategische Kommunikation - Wirtschafts- und Fachmedien)
Chris Gardner, Mary-Jane Elliott, Jessica Hodgson, Hendrik Thys
Tel: +44 203 709 5700 / +44 7921 697 654
Email: mainstaymedical@consilium-comms.comFTI Consulting (für Irland)
Jonathan Neilan
Tel: +353 1 663 3686
Email: jonathan.neilan@fticonsulting.com

NewCap (für Frankreich)
Julie Coulot
Tel: +33 1 44 71 20 40
Email: jcoulot@newcap.frAndreasBohne.Com/Kötting Consulting (für Deutschland)
Andreas Bohne
Tel: +49 2102 1485368
Email: abo@andreasbohne.com

Investor Relations:
LifeSci Advisors, LLC
Brian Ritchie
Tel: + 1 (212) 915-2578
Email: britchie@lifesciadvisors.comESM Advisers:Davy
Fergal Meegan or Barry Murphy
Tel: +353 1 679 6363
Email: fergal.meegan@davy.ie or barry.murphy2@davy.ie

In die Zukunft gerichtete Aussagen

Diese Mitteilung enthält Aussagen, die in die Zukunft gerichtet sind oder so verstanden werden könnten. Diese in die Zukunft gerichteten Aussagen sind kenntlich durch Formulierungen, die in die Zukunft weisen, einschließlich Ausdrücken wie "antizipiert", "glaubt", "schätzt", "erwartet", "beabsichtigt", "mag", "plant", "projektiert", "sollte", "will" oder "untersucht", oder jeweils durch deren negative oder andere Varianten, oder durch vergleichbare Formulierungen, oder durch Darlegungen von Strategie, Plänen, Planzielen, Zielsetzungen, künftigen Ereignissen oder Absichten. Diese in die Zukunft gerichteten Aussagen schließen alles jenseits der historischen Fakten ein. Sie sind Teil dieser Mitteilung und schließen Absichten des Unternehmens, Überzeugungen oder gegenwärtige Erwartungen unter anderem betreffend die Erlöse des Unternehmens, seine finanzielle Lage, Vorstellungen, Finanzstrategien, Erwartungen an Produktentwurf oder Entwicklung, regulatorische Anträge und Zulassungen, Erstattungsregelungen, Vermarktungskosten und Marktdurchdringung ein, sie sind aber darauf nicht beschränkt.

Es liegt in der Eigenart von in die Zukunft gerichteten Aussagen, dass sie Risiken und Unwägbarkeiten einschließen, weil sie sich auf künftige Ereignisse und Umstände beziehen. In die Zukunft gerichtete Aussagen sind keine Garantien künftiger Leistungsfähigkeit, und die tatsächlichen Ergebnisse der Tätigkeit des Unternehmens, die Entwicklung seines Hauptproduktes, der Märkte und der Branche in der das Unternehmen tätig ist, können wesentlich von jenen abweichen, die durch in die Zukunft gerichtete Aussagen in dieser Mitteilung beschrieben oder angedeutet werden. Sogar wenn die Ergebnisse der Tätigkeit des Unternehmens, seine finanzielle Lage und sein Wachstum, sowie die Entwicklung seines Hauptproduktes, der Märkte und der Branche, in der es tätig ist, mit den in dieser Mitteilung enthaltenen in die Zukunft gerichteten Aussagen überein stimmen, sind diese Ergebnisse oder Entwicklungen nicht unbedingt ein Hinweis auf Ergebnisse oder Entwicklungen in Folgeperioden. Zahlreiche Faktoren könnten dafür sorgen, dass Ergebnisse und Entwicklungen des Unternehmens erheblich von jenen abweichen, die ausdrücklich oder implizit in den in die Zukunft gerichteten Aussagen genannt sind. Das schließt den erfolgreichen Marktstart und die Vermarktung von ReActiv8, den Fortgang und Erfolg der klinischen Studie ReActiv8-B, die allgemeinen wirtschaftlichen und geschäftlichen Umstände, die Bedingungen am weltweiten Medizintechnik-Markt, Branchentrends, Wettbewerb, gesetzliche oder regulatorische Veränderungen, steuerliche Veränderungen, die Verfügbarkeit und Kosten von Kapital, die zur Auflage und zum Abschuss klinischer Studien benötigte Zeit, die zur Erlangung regulatorischer Zulassungen erforderliche Zeit und Prozesse, Wechselkursveränderungen, Veränderungen der Geschäftsstrategie sowie politische und wirtschaftliche Unwägbarkeiten ein, ohne sich darauf zu beschränken. Die hier genannten in die Zukunft gerichteten Aussagen sind nur aussagekräftig zum Zeitpunkt dieser Mitteilung.

 

 

Mainstay Medical International plc and its subsidiaries
Annual Report

 

for the year ended 31 December 2016

Mainstay Medical International plc
Table of contents

Corporate and shareholder information
3
Chairman's statement
4
Biographies of Directors
5
Directors' report
8
Corporate governance report
19
Risk factors
23
Directors' responsibilities statement
42
Independent auditor's report
43
Consolidated statement of profit or loss and other comprehensive income
45
Consolidated statement of financial position
46
Consolidated statement of changes in shareholders' equity
47
Consolidated statement of cash flows
48
Notes to the consolidated Financial Statements
49
Parent Company Financial Statements
68

 

Forward looking statements

This annual report includes statements that are, or may be deemed to be, forward looking statements. These forward looking statements can be identified by the use of forward looking terminology, including the terms "anticipates", "believes", "estimates", "expects", "intends", "may", "plans", "projects", "should", "will", or "explore" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts. They appear throughout this annual report and include, but are not limited to, statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial position, prospects, financing strategies, expectations for product design and development, regulatory applications and approvals, reimbursement arrangements, costs of sales and market penetration

By their nature, forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward looking statements are not guarantees of future performance and the actual results of the Company's operations, and the development of its main product, the markets and the industry in which the Company operates, may differ materially from those described in, or suggested by, the forward looking statements contained in this annual report. In addition, even if the Company's results of operations, financial position and growth, and the development of its main product and the markets and the industry in which the Company operates, are consistent with the forward looking statements contained in this annual report, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments of the Company to differ materially from those expressed or implied by the forward looking statements including, without limitation, the successful launch and commercialization of ReActiv8, the progress and success of the ReActiv8-B Clinical Trial, general economic and business conditions, the global medical device market conditions, industry trends, competition, changes in law or regulation, changes in taxation regimes, the availability and cost of capital, the time required to commence and complete clinical trials, the time and process required to obtain regulatory approvals, currency fluctuations, changes in its business strategy, political and economic uncertainty. The forward-looking statements herein speak only at the date of this annual report.

Mainstay Medical International plcCorporate and shareholder information

Directors
Oern Stuge MD, Independent Non-Executive Chairman
 
Peter Crosby, Chief Executive Officer and Executive Director
 
David Brabazon, Independent Non-Executive Director
 
Greg Garfield, Non-Executive Director
 
Nael Karim Kassar, Non-Executive Director
 
Antoine Papiernik, Non-Executive Director
 
James Reinstein, Independent Non-Executive Director
 
Manus Rogan PhD, Non-Executive Director
 
Dan Sachs MD, Non-Executive Director
 
 
Secretary
Tom Maher
 
 
Registered office
Clonmel House
 
Forster Way
 
Swords, K67F2K3
 
County Dublin, Ireland
 
 
Registered number
539688
 
 
Website
www.mainstay-medical.com
 
 
ISIN / Symbol
IE00BJYS1G50 / MSTY.PA (Paris) and MSTY.IE
 
 
Solicitors/ Lawyers
McCann FitzGerald
 
Riverside One
 
Sir John Rogerson's Quay
 
Dublin 2, Ireland
 
 
 
Jones Day
 
2, rue Saint-Florentin
 
75001 Paris, France
 
 
Independent Auditor
KPMG
 
Chartered Accountants
 
1 Stokes Place
 
St Stephen's Green
 
Dublin 2, Ireland
 
 
Principal Bankers
HSBC
 
Bank of Ireland
 
 
ESM Adviser and Broker
J&E Davy
 
Davy House
 
49 Dawson Street
 
Dublin 2, Ireland
 
 
Registrar
Computershare Investor Services (Ireland) Limited
 
Heron House
 
Corrig Road
 
Sandyford Industrial Estate
 
Dublin 18, Ireland
 
 
Paying Agent (in France)
Caceis Corporate Trust
 
1/3, Place Valhubert
 
75013 Paris
 
France

 

Mainstay Medical International plc
Chairman's statement

Dear Shareholder

2016 was a year of continued progress on the path to commercialization of ReActiv8(R), and I am pleased to present the Annual Report for Mainstay Medical International plc and its subsidiaries.

Business review

Enrollment in the ReActiv8-B Clinical Trial commenced in September 2016 and the first subject was implanted on 6 October 2016. The purpose of the ReActiv8-B Clinical Trial is to gather data in support of an application for pre-market approval (PMA) from the US Food and Drug Administration (FDA), a key step towards the commercialization of ReActiv8 in the US.

The first sale and implant of ReActiv8 in Germany was announced on 1 February 2017. The implant was performed by Dr. med. Francis Kilian, Orthopedic and Neurosurgeon at the Catholic Hospital Koblenz-Montabaur in Koblenz Germany. We are progressing discussions with a number of customers across Germany. Our European commercial activities for ReActiv8 are initially focused on Germany where the Company aims to drive adoption of ReActiv8 in a select number of high volume multi-disciplinary spine care centers which will become reference sites.

A detailed review of our 2016 activities can be found in the Directors' Report on page 8 of this Annual Report.

Finance review

Cash on hand as at 31 December 2016 was $36.7 million (2015: $16.6 million). Operating expenses were $16.8 million during the year ended 31 December 2016 (2015: $12.9 million) and the change relates primarily to the commencement and ramp up of the ReActiv8-B Clinical Trial and to commercialization activities.

Outlook

We are pleased with the progress of the ReActiv8-B Clinical Trial. Enrollment is well under way and we estimate that enrollment will complete in this Clinical Trial around the end of 2017, with data availability in 2018, which is in line with our target. If successful, the ReActiv8-B Clinical Trial will yield level 1 evidence of efficacy, which we will use to support an application for PMA approval to allow commercialization in the US. We also anticipate the data from this Clinical trial will help with expansion of commercialization of ReActiv8 outside the US.

The initial focus of our European commercial activities for ReActiv8 is on Germany where we aim to drive adoption of ReActiv8 in a select number of high volume multi-disciplinary spine care centers. We have recruited a direct sales force, which is supported by our team of experienced field clinical specialists, and we are working with customers to integrate ReActiv8 into their routine clinical practice and provide a new treatment option for the many people suffering from Chronic Low Back Pain. As we gain experience and momentum, and as we identify other early opportunities to build our business, we will consider expansion to other sites and countries.

Directors and Staff

I would like to thank the staff, consultants, clinical trial investigators and all my fellow Directors for their support and dedication, which has enabled the continued success of the Company. Of course, we also owe a debt of gratitude to all those people who agreed to be subjects in our Clinical Trials, and helped to advance ReActiv8 as an option for the millions of people suffering from Chronic Low Back Pain. I look forward to the future with optimism.

Yours faithfully,

Oern Stuge MD Chairman
22 March 2017Mainstay Medical International plc
Board of Directors
Biographies of Directors

Oern Stuge MD

Dr. Oern R. Stuge is the independent non-executive Chairman of the Board. He is an international executive with more than 25 years of experience in the life science sector. Dr. Stuge is the owner of Orsco Lifesciences AG, through which he holds several executive and non-executive board memberships and advisory roles.

Prior to founding Orsco, Dr. Stuge worked for 12 years for Medtronic, Inc. in different roles including Senior Vice President ("SVP") & President Europe & Central Asia, and SVP & President Cardiac Surgery. He was a member of the Medtronic Executive Committee & Operating Committee. Dr. Stuge has been credited for successfully transforming Medtronic's global Cardiac Surgery business and accelerating the growth in its neurological and cardiovascular business in Europe, Middle East & Africa.

Dr. Stuge earned an MD from University of Oslo, an MBA from IMD, Switzerland, and an INSEAD Certificate of Corporate Governance.

Peter Crosby

Mr. Peter Crosby has been a Board member of the ultimate holding company of the Group since he was appointed CEO of Mainstay Medical in mid-2009. Mr. Crosby was instrumental in founding the Group, raising the 2010 and 2012 financing rounds, completing the 2014 IPO, and raising the 2016 placement. He is an internationally experienced medical device executive who has been chief executive officer or chairman of seven medical device companies (public and private) in four countries.

Mr. Crosby has contributed to the development and introduction to the global market of dozens of medical devices over a career spanning more than 30 years. After working for five years in a hospital environment, Mr. Crosby entered industry as one of the first three employees of Cochlear, and continued his career with executive roles in many more companies. He has direct experience in active implantable medical devices, including cardiac pacemakers and defibrillators (Telectronics Pacing Systems), cochlear implants (Cochlear), left ventricular assist devices (Ventracor), Neuromodulation (Mainstay Medical), ultrasound (Ausonics, NeoVision), software (Cardicomm Solutions), and in-vitro diagnostics (First Medical, Ischemia Technologies). Mr. Crosby has raised capital for many medical device companies, and has been directly involved in the sale of several companies.

Mr. Crosby graduated with a Bachelor of Electrical Engineering and a Masters in Engineering Science (Biomedical Engineering) from the University of Melbourne, Australia. He is a named inventor on over 30 patents and patent applications, primarily in the field of biomedical engineering.

David Brabazon

Mr. David Brabazon is a co-founder of Adapt Pharma Limited and serves as Chief Financial Officer and a board member. Adapt Pharma Limited is a US focused specialty pharmaceuticals business with its corporate headquarters in Ireland. Mr. Brabazon previously was a co-founder and Chief Financial Officer of Azur Pharma plc, which merged with Jazz Pharmaceuticals plc in early 2012. Mr. Brabazon continued to serve in the merged business as Senior Vice President of Finance and Company Secretary until late 2012. Prior to Azur Pharma, Mr. Brabazon served as Vice President of Finance and Group Financial Controller of Elan Corporation plc.

Mr. Brabazon is a chartered accountant and holds a Masters of Accounting degree from University College Dublin, Ireland and a Master of Business Administration degree from INSEAD, France. Mr. Brabazon serves as a director of Headway (Ireland) Limited which provides support and services to people affected by brain injury.Greg Garfield

Mr. Greg Garfield is a Non-Executive Director of the Company and is Head-Medical Technologies Division of KCK-U.S., Inc. Mr. Garfield serves as a director on the boards of numerous private and public companies in the healthcare industry. From 2006 to 2011, he had various roles at Acclarent, Inc., a medical technology company, including Chief Operating Officer and General Counsel. Acclarent, Inc. was acquired by Johnson and Johnson at a valuation of approximately $800 million cash in January 2010. From 1995 to 2006, Mr. Garfield had various roles at Guidant Corporation, a medical technology company, including Vice President of Business Development and General Counsel. Guidant was acquired by Boston Scientific Corporation in 2006 at a valuation of approximately $27 billion in cash and stock. Mr. Garfield has a Bachelor of Science degree from California Polytechnic State University and a Juris Doctorate from McGeorge School of Law, University of the Pacific.

Nael Karim Kassar

Mr. Nael Karim Kassar is an Investment Partner of KCK Group which follows a multi-asset strategy including venture capital and private equity.

Mr. Kassar has been a Director on the board of RefleXion Medical Inc. since April 14, 2016 and Mainstay Medical International plc since June 17, 2016. He serves as a Non-Executive Director of OnePhone Holding AB and as a Director of Aerin Medical Inc., KCK Ltd., KCK Properties Ltd., Future Finance Loan Corporation Limited, Timeshare Finance Investments Limited, Specialty Finance ICAV Limited, Judgment Acquisition Corporation Limited, High Sealed and Coupled "HSC" FZCO, Sentient Energy, Inc., Citizens Parking Inc., Affirmed Networks, Inc., GFL Environmental Holdings Inc., SiGNa Chemistry, Inc., Murosa Development S.a r.l., HPS Del Mar Holdings LLC, BioInspire Technologies, Inc., QM Power Inc., and Sonitus Technologies, Inc. He served as a Director of Tunnel Capital City Partners Inc. and Hibernia NGS Limited.

Nael holds a bachelor degree in Pure Mathematics from Imperial College London together with a Masters in Advanced Studies in Mathematics from Cambridge University.

Antoine Papiernik

Mr. Antoine Papiernik is a Non-Executive Director of the Company and is a Managing Partner at Sofinnova Partners, which he joined in 1997. Sofinnova has been an initial investor and Antoine has been an active board member in public companies like Actelion, Auris, ProQR, Novus Pharma (then sold to CTI), Movetis (then sold to Shire), Mainstay Medical, Pixium Vision and Stentys which went public respectively on the Zürich stock exchange, the NASDAQ, the Milan Nuovo Mercato, the Belgium Stock Exchange, the Irish Stock Exchange and EuroNext Paris, in Cotherix (initially NASDAQ listed, then sold to Actelion), CoreValve (sold to Medtronic), Fovea (sold to Sanofi Aventis) and Ethical Oncology Science (EOS sold to Clovis Oncology). He has also invested, for Sofinnova, in and is a board member of private companies Corwave, Rgenix, Gecko, ReCor, MD Start, Shockwave Medical, and Reflexion Medical. Antoine has an MBA from the Wharton School of Business, University of Pennsylvania. In 2012 and 2011 Antoine was selected by Forbes for its "Midas List" of the world's top venture capital investors. Antoine is one of the only Europeans on the list, and one of the few life science investors

James Reinstein

Mr. James A. Reinstein has more than 25 years of medical device experience. James is currently the President, CEO and board member of Cutera, Inc. a NASDAQ listed global device company at the forefront of the medical aesthetics space. Just prior to Cutera, he was the President and CEO of Drawbridge Health, a joint venture of GE Healthcare and GE Venture. Previous to Drawbridge, he was the President and CEO of Aptus Endosystems Inc. where he led the sale of the company to Medtronic for over $100 million. Prior to joining Aptus, James served as Executive Vice-President and Chief Commercial Officer at Cyberonics, a neuromodulation company focused on helping patients with epilepsy, depression and chronic heart failure. James spent 17 years at Boston Scientific in various roles and functions including business development, marketing and general management. Most of his career at Boston Scientific was spent working and living in Europe, Asia and Latin America.

James was employed by Procter and Gamble after graduating with a BA in Marketing from the Terry College of Business at the University of Georgia in Athens. He also completed post graduate studies in management at INSEAD Business School in Fontainebleau, France. James is also a General Partner at Palo Alto Medtech Advisors, and also sits on the board of directors of a publicly traded company, Pixium-Vision based in Paris, France and Monteris Medical, a privately held company located in the United States

Manus Rogan PhD, MBA

Dr. Manus Rogan is Managing Partner and co-founder of Fountain Healthcare Partners. He has over 26 years of investment and operating experience in the life science sector in both the US and Europe. Dr. Rogan earned a PhD in chemistry from the University of York (sponsored by GlaxoSmithKline) and an MBA from Trinity College Dublin.

Dr. Rogan began his career in product development at GlaxoSmithkline in the UK and in 1996 joined Elan Corporation's business development group. For four years he was responsible for licensing products and drug delivery technologies in Europe and Japan. In 2001, Dr. Rogan joined Elan's Corporate Venture Capital group in New York where he invested in private and public biotechnology companies. Investments included Sirna (acquired by Merck, 2006) and Beyond Genomics (IPO, 2011). In his seven years at Elan, Manus concluded over 25 investment and technology licensing transactions involving companies in the US, Europe and Japan. Manus currently serves on the board of Opsona Therapeutics and Mainstay Medical. He recently stepped down as Chairman of the Irish Venture Capital Association ("IVCA") and previously represented Fountain Healthcare Partners on the board of Amarin Corporation.

Dan Sachs MD

Dr. Dan Sachs is a physician entrepreneur and founder of KSpine Inc., Respicardia, Inc., Mainstay Medical Inc., and Amphora Medical, Inc., all venture-backed medical device companies. He was previously a venture capital investor with Investor Growth Capital and Spray Venture Partners, and served as Instructor in Medicine on the faculty of Harvard Medical School in the Division of Emergency Medicine.

Dr. Sachs earned an MD from the University of Michigan, and MBA from Harvard Business School

 

Mainstay Medical International plc
Directors' report

The Board of Directors are pleased to report on the progress of Mainstay Medical International plc ("Mainstay" or the "Company") and present the Annual Report of the Company and its subsidiaries (the "Group" or "we") for the year ended 31 December 2016.

Principal activities

Mainstay is a medical device company focused on bringing to market ReActiv8(R), a new implantable restorative neurostimulation system to treat people with disabling Chronic Low Back Pain ("CLBP").

 

The Company is headquartered in Dublin, Ireland. It has subsidiaries operating in Ireland, the United States, Australia and Germany, and its ordinary shares are admitted to trading on Euronext Paris (MSTY.PA) and the ESM of the Irish Stock Exchange (MSTY.IE).

As at 31 December 2016, the Company together with its operating subsidiaries Mainstay Medical Limited, MML US, Inc., Mainstay Medical (Australia) Pty Limited, Mainstay Medical Distribution Limited and Mainstay Medical GmbH form the Mainstay Medical Group.

Key performance indicators

Current key performance indicators, used by management to measure performance and exercise control over operations are summarized below:

Securing funds - The Group has financed its operations to date principally through the issuance of equity securities and debt funding. The management team continues to develop and strengthen relationships to explore further financing options. These may include strategic partnering, private placement or public offering of equities or debt.

Effective monitoring of use of funds - Management prepares budgets and rolling forecasts to track and monitor use of funds. Actual expenditure is measured against budget, and is reported to and evaluated by the Directors on a monthly basis.

Achieving milestones - The Group has defined the strategic activities and milestones leading to commercialization of ReActiv8. These include:

- Product design and development of ReActiv8

- Conducting the ReActiv8-A Clinical Trial

- Quality System certification

- Obtaining CE Marking

- European commercialization of ReActiv8

- Obtaining approval for an Investigational Device Exemption (an "IDE") from the US Food and Drug Administration (the "FDA") to start a clinical trial of ReActiv8 in the US (the "ReActiv8-B Trial")

- Conducting the ReActiv8-B Trial to generate data to file a Pre-Market Approval Application (a "PMAA") with the FDA

- Following Pre-Market Approval ("PMA"), starting the US commercialization of ReActiv8.

Progress towards and achievement of these milestones is reported by the management team to the Board on a regular basis. Outlined in the following business and financial review sections of this report, we describe our performance during the year ended 31 December 2016 on the relevant areas above, including updates on progress towards milestones, and analysis of expenditure and use of funds during the year.

Business review

ReActiv8-B Clinical Trial - Enrollment in the ReActiv8-B Clinical Trial commenced in September 2016 and the first subject was implanted on 6 October 2016. The ReActiv8-B Clinical Trial is an international, multi-center, prospective randomized sham-controlled triple blinded trial with one-way crossover, conducted under an IDE from the FDA. The purpose of the ReActiv8-B Clinical Trial is to gather data in support of an application for PMA to the FDA, a key step towards the commercialization of ReActiv8 in the US.

The primary efficacy endpoint of the ReActiv8-B Clinical Trial is a comparison of responder rates between the treatment and control arms. The Clinical Trial will be considered a success if there is a statistically significant difference in responder rates between the treatment and control arms. A responder is defined as having at least 30% improvement in Low Back Pain reported on a 100mm Visual Analogue Scale ("VAS") between baseline and the 120-day primary outcome assessment visit, with no increase in medications prescribed and taken for pain in the 14 days prior to the visit. The Clinical Trial, if successful, will provide Level 1 Evidence of efficacy of ReActiv8, which may be used to support applications for favorable reimbursement in the USA. In addition, evidence from the ReActiv8-B Clinical Trial will be used to support market development activities worldwide.

The statistical design of the Clinical Trial requires data from 128 subjects at the 120-day primary outcome assessment visit. Total subjects implanted will also include some subjects enrolled and implanted as part of the surgical roll-in phase, in addition to subjects implanted to achieve data from 128 subjects in the pivotal cohort. The Trial is designed with an "interim look" for sample size re-estimation when primary outcome data are available from half the subjects in the pivotal cohort, and if necessary the number of subjects in the pivotal cohort may be increased to achieve the targeted statistical significance. The interim analysis will be performed by a third-party independent statistician under the direction of the Data Monitoring Committee (DMC), and the interim results, other than a DMC recommendation regarding the findings, will remain blinded to the Group and other study participants (including Clinical Trial investigators and Clinical Trial sites).

IDE approval is for up to 40 clinical trial sites, and the Group will likely focus on less than 30 sites, located in the United States, Australia, Belgium, the Netherlands, and the United Kingdom. A summary of the protocol including key subject selection criteria and the outcome measures can be found at https://clinicaltrials.gov/ct2/show/study/NCT02577354.

We are pleased with the progress of the ReActiv8-B Clinical Trial. We have selected 27 Clinical Trial sites of which 18 are enrolling subjects and the remainder are working with us to begin enrolling as soon as possible. 75 subjects have been enrolled of whom, 22 have been implanted with ReActiv8, and 9 subjects are either awaiting implant or are still being assessed. Based on our experience, we estimate completion of enrollment in the ReActiv8-B Trial around the end of 2017, with data availability in 2018, which is in line with our target.

Commercialization - The first sale and implant of ReActiv8 in Germany was announced on 1 February 2017. The implant was performed by Dr. med. Francis Kilian, Orthopedic and Neurosurgeon at the Catholic Hospital Koblenz-Montabaur in Koblenz Germany. We are progressing discussions with a number of customers across Germany. Our European commercial activities for ReActiv8 are initially focused on Germany where we aim to drive adoption of ReActiv8 in a select number of high volume multi-disciplinary spine care centers which will become reference sites. As we gain experience and momentum, and as we identify other early opportunities to build our business, we will expand to other sites and countries.

During 2016 we received CE Marking approval for ReActiv8 based on positive results from the ReActiv8-A Clinical Trial. This Clinical Trial demonstrated a clinically important, statistically significant and lasting improvement in pain, disability and quality of life in people with disabling Chronic Low Back Pain and few other treatment options.

On 12 January 2017, we announced we had applied for ReActiv8 to be admitted to the Australian Register of Therapeutic Goods (ARTG) to allow for commercialization in Australia. The ARTG application included the results of the ReActiv8-A Clinical Trial. The Therapeutic Goods Agency will review the application and may request additional data during the review process.

US Patents - During 2016 we announced the issuance of two new US Patents, bringing the total current number of issued US issued Patents in the Mainstay portfolio to eight. Mainstay continues to add to its portfolio of issued patents and pending patent applications.

ReActiv8-A Clinical Trial/PMCF Study - The ReActiv8-A Clinical Trial is an international, multi-center, prospective, single arm Clinical Trial of ReActiv8. We announced the results of the first 47 subjects implanted in this Clinical Trial, of whom, 46 reached the 90-day end point in August 2015. On 20 September 2016 we announced the one-year results from the ReActiv8-A Clinical Trial, which showed long term sustained performance. As at 31 December 2016, 6 additional subjects had been implanted in the ReActiv8-A Clinical Trial.

The results show clinically important, statistically significant and lasting improvement in pain, disability and quality of life in a population of people with few treatment options. As detailed above, the submission for CE Mark approval included the results of the first 47 subjects implanted in the ReActiv8-A Clinical Trial.

Following CE marking approval, a range of activities is required for Post Market Clinical Follow Up to gather additional data on the long term performance and safety of ReActiv8. The ReActiv8-A Post Market Clinical Follow-up (PMCF) Study is a continuation of the ReActiv8-A Clinical Trial (but with CE Marked ReActiv8). 40 additional subjects are planned to be implanted as part of the continuation of the ReActiv8-A PMCF Study.

ReActiv8-C Registry - In addition to the ReActiv8-A PMCF Study, the Group will conduct a registry. The ReActiv8-C Registry is an international, multi-center, data collection registry. All patients who will be implanted with ReActiv8 during commercialization will be invited to enroll in the ReActiv8-C Registry until the target enrollment numbers have been reached. The purpose is to gather additional summary data on the long-term performance of ReActiv8 in at least 50 patients.

Funding - On 17 June 2016, we announced the completion of a private placement of EUR30 million (approximately $33.7 million) through a placement of 2,307,694 new ordinary shares with new and existing shareholders (the "Placement"). On 11 August 2016, we announced the publication of a prospectus (the "Prospectus") in connection with the Placement. The Prospectus comprised a Summary Document, a Securities Note and a Registration Document. These documents are available on our website (www.mainstay-medical.com).

The Group's debt facility provided by IPF was announced on 24 August 2015 for up to $15 million. During July 2016, we received the last tranche of $4.5 million. As at 31 December 2016, the Group had drawn down the full facility of $15 million.

Financial review

Income statement - Operating expenses related to on-going activities were $16.8 million during the year ended 31 December 2016 (2015: $12.9 million). On-going activities during the financial year included clinical and regulatory activities, research and development, preparation for commercialization and general and administrative activities.

Research and development expenses reflect costs incurred for research, ongoing development and design of the Group's product ReActiv8. These expenses include the salaries of engineers, technicians, quality and regulatory specialists; the cost of outsourced development and manufacturing activities; biocompatibility and pre-clinical studies; and quality costs including the set-up and on-going maintenance of our quality system. Research and development expenses also include the costs of prosecuting and maintaining our intellectual property portfolio, including legal costs and associated filing and maintenance fees. Research and development expenses were $3.6 million during the year ended 31 December 2016 (2015: $2.9 million). An increase of $0.7 million is primarily driven by expansion of the team, who also support clinical trials and commercialization.

Clinical and regulatory expenses relate to the ongoing ReActiv8-A Clinical Trial (including the continuation of the ReActiv8-A Clinical Trial as the ReActiv8-A PMCF Study), and preparation for and commencement of the ReActiv8-B Clinical Trial. Also included in clinical and regulatory expenses are expenses relating to clinical consulting; regulatory consulting; and, salary costs for our clinical team members. All clinical and regulatory costs are expensed as incurred. We are pleased with the progress of the ReActiv8-B Clinical Trial, and we expect clinical and regulatory expenses to increase significantly as enrollment in the ReActiv8-B Clinical Trial continues to ramp up, and as we undertake post market clinical follow-up activities. Clinical and regulatory expenses were $5.6 million during the year ended 31 December 2016 (2015: $4.7 million). The increase of $0.9 million is primarily driven by increased consulting and clinical costs relating to the ReActiv8-B Clinical Trial.

Selling, general and administration expenses include costs relating to the executive, legal, finance and commercial functions. Executive, legal, and finance expenses include the salaries and other related costs for personnel, professional fees for accounting, audit and legal services, general and facilities costs such as rent, insurances and IT costs. Commercial costs during the financial year include the salaries of our direct sales force, costs related to the development of the Group's commercial strategy, and costs related to obtaining and expanding reimbursement for the Group's products after regulatory approvals have been obtained and the products become available to be sold commercially. Commercial expenses are expected to increase with the expansion of our resources to include new personnel in a direct sales team as we commercialize in key target markets in Europe. Selling, general and administration expenses were $7.6 million during the year (2015: $5.3 million). The increase of $2.3 million is primarily driven by the expansion of our team, increase in non-cash share based payments expense and expenditure on preparation for commercialization.

Statement of financial position - On 17 June 2016, we announced that we had raised gross proceeds of EUR30 million (approximately $33.7 million) through a placement of 2,307,694 new ordinary shares with new and existing shareholders (the "Placement"). Transaction costs of approximately $1.2 million were incurred and have been offset against retained earnings.

On 24 August 2015, we announced the closing of debt financing for up to $15 million. As at 31 December 2016, the Group had drawn down the full debt facility of $15 million. The last tranche of $4.5 million was received in July 2016 following CE Marking approval of ReActiv8.

Following CE Marking approval which was received by the Group in May 2016, as part of our preparation for commercialization, we have built up inventory valued at $1.1 million as at 31 December 2016.

Cash on hand at 31 December 2016 was $36.7 million (2015: $16.6 million). Total assets of the Group at year end were $39 million (2015: $17.6 million). The increase in cash is primarily due to the proceeds received from the placement completed in June 2016 and the final tranche of our debt facility, offset by ongoing operating expenditure and buildup of inventory held for commercialization.

Operating net cash outflows for the year ended 31 December 2016 were $16.7 million (2014: $11.6 million). This operating cash outflow reflects the cost of the research and development of ReActiv8, undertaking our clinical trials, preparation for commercialization, the ongoing costs of being a public company, and running the Group.

Principal risks and uncertainties

A summary of the principal risks relating to the Company and/or its industry include the following:

- We have incurred significant operating losses and may not be able to achieve or subsequently maintain profitability.

- We expect to require additional funds in the future in order to meet our capital and expenditure needs and further financing may not be available when required or, if available, could require us to agree to terms which are specifically favorable to new investors, or to restrictions significantly limiting our access to additional capital

- Our future financial performance is substantially dependent on the commercial success of ReActiv8, our only product as of the date of this Annual Report

- We operate in a highly regulated environment and regulatory approval is required before we can market or sell ReActiv8 in any market

- Seeking and obtaining regulatory approval for medical devices can be a long and uncertain process. Strict or changing regulatory regimes, government policies and legislation in any of our target markets may delay, prohibit or reduce potential sales

- We are required to conduct clinical trials for regulatory approvals and other purposes. clinical trials carry substantial risks and are costly and time consuming, with uncertain results.

A more extensive description of the existing and future potential risks to Mainstay's business and to the Company's ordinary shares are outlined in the Risk Factors section of this report, on pages 23 to 41, and should be considered carefully by Shareholders and prospective investors.

Financial risk management

The Group is exposed to a variety of financial risks including credit risks, liquidity risks, interest rate risks and foreign currency risks. Further information can be reviewed in Note 19.

Risk management framework - Mainstay's Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to the limits.

Due to the pre-revenue nature of the Group's activities during the financial year, there are no significant concentrations of financial risk other than concentration of cash with individual banks and there has been no significant change during the financial year, or since the end of the year to the types or extent of financial risks faced by the Group or the Group's approach to the management of those risks.

Credit risk - Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet contractual obligations, and arises principally from the Group's cash and cash equivalents and trade and other receivables.

Liquidity risk - Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Since inception the Group has funded its operations primarily through (i) the issuance of equity securities and (ii) debt funding. The Group continues to explore funding strategies (e.g.: equity, debt, partnering) to support its activities into the future. Adequate additional financing may not be available on acceptable terms, or at all. The Group's inability to raise capital as and when needed would have a negative impact on the Group's financial position and its ability to pursue its business strategy.

Foreign currency risk - The Group's reporting currency is the US Dollar. The Group's exposure to foreign currency risk arises through expenditure incurred in Euro and Australian Dollars. The Group's Australian subsidiary has an Australian Dollar functional currency, and two of the Group's subsidiaries located in Ireland and Germany have a Euro functional currency.

Interest rate risk - The Group's cash balances are maintained in short term access accounts and carry a floating rate of interest.

The Group's debt carries a variable rate of 3-month Euribor plus a margin ranging from 10.5% to 12.5%. Any change in the Euribor rate above zero will directly affect the amount of interest repayable on this debt.

Outlook and future developments

We are pleased with the progress of the ReActiv8-B Clinical Trial. Enrollment is well under way and we estimate that enrollment will be completed around the end of 2017, with data availability in 2018, which is in line with our target. If successful, the ReActiv8-B Clinical Trial will yield level 1 evidence of efficacy, which we will use to support an application for PMA approval to allow for commercialization in the US. We also anticipate the data from this Clinical trial will help with expansion of commercialization of ReActiv8 outside the US.

The initial focus of our European commercial activities for ReActiv8 is on Germany where we aim to drive adoption of ReActiv8 in a select number of high volume multi-disciplinary spine care centers. We have recruited a direct sales force, which is supported by our team of experienced field clinical specialists, and we are working with customers to integrate ReActiv8 into their routine clinical practice and provide a new treatment option for the many people suffering from Chronic Low Back Pain. As we gain experience and momentum, and as we identify other early opportunities to build our business, we will consider expansion to other sites and countries.

Directors and Secretary and their interests

The names of the persons who were Directors during the year are set out on page 3.

Greg Garfield and Nael Karim Kassar were appointed to the board as Non-Executive Directors on 17 June 2016. All other Directors served as directors for the entire year.

The following directors, Mr Antoine Papiernik, Mr. Manus Rogan, Mr James Reinstein, Mr Nael Kassar and Mr Greg Garfield retired at the Company's Annual General Meeting ("AGM") held on 16 September 2016 and submitted themselves for re-election by the shareholders. The resolutions to re-elect each Director were passed at the Company's AGM on 16 September 2016.

It is the Board's current intention that one third of all Directors will retire at each AGM, subject to any additional requirements under Articles 90 to 94 of the Company's Articles of Association.

The beneficial interest of the Directors and Company Secretary, who held office at 31 December 2016, in the ordinary share capital of the Company at the dates below were as follows:

Ordinary shares
 
Ordinary shares at par value of EUR0.001 each
Name
 
At 31 December 2016
 
At 31 December 2015
Peter Crosby
Ordinary shares of EUR0.001 each
81,400
 
81,400
David Brabazon
Ordinary shares of EUR0.001 each
27,828
 
4,728
Dan Sachs MD
Ordinary shares of EUR0.001 each
515,000
 
515,000
Tom Maher
Ordinary shares of EUR0.001 each
7,702
 
10

 

The movement in ordinary shares held by Directors and Secretary between 31 December 2015 and 31 December 2016 relates to ordinary shares acquired in the private placement completed in June 2016.

Share options
Deemed date of grant
Exercise price per ordinary share
Expiry date
No. of ordinary shares under option
as at 31 December 2016
No. of ordinary shares under option
as at 31 December 2015
No. of vested options as as at 31 December 2016
Oern Stuge MD
23 Jan 2013
US$1.00
10 years from vesting
55,014
55,014
53,863
Oern Stuge MD
13 Dec 2016
EUR15.50
10 years from vesting
17,000
-
-
Peter Crosby
23 Jan 2013
US$1.00
10 years from vesting
75,000
75,000
73,420
Peter Crosby
8 Jan 2015
EUR14.90
10 years from vesting
65,000
65,000
31,144
Peter Crosby
17 Dec 2015
EUR17.95
10 years from vesting
35,000
35,000
8,750
Peter Crosby
13 Dec 2016
EUR15.50
10 years from vesting
55,000
-
-
David Brabazon
5 Dec 2013
US$1.00
10 years from vesting
18,427
18,427
13,798
David Brabazon
13 Dec 2016
EUR15.50
10 years from vesting
5,700
-
-
James A. Reinstein
2 Sep 2015
EUR16.87
10 years from vesting
20,000
20,000
6,248
James A. Reinstein
13 Dec 2016
EUR15.50
10 years from vesting
6,200
-
-
Tom Maher
24 Jun 2014
EUR17.08
10 years from vesting
32,000
32,000
19,988
Tom Maher
8 Jan 2015
EUR14.90
10 years from vesting
5,000
5,000
2,394
Tom Maher
2 Sep 2015
EUR16.87
10 years from vesting
6,000
6,000
1,872
Tom Maher
17 Dec 2015
EUR17.95
10 years from vesting
15,000
15,000
3,750
Tom Maher
19 Oct 2016
EUR16.20
10 years from vesting
20,000
-
-

 

Except as disclosed in this report, none of the Directors, who held office at 31 December 2016, had a beneficial interest in the share capital of the Company or its subsidiaries and no such interest, the existence of which is known or could with reasonable diligence be ascertained by the relevant Director, is held by any connected person.

Antoine Papiernik held no interest in the issued share capital of the Company other than the interests that he is deemed to hold in the Company by virtue of the interests that he holds in Sofinnova Capital VI FCPR. At 31 December 2016, Sofinnova Capital VI FCPR owned 2,165,813 ordinary shares amounting to approximately 32.8% of the entire issued ordinary share capital of the Company. As at 31 December 2015, Sofinnova Capital VI FCPR owned 1,775,829 ordinary shares amounting to approximately 41.32% of the entire issued ordinary share capital of the Company. The movement in ordinary shares held by Sofinnova Capital VI FCPR between 31 December 2015 and 31 December 2016 relates to ordinary shares acquired in the private placement completed in June 2016.

Manus Rogan held no interest in the issued share capital of the Company other than the interests that he is deemed to hold in the Company by virtue of the interests that he holds in Fountain Healthcare Partners Fund 1 LP. At 31 December 2016, Fountain Healthcare Partners Fund 1 LP owned 796,940 ordinary shares amounting to approximately 12.1% of the entire issued ordinary share capital of the Company. At 31 December 2015, Fountain Healthcare Partners Fund 1 LP owned 566,171 ordinary shares amounting to approximately 13.17% of the entire issued ordinary share capital of the Company. The movement in ordinary shares held by Fountain Healthcare Partners Fund 1 LP between 31 December 2015 and 31 December 2016 relates to ordinary shares acquired in the private placement completed in June 2016.

Nael Karim Kassar held no interest in the issued share capital of the Company other than the interests that he is deemed to hold in the Company by virtue of the interests that he holds in KCK Limited. At 31 December 2016, KCK Limited owned 1,153,846 ordinary shares amounting to approximately 17.5% of the entire issued ordinary share capital of the Company. At 31 December 2015, KCK Limited held no interest in the Company. The ordinary shares held by KCK Limited as at 31 December 2016 were acquired in the private placement completed in June 2016.

Directors' remuneration

The following table shows the amount of remuneration paid and benefits in kind granted to the Directors by the Group for services in all capacities:

2016:
Fees
Salary
Annual Incentive
Benefits in Kind
Total
Executive Directors
 
 
 
 
 
Peter Crosby (Note 2)
-
$551,673
$140,106
$25,110
$716,889
 
 
 
 
 
 
Non-Executive Directors
 
 
 
 
 
Oern Stuge MD (Note 1)
$102,015
-
-
-
$102,015
David Brabazon (Note 4)
$55,288
-
-
-
$55,288
Greg Garfield
-
-
-
-
-
Nael Karim Kassar
-
-
-
-
-
Antoine Papiernik
-
-
-
-
-
James A. Reinstein (Note 3)
$55,288
-
-
-
$55,288
Manus Rogan PhD
-
-
-
-
-
Dan Sachs MD
-
-
-
-
-

 

2015:
Fees
Salary
Annual Incentive
Benefits in Kind
Total
Executive Directors
 
 
 
 
 
Peter Crosby
-
$411,535
$127,650
$24,728
$563,913
 
 
 
 
 
 
Non-Executive Directors
 
 
 
 
 
Oern Stuge MD (Note 1)
$41,678
-
-
-
$41,678
David Brabazon (Note 4)
$26,860
-
-
-
$26,860
Antoine Papiernik
-
-
-
-
-
James A. Reinstein (Note 3)
$25,991
-
-
-
$25,991
Manus Rogan PhD
-
-
-
-
-
Dan Sachs MD
-
-
-
-
-

 

Notes:

1. In addition to the Directors fees in 2015 above, the Group made payments of $64,878 in 2015 under a consultancy agreement to ORSCO Life Sciences AG (the "ORSCO Consulting Agreement"), a Swiss company which is controlled by Oern Stuge. Details of payment to ORSCO Life Sciences AG in 2015 are included in Note 24. On 31 December 2015, Mainstay Medical Limited and ORSCO Life Sciences AG agreed to terminate the ORSCO Consultancy Agreement with effect from 31 December 2015, and no payments were made in relation to the ORSCO Consulting Agreement in 2016. On 1 January 2016, the Company entered into a new Non-Executive Director Appointment Letter with Oern Stuge with a Director's fee per annum of CHF 100,000.

2. Peter Crosby's salary and bonus in 2016 includes amounts relating to the years 2013, 2014 and 2015 of approximately $130,000 arising from adjustments related to currency and tax equalization.

3. James Reinstein was appointed to the Board on 22 June 2015. The terms of James Reinstein's appointment letter include EUR40,000 Directors Fees per annum plus an additional EUR10,000 per annum for each Committee Chairman position held.

4. David Brabazon was appointed on 3 April 2014, and the terms of his appointment letter included Directors Fees of US$20,000 per annum. With effect from 21 October 2015, the Company revised the terms of David Brabazon's appointment letter and the fee per annum was revised to EUR40,000 Directors Fees per annum plus an additional EUR10,000 per annum for each Committee Chairman position held.

None of the directors exercised any share options in either 2015 or 2016.

Issued share capital

At 31 December 2016 the authorized share capital of the Company was EUR60,000, comprised of 20,000,000 ordinary shares of EUR0.001 each, representing 99.8% of total authorized shares (by number) and 40,000 deferred shares of EUR1.00 each, representing 0.2% of total authorized shares (by number). A full description of the rights attached to the ordinary and deferred shares of the Company is available in the Articles of Association on the Company's website. Further information on share movements is provided in Note 17.

At the Company's 2016 AGM held on 16 September 2016:

- the Directors were authorized, pursuant to Section 1021 of the Companies Act 2014 ("2014 Act"), to allot "relevant securities" up to an aggregate nominal value of EUR10,000, representing approximately 151% of the Company's issued ordinary share capital as at the 29 July 2016. This authority will expire on 16 September 2021.

- the Directors were authorized, pursuant to Section 1023 of the 2014 Act, to dis-apply statutory pre-emption provisions in the event of a rights issue or other pro rata offer of equity securities to shareholders for cash; or other issue of equity securities for cash up to an aggregate nominal value of EUR10,000 representing approximately 151% of the Company's issued ordinary share capital as at 29 July 2016. This authority will expire on 16 September 2021.

The Company is not aware of any agreements between holders of securities that may result in restrictions in the transfer of ordinary shares or voting rights over ordinary shares. The Directors in their absolute discretion and without assigning any reason therefor may decline to register any transfer of a deferred share. The Company is authorized at any time to appoint any person to execute on behalf of the holder(s) of deferred shares a transfer thereof and/or an agreement to transfer the same, without making any payment to the holder(s) thereof and persons so entitled, to such person(s) as the Company may determine as holder(s) thereof and beneficially entitled thereto.

At no time during 2016 were any ordinary or deferred shares in the Company held or acquired by the Company or any subsidiary of the Company.

Share Option Plan 2016

The Group operates a share option plan (the "Plan"). As at 31 December 2016, the Plan allows for the Company to grant share options to employees of the Group co


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