Orexo Strengthens Financial and Strategic Position with Placement of Convertible Bonds and Existing Shares to the Growth Equity Unit of Novo A/S

Regulatory News:

Orexo AB (STO:ORX) and Novo A/S today announced combined transactions encompassing a directed new issue by Orexo of a SEK 111 million convertible bond to Denmark-based Novo A/S and the acquisition of significant blocks of existing shares by Novo A/S from two existing venture capital shareholders, subject to approval at an Extraordinary General Meeting (EGM). The conversion price of the convertible bonds is set at 25 per cent premium to the closing share price on 12 March, 2010.

The investment is managed by Novo Growth Equity, the growth equity unit of Novo A/S and brings Orexo A committed new long-term shareholder with significant experience and expertise in the life-sciences sector. The amount raised through the convertible bond issue will strengthen Orexo’s financial and strategic position and provide a platform for continued growth.

Ulrik Spork, Managing Partner of Novo Growth Equity, said: "Orexo has accomplished significant results over its history. The Company has proven its value by having developed and secured regulatory approval of three products contributing to the treatment of patients in need. Orexo’s documented track record in drug development combined with a number of exciting formulation technologies and a pipeline of compounds in development represents a very attractive risk profile for us as shareholders. We look forward to contributing actively to the further development of Orexo into a leading international specialty pharma company, and this investment supports our strategy to take major stakes in promising late stage life sciences companies with near-term commercial potential.”

Håkan Åström, Chairman of the Board of Orexo, commented: "In Novo Growth Equity we are gaining a long-term and engaged investor with vast life-sciences industry experience, endorsing our products and our business strategy. Today’s announcement provides Orexo with a strong platform for further growth in our commercial operations, and is a significant step towards becoming a leading specialty pharma company.”

Novo A/S will, subject to the EGM approval of the issue, subscribe for the entire issued amount of convertible bonds offered by the company and simultaneously acquires, in a separate transaction, a combined 10.7% of the outstanding share capital of Orexo, from Apax Partners and SLS Invest. The acquisition of these shares is conditional upon a positive decision from the EGM to issue the convertible bonds. Upon closing of the transaction, Novo A/S’ combined shareholding corresponds to approximately 19% on an as converted basis.

The convertible bonds have a conversion price of SEK 47.50 which implies a premium of approximately 25% to the closing price of Orexo’s shares on 12 March, 2010 of SEK 37.90, and is structured with an option, providing Orexo with the right to convert the convertible bond once the company’s share price exceeds the conversion price by 50% during a certain period. The convertible bond issue has a fixed rate coupon of 8% per annum. If not converted, the bond will be repayable in full on 31 March, 2015.

The board of directors of Orexo believes that, in light of the above, diverting from the shareholders’ pre-emptive rights in the issue of convertible bonds to Novo A/S, on the terms described herein, will create significant value for Orexo and its shareholders.

In connection with the transaction, Novo A/S and HealthCap have entered into an agreement to restrict the sale of their holdings in Orexo over the next 12 months.

Staffan Lindstrand, partner with HealthCap and board member, commented "HealthCap is a committed long-term investor in Orexo and welcomes Novo Growth Equity as another strategic long term investor. Further, we believe by adding Novo Growth Equity, the strategic process to fully transform Orexo into a successful commercial pharmaceutical company will be accelerated.”

The convertible bond issue is subject to the necessary resolutions being passed at an EGM, to be held on 31 March 2010. The notice convening the EGM is issued today in a separate stock exchange announcement. The notice contains a more detailed summary of the terms of the convertible bonds. The EGM is proposed to approve the issuance of the convertible bonds. At the upcoming EGM the Nomination Committee will propose to the shareholders to resolve to add a new board member, Michael Shalmi, M.D., MBA, senior partner with Novo Growth Equity. At the same time Johan Christenson, M.D., Ph.D. will retire from the Board of Directors of Orexo.

Shareholders representing more than 40% of the total number of shares outstanding in Orexo have stated that they are supportive of the proposal to issue convertible bonds to Novo A/S. Novo and Healthcap have agreed to support the election of one Director each to the Board of Orexo at the upcoming EGM and the AGM in April, 2010.

Advisors Related to the transaction, ABG Sundal Collier is acting as financial advisor and Vinge as legal advisor to Orexo while Latham & Watkins and Roschier are acting as legal advisors to Novo A/S.

Note Orexo AB (publ) discloses the information provided herein pursuant to the Securities Markets Act. The information was provided for public release on 15 March, 2010, at 8:00 a.m. CET. This press release has been prepared in both Swedish and English. In the event of any discrepancy in the content of the two versions, the Swedish version shall take precedence.

Newswire call: Orexo’s CEO Torbjörn Bjerke and Ulrik Spork, Managing Partner of Novo Growth Equity will host a newswire conference call and Q&A session at 08.30 (CET). Please use the following dial-in details:

SE: +46 (0)8 505 598 53

UK: +44 (0) 203 043 24 36

US: +1 866 458 40 87

Analyst webcast: Orexo’s CEO Torbjörn Bjerke and Ulrik Spork, Managing Partner of Novo Growth Equity will host a webcast for analyst and investors and Q&A session at 10.00 (CET). Please use the following dial-in details:

SE: +46 (0)8 505 598 53

UK: +44 (0) 203 043 24 36

US: +1 866 458 40 87

The presentation can be found at: http://webcast.zoomvision.se/clients/orexo/100315/

About Orexo
Orexo is a revenue generating pharmaceutical company focusing on developing treatments for pain and inflammation. The company has four products on the market as well as a broad project portfolio in late stages of development. Sales and product development are mainly carried out through worldwide partnership agreements with larger pharmaceutical companies. Abstral for the treatment of break through cancer pain is currently Orexo’s most important product. Abstral was launched in major European countries in 2009 and is in registration phase in the USA and in Japan. Orexo has 108 employees, and has its head office located in Uppsala, Sweden. More information can be found at www.orexo.com.

About Novo A/S and Novo Growth Equity
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.

About HealthCap
HealthCap is a family of multi stage venture capital funds, investing globally in life sciences. With committed capital of approximately EUR 800 million, HealthCap is one of the largest specialized providers of venture capital within life sciences in Europe.

The HealthCap funds have invested in 89 companies, of which 24 companies have been taken public on eight different markets. HealthCap companies currently employ approximately 5,000 individuals, have provided the market with a total of 15 approved pharmaceutical products, more than 40 marketed medical technology products and a number of laboratory supply products.

The most recent fund, HealthCap V, was established in 2006 and is currently in its investment stage. For further information please visit www.healthcap.se.

This information was brought to you by Cision http://www.cisionwire.com