Realm Therapeutics plc Update on Strategic Review, Proposed Assets Disposal, Proposed Adoption of Investing Policy, Proposed AIM Delisting and Notice of General Meeting

MALVERN, PA — Realm Therapeutics plc (NASDAQRLM / AIM: RLM), a biopharmaceutical company with a proprietary technology platform of stabilized high concentration HOCl, recently provided an update on its previously announced strategic review.

In line with the announcement of November 29, 2018, the Company has now agreed to sell certain Assets, which comprise the Vashe® wound care royalty stream, an FDA 510(k)-cleared anti-itch hydrogel, which was formerly marketed as Aurstat™, HOCI related equipment, intellectual property (including know-how, patents and copyrights), program records, and certain assigned contracts and intellectual property licenses. The Company’s primary assets also include its cash, cash equivalents, and short-term investments.

Realm further announces its intention to delist its Ordinary Shares from admission to trading on AIM. The Assets Disposal and AIM Delisting are each subject to approval by Shareholders, which the Company is seeking pursuant to a Circular that details the background to and reasons for the Assets Disposal and AIM Delisting, and the proposed Investing Policy for adoption by the Company, together with a Notice of General Meeting.

Assets Disposal

Realm has signed a conditional agreement for the sale of the Assets to Urgo U.S., Inc., the U.S. subsidiary of privately-held Laboratories URGO SAS, an international healthcare company specialised in advanced wound care and consumer healthcare solutions, for gross cash proceeds of $10 million, conditional upon, inter alia, the approval of Realm’s Shareholders. Urgo Medical North America merged with SteadMed Medical, the partner from whom Realm collects the Vashe® wound care product royalties in 2018. Subject to Shareholder approval and customary contractual conditions being met, the Assets Disposal is expected to close on March 28, 2019.

A copy of the Assets Disposal Agreement will be put on display pursuant to Rule 26.1 and the notes to Rule 21.1 of the Takeover Code on the following website at http://ir.realmtx.com/investor-relations by no later than 12 noon on the Business Day following the date of this announcement.

Realm received cash of $0.9 million and $1.1 million in 2017 and 2018, respectively, under the royalty agreement for the Vashe® wound care product, with minimal offsetting operating costs. Realm did not recognize royalty revenue during the year ended December 31, 2018 (2017: $1.1 m) as the Company adopted IFRS 15, Revenue from Contracts with Customers, effective January 1, 2018, upon which future minimum payments were recognized as an adjustment to equity rather than as revenue over future periods. Equipment included in the Assets have a value of approximately $0.3 million.

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At December 31, 2018, Realm had $18.8 million in cash, cash equivalents, and short-term investments. The Assets Disposal is expected to generate approximately $9.6 million in net cash proceeds, after deducting transaction costs. The net proceeds of the Assets Disposal will be retained by the Company to augment its current cash resources, which may be deployed in a potential strategic transaction (which, for potential offerors, may involve a takeover offer for the Company). If the Company executes a strategic transaction (which, for potential offerors, may involve a takeover offer for the Company), it will incur deal-related costs including legal, tax advisory, accounting and banker fees and employee separation costs.

Investing Policy

In connection with the Assets Disposal, the Company proposes to adopt an Investing Policy that requires the Directors to examine potential strategic opportunities. The Investing Policy will require the Company to seek to invest in, partner with, acquire and/or be acquired by companies with meaningful development potential in the life sciences sector or with good overall business prospects; or, if a suitable transaction is not identified, the Company will consider winding down and distributing the remaining assets to Shareholders, following satisfaction of applicable obligations.

AIM Delisting and Nasdaq Listing

Upon Completion of the Assets Disposal, if the AIM Delisting has not occurred, the Company would immediately become an AIM Rule 15 cash shell given that the proposed Assets Disposal represents a fundamental change to the business of the Company, which would cease to conduct substantially all of its existing trading business.

As an AIM Rule 15 cash shell, the Company would be required to make an acquisition or acquisitions constituting a reverse takeover under AIM Rule 14 of the AIM Rules for Companies on or before the date falling six months from Completion. However, the Board is seeking Shareholder approval for an AIM Delisting to take place immediately preceding Completion. If approved, Realm expects the AIM Delisting to take effect from 7:00 a.m. on March 27, 2019 with the last day of trading of the Ordinary Shares on AIM being March 26, 2019.

The Company does not intend to delist the ADSs representing its Ordinary Shares from Nasdaq. However, following the Assets Disposal, the Company may be deemed to be a “public shell” under Nasdaq rules, which would require it to sign a definitive agreement to combine with an operating company within a time frame to be determined by Nasdaq in order for the ADSs to continue to be listed for trading thereon. Whilst the Company aims to complete such a strategic transaction (which, for potential offerors, may involve a takeover offer for the Company), and the Company is in discussions with a number of interested parties (including potential offerors) in this regard, should such circumstances arise whereby a strategic transaction (which, for potential offerors, may involve a takeover offer for the Company) is not completed, the Company would in the immediate term consider the most appropriate market for listing its ADSs in the U.S. The Directors intend to adhere to the Investing Policy, which includes considering winding down and distributing the Company’s remaining assets, after satisfaction of liabilities and obligations, to Shareholders in certain circumstances.

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General Meeting and Circular

A General Meeting will be held at the offices of Cooley (UK) LLP, Dashwood, 69 Old Broad Street, London EC2M 1QS at 2:00 p.m. on March 15, 2019, for Shareholders to consider the proposed Assets Disposal and the proposed AIM Delisting, and to vote on the related Resolutions. A Resolution will also be put to Shareholders to cover the requirement for an AIM Rule 15 cash shell to have an Investing Policy whilst its Ordinary Shares are admitted to trading on AIM, or until it has otherwise become an operating company by completing a reverse takeover or another strategic transaction (which, for potential offerors, may involve a takeover offer for the Company).

Realm continues to assess options available to maximize shareholder value through the strategic review. The Company remains in discussions regarding the Formal Sale Process which may subsequently result in either a takeover offer for the Company or an acquisition constituting a reverse takeover under AIM Rule 14, or, if a suitable strategic transaction (which, for potential offerors, may involve a takeover offer for the Company) is not identified, a potential winding down of the Company and distribution to Shareholders of the Company’s remaining assets following satisfaction of all applicable liabilities and obligations. At the current time discussions are ongoing with a number of interested parties (including potential offerors), some of whom are interested in a reverse takeover transaction (which would involve an acquisition of a business or corporate entity in the life sciences sector, where the potential offeror would acquire the benefit of the Company’s Nasdaq listing and cash) and others, who are potential offerors, are interested in making a takeover offer for the Company (in order to access the Company’s cash). The Directors can confirm that none of the current interested parties (including potential offerors) are interested in entering into a strategic transaction with the Company (which, for potential offerors, may involve a takeover offer for the Company) are seeking to acquire the Assets which are the subject of the Assets Disposal.

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Any potential offeror considering a takeover offer for the Company is entitled to the benefit of Rule 21.1 of the Takeover Code in order to ensure that the Company does not otherwise dispose of a material asset which might frustrate such a takeover offer being made; interested parties considering a reverse takeover transaction do not have the benefit of Rule 21.1 of the Takeover Code as they are not potential offerors for the Company for the purposes of the Takeover Code. In all cases, interested parties (including potential offerors) have made it clear to the Company, during the course of the ongoing discussions, that they have no interest in the Assets which are the subject of the Assets Disposal, but are primarily interested in the cash balances of the Company. No currently interested party (including potential offerors) chose to participate in the sale process relating to the Assets, nor have they objected to the Assets Disposal on the grounds of Rule 21.1 of the Takeover Code, or otherwise).

Should the AIM Delisting become effective, the Formal Sale Process will cease to be governed by the Takeover Code; however the Directors intend that the objectives of that sales process will remain unaltered and anticipate providing an update on the process in early Q2 2019.

A Circular is available on the Company’s website, at www.realmtx.com, and the website of the U.S. Securities and Exchange Commission, and is being posted to Shareholders shortly. Shareholders are advised to read the Circular carefully and in full. The Expected Timetable of Principal Events and the full text of the Letter from the Chairman set out within the Circular are reproduced, without material adjustment, below. Terms used but not defined above in this announcement shall have the meanings given to them in the Circular; such definitions have been extracted and included at the foot of this announcement.

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