Evo Fund, a Cayman Islands-registered investment vehicle, told Japan's Kanto Local Finance Bureau on September 8 that its combined stake in Tokyo-listed Delta-Fly Pharma had fallen to 33.39% from 41.97%, the kind of one-percentage-point move that triggers a mandatory large-shareholding update. The filing is Change Report No. 2 under Article 27-25 of Japan's Financial Instruments and Exchange Act, and it covers activity through the September 1 reporting-obligation date.
The mechanics behind the drop start with a July 22 purchase agreement between Delta-Fly Pharma and Evo Fund covering a third-party allotment of Series 12 subscription warrants. On August 7, Evo Fund acquired 10,000,000 of those warrants off-market at ¥0.14 each; the filing records this transaction under a 41.14% ratio column in its 60-day transaction table. The same agreement lets Delta-Fly Pharma cap how many warrants Evo Fund can exercise once certain conditions arise, and it requires board approval before Evo Fund transfers any warrants to a third party.
Through August, Evo Fund exercised warrants in small daily batches at ¥103 to ¥105 per share, immediately converting them into common stock and selling on the Tokyo Stock Exchange. The pace jumped on September 1: Evo Fund exercised 1,430,000 warrants at ¥104 apiece and, the same day, sold 1,882,900 shares on the market, a transaction the filing lists under a 7.75% ratio entry. September 1 is also the date the filing cites as the reporting-obligation date, by which point the combined stake had fallen to 33.39%.
Evo Fund still held 8,096,000 unexercised Series 12 warrants as of September 1, plus 20,000 common shares, for a total position of 8,116,000 shares and warrants against Delta-Fly Pharma's 16,209,000 shares outstanding. Joint filer Evolution Capital Management LLC, a Nevada-registered manager running Evo Fund's position under a discretionary investment agreement, reported zero shares of its own. The two filers share the same representative: a director of Evo Fund who also serves as chief executive of Evolution Capital Management LLC, according to the filing. Separately, Evo Fund borrowed 500,000 Delta-Fly Pharma shares off-market on August 4 from two individual lenders.
The filing states the fund's purpose is pure investment and discloses no important proposal actions toward the company, though it notes Evo Fund may offer Delta-Fly Pharma advice "depending on circumstances". With more than eight million low-priced warrants still outstanding, the question the September 8 filing leaves open is how much more of that supply lands on the market before the combined stake shrinks again.