SAN FRANCISCO, CA – February 24, 2021 – Kalytera Therapeutics, Inc. (TSX VENTURE EXCHANGE: KLY and OTCQB: KALTF) (the “Company” or “Kalytera“) today provided the following corporate update at the request of the TSX Venture Exchange (“TSXV”) ahead of the reinstatement of trading of the Company’s shares on the TSXV.
Update Regarding Revocation of Cease Trading Order and Reinstatement to Trading
On January 22, 2021, Kalytera announced that a Failure-to-File Cease Trade Order (“CTO”) that had been issued on June 22, 2020 by the British Columbia Securities Commission (the “BCSC”) and the Ontario Securities Commission (the “OSC”) been revoked. With the revocation of the CTO by the BCSC and the OSC, reinstatement to trading is not automatic on TSXV. The Company had to file a reinstatement submission and undergo a review. The reinstatement review took time due to outstanding filings subject to TSXV approval that had not been previously filed by the Company. The reinstatement review has been completed and trading will be reinstated for the open on Friday, February 26, 2021.
Not Meeting Tier 1 Continued Listing Requirements
The TSXV determined that the Company has not maintained its Tier 1 Continued Listing Requirements. The Company will therefore be transferred from Tier 1 to Tier 2 in conjunction with its reinstatement to trade. Tier 2 is the tier in which the majority of the TSXV’s issuers trade, and Tier 2 issuers are mostly comprised of early-stage companies in all industry sectors.
Next Annual General Meeting of Shareholders
The Company is not in compliance for holding an Annual General Meeting of its Shareholders. The last meeting held was July 26, 2019. The Company will issue a Notice of Meeting no later than April 15, 2021 to hold its next meeting no later than May 31, 2021.
Update Regarding Kalytera’s Program to Develop R-107 for Treatment of Coronavirus and COVID-19 Infection and License Agreement with Salzman Group
As previously announced, on July 16, 2020, Kalytera entered into a License Agreement (the “R-107 License Agreement”) with Salzman Group, Inc. (a Delaware corporation), Salzman Group, Ltd. (an Israeli corporation), and Salzman Group Pty. Ltd. (an Australian corporation), (collectively, the “Salzman Group”), under which Salzman Group granted to Kalytera an exclusive, worldwide license to develop and commercialize R-107 for the treatment of coronavirus and COVID-19 infection.
The R-107 License Agreement obligates the Company to pay a license fee of USD $1.2 million (the “License Fee”) to Salzman Group. From the proceeds of the AUD $1,376,000 R&D refund that the Company received from the Australian Tax Office during Q3 2020, the Company made partial payments of the License Fee in the approximate aggregate amount of USD $600,000. On February 17, 2021, the Company and Salzman Group entered into an Amendment Agreement that modified the terms of the R-107 License Agreement to provide that: (1) the approximate USD $600,000 remaining balance of the License Fee will be paid by the Company to Salzman Group within 180 days following receipt by the Company of an additional R&D refund of approximately AUD $700,000 that the Company expects to receive from the Australian Tax Office in early Q2 2021; and (2) the obligation of the Company to pay to Salzman Group a success fee of 100 million common shares within five business days following approval of the first R-107 product by the FDA has been eliminated and replaced by an obligation of the Company to pay to Salzman Group a success fee of USD $2 million (the “Success Fee”) within five business days following approval of the first R-107 product by the FDA. The amended R-107 License Agreement is pending approval by the TSXV.
Salzman Group, Inc., a drug discovery company located in West Tisbury, MA, is the owner of R-107, a proprietary drug with issued and pending patents in approximately 40 countries, including the U.S., Australia, Brazil, China, Europe, India, Japan, Russia and South Korea.
Under the R-107 License Agreement, the Company was granted a license to manufacture, distribute, import, export, market and sell products for prevention and treatment of coronavirus and COVID-19 infection. A full copy of the R-107 License Agreement, as amended, can be found in the Company’s SEDAR profile.
“Kalytera will develop R-107 as a therapy for coronavirus and COVID-19 infection, as well as a broad-spectrum antiviral drug for the treatment of, and possible prevention of, other viral infections,” stated Robert Farrell, President and CEO of Kalytera. “R-107 is a nitric oxide-releasing compound. There is an extensive body of data demonstrating the ability of nitric oxide to prevent the replication and transmission of various RNA viruses, such as those that cause COVID-19 infection, as well as viruses that cause influenza and the common cold.”
Mr. Farrell continued, “Unlike nitric oxide, which is a gas that must be administered by a trained respiratory therapist using special delivery equipment, R-107 is a liquid that can be easily administered orally in a capsule, or nasally though use of a nasal spray, or by intramuscular injection. Due to its ease of administration, R-107 may overcome the challenges inherent in administration of nitric oxide gas, and transform nitric oxide therapy into a potentially best-of-care treatment for COVID-19 infection, and potentially other viral infections as well.”
Under the terms of the R-107 License Agreement with Salzman Group, Kalytera will pay to Salzman Group the License Fee, milestone payments upon achievement of R-107 developmental milestones, royalties on R-107 net sales and the USD $2 million “Success Fee”. The License Fee, milestone payments, royalties and the Success Fee that Kalytera will pay to Salzman Group under the R-107 License Agreement are as follows:
- License Fee, Milestone Payments and Success Fee:
- The USD $1,200,000 License Fee, plus 130 million shares of Kalytera’s common stock, are to be paid to Salzman Group. Kalytera has paid approximately USD $600,000 of the License Fee, and has agreed with Salzman Group that it will pay the remaining balance of approximately USD $600,000 within 180 days following receipt by the Company of an additional R&D refund of approximately AUD $700,000 that the Company expects to receive from the Australian Tax Office in early Q2 2021. Kalytera and Salzman Group have also agreed that the issuance of 130 million shares of common stock to Salzman Group will also be paid following payment by the Company to the TSXV of all appropriate fees relating to this share issuance.
- USD $500,000 to be paid to Salzman Group upon completion of a Phase 2 clinical study;
- USD $750,000 to be paid to Salznan Group upon completion of a pivotal registration clinical study;
- The Success Fee of USD $2 million upon the first approval of R-107 by the FDA.
- Additional fees of USD $3,000,000 to be paid to Salzman upon each subsequent approval of R-107 by each of the following regulatory entities: FDA, Japanese regulatory agency, and EMEA or MHRA;
- Royalties: Kalytera will pay to Salzman Group royalties of five percent (5%) of the net sales of R-107 in each country in which KAL-1816 is covered by an issued patent.
Professor Salvatore Cuzzocrea, President of the University of Messina and former President of the European Shock Society has read and approved the scientific disclosure in this news release. Professor Cuzzocrea has deep expertise regarding the medical use of nitric oxide and nitric oxide donors, and has published more than 600 papers on nitric oxide. He has conducted research and experiments with nitric oxide and nitric oxide donors since 1994, and worked closely as an advisor with the team that designed and invented R-107.
The Company is not making any express or implied claims that its product has the ability to eliminate, cure, or contain the Covid-19 (or SARS-2 Coronavirus) at this time.
Update Regarding Kalytera’s Program Developing Treatment for Chronic Pain
On March 20, 2018, Kalytera has obtained from Beetlebung Pharma, Ltd., (“BPL”) an exclusive, worldwide license (the “KAL-1816 License agreement”) for a novel, first-in-class molecule that strongly and selectively binds with and activates the alpha3 glycine receptor. Kalytera has designated this molecule KAL-1816. Activation of the alpha3 glycine receptor shuts down pain transmission in inflammatory conditions, such as arthritis, colitis, and sciatica.
KAL-1816 was invented by BPL after two years of medicinal chemistry work, during which dozens of novel molecules were invented and screened. Patents covering this molecule have now been filed in the U.S. and many other jurisdictions.
“Over the past two years, Kalytera has worked with this molecule to demonstrate that KAL-1816 binds with and selectively activates the alpha3 glycine receptor,” stated Robert Farrell, Kalytera’s President and CEO. “The objective of our program has been to develop a potent, oral analgesic for the treatment of pain that will be safe and well tolerated. We believe that KAL-1816 has the potential to achieve these goals, and to become a next generation pain medication. This novel molecule may provide effective pain relief, without the risks of addiction or respiratory suppression that exist with opioid analgesics.”
In preparation for future clinical trials, Kalytera will now advance KAL-1816 into a series of IND-enabling studies to be conducted over the next year. These investigations will include in vivo efficacy studies, pharmacokinetic studies, and safety studies, all of which will be required by the FDA for commencement of a Phase 1 human clinical study in the treatment of pain.
Under the terms of the KAL-1816 License Agreement with BPL, Kalytera will pay to BPL milestone payments upon achievement of KAL-1816 developmental milestones, as well as royalties on KAL-1816 net sales, and a success fee (the “Success Fee”) that will become payable within five-days following FDA approval of KAL-1816. The milestone payments, Success Fee and royalties that Kalytera will pay to BPL under the KAL-1816 License Agreement are as follows:
- Milestone Payments and Success Fee:
USD $25,000 was paid to BPL upon signing of the License Agreement in March 2018;
- USD $200,000 to be paid to BPL upon recruitment of the first subject in a Phase 1a clinical study;
- USD $350,000 to be paid to BPL upon recruitment of the first patient in a Phase 2a clinical study;
- USD $750,000 to be paid to BPL upon recruitment of the first patient in a pivotal registration clinical study;
- USD $3,000,000 to be paid to BPL upon each formal approval of KAL-1816 by each of the following entities: FDA, EMEA or MHRA, and Japan; and
- A Success Fee upon the first approval of KAL-1816 by the FDA of 6,500,000 common shares (the “Success Fee Shares”), plus an additional cash payment equal to the amount, if any, by which (i) the closing price of a Kalytera’s common shares on the TSXV on the date on which such FDA approval is announced multiplied by five percent (5%) of the number of Kalytera’s issued and outstanding common shares as of such date, exceeds (ii) such value multiplied by the number of Success Fee Shares. The issuance of such Success Fee Shares is subject to the approval of the TSXV.
- Royalties: Kalytera will pay to BPL royalties of five percent (5%) of the net sales of KAL-1816 in each country in which KAL-1816 is covered by an issued patent.
- Patents: Kalytera will pay BPL USD $150,000 upon issuance of the first patent in each of the following three jurisdictions: (1) the United States; (2) Japan; and (3) any one of the five major European countries (Germany, France, Great Britain, Spain and Italy).
Update Regarding Debt Owed to Former Shareholders of Talent Biotechs, Ltd.
Kalytera’s wholly owned subsidiary, Kalytera Therapeutics Israel, Ltd. (“Kalytera Israel”) acquired Talent Biotechs Ltd. (“Talent”) in 2017 from the former shareholders of Talent (the “Former Shareholders”), under the terms of a share purchase agreement (the “SPA”) between Kalytera, Kalytera Israel, Talent and the Former Shareholders. Under the terms of the SPA, Kalytera Israel is obligated to make certain milestone payments (the “Milestone Payments”) to the Former Shareholders.
Kalytera Israel failed to pay certain Milestone Payments when they became due under the SPA, and issued a promissory note (the “Note”) in favor of the Former Shareholders evidencing such debt. Kalytera Israel is obligated to pay approximately $3 million to the Former Shareholders under the terms of the Note.
Kalytera Israel is in default under the terms of the SPA and the Note, and has received a formal notice of default from the representative of the Former Shareholders. The obligations of Kalytera Israel under the Note are guaranteed by Talent, and both Kalytera Israel and Talent are parties to a Security Agreement, under which they have secured their obligations under the Note by pledging certain assets to the Former Shareholders as security for the Note (the “Pledged Assets’). The Pledged Assets are the assets of the Company’s program evaluating CBD in the prevention and treatment of GVHD. The Pledged Assets are both tangible and intangible assets, consisting primarily of tangible assets, such as patient blood samples, and intangible assets, such as contract rights, clinical and preclinical data, know how, and intellectual property rights that are held under a license agreement between MOR Research Applications, Ltd. and Talent. The Pledged Assets also include all shares of the Company’s two subsidiaries, Kalytera Israel and Talent.
The Company and the representative of the Former Shareholders are in discussions regarding a contemplated agreement under which Kalytera Israel will transfer ownership of all Pledged Assets, to the Former Shareholders in consideration for the release and discharge by the Former Shareholders of all obligations the Company and its subsidiaries may have to such Former Shareholders, including all obligations under the Note and SPA (the “Discharge Agreement”). If the Company and the representative of the Former Shareholders enter into the Discharge Agreement, the Company will issue a press release at that time providing details regarding the terms of such Discharge Agreement, and such Discharge Agreement will be subject to TSXV approval.
The Company is also considering whether a sale of the GVHD program to another interested party may be a viable solution to the issues surrounding the SPA. If the Company does not complete the sale of its GVHD program prior to the Company’s next annual meeting of shareholders, the Company and the representative of the Former Shareholders have discussed that they will enter into the agreement contemplated in the previous paragraph subject to compliance with applicable laws including TSXV policies and required approvals.
About Kalytera Therapeutics
Kalytera Therapeutics, Inc. is a clinical stage biopharmaceutical company focused on developing and commercializing therapies for patients with significant unmet medical needs.
- Website Home: https://kalytera.co/
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Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release may contain certain forward-looking information and statements (“forward-looking information”) within the meaning of applicable Canadian securities legislation, that are not based on historical fact, including without limitation the commencement or completion of any expected or contemplated financing, the success or extent of any contemplated tax refund or other government funding, the occurrence, timing or success of any application to BARDA, the FDA &/or any other regulatory authority in any jurisdiction whether as currently contemplated or otherwise, or the success of any of the Company’s research & development programs. Statements containing the words such as “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions are forward looking statement containing forward-looking information, which may not occur or occur as currently contemplated. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements in this news release depending on, among other things, the risk that future regulatory requirements may change and the capital markets may not be receptive to any contemplated financing at the relevant time. Kalytera undertakes no obligation to comment on analyses, expectations or statements made by third parties, its securities, or financial or operating results (as applicable). Although Kalytera believes that the expectations reflected in forward-looking information in this press release are reasonable, such forward-looking information has been based on expectations, factors and assumptions concerning future events which may prove to be inaccurate and are subject to numerous risks and uncertainties, certain of which are beyond Kalytera’s control. The forward-looking information contained in this press release is expressly qualified by this cautionary statement and is made as of the date hereof. Kalytera disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
- Robert Farrell
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