Kalytera Therapeutics, Inc. (TSX VENTURE: KALY and OTCQB: KALTF) (the “Company” or “Kalytera“) today announced that it has entered into an agreement with the former shareholders of Talent Biotechs, Ltd. of Israel (“Talent“) modifying its obligation to make certain payments to such shareholders.
Kalytera acquired its program in the prevention and treatment of graft versus host disease (“GVHD“) in February 2017 through the acquisition of Talent. Under its agreement with the former Talent shareholders, Kalytera is obligated to make certain contingent payments to them upon the achievement of various milestones, including upon issuance of patents by the U.S. Patent and Trademark Office (the “USPTO“).
On April 19, 2018 Kalytera announced that the USPTO had issued U.S. Patent No. 9,889,100 B2 with claims covering the use of cannabidiol (“CBD“) for the treatment of severe and refractory GVHD. Kalytera has exclusive worldwide rights to this issued patent through an Exclusive License Agreement with MOR Research Applications, Ltd. of Israel (“MOR”).
On May 2, 2018, Kalytera announced that the USPTO had issued U.S. Patent No. 9,956,182 with claims covering the use of CBD for the prevention and treatment of acute and chronic forms of GVHD. Kalytera also has exclusive worldwide rights to this issued patent through an Exclusive License Agreement with MOR.
Upon the issuances of these two patents, the Company became obligated to make milestone payments to the former Talent shareholders of USD$2 million with respect to each such patent, or USD$4 million in the aggregate.
Minimum Aggregate Milestone Payment Due on Closing of Offering Reduced from USD$4 Million to USD$1.5 Million
Under the agreement announced today, Kalytera and the former Talent shareholders have agreed that Kalytera may defer a portion of these milestone payments. The agreement specifically provides that upon closing of Kalytera’s current public offering of units (the “Offering”), which Offering is anticipated to close on or about July 31, 2018, Kalytera will make a minimum payment to the former Talent shareholders of USD$1.5 million from the net proceeds of the Offering, rather than the aggregate payment of USD$4 million that is now due.
The agreement further provides that if the net proceeds of the Offering, after commissions, expenses, and the US$1.5 million minimum payment above, are in excess of USD$1 million, then on closing of the Offering that excess will be paid to the former Talent shareholders up to the remaining USD$2.5M balance of the aggregate milestone payment owing. If there is any remaining balance of the aggregate milestone payment that is not paid on closing of the Offering, the debt will be evidenced through a promissory note bearing interest at 8% and maturing July 31, 2019. The note will be secured by the rights of Talent as licensee under the Exclusive License Agreement with MOR.
Kalytera has previously paid USD$50,000 to the former Talent shareholders in consideration for its deferral of the milestone payments to date. As an additional payment in consideration for the deferral announced today, subject to the approval of the TSX Venture Exchange, Kalytera will issue to the former Talent shareholders units having a deemed aggregate price of US$1 million, where each unit will be composed of one common share and one half of one common share purchase warrant and will have terms and conditions and pricing substantially similar to those of the units to be issued in the Offering. The amount of such payment will be reduced proportionately depending on the amount that the total payment to the former Talent shareholders at closing of the Offering exceeds USD$1.5 million. If the former Talent shareholders are paid in full at closing of the Offering, then there will be no such additional payment.
The former Talent shareholders also have the ability to elect, by August 8, 2018, whether to receive the above noted additional payment in cash, instead of units, in which case, the amount to be paid will be reduced by 50%, with such amount to be added to the balance of the promissory note.
Kalytera Therapeutics, Inc. is pioneering the development of CBD therapeutics. Through its proven leadership, drug development expertise, and intellectual property portfolio, Kalytera seeks to establish a leading position in the development of CBD medicines for a range of important unmet medical needs, with an initial focus on acute graft versus host disease and treatment of acute and chronic pain.
President and CEO
Phone: (888) 861-2008
Colwell Capital Corp.
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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 in respect of its product candidate pipeline, planned clinical trials, regulatory approval prospects, intellectual property objectives and other statements containing the words “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions. 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 depending on, among other things, the risk that future clinical studies may not proceed as expected or may produce unfavourable results, the risk that Kalytera may not be able to exercise the options described above in the event it is not able to fund the development of the optioned technology, the risk that development and commercialization of the formulations described herein may not be completed as expected, the risk that such formulations may not exhibit the expected mechanism of action and may not have the desired safety and efficacy profile, and other regulatory and market risks. 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.