Press Release

Kalytera Announces Closing of Final Tranche of Private Placement of Common Shares and Common Share Purchase Warrants and Amendments to Secured Convertible Debenture Units

By October 30, 2019 No Comments

Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTCQB: KALTF) (the “Company” or “Kalytera”) is pleased to announce that it has closed an additional and final tranche of its private placement, for 2,811,111 common shares of the Company and 2,811,111 common share purchase warrants for aggregate gross proceeds of approximately C$126,500. Industrial Alliance Securities Inc. will receive compensation in connection with this tranche of the private placement consisting of a cash commission equal to C$10,120 and will be issued 224,889 warrants bearing the same terms as those issued in the offering. All securities issued in this tranche are subject to a hold period expiring on February 26, 2020 in accordance with applicable securities laws. The offering remains subject to final TSX Venture Exchange (“TSXV”) approval.

The additional closing was part of a larger private placement transaction (the “Private Placement”) under which the Company issued units, each consisting of one common share and one common share purchase warrant, at a price of C$0.045 per unit, pursuant to the grant of a discretionary waiver by the TSXV of its C$0.05 minimum pricing requirement. As previously disclosed, Mr. Farrell, the Company’s Chief Executive Officer, and Mr. Erickson, a member of the Company’s board of directors, invested at a price of C$0.05 per unit, instead of the C$0.045 per unit price made available to all other investors.

Each common share purchase warrant will have an exercise price of C$0.05, and a term of 36 months from the date of issuance. Beginning on the date that is four months plus one day following the applicable issuance date, Kalytera may accelerate the expiry date of such common share purchase warrants to the date that is 30 days following notice of such acceleration should the daily volume weighted average trading price of Kalytera’s common shares be greater than C$1.00 for any 10 consecutive trading days on the TSXV.

As previously disclosed in more detail in the Company’s press release dated September 11, 2019, proceeds of the Private Placement will be used to fund preparatory work for initiation of the Company’s Phase 3 clinical registration study for its lead product development program evaluating cannabidiol (“CBD”) for the prevention of acute graft versus host disease (“GVHD”). Proceeds will also be used to augment the Company’s working capital as it enters into discussions with potential corporate partners for its GVHD program.

The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and were not offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Amendments to Secured Convertible Debenture

Kalytera has also entered into an agreement to amend the terms of the convertible debenture units issued to a single investor in a private placement on March 6, 2019. The convertible debentures units consist of $787,500 principal amount of 10.0% secured convertible debenture (the “Convertible Debenture”) maturing on March 6, 2021 and 12,115,384 common share purchase warrants (the “Debenture Warrants”) initially expiring on March 6, 2021.

Under the amendments, the conversion price of the Convertible Debenture and the exercise price of the Debenture Warrants shall be reduced to C$0.05 from C$0.065. The Convertible Debenture has also been amended to provide that quarterly interest payments may only be made in cash, and to provide that 10% of the aggregate net proceeds received from any new equity or debt financing undertaken by Kalytera shall be used towards the repayment of principal and any outstanding interest under the Convertible Debenture. In addition, the holder of the Convertible Debenture may require that the Convertible Debenture be repaid in full if any equity or debt financing undertaken by Kalytera involves the issuance of securities at price of less than C$0.04 per common share. The expiry date of the Debenture Warrants was changed to March 6, 2020, provided that if the closing price of Kalytera’s common shares on the TSXV exceeds the new exercise price of the Debenture Warrants by 25% or more for any ten consecutive trading days, then the Debenture Warrants will expire on the 30th business day calculated from the day that is the seventh calendar day after the last day of the above-mentioned ten day trading period.

The amendments to the Convertible Debenture and the Debenture Warrants are subject to TSXV approval.

These amendments are intended to keep the Convertible Debenture in good standing pending the short-term completion of the Company’s previously disclosed negotiations with the former shareholders of Talent Biotechs Ltd. (“Talent”) to extend the maturity date of a secured promissory note held by them from July 31, 2019 to December 15, 2019. While Kalytera believes the negotiation of this extension is reasonably likely to be completed within the timeframe required under the Convertible Debenture amendments, there can be no assurance that such an extension will be obtained. The secured promissory note (which bears a principal amount of approximately US$2 million and an interest rate of 8% per annum) was issued by a subsidiary of the Company with an effective date of August 8, 2018 to evidence certain outstanding contingent payment obligations owed to the former shareholders of Talent pursuant the share purchase agreement under which the Company acquired Talent and its GVHD program.

About Kalytera Therapeutics

Kalytera Therapeutics, Inc. is pioneering the development of cannabidiol (“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 GVHD and treatment of acute and chronic pain.

Kalytera Company Contact

Robert Farrell
President and CEO
Phone: (888) 861-2008

Cautionary Statements

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 in respect of final TSXV approval of the Private Placement, TSXV approval of the amendments to the Convertible Debenture and the Debenture Warrants, the satisfactory completion of negotiations with Talent, the extension of the maturity date of the secured promissory note with the former shareholders of Talent, the future good standing of the Convertible Debenture, the Company’s 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 required regulatory or TSXV approvals may not be obtained, and the risk that negotiations with the former Talent shareholders may not be successful and may not be completed on terms that are favourable to Kalytera or at all. 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 are expressly qualified by this cautionary statement and are 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.