Press Release

Kalytera Announces Update to Private Placement

By September 11, 2019 No Comments

Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTCQB: KALTF) (the “Company” or “Kalytera”) today announced that it is updating the terms of its private placement previously announced on August 21, 2019 (the “Private Placement”). The Company proposes to raise up to approximately CDN $1.5 million (USD $1.14 million) pursuant to the Private Placement through the issuance of units, each consisting of one common share and one common share purchase warrant pursuant to the Private Placement, at a price of C$0.045 per unit, pursuant to the grant of a discretionary waiver by the TSX Venture Exchange (the “TSXV”) of its C$0.05 minimum pricing requirement.

Use of Proceeds

As previously disclosed, the 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”), including costs of approximately USD$200,000 for preparation of regulatory filings in Israel and Australia required for initiation of the Phase 3 clinical registration study in these jurisdictions. Proceeds will also be used for general corporate purposes, including a partial repayment of approximately USD$200,000 under an outstanding promissory note (which will be increased to USD$400,000, in the event the maximum offering amount is raised), as well as up to approximately USD $540,000 (less the amount of any commissions payable to the Agent as described below) for other general and administrative expenses, including legal and accounting fees that the Company estimates it will incur as it enters into discussions with potential corporate partners for its GVHD program.

Although the Company intends to use the proceeds of the Private Placement as described above, the actual allocation of proceeds may vary from the uses set forth above, depending on future operations or unforeseen events or opportunities. If the Private Placement is not fully subscribed, the Company will apply the proceeds of the Private Placement to the above uses in priority and in such proportions as the board of directors and management of the Company determine is in the best interests of the Company.

Existing Shareholder Participation

Subject to applicable securities laws, the Private Placement will be open, for a limited time ending on September 18, 2019, to all existing shareholders who held the Company’s common shares on September 9, 2019 (the “Record Date”), including pursuant to the “existing shareholder exemption” available under the securities laws of most jurisdictions in Canada. Under the “existing shareholder exemption”, investors will generally be limited to an investment of no more than C$15,000, unless the investor has obtained advice from a registered investment dealer regarding the suitability of the investment. Investors may also participate without such limitations if they qualify as an “accredited investor” under applicable securities laws or satisfy other available exemptions. Each purchaser will be required to complete a subscription agreement which confirms, among other things, the availability of an exemption from the prospectus requirements of applicable securities laws in respect of the sale of units to such purchaser. Each purchaser will be subject to a minimum subscription amount of C$1,000 in order to participate in the Private Placement. In the event of over-subscription, the Company will determine allocations between shareholders at its sole discretion.

Existing shareholders as of the Record Date who are interested in participating in the Private Placement should contact the Company at: Potential investors should indicate the amount of their intended investment in either Canadian or U.S. dollars, as well as the email address at which the Company should contact them to provide further details regarding the Private Placement and relevant transaction documentation.

In order to participate in the Private Placement, existing shareholders must notify the Company by no later than 5:00 p.m. Eastern time on Wednesday, September 18, 2019 (the “Notification Deadline”).

Insider Participation

Bob Farrell, the Company’s Chief Executive Officer, will invest at least C$98,647.50 in the Private Placement, while Ron Erickson, a member of the Company’s board of directors, will invest at least C$26,306.00. Mr. Farrell and Mr. Erickson, and any other non-arm’s length party that participates in the Private Placement, will invest at a price of C$0.05 per unit, instead of the C$0.045 per unit price that will be made available to all other investors. The participation of insiders in the Private Placement constitutes a “related party transaction” as defined in Multilateral Instrument 61-101 — Protection of Minority Security Holders in Special Transactions and Policy 5.9 of the TSX Venture Exchange (the “TSXV”). The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of such regulations, as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction, insofar as it involves related parties, will exceed 25% of the Company’s market capitalization. The Private Placement will be approved by those independent directors that are not participating in the transaction.

Additional Terms

The Company will issue up to 33,333,333 units, with each unit consisting of one common share and one common share purchase warrant. The common share purchase warrant will have an exercise price of CDN $0.05, and a term of 36 months. Completion of the Private Placement is subject to customary conditions, including the approval of the TSXV, and all other necessary regulatory approvals. The first tranche of the Private Placement is expected to close on or about September 13, 2019. Eligible existing shareholders as of the Record Date who make a request to the Company to participate in the Private Placement may be required to complete their investment transaction at a second closing to be completed as soon as possible following the first tranche closing and the September 18, 2019 Notification Deadline. There is no aggregate minimum offering amount that must be raised in order for the Company to complete closings pursuant to the Private Placement.

Certain aspects of the Private Placement are being facilitated by Alere Financial Partners, a division of Cova Capital Partners LLC (the “Agent”). The Agent is an arm’s length party to the Company. In connection with the services to be performed by the Agent, the Agent is entitled to receive a cash commission equal to 8% of the aggregate gross proceeds of the Private Placement attributable to investors introduced to the Company by the Agent. In addition, the Agent will also be granted a number of non-transferable broker warrants (“Broker Warrants”) to acquire that number of common shares equal to 8% of the aggregate number of common shares sold in the Private Placement to investors introduced to the Company by the Agent. The Agent will not receive any cash commission or Broker Warrants based on investments made by management and members of the Company’s board of directors, or by any other investors who contact the Company directly and were not introduced to the Company by the Agent.

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 are not being 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.

All of the securities sold pursuant to the Private Placement, (including any common shares issuable upon exercise of the common share purchase warrants) will be subject to a four month hold period which will expire four months and one day from the closing date of the applicable tranche of the Private Placement.

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 graft versus host disease (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 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, and the risk that required regulatory approvals (including in respect of the Private Placement) may not be obtained. 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.