SAN FRANCISCO, CA and TORONTO, ON — (January 12, 2021) – Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTC: KALTF) (the “Company” or “Kalytera“) today provided the following information to bring shareholders up to date with respect of its activities.
As previously announced, on July 16, 2020, Kalytera entered into a License Agreement (the “License Agreement”) with Salzman Group, Inc. (“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.
Salzman Group, Inc. (“Salzman Group”), a drug discovery company located in West Tisbury, MA, is the owner of R-107, a proprietary drug with issued and pending composition of matter and method of use patents in approximately 40 countries, including the U.S., Australia, Brazil, China, Europe, India, Japan, Russia and South Korea. As discussed below, clinical studies have not commenced with respect to R-107 and R-107 does not have regulatory approval for use in any country.
The License Agreement has now been filed with SEDAR. The License Agreement initially was meant to be part of the larger contemplated transaction in which the Company would acquire Salzman Group. The Company will not proceed with the acquisition of Salzman Group. Instead, the company will focus its resources on the development of R-107 for the treatment of coronavirus and COVID-19 infection under the License Agreement.
Kalytera Will Not Proceed with Acquisition of Salzman Group at This Time
On May 19, 2020, Kalytera announced that it had signed a Letter of Intent dated May 12, 2020 (the “LOI”) to acquire Salzman Group. At that time, a valuable asset of Salzman Group was its contract with the Biomedical Advanced Research and Development Authority (BARDA), a division of the U.S. Department of Health and Human Services. Under this contract, BARDA awarded Salzman Group USD $15.9 million to develop R-107 as a treatment for chlorine inhalation lung injury (“CILI”). An additional USD $69.9 million could have been released to Salzman Group over the next 36 months, as developmental milestones were achieved. Under GAAP, these U.S. government funds would have been recognized as contract revenues when received over that period, and it was anticipated that Salzman Group would recognize net operating profits of approximately USD $1.4 million per year from these contract revenues. However, on September 16, 2020, Salzman Group was informed that BARDA was terminating the BARDA Contract and diverting its funding under the BARDA Contract, and all similar contracts, to support projects for prevention of COVID-19 infection. The Company was not informed directly of this from BARDA, but learned about this afterward from Salzman Group.
Following termination of the BARDA Contract, on about September 28, 2020 Kalytera determined that it was no longer in the best interests of the Company to go forward with the acquisition of the Salzman Group. Instead, the Company will proceed to develop R-107 under the Company’s exclusive world-wide license for the development and commercialization of R-107 for the treatment of COVID-19 infection.
R-107 is a nitric oxide releasing compound. As of the date of this press release, there has been compelling new data demonstrating that nitric oxide achieved viral clearance in severe and critical COVID-19 patients. Based on these data,Company has determined that its best use of resources will be in the development of R-107 for treatment of coronavirus and COVID-19 infection under the License Agreement.
By not proceeding with the acquisition of Salzman Group at this time, the Company will avoid the substantial dilution that would have resulted from the issuance of additional shares to the shareholders of Salzman Group.
Next Steps in the Development and Commercialization of R-107 for Treatment of COVID-19 Infection
Kalytera plans to submit an Investigational New Drug Application (IND) to the Australian Therapeutic Goods Administration (TGA) and the U.S Food and Drug Administration (FDA) in support of a first-in-human Phase 1 clinical study. This Phase 1 safety and pharmacokinetic study of intramuscular R-107 will utilize a single dose escalation design in 32 healthy middle-aged volunteers at CMAX, a clinical contract research organization located at Royal Adelaide Hospital in Australia. As is always the case with clinical studies, there is a possibility that the Phase 1 clinical study may not proceed as expected or may produce unfavorable results.
Following completion of the Phase 1 study, Kalytera intends to apply for funding from the U.S. Department of Health and Human Services for the further development of R-107 in coronavirus and COVID-19 infection. If awarded, this funding would support the significant financing required for completion of the required Phase 2 and Phase 3 clinical trials in patients with COVID-19 infection. However, there is no guarantee that the Company will be able to obtain such funding from the U.S. Department of Health and Human Services, in which case the Company will need to seek such significant funding from other sources, including possible equity or debt financings to conduct research, product testing and applications for regulatory approvals as needed.
Before the Company will be able to apply for regulatory approvals for R-107, the Company must complete all required clinical trials. There is no assurance that the completion of such clinical trials and such regulatory approvals will occur in a timely manner or at all, and, in any event, the commercialization of R-107 as a treatment for coronavirus and COVID-19 infection is not be expected to occur in the near term.
There are various risks associated with the development and commercialization of R-107 for treatment of coronavirus and COVID-19 infection including: (a) there can be no assurance of the success of any proposed research, development, and commercialization of any new product; (b) the adverse effect that any competitive or alternative treatment or preventative product might have on the proposed development and commercialization of R-107; (c) whether the Company will be able to secure the required funding for its proposed activities with respect to R-107; and (d) whether the Company will be able to secure the required regulatory approvals for R-107.
Professor Salvatore Cuzzocrea, President of the University of Messina and former President of the European Shock Society is working with Kalytera on this program. 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 Salzman Group 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.
Summary of Previously Announced & Closed Private Placement
On July 22, 2020 the Company closed in escrow it’s previously announced non-brokered private placement (the “Private Placement”) of units comprised of common shares (“Shares”) and one half common share purchase warrants (“Warrants”) in the capital of the Company. The Company confirms that it received final acceptance for the Private Placement on July 24, 2020, and completed escrow closing and post-closing matters, culminating in a final raised amount of gross proceeds of CDN $309,430.50 from the issuance of 20,628,700 shares and 10,314,350 warrants.
Each unit had a purchase price of $0.015 per unit. Each full common share purchase warrant will have an exercise price of CDN $0.05, and a term of 24 months. At any time on or after the date that is 4 months from the closing date, if the daily volume weighted average trading price of the common shares on the TSX Venture Exchange (the “TSXV”) equals or exceeds $0.10 CAD for a period of at least 10 consecutive trading days, the Company shall be entitled to accelerate the expiration date of the Warrants to the date that is 30 days from the date that notice of such acceleration is given. From and after the new accelerated expiration date, no Warrant may be exercised, and all unexercised Warrants shall be void. The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended or any U.S. state securities laws, and any securities issued to US Persons are restricted securities subject to an indefinite hold period unless traded in compliance with applicable exemptions. The securities under the Private Placement are also subject to a four month and a day hold from the date of issuance of the securities starting from July 22, 2020 under Canadian securities laws.
The Company paid a cash commission of 8% of the gross proceeds raised and closed in respect of the offering to Echelon Wealth Partners Inc. (“Echelon”) with respect of the funds raised by it, and broker’s warrants to this finder, exercisable within 30 months following the relevant closing date, to acquire in aggregate that number of common shares which is equal to 8% of the number of units sold under the offering with respect of the funds raised by it, which warrants expiry 30 months from issuance (closing date of July 22, 2020) and are exercisable at $0.05 per warrant. Accordingly, Echelon received a cash finder fee of $20,000.04 and 1,333,336 broker warrants. Except for the mentioned commission and warrants to Echelon, no bonus, finder’s fee, commission, agent’s option, or similar compensation, whether in cash or securities, has been paid or is payable in connection with the Private Placement.
The proceeds from the placement were used to pay auditor and accounting fees, director & officer insurance premiums and other accounts payable.
Status of Trading Halt
On June 22, 2020, the British Columbia Securities Commission (the “BCSC”) issued a Failure-to-File Cease Trade Order against the Company (the “FFCTO“) that was reciprocated by the Ontario Securities Commission (“OSC”) due to the Company’s failure to file by the prescribed filing deadlines its annual financial statements for the year ending December 31, 2019, and the accompanying Management’s Discussion and Analysis and certifications. As a result, the TSXV also suspended the trading of the Company’s common shares. The Company filed its audited financial statements for 2019, the quarterly financial statements for Q1 and Q2 2020, and the accompanying Management’s Discussion and Analysis and certifications for all three periods (the “Filings”) in late October and early November 2020, and applied to the BCSC and the OSC in early November to have the FFCTO fully revoked. The Company has also paid all required fees and responded to all comments and questions from the BCSC and OSC, and anticipates that the FFCTO will be fully revoked shortly. The Company thanks shareholders for their patience as the Company works through the commissions’ review process
About Kalytera Therapeutics
Kalytera Therapeutics, Inc. (“Kalytera“) is committed to developing new treatments for a variety of diseases and disorders, by discovering, developing, manufacturing and delivering innovative human therapeutics. Kalytera focuses on areas of unmet medical need, and leverages its expertise to find solutions that will improve health outcomes and dramatically improve people’s lives.
- Website Home: https://kalytera.co/
- News and Insights: https://kalytera.co/news/
- Investors: https://kalytera.co/investors/
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 (including with respect of the FFCTO and the granting of any partial or full revocation orders for it, and the development, potential commercialization and potential distribution of R-107 by the Company), 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 unfavorable results. In particular: there is no guarantee that positive results from industry and academic groups regarding R-107 will translate into the Company being successful in commercializing R-107 or any product(s) derived from it; it may be the case that other competing products or services may be superior to R-107 or enter the marketplace before the Company can distribute and commercialize R-107; the distribution of any drug, including R-107, is subject to regulatory approvals, and there is no guarantee that the Company may secure the required approvals (or secure them in time) to successfully commercialize or distribute R-107; and the Company may need additional funds to be able to successfully commercialize R-107. 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
Mass General study shows the benefits of inhaled nitric oxide therapy for pregnant patients with severe and critical COVID-19: https://www.massgeneral.org/news/press-release/nitric-oxide-benefit-pregnant-covid-patients