Kalytera Provides Update on Arrangement with Former Shareholders of Talent Biotechs

By August 24, 2018Press Release

Kalytera Therapeutics, Inc. (TSX VENTURE: KALY and OTCQB:KALTF) (the “Company” or “Kalytera”) today provided an update on the previously announced arrangements reached with the former shareholders of Talent Biotechs Ltd. of Israel (“Talent”) modifying the Company’s obligation to make certain payment 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 the purchase 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”). As previously announced, two such patents issued earlier this year, and Kalytera then became obligated to make milestone payments to the former Talent shareholders of US$2 million with respect to each such patent, or US$4 million in the aggregate. Kalytera has exclusive worldwide rights to these issued patents through an Exclusive License Agreement with MOR Research Applications, Ltd. of Israel (“MOR”).

The previously announced arrangement with the former shareholders of Talent required that upon closing of Kalytera’s public offering of units (the “Offering”), Kalytera would make a minimum payment to the former Talent shareholders of US$1.5 million, plus, if the net proceeds of the Offering exceeded US$1 million (after deducting the US$1.5 million payment and commissions an expenses incurred in the Offering), then that excess would be paid to the former Talent shareholders up to the balance owing.

Based on the above, in connection with closing of the Offering (including the exercise of the over-allotment option thereunder) Kalytera has now paid the former Talent shareholders the amount of US$2,011,380. While an additional US$226,675 would have been payable to the former Talent shareholders from the proceeds of the Offering based on the initial arrangement, under an agreed modification to the arrangement, Kalytera was permitted to continue to defer payment of that amount in order to leave Kalytera with additional cash proceeds to fund its operations.

The current balance owing to the former Talent shareholders is now US$1,988,620, which amount will be evidenced by a promissory note maturing July 31, 2019 and which will bear interest at the rate of 8% per annum. The promissory note will be secured by the rights of Talent as licensee under the Exclusive License Agreement with MOR.

Pursuant to the previously announced deferral arrangement with the former Talent shareholders, such former holders are entitled to an additional payment in connection with the deferral, which will be in the amount of CDN$1,038,218.73. The former Talent shareholders have now confirmed their election to receive such payment in units that will have terms and conditions and pricing substantially similar to the units that were issued in the Offering. The amount owing will be extinguished through the issuance of 9,438,352 units. Consistent with the units issued in the Offering, each unit will have a deemed issue price of C$0.11 and will consist of one common share and one half of one common share purchase warrant. Each whole common share purchase warrant will have an exercise price of C$0.155 per common share. The issuance of these units is subject to approval by the TSX Venture Exchange (“TSXV”).

The Company will issue the units, which will be subject to a four month hold period, as soon as practicable upon receipt of approval of the TSXV.

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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 Contacts

Robert Farrell
President and CEO
Phone: (888) 861-2008
Email: info@kalytera.co

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 applicable regulatory approvals will not be obtained or the ris k that future clinical studies may not proceed as expected or may produce unfavourable results. 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.