Press Release

Kalytera Provides Updates Regarding Annual Filings, the Acquisition of Salzman Group, and the Company’s Private Placement

By June 30, 2020 No Comments

Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTC: KALTF) (the “Company” or “Kalytera”) today provided updates regarding the following three matters: (1) the delay in filing of its annual financial statements for the year ending December 31, 2019 and the accompanying Management’s Discussion and Analysis and related CEO and CFO certifications (collectively, the “Annual Filings”); (2) the acquisition of Salzman Group, Inc.; and (3) the Company’s previously announced private placement of units.

Annual Filings

The Company is working with its auditors, Ernst & Young, to complete the Annual Filings. The Company anticipates that final approval and posting of the Annual Filings on www.sedar.com will be completed soon. As a consequence of the delay in the preparation of the Annual Filings, the Company also announces that the filing of its financial statements for the three-month period ended March 31, 2020, and the accompanying management discussion and analysis together with the related certifications (collectively, the “Interim Filings”) will also be delayed and not released as required. The Company expects the Interim Filings to be filed shortly after the Annual Filings are filed.

On June 22, 2020, the British Columbia Securities Commission (the “BCSC”) issued a Failure-to-File Cease Trade Order against the Company (the “FFCTO”) due to the Company’s failure to file the Annual Filings by the prescribed filing deadline. The order prohibits trading of the Company’s securities through an exchange, securities issuances by the Company, and private transactions unless a full or partial revocation is granted by the BCSC (and any other commission in a jurisdiction where the securities of the Company may be issued and the FFCTO is in effect, such as the Ontario Securities Commission) (“OSC”). The order takes automatic effect in each jurisdiction of Canada that has a statutory reciprocal order provision, subject to the terms of the local securities legislation, and in the Company’s case, the order has taken effect in British Columbia and Ontario. The Company is a reporting issuer in Alberta and it expects that the Alberta Securities Commission may implement a similar order shortly. The FFCTO currently remains in place.

Upon filing the Annual Filings, the Company will apply to have the FFCTO fully revoked.

Despite the FFCTO, a beneficial security holder of the Company who is not, and was not at the date of the FFCTO, an insider or control person of the Company, may sell securities of the Company acquired before the date of the order (June 22, 2020) if both of the following apply:

The sale is made through a “foreign organized regulated market”, as defined in section 1.1 of the Universal Market Integrity Rules of the Investment Industry Regulatory Organization of Canada; and

  1. The sale is made through an investment dealer registered in a jurisdiction of Canada in accordance with applicable securities legislation.
  2. Security holders wishing to use this exception should consult their broker, dealer, or other financial advisor prior to making a trade of the Company’s securities.

The Transaction with Salzman Group

Kalytera announced, on May 19, 2020, that it had signed a Letter of Intent (the “LOI”) to acquire Salzman Group, Inc., a privately held company located in West Tisbury, MA (“Salzman Group”). Salzman Group 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. Salzman Group is developing R-107 for treatment of coronavirus and COVID-19 infection, as well as for treatment of chlorine gas inhalation lung injury, and pulmonary arterial hypertension.

The TSX Venture Exchange (the “TSXV”) has reviewed Kalytera’s submission relating to the acquisition of Salzman Group (the “Acquisition Transaction”), and has informed the Company that the TSXV’s approval of the Acquisition Transaction is subject to routine conditions, as well as the following specific conditions:

The Acquisition Transaction will be completed in two parts:

  • Upon closing of the first part of the Acquisition Transaction, Kalytera will acquire from Salzman Group an exclusive, worldwide license to develop and commercialize R-107 for treatment of coronavirus and COVID-19. As consideration for the license, Kalytera will issue to the shareholders of Salzman Group 130 million shares of Kalytera’s common stock. Upon issuance of these shares to the shareholders of Salzman Group, such shareholders will own, in the aggregate, approximately 19% of Kalytera’s common shares.
  • Upon closing of the second part of the Acquisition Transaction, Kalytera will issue to the shareholders of Salzman Group an additional 394 million shares of Kalytera’s common stock, which will bring their aggregate ownership of Kalytera’s common shares to approximately 49.9%. In consideration for the issuance of these additional shares, the Salzman Group shareholders will transfer all shares of Salzman Group to Kalytera. The second part of the Acquisition Transaction is subject to routine conditions, as well as the following specific conditions:
    • The Company must obtain the approval of disinterested shareholders for the issuance of the additional 394 million common shares to the shareholders of Salzman Group;
    • Upon closing of the second part of the Acquisition Transaction, the Company must have sufficient working capital and financial resources for a six month period; and
    • Salzman Group and the Company must provide to the TSXV Salzman Group’s audited financial statements for 2018 and 2019.

“We expect to complete the first part of the Acquisition Transaction by July 15,” stated Robert Farrell, President and CEO of Kalytera. Mr. Farrell continued, “We will need approximately 10 weeks to complete the second part of the transaction, which will give Salzman Group time to complete the audits of their financial statements for 2018 and 2019, and will give Kalytera time to prepare for and schedule a special meeting of shareholders. We expect the shareholder meeting to occur in mid-September, and, assuming that the disinterested shareholders approve the Acquisition Transaction, we will close the transaction at that time.”

Mr. Farrell went on to state, “We will be delighted to acquire, in the first part of the Acquisition Transaction, the exclusive, worldwide license to develop R-107 for treatment of coronavirus and COVID-19. R-107 is a liquid prodrug of nitric oxide, and within the past two months there has been an increased focus on the potential of nitric oxide for treatment of COVID-19 infection, with several clinical trials being initiated to evaluate inhalable nitric oxide in this disease. We believe that R-107 is potentially more effective, efficient and less expensive than inhalable nitric oxide.”

R-107 is a novel molecule that acts as a nitric oxide donor. Nitric oxide normally exists in a gaseous state, and is approved as such by the FDA for administration to patients via inhalation therapy requiring a special type of delivery device, and complex administration by trained respiratory therapists. R-107, in contrast, is a liquid that is readily administered by a single intramuscular injection. In addition to its clear advantages in simplicity of administration, R-107 does not lose its potency after prolonged periods of administration. In contrast, other nitric oxide donors in liquid form, such as nitroglycerin, rapidly induce tolerance and lose biological activity after more than a single dose. Accordingly, R-107 is poised to be the first liquid nitric oxide donor that is easy and inexpensive to administer and provides sustained and biologically effective delivery.

Gaseous nitric oxide has shown clinical evidence of antiviral activity against strains of coronavirus. For example, inhaled nitric oxide has demonstrated an inhibitory effect on the replication of the SARS virus (“SARS-CoV”).1 The SARS virus is a coronavirus. Inhalable nitric oxide is being evaluated in a Phase 2 clinical study sponsored by Massachusetts General Hospital in severe acute respiratory syndrome in COVID-19.2

Respiratory viruses, such as SARS-CoV and COVID-19, can cause acute respiratory distress syndrome (“ARDS”), in which fluid leaks into the lungs, making breathing difficult or impossible. The prognosis with COVID-19 can be poor if the patient develops respiratory disease. R-107 will be developed for treatment of COVID-19 infection, and, because there are no existing therapies or vaccines to effectively treat or prevent COVID-19, it is anticipated that the FDA will allow an expedited clinical development pathway for R-107 in this indication.

The Company is not making any express or implied claims that R-107 has the ability to eliminate, cure, or contain the Covid-19 (or SARS-2 Coronavirus) at this time.

Private Placement Offering

With respect to the contemplated private placement offering of units of the Company that was previously announced, the Company has applied to the BCSC and OSC for a partial revocation order allowing the commencement and closing of the Private Placement after the grant of the partial revocation orders.

Kalytera will offer up to approximately CDN $450,000 of units at a price of CDN $0.015 per unit (the“Private Placement”). Each unit will consist of one common share and one-half of one common share purchase warrant. Each full common share purchase warrant will have an exercise price of CDN $0.05, and a term of 24 months. Completion of the Private Placement is subject to customary conditions, including the approval of the TSXV, and all other necessary regulatory approvals.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State 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 and a day hold period which will expire four months and one day from the date of closing of the Private Placement.

Net proceeds of the Private Placement will be used for payment of approximately a total of CAD $450,000 for audit and accounting fees, and payment of legal fees, insurance premiums and other general and administrative expenses that are currently due.

The Company confirms that there is no other material information concerning the affairs of the Company that has not been previously generally disclosed.

Initiation of Private Placement

Kalytera has applied to the BCSC and OSC for a partial revocation order to allow the completion and closing of the Private Placement after the grant of the orders. Kalytera will also apply this week with the TSXV for approval of the Private Placement.

Upon receipt of these approvals, Kalytera will initiate the Private Placement.

References

  1. Akerstrom S et. Al. Nitric oxide inhibits the Replication Cycle of Severe Acute Respiratory Syndrome Coronavirus. J Virol 2005; 79(3):1966-9.
  2. ClinicalTrials.gov Identifier: NCT04306393

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.

Kalytera Company Contact

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. In particular, this press release contains such forward-looking information regarding the acquisition of Salzman Group, related or proposed research and development activities of Kalytera, the Private Placement, contemplated orders by the relevant securities commissions, and each of the foregoing’s possible effects on the business and operations of Kalytera, which events and effects might or might not occur as currently contemplated by Kalytera. 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; acquisition of Salzman Group might not be completed (including the Company not receiving final acceptance for its completion) or completed on terms currently disclosed; the Private Placement might not complete or complete as currently planned, and any funds that may be raised under it may be insufficient to carry out the activities for which they are intended for or any other activity; and even if the Private Placement fully completes as planned the proposed activities for which they are intended for and any other activity of the Company might not be completed as currently planned due to economic, business and other factors, some of which are beyond the control of the Company . 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. With respect of Kalytera’s press release of May 19, 2020, readers should read the disclaimers and other cautionary information in that news release. 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.