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CALGARY, Alberta, Feb. 27, 2020 (GLOBE NEWSWIRE) — Hemostemix Inc. (“Hemostemix” or the “Company”) (TSXV: HEM; OTC: HMTXF) provides the following update:
Further to the Company’s press release dated February 25, 2020, the Company confirms it will be appearing in the Court Queen’s Bench of Alberta (the “Court”) on February 27, 2020 at 1PM MST to consider the report to be provided by Grant Thornton Limited (“Grant Thornton”), as court appointed agent, in regards to the viability and veracity of closing of the proposed financings of the Company by March 2, 2020 and comment on the ability and viability of the Company to repay amounts owing to J.M Wood Investments Ltd. (“Wood”) in full. The Company confirms it provided Grant Thornton with unredacted copies of subscription agreements required pursuant to the February 21, 2020 Court order.
This Court proceeding is further to Wood’s application to the Court for the issuance of an order appointing a receiver on January 24, 2020, the January 31, 2020 Consent Order and the February 21, 2020 Court order. The Company initially received a demand letter from Wood on October 1, 2019 in regards to US$1,100,000 (Cdn$1,456,140.63) advanced pursuant to the July 31, 2019 loan agreement between Wood and the Company (the “Demand Loan”). The demand letter included certain forbearance provisions delaying repayment by up to 120 days, which the Company complied with. On January 9, 2020, Wood sent the Company a Notice of Default and Demand for the immediate repayment of the May 15, 2019 $500,000 Convertible Debenture issued to Wood and $1,172,175.33 Demand Loan plus 12% interest. The Company disputes the effective dates and principal amounts owing of the Notice of Default and Demand. The Company believes the total principal amounts owing to Wood is $1,956,180.50 plus interest. The Company’s press release dated February 25, 2020 provides additional disclosure of the demand letters provided by Wood and recap of the events leading to the receivership application, Court proceedings, Court orders, and appointment of Grant Thornton.
PRIVATE PLACEMENT UPDATE
The Company expects to complete a first closing of its unit financing (the “Financing”), as previously announced on January 2, 2020 and February 25, 2020, consisting of up to 300 million units at one cent per unit for gross proceeds of up to $3 million on or about February 28, 2020, subject to receiving TSX Venture Exchange approval, which is expected shortly. Each unit will comprise of one common share of the Company and one share purchase warrant. Each warrant will entitle the holder to acquire one additional common share in the capital of the Company at a price of five cents per warrant, for a period of one year from the date the units are issued. As previously disclosed on January 2, 2020, the Financing is being conducted in reliance on the Exchange’s temporary relief measures set out in the Exchange’s bulletin of April 7, 2014, (the “Temporary Relief Measures”. In order to comply with the Temporary Relief Measures, the closing of the Financing is also subject to providing to the Exchange with written confirmation from subscribers and shareholders holding not less than 50% of Company’s issued and outstanding shares (after giving effect to the Financing) that they will vote in favour of the proposed ten for one share consolidation (the “Consolidation”). The net proceeds of the private placement will be used to repay all indebtedness owning to Wood ($2,089,000 to be paid into Court), legal expenses ($30,000), audit expense ($30,000), costs for a statistician to perform an interim clinical trial analysis and report ($50,000), pay certain accounts payable ($50,000) and the balance for unallocated working capital. Please refer to the January 2, 2020 news release for additional terms and conditions of the private placement. Insiders of the Company intend to subscribe for units under the Financing. Any subsequent closings must be completed on or before April 4, 2020.
LITIGATION UPDATE
Management of the Company believe that Jed Wood and J.M. Wood Investments Ltd. are using the application for the appointment of a receiver to obtain a collateral advantage in litigation and using the proceedings to prevent the Company from closing the private placement, which is a necessary prerequisite to repaying the outstanding debt.
Further to the Company’s press release dated February 25, 2020, the Company provides the following additional chronological update and recap of the events leading up to the action filed against the Company by Aspire Health Science, LLC (“Aspire”) in Orange County, Florida.
The Company and Aspire entered into an original license agreement dated February 15, 2018 (the “Original License”) which granted Aspire a limited license for the Company’s ACP-01 technology in certain jurisdictions. The Company also entered into a Contract Manufacturing Agreement with Aspire dated February 15, 2018 (the “Manufacturing Agreement”) for the manufacturing of the Company’s ACP-01 product for the clinical trial and for research and development. The Manufacturing Agreement was terminated on October 31, 2019.
As previously announced, the Company and Aspire entered into an amended license agreement dated September 30, 2019 (the “Amended License”) which included, among other amendments, the payment of USD$1,000,000 to the Company within 30 business days from execution of the Amended License Agreement.
Following the reconstitution of the Company’s Board of Directors and management team in December of 2019, on December 5, 2019 the Company provided written notice to Aspire that the Amended License was rescinded as a result of Aspire’s failure to pay the Company USD $1,000,000 as required under the Amended License, as announced in the Company’s press release dated December 11, 2019.
Aspire alleges that they paid a total of USD$1,000,000 to Hemostemix creditors on December 12, 2019 in satisfaction of the Amended License payment, which Aspire noted in their January 28, 2020 action. The Company disputes these purported payments as satisfaction of the license fee and reaffirms its position that it had rescinded the Amended License on December 5, 2019 as Aspire did not pay the Company the USD$1,000,000 payment as required under the Amended License.
On February 3, 2020, the Company was served with a claim filed by Aspire in the Circuit Court of the 9th Judicial Circuit in and for Orange County, Florida regarding the dispute settlement mechanism under the Amended License. On February 13, 2020, Aspire issued a press release that it filed an amended motion for a speedy hearing in relation to the previously announced legal proceeding initiated against the Company. Management of the Company believes this is merely another attempt to prevent the Company from closing its financing and forcing the Company into receivership. On February 20, 2020 Thomas Smeenk, on behalf of the Company, filed an affidavit through the Company’s attorney, Allen Dyer Doppelt + Gilchrist, P.A. in Florida and the Company filed a motion to dismiss this action.
Subsequent to closing the first tranche of the Financing and full payment to Wood to discharge the current security interests in favour of Wood, the Company intends to:
- Set a record date for an Annual and Special Meeting of Shareholders within 60 days of the first closing, which includes a resolution to approve a consolidation of the Company’s common shares on a ten old for one new basis;
- Complete a second closing of the Financing on or before April 4, 2020;
- Appoint a clinical trial manager or chief scientific officer to take over management of the current Phase II clinical trial and complete a midpoint analysis of the data, including assessing a futility analysis of the data; and
- Appoint a Chief Financial Officer and search for a permanent Chief Executive Officer.
The Company intends to hire a clinical trial manager or chief scientific officer to take over management of its Phase II clinical trial from Aspire. The Company will also need to engage a new manufacturing partner should the Company wish to enroll additional patients in its trial. There is no certainty that the Company will be able to identify a new manufacturing partner nor enter into an agreement on terms suitable to the Company, or at all. To-date, the Company has requested that Aspire provide all clinical trial data and material to the Company. However, Aspire has not provided such information and continued to manage the clinical trial pursuant to the Amended License even though the Company rescinded such Amended License on December 5, 2019. Aspire’s press release dated February 13, 2020 also announced that it had suspended patient recruitment for the Hemostemix clinical trial due to lack of certainty regarding the Amended License until the outstanding legal matters are sufficiently resolved. The Company intends to aggressively support its position that the Amended License was rescinded and that Aspire must return all Company clinical trial material immediately. The Company intends to appoint a new Chief Financial Officer shortly after the full payment to Wood and discharge of the current security interests. The Company is continuing its search for a new CEO and will provide a further update on management appointments when available.
ABOUT HEMOSTEMIX
Hemostemix is a publicly traded autologous stem cell therapy company, founded in 2003. A winner of the World Economic Forum Technology Pioneer Award, the Company developed and is commercializing its lead product ACP-01 for the treatment of CLI, PAD, Angina, Ischemic Cardiomyopathy, Dilated Cardiomyopathy and other conditions of ischemia. ACP-01 has been used to treat over 300 patients, and it is the subject of a randomized, placebo-controlled, double blind trial of its safety and efficacy in patients with advanced critical limb ischemia who have exhausted all other options to save their limb from amputation.
On October 21, 2019, the Company announced the results from its Phase II CLI trial abstract presentation entitled “Autologous Stem Cell Treatment for CLI Patients with No Revascularization Options: An Update of the Hemostemix ACP-01 Trial With 4.5 Year Followup” which noted healing of ulcers and resolution of ischemic rest pain occurred in 83% of patients, with outcomes maintained for up to 4.5 years.
The Company owns 91 patents across five patent families titled: Regulating Stem Cells, In Vitro Techniques for use with Stem Cells, Production from Blood of Cells of Neural Lineage, and Automated Cell Therapy. For more information, please visit www.hemostemix.com.
Thomas Smeenk, President, CEO & Founder
Suite 1150, 707 – 7th Avenue S.W., Calgary, Alberta T2P 3H6, 905-580-4170
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This release may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “potential,” and similar expressions, or that events or conditions “will,” “would,” “may,” “could,” or “should” occur. Although Hemostemix believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Forward-looking statements are based on the beliefs, estimates, and opinions of Hemostemix management on the date such statements were made. By their nature forward-looking statements are subject to known and unknown risks, uncertainties, and other factors which may cause actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the Company’s ability to fund operations and access the capital required to continue operations, close the $3,000,000 unit financing, the appointment of a clinical trial manager or chief scientific officer and other management including a CFO and CEO, the Company’s stage of development, the ability to take over and complete its current CLI clinical trial, the ability to engage a new manufacturing company to manufacture ACP-01, complete an interim clinical trial review and report and futility analysis and the results of such, the success of litigation involving Aspire, future clinical trials and results, long-term capital requirements and future developments in the Company’s markets and the markets in which it expects to compete, risks associated with its strategic alliances and the impact of entering new markets on the Company’s operations. Each factor should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. Hemostemix expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise. Additional information identifying risks and uncertainties are contained in the Company’s filing with the Canadian securities regulators, which filings are available at www.sedar.com.
