ISOTECHNIKA REPORTS DEVELOPMENT, DISTRIBUTION AND LICENCING AGREEMENT AND PRIVATE PLACEMENT FINANCING WITH ILJIN LIFE SCIENCE CO., LTD., AMENDMENT OF ARRANGEMENTS WITH PALADIN LABS INC., AND RELATED MATTERS
EDMONTON, Nov. 16 /CNW/ - Isotechnika Pharma Inc. (TSX:ISA) ("Isotechnika" or the "Corporation") today announced that it has entered into a Development, Distribution and License Agreement (the "DDL") with ILJIN Life Science Co., Ltd ("ILJIN") for the further clinical and commercial development of voclosporin for use in transplant indications applicable to voclosporin. Under the DDL in exchange for ILJIN funding the Corporation to perform a single Phase 3 clinical trial in kidney transplantation through a combination of a license fee of $5 million USD and the purchase, in three tranches, of Common Shares from treasury (the "Private Placement"), the Corporation has granted to ILJIN an exclusive license to voclosporin for transplant and autoimmune indications for the US and other regions outside of Canada, Israel, South Africa, Europe, China, Taiwan and Hong Kong. The Corporation retains the rights over voclosporin in Europe for future development and commercialization. The Corporation will also use reasonable commercial efforts to facilitate the appointment to the board of directors of the Corporation (the "Board") of two (2) nominees of ILJIN. The DDL becomes effective on the date on which all conditions and approvals required under the DDL (including shareholder and regulatory approval, including the approval of the Toronto Stock Exchange (the "TSX"), of the Private Placement) have been satisfied (the "Effective Date").
Pursuant to various agreements between the Corporation and Paladin Labs Inc. ("Paladin"), Paladin holds the patents and patent applications relating to voclosporin, third party manufacturing and supply contracts, the right to develop voclosporin in certain countries and the right to supply the Corporation with its required bulk voclosporin. In order to support the proposed transaction with ILJIN, Paladin has agreed to amend those agreements (the "Paladin Amendments") in order to transfer to the Corporation certain ownership and rights in and to all voclosporin patents and patent applications and Paladin held voclosporin know-how and improvements to voclosporin as of the Effective Date. Paladin has also entered into an agreement with ILJIN to sell 12,500,000 Common Shares of Isotechnika to ILJIN at closing.
ILJIN will purchase 90,700,000 Common Shares of the Corporation in three tranches as per the table below.
|Private Placement Tranche||Closing Date||Number of Shares||Subscription Amount||Price per Share|
|First||30 business days after the Effective Date||11,500,000||$2,375,000 USD||$0.207 USD|
|Second||On or before the first anniversary of the Effective Date||39,600,000||$8,500,000 USD||$0.215 USD|
|Third||On or before the second anniversary of the Effective Date||39,600,000||$9,000,000 USD||$0.227 USD|
Because greater than 25% of the current outstanding Common Shares will be issued pursuant to the Private Placement, the rules of the TSX require that the Corporation obtain Shareholder approval of the Private Placement and the Corporation is calling and plans to hold a special meeting (the "Meeting") of shareholders as soon as practically possible, which meeting is expected to be held on, or about, December 15, 2010.
"The additional funding by ILJIN for the voclosporin program in transplantation and in particular the initiation of a global Phase 3 clinical trial in transplant is a significant milestone in the future commercialization of voclosporin," stated Dr. Robert Foster, President and CEO. "We are very excited to have ILJIN Life Science Co., Ltd. as a partner. ILJIN Life Science Co., Ltd. is a member company of the ILJIN Group, a global conglomerate based in Seoul, South Korea, which last year had approximately US$2 billion of revenue."
The Board reviewed the DDL and Private Placement transactions and concluded that the proposed transaction with ILJIN provides:
the means to advance the development of voclosporin through a Phase 3
trial in transplantation;
a unique opportunity for the Corporation to actively obtain 50% of net
profit for the sale of voclosporin in the US, and 50% of net profit for
the sale of voclosporin in other countries in which ILJIN directly
commercializes voclosporin, which is significantly greater than
standard royalty rates of 10-15% of net profit; and
- a viable opportunity for the stakeholders in the Corporation to better realize the full value of the Corporation's voclosporin asset.
The Board has approved the DDL, the Private Placement and the Paladin Amendments and will be recommending that shareholders approve the transactions with ILJIN and vote in favour of the Private Placement.
"We are very pleased to announce our investment in Isotechnika and the transplant field," said Daniel S. Park, Executive Vice President of ILJIN Life Science Co., Ltd. and ILJIN Group. "We believe this is a significant opportunity for ILJIN to expand its business in the life sciences field."
In addition the Board has resolved to amend the by-laws of the Corporation to lower the minimum ratio of directors of the Corporation that have to be resident Canadians to both assist in accommodating its commitment to ILJIN to appoint two nominees to the Board and to match the existing residency requirements set forth in the Business Corporations Act (Alberta) (the "ABCA").
At the Meeting, shareholders will be asked to confirm the amendment to the by-laws made by the directors to require that only one quarter (1/4) of the directors be resident Canadians as is the minimum requirement in the ABCA and that the by-laws of the Corporation be amended to remove the requirement that the Board shall not transact business at a meeting, other than filling a vacancy in the Board, unless at least half of the directors present are resident Canadians.
As well shareholders will be asked to vote in favour of the election of ILJIN nominees at the Meeting and such other nominees as may be required in order for the Board to comply with the residency requirements of the ABCA, all of which will be set forth in the Information Circular that will be sent to shareholders for purposes of the Meeting.
The Corporation is pleased to announce that Dr. Jing Lou, Co-founder, Chief Executive Officer and a director of Isotechnika's partner, 3SBio, Inc., has joined the Board effective November 9, 2010 filling the vacancy created by the earlier resignation of David MacNaughtan. The Corporation also announces that Nancy Harrison has resigned from the Board effective November 9, 2010. The Corporation and the Board thank her for her service as a director.
About ILJIN Group
Information on ILJIN Group can be found at www.iljin.co.kr.
About Isotechnika Pharma Inc.
Isotechnika Pharma Inc. is a biopharmaceutical company focused on the discovery and development of immunomodulating therapeutics that are designed to offer advantages over other currently available treatments. There is a significant unmet medical need in the treatment of both solid organ transplantation and autoimmune disease. It is estimated that the market potential will be $3 billion annually in sales for calcineurin inhibitors such as voclosporin in 2010.
We seek Safe Harbor.
For further information:
|DR. ROBERT FOSTER |
President & CEO
780-487-1600 (Ext 247)
780-487-1600 (Ext 226)