News ReleaseISOTECHNIKA REPORTS DEVELOPMENT,DISTRIBUTION AND LICENCING AGREEMENT AND PRIVATE PLACEMENT FINANCINGWITH ILJIN LIFE SCIENCE CO., LTD., AMENDMENT OF ARRANGEMENTS WITHPALADIN LABS INC., AND RELATED MATTERS
11/16/2010 8:40 AM - Canada NewsWire
EDMONTON, Nov. 16, 2010 (Canada NewsWire via COMTEX News Network) --
IsotechnikaPharma Inc. (TSX:ISA) ("Isotechnika" or the "Corporation") todayannounced that it has entered into a Development, Distribution andLicense Agreement (the "DDL") with ILJIN Life Science Co., Ltd ("ILJIN")for the further clinical and commercial development of voclosporin foruse in transplant indications applicable to voclosporin. Under theDDL in exchange for ILJIN funding the Corporation to perform a singlePhase 3 clinical trial in kidney transplantation through a combinationof a license fee of $5 million USD and the purchase, in three tranches,of Common Shares from treasury (the "Private Placement"), theCorporation has granted to ILJIN an exclusive license to voclosporinfor transplant and autoimmune indications for the US and other regionsoutside of Canada, Israel, South Africa, Europe, China, Taiwan and HongKong. The Corporation retains the rights over voclosporin in Europefor future development and commercialization. The Corporation willalso use reasonable commercial efforts to facilitate the appointment tothe board of directors of the Corporation (the "Board") of two (2)nominees of ILJIN. The DDL becomes effective on the date on which allconditions and approvals required under the DDL (including shareholderand regulatory approval, including the approval of the Toronto StockExchange (the "TSX"), of the Private Placement) have been satisfied (the"Effective Date").
Pursuant to various agreements between theCorporation and Paladin Labs Inc. ("Paladin"), Paladin holds thepatents and patent applications relating to voclosporin, third partymanufacturing and supply contracts, the right to develop voclosporin incertain countries and the right to supply the Corporation with itsrequired bulk voclosporin. In order to support the proposedtransaction with ILJIN, Paladin has agreed to amend those agreements(the "Paladin Amendments") in order to transfer to the Corporationcertain ownership and rights in and to all voclosporin patents andpatent applications and Paladin held voclosporin know-how andimprovements to voclosporin as of the Effective Date. Paladin has alsoentered into an agreement with ILJIN to sell 12,500,000 Common Sharesof 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 Number of Subscription
Placement Closing Date Shares Amount Price per Share
Tranche
30 business
First days after the 11,500,000 $2,375,000 USD
.207 USD
Effective Date
On or before
the first
Second anniversary of 39,600,000 $8,500,000 USD
.215 USD
the Effective
Date
Third On or before 39,600,000 $9,000,000 USD
.227 USD
the second
anniversary of
the Effective
Date
Becausegreater than 25% of the current outstanding Common Shares will beissued pursuant to the Private Placement, the rules of the TSX requirethat the Corporation obtain Shareholder approval of the PrivatePlacement and the Corporation is calling and plans to hold a specialmeeting (the "Meeting") of shareholders as soon as practically possible,which meeting is expected to be held on, or about, December 15, 2010.
"Theadditional funding by ILJIN for the voclosporin program intransplantation and in particular the initiation of a global Phase 3clinical trial in transplant is a significant milestone in the futurecommercialization of voclosporin," stated Dr. Robert Foster, Presidentand CEO. "We are very excited to have ILJIN Life Science Co., Ltd. as apartner. ILJIN Life Science Co., Ltd. is a member company of theILJIN Group, a global conglomerate based in Seoul, South Korea, whichlast 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:
1. the means to advance the development of voclosporin through a
Phase 3 trial in transplantation;
2. 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
3. a viable opportunity for the stakeholders in the Corporation to
better realize the full value of the Corporation's voclosporin
asset.
TheBoard has approved the DDL, the Private Placement and the PaladinAmendments and will be recommending that shareholders approve thetransactions with ILJIN and vote in favour of the Private Placement.
"Weare very pleased to announce our investment in Isotechnika and thetransplant field," said Daniel S. Park, Executive Vice President ofILJIN Life Science Co., Ltd. and ILJIN Group. "We believe this is asignificant opportunity for ILJIN to expand its business in the lifesciences field."
Board Composition
In addition the Boardhas resolved to amend the by-laws of the Corporation to lower theminimum ratio of directors of the Corporation that have to be residentCanadians to both assist in accommodating its commitment to ILJIN toappoint two nominees to the Board and to match the existing residencyrequirements set forth in the Business Corporations Act (Alberta) (the"ABCA").
At the Meeting, shareholders will be asked to confirmthe amendment to the by-laws made by the directors to require that onlyone quarter (1/4) of the directors be resident Canadians as is theminimum requirement in the ABCA and that the by-laws of the Corporationbe amended to remove the requirement that the Board shall not transactbusiness at a meeting, other than filling a vacancy in the Board,unless at least half of the directors present are resident Canadians.
Aswell shareholders will be asked to vote in favour of the election ofILJIN nominees at the Meeting and such other nominees as may berequired in order for the Board to comply with the residencyrequirements of the ABCA, all of which will be set forth in theInformation Circular that will be sent to shareholders for purposes ofthe Meeting.
The Corporation is pleased to announce that Dr. JingLou, Co-founder, Chief Executive Officer and a director ofIsotechnika's partner, 3SBio, Inc., has joined the Board effectiveNovember 9, 2010 filling the vacancy created by the earlier resignationof David MacNaughtan. The Corporation also announces that NancyHarrison has resigned from the Board effective November 9, 2010. TheCorporation 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.
IsotechnikaPharma Inc. is a biopharmaceutical company focused on the discoveryand development of immunomodulating therapeutics that are designed tooffer advantages over other currently available treatments. There is asignificant unmet medical need in the treatment of both solid organtransplantation and autoimmune disease. It is estimated that the marketpotential will be $3 billion annually in sales for calcineurininhibitors such as voclosporin in 2010.
Isotechnika Pharma Inc.is a publicly traded company on the Toronto Stock Exchange under thesymbol "ISA". More information on Isotechnika Pharma can be found atwww.isotechnika.com or www.SEDAR.com.
We seek Safe Harbor.
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SOURCE: Isotechnika Pharma Inc.