CALGARY, Alberta, Feb. 25, 2020 (GLOBE NEWSWIRE) -- Hemostemix Inc. (“Hemostemix” or the “Company”) (TSXV: HEM; OTC: HMTXF) provides the following update:
On February 21, 2020, the Court Queen’s Bench of Alberta (the “Court”), after having heard the concerns raised by the Company with respect to an application by J.M. Wood Investments Ltd (“Wood”) for the issuance of an order appointing a receiver, ordered that: (i) the application of Wood be further adjourned to February 27, 2020; (ii) the Company provide Grant Thornton Limited, as court appointed agent, a copy of Thomas Smeenk’s affidavit and unredacted copies of the exhibits (subscription agreements) no later than 4:00 p.m. EST on February 21, 2020 (which the Company complied with); (iii) provide additional rights to Grant Thornton Limited to prepare a report for the Court by February 27, 2020 to set out the viability and veracity of closing of the proposed financings of the Company by March 2, 2020; and (iv) comment on the ability and viability of the Company to repay Wood in full.
Further to its news release issued in February 10, 2020, the Company wishes to clarify that 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. 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 that both actions are attempts by Wood to prevent the Company from closing its financing announced on January 2, 2020 and to force the Company into receivership. On February 20, 2020 Thomas Smeenk, President and CEO of the Company, filed an affidavit through the Company’s attorney, Allen Dyer Doppelt + Gilchrist, P.A. in Florida, that the dispute should be governed by the Laws of the Province of Alberta and attorn to the venue and jurisdiction of Alberta courts.
PRIVATE PLACEMENT UPDATE
The Company expects to close its financing, as previously announced on January 2, 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 27, 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. The proceeds of the private placement will be used to repay all indebtedness owning to Wood. Please refer to the January 2, 2020 news release for additional terms and conditions of the private placement.
The private placement of convertible debentures announced on February 19, 2020 has been withdrawn.
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.
The Company provides the following chronological update and recap of the events leading up to the application to the Court of Queen’s Bench of Alberta by J.M. Wood Investments Ltd. for an order appointing a receiver and the action filed against the Company by Aspire Health Science, LLC in Orange County, Florida.
On May 3, 2019, the Company issued a news release announcing a $1,000,000 secured convertible debenture financing (“Convertible Debenture”). On May 16, 2019, the Company announced the first closing for proceeds of $525,000, including $500,000 from J.M. Wood Investments Ltd. (“Wood”) and secured by a general security agreement over all assets of the Company, including intellectual property rights over the Company’s stem cell technology. The repayment of principal and interest was due December 31, 2019. The funds were used for general working capital purposes and to fund ongoing clinical trial costs.
In a news release dated August 1, 2019, the Company announced it had secured a demand loan from Wood for up to $2,000,000 and secured by a general security agreement over all assets of the Company, including intellectual property rights over the Company’s stem cell technology (the “Demand Loan”). After September 30, 2019, Wood could provide the Company with at least 60 days’ written notice requiring repayment of the outstanding principal amount of the Demand Loan plus any accrued and unpaid interest.
The Company used those funds to continue the phase 2 clinical trial and for general working capital, however the Company was not successful in raising additional financing or investment to complete the ACP-01 clinic trial and finance operations. Therefore, the Company continued to search for strategic alternatives for financing, licensing or partnering to complete the current phase 2 clinical trial for CLI. In connection with this strategy, the Company entered into discussions with its manufacturing and licensing partner, Aspire Health Science, LLC. (“Aspire”).
With no other alternative funding available to continue the clinical trial, the Company entered into an Amended License Agreement dated September 30, 2019 with Aspire. The Amended License Agreement amended the original License Agreement between the Company and Aspire dated February 15, 2018 and 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.
On October 1, 2019, Wood sent the Company a demand notice for the repayment of all outstanding indebtedness. The demand letter included certain forbearance provisions delaying repayment by up to 120 days, which the Company complied with.
On November 19, 2019, the Company announced that Kyle Makofka resigned as Chief Executive Officer of the Company. Mr. Makofka is currently the President and CEO of Aspire.
Following the reconstitution of the Company’s Board of Directors and management team in December of 2019, the Company provided written notice to Aspire that the Amended License Agreement was rescinded as a result of Aspire’s failure to pay the Company USD $1,000,000 as required under the Amended License Agreement.
On January 2, 2020, the Company announced a non-brokered private placement financing of up to $3,000,000 to repay all indebtedness to Wood.
On January 9, 2020, Wood sent the Company a Notice of Default and Demand for the immediate repayment of $500,000 Convertible Debenture 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 amount owing to Wood is $1,956,180.50 plus interest.
On January 24, 2020, Wood made an application to the Court of Queen’s Bench of Alberta (the “Court”) for the issuance of an order appointing a receiver. The Company responded with a 347 page affidavit including appendices, sworn on January 30, 2020 by David Wood, the Chairman of the Company. On January 31, 2020, the Court granted a consent order to: (i) adjourn the receivership application to February 20, 2020; (ii) appoint Grant Thornton as inspector; and (iii) the costs of the application of January 31, 2020 would only be payable by the Company if the receivership application proceeds on February 20th.
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 Agreement. 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.
On February 21, 2020, the Court, after having heard the concerns raised by the Company, ordered that: (i) the application of Wood be further adjourned to February 27, 2020; (ii) the Company to provide Grant Thornton Limited, as court appointed agent, a copy of Thomas Smeenk’s affidavit and unredacted copies of the exhibits (subscription agreements) no later than 4:00 p.m. EST on February 21, 2020; (iii) provide additional rights to Grant Thornton Limited to prepare a report for the Court by February 27, 2020 to set out the viability and veracity of closing of the proposed private placement by March 2, 2020; and (iv) comment on the ability and viability of the Company to repay Wood in full.
APPOINTMENT TO SCIENTIFIC ADVISORY BOARD
The Company is pleased to announce the appointment of Dr. Pierre Leimgruber, MD, FACC to its Scientific Advisory Board, as a specialist in the prevention and treatment of cardiovascular disease (CVD). Dr. Leimgruber is board-certified in internal medicine, cardiovascular diseases, and interventional cardiology and he has worked for 32 years as an interventional cardiologist, affiliated with four leading Spokane hospitals. Dr. Leimgruber also serves as Clinical Associate Professor of Medicine at the University of Washington School of Medicine in Seattle. Dr. Leimgruber received his medical degree from University of Zurich Medical School and trained with Andreas Gruentzig, MD, the inventor of balloon angioplasty, at Emory University Hospital in Atlanta. Dr. Leimgruber is the author of 26 peer-reviewed research studies published in leading medical journals.
“After performing thousands of angioplasties and stent placements in patients with severe coronary, carotid artery but also patients with PAD and severe/critical limb ischemia , I am excited to be working with the scientific advisory board, to advise Hemostemix’ officers and directors from a science-based, cardiology-practice-based, clinical trial and business development-based perspectives,” said Dr. Leimgruber. “ACP-01’s clinical trial data and open label study data in both critical limb ischemia and heart disease is world class to-date,” he said. “Its medical applications – CLI & PAD, Angina, Ischemic & Dilated Cardiomyopathy - are unmet needs at a global scale,” continued Dr. Leimgruber. “Management, I know, now understands what it is going to take to build a profitable autologous stem cell therapy company,” said Dr. Leimgruber.
“I have known Dr. Leimgruber since 2008, when he was graciously introduced to me by my good friend Roger, patient number 35, and I am delighted to recruit him to the scientific advisory board” said Thomas Smeenk, President. His open communication style and multifaceted-experience-based counsel is going to be a great addition to our SAB and our team” Smeenk said.
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.
Contact: 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, the Company’s stage of development, the ability to complete its current CLI clinical trial, complete a futility analysis and the results of such, 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.