Exclusive License is Part of Larger Transaction to Acquire Salzman Group
SAN FRANCISCO, July 16, 2020 — Kalytera Therapeutics, Inc. (TSX VENTURE: KLY and OTC: KALTF) (the “Company” or “Kalytera“) today announced that it has entered into a License Agreement (the “License Agreement”) with Salzman Group, Inc. (“Salzman Group”), under which Salzman Group has granted to Kalytera an exclusive, worldwide license to develop and commercialize Salzman Group’s proprietary drug, R-107, for the treatment of coronavirus and COVID-19 infection.
The License Agreement is the first step in a larger transaction in which Kalytera will acquire Salzman Group (the “Acquisition”). The Acquisition is expected to close later this year, subject to customary conditions including TSX Venture Exchange (the “TSXV”) and shareholder approvals.
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. In addition to coronavirus and COVID-19 infection, Salzman Group is also developing R-107 for treatment of chlorine inhalation lung injury, and pulmonary arterial hypertension.
R-107 is a liquid prodrug of nitric oxide. Based on the clinical evidence of nitric oxide’s antiviral activity against strains of coronavirus, Kalytera will develop R-107 for treatment of coronavirus and COVID-19 infection.
Following completion of a Phase 1 clinical safety and pharmacokinetic study, Kalytera intends to apply for funding from the U.S. Department of Health and Human Services for the costs of Phase 2 and Phase 3 clinical studies of R-107 in coronavirus and COVID-19 infection.
Kalytera expects the Phase 1 clinical safety and pharmacokinetic study to be completed this year.
Under the terms of the License Agreement, Kalytera will pay a license fee to Salzman Group of 130 million Kalytera common shares.
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 by the prescribed filing deadlines its annual financial statements for the year ending December 31, 2019, and the accompanying Management’s Discussion and Analysis and certifications, (the “Filings”). Except for the partial revocation order granted for the Company’s ongoing private placement (as disclosed in the Company‘s press release of July 15, 2020), the FFCTO prohibits share issuances by the Company (including any issuance to Salzman Group) unless a full revocation is granted by the BCSC (and any other commission in a jurisdiction where the securities of the Company may be issued). The Company is working with its auditors, Ernst & Young, to complete the Filings, and anticipates that final approval and posting of the Filings on www.sedar.com will be completed soon. Upon filing of the Filings, the Company will apply to have the FFCTO fully revoked, at which time after the FFCTO has been lifted the Company will issue the license fee of 130 million Kalytera common shares to Salzman Group.
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 coronavirus and COVID-19 infection, with several clinical trials being initiated to evaluate inhalable nitric oxide in this disease. R-107 is potentially more effective, efficient and less expensive than inhalable nitric oxide.
R-107 is a proprietary and novel molecule that acts as a nitric oxide donor. Nitric oxide normally exists in a gaseous state, and is approved 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
There is currently a critical global shortage of devices for delivery of inhalable nitric oxide, and, even if such devices were to become available, administration of gaseous nitric oxide would be complex and labor-intensive, substantially limiting the number of patients that could be treated at any one time.
The Company believes that its R-107 drug will allow for multiple patients to be treated simultaneously, in a potentially safe and less labor-intensive manner, without the need for special delivery equipment.
The Company is not making any express or implied claims that its product has the ability to eliminate, cure, or contain the Covid-19 (or SARS-2 Coronavirus) at this time.
“Given the data demonstrating the antiviral activity of nitric oxide against coronaviruses3, as well as the even greater body of data demonstrating the potential activity of nitric oxide in treatment of viral-associated lung disease4, Kalytera and Salzman Group are working together to advance R-107 into Phase 1 clinical testing,” stated Robert Farrell, President and CEO of Kalytera. “We plan to submit an Investigational New Drug Application (IND) to the Australian Therapeutic Goods Administration (TGA) and the U.S Food and Drug Authority (FDA) in support of a first-in-human Phase 1 clinical trial. We are planning to carry out this Phase 1 safety and pharmacokinetic study of intramuscular R-107 using a single dose escalation design in 32 healthy middle-aged volunteers at CMAX, a clinical contract research organization located at Royal Adelaide Hospital in Australia. The study will be initiated during the third quarter, and we expect it to be completed during fourth quarter this year.”
Professor Salvatore Cuzzocrea, President of the University of Messina and former President of the European Shock Society is working with Salzman Group and Kalytera, and has read and approved of the scientific disclosure in this news release. Professor Cuzzocrea has deep expertise regarding the medical use of nitric oxide and nitric oxide donors, and has published more than 600 papers on nitric oxide. He has conducted research and experiments with nitric oxide and nitric oxide donors since 1994, and worked closely as an advisor with the Salzman Group team that designed and invented R-107.
The Acquisition of Salzman Group
Kalytera announced, on May 19, 2020, that it had signed a Letter of Intent dated May 12, 2020 (the “LOI”) to acquire Salzman Group.
The TSX Venture Exchange (the “TSXV”) reviewed Kalytera’s submission relating to the acquisition of Salzman Group (the “Acquisition Transaction”), and 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 first part of the Acquisition Transaction will consist of the grant by Salzman Group to Kalytera of an exclusive, worldwide license to develop and commercialize R-107 for treatment of coronavirus and COVID-19 infection. 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. The issuance of these shares is subject to the FFCTO being fully revoked to allow Kalytera to issue these shares to the Salzman Group. As mentioned, Kalytera will apply to have the FFCTO removed as soon as it makes the Filings.
° The second part of the Acquisition Transaction will close following the issuance of additional common shares to the shareholders of Salzman Group, which will bring their aggregate ownership of Kalytera’s common shares to approximately 49.9%, as of the date of such issuance (the “Additional Shares”). In consideration for the issuance of the 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 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 are delighted to have completed the first part of the Acquisition Transaction, by obtaining from Salzman Group the exclusive, worldwide license to develop R-107 for treatment of coronavirus and COVID-19 infection. 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,” stated Robert Farrell, President and CEO of Kalytera. ”We expect the shareholder meeting to occur in September, and, assuming that the disinterested shareholders approve the Acquisition Transaction, we will close the Acquisition at that time.
Kalytera and Salzman Group to Collaborate on Development of R-107 for Coronavirus and COVID-19 Infection Prior to Completion of the Acquisition
Kalytera and Salzman Group have also entered into a Sponsored Research and Development Agreement (the “R&D Agreement”), under which the parties will collaborate on the clinical development, regulatory approval, manufacturing and commercialization of R-107 for treatment of coronavirus and COVID-19 infection. Under the R&D Agreement, Salzman Group will fund all costs for the Phase 1 clinical safety and pharmacokinetic study, which will evaluate the safety of R-107 in 32 subjects.
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.
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 (including with respect of the FFCTO and the granting of any partial or full revocation orders for it), intellectual property objectives and other statements containing the words “believes”, “anticipates”, “plans”, “intends”, “will”, “should”, “expects”, “continue”, “estimate”, “forecasts” and other similar expressions. 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 results. 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. 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.
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
3 Akerstrom S et. Al. Nitric oxide inhibits the Replication Cycle of Severe Acute Respiratory Syndrome Coronavirus. J Virol 2005; 79(3):1966-9.
4 Nitric Oxide Investigated as COVID-19 Treatment