Hemosol (NASDAQ:HMSL)
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Hemosol Completes Cascade Technology Transfer and Announces
Financings to Raise $13.4 Million
TORONTO, March 31 /PRNewswire-FirstCall/ -- Hemosol Corp. (NASDAQ:HMSLNASDAQ:
TSX:NASDAQ:HML) ("Hemosol") today announced that it has successfully
implemented the novel Cascade technology for the extraction of valuable
therapeutic plasma proteins at a 30-litre scale. Hemosol has met or exceeded
yield expectations and demonstrated significant improvement over existing
manufacturing methods. The achievement of these milestones will allow Hemosol
to move to clinical scale production later in the year.
Hemosol also announced several key developments related to financing its
growth, including agreements for financing transactions to raise aggregate
gross proceeds of approximately $13.4 million, the extension of MDS Inc.'s
guarantee of Hemosol's $20 million credit facility and the amendment of the
Cascade license agreement that will see ProMetic Biosciences Inc. ("ProMetic")
accept a combination of cash and common shares of Hemosol ("Common Shares") as
part of the licensing fee.
Cascade Technology Transfer Complete
Hemosol's successful scale-up to the 30-litre pilot scale followed completion
of the four-litre development scale and engineering runs earlier this year. In
these preliminary stages, Hemosol achieved significantly higher protein yields
compared to current methods. By achieving pilot scale, Hemosol has established
a foundation to build toward clinical scale production by the end of the third
quarter of 2005. Once clinical scale is reached, Investigational New Drug
applications related to the three initial lead proteins will be prepared and
filed with the U.S. Food and Drug Administration ("FDA"), followed by clinical
development activity and full commercial scale-up of the Cascade process.
Following the successful completion of clinical trials, New Drug Applications
will be filed with the FDA. Upon regulatory approval of the first product,
commercial production could begin.
Details of Financings
Hemosol has entered into a securities purchase agreement (the "Securities
Purchase Agreement") providing for the issuance, on a private placement basis,
of a secured convertible note (the "Note") in the principal amount of US$5
million to Laurus Master Fund, Ltd. ("Laurus"). The Note is secured by a second
charge over all of Hemosol's assets, will have a term of three years and a
conversion price of US$0.69, subject to adjustment. The Note will bear interest
at a rate equal to prime plus 2% and principal repayment will not commence
until the tenth month of the term. Interest and principal may be paid in Common
Shares if certain conditions are met and the rate of interest will be decreased
in stages if the Common Shares appreciate to specified levels. The Securities
Purchase Agreement also contemplates the issuance to Laurus of a warrant of
Hemosol with a term of five years which will entitle Laurus to purchase
2,729,122 Common Shares at an exercise price of US$0.86 per Common Share as to
54% and US$1.04 per Common Share as to the remaining 46%.
Hemosol has also entered into subscription agreements with purchasers providing
for the issuance, on a private placement basis, of an aggregate of 10,948,731
special warrants of Hemosol (the "Special Warrants") at a price of $0.67 per
Special Warrant, raising aggregate gross proceeds of approximately $13.4
million. Each Special Warrant will be exercisable into one Common Share and one
common share purchase warrant (a "Warrant"). Each Warrant will entitle the
holder to purchase one Common Share at an exercise price of $1 for a period of
five years following the closing of the transaction. Hemosol has engaged Life
Science Group Inc. ("LSG") and Loewen, Ondaatje, McCutcheon Limited ("LOM" and,
together with LSG, the "Agents") as placement agents in connection with the
financings.
In order to direct its current resources to advance efforts to commercialize
products using the Cascade, Hemosol and ProMetic have amended the Cascade
license agreement. The amendment sees the $4 million cash license fee payment,
which is due to ProMetic as a result of the successful implementation of the
Cascade process at 30-litre scale, replaced with (a) a cash payment of $1
million and (b) the issuance to ProMetic of 3,488,372 Common Shares within 15
days of the closing of the private placements.
In conjunction with the proposed private placements, Hemosol has entered into a
memorandum of understanding with MDS Inc. ("MDS"). MDS will extend the term of
its guarantee (the "MDS Guarantee") of Hemosol LP's $20 million credit facility
from June 20, 2005 up to June 20, 2007, in connection with the extension of
such credit facility from May 25, 2005 up to May 25, 2007. The credit facility
is to be increased by $1 million on a temporary basis. Any amounts drawn down
under this temporary increase will be re-paid at closing from the proceeds of
the financings. As consideration for the extension of the MDS Guarantee,
Hemosol will issue to MDS a warrant to purchase up to 2.75 million Common
Shares at an exercise price of $0.84 per share and with a term of five years
from the date of issuance. One half of the warrants issued to MDS will vest
immediately upon issuance and the remaining one half will vest in equal
portions on the 20th day of each calendar month, commencing on June 20, 2005
and ending on May 20, 2007, or such earlier date as the MDS Guarantee is
terminated.
In connection with its services as placement agent to Hemosol with respect to
the Note offering, LSG will receive special broker's warrants to acquire,
without additional consideration, Warrants to purchase 72,464 Common Shares. As
well, the Agents will receive, as partial compensation for their services in
connection with the Special Warrant offering, special broker's warrants
entitling the Agents to acquire in the aggregate, without additional
consideration, that number of compensation options equal to 5% of the number of
Special Warrants sold pursuant to the Special Warrant offering and each
compensation option will entitle the holder to purchase one Common Share and
one Warrant at a price of $0.67 for the same period that the Warrants are
exercisable.
As the aggregate number of Common Shares issuable in connection with the
transactions discussed above will exceed the maximum number of securities
issuable without security holder approval under the rules of the Toronto Stock
Exchange (the "TSX"), Hemosol intends to rely on an exemption from the security
holder approval requirements of the TSX Company Manual on the basis of its
serious financial difficulty. The above-mentioned transactions have been
considered by a special committee (the "Special Committee") of independent
directors of Hemosol who are free from any interest in the transactions and are
unrelated to any of the parties involved in the transactions. The Special
Committee has determined that the transactions are reasonable in the
circumstances of Hemosol and are designed to improve Hemosol's financial
position, and has recommended that Hemosol make application to the TSX for an
exemption from the security holder requirements of the TSX Company Manual. On
the basis of the recommendations of the Special Committee, the board of
directors of Hemosol has determined that Hemosol is in serious financial
difficulty, that the transactions are designed to improve Hemosol's financial
situation and are reasonable in the circumstances of Hemosol, and has
authorized Hemosol to make the application to the TSX. All of the transactions
described above are subject to customary conditions, including TSX approval.
The closings of the Note offering, the Special Warrant offering and the
extension of the MDS Guarantee are each conditional on the others and are
expected to occur on or about April 7, 2005. The acceleration of the closings
of these transactions is reasonable and necessary in the circumstances as a
result of Hemosol being in serious financial difficulty.
This press release does not constitute an offer or invitation to subscribe for
or purchase any securities in the United States. The securities offered have
not been and will not be registered under the United States Securities Act of
1933, as amended and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
About Hemosol
Hemosol is a biopharmaceutical company focused on the development and
manufacturing of biologics, particularly blood-related proteins. Hemosol has a
broad range of novel therapeutic products in development, including oxygen
therapeutics and protein-based therapeutics to treat certain infectious
diseases, cancers and anemia.
For more information visit Hemosol's website at http://www.hemosol.com/.
The Common Shares are listed on the NASDAQ Stock Market under the trading
symbol "HMSL" and on the TSX under the trading symbol "HML".
Certain statements concerning Hemosol's future prospects are "forward- looking
statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and other applicable securities legislation.
There can be no assurances that future results will be achieved, and actual
results could differ materially from forecasts and estimates. Important factors
that could cause actual results to differ materially from forecasts and
estimates include, but are not limited to: Hemosol's ability to successfully
implement the Cascade technology and commercialize products derived there from;
Hemosol's ability to obtain additional financing; Hemosol's ability to obtain
regulatory approvals for its products; Hemosol's ability to successfully
complete clinical trials for its products; Hemosol's ability to enter into
satisfactory arrangements for the supply of materials used in its manufacturing
operations and the sale of resulting products to customers; technical,
manufacturing or distribution issues; the competitive environment for Hemosol's
products and services; the degree of market penetration of Hemosol's products;
Hemosol's ability to attract and retain clients for its bio-manufacturing
services; and other factors set forth in filings with Canadian securities
regulatory authorities and the U.S. Securities and Exchange Commission. These
risks and uncertainties, as well as others, are discussed in greater detail in
the filings of Hemosol with Canadian securities regulatory authorities and the
U.S. Securities and Exchange Commission. Hemosol makes no commitment to revise
or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.
DATASOURCE: Hemosol Corp.
CONTACT: Jason Hogan, Investor & Media Relations,
(416) 361-1331, (800) 789-3419, (416) 815-0080 fax, ,
http://www.hemosol.com/;
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