PRESS RELEASES
28
May
2019
Novoheart to Acquire Xellera Therapeutics

May 28, 2019

Novoheart to Acquire Xellera Therapeutics

  • Xellera Therapeutics Limited will accelerate the progression of Novoheart’s current business scope
  • Significantly enhances Novoheart’s liquidity, gaining access to approximately C$22,500,000 cash


​VANCOUVER, BC – May 28, 2019 – Novoheart Holdings Inc. (“Novoheart” or the “Company”) (TSXV: NVH; FWB: 3NH) announced that effective on May 27, 2019, it has entered into a definitive non-arm’s length agreement to acquire (the “Acquisition”) all of the shares of Xellera Therapeutics Limited (“XT”) for C$33,805,000 to be satisfied through the issuance of 93,000,000 common shares of the Company (“Common Shares”). As stated in the vision statement, Novoheart aspires 1) to revolutionize human heart tissue engineering for disease modeling and pre-clinical drug discovery, and 2) to develop novel therapeutics for clinical cardiac therapies and precision medicine. Since its public listing in 2017, the Company has been focusing on launching its pre-clinical programs. The Acquisition will accelerate progression of the Company’s current business scope to include the development of clinical assets with the availability of unique expertise and professional networks in clinical trials and related regulatory requirements in the US, EU and HK/China, and a state-of-the-art GMP facility currently being established, with a target completion date in the first half of 2020, to be compliant with international standards for manufacturing clinical-grade advanced therapeutic products (ATP) for clinical trials and other applications, thereby leading to new revenue streams. Furthermore, Novoheart’s liquidity will be expected to become significantly enhanced through an access to approximately C$22,500,0001 cash on XT’s balance sheet.

“We are very excited by this merger with Xellera Therapeutics,” said Allen Ma, Chairman of the Board.  “Access to the impressive resources and facilities at XT rapidly move us closer to our long-term mission of developing clinical grade cell and tissue based therapies for cardiac repair, and the specialized expertise of Xellera’s internationally recognized scientific team will help us successfully navigate complex regulatory processes and gain access to an expanding global market for next-generation cardiac therapeutics.”  


Acquisition Terms

Under the terms of the Acquisition, Novoheart has agreed to acquire 100% of XT for a total purchase price of C$33,805,000. Upon closing of the Acquisition, the shareholders of XT will receive 93,000,000 Common Shares at a deemed price of approximately C$0.3635 per share.

In connection with the Acquisition, XT’s shareholders have agreed to enter into lock-up agreements pursuant to which the Common Shares received as the consideration for the Acquisition will be subject to restrictions on sale for a period of up to three years, with semi-annual vesting at 15%, 15%, 15%, 15%, 20% and 20%, respectively.

In connection with the Acquisition, it is expected that Dr. Katherine Ngan and Mr. Roger Ngan, two of the founders of XT, will join Novoheart’s board on closing. With an Honorary Doctorate of Business Administration, Dr. Ngan is the President of the May Cheong Group, which owns the premium brands Bburago, Maisto, Polistil, and others. As the Honorary President of The Chinese Manufacturers’ Association of Hong Kong and the holder of numerous industrial honours such as the Hong Kong Young Industrialist Award and the Enterprise Trophy of the Hong Kong Business Awards, Dr. Ngan will bring to the Board significant entrepreneurial and manufacturing expertise. Mr. Roger Ngan, Chief Executive Officer of May Cheong Group, specialises in sales, marketing as well as mergers & acquisitions. Collectively, Dr. Ngan and Mr. Ngan are expected to contribute to the critical expansion of business in China and Asia.


The Special Committee and Board Recommendation

Novoheart appointed a special committee of independent directors (the “Special Committee”) to supervise, oversee and review the negotiation of the acquisition of XT given the related party nature of the Acquisition. Dr. Ronald Li, the CEO, a director and a control person of the Company is also a director and an indirect approximate 39% shareholder of XT.

The Special Committee engaged Evans and Evans, Inc. (the “Valuator”) to provide an independent valuation of XT and a fairness opinion on a “fixed fee” basis. The Valuator has provided an opinion to the Special Committee that, subject to the assumptions, limitations and qualifications set out in such opinion, the consideration to be paid for the purchase of XT is fair, from a financial point of view, to Novoheart.

Following an extensive review and negotiation process, the Special Committee unanimously determined that the Acquisition is in the best interest of the Company and recommended to the Board of Directors of the Company that the final terms of the acquisition be accepted. In making its recommendation, the Special Committee considered, among other things, the Valuator’s fairness opinion.

The Board of Directors of the Company unanimously (other than Dr. Li and Camie Chan who declared an interest and abstained from voting on the Acquisition) approved the proposed Acquisition following its acceptance of the unanimous recommendation of the Special Committee and has recommended that shareholders of Novoheart vote in favour of the Acquisition.


Approval Process

The Acquisition will be subject to approval by Novoheart’s shareholders at a special meeting of shareholders expected to occur in late June 2019. In accordance with the policies of the TSX Venture Exchange (the “TSX-V”), the votes of Non-Arm’s Length Parties (as defined in the TSX-V’s policies) and, in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), the votes of any “interest party” and its affiliates must be excluded for purposes of shareholder approval. Accordingly, shares held or controlled by Dr. Li, Katherine Ngan and Roger Ngan and their respective affiliates and joint actors will be excluded from the vote. The Acquisition is also subject to the approval by the TSX-V. Subject to receipt of all necessary approvals, the Acquisition is expected to close in or about late June 2019.

The Company will be relying on the exemption in section 5.5(b) of MI 61-101 with respect to the formal valuation requirement of MI 61-101, on the basis that the Common Shares are only listed on the TSX-V.

1 HKD135,000,000 converted into Canadian dollars at a rate of C$1.00 = HKD6.00.


About Novoheart:

Novoheart is a global stem cell biotechnology company pioneering an array of next-generation human heart tissue prototypes. It is the first company in the world to have engineered miniature living human heart pumps that can revolutionize drug discovery, helping to save time and money for developing new therapeutics. Also known as 'human heart-in-a-jar', Novoheart’s bio-artificial human heart constructs are created using state-of-the-art and proprietary stem cell and bioengineering approaches and are utilized by drug developers for accurate preclinical testing as to the effectiveness and safety of new drugs, maximizing the successes in drug discovery whilst minimizing costs and harm caused to patients.


About Xellera Therapeutics Limited:

Xellera Therapeutics Limited (XT) is dedicated to developing cell- and gene-based therapies. XT’s mission is to bring advanced therapeutic options to patients in an era of precision medicine. XT is focused on building a Good Manufacturing Practice (GMP) facility for generating clinical-grade human stem cell lines, initially within the Southern Chinese population. The goal of these clinical-grade stem cell libraries will be to enable quicker identification of suitable donor material for cell-based therapies, minimizing the wait and avoiding complications commonly associated with transplantation, such as immune rejection or side effects caused by immunosuppression.

 

For further information, please contact:

Ronald Li, CEO

info@novoheart.com

(604) 398-3170

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.


Cautionary Note Regarding Forward-Looking Statements

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation; statements about the expected timing and completion of the Acquisition, including receipt of all shareholder and TSX-V approvals, the expected benefits of the Acquisition, the timing and completion of XT’s GMP facility, the development of new revenue streams, the success of the Company’s commercialization efforts, raising additional or alternative financing, the Company’s future plans, its goals and expectations, and the potential applications of its MyHeartTM platform are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the risks identified under the heading “Risk Factors” in Novoheart Holdings Inc.’s annual information form for the year ended June 30, 2018 or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulators. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the respective companies undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. Investors are cautioned against attributing undue certainty to forward-looking statements.

 

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