STRATEGIC TRANSACTIONS

Antibe Therapeutics to acquire 85% of Citagenix

2015-10-06 11:26 ET - News Release

Mr. Dan Legault reports
ANTIBE THERAPEUTICS ANNOUNCES STRATEGIC TRANSACTIONS
Antibe Therapeutics Inc. has entered into agreements to complete strategic transactions that mark the transition of the company from a development-focused biotechnology company to a diversified healthcare company with both development and commercial-stage assets across a broad range of markets.

In addition to the continuing development of its lead clinical candidate, ATB-346, and its pipeline of drugs that target inflammatory and degenerative conditions, Antibe is undertaking a strategic thrust into regenerative medicine.
Summary of transactions

• Antibe will acquire an 85-per-cent interest in Citagenix Inc., a Montreal-based sales and distribution company with a focus on regenerative medicine;
  • Creates a diversified healthcare products company with annual revenues of approximately $10-million;
  • Creates a commercial infrastructure for additional products;
  • Antibe will acquire the remaining 15-per-cent interest in Citagenix upon fulfillment of a regulatory condition;
• Antibe proposes to complete a non-brokered private placement of convertible debentures and warrants for gross proceeds of up to $2.75-million.

Antibe has entered into share purchase agreements to acquire 85 per cent of Citagenix. Citagenix is a privately held, Montreal-based regenerative medicine company, specializing in bone grafting and related procedures. It markets, manufactures, sells and distributes a broad range of high-quality dental and orthopaedic surgical products, as well as a line of highest quality, German-made surgical instruments. Citagenix has a fully established commercial infrastructure with annual revenues of $9.7-million for the 12-month period ending Aug. 31, 2015. As at Aug. 31, 2015, Citagenix had current assets of $2.94-million, total assets of $3.03-million, current liabilities of $1.05-million, long-term debt of $160,000, preferred shares of $1.14-million, and shareholders' equity of $680,000. The financial information for Citagenix is unaudited.

Antibe believes there is opportunity for organic growth of the existing product portfolio, addition of new products and expansion into the U.S., Europe, Middle East and Asian markets in the near term. Antibe has agreed to further develop the sales capacity of Citagenix by investing an additional $2.25 million in Citagenix in the next year. Antibe has agreed to purchase 85% of the common shares and 100% of the preference shares of Citagenix, by paying $400,000 in cash and issuing 25,876,421 Antibe common shares at a deemed price of $0.15375per common share.The Citagenix vendors have agreed to a lock-up of the Antibe common shares they will receive as consideration, with 25% of such shares to be released on the closing date, and an additional 25% to be released on each of the 6 month, 9 month and 12 month anniversary of the closing date. The purchase price of Citagenix represents approximately 0.5x the current unaudited annual revenue of Citagenix. Antibe has agreed to purchase the remaining common shares of Citagenix by issuing 2,857,500 Antibe common shares at a deemed price of $0.20 per common share subject to the vendor clearing a Personal Information Form ("PIF") with the TSX Venture Exchange. Further information concerning the vendor of the remaining Citagenix shares will be disclosed in a subsequent news release following clearance of the PIF. Citagenix will operate as a subsidiary of Antibe and its financial statements will be consolidated with those of Antibe.
 
Daniel Legault, CEO of Antibe, commented, "We believe this transaction is transformative for Antibe. We have obtained a commercial infrastructure and we are excited for the opportunity to work with our new colleagues at Citagenix. The Citagenix product portfolio and large existing customer base provide a platform to grow the business and we expect and sustained growth of these revenues over time by selectively adding class-leading and innovative products to our product line."  Uwe Tritthardt, CEO of Citagenix, stated, "We are very excited by becoming an important part of the new Antibe fully integrated healthcare company. Joining with Antibe will provide Citagenix the funding needed to accelerate our growth strategy."

In connection with the above transaction, Antibe intends to complete a non-brokered private placement of senior secured convertible debentures (the "Debentures") and warrants (the "Warrants") for gross proceeds of up to $2.75 million. The Debentures will have a term of three years from the date of their issuance, bear interest at a rate of 10% per year, be convertible at the option of the holder into common shares of Antibe at a price of $0.22 per share and be secured by the assets of Antibe. Purchasers of the Debentures will be issued an aggregate of up to 5,500,000 Warrants to purchase common shares of Antibe. The Warrants will be each exercisable for the purchase of one common share of Antibe at a price of $0.31 for a period of 3 years. The Bloom Burton Healthcare Lending Trust, a healthcare-specialized institutional investor, is expected to be the lead investor in the private placement.

John Wallace, Antibe's founder and CSO, added, "This is a transformative day for Antibe and our shareholders. We believe that these transactions will provide new avenues of growth for Antibe and, most importantly, with immediate revenues to deliver value while we continue to develop ATB-346 and our other potential blockbuster NSAID derivatives. In addition, while there is strong strategic fit between the two companies, their therapeutic areas and patient populations served, the acquisition of Citagenix provides diversification of our business and a growth platform. We are pleased that Antibe has transformed into an integrated healthcare and biotechnology company with a focus on inflammation, pain and regenerative medicine."
Each of the Citagenix acquisition and the offering of the Convertible Debentures and Warrants is conditional on the prior approval of the TSX Venture Exchange.
We seek Safe Harbor.