Makena Resources Inc. Announces Recapitalization Financing, New Management Team and Board of Directors
And Business Combination with Biocan Technologies Inc. and Epimeron Inc. to form Willow Biosciences Inc.VANCOUVER, Dec. 20, 2018 - Makena Resources Inc. ("Makena") (CSE: MKNA) is pleased to announce: (i) a non-brokered private placement of up to an aggregate of $15.0 million (the "Private Placement"); and (ii) the appointment of a new management team (the "New Management Team") and new board of directors (the "New Board") in connection with the completion of the Private Placement (collectively, the "Recapitalization"). Completion of the Recapitalization is subject to customary closing conditions, including the approval of the Canadian Securities Exchange (the "CSE").
Makena is also pleased to announce that it has entered into a non-binding letter of intent with BioCan Technologies Inc. ("BioCan") and Epimeron Inc. ("Epimeron") dated as of December 19, 2018, pursuant to which, concurrent with the completion of the Recapitalization, Makena will: (a) acquire all of the: (i) common shares in the capital ("BioCan Shares") of BioCan; and (ii) common shares in the capital ("Epimeron Shares") of Epimeron through the issuance of an aggregate of 857,142,858 common shares ("Common Shares") of Makena for a total transaction value of $30.0 million; and (b) complete a business combination with BioCan and Epimeron pursuant to a plan of arrangement (the "Plan of Arrangement") under the Alberta Business Corporations Act (the "Arrangement" and, together with the Recapitalization, the "Transaction") which will result in the combination of Makena, BioCan and Epimeron under the name Willow Biosciences Inc. ("Willow" or the "Company"). The Arrangement is subject to, among other things, the execution of a definitive agreement among Makena, BioCan and Epimeron (the "Arrangement Agreement") and customary closing conditions, including the approval of shareholders, the Alberta Court of Queen's Bench and the CSE. It is anticipated that the Arrangement Agreement will be executed on or about January 2, 2019 and the Recapitalization and the Arrangement are expected to be completed on or about January 31, 2019 (the "Closing"). Pursuant to the letter of intent, Makena has agreed to deal exclusively with BioCan and Epimeron with regard to the Recapitalization and the Arrangement.
Upon completion of the Transaction, Willow will be positioned to become the industry leader in cannabinoid biosynthetic production by capturing key intellectual property around the most cost-effective methods to produce cannabinoids. Willow's operational capabilities will span the entire product development pathway. The Company's integrated team in Canada and the United States will have full capabilities to underpin achievement at all stages of development cycle.
Pharmaceutical and consumer-use markets currently can only procure high purity cannabinoids from chemical synthesis or plant-based extraction, both of which come at a high cost. Furthermore, rare cannabinoids and novel cannabinoids are not available via plant-based extraction commercially. Yeast-based biosynthesis presents an attractive alternative by giving low cost, high purity and scalable production for pharmaceutical and nutraceutical markets, also giving them access to rare cannabinoids and cannabinoids tailored to precise treatments.
New Management Team
The New Management Team will be led by Trevor Peters as President and Chief Executive Officer, Travis Doupe as Chief Financial Officer, Dr. Peter Facchini as Chief Scientific Officer, Jerry Ericsson as Vice President, Operations, Dr. Jillian Hagel as Vice President, Applied Science, Dr. Mathias Schuetz as Vice President, Research and Development and Sanjib (Sony) Gill as Corporate Secretary.
The members of the New Management Team include world-leading discovery biologists, cannabis geneticists and the founding shareholders, senior officers and board members of BioCan and Epimeron.
| Trevor Peters Director, President and Chief Executive Officer | Mr. Peters is the President, Chief Executive Officer and a director of BioCan. Mr. Peters is an experienced executive having co-founded four start-up companies in the past 15 years. Mr. Peters has raised over $1.0 billion in equity and debt financings at various stages of corporate development and has been integral to successful transactions totalling over $4.0 billion on sale. Mr. Peters has an extensive intellectual property and patent protection background in the energy technology sector | |
| Travis Doupe | Mr. Doupe is the Chief Financial Officer of BioCan. He has over 18 years' experience in financial leadership roles in the international oil and gas industry, during which time he provided corporate strategic direction while overseeing all aspects of financial operations, including budgeting and planning, treasury, accounting, tax, reporting and investor relation functions. Over half of Mr. Doupe's 18 years of financial experience has been in various Chief Financial Officer roles, principally in publicly listed companies. Mr. Doupe holds a CA-CPA designation and a Bachelor of Management degree from the University of Calgary | |
| Dr. Peter Facchini Chief Scientific Officer | Dr. Facchini is the Chief Scientific Officer and a co-founder of Epimeron. Dr. Facchini has been Professor of Plant Biochemistry in the Department of Biological Sciences at the University of Calgary since 1995. Dr. Facchini is the Canada Research Chair in Plant Metabolic Processes Biotechnology and he received the C.D. Nelson Award from the Canadian Society of Plant Physiologists as the outstanding young plant biologist in Canada. Dr. Facchini has published over 150 research papers and scholarly articles in high-impact journals such as Nature Chemical Biology, Plant Cell, Plant Journal and the Journal of Biological Chemistry. Dr. Facchini received a PhD from the University of Toronto in 1991 and conducted postdoctoral research at the University of Kentucky and the Université de Montréal | |
| Jerry Ericsson Vice President, Operations | Mr. Ericsson is an experienced clean-tech executive responsible for raising more than $25.0 million to commercialize thermochemical technologies. Mr. Ericsson has more than 15 years of experience in research and development of novel technologies in forestry and agricultural industries and eight years' experience in integrated pest management (IPM) research in greenhouse and field crops. Mr. Ericsson has authored or co-authored three patents and more than ten peer-reviewed papers in international journals | |
| Dr. Jillian Hagel Vice President, Applied Science | Dr. Hagel is the Chief Operating Officer and a co-founder of Epimeron. Dr. Hagel has over 17 years' experience in medicinal plant biochemistry. Dr. Hagel has co-authored over 35 peer-reviewed publications in high-ranking journals such as Nature Chemical Biology, Nature Communications and Plant Cell, presented internationally and been the recipient of multiple academic awards. Dr. Hagel is the co-inventor on numerous patent applications and received a PhD in 2010 from the University of Calgary | |
| Dr. Mathias Schuetz Vice President, Research and Development | Dr. Schuetz is the Adjunct Professor in the Department of Botany at the University of British Columbia and a researcher and plant molecular biologist with extensive expertise in plant genetics and cannabis technology. Dr. Schuetz has over 14 years' research experience and he is the author of many peer-reviewed publications in prestigious plant science journals. Dr. Schuetz has received numerous citations and awards for research excellence and received a PhD in 2009 from Simon Fraser University | |
| Sanjib (Sony) Gill | Mr. Gill is a partner at McCarthy Tétrault LLP, a national law firm. Mr. Gill has dealt with all aspects of a public and private company's creation, growth, restructuring and value maximization. Mr. Gill has extensive experience in the negotiation, structuring and consummation of a broad range of corporate finance, securities and mergers and acquisitions transactions. He serves on the board of directors of, and acts as corporate secretary to, numerous public and private companies. Mr. Gill is recognized in Chambers Canada as a leader in Corporate Commercial – Alberta. He also appears in theCanadian Legal Lexpert Directory as a leading lawyer in the area of Corporate Mid-Market, and as a leading lawyer in the current edition ofWho's Who Legal: Energy. In 2011, he was named amongLexpert magazine's Rising Stars: Leading Lawyers Under 40 |
New Board of Directors
Upon closing of the Transaction, the New Board will be comprised of Dr. Joseph Tucker (Executive Chairman), Trevor Peters, Dr. Peter Seufer-Wasserthal, Sadiq H. Lalani, Donald Archibald and Dr. Fotis Kalantzis.
The New Board has extensive experience in successfully founding, growing and monetizing public companies. The directors' combined experience and expertise will provide the New Management Team with invaluable advice, guidance and mentorship.
| Dr. Joseph Tucker (Executive Chairman) | Dr. Joseph Tucker is the Chief Executive Officer and a co-founder of Epimeron. Dr. Tucker possesses extensive senior leadership experience, having served as Chief Executive Officer, Chief Financial Officer and Vice President of multiple public and private biotech companies. He has taken companies from incorporation through to acquisition, out-licensing and stock market listing. Dr. Tucker holds more than 20 issued or pending patents and is a member of the Board of Directors of BioAlberta. Dr. Tucker received a PhD in Biochemistry & Molecular Biology from the University of Calgary |
| Dr. Peter Seufer-Wasserthal | Dr. Seufer-Wasserthal has more than 25 years' experience in the technology and biotechnology sector. Dr. Seufer-Wasserthal is currently Chief Commercial Officer of Origenis GmbH and previously served as Vice President, Business Development for Intrexon Corporation, responsible for business development in Europe and Asia for four years. Dr. Seufer-Wasserthal received his PhD from the Technical University of Graz |
| Sadiq H. Lalani | Mr. Lalani has been Chief Financial Officer of Kelt Exploration Ltd. since October 2012 and Vice President since October 2017. Before that, Mr. Lalani was Chief Financial Officer & Vice President, Finance of Celtic Exploration Ltd. from October 2002 to February 2013. He has over 25 years' experience in leadership positions. Mr. Lalani holds a Bachelor of Commerce degree from the University of Calgary |
| Donald Archibald | Mr. Archibald is an independent businessman and the Executive Chairman of Cequence Energy Ltd. Mr. Archibald was a former director and audit committee member of numerous public issuers, including Spartan Energy Corp. from December 2013 to May 2018 when it was acquired for approximately $1.4 billion by Vermilion Energy Inc. and Spartan Oil Corp. from June 2011 to January 2013 when it completed a business combination with Bonterra Energy Corp. for a total transaction value of approximately $480 million. Mr. Archibald has held senior executive positions with a number of public and private issuers, including roles as President of Cypress Energy Corp., Chairman and Chief Executive Officer of Cyries Energy Inc. and President and Chief Executive Officer of Cequel Energy Inc. He holds a Bachelor of Commerce Degree and a Masters of Business Administration |
| Dr. Fotis Kalantzis | Dr. Kalantzis has been co-founder of several public companies and has over 25 years' experience in oil and gas exploration and development in technical and leadership positions. Dr. Kalantzis has been instrumental in a number of significant transactions including in his capacity as a senior officer with Spartan Energy Corp. from December 2013 to May 2018, Spartan Oil Corp. from June 2011 to January 2013, Spartan Exploration Ltd. (public) from September 2010 to June 2011 and Spartan Exploration Ltd. (private) from January 2008 to September 2010. Dr. Kalantzis holds a MSc from the University of Saskatchewan and PhD from the University of Alberta and has published and presented many papers in international journals and conferences |
Corporate Strategy
The New Management Team has extensive experience creating shareholder value on an absolute and per share basis through a focused full-cycle business plan and believes Willow will have an unrivalled advantage in a market where demand for cannabinoids is accelerating and high purification costs create the need for advanced, cost-effective manufacturing. Willow's world-leading discovery biologists and business experts will guide a multidisciplinary team that will involve the entire supply chain, from gene discovery through manufacturing and commercialization.
Yeast fermentation cannabinoid production offers significant advantages over plant-based extraction. The controlled manufacturing environment facilitates scale up, purity, security of product supply and is pesticide-free and substantially more cost-effective. In addition, rare and novel cannabinoid production, inaccessible by plant-based extraction, requires the same cost inputs as more abundant cannabinoids such as CBD, opening up new consumer and pharmaceutical markets.
Willow has a proven ability to commercialize fermentation-based production, leveraging:
- Discovery biology to identify important genes in desired metabolic pathways;
- Past success securing intellectual property to protect and commercialize discoveries;
- High-throughput targeted evolution and screening technology to generate higher yields; and
- Relationships with leading contract development and manufacturing organizations in Canada and the United States.
The use of proceeds of the financing will fully fund Willow to complete research and development to commercial production of high purity cannabinoids via yeast-based biosynthesis.
Epimeron has been a University of Calgary spin out company working with Innovate Calgary, the university's knowledge transfer and business incubator. The University of Calgary has actively supported the translation of Dr. Facchini and Dr. Hagel's work in the area of plant genomics. Going forward, Willow will continue to conduct research at the University of Calgary.
"The formation of Willow Biosciences Inc. is another example of how social and economic gains are created through the translation of research. We're pleased for Willow and are looking forward to continuing to support them in their next stage of business growth," states Peter Garrett, Associate Vice President Research - Innovation, University of Calgary and President, Innovate Calgary.
The Arrangement
Pursuant to the Arrangement:
| (1) | each holder of BioCan Shares shall exchange such BioCan Shares for Common Shares on the basis of a deemed value of $0.035 per Common Share and shall receive approximately 7.301 Common Shares for each BioCan Share held by such shareholder; |
| (2) | each holder of Epimeron Shares shall exchange such Epimeron Shares for Common Shares on the basis of a deemed value of $0.035 per Common Share and shall receive approximately 577.687 Common Shares for each Epimeron Share held by such shareholder; and |
| (3) | the name of Makena shall be changed to Willow Biosciences Inc |
Completion of the Arrangement is subject to the satisfaction of a number of conditions, including, but not limited to: (i) the execution of the Arrangement Agreement; (ii) receipt of the approval of shareholders of Makena, BioCan and Epimeron; (iii) receipt of Court approval of the Arrangement; (iv) receipt of CSE conditional approval for the Arrangement and the issuance of Common Shares pursuant to the Arrangement; (v) all conditions under the Arrangement Agreement (other than the issuance of Common Shares necessary to complete the Arrangement) having been satisfied or waived; and (vi) receipt of all other required regulatory, governmental and third party approvals.
Eight Capital and Laurentian Bank Securities Inc. are acting as advisors in respect of the Transaction.
The Transaction is expected to constitute a "Fundamental Change" pursuant to the policies of the CSE and is subject to the acceptance of the CSE and the approval of shareholders of Makena, BioCan and Epimeron.
Shareholders holding not less than 50% plus one Common Share of the issued and outstanding Common Shares and not less than 66.67% of the issued and outstanding Epimeron Shares will approve the Transaction by way of written resolution.
In connection with the Transaction, it is expected that BioCan will hold a meeting to seek shareholder approval of the Arrangement.
Makena intends to submit all requisite filings with the CSE in due course, including a management information circular in respect of the Transaction.
The Arrangement will not result in the creation of a new "control person", as such term is defined by the policies of the CSE.
Private Placement
Pursuant to the Private Placement, investors will subscribe for up to an aggregate of 428,571,429 Common Shares or units ("Units") of Makena at a price of $0.035 per Common Share or Unit, as applicable, for aggregate gross proceeds of up to $15.0 million. The completion of the Private Placement will be concurrent with, and is conditional on, the completion of the Arrangement and is expected to occur on or about January 31, 2019 (the "Closing").
Units will be issued to subscribers that are members of the New Management Team and the New Board, together with certain additional subscribers identified by such persons. Common Shares will be issued to all other subscribers.
Each Unit will be comprised of one Common Share and one performance-based Common Share purchase warrant (each, a "Performance Warrant"). Each Performance Warrant will entitle the holder to purchase one Common Share at a price of $0.035 for a period of five years. The Performance Warrants will vest and become exercisable as to: (i) one-third upon the 20-day volume weighted average trading price of the Common Shares (the "Market Price") equaling or exceeding $0.0525; (ii) an additional one-third upon the Market Price equaling or exceeding $0.070; and (iii) a final one-third upon the Market Price equaling or exceeding $0.0875. In addition, in the event the Market Price equals or exceeds $0.140, each Performance Warrant will be exercisable for 1.5 Common Shares, provided that, at the time of exercise in respect of the additional 0.5 of a Common Share per Performance Warrant (the "Performance Incentive"), the Common Shares are: (i) listed on the facilities of a recognized stock exchange (other than the CSE or the TSX Venture Exchange (the "TSXV")); (ii) acquired for cash; or (iii) acquired for the securities of a company listed on a recognized stock exchange (other than the CSE or the TSXV).
The resignation of the current board of directors and management team of Makena and the appointment of the New Management Team and the New Board will occur contemporaneous with the Closing.
The Private Placement will not result in the creation of a new control person.
The net proceeds of the Private Placement will be used to fund the pro forma business plan of the Company and for working capital and general corporate purposes.
About BioCan
BioCan, a company incorporated under the laws of Alberta, is a research and development company focused on plant research as it relates to biosynthesis of high value plant products. Much of BioCan's research efforts over the past several years has been devoted to the biosynthesis of phytocannabinoids to better understand how they can be produced more efficiently for the pharmaceutical or fine chemical market. Developments from BioCan's research not only furthers the fundamental understanding of how specialized metabolite (e.g. cannabinoids and terpenes) biosynthesis is regulated, but also provides important targets for product developments. BioCan has a corporate office in Calgary, Alberta, has established research collaborations at the University of British Columbia, and has its private laboratory and research facility in Burnaby, British Columbia.
The current directors and officers of BioCan are: Trevor Peters (President, Chief Executive Officer and a Director), Travis Doupe (Chief Financial Officer), Jerry Ericsson (Chief Operating Officer), Dr. Mathias Scheutz (Chief Scientific Officer), Douglas Edward Allen (Director), Gregory G. Turnbull (Director) and Dr. Jonathan Chan (Director).
As of the date of this press release, 58,450,444 BioCan Shares, 11,621,334 BioCan common share purchase warrants and 250,000 stock options are issued and outstanding. In connection with the Transaction, all outstanding Biocan stock options will be exercised for cash.
For more information on BioCan, please visit https://www.biocantechnologies.com.
About Epimeron
Epimeron, a company incorporated under the laws of Alberta, is working to enable the commercialization of high-value bioproducts by making key discoveries in plant genomics for Epimeron's synthetic biology partners. At Epimeron, newly discovered genetic elements and biochemical strategies are translated into the appropriate commercial host organism. Epimeron seeks to partner and work together to enhance the success of manufacturing programs.
The current directors and officers of Epimeron are: Dr. Joseph Tucker (Chief Executive Officer and Co-Founder), Dr. Peter Facchini (Chief Scientific Officer and Co-Founder), Dr. Jillian Hagel and (Chief Operating Officer and Co-Founder).
As of the date of this press release, 549,001 Epimeron Shares and 207,500 stock options are issued and outstanding. In connection with the Transaction, all outstanding stock options will be exercised.
For more information on Epimeron, please visit http://epimeron.com.
About Makena
Makena is a Canadian-based junior exploration company focused on creating shareholder value through discoveries and strategic development of its assets in Canada.
Upon completion of the Transaction, the Company will execute a new cannabinoid science and biosynthesis strategy, conducting business as "Willow Biosciences Inc.". The Transaction has received unanimous approval from the board of directors of Makena.
There are currently 35,246,184 Common Shares, 18,243,708 share purchase warrants and 963,050 stock options of Makena issued and outstanding. Pursuant to the Transaction, all outstanding options of Makena will vest and become exercisable until the date that is 30 days following Closing, at which time, all outstanding options shall be cancelled. Assuming the exercise of all existing stock options and share purchase warrants and proceeds of $15.0 million from the Private Placement, and including the Common Shares to be issued in connection with the Arrangement, there will be approximately 1,340,167,229 Common Shares outstanding at Closing.
Additional Information
Additional information regarding the Transaction, BioCan, Epimeron, Willow, the financial statements of BioCan and Epimeron and pro forma financial statements of the Company after giving effect to the Transaction will be made publicly available by Makena in due course, including pursuant to the management information circular to be filed on SEDAR in connection with the Transaction at www.sedar.com. The Company's work program and other information regarding BioCan, Epimeron and Willow will be submitted to the CSE for their review.
Reader Advisory
Completion of the Arrangement and the Recapitalization are subject to a number of conditions, including, but not limited to, the acceptance of the CSE, Court approval and shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Arrangement or the Recapitalization will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Makena should be considered highly speculative.
This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
The Canadian Securities Exchange has in no way passed upon the merits of the Arrangement or the Recapitalization and has neither approved nor disapproved of the contents of this press release.
Neither the Canadian Securities Exchange nor the Market Regulator (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information concerning the Arrangement, the Recapitalization, the expected composition of the board of directors and management of Willow, the application to the CSE in respect of the Arrangement and the Recapitalization, the completion and timing of the transactions contemplated herein, the change of name of Makena, the Company's corporate strategy and the anticipated benefits of the Transaction. In addition, statements relating to Willow's business, strategies, expectations, planned operations or future actions, including research and development programs and collaborations and partnerships, the performance of Willow's business and operations; the competitive conditions of the industry in which Willow will operate and the competitive advantages of Willow; and the Company's future product offerings, including analytical testing, genetics, pest and disease management and cannabinoid production.
The forward-looking statements and information are based on certain key expectations and assumptions made by Makena, including expectations and assumptions concerning: Makena, BioCan, Epimeron and Willow; the Recapitalization and the Arrangement, including CSE, Court and shareholder approvals and the execution of the Arrangement Agreement and the satisfaction of other closing conditions in accordance with the terms of the Arrangement Agreement; the future operations of, and transactions completed by, Willow; the availability of sufficient capital; the availability of and access to qualified personnel; Willow's ability to protect its intellectual property; the expected growth in the cannabis market, including demand for cultured cannabinoids; expectations regarding the regulatory framework for cultured cannabinoids; the medical benefits, viability, safety, efficacy, dosing and social acceptance of cannabis; the securities markets and the general economy; the legalization of the use of cannabis for medical and/or adult use in jurisdictions outside of Canada; and applicable laws not changing in a manner that is unfavorable to Willow.
Although Makena believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Makena can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Without limitation, these risks and uncertainties include: the parties being unable to obtain the required CSE, Court and shareholder approvals; the failure to complete the Private Placement on satisfactory terms, risks associated with the cannabis industry in general, infringement on intellectual property, failure to benefit from partnerships or successfully integrate acquisitions, actions and initiatives of federal and provincial governments and changes to government policies and the execution and impact of these actions, initiatives and policies, import/export and research restrictions for cannabinoid-based operations, the size of the medical-use and adult-use cannabis market, competition from other industry participants, adverse U.S., Canadian and global economic conditions, failure to comply with certain regulations and departure of key management personnel or inability to attract and retain talent. Makena undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW./
SOURCE Makena Resources Inc.
Contact
Trevor Peters, T: (403) 669-4848, E: t.peters@biocantechnologies.com; Joseph Tucker, PhD, T: (508) 627-0485, E: jtucker@epimeron.com; 202, 1201 - 5th Street SW, Calgary, AB T2R 0Y6
