On June 26, 2020 Helix BioPharma Corp. (TSX: HBP) ("Helix" or the "Company"), a clinical-stage biopharmaceutical company developing unique therapies in the field of immuno-oncology based on its proprietary technological platform DOS47, reported that it has entered into a non-binding term sheet to divest the remaining shares it holds in its Polish subsidiary (the "Divestment"), Helix Immuno-Oncology S.A. ("HIO"), representing approximately 51% of the issued and outstanding shares of HIO prior to the HIO Private Placement described below (Press release, Helix BioPharma, JUN 26, 2020, View Source [SID1234565135]).
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Under the term sheet, the Company has accepted a non-binding offer from CAIAC Fund Management AG, in its capacity as designated trustee of an Alternative Investment Fund (the "Fund"), that is currently in the process of being established and authorized by the Financial Market Authority in Liechtenstein ("FMA"). The terms of the offer provide for Helix to sell its remaining holdings in HIO for gross proceeds of up to PLN6,700,000 (~CAD2,300,000). The transaction is scheduled to close on August 31, 2020, and is subject to a number of conditions, including the approval of the Fund by the FMA; the raising of a minimum PLN7,300,000 by the Fund as well as regulatory approval of the transaction, if required. As a result, there can be no assurance that the closing of the Divestment will occur on the terms set out herein or at all.
The Company has also approved an increase in share capital of HIO and the issuance of up to 2,200,000 Series B ordinary shares in the capital of HIO to enable it to issue up to 2,200,000 series B ordinary shares by way of a private placement financing for aggregate gross proceeds of approximately PLN 2,970,000 (the "HIO Private Placement"). Assuming the successful completion of the HIO Private Placement, the Company’s shareholding in HIO is expected to decrease to approximately 42.5 % of the outstanding shares of HIO.
In addition, the Company has entered into agreements with HIO (the "Debt Cancellation Agreements"), pursuant to which it has cancelled an aggregate amount of ~CAD$2,700,000 of intercompany debt owed to the Company by HIO. Since HIO is a subsidiary of the Company, the Consolidated Statements of Financial Position of the Company have not presented intercompany transactions as advances by the Company to HIO since liabilities of the subsidiary were offset and eliminated against each other on the Consolidated Statements of Financial Position. As part of the Debt Cancellation Agreements, the Company and HIO have agreed to terminate both the BiphasixTM asset transfer agreement and the V-DOS47 license agreement. As a result, all transferred assets related to BiphasixTM and VDOS47 have been automatically re-assigned and transferred from HIO back to Helix without any formality. The Company has also ceased funding HIO with immediate effect.
The debt forgiveness and the transfer of assets pursuant to the Debt Cancellation Agreement are considered related party transactions within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company relied on exemptions from the formal valuation and minority approval requirements in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of the transactions based on a determination that the fair market value of the transactions does not exceed 25% of the Company’s market capitalization, as determined in accordance with MI 61-101.