Newmac Resources Inc. ('Newmac' or the 'Company') (TSXV: NER) is pleased to announce that it entered into an arm's length agreement dated February 16, 2022 (the 'Agreement') with SignalChem Lifesciences Corporation setting out the terms of the reverse takeover acquisition of SignalChem by the Company.
Pursuant to the terms of the Transaction, the Company will acquire 100% of the issued and outstanding common shares of SignalChem by way of a triangular amalgamation. The Transaction will constitute both a reverse takeover and a change of business for the Company under the policies of the TSX Venture Exchange (the 'Exchange').
SignalChem
SignalChem is a biotech and drug research and development company located in Richmond, British Columbia. It is a private company with no control person. SignalChem began its business in British Columbia in 2004 with its initial focus on producing kinase-related products to facilitate biomedical research and drug discovery efforts. This division currently focuses on the research, development and production of innovative and high-quality human recombinant cell signaling products. Throughout the years, SignalChem has capitalized on its core expertise in cellular signaling, molecular biology and protein biochemistry to generate more than 2,000 functional protein products covering over 90% kinase targets of the entire human kinome and disease-related mutant kinases, epigenetic enzymes, ubiquitinating enzymes and other signaling proteins.
SignalChem now has four wholly-owned subsidiary corporations: (1) SignalChem Pharmaceutical Corp., which is involved in drug discovery, including the AXL inhibitor drug program which soon will enter phase 2 clinical trial in US/Canada; (2) SignalChem Biotech Inc., which is involved in bio-reagents business; (3) SignalChem Diagtech Corp., which is involved in in vitro diagnostic (IVD) products and (4) SignalChem Plantech Corp., which is involved in plant biosynthesis. SignalChem initiated its drug discovery business in 2012 (currently part of SignalChem Pharmaceutical Corp.). It is a multi-platform and clinical-stage drug discovery and development company focusing on development of next generation of novel, small molecule kinase inhibitors as targeted therapy for the treatment of cancer. Its experiences and expertise in the kinase biology and drug discovery and development allow it to deliver novel therapies against new and untapped kinase targets with a greater likelihood of success and better outcomes for patients. Currently, SLC-391, an inhibitor of the receptor tyrosine kinase AXL, is under phase 1 clinical trials to evaluate its safety and tolerability in subjects with solid tumours in multi-cancer centres in Canada and the dose expansion phase is anticipated to be completed by first quarter of 2022.
Collaboration partnerships have been formed on AXL phase 2 clinical trials with Merck & Co. and Sihuan Pharmaceutical Holdings Group.
SignalChem Biotech Inc. was established in 2004 and focuses on the development, production and marketing of cell signaling reagents through five protein expression systems (bacteria, yeast, plants, insects and eukaryotic cells). SignalChem Biotech Inc. offers over 3,000 cell signaling protein products encompassing wild type and mutant kinases, epigenetic enzymes, ubiquitinating and debituminizing enzymes which are closely related to human disease research, drug development and clinical diagnosis. The bio-reagents business has more than 40 partners/distributors in 54 countries serving over 4,000 clients worldwide, including world known large pharmaceutical companies.
SignalChem Diagtech Corp. and SignalChem Plantech Corp. were established in the past three years to capture rapid growth opportunities and fully utilize SignalChem's deep knowledge and expertise in signaling enzymes, functional proteins and understanding of metabolic pathways in plants to produce the medicinally important secondary metabolites. According to SignalChem's 2020 year-end audited financial statements, as at December 31, 2020, it had total assets of $5.6 million, total liabilities of $4.4 million and shareholders' equity of $1.2 million.
It generated total revenues of $8.3 million in 2020 with a gross profit of $6.2 million and net loss of $0.3 million after all expenses including drug discovery R&D expenditures. On completion of the Transaction, the Company expects to be a Tier 2 life sciences issuer listed on the Exchange (the 'Resulting Issuer'). It is also expected that the Resulting Issuer will change its name under the Business Corporations Act (British Columbia) to 'SignalChem Inc'.
Transaction
The Transaction will be effected by a triangular amalgamation (the 'Amalgamation'). Newmac will incorporate a new subsidiary ('Newmac Subco') and Newmac Subco will amalgamate with SignalChem to form an amalgamated company ('Amalco'). As a result, Amalco will be a wholly-owned subsidiary of Resulting Issuer at the time of the completion of the Transaction. At the effective time of the Amalgamation: (1) each SignalChem common share issued and outstanding immediately before the effective time of the Amalgamation will be cancelled and, in exchange, each holder thereof will receive 3.5639 Resulting Issuer common shares for each SignalChem common share previously held; (2) each Newmac Subco common share issued and outstanding immediately before the effective time of the Amalgamation will be exchanged for one Amalco common share; (3) as consideration for the issuance of the Resulting Issuer common shares in connection with the Amalgamation, Amalco will issue to Resulting Issuer one Amalco common share for each Resulting Issuer common share issued and (4) Amalco will be a whollyowned subsidiary of Resulting Issuer. No fractional Resulting Issuer common shares will be issued, the number of Resulting Issuer common shares to be issued will be rounded down to the next whole share, and no cash amount will be payable in lieu thereof.
SignalChem has granted options to acquire an aggregate of 3,306,100 SignalChem common shares and such options will roll-over into options to acquire 11,782,610 Resulting Issuer common shares based on the Share Exchange Ratio. SignalChem has also issued warrants to acquire an aggregate of 171,428 SignalChem common shares and such warrants will roll-over into warrants to acquire 610,952 Resulting Issuer common shares based on the Share Exchange Ratio. Also, it is expected that the Resulting Issuer will issue share options to eligible persons in accordance with the Resulting Issuer's share option plan and applicable Exchange policies.
SignalChem currently has 37,810,152 common shares issued and outstanding. Newmac currently has 9,716,042 common shares issued and outstanding.
Upon completion of the Transaction, including the Concurrent Financing and the Debt Settlement, both of which as described below, (1) based on the minimum of $10 million in gross proceeds from the Concurrent Financing, the current Newmac shareholders are expected to own approximately 6.46% of the Resulting Issuer common shares, the current SignalChem shareholders are expected to own approximately 82.56% of the Resulting Issuer common shares, and the Concurrent Financing shareholders are expected to own approximately 8.50% of the Resulting Issuer common shares, all on a non-diluted basis and (2) based on the maximum of $20 million in gross proceeds from the Concurrent Financing, the current Newmac shareholders are expected to own approximately 5.96% of the Resulting Issuer common shares, the current SignalChem shareholders are expected to own approximately 76.09% of the Resulting Issuer common shares, and the Concurrent Financing shareholders are expected to own approximately 15.67% of the Resulting Issuer common shares, all on a non-diluted basis.
If an agent is engaged in connection with all or a portion of the Concurrent Financing, it is expected that the agent would receive agent's warrants as is customarily paid for such a transaction. The Concurrent Financing may also involve the payment of finder's fees as permitted by Exchange policies.
Arm's Length Transaction
The Transaction constitutes an arm's length transaction and the Transaction will be subject to shareholder approval, such approval is expected to be obtained at a shareholders' meeting or by written consent, subject to Exchange acceptance. As the Transaction will be arm's length, minority shareholder approval by way of a shareholders' meeting is not expected to be required under Exchange Policy 5.9 and Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. SignalChem shareholder approval will also be required for approving the Transaction. SignalChem is unrelated and 'arm's length' to Newmac and the Transaction was negotiated at arm's length. One of the current directors of SignalChem, Gong (Michael) Chen, was formerly a director of Newmac. Mr. Chen was a director of Newmac from January 2012 until March 2021. Mr. Chen has been a director of SignalChem since January 2016. Mr. Chen was not a director and was not involved with Newmac when the Transaction was negotiated and therefore the Transaction is considered to have been negotiated at arm's length
Newmac is currently controlled by Real Flourish Holding Limited ('Real Flourish') and 0979595 BC Ltd. ('595BC'). Real Flourish is a corporation wholly-owned by Hanxin - 4 - (Harrison) Wu, who is a director and an officer of Newmac. Real Flourish owns 4,500,000 common shares of Newmac, representing 46.3% of the issued and outstanding common shares of Newmac. 595BC is a corporation owned by Tao Peng, the brother-in-law of Hanxin (Harrison) Wu. 595BC owns 2,950,000 common shares of Newmac, representing 30.4% of the issued and outstanding common shares of Newmac. As part of the Transaction, Newmac will settle all amounts due and owing to Hanxin (Harrison) Wu, who is currently a director and officer, as well as a control person of Newmac, and other related parties to Newmac, of a total of $601,386 through the issuance of 834,679 Newmac common shares at a price of $0.7205 per share (the 'Debt Settlement'). No deposit, advance or loan has been made or is required to be made under the Agreement.
Antonius (Toni) Schuh - Independent Director
Dr. Schuh is a founder of Global Source Ventures. He has over 20 years of executive leadership experience in the biotechnology, healthcare and life sciences industries and has served as CEO of five life sciences companies, including Arcturus Bioscience, AviaraDx (now bioTheranostics), Sequenom (NASDAQ: SQNM), Sorrento Therapeutics (NASDAQ: SRNE) and Cardiff Oncology (NASDAQ: CRDF, formerly Trovagene). In each case, Dr. Schuh developed company strategy based on a focused value proposition, oversaw the execution of such strategy, and secured funding to achieve transforming milestones, including multiple product launches. Based in San Diego, California, Dr. Schuh is a certified pharmacist and earned his Ph.D. in pharmaceutical chemistry from the University of Bonn, Germany.
Yu (Dennis) Xia - Independent Director
Dr. Dennis Xia is a board director and Senior Vice President of Akeso, a biopharmaceutical company listed on Hong Kong Stock Exchange (9926.HK). Dr. Xia has over 20 years of management experience in international pharmaceutical companies. He excels in pharmaceutical product development, cGMP regulations and quality management system, and regulatory affairs. Prior to joining Akeso Biopharma, Dr. Xia served as associate director, product development at Apotex, Inc., the largest pharmaceutical company in Canada, and as the global quality director at Albany Molecular Research Inc. He led or participated in FDA approval for more than 30 drugs in the U.S. and has also led the development of the first generic Lipitor drug to be approved in a number of countries. Dr. Xia obtained his bachelor's degree in applied chemistry from Peking University and later obtained his Ph.D. in chemistry from the University of Wales in the U.K.
Transaction Conditions
Pursuant to the Agreement, the material mutual conditions precedent include: (1) shareholders of Newmac and SignalChem approving the Transaction; (2) the Exchange conditionally accepting the Transaction; (3) obtaining all other requisite consents and approvals to complete the Agreement and the Amalgamation; (4) not having dissent rights with respect to the Amalgamation exercised by SignalChem shareholders representing 5% or more of the SignalChem shares; (5) SignalChem completeing the Concurrent Financing and (6) Newmac entering into the Debt Settlement. Each of Newmac and SignalChem have respective condition precedents that are customary for a transaction of this type such as performance of covenants, delivery of completion documents, and no material adverse changes having occurred in respect of each of the parties. Prior to the Amalgamation, a finder's fee of 1,134,305 SignalChem common shares will be issued to DoubleOcean Financial Group Ltd., a company controlled by Gong (Michael) Chen, an independent director of SignalChem (the 'Finder's Fee'). The Finder's Fee is expected to be within the finder's fee limitations set out in Exchange Policy 5.1. Newmac's non-material Chinese subsidiaries, Newmac (Shenzhen) Co. Ltd. and Newma (Guangzhou) Technology Co. Ltd., were involved in exploring the skin care business in China, but have ceased operations. Newmac is in the process of dissolving these two Chinese subsidiaries and their dissolution is expected prior to completion of the Transaction. After completion of the Transaction, the Resulting Issuer intends to use commercially reasonable best efforts to dispose all of its mining assets that Newmac currently holds.
Trading Halt
Trading of Newmac's listed shares on the Exchange was halted at the request of Newmac on May 11, 2021 in advance of the announcement relating to the letter of intent for the Transaction. The closing price for Newmac's common shares was $0.285 per share when trading was halted. It is expected that the trading halt will continue until completion of the Transaction.
Contact:
Valent Chan
Tel: 778.288.3252
Forward-Looking Information
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 terms and completion of the Transaction including, without limitation, the Amalgamation and Concurrent Financing, 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 following risks: failure to satisfy all conditions precedent to the Transaction, including shareholder approval, acceptance of the TSX Venture Exchange and completion of the Concurrent Financing and the additional risks identified the management discussion and analysis section of Newmac's interim and most recent annual financial statement 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.
NEWMAC RESOURCES INC. 
