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SemBioSys Genetics Inc. (SBS.TO) Closes $4,000,000 Financing


3/18/2011 2:34:55 PM

CALGARY, March 18 - SemBioSys Genetics Inc. ("SemBioSys" or the "Company") (TSX:SBS) a development stage biotechnology company that utilizes its patented plant seed oilbody technology platform to develop biosimilar drug candidates and high value proteins, today announced that it has closed its previously announced $4 million financing. Under the final terms of the financing, SemBioSys has received $4 million of funding from Concept Capital Management Ltd. ("Concept Capital"), which is beneficially owned by Mr. Bernd Högel, in the form of bonds with an aggregate principal amount face value of $4 million (the "Bonds") and detachable warrants (the "Warrants") to purchase common shares of SemBioSys. The exercise price of the Warrants is initially $0.06 per share, subject to adjustment.

We believe that the financing will allow SemBioSys to regain compliance with the financial condition continued listing requirements of the Toronto Stock Exchange (the "TSX").

SemBioSys will use the proceeds of the offering for general operating capital and to negotiate one or more partnership transaction(s) for its biosimilar human insulin, next generation cardiovascular candidate, Apo AIMilano and/or additional products enabled by its novel plant based technology platform to make biosimilar drugs.

The Bonds issued in the transaction bear interest at a rate of 7% per annum, compounded annually, have a maturity date of 10 years from the date of issuance and are secured by certain intellectual property assets of SemBioSys. The Bonds include a "call" provision that provides that they can be called by the holder after three years or redeemed at 120% of their face value, plus accrued interest, at any time by SemBioSys.

The Warrants entitle the holder to purchase, with either all or a combination of, cash, Bonds and/or accrued interest (at 7% compounded annually), the equivalent of $4 million, plus accrued interest, worth of common shares of SemBioSys for a period of 10 years after the closing of the proposed financing at an initial exercise price of $0.06 (the "Initial Exercise Price") per common share. The Initial Exercise Price can be reduced on each six month anniversary of the date of issuance of the Bonds if the simple average daily closing price of the common shares on the Toronto Stock Exchange for the previous six month period is less than $0.06, subject to a floor price of $0.05 (the "Floor Price") per common share. If the Initial Exercise Price is adjusted downward in accordance with the previous sentence, it shall not thereafter be adjusted upwards, except in connection with proportional price adjustments required in connection with, for example, a share consolidation. In the event the Company undertakes certain dilutive common share issuances, the Floor Price may be adjusted downwards and the maximum number of common shares issuable may be increased.

Assuming the holder exercised all Warrants as at today's date, the holder would acquire 66,666,667 common shares at an exercise price of $0.06, representing approximately 129.8% of the current issued and outstanding share capital of the Company (in the event that all Warrants were exercised at $0.06 at the end of the 10 year term and the interest paid in cash, the holder would hold approximately 56.5% and existing shareholders would hold approximately 43.5% of the then issued and outstanding share capital of the Company) and a maximum of 157,372,109 common shares at $0.05 per common share or approximately 306.3% of the current issued and outstanding share capital of the Company (in the event that all Warrants and accrued interest were exercised at $0.05 at the end of the 10 year term, the holder would hold approximately 75.4% and existing shareholders would hold approximately 24.6% of the then issued and outstanding share capital of the Company).

The terms of the transaction were unanimously approved by the directors of the Company who were free from any interest and unrelated to the parties involved in the proposed transaction. The Company applied for and received, an exemption from the Toronto Stock Exchange, in accordance with Section 604(e) of the TSX Company Manual, from the requirement to obtain shareholder approval for the transaction in consideration of the serious financial circumstances of the Company, as previously described in the Management's Discussion and Analysis for the period ended September 30, 2010. Closing of the financing by the investor was conditional upon receipt of such exemption from the TSX. Shareholder approval for the proposed financing would have otherwise been required by the TSX since the number of common shares to be issued on the exercise of the Warrants exceeds the maximum 25% dilution permissible under TSX rules, the exercise price of the Warrants is subject to a reset, the initial exercise price of the Warrants is lower than the market price and the transaction can materially affect the control of the Company because of the large potential share ownership of the investor, Concept Capital. The Company's reliance on the financial hardship exemption provisions under the TSX Company Manual is based on determinations by the board of directors of the Company, acting in good faith, that the Company is in serious financial difficulty, that the transaction is designed to improve its financial position and that the terms of the transaction are reasonable under such circumstances.

About SemBioSys

Calgary, Alberta-based SemBioSys is a development stage biotechnology Company that utilizes its patented plant seed oilbody expression technology platform to develop biosimilar drug candidates and high value proteins. SemBioSys' seed-based protein expression system can enable exceptionally low cost of production with unprecedented scalability and reliability. SemBioSys is focusing the platform selectivity to develop biosimilar product candidates with tremendous commercial value. The Company's current pharmaceutical development programs include insulin (SBS-1000, regulated as a biosimilar in Europe) and Apo AIMilano, a new chemical entity and next-generation cardiovascular therapy with blockbuster revenue potential if it reaches market for treatment of atherosclerosis. SemBioSys' Apo AIMilano is a des-1,2- variant of Apo AIMilano as previously described in scientific literature. SemBioSys is listed on the Toronto Stock Exchange under the ticker SBS. More information is available at www.sembiosys.com.

This press release contains certain forward-looking statements, including, without limitation, statements containing the words "believe", "may", "plan", "will", "estimate", "continue", "anticipate", "intend", "expect" and other similar expressions which constitute "forward-looking information" within the meaning of applicable securities laws. Forward-looking statements reflect the Company's current expectation and assumptions, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These forward-looking statements involve risks and uncertainties including, but not limited to, the current financial position of the Company, the Company's ability to continue as a going concern and its ability to raise the funds necessary to continue its operations, the status of the TSX's de-listing review, the continued listing of the common shares on the TSX and the continued ability of the Company to maintain its listing on the TSX, the dilution of the proposed financing to existing shareholders, final regulatory approval of the proposed financing, the use of proceeds of the financing, the identification and negotiation of partnerships with respect to the Company's next generation cardiovascular candidate, Apo AIMilano and/or additional products, the development of additional products, changing market conditions and market size, the acceptance of an IND by the FDA in respect of clinical studies, the submission of a CTA to the appropriate European authorities, the successful initiation and timely and successful completion of clinical studies, the fact that Apo AIMilano is currently a development stage drug, the establishment of corporate alliances and partnerships, the impact of competitive products and pricing, new product development, uncertainties related to the regulatory approval process and other risks detailed from time-to-time in the Company's ongoing filings with the Canadian securities regulatory authorities which filings can be found at www.sedar.com. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable Canadian securities laws.

For further information:

SemBioSys Genetics Inc. Rick Pierce President, U.S. and International Operations Phone: (617) 447-8299 E-mail: piercer@sembiosys.com

The Equicom Group Inc. Ross Marshall Vice President Phone: (416) 815-0700 ext. 238 E-mail: rmarshall@equicomgroup.com


Read at BioSpace.com


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